MA Financial Group Limited (MAF) Earnings Call Transcript & Summary

Ladies and gentlemen, I think we'll make a start. Good morning, shareholders. My name is Jeffrey Browne, and I'm the Chair of your company. I'd like to begin by respectfully acknowledging the traditional owners of the lands across Australia and pay our respects to elders' past, present and emerging. And I've been warm welcome to any First Nations Australians that are present today. I've been informed that a quorum is present, and it is now just gone past 11:30 a.m., the nominated time that mentioned in the meeting, I declare the meeting open. Notice of meeting has been distributed and will be taken this read. On behalf of my fellow directors, I'd like to welcome you to this 2023 Annual General Meeting. And I'd also like to introduce those attenders today. Seated before you to my right are Vice Chair, Andrew Pridham, join joint Chief Executive Officer, Chris Wyke and Julian Biggins, Non-Executive Directors, Alexandra Goodfellow, Simon Kelly and Nikki Warburton; and Company Secretary and General Counsel, Rebecca Ong. Also joining us via webcast are our U.S.-based directors, Ken Moelis and Kate Pilcher Ciafone. I'd also like to welcome Giles Boddy, our Chief Financial Officer; Janna Robertson, our Chief Operating Officer and Joint Company Secretary; Shaun Kendrigan, representing KPMG, the company's auditors; and Rebecca Maslen-Stannage representing Herbert Smith Freehills of the company's lawyers. In your end that we need to evacuate the building, please note the location of your nearest exit, and please also switch off mobile telephones until the conclusion of the meeting. Ordering the company's registry will shortly outline procedures for voting and questions at today's meeting. I'll then make a short address and invite joint Chief Executive Officer, Chris Wyke, to do the same. Following this, I will proceed to go back to the formal business of the meeting. I'll now hand over to Eddie Diab from Boardroom to outline the question and voting procedure for today. Eddie?

There are several matters I need to mention with the format of today's meeting. I will take a few moments to explain the verdict and Q&A procedures that we will use today. Ready to proceed. As you registered today, you were issued with a purple, orange or white color card. Purple cards are for shareholders who are entitled to speak and vote thinking. Orange color cards up for shareholders who are entitled to speak, but not vote and white color cards that will visit us attending the meeting today. The notice of meeting sets our information regarding the resolutions to be put in today's meeting. There are 9 items on the agenda this morning, 8 of which the shareholder required, 8 of which, sorry, require the shareholders at it. Details of the direct potent property received with each item will be shown on the screen behind me after the discussion of the annual business.

The Chair is holding open vote to use the capacity as a Chair, and it is his attention to vote all available proxies in favor of each resolution. Each item of business at today's meeting will be conducted by way of poll. The chair will ask you to cast your votes at the relevant time of each item of business, but only to hand your voting cards to boardroom representative at the conclusion of the meeting. The results of the vote will be available later today on the ASX and the MA Financial Group Limited website. Please note that only shareholders, proxy holders or shareholder representatives may vote. Questions. We ask that shareholders who wish to ask a question on the various items outlined in the Notice of Meeting. Do so when we reached a relevant agenda item later in the meeting. We will endeavor to answer any questions from the shareholders as we can. There is a microphone at the front of the meeting area. Would shareholders wishing to address the meeting, please approach the microphone once the chair invites questions. Please state your name and show either your purple or orange admission card. As a cadence to all shareholders, please -- all right. Please note that in order to enable all shareholders a reasonable opportunity to be heard, all speakers are asked to limit their comments and questions to no more than 2 questions per resolution and no more than 10 questions in total. Please limit each question to no longer than 2 minutes. I would remind shareholders that questions must relate to the item of business under consideration. I will now hand back over to the Chair.

Okay. Thank you very much. While shareholders, the MA Financial Group performed extremely well in 2022, and the business continues to expand and evolve. I'd like to take this opportunity to thank all of our people for their efforts and commitment in delivering such a positive result. In 2022, MA Financial achieved a record underlying revenue of $302 million. This was a 41% increase on the prior year and a 29% growth in underlying earnings per share to $0.383 per share. This is also a record for the company. As a result of this strong growth and our well-capitalized balance sheet, the Board was able to declare a fully franked final dividend of $0.14 per share to add to our interim dividend of $0.06 per share. The combined full year distribution of $0.20 per share was up 18% on 2021. Joint CEO, Chris Wyke, will take you through the divisional highlights shortly. MA Financials' growth is a result of many years of ongoing investment in our platform and our capability and a deliberate strategy to build a diverse company, enabling it to grow through market cycles. In 2022, we see -- we achieved strong growth in our Asset Management division and through the successful acquisition of the mortgage aggregator Finsure under our ownership, Finsure has grown to manage $91 billion of residential mortgages representing over 350,000 borrowers. In March, we moved to full ownership of our residential mortgage lending business, MA Money. The successful acquisition and integration of MA Money helped grow the total loan portfolio by 98% to $393 million. The data and insights we now have access to in this $2 trillion market significantly enhance our capability as a credit originator and manager. During 2022, inflows into our credit funds almost doubled on the previous year to $1.1 billion. This growth reflects a positive macro environment for credit investment alongside growing market awareness of our capability as a manager and originator of credit assets. This momentum is continuing into 2023, and we believe credit fund investing has long-term tailwinds. Our investment in our credit and lending platforms has been a conscious strategy to harness these tailwinds. Highlighting our conviction to execute the strategy is the recent acquisition of Blue Elephant Capital Management, which will allow the group to extend its capability into the United States, the world's largest private credit market by our business partner, we know well and have great competency. As our company grows, an important element is a significant and growing proportion of our revenue that is recurring in nature, underpinned by consistent predictable revenue streams. This should provide shareholders with confidence in the group's ability to deliver pleasing results, while also strategically investing in growth opportunities when they arise. Another core principle of our strategy to propel growth is our focus on empowering people. MA is a diversified financial services group operating multiple business units in parallel. Our senior leadership team benefits from significant depth of experience and long tenure working together. Our highly motivated people own approximately 31% of the company and share a sense of pride in our company's history and its prospects for future success. Many years of empowerment and training, coupled with our track record of returning key staff means the company enjoys long-term stability and focus. This has helped us to deliver compound annual EPS growth of 23% since our listing on the ASX in 2017. With a continued focus on retention and incentive in 2022, we continue to refine our remuneration structures to provide appropriate incentivation that aligns with positive shareholder outcomes over the long term. Our full approach is outlined in our annual report. At MA Financial, we believe building a sustainable business generates better outcomes for all stakeholders. Sustainability is about making decisions for the long term and as significant owners in the business, the management team places a long-term lens on decision-making and strategy. In 2022, we've produced our second annual sustainability report, reflecting MA's increasing maturity in environment, social and governance practices. From an environment sustainability perspective, 2022 has been a key year with the company reporting a baseline figure for its carbon footprint and committing to net zero target by 2050 for its direct operations. The group also aims to reduce Scope 1 and Scope 2 emissions intensity per employee by 50% by 2030. Our ESG practices will continue to evolve as the group increases in scale and broadens its business interests. Reflecting our desire to increase the Board's independence and diversity. We were delighted to appoint Nikki Warburton as an independent Non-Executive Director in December 2022. Nikki brings 30 years of branded consumer marketing experience across a range of industries, including automotive advertising and media. He has a strong track record in growing businesses and building brand recognition that will help strengthen the Board's capability. Outlined in our sustainability report within the 2022 annual report are the gender targets for our broader workforce and senior executives, including the key initiatives underway to help us meet these diversity objectives. Finally, I'd like to thank our Board and all of our staff for their continued hard work, dedication through another period of significant business growth, maintaining our strong workplace culture based on our key values of growth, innovation, cohesion and accountability remain key to our continued success. Thank you for your ongoing support of MA Financial Group. And as Chairman, I'd like to now ask CEO, Chris Wyke, to address the meeting. Chris?

Thanks, Jeff, and welcome to shareholders and guests to our Annual General Meeting, and thanks for your attendance today. My name is Chris Wyke. And together with Julian Biggins, I am joint Chief Executive Officer of MA Financial Group. It's my pleasure to address MA Financials' 2022 performance today and share some commentary on 2023. My Chair, Jeffrey Browne has already detailed some of the group's financial highlights, which we believe reflect the value of our diversified firm designed to withstand challenging economic conditions. Throughout '22, we continue to invest in growing the business while also delivering record shareholder returns. Some highlights of the year include underlying revenue increasing 41% to $302 million, underlying earnings per share of $0.383, an increase of 29% on 2021. And assets under management grew to $7.8 billion, an increase of 13%. And today, assets under management sit at $8.4 billion, up 8% on 31 December 2022. During the year of 2022, gross fund inflows increased 17% to $1.5 billion. The residential and specialty loan book grew 98% to close the year at $393 million. Now let's take a closer look at the divisions which make up our business. In Asset Management, our Asset Management division remains a significant contributor to the firm. In 2022, it delivered a record result with underlying EBITDA up 78% to just over $103 million, and this was driven by strong performance fees and a 36% increase in recurring revenues. Gross fund inflows in 2022 was $1.5 billion, and that was driven by strong growth in our credit funds, reflecting strong investor demand for strategies offering income stability and security in a rising interest rate environment. Further, the composition of this $1.5 billion was more diverse. International inflows to non-migration designated funds increased 97% to approximately $510 million. Inflows from domestic investors grew to $609 million, an increase of 26% on 2021. As our open-ended funds gained increased investment platform access, and we expanded our relationships with independent financial advisor groups. Achieving this diversity has been a strategic focus of the business for the past 5 years. And our hospitality assets continue to perform well with operational earnings and a strong transactional market, supporting both distribution and valuation gains in 2022. In real estate, we took a more cautious view as the prospect of higher interest rates and a weakening economy saw us being highly selective with our investment decision-making. Notwithstanding our cautious approach, we were able to acquire Perth's iconic 31-story office tower, Allendale Square or $223 million in a joint venture with Centuria Group. In terms of our corporate advisory and equities business. This business performed well despite the difficult market conditions, which impacted the amount of equity capital markets activity we experienced. Revenue per executive was $1 million, and this is at the lower end of our target range. Business advised on a range of completed transactions were $13.9 billion, up from $5.8 billion in 2021, and we made the strategic decision to invest in new resources to increase our capability in the small to mid-cap industrial sector. Notably, we advised consolidated press holdings on the disposal of its 37% stake as part of the $9.8 billion sale of Crown Resort. Lending & Technology. The growth of our Lending and Technology division continued in 2022 as we begin to realize our ambitions for this business. Our strategy is to create a technology-enabled, highly scalable lending ecosystem that generates fee-based income, spread income and delivers primary origination investment product to our managed credit funds. Consistent with this strategy, we completed on the acquisition of the Finsure technology platform in February 2022 and experienced considerable growth throughout the year. The numbers of brokers on the Finsure platform increased 24% to 2,640, and managed loans on the platform increased by 37% to $91 billion. In 2022, we continued to develop our lending platforms. We invested in MA Money, undertaking a complete rebrand repositioning an overhaul of its range of residential loan products and services to drive growth. And our specialty finance business expanded its range of high-margin bespoke lending opportunities. Overall, the MA Money and specialty loan book grew 98% to $393 million. In terms of capital management, our strategy to maintain a prudent and dynamic operating balance sheet continued in 2022, with the group holding almost $100 million in cash on its balance sheet at the year-end. In 2022, we secured a new $40 million revolving working capital facility just to provide further flexibility to our balance sheet and our ability to fund appropriate growth initiatives. Our core borrowings remained unchanged during the year. Given the profitability of the business and the asset backing, we view our current level of borrowings as conservative. Our balance sheet is positioned for continued growth. Just some commentary on FY '23. Despite the volatile markets and uncertain macro environment, we've had a pleasing start to the year, highlighted by strong underlying business momentum and several important strategic achievements. Inflows into our asset management business continues to grow, driven by strong demand for our credit investing funds. Gross inflows for the year to May 1 were $610 million, up 50% on the same period last year. Notably, only 6% of these inflows were into migration-related funds, highlighting the increased diversity of the group distribution channels. Net inflows were up 29% on the prior year to $390 million. Also, we recently announced the acquisition of Blue Elephant Capital Management, a strategically exciting investment that provides us with a highly scalable entry into the USD 5 trillion alternative and specialty finance market. Incorporating Brinton, the group's total AUM grew to $8.4 billion as of the 1st of May, up from $7.8 billion at the end of 2022. We've also seen we launched the MA Marina Fund with the acquisition of the d'Albora Marina portfolio, the largest premium Marina network in Australia, and demand for the fund has been exceptionally strong. We also opened a new office in Singapore to extend our international distribution capability. Our real estate team successfully sold Gateway Plaza Shopping Center in Warrnambool Victoria for $70 million, delivering an 11% annualized return to investors over the 10-year holding period of that fund. We do see significant opportunity to acquire real estate assets in the next 6 to 12 months, and we are well positioned to do so. Our residential lending business, MA Money has had a positive start. Launching is new loan product sets in February, it has already settled $103 million of new loans and has an application pipeline in excess of $150 million. As previously advised, our significant investment in MA Money is negative to our earnings in the short term, but we are excited about its prospects, and we are confident it will prove to be a valuable investment in the future. Deal activity in the corporate advisory and equity space continues to be M&A led and key transactions to date this year include the sale of on-site to Onsite to Sime Darby and Webuild's purchase of Clough. First quarter for us has been very active and business momentum is strong, positioning the group well for significant growth. However, it is important to note the macro environment is challenging. Market volatility and in particular, the consequences of rising interest rates is likely to impact some of the transactional components of the business. And in particular, performance fees and corporate advisory revenue, it's too early, however, in the year to predict the quantum of this impact. However, it is important to balance this cautionary comment with the fact that our core revenues relating to annuity-based income remained very strong, reflecting the strong growth in client inflows and consequently, assets under management. Performance fees are, by nature, more unpredictable than base management fees as they are linked to underlying asset growth and revaluation cycles. This was evident in 2022, where we benefited from very significant performance fee income based on asset growth in some of our larger funds and in particular, the hospitality sector. In addition, we are monitoring operating expenses. Given the annualization of the 2022 operating expense growth as it flows through into a full year in 2023. We retain a strong focus on expense management and have a disciplined approach relating to operating costs. Notwithstanding macro headwinds, our focus remains on increasing recurring revenues through continued positive flows into our asset management funds and driving growth in fees and spread income from our lending and technology platform. In terms of market volatility, we always see opportunities. Challenges globally in the investment banking industry is presenting us with growth opportunities. Some times of market weakness and uncertainty that provide the best environment to higher talented investment bankers, we are actively evaluating opportunities in this regard. It has always been our philosophy to manage our company for the long term. Despite the current challenging economic and business environment, we remain committed to investing appropriately with an eye to future growth. This fact is evident with our investments initiatives such as MA Money, Blue Elephant Capital Management, Finsure and Middie on the technology and lending platform and as just explained, talent for Corporate Advisory and our CDs business. We always focus on balancing investments for the long-term growth with delivering near-term returns to our shareholders. However, as mutual owners of the business are bias is always on the long term. As our business grows and becomes more diverse, the focus on developing our brand has never been greater. We have made a significant investment in brand development. This includes upgrade in client-facing technology, brand architecture and client events and sponsorships. Building our brand is a core element of our determination to grow market awareness of our many successful businesses, our capabilities and our managed funds. The strength of our client inflows in 2022, and again, this year reflect the growing awareness and trust in the MA Financial brand. Pads to our people more generally, we recognize the critical role our employees have in our business, and these achievements are not possible without them. Our people provide a competitive advantage and determine our unique culture, which encourages an owner's mentality to business building and problem solving. Investment in training and development of the workforce is a key priority and delivered by the MA Academy, provides a mix of practical and broad opportunities, including direct exposure to our most experienced leaders. We believe this is the best way to develop a high-performing team and help ensure MA employees realize their full potential. So in summary, is confirmed today, we remain confident about the positioning of the business and the significant growth opportunities across all divisions. We continue to execute our strategy of building profitable businesses in scalable markets where we have operating edge and expertise. We continue to identify investments that will underpin future sustainable growth and generate the best risk-adjusted returns for our fund investors and our shareholders. We thank our clients and shareholders for the ongoing support and the confidence shown in our Board and management. And we would like to thank our people and their families as a team effort for their effort and ongoing commitment to the growth in MA Financial.

Okay. I'll now turn to the first item of business on today's agenda, which is to receive and consider the financial report of the company, its controlled entities and reports of the directors and auditor for the year ended 31st December 2022. These reports were released on the ASX as part of the annual report on 23rd February 2023. They are also published on the company's website. The text of the first item of business is shown on the screen. Neither the Corporations Act nor the company's constitution requires a vote of shareholders on these reports, but it is an opportunity for shareholders to ask questions relating to the reports. [Operator Instructions] And please note that shareholders will be limited to a total of no more than 10 questions. Are there any questions in relation to this item? Thank you. Other questions?

Stephen, a shareholder. I was wondering if we can start off with an agreement. I'll kick this off to 4 questions for today. If you'll commit to running a hybrid AGM next year. So shareholders given Melbourne don't have to fly all the way to Sydney to participate. And if you'll also commit to publishing a full webcast, archive or transcript. So shareholders look like harsher shareholders who are unable to watch it live or turn up can access a full record of what happens to the public a year in the year.

And I don't come to an AGM to do deals, but we will publish a full transcript of meeting on the website as we have in the past, and the meetings for the future, will, unless otherwise determined appropriately follow the same form and courses today.

Webcast... Online voting or online question.

I'll follow the same course of the meeting today.

Okay. So my first question is asset of just active resorbing markets, $75 million. And on ridgeway as Jeff announced this morning, the class action with Polo half 20,000 retail shareholders who've lost about really contracts the difference real product that's risk a lot of the retail shareholders. So contracts for difference are a controversial product that has leased a lot of people. Have we ever had any involvement in contracts for difference? And what does the company think about the $75 million fine and the fact that we're now seeing class actions on behalf of 20,000 vessels is $800 million is clearly to financial product that has been quite prominent in Australian are.

Well, Stephen, you obviously know a lot more about it than I do. And I don't know about the detail behind the asset fine. But I know that ASIC established to police the financial services industry, and we have full conference and the ability to do so in the discharge their duties. We have any such similar problems with financial.

Right. So my second question is this is -- we're also directly in tele controversial product, which is 5%. We're the second biggest pub operator in new Subways through Red cake us on miles residues, well, the record $8 billion last year. I wanted a very effective and same product. This is the most capital of any jurisdiction in the world. as to say that more than 100% of our recast come from poker machines, which we had in some of the poorest most possible parts of Sydney. What are we doing to retain our social license and mitigate against future regulatory actions because we're running these machines very hard, all nice in 4 areas with very sophisticated marketing is the progress being for a company like males to be doing and how we're managing the regulatory risk around being the second biggest pub co commission operator in New South Wales?

Well, the company is called MA Financial, and we have great confidence in our hospitality assets. We note that the previous state government, the opposition went to the state election in New South Wales, both with policies on improving aspects of responsible gaming, and they're fully supported by all of us at MA Financial. We have trialed ourselves some gaming minimization measures within our business is a little bit complicated because of the impact of privacy, but third-party or self-exclusion, facial recognition of things that we have looked at and tried ourselves the proposed trial in relation to cashless gaming card announced by the new state government is something we will fully cooperate with.

The next question was pre-submitted by shareholder market queue. And the question asked the mix of revenue streams of MA Financial has substantially changed over the past 5 years, given the successful growth of the asset management business. Was the growth in asset management, a deliberate strategy to have a mixed shift toward predictable annuity style revenues? And has this made the business easier to manage and future earnings easier to forecast.

Well, no public company is easy to manage. But what we have done is -- more if I'll say the word from our beginnings as a pure corporate advisory business into an asset management business, that's at approximately 84% of our revenue now comes from asset management. What, of course, that does to deliver great and consistent value to shareholders to improve the quality of our earnings? So we have moved the business quite deliberately to build our asset management capability. And as we stand here today, we now have about $8 billion, slightly over $8 billion worth of funds under management producing great, high-quality returns for our company and our shareholders.

Have a further present question from shareholder Daniel Susi. And you seem to be attracting strong inflows into your funds? What is driving these inflows? And I think your question is in the context of...

Well, I think returns and value to shareholders. And what we're seeing also very pleasing is the diversification of the inflows such that we have now almost 50% of inflows from high-net-worth individuals. We've reduced our dependency on these significant investor Visa program, which runs about -- or last year, about 17% of the inflows. So the diversification of inflows and the strong inflows are continuing to build in the company, I think, are a reflection of the confidence that shareholders have in our business. Okay. So as there are no further questions, we now move -- sorry, Stephen. I did say 2 per question, but I'll take another one from you. But bear in mind that this is #3 out of the 10 that you've got.

I've never come across a whole meeting can it before, but I actually think it's a good way -- we've got good these should do that. I should be on 15 or 20 questions. So it makes you think about Polo. 3. You mentioned your address chair that the staff own 31% of molars. Could you just clarify if that's including 10 in New York? I'm guessing that Andrew Pridham is the biggest shareholder with roughly 20 million share distant percentage. Can you just tell me who are the next 4 biggest in terms of skin in the game, I hope as a joint CEOs, but I'm not sure? And on the question timing to the top table chair. You recently sold 63,000 shares for $2.7 million or $3.92 in. You've left quite on the table with the stock is now at $49, and you've only got 150,000 shares left. So why have you decreased your personal skin in the game so substantially when you're seeing the praises of that alignment and skin of the game with the staff.

Well, very regrettably, Stephen, that was a sale for me to meet a capital call in relation to other matters that I'm involved in. But I still retain, as you said, 150,000 shares. The policy in this company is that directors maintain a shareholding at least equal annual fee and my current shareholding is more than 2.5x that.

2 years ago at the online AGM that I attended, I asked about the items to do some very heavy hand at regulation of proxy. And here, you publicly said that you supported the idea that proxy advisers be forced to submit their reports to companies for backcheck before they're published. Now my view is with the ridiculous intrusion of private contracted rates. Your son is a German, I'm sure you wouldn't tell how sort of significant story to Flubs before they published. So you still hold the view that proxy advisers should be forced by the government to show you what they're going to say or they say -- and on the question of visas there any for covering us for today's meeting in terms of you know anything about wouldn't recommend that to get any part or whether there's been any material process both by the shareholders.

Yes. I think what's happened as a result of that discussion, Stephen, is the proxy advisers have made the point of engaging with the companies considering for the AGM for publishing the recommendations. I've met with all of the major proxy advisers this year did so again last year. We take very seriously the work of the proxy advisers, and I pointed out to you in my opening address the increase in independence and diversity on our board, which was in response to matters advocated by the proxy advisers. So whilst we don't see their reports, we have very active and more meaningful engagement, I think that's been a really good development. Any more questions, Janna? Other questions that have been submitted has been dealt with in the address.

Okay. Thank you. Item 2A on today's agenda is the reelection of Ken Moelis as a Director of the company, and the text of that resolution is now shown on the screen. Ken is offering himself for reelection at this meeting. Ken is a Non-Executive Director of the company and was appointed to the Board in 2009. He's currently Chair and Chief Executive Officer of Moelis & Company and brings over 40 years of investment banking and executive experience to the Board. Further information about 10 is set out in the Notice of Meeting. The Board recommends that shareholders vote in favor of Item 2A. Again, I invite any questions that shareholders may have on this item of business. Queuing up the questions early, Stephen.

The 11 night of the business go with the second one on average. I can on the call, being up for election, I hope that is normally in terms of the candidates for election and sites up over a couple of campaign speech. But I'm curious to hear from Canes available on whether he's comfortable with the name change we did a couple of years ago in removing his name in the door. And what he and his firm long-term intentions are with MA Financial. Obviously, you're going to have to jointly set up for Andrew 2009, it was pivotal, but then it's a progressive out of time at to sort of reduce to reduce. So can give us some insight into how he sees the future of his first will involvement. I think you got to serve a full 3-year term to John Howard question. And is the shareholding going to remain about the same or could it be further to lose down replacements, et cetera, et cetera.

Okay. Thank you for the question. I think I can answer those. Having spoken again about all the matters that you mentioned in relation to the name change that was deliberate and voted on by the Board, of which Ken and Kate also from Moelis Company are members. We felt that there was a need to differentiate ourselves in relation to our asset management business and that was fully supported. Ken's an active member of our Board intends to remain an active member of our Board, and his contribution is greatly appreciated by all the other directors. In relation to the reduced shareholding, one of the issues that is weight on our share price over the years is lack of liquidity. And in order to gain admission to the ASX 300, we need to improve liquidity is one of the requirements. So Moelis & Company very kindly assist us to get into the index, and I think that has brought further advantages for all shareholders.

My question follows on from that, just in on the benefits of the relationship with Moelis & Company as a strategic partner?

Well, Moelis & Company has a legendary experience in investment banking, in origination, so many contacts in the U.S. As I mentioned earlier in my address, the acquisition of what was previously none as Blue Elephant was actually that opportunity was introduced to us by Moelis & Company. We spent several years assessing the suitability of that and eventually acquired it. In relation to the CPH mandate that involves some high degree of cooperation between Moelis & Company and U.S. assisting us to execute that which was originated in Australia. They're a great sounding board, Kate, who's on the call as well. is a very experienced investment banker, a very enthusiastic Board member and Ken of course has that legendary experience that we would never want to lose here. And for salamis, we can have that at our Board table, we welcome Ken and Kate's contribution very warmly and very sincerely -- that's it. There are no further questions, please complete your voting cards for Item 2A, and the details of the voting already received on this item are displayed on the screen. Item 2B on today's agenda is the election of Nikki Warburton as a Director of the company. The text of the resolution is shown on the screen. Nikki was recently appointed to the Board in December in 2022. In accordance with the company's constitution, Nikki is submitting herself for election at this meeting. Nikki has over 30 years of senior executive and Board experience in marketing across a broad range of industries. Further information about Nick is contained in the Notice of Meeting. The Board, with Nikki abstaining, recommends shareholders vote in favor of Item 2B. I now invite any questions you may have on this item of business. No questions. Thank you. As there are no questions, please complete your voting cards for Item 2B. Details of the voting already received on this item are displayed on the screen. Moving to Item 3 on today's agenda relates to the adoption of the company's remuneration report for the year ended 31st December 2022. The text of the resolution is shown on the screen. The remuneration report sets out the remuneration policies of the company and reports on the remuneration arrangements in place for the company's key management personnel during the year. As prescribed by the Corporations Act, the vote on the adoption of the remuneration reported to advisory only and does not bind the directors or the company. However, the Board will take the outcome of the vote and discussion at this meeting into account in setting remuneration policy for future years. The Board unanimously recommends that shareholders vote in favor of Item 3. I now invite any questions you may have on the side of the business.

I remember the exclusions were a little bit untidy I mean 2 or 3 years ago, where I think there was an insight or vote on rem and that was not done in the pole or something like that. I can't remember the details. But I'm interested to know if there has been a material process with the property. So bests practices obviously just disclose the proxies before the base so you can ask questions if they have a process and see how in the call. So you very much pleased the button with the opposites up. Am I able to frame the question around that?

Well, I think we're going to display the -- all of those at the end of the meeting, Stephen, but let me tell you for the sake of you were boarding agonizing about asking a question or we're still asking one that there's been no revolve, if that's the way you want to put it from proxy holders in relation to this in business.

So my REM question is, I've heard that half [indiscernible] Micro I'll try to tie to get others tend to the upper and you always tend to speak for Mike... I'd like it nearly as much as you do, Stephen. Large species or Keolis before when he was the candidate not you. So my question is, I'd like to hear from Julian here spoken today. He's the joint CEO. How does he feel that the joint CEO situation is working in terms of fairness of REM. I mean, doesn't it mean that both of them are being paid less because they're sort of sharing the same PayPal. And do the contracts actually require that they be the same? I noticed they've got exactly the same shareholding at the moment, but one of them got 2.7 minus got 2.8 million in the statutory account. So how do you work it -- if someone lands a big whale and we get a $10 million access based on their connection. But does everyone get 50% of everything is under this arrangement very usual, and the Merlots far as it's done. These guys are related. I tend to hear from the one who's been silent so far, so we get equal treatment given that is the equal CEO. And if you could explain that pay situation, that would be great.

Well, what we do, do with joint CEOs as rotate that, and Julian spoke to you last year, and it was only fair to you, Christie opportunity to address on behalf of he and Julian this year. The remuneration for both CEOs is measured in relation to our peers. It's consistent with -- our general remuneration policy at MA Financial, where we have low basis and high incentives. The SCI for the 2 CEOs is capped. And outperformance is rewarded in LTI, which is a 5-year cliff fest instrument that only has value at the end of that period, if the share price has increased. So we think the remuneration arrangements for both CEOs. In fact, all executives align with that general philosophy and our general view that we encourage an ownership mentality here in our company. So Stephen, if you fully criticize me on Twitter from not inviting Julian to come up here, the question of remuneration or the interaction or how the 2 co-Chief executive work together is really one for me as the chair not for them to comment on. The co-Chief Executive arrangement between Julian and Chris is working extremely well. I've shared many companies, as you may know, and perfectly satisfied with the arrangement. In fact, I think we get more out of the joint arrangement we bought out of a single chief executive because of the debate, the divergency of use and the fact that both come at it from slightly different lenses. So I'm very happy with the joint CEO arrangement, and I'm very satisfied with the remuneration arrangements in relation to each of Julian and Chris appropriate.

Or -- there is one pre-submitted question on the rem report. It comes from shareholder, Marcus Ho. In relation to the determination of LPI, we note that there's been a significant change to now be 100% based on a CAGR EPS measure within the range of 7.5% to 12.5% over 5 years. Could you explain why the change was made and why this is the right metric to align the performance of the executives to shareholder outcomes.