Bluesky Holdco Limited ($IMB)

Good morning, everyone, and you're very welcome to another Coffee Microcaps webinar. I am delighted to have everyone here with this afternoon. My name is Mark Tobin. I'm the founder of Coffee Microcaps for anybody who is joining us for the first time. And for all our regular attendees, you're very welcome back to this afternoon's session. I'm just going to quickly run through a couple of intro slides, and then we're going to get straight into it with our first presenter of the afternoon. A quick mention to DMX Asset Management, who are our sponsors here at Coffee Microcaps. If you are looking for an active manager in the microcap and small cap space, please do check out their website for the various funds they offer and for their PDS and TMDs. And of course, you've got any questions, please do reach out to Steven or Michael at DMX. And as always, we can't have a session without welcoming our good friends from ASIC. So any of them are joining us, you're very welcome. And for anyone who is joining us for the first time, the companies we tend to have on here capped under $300 million, that's our definition of a microcap in revenue, approaching cash flow breakeven or some of the companies here this morning already -- or this afternoon, I should say, already profitable. We tend not to have companies from the resources and biotech sector, what I like to call industrial microcaps, which covers everything else, financial services, health care, technology, retail and every other kind of industry sector. Structured today, we've got 3 companies presenting this afternoon, each company, 30 minutes, which we kind of break down into a 20-minute preso and 10 minutes of Q&A. If you do have any questions, please type them in the Q&A box rather than the chat box and this makes it easier to moderate the questions. And please note the webinar is being recorded and will be posted on the Coffee Microcap's YouTube channel tomorrow morning. You can follow us pretty much on all the socials, Twitter, YouTube, LinkedIn, and I do write a free monthly newsletter that goes out on Substack. Our first presenters this morning are going to be Bioxyne. We've got MD and CEO, Sam Watson; and Jason Hine, Executive Director and COO. Following them, we are welcoming back Dennison Hambling from Intelligent Monitoring Group, who should be very familiar to our regular attendees. And then we've got our second new company along with Bioxyne joining us for the first time this afternoon, Teaminvest Private Group. We will have Andrew Coleman, CEO, joining us. So I am going to stop sharing my screen, and I'm going to hand you over to Sam and Jason. Sam, if you want to just pull up your deck, I will let you know when I can see it on screen here. Yes, I can see the cover slide of your presentation. You can take it away whenever you're ready. [indiscernible]

Thank you very much for the introduction. My name is Sam Watson. I'm the CEO and Managing Director of Bioxyne. We're joined by my Co-Director, Jason Hine. We prepared this presentation for you today, and thank you very much for your time. A little high level on Bioxyne. We're a licensed pharmaceutical manufacturer, importer, exporter, wholesaler of controlled medicines and substances. We focus on the final dose form manufacturing of medicines at the moment containing cannabis, MDMA, psilocybin. I skipped over the disclaimer, but please have a read when you get a chance. So our current portfolio is MDMA primarily for investigating PTSD, psilocybin for investigating mental health -- depression and other mental health conditions and medicinal cannabis, which is in Australia, $1 billion a year plus market and overseas, many multiples more than that. In terms of the sort of management estimates on the markets we address and target, 3 primary investigational areas where we're monetizing these products at the moment. Cannabis is typically prescribed to patients with chronic pain, who don't respond to existing alternative or mainline treatment options. So cannabis is a second-line treatment option. Psilocybin and MDMA psychedelic treatments, which are combined with therapy. And Australia is one of the market leaders in the world for -- when it comes to the regulation of these psychedelic medicines. It was one of the first countries to actually recognize psilocybin and MDMA as having therapeutic potential therapeutic benefits. So we're one of the only companies in the world with all 3 on our GMP manufacturing license. We were the first in Australia to get both on the license back in February 2024, just 6 or 7 months after the legislation changed. And we are still the only one with both psilocybin and MDMA finished dose form products on our licenses. So we operate in a significant global area, pharmaceuticals. We feel the industry is recession-proof. When people get sick, they need to medicate. And mental health, in particular, is a growing concern and a growing cost of the global economy. The treatable market values, we estimate for each -- the combined market value of almost $200 billion per year. Now what we see in these indications in these illnesses is a high level of treatment resistance where the existing arsenal of medication does not suitably treat the patient's indication. And that's particularly relevant when it comes to depression and PTSD. And by the way, PTSD, the primary treatment option is actually using depression medication, selective serotonin reuptake inhibitors. So there's a lot of scope for growth and the potential is significant in the industry that we're in. Now as a business, key takeaways, we are growing at over 132% year-over-year at the top end of our guidance for FY '26. That will be 150% up from FY '25. FY '24 to FY '25, we grew 215%. So over 2 years since being awarded our license, we have grown from a relatively small business to a much larger business. And this year, the midpoint of our revenue guidance is $70 million, and that takes us through the end of June, so 4 weeks from today. We're cash flow positive, have been for 2 years, and we are profitable. So we're operating the first half of FY '26, we produced around 25% EBITDA margin adjusted business is going from strength to strength, exceptionally strong balance sheet. We have maintained fiscal prudence and we're managing our cash and our investment very well as we grow. We have invested significant cash into inventory to fund demand. And that growth that we're seeing here is purely organic. That's our Australian business, leveraging the infrastructure and the license stack that we've built over the last 2 years. What we're going to see over the next 12, 24 months is significant growth overseas. So we've just started building and we're on track to finish in December of this year, a mirror image of our Australian site in the U.K. to take on the U.K. market. We're also looking at opportunities in Germany. You may have seen last week, we announced a 2-year contract for $50 million with our German partner, and that is backed up by several clients in the German market who we are already seeing tremendous demand and growth from. In terms of the business setup, once again, we're a pharmaceutical manufacturer. Our play is building the final dose form, the final medicinal product manufacturing capabilities in local markets. In Australia, we've built $250 million of annual revenue capacity in our existing sites. We're replicating what we're doing in Australia and the U.K., and we anticipate that our global manufacturing capacity by the end of this calendar year will be around $400 million. Having these assets locally is incredibly important. sorry before I get into that, I love this chart. It's a one-way street for us. We've been on the up for the last 2 years. This shows solid execution of what we believe is one of the best operating businesses in our industry, Bioxyne. We keep delivering strong quarter-on-quarter revenue growth, and there's a lot more room for us to continue scaling both in Australia and overseas once we bring those manufacturing assets online. We operate very efficiently, effectively. And what we do have is a very hard to replicate regulatory stack, regulatory platform. And that license stack includes GMP, one of the hardest certifications to get. And it's a GMP license, which covers multiple products, multiple different product SKUs, we were the first company when we received our license to start manufacturing cannabis pastilles, gummies in Australia. Before we started doing that, pastilles were less than 1% of total prescriptions for cannabis. Today, they're around 18% of prescriptions in Australia. So we've pretty much built that category. Internationally, as we grow, we're gaining more and more traction in local markets with local regulators. In the U.K., we're working with local government, both on financial funding, so through a loan and grant scheme, but we're also talking with the office -- sorry, the Home Office, the equivalent of the Office of Drug Control, Home Office in the U.K. and the MHRA, who will be inspecting and awarding our GMP license, hopefully in December. Once again, high growth rate, significant capacity, underutilizing capacity at the moment, low capital intensity to deliver that capacity, but the intellectual property we've developed in our processes allows us to invest little capital to achieve high output and revenue potential. Jason, I've been rambling. So do you have anything to add at this point?

You've done great. The capacity is a big part of our business and the ability to meet the demand as it grows. There are tailwinds that we'll talk to in the next couple of slides, where you'll see that our capacity to fulfill and meet the market demand is there for not just Australia, but for international markets as well.

So getting into market opportunity. Our vision for Bioxyne is to build a multibillion-dollar pharmaceutical manufacturer. We're not a cannabis company. We're not just a psychedelics company. Over the coming 12, 24 months as we expand internationally and we replicate our manufacturing of finished products overseas, the anticipation and what we plan to do is to expand into other generic medicines, larger markets than cannabis. Cannabis has been our first commercial rollout because it's a high-growth market. The barriers to entry are high. The licensing is highly regulated and restricted. But now that we've proven and we're going to continue proving our ability to execute in cannabis and in psychedelics, we see huge growth potential in both generic and also novel -- other novel therapeutics. You'll see here peptides on our agenda for 2027. Now the peptides market has come under a little bit of scrutiny, but it's very similar to medicinal cannabis in that it's probably even bigger in terms of dollar values. It is regulated. Many peptides are scheduled for on the therapeutic goods list, but there are no local manufacturers. For example, in Australia, there's no local manufacturing for peptide medicines. Now our approach would be to apply our cannabis specials manufacturing, so unregistered unapproved medicines, same as peptides, but to give special access to our network of prescribers and clinics, but to apply local manufacturing infrastructure to develop and make those medicines. Our long-term vision for the business is also to get into drug registration, which requires strong data sets, clinical trials. However, the operating model at the moment is we're generating revenue, generating profits, and we're commercializing these investigational medicines before building those expensive data sets. Jason, you mentioned some tailwinds before, maybe I'll pass it over to you to run through those.

Yes. Thank you, Sam. We'll start off with the psychedelics space. The psychedelics is a growing sector and is being used significantly to address mental health issues that are not being met by the big pharma solutions, which are currently available in the marketplace. There was recently an ABC documentation with regard to how we operate and what we do and how we manufacture the psychedelics side of the business. And there's some patient examples there, and they went through the journey of one patient who had gone through the whole process of losing a child and dealing with the mental health issues from that. And after using the large pharma solutions, which were not working for her, she went on to the psychedelic medication and has had a much better result and a good recovery as moving it forward. It does work. It's a very different approach. The U.S. is now starting to open up that psychedelic space because of the veterans that are currently over there. The market is growing and the interest from around the world is quite significant. As Sam mentioned, we're the only licensed manufacturer for cannabis, psilocybin, and MDMA. And as a result, with our capacity that we've built at our facility up in Queensland and our reach across the world from the point of view of the GMP certification that we have, the opportunity for us to grow into those markets is significant. The cannabis market is, as Sam mentioned, underpinning our operations at this point in time. There are some significant movements in the legislative area with regard to driving laws in Australia, and they will be opening up the opportunities for people to actually use the prescribed medication to avoid being hit with a fine for driving under the influence. This will obviously open up the market significantly for the Australian business and our capacity, again, will be able to supply the increased demand. The illicit market is expected to be dried up as a result. When they changed the laws in other countries with regards to driving, the market for the medicinal cannabis space has doubled. So we are expecting that will be the case in Australia as well. We have, as part of our process, been assisting a lot of our customers with their growth into other markets as we are expanding into the U.K. as all of our Australian clients. The U.K. market is effectively 3 to 5 years behind the Australian market from a regulatory perspective, but it's 3x the size from a population base. So the capacity is there to be a significantly larger market than Australia. Our customers that we are assisting with launching their products into the U.K. market, we're sponsoring them -- not sponsoring them in. We're actually -- we've had the TGA, ARTG licenses approved for their products to be supplied into the U.K. or manufactured out of Australia. And when our facility in the U.K. does come online, which is expected to be at the end of this calendar year, all of those customers were moved from being supplied out of the Australian operation to being supplied out of the U.K. facility. So we expect that our facility will hit the ground running as soon as the licenses are granted and we start producing. All of our customers are being supplied out of Australia will be supplied out of in country.

So what we tried to do here is paint the picture of the supply chain from cultivated raw material to active pharmaceutical ingredient. When we bring it into the facility, we do the higher value processing into the final dose form medicines. The medicines that go to pharmacies end up being dispensed to patients. Now from end to end, and this slide doesn't actually show the numbers, but there's around 10x from raw material cost to patient price. And that's for a typical cannabis flower product. Now when you look at other dose forms, that margin increase is more significant. So there's more margin. But what we're trying to show here is there is significant margin through the value chain and through the supply chain in the cannabis industry. And we are capturing a good portion of that, but our clients and our suppliers are also capturing a good portion of that. So we need to -- I think we're showing that cannabis companies can be profitable, sustained over the long term whilst growing, whilst generating cash. Although many of our listed peers in that part of our business in the cannabis side of things are not, I believe that's changing, and we are very much leading in that messaging.

And just to add on to that, with regards to our position within the supply chain, we are cultivator. We are not a B2C supplier. We sit right in the middle of the wheel and all the spokes from everybody else comes into us and goes out from us. So we are the linchpin, the conduit to the market for all products. Everything in Australia from the point of view of medicinal cannabis has to come through a GMP manufacturer. We are the largest, we are the fastest, and we are the ones that are able to supply the majority of the market in Australia.

Now the plan is to replicate internationally and have these assets locally in local markets. Regulators are less fond of imported finished products than locally manufactured products. It's a quality and pharmaceutical control thing. And we've witnessed this in the U.K. Our U.K. growth has been held back by the MHRA not looking favorably upon our finished products going into the U.K. and this is the same from any country. They much prefer products to be manufactured locally under one of their GMP licensed local facilities, which is why the need and the opportunity for us to build local assets and control the GMP license in the U.K. and other markets is critical to what we're doing.

And to add to that as well, the customers in the local markets, they want to make sure that their supply chain is consistent. The cost of patient acquisition is enormous. And as a result, being out of stock can mean that you would lose patients that you spend a lot of time cultivating and attracting by your clinics or doctors and so forth. Having the local supply ensures that they don't have the outages where imported products get held up with import permits and supply chain issues from overseas. Having it done all locally means that there's guaranteed supply and guaranteed ability to maintain and retain those customers.

We're going to speed up and get through the next 5 or so slides in a couple of minutes. But just to reiterate, FY '26 guidance, $65 million to $75 million, midpoint, $70 million. To deliver that, it's -- we're very much in the ballpark. It's at the low end, $12.5 million on this current quarter in revenue versus $21.3 million for the previous quarter. To hit the high end of revenue guidance means to deliver $22.5 million on this current quarter. We're on track. If you look at this year's guidance and look at the big contract we've just signed overseas, you can probably piece together an idea of where FY '27 guidance will end up, but we're going to deliver that once the Board signs off on our '27 budget in the coming month. In terms of cash flow, we've continued to build our cash receipts. We had a planned and intentional negative cash outflow in Q1 of this financial year, and that was to significantly invest in inventory to meet both local to Australian and international demand. And we've continued to scale up our inventory levels to meet further demand whilst generating positive cash. So this year will be our second full year of positive cash flow in a row. I won't spend too long on the ADREX contract. It's a very strong local partnership with a company that has deep roots into traditional pharmaceuticals as well as same-day distribution to 20,000 pharmacies in Germany. We are incredibly excited about this partnership, and we are investing in it alongside our German partners and it's going very well so far. Big market potential. Just to touch on one of the most important bits in this slide is the dual approach. So we're not just a white label contract pharmaceutical manufacturer. We have our own proprietary brand, and that sits alongside as a friendly offering to our clients, clinics on their formularies, prescribers. They want to see brand diversity, product diversity. Dr. Watson brand is going very well, and we're pushing it now getting to Germany, the U.K. and it's also been in Australia for the last 3 years -- sorry, also Latin America, first $0.5 million deliveries going out, I think, before end of financial year, which is great. So we're a first mover in Latin America. We've touched on new product capabilities. We have been assessing M&A opportunities over the last 12 months. What we wanted to do is demonstrate our organic potential, the growth potential and all the growth to date has been organic. There's plenty more organic growth to be delivered over the next 12 to 24 months. We are assessing M&A opportunities. And what we will do is anything that we look at will be accretive and strategic. We have a very aligned Board and management team. Everyone on this slide is an investor, cash investor and a shareholder. And that goes all the way through the executive team and the management team within the subsidiaries of the group. So we have a very high percentage of our staff actually purchasing stock, which is great, a lot of commitment there. A wealth of experience both in cannabis and financial services and traditional pharmaceuticals as well. Last thing, we recently announced the 10:1 reverse split or consolidation. The purpose behind this is to get out of that penny stock sort of perception, become more institutional grade, reduce the volatility and also to change the name of the company. So we've been Bioxyne for the last 3 years. Breathe Life Sciences is the operating business, the group underneath Bioxyne that is delivering the numbers. The tick is going to change to BLS. The name is going to change to BLS Pharmaceuticals, and we're going to create a consistent logo throughout the business. That will just enhance our brand presence in the market. Mark, I think we can probably wrap it up. Sorry for going slightly over time.

That's fine, Sam. Actually, one of the questions was just on why you were doing the share split. So I think you've covered off that one. And then one I just want to quickly cover off supply to the German market. I think you did mention in the presentation. Is that going to come from the U.K. facility or the Australian facility?

It's coming from the Australian facility at the moment, and it probably will continue to for the vast majority of that supply. So we're really leveraging that Australian capacity to grow overseas.

And then another question around why customers use Bioxin versus other competitors and what do the big brands need to kind of use Bioxin. So I guess to use -- to come to Bioxin as a manufacturing partner, what -- I guess, kind of what do they need to see?

Consistent delivery, on-time delivery, faster turnaround times, 3 weeks with us versus 6 to 8 to 10 weeks with others, full product scope to across the full range of medicines. We're a one-stop shop. We can do all of it. And there's also value-add services such as procurement. We're seeing a lot of our clients come to us to source the raw materials, whereas historically, they were sourcing their own. We're now also in a position where we can extend working capital and payment terms to help our clients grow. And we've seen that with several of the clients who have really grown quite rapidly with our platform coming using our platform and there's many benefits. So yes.

Okay. And I don't know maybe Jason or whichever one wants to take it. What sort of peptides are you looking at specifically?

3 or 4. We won't get into the details too much, but we're looking at -- there's one which has been approved and so gone through full trials in a certain market, but not yet in Western markets. We're looking at any peptide that's aligned with our existing clinical indication. So medically focused peptides. We're not looking at sort of health, wellness, potentially longevity, but more what we would consider more medically inclined peptide medicines.

And then we've got another question here, and I'm not sure what this number relates to, but how quickly can you scale up in the U.K., i.e. 150 million. I presume that's manufacturing capacity they're talking about.

Yes, that's manufacturing capacity. So that's -- we've actually -- from the initial plan, we have extended the scope and we're investing more into the U.K. facility. Originally, because one arm of the U.K. regulators are not positive around pastilles, but then the other arm are fine with it. We initially didn't include pastilles in the scope. In the last few months, we've now included to add on manufacturing capabilities for pastilles because we know it's possible and it is allowed. So that has -- that capacity should be once we're finished in December and licensed, that will be the starting capacity. And there is some room to extend that with some further capital investment into the site.

Okay. And another question just on target markets, why the target markets you have chosen versus -- and why places like Canada, the U.S., Asia are not on the list of kind of target markets?

That's a good question. I was going to say the target markets that we are focusing on are the highly regulated medicinal markets. The U.S. is recreational, albeit every state is operating under different regulatory frameworks. And some states, it's illegal. Some states, you can buy on the street corner. It's all fine. Canada is primarily a recreational market. The reason why we're focusing in the Latin American markets is that those countries, they require the product to be made by a medicinal GMP facility, and those facilities aren't available out of the U.S. The U.S., you actually can't even import or export from. It's a closed market. And the Canadian market or the Canadian manufacturers don't meet the requirements for the Latin American supply. So they do not [indiscernible] different regulatory hurdles and frameworks, and we fit into the vast majority of the world's requirements.

Yes and then one final question, if I can squeeze it in because I know Sam has to go bang on the hour here. Seasonality between first half, second half, is there anything that kind of people need to kind of keep in mind?

If we can flip back to that revenue chart, the third quarter of the financial year, it typically has a little bit of a dip because of New Year, Christmas, New Year and 2 weeks of January being missed, but we've actually -- we seem to have normalized through that in the most recent Q3. And I think the international side of the business now expanding and growing will completely get rid of that seasonality. So not so much no. And the revenues in this industry are very sticky. Patients typically do have repeat prescriptions and they're getting a prescription every 4 to 6 weeks, and they keep coming back, which is great. So we see that with clients. And to Jason's point earlier, the risk and cost for our clients, the clinics of losing a patient being out of stock would cause that. It's too risky and too costly. So we often see very accurate and long-term forecasting and planning, which makes our lives a lot easier managing the manufacturing.

Perfect. Sam, Jason, we leave it there because I do know Sam has to catch a flight. So I would -- don't want to delay him. Thank you very much for joining us here on unlock stock -- sorry, Coffee Microcaps, I should say. And we will hopefully have you back in some point later in maybe 2026.

Sounds good. Thanks, Mark.

Thanks, Jason. And I know our second presenter is waiting in the wings there. There he is. Dennison Hambling. Welcome back to Coffee Microcaps.

How are you doing?

Very well, Dennis. If you want to bring your slide deck up, Dennis, I'll let you know once I see it.

Yes. Any chance you can see that?

Not yet. Maybe it's loading. No.

I just have to pop over there.

Yes It's coming now, Dennison. Yes if you want me to present for you, there we go. Perfect. Just go back to the cover slide, there we go. Thank you very much, Dennison. You can take it away whenever you're ready.

Great. Thanks very much, Mark, and thanks, everyone, for your time. We'll move through fairly quickly today. The point of today's update really was just to, I guess, rehighlight and reacquaint the market and our investors with the acquisition that we announced in December last year, which we settled this week and are very excited about. So I'd like to just sort of step through those again and probably be able to now that we own them and give a bit more color about sort of the point and rationale behind that and what we've really bought. So the overview today is that we settled the acquisition of Wormald New Zealand and Red Wolf end of last week on Friday. They are material acquisitions for us, very material in New Zealand, but also material for the group. They have the effect of really increasing our end-to-end New Zealand market commercial exposure, which we'll talk through. The transaction was funded through drawing down our acquisition facility, which was $35 million facility. The final price was AUD 37 million. So a little bit of cash there, but not much. You'll recall also that we raised money after announcing this event. So we'll step through the balance sheet shortly. It's added two leading businesses in the space. And I think that's really the important thing that we want to highlight. We have had to build this business over time. And I think what is really exciting for us is that we are now increasingly -- has been, I guess, for some time, being able to acquire really great businesses and great brands that we're adding to. So both of these are very well established in the New Zealand market. I think the most interesting point was until today or at least until last Friday, we weren't able to highlight that the actual name of the business in New Zealand we bought was is Wormald New Zealand. We refer to as Tyco New Zealand under the prior owner's instruction until we actually had under our bit under our ownership, which we'll talk about the business a bit more in a second. The effect of the acquisition is to take our New Zealand footprint to over 500-plus staff. It also gives us a complete end-to-end coverage of New Zealand, which as we have moved through the IMG journey, it's come to understand the importance of that, particularly to large customers and large national scale customers, which is really where we are focused on driving the business and have been focused on driving the business. Put all together, the business is trading to budget, and we're on track to deliver a pro forma EPS. And I say pro forma being a full year of these acquisitions in our books of at least $0.062 per share. So it puts us in a great position of profitability for us to keep building our business. A little bit about the two businesses a little bit more granularity. So again, the Wormald name is just an incredibly strong presence in the New Zealand and the Australian market. Now we own the New Zealand business, just to be clear, and we don't have or touch the Australian business, but the brand is actually the same. It's a shared brand between the two organizations now. That brand, though, started in New Zealand in 1896. And so for those in Australia, if you sort of liken an Elders rural type of brand, I mean that's the equivalent in the New Zealand ecosystem and commercial world. It offers end-to-end service that essentially is a far -- looks after fire suppression. So our estimation is that Wormald looks after about 28% of commercial buildings in New Zealand. So where you go in and there's a fire suppression system, Wormald services maintains upgrades, looks after those. As you would might imagine from that, it's a very recurrent service-based business with a long track record and a sort of contracted stable customer base. The other point to note about that market share is it's probably about twice the size of the next biggest competitor. And so that is a leading position, not just a great name, but also a leading position. And really, the goal for us with Wormald is like we've done also with ADT on the security side is to make Wormald great again. And so putting it back into more focused ownership hands. It had been tucked up inside a global Fortune 300 multinat who probably hadn't at a group-wide level, had any sort of touch or feel or even understanding of this business tucked up down the bottom of the world. Now it's into much more focused hands with local management who are unable to actually start to move this business forward. And it's worth noting that in the history of Wormald, again, because it's been around so long, at one point in time, it had 70% market share. So to make Wormald great again, there is still plenty of room for us to go. The other business what we bought, and so effectively, Tyco New Zealand was two stand-alone operations was Red Wolf Security or High-level Security as we've got here. Red Wolf is another business that's been around for some time. It was founded in Wellington, New Zealand, 2005. And what makes Red Wolf really exciting for us is it specializes in high-level security of high security as we call it in Australia. High security is a different standard again of commercial and enterprise security, security, it's typically done by a distinct certification that has its own certification. There's very few providers, and they provide services like looking after military establishments, got a lot of government work. And for Red Wolf, the Ministry of Foreign Affairs for New Zealand is a key customer. It's a 10-year contract looking after all the embassy security access control around the world. That's really exciting for us because it's a great business. We've got a lot of respect for the team there. Also probably largely forgotten, I won't say unloved but tucked away in Wellington from a JCI point of view, where you know security hasn't has been increasingly less of a focus for that overall business. I think in our hands, there's a lot of growth in that industry, and we've got a leading player who's very keen with a great team prepared to grow. The interesting part for us is that as IMG has taken the journey on commercial security, having Red Wolf aligns very closely with our commercial enterprise strategy in Australia. And so the cross leverage of these close teams and the respect they have for each other and the common sort of technology platforms that we use is very leverageable. So really excited to have the Red Wolf guys in. Again, just to step back, the rationale for both was a couple of, I guess, major points. One was just to reinforce our higher-value focus and positioning. We're trying to be the leading service provider in our space in Australasia. And so for us, in New Zealand, we now have the strongest fire and security platform. We need to keep investing in these businesses. They can be stronger. They can be more preeminent, and they can do more things for their customers, but the platform is set now and strong, wide and highly recognized. It's added a range to our business. So fire is part of our life safety strategy for the group. Effectively, we offer monitoring and associated services around life safety. So whether that's on the security side and proactive security with our video solutions or on the fire side, keeping people safe in extreme fire environments. It's extending an additional highly serviced, highly recurrent technical service business that we can invest in and invest in the people. It is stable. So it's added contracted customers. And I think in the New Zealand case specifically, what having Wormald do and as hopefully, the Wormald team see what we are doing on the security side, accessing those -- that large pool of commercial buildings where we're already turning up and servicing and being able to show them the proactive results we're having on security, which are highly differentiated and successful compared to the traditional sort of security, electronic security world, gives them a chance to hopefully fast track that upsell and discussion with premise owners and building owners. So I think that's a very exciting thing we'll be looking to build out into over the next couple of years in New Zealand. And then obviously, it's financially successful. It's accretive for us. Our balance sheet has remained in strong shape, and it's adding about 20 -- just over 20% accretion to earnings, noting that the share price today is around the same share price it was that we raised money at. So we're really keen for people to understand the positive impact that this has. Again, on the financial side, material acquisition, material accretion, EBITDA in A dollar terms, the New Zealand,, A dollar has moved around a bit, and I think that is a call out we would make. I'm not sure how many other companies in Australia have a New Zealand component of any significance. But in the last -- prior to about 6 months ago, the last 3 years has been flat, there has been quite a marked change in those currencies, which is putting translation pressure on the A dollar to New Zealand cost, but it's going to add about AUD 10 million of A dollar earnings, NZD 11 million New Zealand. and it was very opportunistic. And so post that, it puts us with a business of a pro forma EBITDA in that sort of $53 million to $57 million range. So as we're looking into '27, that sort of forms a base for us as we get close to the end of this financial year, fully funded debt facilities, which are sitting nicely in the middle of our sort of target gearing range at 1.6x net debt to proforma EBITDA with that strong EPS accretion and very strong EPS base as those earnings start to come through our P&L of just north of $0.0625. So with those businesses in the kit now, it's good just to kind of step back quickly refresh the IMG story. So it's a couple of turns to our story for those that don't know and assuming a few of you that will be listening will know us and the story quite well. Really, we started with a business that was in a fragmented sort of unloved industry back in 2020. We invested into a business that was problematic. We invested into the business with a new operating platform, which allowed us to start to look at value-added services. So the monitoring platform forms the base of our business. It allows us to essentially sell what would have been called IoT type of services when that was a bit more flashy a few years ago. But really, IoT focus on security being our big vertical, but also now fire is something that we are leaning into. We monitor most of the fire customers that Wormald looks after. And so from there, it's really been a journey of adding the technical services capability to help drive back on to that monitoring growth platform. And this year in '26, the big piece being this move opportunistically into the fire space. And so as we now look forward, the platform is set in Australia around security. It's very set in New Zealand around both fire and security and giving that commercial -- really strong commercial footprint, and we're looking now to drive the use of the technologies and the investment that we've made over the years into strong growth and on the security side and perimeter security in particular. So today, what it leaves us with is with a strong business. We've got a strong profile. We make good quality cash and profit. It's highly recurring. So at least 57% of our revenue each year is recurring, whether that's monitoring or service and we're scaled. We would have the largest consolidation of monitored customers in the security space and fire space in Australasia. And we've got a really dedicated and successful skilled workforce of effectively technicians and service people and engineers who enable us to put these platforms out to work. And so it leaves us today with a reasonable market value of about $250 million. So moving out of the micro microcap land, a bit more into the micro land, pushing up into the small cap land, but with a very institutionally owned base, too. And we have about 65% of our register owned by institutions and the rest moms and dads and staff. The business has sort of 4 key areas. So there's the ADT business, which is the direct security business, Australia and New Zealand. Signature Security in Australia is our partner business, now adding Wormald, which is our direct fire business in New Zealand. And just for want of explaining it to you visually, ADT New Zealand and Wormald New Zealand operate in the same building in Auckland. The operational center is literally the same building. There's no -- there's only a couple of other people in that building doing some other things to JCI. And so they are actually not integrated but tightly associated already. So a very simple situation for us to manage. And the IMS building, which is our traditional starting business, which is our wholesale security monitoring business. Our direct coverage, which I think is one of our big strategic advantages now is if you're a large customer who wants serious and high-quality service provision, be that a data center through to a retailer, through a large mining company through to the government, then there's very few sort of one-throat-to-choke-type providers, and that's what we have built with our technical service coverage base. Backed up with our monitoring centers or our response centers, of which we have three in Australia, not all in the center of Australia, but just put there to sort of hide their locations and one in New Zealand likewise for the same reason. And then turning to growth and who are and what we're trying to do. So we've got a very clear vision. We are here to be the leader. We're here to become and be the leader in security and life security-related services for businesses, homes, families and individuals. And we're going to do that by providing a really great service at a good price and being open and have access to, which we do by virtue of our scale, the latest and best technology available anywhere. The values of our organization for the people, something investors don't tend to focus too much on, but are really important. If we want to build this to be a leader and an enduring business, we're very focused on getting behaviors, cultural alignment across the business that we have today and going forward. From a corporate strategy point of view, what are we really doing? We started off by investing in our monitoring platform and then our people. And then we use our unique scale as we've been building it, which is allowing us to open up some competitive advantages, it's allowing us to be a unique provider, which is allowing us to grow our profit, which is allowing us to start to hopefully create a flywheel, which will continue to separate us from our peer group and make us move into that full and clear leadership position for the services that we offer. The two engines that really drive that are this focus that we have on that using that footprint and skill base to drive our enterprise and commercial security and fire technical services. And so because we can reach everywhere, we are, hopefully, and will remain and become even further a unique valued customer and provider to enterprise and commercial customers. We are reporting really good results. It's really heartening that, that strategy, the more and more we dig into it, the more we become known to our target customer base that's working. I don't have the exact number, but I remember looking recently, I think we probably work for about nearly 30 of the top 50 biggest companies in Australia now. And so it's about deepening those relationships. It's about picking up more of them and about spreading ourselves around. And it's still early. It doesn't imply that we're done. It just implies that we're making success. The other side is using our leading security and IoT monitoring platform to really drive these high value-added security services into premises in Australia. And we talk about premises rather than resi or commercial. Essentially, anyone that wants a property to be proactively monitored, we now have caught over 60 criminals with the police this year of our proactive service, which is new to Australia. We're on probably around 1,000 sites now starting at 0 going back only 12, 18 months ago, but we're deterring far more crime than that. And so it's highly effective, and we're looking to bring that to market in a scalable fashion using our technical base to keep people safe, which is exciting. Last couple of points is it's an attractive business. As I made the point, it's highly recurring. So it starts with -- ends with monitoring. So once you have our services installed and looked after, the 24-hour data 365-day a year services, you need your doors to work and understand who's coming and going to and you need your monitoring to be monitoring who's coming and going. And in fire, you need those suppression systems to never fail. And so service monitoring, service maintenance and then moving into upgrades and new customers and expansion and technology and all those things makes for a very long customer life cycle. Frankly, the shortest life cycle is home security, which again, we don't tend to focus on premises rather than necessarily any particular type but is at about 7 to 8 years average life, whereas commercial and enterprise, we've got customers that have been with either the existing businesses or the ADT businesses for 15, 20 years plus. And so once you have a customer and if you look after them, they are highly recurrent and likely to stay with you for a long, long time. As I said through this, so what have we done? These acquisitions, hopefully will speak to reach, our competitive advantages are few but serious. Reach is really important. Reach with our own people who are trained, who know what they're doing, who can deliver these results and solutions 365 days a year. Trust, making sure we use our scale to lead with certification, reliability, that fall over/failover type infrastructure. We are the only A1, R1A monitoring company in Australia. That means we run two rooms concurrently, falls over, nothing changes. We are there 24 hours a day, 365 days a year regardless. And then finally, the actual solutions themselves. And again, scale continues to make it clear to us that we can lead. It gives us good pricing, but it also gives us access to leading technology, and it's our job through our cultural values to stay on top of it and deliver -- actually deliver and bring these to market for our customers. So then turning to the net effect of all of these, and I'll wrap up with some questions if there are any. Reiterating, I guess, guidance. So prior to these acquisitions, we had underlying EBITDA guidance for the year. Here, we're just like adding in the effect of the pro forma effect of these acquisitions, which have settled, which are ours now to give people a bit of a base to work off when they think about valuation for us and the profitability of the business we have today as we move forward. And I'll finally wrap that up with a bit of just, I guess, a step back in the past. Here, we just build up -- some of this is just, I guess, internally and for me to remind us of where we've been. We really started this journey properly in about 2021, 2022 after we've done the hard yards of getting the technology in place. In that time, we've delevered the business -- we've improved profitability. We've absolutely improved quality and outcome. And we still -- we trade today at one of, if not sort of towards the lower end of our EBITDA range in that time, but certainly again focusing more importantly now on EPS at a pretty undemanding multiple relative to the market and relative to our comp [indiscernible] globally, but that's not mine to control. It's others to worry about. I'll pause there, Mark, and see if there's any questions. Hopefully, that wasn't too fast.

Thanks, Dennison. Yes there are a couple of questions. If you were e-mailed in for people who want to watch it back on YouTube, they couldn't unfortunately join us this afternoon. So I'm going to start with one of those. FY '27, will it be a year of organic growth with kind of any -- without any significant M&A? In other words, will we be able to clearly see the underlying organic growth in the business is the question.

So we have been growing underlying organic growth at about 8% per annum for the last three halves that we've been calling it out and reporting it. And the way we calculated organic growth is what would the growth have been in the businesses that we would have owned for 12 months. And I guess one of the reasons I say it that way is because the businesses we bought have grown after we bought them as well. So we see that as the organic growth platform. And what we've been looking to do is put together a platform and a market position and a solution set and a skill base that allows us to hopefully accelerate that. And so we're very focused on seeing that organic growth rate pick up. And in that regard, I'd call out the 2 sort of lead indicators that we talk to quarterly. We had 27% quarter-on-quarter commercial growth in the last quarter just released in May, and we had 16% Q3-on- Q2 growth of the ADT Guard live video monitoring product. So that should start to translate through as we move forward into organic growth accelerating. I think the point being made in the question is that we've had to walk and chew gum as we've done this journey. We weren't blessed with a clean spin. I didn't -- I wasn't able to raise $1 billion and start with nothing and build it up. We've had to assemble the assets and the people to do it. And sadly, that does come with noise for those that love to forensically investigate accounts, and I can understand that. I understand that, but it is the journey that we've had to be on. Inside of that further complicating is we've been investing in the business. And so just to be clear to anyone that's interested in us, like we're here to build an enduringly good business, not to hit a quarter, number for anybody sort of peace of mind around what we're doing. And so it makes it challenging. Certainly, without though -- with this now landing this side of the financial year, it does set us up for a clean year next year, which I appreciate is helpful, and I do understand that. And so as I say, it's more of an output for us than an input. Our metric has been from day 1, again, given we didn't start with turnaround was are we making good business decisions and are we seeing them come through, and we're really comfortable with that. And so they will come out and are coming out the other side.

Before I go back to the e-mail questions, I want to take 1 or 2 from the audience here. Post this Wormald acquisition, what's the latest plan on ADT Care? Previously announced a strategic review is still ongoing with that segment? Maybe just give us an update there, Dennison, please.

No. Look, really fair question because we haven't like publicly put out, I guess, an announcement about it. The outcome though -- part of the reason that I made it a public discussion was because there was an ongoing discussion that could be had with the major underwriting customer of the care business in New Zealand, that was the New Zealand government. We have had a very good meeting of the minds and the average price of our new additional customers, so not our base of business. So you won't see this impact earnings like today materially. But as we move forward, we've improved the average price in our New Zealand care business for new install by 28%. So that will start to flow through and pull up those economics. And fundamentally, what we were calling out was it was our lowest returning business on return of capital. Had some really attractive dynamics, but we were questioning whether if those prices and returns were maintained, whether it's the best use of our capital or shareholders' capital, all of our capital. And post that price change, we feel heartened that it is actually a good business and now very keen to work closely with our counterparty being the government there. What I'm excited about having gone through that some strong and difficult conversations for a period there to get alignment is the New Zealand government is actually very focused on delivering effectively efficiency in the health chain and technology can be used much more efficiently inside people's homes as they age. And so the technology kind of exists today, but it's not being applied. And to be blunt, with the right relationships, we can probably help New Zealanders, New Zealand government and to Australia, too, if we had enough common ability to get the governments together to actually really improve outcomes and improve returns. And so now it may move into a growth phase. So with us, we did receive -- we did have discussions around potentially selling that business. I was very heartened with the interest that we received. But when we looked at the growth potential and the returns that we can now generate, we feel that it's better to stay with us and set the New Zealand business up with a strong platform. And I think the secondary part of that, though, is that we have determined not to drive that directly in Australia. The settings aren't the same sadly in Australia. Just to be clear, I have a New Zealand accent, I'm an Australian citizen. I'm an Australian and New Zealand citizen. 70% of our business is actually Australia. That has been our engine. We've just simply set up the platform in New Zealand now this acquisition. I did get one shareholder question whether we did this for my own personal benefits. I can assure you that isn't the case. But what we've learned, though, is that care environment in Australia is different. We do need to see some real change, and I think it speaks to a wider a lot of the wider things going on in Australia. There's some huge opportunities for better results and outcomes as we all probably feel, but we're not there yet in the setup in the government and institutions to deliver it. So we'll watch that, but we're not going to be -- we're not likely to be doing anything there.

Another e-mail one. As the inherent cash flow and business improves, is there a consideration of capital management for shareholders, dividend commencement, buybacks? Just maybe a quick...

Again, if we take the line that the aspirational goal here is to create an enduring business that is absolutely part of it. Personally, I'd love to see that too as a shareholder. Look, we're really just coming out now of the phase. We had to refinance the debt. We've obviously had opportunity. I mean this transaction is a good example of that in that what we have found is the more we have seasoned in this industry, bear in mind, I've only been in it now -- I mean it's 5 years, but it is only 5 years that the deeper we've got the more we've moved into a leadership position, the more we have to consider. Now I think we've fleshed out our boundaries and what we are. And we don't -- I'm not making a call for capital here. I'm just saying that we sort of had to go through a process as we build this business about who we are. We haven't had -- we've had a lot of tax losses and no franking. So dividends haven't been something that we've actively considered as much because they weren't tax efficient. So buybacks would be your go-to. I mean this transaction is a -- for instance, I mean, at 4x EBITDA, which is the highest price we have paid, and I don't want to pay and won't pay above those sort of multiples. But for an outstanding business particularly in both Wormald and Red Wolf, frankly, given our trading multiples, they are accretive. So we are still focused on building a business as a first point. But yes, we are starting to generate cash. And I can see an environment where we will generate more cash than, frankly, we really need now that the strategy and the foundations are in place. So the short answer is yes, but we are still, I suppose, just giving it a bit of time to work it out. What we are working on probably more importantly is a 3-year plan. And we are -- I guess, a little bit -- I'm a little bit TBD just in terms of date in terms of when we'll come out. But our intention is sometime in the next few months to come out and actually put a clear 3-year plan down for the market and for our investors and potential investors to mark us against. And as part of that, I think we'll be able to start to put a framework in place around what you'd reasonably expect us to do or how you would expect us to use capital for everybody for shareholders.

Perfect. Dennison, unfortunately, we're out of time. Sorry we're going to leave it here. Apologies. Still in a few others, so I didn't get to your questions, but know that we have Dennison back with us again.

For sure. And anybody that does have questions you like to follow up Shenin, who is our Head of Digital Intelligence is now officially full-time IR as well. So I'm sure she's very happy to take any questions you might have. Her details are on the packs. Please feel free to reach out to her, and we're happy to answer any questions anybody has. Good, bad or indifferent.

Okay. Perfect. Thank you, Dennison.

Thank you.

We will hand over now to our final presenter in the morning and -- or the afternoon, I should say. And I'm delighted to welcome Andrew Coleman from Team Invest Private Group joining us for the very first time, similar to our first presenters this afternoon with two new names to the Microcap's audience here. So Andrew, very welcome.

Thank you very much, and I am appropriately accoutred for it. Mark and everyone, look, I thought maybe it's just worth going through a few quick slides about who we are and then really more just a general discussion because I think that's probably more valuable certainly when I'm in your shoes as an investor. That's definitely what I prefer to spend my time on. So if you just bear with me one second, and I'll just share that for you. Hopefully, you can see that. There you go. Is that now showing on the screen?

It is. I can see there - this I'm not sure if this is the cover slide. Slide 3 of 10 in this deck, but it's up.

Yes Perfect. Excellent. I'll just talk to a couple of slides. I won't do the whole thing, the announcements on the market from a few months ago. So from our point of view, anyone is welcome to dig into it. But I thought it's useful just to start with who we are as TIP. So we're an ASX-listed investment house focused on compounding knowledge and wealth. And really, at our core, we believe that education and research is the foundation of all good decisions in life, whether they are business decisions or your personal decisions. And that education and research throws up some actionable insights that you can put into practical application. And then if you're smart and you work out how to capture the knowledge from that, you can spin that flywheel really fast by delivering iterative improvements. In other words, taking the knowledge that you've learned from putting something into practice, running it back through education and research and generating higher and higher returns from your insights. And that's what we've been doing since we were started originally. Of course, spun out some research from the University of New South Wales in the investment education space. And these days operating a much broader business across three verticals, each of which puts that little diagram into practice every day using proprietary research-driven insights to materially increase the returns for our clients and therefore, the returns for our shareholders. So our three divisions today, we have an education and advice division, which is about as simple as it sounds. It's where we advise others in investment banking, consulting and high net wealth and institutional advisory services, mostly around investing, of course. And we've got a 25-year track record there of delivering material outperformance to our clients with about $1.6 billion under advice. Our second vertical is the funds management business, where pretty simply we put people's capital to work for them. So often those are clients originally of our education and advice business who then turn around and say, "look, we prefer you to manage it for us rather than just advise us." And as of February or as of the end of December, when this was last published with updated numbers, we had about $270 million in funds under management in that division with approximately 250 basis points per annum outperformance for over 10 years now. And then our third division, which derives the majority of our revenue and profit these days is our own balance sheet, where we effectively deploy our own capital in strategic investments, both minority and majority in private companies, old-school private equity that we've been doing now since 2012 and public equities that we've, of course, been doing for those 25 years. And today, we have about $133 million deployed in that area of the business, generating a 3.1x average money on invested capital, which really just means that over the course of our investment horizon, we've received $3.10 back for every dollar we've deployed on average. So of course, that includes some very big wins, some not so great returns. But overall, it's averaged out is about $3.10 back for every dollar we've deployed. In terms of the half that's just been because that's the most recent thing to talk about, we delivered again another really good revenue and profit. And our passive portfolio has grown now to $18 million. But the main thing I just want to call out because it's something that I think is not particularly well understood about our business is the very high cash conversion ratio. So if you notice there, we actually delivered in the half at 272% cash conversion ratio. In other words, we brought back cash worth $2.70 for every dollar of profit we're disclosing to the market. And that's pretty standard for us. I mean, maybe not full 270%, but that our cash conversion ratio is materially above 100% because the nature of the accounting standards effectively mean that most of our profit doesn't get recognized in the P&L. It comes through other metrics on the cash flow and balance sheet. And as a result, we're able to make materially more investments every year than you would think a business of our size and could. And I'll just call that out because we have to look at this over the last 12 months, we've been able to generate over $10 million of operating cash flow which we were then able to deploy back a $7.1 million of growth CapEx and new investments, $2.8 million of investments sold during the year and returned another $1.1 million of cash back to our shareholders. So from that point of view, we're a very cash-generative business. And it's the reason I often get asked the question, which is that despite being primarily a private equity firm and having listed in 2019, we have yet to tap our shareholders for money since being on the ASX. So in that sense, we're quite a boring ASX listed company. We went to the primary markets with a compliance-only listing because we didn't need cash. We wanted the flexibility of being listed. And we've only returned capital to shareholders since. We've never tapped their wallet. So that's obviously both a big strength of our business and also potentially the weakness because it means that we aren't in the face of brokers and the market all the time being able to spruik our share price. And as a result, obviously, our share price is now at about a 60% discount to our book value despite having grown at EBITDA at 45% per annum over the period FY '17 to FY '25. So I think that's all I just wanted to call out in advance before doing some Q&A. One other thing that you may notice if you've been following us is we recently just announced an acquisition or potential acquisition of Intelligent Investor from InvestSMART Group. And the reason we've done that, as you can imagine, with our three verticals is it adds a material retail distribution front end to our funds management and advice business. And Alan Kohler, John Addis, Nathan Bell and the team there at Intelligent Investor have built a wonderful business over the last 30 years, teaching people how to be good value investors, whether that's in public or private markets. And that aligns exactly with our ethos of education and advice, spinning into insights, putting them into practice and delivering returns. So we're really excited to be welcoming them to the group. We expect the transaction will be materially accretive because, obviously, as investors, otherwise, why would we be doing it? And it will effectively double the size of our funds management business from a funds under management point of view and similarly, revenue and profit in that end of the business. So we're quite excited about it. But Mark, I think that's probably all I really can say today. Really, to sum it up, we're a boring fund business that generates a lot of cash, and we return that to shareholders while continuing to grow. So that probably makes me a little bit of a boring speaker, but I think it makes us a very good investment.

Yes. Thanks very much, Andrew. Just maybe we'll start kind of where you ended after with the Intelligent Investor acquisition, given it's the kind of most recent piece of news flow. As you said, there doubles the FUM under management there. Maybe just the long-term strategy within that segment of the business. Do you want to get to ZAR 1 billion -- or sorry, $1 billion is kind of the first kind of medium-term target? And how does that come about? Is it through an organic growth strategy now with, as you said, retail distribution piece that comes with Intelligent Investor? Or is there more acquisitions you'd kind of like to do and what would those look like?

Well, I think let me start by saying we have a...

Apologies, that is probably about a 3-part question, that is only one question

No, that's great. I like detailed question. That's my brain is a ex-researcher, right? Look, I think, firstly, we have a large part of our business that's a private equity background. So we're always on the lookout for acquisitions. So I think once we bedded down Intelligent Investor, it's only logical that we will bolt on other similar things because that's what we've been doing for the last 20 years, right, since we sort of started as a business. But in terms of the investment strategy from our point of view, specifically around Intelligent Investor, we think it's a wonderful asset that has significant growth in it by itself. So if you look at how that business has been run, it's delivered some really wonderful content for about 25 years to Australians. I think probably many of us have subscribed to the Eureka report and Intelligent Investor over the years. I know I certainly did as a junior as well as through to this day. But what they obviously haven't been able to do because of the scale of the operation was materially expand its footprint, both through marketing direct-to-consumer here in Australia and also moving to geographic spread of what it covers. And so one of the things that I think is very logical if you look at where we research and cover, we're a global research operation in our education and advice business. We cover Australia, New Zealand, U.S., Europe and I think it's 48 global markets. So there's a huge opportunity for us to expand what is effectively an online business. It's like you doing webinars and online research that can be broadly shared around into other markets. So we're really excited about taking the wonderful insights of that team and growing it broadly. And that applies both to the subscription side of the business, which is where people sign up to get those news letters and broker recommendations as well as the funds under management side, which are effectively full listed ETFs and therefore, distributable pretty much anywhere around the world with the appropriate marketing and compliance structure. So to your question around then the second part, which is where do we want to take it, I think $1 billion is the beginning. I mean it's not going to get there in one giant leap. It's going to be a series of incremental steps. But our goal is to manage more and more wealth wisely for our clients. And from an operational scale point of view, it's no harder managing as we found $100 million to $10 million $200 million to $100 million. And I think that each time the extra 0 gets added, it's just simply making bigger trades in the same companies we've already identified. Maybe some of the most micro caps become vast majority of such a scale that we could easily deploy many times what we're currently deploying with very limited extra cost.

And I do want to call out because it's not too often we get micro caps on here that do pay a dividend. But I mean you guys do pay a dividend, fully franked. Maybe just a comment on what is the dividend policy, thoughts around capital management given the discount to NTA.

Yes. So we've been doing a dividend since we listed. We've also been doing a buyback for quite a few years now. The advantage of having lots of cash is you get to choose how you deploy it. So we sort of all got all 3 boxes going at once. We are busy making new investments all the time to use our cash whilst paying dividends and doing a buyback. So from a capital allocation point of view, we get the luxury of having a little bit of everything. I think the nature of our business is such that we are lucky that we have businesses that are cash flow generative. That's what we buy in both the private equity side and the public equity side. And so that lets us decide what's the best use of our capital at any time. We're very conscious. I mean, I'm a major shareholder, my family and myself are about 20% of the register. And then the rest of our Board and management team are another roughly similar amount. So we're very conscious of the fact that we have material skin in the game. We would like a return on our capital invested as individuals, not just the company. So that can come to us as either dividends or buybacks, and we've been doing that for a long time. But at the same time, we don't want to do that and sacrifice growth. So we, as a Board, just look at it each half and say sort of what's available for growth based on what we see in the market right now and any excess we're returning through either a buyback or a dividend, depending on what looks more attractive. Mr. Chalmers is may be having a say into which of those two becomes more attractive going forward.

Okay. Let's not open that Pandora's box outside the scope of this webinar. And there's plenty of content flowing around for anybody who wants to go around that rabbit hole, and I'm sure we'll continue for the next 12 months. On -- I know you pointed to the discount to NTA, but I'm just wondering when people are looking at your business. Do you think that's the best metric to look at discount to NTA? Or should they think of you as an asset management business where you're trading on a price earnings multiple or some kind of other multiple? I'm just seeing to -- people are trying to value the business. What do you feel is kind of the most reasonable kind of metric to apply to a valuation of a business like yours?

Look, I would much prefer everyone used an earnings multiple because the number would be even higher than our NTA. But I think genuinely, unless you're prepared to do work and research and understand what it is we do using our NTA or our book equity, I'd use book equity because its just simpler as a simple proxy for our value is probably fair. The reason I say that, of course, is remember, we can only write down the value of our assets in private equity. We can never write them up from the accounting standards. So our book equity will always materially undervalue the value and use of what we own. So for example, if we buy a private equity business for $5 million or $10 million, and it triples in value because it triples in size, I don't get to write it up on my books at all, whereas on the other hand, if I buy it for $10 million and it turned out it wasn't a good idea, I can only write it down. So from that point of view, our book equity, unlike in some other businesses will always be on the conservative side of our true value. As a result because I like to always encourage people to be a bit conservative. I think it's a very easy proxy to just quickly say, how do we look from an efficient market point of view. And obviously, if you can get us a 60% discount, I think that's like buying dollar bills for $0.40, so I've been in the market buying our own stock, for me.

Somebody who was a qualified accountant of one time in the past, that standard that you're talking about there on writing up and writing down [indiscernible] is one of the most ridiculous standards of our time, but anyway.

I think it makes sense if what you're trying to do is prevent another Enron, right? You want people to value themselves up. So I can understand it, but it does create some weird problems when you are in the business of growing businesses.

Which we are going to see a classic example of now when the SpaceX IPO comes through. And a lot of funds will have these crazy monthly numbers once the IPO actually like hits the boards. So if you're an investor, whether you're going in the month before or the month after, it's going to cause a lot of different problems. But anyway, we're getting very technical here. Another question, can we just delve into the private equity business? And just to give people a sense of industries you're looking at, is it mid-market businesses, small -- the whole theme that we see in the market of the boomer generation are looking to like exit businesses now. There's no natural successors from the kind of next generation. Maybe just talk to what is in that private equity book and kind of why is the sweet spot for businesses you were looking at in there?

Sure. So we actually -- we launched the private equity side in 2012 on exactly that thesis, the idea of the baby boomer generation has been the most entrepreneurial history. Also at the time, research showed that over 70% of them hadn't considered what they were going to do for business longevity, either their own or the company that they own. And so we thought there was a huge opportunity to get in there and effectively arbitrage the opportunity, which is we could come in and say, "look, we want to provide a staged exit for you that preserves your legacy, materially unlocks value for you and your family, but also even sell to a competitor or a debt-laden business who then might destroy what you've built." And that was quite personal to me because my father had been a serial entrepreneur. And in fact, I at the age of 13 had sold a business that was very important in the education space, actually had -- was the very first business to do self-study mathematics and language programs. So everything behind Duolingo and everything else comes from his original work and had been bought by PE run into the ground and folded in about 18 months after purchase despite having been 500 staff. So it was a quite personal thing for me. We're all the product of our own experience. That is now quite a crowded trade. There's lots of other people who have since in the last sort of 15 years woken up to that opportunity. And so what we've started to do is we still play a little bit in that space, but we're doing a lot more work now with younger generation managers who I joke have reached the level of their confidence, not competence. So effectively, they've built a wonderful niche business they're now at that position where the funding and effort required to grow it is scary when they have young kids and a mortgage. Unfortunately, in Australia, most growth comes from bank funding that's secured against your home. And it's one thing to have a mortgage originally. It's another thing to remortgage the house when you've got young kids and you finally just got financial independence. So we're finding there's a big opportunity for us now in that space to come in and help those sort of 40-year-old owners who've grown to sort of between [ 20 ] and $200 million revenue and are now saying, well, the next stage of growth is going to be scary for my family if I don't have a partner. And I think that's just the next wave that we'll see coming through. So we still have both in the portfolio. In terms of the industries, we are industry agnostic, but the majority of our portfolio is in two main categories in services businesses where we have a material ability to leverage their growth through our structure. In heavy engineering, where we in heavy engineering and manufacturing, we've had quite a lot of success. That's not my background originally. It just happens to be a couple of our first investments were in that space and having built quite a good name for ourselves there, we've been able to do that again with a few others in similar industries. So they are our two main parts of the portfolio.

And is that all domestically focused in Australia? Or is it an international book partly international?

Yes, they're all businesses that are headquartered here and originally started here. Some of them have since expanded offshore. I'll call out in particular one that you may and the people on this call may be interested in because it just highlights sometimes both the growth and the luck that comes in this business. So we made an investment, 30% of a business called Multi Media Technology in the back end of 2018, beginning of 2019. MMT at the time was an importer and distributor of IT hardware, mostly audiovisual things. So web cams and a thing called graphics cards, which was important for gamers and people who wanted to make video. As a result, it came with an exclusive relationship at the time with a company some of you may have heard of, that's ticker is NVIDIA, NVIDIA, of course. And as a result, we've seen that grow materially and now expanding to many more product lines in offshore. So from that point of view, you do get some of those really great success stories in the portfolio. I think that's one the market hasn't talked about much about us. They still think of us in other ways. But I think there's a lot of latent value there, as you can imagine, with the growth in AI and the sale of that. And then on the other side of the business, in terms of really boring but wonderful businesses, we own a business called East Coast Traffic Control that we purchased in 2015 that is literally people at the side of the road, making sure you're safe with stop signs and slightly better technology these days, and that's growing sort of tenfold again under our leadership or sort of ownership. So those are the kind of businesses we like. It's businesses that have really strong fundamentals, a management team that have huge ability but need someone to help them unlock it, whether that's the case of some capital or whether it's some advice or a combination of the two.

And just to pick up on another theme in the market related to private equity. We've seen a lot of private equity rolling over. I don't think you operate in a fund that's more on your own book, but funds rolling over, coming up to natural can't get the exit prices that they want because they maybe paid too much back in COVID craziness valuation times. So can we maybe just talk about the exit strategy for the private equity book? Is it -- you've kind of taken the business as far as you think you can under your leadership and actually it needs an even bigger partner now for the next one or an attractive offer comes along and you're happy to let it go at a valuation that seems fair.

Yes. So we exit really for three reasons. The first is the one you pointed out, which is that the business will grow further without us than if we stay. So rather than being a roadblock to that growth, we'll exit them for that reason. If you treat people as your genuine partners in that operation, it's only fair to unshackle them. So that's one reason we exit. Second reason we exit is it's just not working. Not everything works out, particularly when humans are involved. It's kind of like dating, right? You enter with the best of intentions, but things can change over time. You're not always the same people that have the same priorities. So we will exit if that happens. And then thirdly, it's the opportunistic exit. Someone comes around with a check that's just larger than we think it's internally worth to us. The business may be worth that, but not under our leadership, and so we'll exit. In terms of -- primarily, it's the first two categories, not the third. It's lovely when someone comes with a wonderful check, but that's rarer. It's usually because there's a strategic reason for the exit. We do have one big advantage, though, which you sort of touched on versus the traditional private equity fund. Because of a traditional private equity fund, you're taking capital from others and you're gearing that. You have very sort of hard and fast end dates that if the market doesn't play ball, can result in material value erosion. One of the reasons we listed and we amalgamated everything on to our own balance sheet, which effectively means bought everyone out and put them under one structure is so that we could control the timing of that exit because we've seen in the first vintage of our funds that exactly that happens. You build this wonderful business together, you get to year 5 or 7. And suddenly, you're in this exit process that just doesn't make strategic sense. You've got a whole bunch of growth ahead of you or you should have exited in year 3 and now you're stuck. So from that point of view, we wanted that flexibility, and we went down that path of putting it all on our balance sheet for that reason. I think that's a material advantage. Sometimes people in the industry disagree with me, but I think that flexibility enables us to maximize the returns in a way that a traditional fund structure doesn't. And I think that's why you see in our results that 3.1x MOIC, which is well above market standard for a PE group. And that's, I think, just partly because we're getting to control when we exit. If your neighbors know when your house is about to sell, they'll underbid it compared to if you can choose the time to leave. So from that point of view, I think it's a big advantage.

And I don't think follow-on funds or secondary funds were as popular as they are now back in 2013, '14, '15 as an innovation of the private equity sector, shall we say, that has seem to have emerged in the last 2 or 3 years.

In my early banking days, I sat next to a very wonderful banker, they'll remain nameless for this point of view, but he had a very good turn of phrase and he coined in the middle of the GFC, the lovely line of the rolling loan gathers no loss. And I think you see that a lot in closed-end structures. They roll it to pretend the loss hasn't occurred. It's a dangerous game. It makes the manager a lot of money. It doesn't necessarily work so well if your money is tied up with them.

Exactly. And then just maybe if we can take one final question on the private equity business. Looking backwards, looking forward, the opportunity set now as you kind of look at it today, I know you're saying the cohort of businesses you're looking at has changed from those baby boomer exits to maybe the growth capital. But in terms of that opportunity set, does it -- is it still presenting plenty of opportunities to put capital to work? Or are vendor expectations out of line, what kind of valuations you want to pay? Maybe just give us a sense of where that kind of market is at the minute.

Yes, it's interesting. When we started in the private equity side in 2012, it was pretty easy to buy private businesses at 4 to 7x earnings because there was a big value differential between public and private markets, and there weren't a lot of people playing. Over the last sort of 10, 15 years, that differential has reduced materially and private businesses have been bid up to numbers that just don't make a lot of sense to me. That is turning again. And it's just a typical pendulum. I mean there was all this cheap money flowing around, as you mentioned, in firms and others that to deploy them. Again, the problem with that 5- or 7-year structure is if you get the money on day 1, you got to deploy it quick. Otherwise, you run out of time to invest it. So you overbid for the assets in auctions, that lovely old joke of the winner of the auction is the one who comes second. And they basically overbid and overpaid for these assets. So we sat on the sidelines and focused on deploying our capital mostly into the existing portfolio. So we didn't stop spending. We just bought things for the existing portfolio and saw a lot of organic growth. In the last 6 months, and I think everyone has noticed this if you been watching the ASX and global markets, that bifurcation of valuations has started again in a good way for a company like us. In other words, all those companies on stratospheric valuations have plummeted and it's reset value expectations back to something more reasonable. So I mean you see that in our Intelligent Investor acquisition and others that we're making as bolt-ons recently, and I'm sure we'll make a few bigger ones as well. We want to buy in that sweet spot where we're buying a wonderful business at a reasonable price. We're not interested in getting into auctions when the market gets toppy. So downtimes like perhaps we're going through now, that's our sweet spot, and it's why we build the war chest. So for those who cover us, we'll know that we have a very large acquisition line that was currently untouched. We've paid off all our debt. That's very puzzling for a private equity firm. If you look at it, you think why you a PE firm with not a single dollar of debt. My answer is because we've been waiting to deploy it, and we're now starting to get excited about what we can deploy.

And just one last question. I'll just squeeze it in here. Obviously, the cost of debt funding for a lot of these PE firms has like materially changed in the last like 3 years. Has that lessened competition because now you're looking at 10-year rates plug back into it at like over 4% if we take like U.S. dollar one and suddenly, it doesn't - what their ability to pay doesn't kind of make as much sense anymore, but they're not going to move away from having debt as part of the capital structure of these funds. So has competition also decreased, would you say in the market?

Yes, I think so. I think there are as many competitors as they were a year ago, but they don't have the cash to spend that they had a year ago, both because of the cost of debt rising materially, and that's a big one. But also the cost of equity has risen. I mean the idea of being an investor in PE and VC and being only too happy to know your portfolio is entirely loss-making in the hope that you can sell it to a bigger fool down the line is dying off again as it should. Schumpeter referred to capitalism in the process of creative destruction and there's been a lot of value destruction in those kind of firms, and that's lessening competition for the assets we want just because I joke all the time, if an asset is selling for $1 million, there's a lot of bidders. And if an asset is worth $1 billion, there's a lot of global bidders. But when you're talking about sort of $5 million to $25 million, there's not a lot of individuals who can write that check and not a lot of global players who want to bother. So from that point of view, as capital becomes more expensive, it really does in our space in the market materially reduce competition. And from our point of view, having a big cash balance, a large cash-generative portfolio and untapped cash reserves through debt reserves and others, that gives us some really strong dry powder to compete on the assets we want to compete.

Perfect. Andrew, we have slightly run over time. I apologize, but we'll leave it there. Thank you very much for joining us. And yes, hopefully, maybe we can have you back in after the full year results.

Look forward to it. Thanks for having me.

And thanks, everyone. That concludes our webinar for this afternoon. Thanks, everyone, for joining us. And yes, we'll be in touch with our next event as soon as we get a few companies lined up. Thank you. Have a good rest of your Monday.