Australian Foundation Investment Company Limited (AFI) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to AFIC Full Year Financial Results briefing. [Operator Instructions] I would now like to hand the call over to your first speaker today, Mr. Mark Freeman, CEO and Managing Director of Australian Foundation Investment Company. Thank you. Please go ahead.

Well, good afternoon, everyone, and as stated, I'm Mark Freeman, the CEO and Managing Director of the Australian Foundation Investment Company, and welcome to this full year result briefing. I'd like to begin by acknowledging the traditional owners and custodians from all the lands we are gathered on today, and pay my respect to the elders past, present and emerging. I have joining me today on the webinar David Grace, Nga Lucas from the investment team; Andrew Porter, our CFO; and Geoff Driver, General Manager of Business Development. Before we start the presentation, a bit of housekeeping on this webinar. This briefing is based on the material available on the company's website. If you are using your computer to access the presentation via the webcast, the slides will change automatically. If you are accessing by phone only, the PDF of the slides with page numbers is available on the website. Finally, please note, following the presentation, there will be time for questions and answers. You can ask a question either via the webcast or through the operator. I will now move to Slide 2, which is the disclaimer. And the states that we're here to talk about what we're doing in the company, and we're not here to give me advice as such. Moving to Slide 3, the agenda. I'll just give an overview of the company, then pass over to Andrew Porter, who will discuss the recent financial results. And then David and I will talk through the markets, portfolio activities and outlook. So on to Page 5, just to remind everyone that we primarily invest in Australian and New Zealand companies. We're the largest listed investment company on the ASX, with over 160,000 shareholders with an independent Board of Directors. Importantly, shareholders own the company own the management rights to the portfolio. Therefore, the management expense ratio is kept extremely low at 0.14%, with no performance fees. We are a long-term investor and seek to be low turnover and therefore, tax effective, we understand that tax can be a considerable drain on investors' final returns. We also like to have a portfolio and ultimately, share price that produce returns at a less volatile than the index and a long history of growing and stable fully franked dividends that was demonstrated through the downturn in COVID, where we sustained the dividend. Investment team manages 3 other funds, Djerriwarrh Investments, Mirrabooka and AMCIL, and we'll move on to the next slide, Slide 6. We're aiming to provide shareholders with attractive investment returns through a growing stream of fully franked dividends and growth in capital, and over the long term, we aim to pay dividends, which grow faster than inflation, although that's not going to happen in the short term, with interest rates and inflation where they are and to provide those total returns over the medium to longer term. So with that, I'll pass over to Andrew Porter, our CFO, to talk through the results.

Thank you, Mark, and good afternoon, ladies and gentlemen. And we are on Slide 8 for those of you that are following along on the screen. So if I run through these boxes in descending order, the first one, the profit for the year, just over $310 million. Now on first sight, this is down from last year's profit, which is just $361 million. That included a $75 million, what we would call script dividend, as a result of the BHP Petroleum and Woodside merger. If you were to take that out, actually, the profit was up 8.6% for the year and the dividend increases came from a wide range of sources. What that meant was that we were able to increase the dividend for the whole year at the interim, that went up from $0.10 to $0.11. So overall, for the year, the dividend is $0.25, up from $0.24. The final dividend has remained constant at $0.14. And just to remind shareholders what we said in the past, the board will continue to take the disparity between the interim and the final dividend into account, when setting their dividend policy. Total shareholder return, which is the box on the bottom left, that was actually down 1.4% for the year, and I'll come on to that in a moment. The total portfolio return for the year, including franking, we think that's an important part of the equation, because that does take into account the tax that is incurred and of course, the franking benefits that shareholders can take. David will come on to that in the next session. That was down -- that was up 30.9% for the year. The management expense ratio was down to 0.14% from 0.16% in the year. That means it costs $0.14 for every $100 that you have invested in the company. Some expenses, particularly travel for instance did go up, but the reduction was largely caused by the amalgamation of incentive plans during the year. More details on that can be found in both last year's remuneration report, and this year for those who are interested. The big driver, of course, for the MER, which is the total cost of running the company as a proportion of the average portfolio value, is that average portfolio value. And although you can see in that last box that it was up to $8.9 billion from $8.2 billion the year before, actually, the average value was down, it was $8.7 billion this year against $9.1 billion last year. So that's an important thing to bear in mind when looking at the MER. But remember that AFIC continues to -- we think, a cheap and solid way of investing in the stock market. If we go on to the next slide, Page 9, Slide 9. This shows what we were talking about. You can see from this graph, which is a graph of the premium discount on the share price against the intangible assets of the company. But we moved at the end of June to a discount of 2% from a premium of 13% at the same time last year. So that's quite a big movement, and that cause is why that shareholder return is showing a minus 1.4%. Now this decline from a premium to a discount was faced by many, if not most or all other LICs on the market, and that does create a stagnation in the share price. But what we have seen generally, is that over the long term, which is our horizon, the share price will normally track the NTA performance. And I'll be around to take any questions on that or any other aspects of the financials later on this afternoon. But in the meantime, I'll hand over to David.

Thank you, Andrew, and good afternoon, everybody. So moving on to Slide 11. So managing the portfolio, we look to invest in quality companies and remain low turnover, as it minimizes tax and allows us to benefit from compounding returns over the long term. Our focus on quality companies has delivered returns with a lower volatility than the broader market. Additionally, we have been able to maintain a consistent dividend profile, including the increased dividend to shareholders this year. So the chart on the left hand side shows the relative performance of the portfolio against the ASX 200 over various time periods, including franking over the last 12 months, the market increased 16.6%, while the portfolio delivered a return of 13.9%. As a reminder, the returns for the portfolio was shown after tax and expenses, which combined, were a drag of approximately 0.6% during the year, largely reflecting capital gains tax on profits realized. The associated franking credits are now available on the balance sheet for distribution in a later period. It's been a choppy time in markets with macroeconomic factors driving investor sentiment, particularly focused on the next move of central banks and reported inflation data. Despite this, the portfolio delivered a return of almost 14%. We're not trying to pick the next macro data points and focus our research efforts on the fundamentals of the companies we invest into. In this regard, we consider the core of the portfolio to be invested in quality companies, with good long-term prospects. Additionally, we feel we have an appropriate mix of income and growth attributes, well positioned to deliver our investment objectives of attractive total returns over the medium to long term and to pay dividends, which grow over time. So a couple of things to point out in relation to the 12-month performance. Firstly, the sharp pullback in share prices of many quality companies. These include portfolio holdings, Mainfreight, ASX and Transurban. And for context, all these companies delivered solid returns in the prior 2 years. These are all quality companies, well positioned to deliver strong long-term returns to shareholders. As a low turnover tax aware investor, we elected to hold on to the majority of our holdings in these companies, as we believe the fundamentals remain unchanged, and following a period of overvaluation, we now consider valuations to be more reasonable. Secondly, and as the chart on the right-hand side shows, the materials/resources sector delivered strong performance in FY '23, increasing just under 23%, well ahead of the market return of 14.8%. Several factors contributed to the strength, most notably the reopening of the Chinese economy post COVID lockdowns in late 2022. Additionally, the strong performance was also reflective of supply chain challenges following Russia's conflict in the Ukraine. The largest resource holdings in the portfolio of BHP and Rio Tinto, both are favorably exposed to generally long-term positive economic growth, both are well-managed and are long-life, low-cost Tier 1 operating assets and importantly, both have very strong balance sheets. The strength in the resources sector was primarily driven by smaller companies. We wouldn't expect to have a large holding of small resource companies within the portfolio for the following 2 reasons; firstly, they offer a little in the way of dividend income, the key attribute we look for as we seek to maintain a consistent dividend profile. And importantly, a measure that a company is generating free cash flow. And secondly, small resource companies typically have a poor track record of capital allocation, as they seek to replace their finite assets. Accordingly, over our long-term investment horizon, we think we can find better opportunities of where to allocate capital. So just a few comments on the banks and why we've used the recent sell-off to add to our holdings. There's been a lot of fear surrounding the banks over the last 12 months, risk of contagion from the challenges faced by several U.S. regional banks and feeds around a potential bad credit cycle in Australia. We see Australia's banks among the strongest and most tightly regulated in the world. Accordingly, we don't see any systemic risks for our banking sector. We feel the price we are paying is reflective of the prevailing backdrop, and while we're not expecting strong earnings growth, we see they represent value and are supported by strong fully franked dividend yields. So moving on to Slide 12. Just to briefly recap our investment philosophy and how we manage the portfolio. We aim to invest in quality companies, maintain low turnover, so as to minimize the tax payable by shareholders. To deliver attractive total returns over the long term, we want to hold a diversified portfolio delivering a mix of attributes. We want growth companies holding market leadership positions, cyclicals with strong balance sheets, favorably exposed to long-term economic growth. Stalwarts, being companies owning difficult to replicate strategic assets. And income stocks companies with an attractive dividend yield, as dividends play an important role in total shareholder returns. Maintaining appropriate diversification across the 4 factors allows the portfolio to perform under various scenarios. Shown on this slide is the long-term performance of the ASX 200 going back to 1980, while also showing the outperformance of industrial companies versus resource companies over the time period. Chart provides excellent long-term context, that the general trend in market performance is from the bottom left to the top right-hand corner. Over the time period shown, you can see the impact of the GFC and the onset of COVID. Despite the temporary setbacks, the ASX 200 has delivered an average growth rate, including dividends of slightly more than 10% per annum. The equity markets always face challenges from external events. The chart shows sharp pullbacks in markets are not uncommon. And when they occur, they quickly recover. These events can't be predicted and their impact on market performance varies. We don't prefer to have the skills to frequently trade our company holdings around the unpredictable economic events. However, we take comfort that over the very long term, equity markets deliver positive returns for shareholders. But as history shows, [indiscernible] times of bad news, delivers good returns for long-term shareholders. We want to be holders of quality companies that own strategic assets, position them well to maintain earnings growth despite the constantly changing operating environment. Moving on to Slide 13. There are lots of drivers of headline inflation and the charts on the slide show a very simplified view of recent moves in headline inflation shown by the blue lines and Central Bank cash rates for both the U.S. and Australia is represented by the purple lines. As I mentioned earlier, while we are aware of the macroeconomic environment, we do not select stocks by predicting the next data point on any economic factor. We observed the fundamental drivers of every company we invest in to and allocate capital to companies where we consider their long-term prospects remain strong. The key takeaways for us from the charts; inflation continues to remain at a high number, leading to rising costs for companies that is extremely challenging to manage, and companies with pricing power are best positioned to pass on rising cost to customers. Whatever the charts indicate, the policy initiatives are at least a normalization post COVID, and having the desired effect of lowering headline inflation. We know that equity markets are always forward-looking, and while rates may go higher and inflation may remain elevated, there is now evidence that the worst of the cost inflation may be behind us. While we remain cautious, we've been able to use recent share price weakness to add to a number of our existing holdings at attractive prices, where we consider long-term fundamental opportunity is not being adequately appreciated. Moving on to Slide 14. As we've included in previous presentations, the charts on the slide show long-term valuation metrics for the overall market. Charts shown on the price to book and price to sales for the ASX 200 over the last 20 years. They're helpful to understand market sentiments, particularly investor risk appetite towards the broader market. The 2 measures indicate that the valuation of the market is in line, to slightly expensive with long-term averages. While a helpful starting point, we know the operating environment today for many companies is more challenging. Earnings growth is harder to come by, as leading economic indicators are slowing, while companies are left with high cost basis. [ Charts ] reinforce an earlier point, selective value was emerging in a number of companies, while the overall valuation of the market remains fair to slightly expensive. At this point, I'll hand over to Nga.

Thanks, Dave. Good afternoon, ladies and gentlemen. Just moving on to Slide 16 on recent transactions. The companies listed on the left-hand side shows stocks we have trimmed or exited during the period. We trimmed our position in Carsales, Transurban, Mainfreight, IRESS, and NEXTDC to manage the size of those positions in the portfolio. We [ trimmed ] Brambles as we think the share price was fully reflecting the strong COVID-induced operating environment, which we think will prove to be temporary. The decision to exit Orica, InvoCare and Reliance reflects our view that the long-term prospects for these companies will be increasingly challenged, as competitive intensity increases. During this time, InvoCare received a takeover bid, assisting our exit price. In the case of Temple and Webster, with the share prices of many quality companies falling, we saw more attractive opportunities to reallocate that capital. On the far right-hand side, we show existing holdings that we have added to in the last 12 months. We used share price weakness to buy quality companies that we see value presenting. Short-term share price weakness gave us the opportunity to add to our holdings in Goodman Group, CSL, BHP, NAB, Mirvac, Santos, Domino's and IDP. I'll talk a bit more about IDP later in the presentation. Domino's Pizza has been a disappointing investment so far for us, but we are now confident that we are through the worst of the cost headwinds and operational issues. We also think the current share price does not reflect the long-term opportunity to grow stores in key markets. In the new purchases column, we added one new stock. Breville is a well-known Australian small home appliance brand, which is growing in popularity in the U.S. and other overseas markets. Following a number of years of strong profit and share price performance, share price weakness gave us the opportunity to initiate a position. The company has the opportunity to grow its brand overseas, as an experienced management team, and a strong balance sheet. In the following slides, we'll focus on a few portfolio companies in more detail, highlighting why we consider them to be good long-term investments for the AFIC portfolio. Starting with Slide 17, CSL. CSL is a specialist biotech company that develops and manufactures products to treat serious human medical conditions. We've seen a decent pullback in the share price recently, largely over fears around a new competing product. The trial results of this competing product are now known. Whilst we expect CSL to lose some market share, we believe this will be manageable and only very small in the context of the broader growth opportunity for the company. We've used the sell-off to add to our holding, as we think the share price reflects good long-term value, and the company has attributes we like, including a very strong management team and Board, who have delivered significant shareholder value by successfully allocating capital over many years. The company has a market leadership position in its core plasma fractionation business and has this proven track record of delivering higher returns than competitors. CSL invests more than 10% of revenue in R&D, which is a key driver of new business growth. We continue to have high confidence that CSL has many years of strong earnings growth, delivering attractive returns to long-term shareholders. On Slide 18, Goodman Group. Goodman Group is an industrial property specialist. They own, develop and manage logistics and distribution centers, warehouses, business parks and data centers in major global cities. Their customers are the likes of Amazon or Woolworths. They operate in 14 countries and have built a leadership position in its key global markets, by building high-quality properties that are close to consumers, providing essential infrastructure for the digital economy. A lot of this growth in demand for industrial properties has been due to the boom in e-commerce. The business has over $80 billion in assets under management and is led by founder and shareholder, Greg Goodman, who remains highly motivated and disciplined in is investing. The very experienced management team are in a great position with their balance sheet to take advantage of any opportunities, should they present in the current industrial property market. On to Slide 19; IDP is a leading international student placements and English language testing business. They help match international students with universities and facilitate English language testing for the purposes of education, work and migration. Due to its global network of facilities, investment in technology and highly regarded brand and reputation, IDP has become the market leader in each of its businesses. We think the company will continue to grow, helped by the growing demand for Western education and immigration. With investment in technology and digitization, we believe IDP is well placed to take market share as they use data to better match universities with potential students globally. Alongside this, IDP has been investing to transition the English language test from paper based to digitally delivered and assessed. This strategy to create an online marketplace through education, through digitization, should deliver higher returns for the business in the long term. We used recent share price weakness to increase our holdings, in what we believe to be a high-quality business. At this point, I will now hand back to Dave for some outlook comments.

Thanks, Nga. So just on Slide 21, we've highlighted in the presentation today, that economic conditions in the operating environment for companies remains uncertain. Economic growth in developed markets remain solid, with slowing growth in China. Returns from equity markets have been strong despite broad-based expectations of a recession and cost inflation, while easing remains high in a historic context. Despite the uncertain backdrop, the portfolio is invested in well-managed, high-quality companies that own and operate highly strategic assets, while maintaining strong balance sheets. We feel we have an appropriate mix of companies able to deliver income, together with capital growth, enabling us to meet our investment objectives. I'll now hand back to Geoff to coordinate Q&A.

Thanks, David, and Nga. So just to remind you, you can ask questions via the web or via the phone. So the first question we have is in regard to Mainfreight, international growth story, a company we've held for quite some period of time. I guess the question is coming from the viewpoint that the shareholder is a little surprised to see you've selling Mainfreight. Can you provide some background to reasons for this?

Yes, sure. Thanks, Geoff. Thanks for the question. So Mainfreight for those unaware, is a transport warehouse business that has been a meaningful hold in the portfolio for a period of time. One of the things that has attracted us to the business, is the ability to invest alongside the founder of the business, who remains the Chairman of the company today. It's a really well-managed business, maintains a strong balance sheet, and has been able to deliver many years of organic growth without making any sizable acquisitions, as it's taken its business model initially from New Zealand, where it was founded, into Australia and then more recently into Europe and the U.S. And in both of those markets, they've now been there for over 2 decades. I guess for us, we just see some short-term headwinds coming for the company more related to the consumer environment and its slowdown, with anything consumer-facing. And when we saw attractive opportunities on the other side and one of those being CSL, for example, we needed to capture that opportunity. So it's really a function of portfolio rebalancing. However, we continue to like the long-term story for Mainfreight will continue to be a meaningful part of the portfolio for a long time.

Thanks, David. So the first question has really come into perspective about whether how AFIC approaches ESG in terms of its investment process. And we clearly not -- don't put ourselves out to be an ESG fund, but we clearly look at the factors within the elements of environmental, social and governance as a way of understanding the long-term potential for a business and its profitability. So the question really coming from the viewpoint of climate change and how we view that in the context of the portfolio, and the stocks we have within the portfolio? And I guess the question is related to the fact that we did underperform over the last 12 months, but we've clearly stated that was partly due because of that underway position in energy. So I'll hand to you first, Mark, and then perhaps David?

Yes. And Geoff, it's fine, we don't label ourselves as an ESG investor as such, and we do hold positions in Woodside and Santos within that oil and gas industry. But our process, a long-term investor, we want to be in companies that we think can grow their earnings per share over the long term, and therefore, dividends per share. We look at a number of factors to assess the quality of a company, and a couple of those are the uniqueness of the assets, so that really goes to the market position of the company. But a couple of the other factors we consider is the sustainability of a company's business model. So what are the risks that could come on to a company, and to the extent what outside influences can impact the company? So if you actually break down the components of ESG, the individual elements, they've been part of AFIC's process since I first started a long time ago. If you think about, gee, the governance -- governance has always been something we look to. We want companies that are well governed and that goes to the people that run a business and assessment of people is very important. Social implications, I mean, we believe companies should have a social license to operate a company. And in fact, we've taken a view for a long period of time that we won't invest in pure-play gambling stocks, and that's been a very clear and stated policy certainly in the 28 years that I've been involved with these companies. And then the environmental issues, again, it goes to the assessment of sustainability of our business model. So there are environmental issues that's going to impact or affect the ability of a company to grow their earnings, then that comes into our analysis, because we don't want to be in companies where profits are going to go down essentially. And so if you're assessing the sustainability of our business model or it's outside influences, then environmental considerations may or may not be an impact. So if they are relevant, obviously, they come into our consideration. But for many companies we hold, it's not a high issue in terms of the way it may impact the business model. So as I said, they're incorporated -- [indiscernible] incorporating into the way we think about companies.

Sorry, Mark. So just -- I guess there's another question here, which is probably a follow-up to that discussion, about how do we look at investing in fossil fuels at this point of time, which is the other side, I guess -- the question we've just had?

Yes, what we do -- as I said, when you're an investor, it's really hard to influence what companies do if you're not an investor. And so certainly the -- if you take Santos and Woodside, what we're looking for them to do, I mean, at this point -- I mean, they're not doing anything illegal as such, but we want them to be responsible in terms of the way they run the company, and we want to see these companies endeavor to improve their carbon footprint like all companies are doing. And in that sense, it doesn't make them any different to any other company. We want them doing their best to improve their footprint. And in fact, we see that producers like Santos and Woodside, if you look from a global perspective, these companies are doing a lot to improve their footprint. So we want we want to support companies that are really doing the right thing, because if these companies are not supplying oil and gas, certainly, they're needed in the short term, supply will fall to other areas in the world, and there are a lot of places in the world that we know, that don't take ESG very seriously, and we certainly don't want the world relying on those areas for their oil and gas. David, any follow-ups...

I think for both of those companies, Santos and Woodside, so the majority of their production is LNG, which we see is the key transition fuel, as the world's energy needs come from -- or move from fossil fuels into renewables. And on that, we would have expected 2 or 3 years ago that, that was going to happen much faster than what the reality has proven to be, and we're really encouraged in the interim about the measures that both Santos and Woodside have taken, in terms of being able to decrease their carbon footprint, as we move through that transition. I think the other point to note, too, is just the much stronger balance sheet that both of these companies have, post the mergers that they've done. And that's Santos with the acquisition of Oil Search, and then Woodside with the merger with BHP Petroleum. So I feel that companies are really well positioned, and we're encouraged about the measures that they're taking, just to remove their carbon footprint, as that transition plays out.

Thanks, Dave. So I've got a question here about...

Sorry, Geoff, just wanted to add. In watching these companies, we obviously meet with management twice a year, and companies like Santos and Woodside. Obviously, there's always a lot of discussion about where they are and us asking what else can you do? What are the improvements you can do? So it's an ongoing conversation. It's not just a point in time and they are certainly aware that they need to keep improving, and how they're performing on these issues.

I guess the other point is, that we've benchmarked the portfolio against certainly carbon intensity, and we're certainly well under the Index.

Yes. And that's really an outcome of probably focusing on quality companies. It is not -- again, we don't [indiscernible] ESG investor as such, but our focus on more quality companies sees an outcome, that shows how the AFIC portfolio has considerably lower, I guess, carbon footprint than the broader index as such.

Thanks, Mark. So there's another question here. We've seen a number of ASX-listed companies taken privately recently. Is this an ongoing trend, and is it likely to impact future AFIC returns?

Yes. Look, it's something -- it's not -- a lot of the companies that we hold, often in our starting position, we actually don't want them to be taken over; because some of these companies have irreplaceable strategic assets. And we always find -- Sydney Airport is a good example. We weren't keen sellers of that, because we thought there was an incredible asset if you're prepared to take a longer-term view, but most of the market are not prepared to take those long-term views, and are looking for a sure hit. And most of the market doesn't consider the tax implication of selling shares as well, certainly at the institutional level. So look, does it concern us? I mean, we'd like to see more companies come on to the Australian market. Yes, there is a bit of a concern that longer-term investors, a lot of larger groups or institutional funds globally can look to buy into companies, particularly when the share price weakens. I'm hoping that the ASX stays vibrant. I mean it's still a good market at the moment, and I hope that people will take longer-term views when they're considering a takeover offer.

Thanks Mark. So you mentioned IDP. Nga, a question sort of kind of your viewpoint, sort of where were you sort of buying -- upholding the cycle of IDP share price?

Thanks, Geoff. The vast majority of the shares were bought in the recent pullback of the share price. So we're long-term patient investors, and we generally take a small initial stake and wait for value to present in high-quality businesses, before moving a bit higher. We'll track the business from here, and the strategy and the execution of the strategy going forward, and we'll continue to assess the size of the position in the portfolio from here.

Yes. So when there was a dislocation in price, I mean there was a significant event. One of the areas of business, which is in the Canadian market, that they were going to open up for competition. That means all their businesses now are open for competition. They've got English language testing and student placement. This was in the English testing part of their business. It will have a bit of an impact on profits, but the share price fell over 20% and the market became very nervous. We think the student placement business still has fantastic growth opportunities. They've got a great market position, and I think perhaps the value of that business was lost in the share price falls. And as Nga said, we watch for quality companies to have some sort of dislocation and a bit of bad news often presents the best buying opportunities, and that's what we've done here.

So the question -- next question I'll ask is about the franking credit reserves, and how many use of dividends does a franking credit reserve currently cover?

So after we pay the final dividend, essentially, we've got just under $0.40 worth of franked dividends payable out of franking reserve. So in $0.25 out, that's just under [ 2 years ]. If we receive no other income at all during those years. So I'd always be cautious. I wouldn't say we're over reserved, but I would say we're adequately too well, too comfortably reserved.

There's a couple of questions here, which I'll sort of put together in terms of raising capital through a share purchase plan. And more generally, down market is a good buying opportunity, although we're not in the down market at the moment, I suspect. So I guess the question is, do we look -- how do we look at raising capital through a share repurchase plan?

Yes. Well, look, we've done them before. Often, it's around where opportunities are in the market, stocks we'd like to build up. So -- but I just think it's an ongoing conversation with the Board. So we're always open to it and it could also be how we're seeing the balance in the portfolio. So traditionally, it's given us an opportunity to get fresh capital in. Adds to stocks without necessarily having to trim existing holdings to take advantage of other opportunities. So it's very much -- it's something that's always live and something that's always up for discussion. And really, we have those discussions with the Board and we'll take a view on that as we go.

And the other thing that we have to look at is whether the share price is trading at a discount. That's going on. Be around likely to do it at a discount this year, certainly the case. So this is a question about why AFIC and the [ broader listed ] investment company. Mark has reiterated from a premium to NTA, to discount to NTA. So I guess the general answer is, a lot of investors have switched from equities to other assets, cash and fixed interest, which has taken quite a lot of demand, and we've seen it across a lot of these investment companies that Mark spoke about earlier on, that this seems to be a general feature in the market. And of course, if you're in an open-ended fund, then when there's less demand and people will redeem their units, clearly they get their money back, but the fund becomes smaller. I guess, in a listed investment company space, where there's a certainty of capital, a closed-end fund, that dynamic plays out in the way the premium or whether the share price is trading relative to NTA, and that's what we're seeing at the...

Yes, across the whole market, this is what's happening. So I think the interesting part is, just said that retail investors can now get a pretty good yield in the bank, and I think that's taken some buying out of the market. But these things are cyclical, and even when you look at the earlier chart, the way AFIC trades, there are periods where it has had a premium, and periods where it goes to a bit of a discount. But in the long run, it probably averages just a small premium to NTA.