Macquarie Group Limited (MQG) Earnings Call Transcript & Summary

[Presentation] Good morning, ladies and gentlemen. And welcome to Macquarie Group's 2021 Annual General Meeting. I am Peter Warne, Chairman of the Macquarie Group board. I will be chairing the meeting today. I note that a quorum is present. I now formally declare the meeting open. I acknowledge the traditional owners of the land from where I speak to you today, the Gadigal people of the Eora Nation, and pay my respects to their elders past, present and emerging. This meeting is being held in Sydney, which is currently subject to COVID-19 public health restrictions, with the majority of our shareholders attending remotely. Those of us who are in the room are practicing appropriate physical distancing. The COVID-19 pandemic continues to affect communities here and internationally. I hope all of you attending this meeting today are safe and well. Joining me today is your Board. Sitting alongside me is Managing Director and Chief Executive Officer, Shemara Wikramanayake. We are also joined by Chief Financial Officer, Alex Harvey; and Company Secretary, Dennis Leong. Attending remotely are nonexecutive directors, Jillian Broadbent, Philip Coffey, Michael Coleman, Diane Grady, Rebecca McGrath, Mike Roche, Glenn Stevens and Nicola Wakefield Evans. Also attending remotely are members of Macquarie's Executive Committee, including Greg Ward, Nick O'Kane, Michael Silverton, Ben Way, Stuart Green, Nicole Sorbara and Patrick Upfold. As we do each year, today's meeting will be structured as follows. I will outline the key highlights of the past financial year. Shemara will take you through last year's result, update on the first quarter of the current financial year and discuss the outlook for the remainder of the year. We will then hear from directors seeking reelection to the Board today, Glenn Stevens and I. And we'll also hear from Directors Rebecca McGrath and Mike Roche, who are seeking election for the first time. I will then formally open the polls. This year, we will not break for refreshments. Funds traditionally spent on refreshments will be donated to OzHarvest. The final part of the meeting will be dedicated to shareholder questions and discussions of the formal business -- items of business. As with last year, I assure you there will be ample opportunity for shareholders wishing to address the meeting to do so. [Operator Instructions] We will repeat these instructions later in the meeting. Please note that regardless of when you submit your question, we will address it during the formal business of the meeting, as is our customary practice. We will try to ensure that all topics of interest are addressed in our responses. Questions submitted online may be moderated or amalgamated if there are multiple questions on the same topic. If you wish to view the meeting again after its conclusion, a recording will be available on the Macquarie Group website from this evening. You may recall that last year, we discussed the work that the team had done on rearticulating Macquarie's purpose: empowering people to invest and -- to innovate and invest for a better future. Over the course of this year, this statement of purpose has continued to be embedded in Macquarie's culture alongside our long-held principles of opportunity, accountability and integrity. Our purpose explains why Macquarie does business, and our principles define about how we do business. As Shemara and I take you through today's presentation and in the short films that open and close this meeting, you will see many examples of Macquarie's purpose and principles at work. Like many organizations around the world, Macquarie has felt the effects of the COVID-19 pandemic. Through this challenging period, the group's long-standing fundamentals have positioned us well to support our clients and other stakeholders. These fundamentals are the diversity of our business mix and geography, strong capitalization, a well-funded balance sheet and a conservative approach to risk management. Strong fundamentals have enabled us to focus on the immediate needs of our stakeholders and meeting our ongoing commitments to them. The ways in which we have done this include helping consumers and small businesses deal with sudden change, facilitating access to global capital, bolstering resilience in essential community services, supporting the move to remote working and learning and addressing community needs through philanthropy. Making decisions with a view to the ongoing health and wealth of our people has been critical in fulfilling these commitments. At the peak of the commitment -- of the pandemic last year, 98% of staff were working remotely. Considerable long-term investment has been made into the systems and capabilities to support large-scale remote working, and we are pleased that staff engagement actually increased despite the change to our working conditions. Our teams are at different stages of returning to the office based on what is permitted in each location. As a general comment, we have seen more of our staff successfully embrace a hybrid of remote and in-office working and we expect this trend will continue. FY '21 was an uncertain period for many of our customers, and Macquarie provided a range of support options. It is pleasing that as at June 2021, less than 0.01% of our clients remained on some form of pandemic assistance down from the peak levels of 13%. Importantly, these clients have returned to regular payments. And we have once again stepped up support for clients most affected by the latest wave of lockdowns in Australia. We recognize the responsibility that comes with managing essential services and our long-standing approach to crisis planning of portfolio assets managed by Macquarie to withstand the economic impact of the pandemic while identifying new ways to respond to disruption on behalf of the community. While not related to the pandemic, I want to pause for a moment to note a significant incident at one of our portfolio businesses, Currenta, which is a provider of infrastructure and service to chemical producers in Germany. Currenta is owned and managed by 2 of Macquarie's European infrastructure funds. Earlier this week, there was an explosion at a tank farm, which tragically resulted in 2 fatalities and the injury of 30 staff. Macquarie is supporting Currenta's management team as they support their staff, assist authorities within their investigations, conduct their own reviews and communicate with stakeholders. Our deepest condolences go to the families of those workers who have tragically lost their lives. Our philanthropic efforts last year included a COVID-19 specific allocation of $20 million over and above our regular philanthropic funding. The COVID-19 allocation balanced immediate and longer-term needs across direct relief, public health and clinical research and supporting workers and businesses in restarting economic activity. We also stood by our existing community partners as they faced sharply increased demand for their services by providing more funding flexibility and additional grants. Shemara will take you through Macquarie's performance in detail. In advance of that, I will outline a few key financial highlights for the last financial year. FY '21 was another busy year for Macquarie. And while the effects of the pandemic on economic activity were particularly felt in the first half, the group ended up the financial year achieving a record result of just over $3 billion. This is testament to the resilience of our diverse businesses and staff and the ability to adapt to changing market conditions. In addition to net profit, the group reported growth in key financial performance metrics, including operating income, earnings per share and dividends per share. Shareholders received a full year dividend per ordinary share of $4.70 franked at 40%. This was up from $4.30 per share in the prior year, which was also franked at 40%. 56% of earnings or about $1.7 million was returned to shareholders as dividends, with the payout ratio balancing returns to shareholders with opportunities to invest in the future and to support clients through the pandemic period. In order to allow additional flexibilities to support business growth, the Board has resolved to update the annual dividend payout policy range to 50% to 70%. I'll now turn to risk culture and conduct, an area which the Board and management invest considerable time and resources. Macquarie's strong performance over more than 50 years is characterized by empowering teams to harness their capabilities to serve clients, investors and communities. This opportunity is balanced with strong accountability for owning and managing risk. The primary responsibility for risk resides at the individual and business unit level, while robust independent oversight is provided by our risk management group and further independent, and objective risk-based assurance is provided by the internal audit division. Integrity underpins everything that we do. The risk management framework is supported by a remuneration framework and consequence management process to encourage appropriate behaviors and discourage inappropriate behaviors. In FY '21, there were 97 matters involving conduct or policy breaches that resulted in termination of employment or formal warnings. The majority of formal warnings were accompanied by an average 48% reduction in profit share. While covering risk management matters, I would also like to note to shareholders that at the beginning of the current financial year, APRA announced enforcement action against Macquarie Bank. The enforcement action resulted in increased capital and liquidity requirements for the bank and requires us to restate selected historical regulatory returns. This action is in relation to historical matters and does not impact the current overall soundness of Macquarie Group's capital or liquidity ratios. From a Board perspective, this is a matter we take very seriously and we are providing a rigorous review and interrogation of the work being done to address these matters to APRA's satisfaction. The Board's oversight of risk culture and conduct is informed by qualitative and quantitative analysis. In FY '21, given the large shift to remote working, senior leadership increased their staff communications with regular and clear reminders of risk culture and conduct expectations. While our businesses have been busy, so too have the support areas and their collaboration in maintaining risk conduct and culture is an important one. We continue to roll out our executive leadership development program in FY '21 and added virtual senior leadership development programs. These programs place emphasis on inclusive working environments and their positive impact on risk culture. Online supervisory training for our people, managers and directors has been refreshed with the inclusion of additional material covering hybrid working environments and fostering a speak-up culture in teams. A new conduct standard was launched supported by enhanced monitoring to identify and evaluate instances where conduct is a root cause of incidence. The Board regularly receives detailed risk culture indicator reports, including insights from risk culture, deep dives and assessment of progress made from prior reviews. The group's integrity office is an independent function, which has been in place for more than 20 years. It reports directly to the CEO and meets regularly with me as Chair. In FY '21, the integrity office has continued a heavy schedule of training and development. More than 9,000 staff received tailored training and leadership development in FY '21, focusing on hybrid working, integrity, speaking up and psychological safety. Environmental, social and governance matters remain a significant area of focus for the group and the Board. It's entirely appropriate given the responsibilities that we have to clients, shareholders, communities, our people and the environments in which we operate. Macquarie is very active across all 3 aspects of ESG through direct investments such as energy transition and social infrastructure, engaging in forums where we can share our expertise to help inform policies that support better ESG outcomes, supporting reporting standards to promote better measurement of impact and putting in place the policies and practices that foster sound ESG outcomes in our investments, workplaces and capabilities in our staff. Macquarie continued to be active across a wide range of ESG initiatives during the year with a number of outcomes achieved by staff. These outcomes span business activities, conduct and culture, direct operations and engagement with clients, staff and communities. The environmental aspect of ESG continues to drive a lot of business and operational activity within Macquarie. As at March 2021, Macquarie had 44 gigawatts of green energy assets in development, operation or management. For every $1 invested in conventional energy, the group is investing $6.64 in renewable energy. As I've said at previous AGMs, alongside our proactive approach to addressing the challenges in the energy transition, we note that global projections of power generation indicate an ongoing role for natural gas for some time in an orderly transition to a lower carbon economy, especially where it enables coal phaseouts and higher shares of variable renewables generation. These sources of these projections include the International Energy Agency, the U.S. government's Energy and Information Administration and Bloomberg New Energy Finance. We are working with a number of conventional energy businesses on aiding decarbonization initiatives and commitments, and Macquarie is extremely well placed to support those businesses as they transition to net zero. The demand for solutions that address the effects of climate change continues to grow around the world. With many countries committing to green economic recoveries and nations and businesses committing to net zero emissions, we anticipate that this demand will continue to expand. Macquarie, with its strong heritage in infrastructure, energy and Commodities, has a differentiated set of capabilities to help meet that demand. Each of our operating groups in all our regions are engaged through direct investment, creating new assets, providing financing, facilitating market activity or advising clients on addressing the challenges of climate change. When we announced the group's FY '21 result in May this year, we also announced the group's commitment to net zero emissions. This follows a commitment made by Macquarie Asset Management to achieve net zero emissions across its portfolio by 2040. Our involvement in energy transition goes back 20 years, and this long-standing expertise and capability is reflected in 4 components of our net zero commitment. Firstly, strengthening support for clients and portfolio companies to manage the transition to net zero and realize decarbonization ambitions. For example, we have started work with portfolio companies to consistently measure greenhouse gas emissions and identify emission reduction opportunities. Where we have sufficient influence, we will work with these businesses to develop plans that will put them on a pathway to reduce emissions in line with our net zero economy. Secondly, increasing our own investment in climate mitigation and adaptation solutions. This builds on our leading position as a global developer, investor, financier and manager of renewable energy projects. Thirdly, aligning the emissions of our financing activities with the objective of enabling and accelerating the world's pathway to net zero by 2050. This includes measuring and setting interim and long-term science-based emissions targets for our financing activities, prioritizing our efforts with clients and partners in high-emission sectors and the role that we play in accelerating their path to net zero. Finally, continue to reduce the emissions of our own business operations with a commitment to reaching net zero operational emissions by 2025. Macquarie has been carbon-neutral since 2010 across our offices, data centers and business air travel, and this provides a strong foundation for our 2025 commitment. Work on our detailed net zero plan is currently underway with the aim of publishing it in 2022 with annual progress reports thereafter. Macquarie strives to be a diverse and inclusive workplace, and considerable investment has been made in this area over a number of years. As a business that is underpinned by the expertise of its people, there is a strong connection between the depth, breadth and scale of the group, the diversity of our staff and the range of perspectives they bring to our projects and decision-making. Fostering and maintaining a diverse workplace with an inclusive culture requires continual investment. The work that we do often follows the professional life cycle of an individual from school, where they make choices about their career path through to university and then into their career with Macquarie. The types of initiatives undertaken include working with schools and universities to provide financial services as fulfilling career path for women, ensuring diversity of recruitment in our intern and graduate programs, embedding more equitable work practices, employee network groups and prioritizing growing the leadership capability of our people leaders to maintain an inclusive workplace. The work that goes into building a diverse and inclusive workplace is never complete. However, we wanted to take some time today to reflect on what we have achieved to date and recognize those organizations with whom we have partnered to support our efforts, as seen on this slide. The Macquarie Group Foundation has had a particularly active year. The foundation and Macquarie staff contributed a record $64 million to more than 2,400 nonprofits. This includes the $20 million COVID-19 allocation, funding allocations to our 5 50th anniversary award recipients and our global grant-making program. As I've said in previous years, Macquarie's philanthropic activity is substantially driven by Macquarie staff. Fundraising is just one aspect of the contribution our staff make to community organizations. Each year, staff contribute thousands of hours volunteering, sharing their skills and serving on nonprofit boards. The foundation has also managed the distribution of the $20 million COVID-19 allocation. Almost all of that allocation has now been distributed to a range of local and international organizations focused on direct relief, medical research and economic recovery. As I conclude this section of the meeting, I would like to thank my Board colleagues and extend a special welcome to 2 new directors, Mike Roche and Rebecca McGrath, who will address the meeting during the formal business. I'd also like to thank Gordon Cairns and Mike Hawker, both of whom retired from the Board, Gordon in May this year and Mike in September 2020. Gordon and Mike have served Macquarie shareholders over many years and fulfilled their responsibilities with great care, energy and tremendous enthusiasm for the organization. On a personal note, I have enjoyed working with Gordon and Mike and have benefited from their wise, insightful counsel. We wish them both well for the future.The Macquarie Board is a hard-working one, and every Board member makes a valuable contribution. The experience and expertise of your directors and the diligence which -- with which they carry out their responsibilities supports the growth of your company. I'd also like to thank Macquarie's management and staff for their value contribution. FY '21 has presented a unique set of challenges. The management and team, led by Shemara, have navigated global economic uncertainty with great care, have grown the business and kept its focus on supporting the needs of clients, shareholders and the broader community. Now that concludes my opening remarks. Thank you for listening and your ongoing support as Macquarie shareholders. I'll now hand over to Shemara to discuss Macquarie's results in more detail and update you on recent performance. Shemara?

Okay. Thank you, Peter, and good morning, and welcome, everyone. And I'd like to begin as well by extending my sympathies to everybody impacted by this explosion we've just had at Currenta. Now before I go through our most recent results, I thought I'd just take a moment to note that we just delivered our 52nd year of consistent profitability, unbroken profitability since being established in 1969. And we also, in terms of our total shareholder return since listing, are best-in-class compared to many peer groups, as you see on this slide. Now turning to the results for the financial year just completed FY '21, the year to 31 March '21. As you've seen, that was a record result and very commendable in the COVID-impacted environment that we operated in. And it was also up 10% on the previous year FY '20, where you may recall, it would have been in line with the previous year FY '19 despite our taking just under $500 million of provisions in relation to expected credit losses for the upcoming environment we were just going into with the pandemic. The other thing I'd note on this page is that this last financial year FY '21 was very much a year of two halves, where the first half of the year, which was a quarter just after March last year and the quarter beyond that, so up to the end of September last year, was an environment in which investors had their confidence really shaken by what was going on with the pandemic. And markets were pretty much becalmed, activity levels very low. And so it's an unusually subdued quarter, and we ended up making only $900 million of our EUR 3 billion in that year -- in that half year.But in the second half, we earned over $2 billion, and that was a particularly strong quarter as markets caught up and there was an element of catch-up, so very much a year of two halves, particularly for our Macquarie Capital business in Banking and Financial Services. Now looking in a little bit more detail at our 4 operating groups. The main thing I'd note here is that we get very good diversification through market cycles between the annuity-style businesses, which are highlighted in blue, and the market-facing businesses, which are highlighted in green. So in a year like last year with the pandemic, the annuity-style businesses, as you saw, continued to perform consistently with being just down 4% despite the external environment. And then the market-facing business was very impacted by the challenging first half but benefited from being able to step up and support clients as they came back to high activity levels in the second half. So that diversification is important for helping us deliver through all cycles as we saw particularly last year. And equally, this diversification that we have, as you can see here on this slide, by geographies where we operate across 4 regions and all of them contributed well to our results last year. Now I might look in a little bit more detail at our operating -- each of our 4 operating groups for last financial year and our financial position at the end of the year before moving to this quarter. So starting with Macquarie Asset Management. That business contributed just over 1/3 of our income last year, and it was down slightly 5% on the prior year, but that was because we had a very big one-off in that prior year by the realization of performance fees that were very strong in FY '20. But I think importantly, in this business, as you can see here, we've built business at the end of last year that had $562 billion of assets under management. And it was divided between a private markets business and a public markets business, things like listed equities, fixed income, et cetera. And that positions us very well through the medium term to help the growing savings in the world get invested at decent returns over the medium term in a very low risk-free return world. So the private markets business now, with its great track record, continued to raise money well and raised over $20 billion last year, $21.8 billion and invested just under $15 billion. And the public markets strategies that we have, 60% of them beat their benchmarks on a 3-year period. In addition to that, we were able to grow the scale of that business with the acquisition of the Waddell & Reed business, which didn't complete until this financial year, April, but which we entered into the agreement to buy last year. So a great asset management franchise and good structural growth. And the same with our Australian Banking and Financial Services business, which you can see here contributed 13% of our income. It was flat to the year before despite strong growth -- I'll talk about -- in all its books, and that was because of the challenging environment last year, requiring us to take meaningful expected credit loss provisions depending on how things play out. But despite that, because of the many years of investment we've done in optimizing customer experience by investment in systems, technology processes, we were able to deliver not just hardship assistance but rapid turnaround times. So that you'll see here that our home loan book grew by 29% last year and our business banking book, which is mostly focused on small and medium enterprises, grew by 13%, and equally to support that our deposits grew by 26%, and our funds on platform grew by 28% to exceed $100 billion. So another strong year in the growth of the franchise, that important franchise in Australian financial services. Then in our Global Commodities and Global Markets business, that business was our biggest contributor last year with the environment that we encountered in external markets, delivering 42% of our income and up 50%. And that business provides service to producers and consumers in areas like commodities but also financial market services in terms of foreign exchange, fixed income, et cetera. And that business basically had a year in which we experienced dislocation in many commodities and financial markets in many regions through the year, so had a particularly strong year through the last financial year. But again, it's operating across 162 products now in different subsectors and regions and well placed to continue its structural growth. And then Macquarie Capital contributed 11% of our income. You see there, it's down 15%, but that was the business which most starkly experienced the year of two halves. So in the first half of the year, activity was very becalmed. Although I'd say subject to the equity capital markets activity here in Australia, there was a lot of fundraising response to the pandemic, and we raised $0.54 in every dollar. But the overall business actually made a loss in the first half of last financial year for the first time since the FY '12 financial year. But in the second half, with the activity levels picking up and catching up, it generated $840 million. And that's why we finished the year on $650 million. And it also managed to deploy capital very well in that challenged environment, $4.5 billion into credit and bespoke financial solutions. Now as well as delivering strong earnings, the business has also again generated very good return on the equity used in those businesses. So the annuity-style businesses delivered 23% return and over the last 15 years have averaged 22% return. And the market-facing business has also delivered 17% return on equity with an average of 16% over the last 15 years. And when you take into account our surplus capital that we hold in terms of our prudent approach to capital and funding, we came down to a net return of 14.3%, which is consistent with the 14% we've been delivering on average over the last 15 years and is a very commendable return in the low risk-free rate environment we've operated in. Now I mentioned our prudent capital and funding positions. And you can see here that surplus capital I talked about. We were holding $8.8 billion at the end of last year. We also were holding a 12.6% CET1 ratio at Macquarie Bank Limited, and our funding was very well matched with the term funding well exceeding term assets. And our ratings being at A at least for -- as you can see there, 30 years with S&P, 25 with Moody's and Fitch. So we've maintained and grown strong ratings throughout our period of being rated. Now with that summary of the first -- of last financial year, I'll turn to looking at the first quarter of this financial year. And basically, in terms of this financial year, the contribution from all of our operating groups together was significantly up on the prior comparable quarter. But as I've just been mentioning, the prior comparable quarter was basically the first quarter of the pandemic hitting the developed world. And so particularly in Macquarie Capital and Banking and Financial Services, we had challenging quarters with activity levels low and with hardship assistance and payment pauses. Also in this quarter, we had a couple of large one-offs. So in Commodities and Global Markets, we sold our U.K. commercial and industrial meter leasing business. It's a few hundred thousand meters out of the many double-digit millions we have, but that generated a profit of about $450 million one-off. And we also, in our asset manager, earned a disposition fee on realizing the assets in our U.S. listed infrastructure fund. Looking at the 4 businesses and in a bit more detail for the first quarter and how they each performed, the asset manager I mentioned at the end of last year had $562 billion of assets under management. That stepped up to over $690 billion, just shy of $700 billion, principally driven by the Waddell & Reed acquisition closing. And then in July this year, we also announced that we'd entered into an agreement to acquire AMP's Global Equity and Fixed Income business. Now that hasn't completed yet. So it's not counted in the assets. But we're continuing to grow the scale of that public markets business where scale and diversity offering is very important to continuing to grow and to compete. And then in our private markets business, you'll see we continue to grow the franchise as well. We raised about $3 billion. The run rate by quarter in both the raising and reinvesting, which was $1.3 billion, can vary a lot because it depends with the raising, what funds are open at the time. You may have seen last night, we announced that we had closed our sixth U.S. infrastructure fund at USD 6.9 billion, up from the predecessor at $5 billion and the target raising at $5 billion. So we're still getting very good momentum in fundraising. And then in investing, even though only $1.3 billion was reported, we had many transactions complete after the quarter, and it was a very active quarter. It's just the completion time didn't happen. And I'm talking about things like Vocus and Bingo here in Australia or the Vitalharvest acquisition, agriculture, or in Europe, the Autostrade per l'Italia toll road in Italy; or in the U.S., the Washington State utility, Puget Sound. So good growth in that franchise over the quarter. Similarly in Banking and Financial Services, not quite growing at the same rate as last financial year but still growing strongly with both the home loan mortgage book and the business banking book up 6%. And also, our funds on platform up 8% and the deposits growing by 2% to support that. So continued good franchise growth as a result of our long-term investment. And in Commodities and Global Markets, I mentioned the big $450 million one-off contribution. We also had the benefit in that quarter just finished of good conditions in commodities markets and good activity level as well in financial markets, particularly in foreign exchange and fixed income. And the commodities' positive experience was across the board. So in North American power and gas as well as European, given particularly most recently some hot weather in North America that caused shortage of LNG in Europe as well and then also in base metals, gold, steel and zinc. And Macquarie Capital, we guided at the beginning of this financial year that we expected improved transaction activity and realization environment, and we saw that play out with 115 transactions completed in this quarter worth just under $100 billion and very good realizations as well. And in addition to that, an ongoing good environment for investing with $2.3 billion invested into both credit markets and bespoke financing positions, solution options. Now together with the good earnings performance, as with at the end of last financial year, at the end of this first quarter, we continue to be in a strong position with both funding and capital. On funding, you can see our term funding well exceeds our term assets still. We also had our deposits increase by 2%, as I mentioned, up now at $85.7 billion. And importantly, we were able to issue $17.6 billion of term funding, which compares to the $22 billion we did for the whole of the year last year. And turning to capital as well. We finished the year, as I mentioned, with $8.8 billion of surplus capital over the Basel III minimum. That came down to a $7.4 billion figure at the end of this first quarter. It was impacted a little by the dividend we paid, offset by the shares we issued for the staff merit plan. But the biggest impact was from the $1.5 billion that was absorbed into all 4 of our operating groups as they continue to see good opportunity to deploy capital even in this environment of excess and abundant liquidity. And you can see here, we thought we'd look at not just the $1.5 billion in this quarter, but if we go back over the second half of last year as well in that 9 months, our businesses have invested $3.8 billion of capital. So they're finding good opportunity in the asset manager. It was things like the Waddell & Reed investment as well as investing the balance sheet and growing adjacent strategies. Banking and Financial Services, it was the growth of the books I talked about, and we're growing very conservatively in low loan-to-value ratio segments but being able to win good business given our systems and customer experience we can deliver. And then in Commodities and Global Markets, with the activity levels of our clients, our loan books are growing and capital is being put into trade debtors and also into market risk capital as we grow with derivative market movements, et cetera. And lastly, I mentioned in Macquarie Capital, we're finding good opportunities to invest in higher lending activity and new investments. So with all that opportunity to invest capital, as you've seen, the Board has taken a few actions to support the business. One of them was applying the 1.5% discount to the dividend reinvestment plan last year and also issuing shares rather than buying to satisfy the staff merit, which raised about $1 billion. We also issued $750 million of Tier 2 capital to enhance our loss-observing capital position. And finally, as Peter mentioned, the Board has decided in order to provide additional flexibility to support business growth, to update the annual dividend payout policy to 50% to 70% from 60% to 80%. Now despite that investment of capital, you can see we continue to have very strong regulatory ratios, well above the Basel III minimums. And particularly, our CET1 ratio is at 12.1% at the end of the quarter. And before moving on to the outlook, then the last thing I wanted to mention is a few regulatory updates we've had. I know this is a busy slide. But the main things to mention there are that APRA -- recently, 3 things, I guess, I'd mention that APRA in terms of new changes it's introducing in relation to unquestionably strong in the capital required for that. It launched a letter on the 21st of July, outlining its proposed policy changes for the bank capital reforms. And as said that it expects by November this year to reduce -- to produce the final prudential standards in relation to that. We remain confident that we have sufficient capital to accommodate likely additional regulatory Tier 1 capital requirements. But this, of course, is subject to final impacts of what is released. So that's the first thing. The second thing is in relation to remuneration, APRA is in the process of releasing its CPS 511 guidance. It invited submissions, which we responded to at the end of July, just recently -- and in fact, just the end of last week, I should say. And then in relation to the financial accountability regime, the FAR regime, which is the next step from the BEAR regime, APRA has also invited submissions during the month of August, and we will be responding to that. Now the last thing I should note, as Peter noted, is that on the 1st of April this year, APRA released actions in relation to required actions regarding both our risk management practices and our ability to calculate and report our key prudential ratios. Macquarie has had in place a number of programs to respond to these. And while APRA noted that this related to historical matters and doesn't impact the overall soundness of Macquarie's capital or liquidity that we see that we have more work to do on this, and we're working through a period of intensified supervision with our regulator, APRA, to make sure we deliver on their priorities as well as part of an ongoing program we're involved in uplifting our operational risk management and our regulatory compliance and reporting. So I think that's all in terms of regulatory update. And so I'll just turn now to our short-term outlook. And this is basically consistent with the guidance we gave at the beginning of the financial year. And as you know, we give the guidance by operating group. So I'll briefly reiterate the points that we covered at the beginning of the financial year. In relation to the asset manager, we, excluding the Waddell & Reed investment, expect base fees to be broadly in line. But the other income, we expect to be slightly down because we did have that material realization from exiting the European rail portfolio last financial year. And Waddell & Reed this year will have a slightly reduced impact on net income given that we will have one-off integration costs. Then Banking and Financial Services, as I said, the continued momentum in both our loan portfolios and our platform volumes should drive results but offset by the competitive dynamics here that impact margin pressure and by the fact that we are continuing to invest in the business and will incur expenses to support the volume growth but also technology investment and regulatory requirements. And of course, we have to maintain ongoing monitoring in terms of provisioning given the COVID environment. Then Macquarie Capital, as we guided at the beginning of the financial year, we expected increased transactional activity which we're seeing, and increased realizations which we're seeing, and as well, better deployment or strong deployment opportunity which we're seeing. And then for Commodities and Global Markets, we guided at the beginning of the year that we expect that to be significantly down in the commodities area because of the dislocation we saw in markets around the world last financial year and also the fact that we had positive impact from the timing of income recognition in storage and transportation contracts last year that we didn't expect to repeat. So despite a good quarter in the first quarter, we maintained that guidance, but we would note that we expect consistent contribution from financial markets and also from our specialized asset and finance business. And lastly, in relation to compensation ratio and tax, we expect that to be broadly in line with historical levels. Now this short-term guidance, of course, is subject to a number of external factors outside of our control, things like the duration of the COVID-19 pandemic, the speed of recovery and the extent of support from governments, market conditions, including significant volatility impacts and events and also the impact of geopolitical events, potential tax or regulatory changes and tax uncertainties, completion of period-end reviews and the completion rate of transactions, and the geographic composition of income and the impact of foreign exchange. And given all this, we continue to maintain our cautious stance and conservative approach in relation to all of capital and funding and liquidity, as you've seen, to enable us to respond through this environment. And finally, in terms of the medium-term outlook, as we say regularly, we remain confident of our ability to deliver superior return over the medium term, driven by our deep expertise in a range of, as you've seen across our 4 businesses, different capabilities. We're well positioned. And structurally, there's good growth and also the diversity of geographies across our 4 operating groups. Now that's, of course, coupled with our strong 4 support groups that continue to deliver our proven risk management framework and culture and also supported by our strong and conservative balance sheet. So with that, I will hand back to Peter to continue the formal business of this meeting. Thank you.

Thank you, Shemara. We now move to the formal items of business for the meeting. The notice of meeting and the accompanying explanatory notes have been sent to shareholders, and I propose to take them as read. The items of business are shown on the slide. Agenda item 1 is to consider and receive the annual accounts. I now lay before the meeting the financial report, the director's report and the auditor's report of Macquarie for the financial year ended 31 March 2021. Please note there is no formal resolution relating to the financial statements. Agenda items 2a and 2b are the elections of our new directors, Rebecca McGrath and Mike Roche, as voting directors. Agenda items 2c and 2d are the reelections of Glenn Stevens and me as voting directors. Each director will address the meeting shortly. Agenda item 3 is the annual nonbinding vote on the remuneration report. The remuneration report is on Pages 100 to 144 of our 2021 annual report. Included in the explanatory notes to the notice of meeting are the letter of the Chair of the Board Remuneration Committee and an analysis that compares performance and executive remuneration measures for FY '20 and '21. Our remuneration framework is long-standing. It supports our principles by motivating staff to be innovative and to build businesses and to be accountable for their decisions, behaviors and their associated risk management, customer and reputational consequences. Our remuneration framework for the 2021 financial year has remained largely unchanged. Overall, we have received consistently positive feedback about our approach to remuneration, and our framework has been a key driver of Macquarie's sustained success as an international organization. Agenda item 4 is a request to refresh the shareholder approval of termination benefits, where a director-level staff leaves in circumstances described in the explanatory notes to the notice of meeting. Agenda item 5 is to approve the Managing Director's annual participation in the employee group, Employee Retained Equity Plan, or MEREP as we call it. The final item seeks shareholder confirmation of the issue of Macquarie Group Capital Notes 5 in March 2021 to refresh our share placement capacity. Details of the issue are set out in the explanatory notes to the notice of meeting. I'll now ask to hear from those Board members seeking election and reelection today. Agenda Item 2a is the election of Rebecca McGrath, who having been appointed by the Board as an independent voting director on 20 January 2021, offers herself for election. Rebecca is an experienced company director and chairman with a substantial international business experience. She spent 25 years at BP plc in Australia and in Europe, where she held various executive positions, including Chief Financial Officer, Australasia, and served as a member of BP's Executive Management Board for Australia and New Zealand. We believe that her extensive experience in the energy and industrial sectors and as a nonexecutive director has already been and will continue to be of significant benefit to Macquarie. Since her appointment to the Board, Rebecca has been a member of the Board Governance and Compliance Committee and Nominating and Risk Committees. The Board has no reservation regarding Rebecca's ability to fully discharge her duties as one of your directors. I have pleasure in asking you to hear from Rebecca on her election as a Director. Due to the current COVID restrictions, Rebecca has prerecorded this message.

Thank you, Peter. Good morning, ladies and gentlemen, and thank you for considering my election to the Macquarie board. Since being appointed in January this year, I have greatly enjoyed learning about Macquarie's wide array of businesses in Australia and around the world. I'm delighted to be contributing to your Board's diverse set of skills and perspectives. I bring a wealth of international business experience in the energy and industrial sectors. Over the course of my executive career, I have held a number of senior management roles in the resource sector across finance, operations, corporate planning, project management and marketing in Australia, the U.K. and Europe. This provided me with significant insights into risk management, market dynamics, value chains and infrastructure strategies. My executive career has been substantially augmented by a decade of experience in the industrial sector as a non-executive director. This has deepened my knowledge of gas and other commodity markets, including chemicals and base metals. It has provided me with knowledge of the global energy shift to electrification in transport applications, renewables and battery technologies more broadly. I have had governance oversight of successful billion dollar infrastructure projects, international growth strategies and large-scale business transformations, including driving and influencing change in workplace health and safety performance. This is demonstrated by my current Chairmanship of Oz Minerals Limited and Scania Australia, and past recent experience as a Nonexecutive Director of Incitec Pivot Limited and CSR Limited. Over the last 10 years, I have served as a Non-Executive Director of Goodman Group and more recently as an Independent Director of Investa Wholesale Funds Management. This has provided me with significant knowledge of the commercial and industrial property sectors internationally and to the prudential requirements of large-scale fund and asset management enterprises. As a professional company director, I have a strong commitment to good governance. I'm currently President of the Victorian Council of the Australian Institute of Company Directors and a member of its National Board as well as a member of the ASIC Corporate Governance consultative Panel. It is an honor to serve Macquarie as a shareholder's representative. And if elected to the Board, I can assure you that I will dedicate both the time and commitment to fulfill my duties in a manner that awards your trust in me. Thank you very much.

Thank you, Rebecca. Agenda Item 2b is the election of Mike Roche, who having also been appointed to the Board as an independent voting director on 20 January 2021, offers himself for election. Mike has over 40 years' experience in the financial sector. And as a highly skilled and experienced provider of strategic financial, mergers and acquisitions and capital advice to major corporate, private equity and government clients. He held senior positions with AXA Australia as a qualified actuary and Capel Court ANZ. His extensive experience as a corporate finance adviser and -- in structured finance will add valuable and relevant financial expertise to the Macquarie board. Since his appointment to the Board, Mike has been a member of the Board Nominating, Remuneration and Risk Committees. The Board has no reservations regarding Mike's ability to fully discharge his duties as one of your directors. I have pleasure in asking Mike -- asking you to hear from Mike on his election as a director. Due to the current COVID restrictions, Mike has prerecorded this message.

Good morning, everyone. Thank you, Peter, for the introduction. I appreciate the opportunity to address you today, even if it's not in-person, to explain a little about me and what I stand for and to give you a basis to support my appointment to the Board of Macquarie. As you heard from Peter, I've spent over 30 years in investment banking, of which 20 was for an international investment bank. So I know the industry well. I come to investment banking via a career as an actuary. I believe this discipline is a good base because it trains you and equips you to think long term, it requires you to understand cause and effect. And it's about getting to the underlying drivers and learning to ignore the surrounding noise and false signals. Importantly, decisions fall to you as the expert. So you have to work out what you think and why. I think one of the reasons I look to this was my background of growing up in a farm as 1 of 10. You had to work out how to be your own person as you were otherwise just part of the group, and I hated that. I learned about consequences early on in my career. One of my early tasks was to divide up superannuation assets to older employees suddenly without a job due to company failures in the early '70s recession. This is one of the things actuaries did back then. I had to explain to these members how I divided them up. There were no rules, no guidelines. It was up to me. And also explained to them why they received so little, collapsed asset values being the case. I can tell you it was a sobering experience. What do I bring to Macquarie? I'm currently a Non-Executive Director of Wesfarmers and 3 private companies. This is across a variety of industries, including superannuation, funds management, digital, property funds management. I also hold not for-profit roles, small business mentor, a member of ADARA Corporate Advisory Wise Counsel Panel. And together with my wife, Geraldine, we founded the Sally Foundation. So we do our own charitable works. So I have broad experience. I also have a deep understanding of investment banking. I've worked for clients from most jurisdictions around the world, U.K., U.S., Europe, Singapore, China, Hong Kong, South Africa, you name it. There's probably more. My career started in project finance infrastructure when it was just getting going in Australia in the early '80s and included over 20 years at Deutsche Bank, where I held senior roles in structured finance and M&A. I was head of M&A for 10 years and on the federal government appointed takeover panel for 2 turns. During my time, I was involved in many of the largest and most complex takeovers in Australia, many of which were cross-border, and in the privatization of most of the energy and airport assets. So I believe I had the skill set that complements those of other Board members and adds to the Board's ability to oversee the diverse global operations of Macquarie, diverse globally and by business. I bring independent thinking. Integrity. I care deeply about what is right. I understand the significance of signals from the top and how important they are for how an organization operates and behaves. I have a questioning mind. I like to work with highly capable people, and Macquarie has lots of these around the Board table and the management team. But I'm naturally a little skeptical to say. So I really want to understand the ins and outs of how and why we are doing things. I look forward to your support. Thank you for the opportunity.

Thank you, Mike. Agenda item 2c is the reelection of Glenn Stevens. Glenn has been an Independent Voting Director of Macquarie since November 2017. He is currently the Chair of the Board Risk Committee, and a member of the Board Audit and Nominating Committees. Glenn is an experienced director and a valued member of the Board. He previously worked at the highest levels of the Reserve Bank of Australia for 20 years, culminating in the role of Governor of the Reserve Bank from 2006 to 2016. He has extensive expertise in global economics and is an internationally respected central banker. Glenn brings a unique perspective to our boards not only regarding the drivers of Australia's economy but also those of the international economies from which Macquarie derives the majority of its income. He has added significant banking and financial knowledge to the Macquarie board. The Board has no reservations regarding Glenn's ability to fully discharge his duties as one of your directors. I have pleasure in asking you to hear from Glenn on his reelection as a director. Again, due to current COVID restrictions, Glenn has prerecorded this message.

Thank you, Chairman and fellow shareholders. Good morning. Thank you for the opportunity to address the meeting. I've been a director of Macquarie since November of 2017. It's been a wonderful experience to get to know this remarkable company and its exceptional management and to serve you, the shareholders. I believe we've been able to make a constructive contribution to the Board. I hope you feel as I do that this has been a successful period for the company. As Chair of the Risk Committee since late 2019, I've worked with the risk management function to try to always ensure that the Board is focused on the key risks the company faces. My question is always, have we understood the risks? And are the shareholders being paid enough to accept them? I've supported work to strengthen our regulatory engagement and compliance framework because this is a critical precondition for our success as an organization. I've taken a particular interest in the stress testing work that's done in Macquarie because that's what gives us confidence that we can withstand even very bad events that could come along in the external environment. I work in a collegial fashion with the Chair and other Directors, always seeking to put Macquarie's interest first and to ensure that the Board is operating at -- most effectively as it can. Macquarie faces challenges in the years ahead. The Board will be active in seeking to anticipate and respond to those. I hope to play a part in that, and I respectfully seek your support to continue as a director of your company. Thank you.

Thank you, Glenn. I'll now take the opportunity to address shareholders in connection with my reelection as a director of Macquarie, which is agenda item 2d. The last 12 months have been a period of transition and renewal for the Macquarie Board. Since last year's AGM, we have welcomed the appointment of 2 new directors following 3 director retirements with the potential for further board renewal as we continue to ensure that Macquarie Board membership comprises high-caliber directors with an appropriate mix of skills, professional experience, tenure and diversity. Significant changes in the operating environment have also been experienced across our businesses in the last year as management changes occurred and the global pandemic continued to affect the broader economy, our clients, communities and the way our staff work as well as ongoing changes to the regulatory environment. Given this level of change and to allow for an orderly transition, the Board has asked that I remain Chairman for a further year. After many years on the Macquarie board, I have a deep understanding of the company's operations in Australia and globally. My role as Chairman of the Board -- sorry, in my role as a member of the Board Remuneration and Board Risk Committees has reinforced me -- for me the importance of Macquarie's approach to remuneration and its contribution to Macquarie's success for the group while prudently managing risk. In my current role as a Professional Nonexecutive Director, I'm also a Board member of Allens and a member of the ASIC Corporate Governance Consultative Panel. I've served Macquarie as Chairman since 2016, and I believe I have the relevant skills and experience to continue to be an effective chairman if I'm reelected today. I have acknowledged to my fellow board members that I will continue to have sufficient time to fulfill my duties as Chairman of the Board. I regard it as a privilege to serve as Chairman of this outstanding Australian company. And if reelected, will continue to work with the Board and management on behalf of our stakeholders, especially you, our shareholders. I offer myself for reelection and intend to retire as Chairman and a Director of Macquarie and Macquarie Bank after the 2022 Annual General Meeting. Thank you. To allow everyone attending our meeting an opportunity to vote, I now open the polls in respect of all the motions that shareholders will vote on today. The polls will remain open until just before I close the meeting. [Voting]

Shareholders and proxy holders attending via the Lumi platform can cast a direct vote by clicking on the bar chart icon. Select the option corresponding with the way you wish to vote. Once the option has been selected, the vote you selected will change color and a confirmation message will appear. There is no need to press a submit or send button. Your vote is automatically counted. To change your vote, select another option to override. Votes can be changed up until the time I close the polls. Proxy holders with directed votes will have those votes automatically voted as directed. All open votes held by a shareholder or proxy holder will be voted according to the option you select via Lumi. Shareholders and proxy holders participating in this meeting by teleconference cannot vote using the teleconference facility. Let's now move to take questions and comments. It's my duty as Chairman to ensure that shareholders as a whole have a reasonable opportunity to ask questions about or comment on the management of the company, the remuneration report and the other items of business before the meeting today. To achieve this, I have adopted procedures for this meeting as set out on this slide. I'm committed to ensuring that people attending the meeting feel safe and respected at all times, and this includes ensuring that the meeting is conducted in an orderly fashion. Shareholders have attended today's meeting to discuss matters of interest to shareholders as a group. We will read out and seek to answer relevant questions received in writing prior to the meeting or during the meeting through the Lumi platform. You may submit a question or comment by looming at any time during the meeting up until the end of the Q&A session. [Operator Instructions] Questions may be moderated or amalgamated if there are multiple questions on the same topic. We'll also respond to questions from shareholders calling on the teleconference line. Dial into the teleconference using your preregistration information provided to you by Link Market Services and follow the prompts to ask a question. [Operator Instructions] We will start with questions submitted in advance, then turn to questions on the teleconference line, followed by questions submitted online during the meeting. Individual shareholders and proxy holders may ask 2 questions at a time. We will give all other holders an opportunity to ask questions before returning to holders who have asked more questions. Following investor feedback after prior AGMs, in order to address as broad a range of topics of interest to shareholders as possible, I may defer to later in the meeting further questions on a particular topic or subject area if there have already been a number of questions asked on that topic. If you have an individual customer issue or other matters that don't relate to the items of business at today's meeting, our investor relations staff will be happy to take your query. Please e-mail them to [email protected]. I note that Ms. Kristin Stubbins from PricewaterhouseCoopers, the external auditor, is present at today's meeting. She's available to respond to any questions relevant to the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the company in relation to the preparation of the financial statements, and the independence of the auditor in relation to the conduct of the audit. The external auditor did not receive any written questions from shareholders prior to the meeting.

I will now take questions that have been submitted in advance.

Thank you, Mr. Chairman. The first question is from Ms. [ Wai Cheung Mary Lee ]. How do you see Macquarie's market status in 10 years time?

Thank you for the question. I believe that Macquarie will continue to adapt, innovate and evolve, as it always has. It's done that over the last 52 years. It continues to look for opportunities to develop in the market, in all the markets in which we operate, and to expand on those and seize those opportunities on behalf of shareholders. We believe we're in a -- we're well-positioned to benefit from the medium-term growth drivers of the economy, such as energy transition, technology disruption, essential infrastructure and urbanization, as we've articulated in the past.

This next question is from Mr. [ Xiagi Shao ]. Do you see AMP's retail banking as an interesting business to acquire, considering that the price for AMP right now is quite cheap?

We don't comment on potential acquisitions.

The next question is from Mr. [ Mark Charles Weller . ] What responsibility is the Macquarie executive taking for the disastrous Nuix float, where clearly due diligence in the lead up to it was near non-existent. I only subscribed to the IPO based on the fact the MCQ name was appended to it and I trusted it would be sound. Question from a customer and shareholder of MCQ and shareholder of Nuix.

Well, thank you for the question. First thing I'd like to say is that we genuinely regret the current position for Nuix investors. But that is an operational question, which I'll refer to Shemara. So Shemara, could you respond, please?

Yes. Thank you, Peter. And thank you, Mr. [ Weller, ] for your question. And I should start by saying the whole team and I regret the impacts for shareholders like yourself and especially as you say, you're a customer and a shareholder in Macquarie. But I guess I should note first that we remain aligned with you and all shareholders as still the largest shareholder of Nuix. So we've got a 30% shareholding and it's 7x bigger than any other shareholder. And as someone who has been a shareholder since 2011 is the largest shareholder and we're also a customer, I guess I first wanted to note that we remain confident in the medium-term prospects of this high-quality business and product. But turning to your specific question, which was about the float and the due diligence process, we had a separate team undertake the due diligence to the team that worked on the investment. And we operated to our usual very rigorous standard that we do in all our equity capital markets obligations, together with our joint lead manager, our top-tier lawyers and accountants who worked on that float, the company itself and the other shareholders, to make sure the prospectus that was put out was robust. And at the time, none of us had any reason to believe that the prospectus forecast at the time of float would not be met. Now I need to recognize now that Nuix is a separate independent listed company with its own high-quality Board and its own high-quality team. And it has articulated since the IPO that there were a number of unexpected circumstances that it says contributed to the maiden forecast not being met. And these included things like the COVID pandemic, the implications it had for the extended shutdown on the U.S. government, the FX implications. And also, it mentioned the change in how it's billing customers. We have no more information than any other shareholder now in relation to the drivers, et cetera, because we are involved as a 30% shareholder. But I can say, as I just did, as the largest shareholder, as someone who's been an investor for a long time, as a customer, we continue to be confident in Nuix's products and its medium-term prospects. We also are committed to working with the Nuix Board and team in any way that they may find helpful to try and regain investor and market confidence. And we know that will take time, but we ultimately respect that this is a separate listed company. And in terms of offering our services, it's their judgment as to when they find it valuable or not. But we remain a committed holder. We remain committed to being aligned with all of you, and we believe in this business and its prospects medium term. Thank you.

Mr. Chairman, the next question is from Mr. [ Sospeter Kimu-hu Marigui. ] Why is there so much bad publicity about Nuix?

Again, Shemara, could you respond to that?

Yes. And again, thank you, Mr. [ Marigui ] for your question and for -- if you are an investor in Macquarie -- Nuix as well as Macquarie. Basically, the fundamental issue with Nuix, as I just mentioned, is that it failed to meet its maiden forecast in a very short period after listing. And the listed market takes this very seriously and very negatively. And our experience with these sort of situations is it's going to take time now to regain the trust and confidence of investors. And as that process plays out, as you see, there's been a lot of negative publicity, as you mentioned. Thank you.

Thank you, Mr. Chairman. The next question is from Mr. [ Ross Walbrook. ] I note that in the Managing Director's report, which is on Page 13 of the annual report, it is stated that in early FY '22, $1 million was committed to support COVID-19 relief in India. While I commend the generous allocation to a worthy world issue, could you please advise how India, one of the world's powerhouse economies, was selected over and above other much poorer countries in that region and indeed the world?

Shemara, could I ask you to respond to that question please?

Thank you, Peter, again. Apologies for the mask. Thank you, Mr. [ Walbrook ] for taking interest in our foundation activities. As Peter mentioned, we allocated $20 million last year extra to the foundation on top of what we normally allocate to help respond to the pandemic environment in areas of direct relief, medical research and also economic recovery. And our Foundation Committee in allocating that money used the approach we normally do with our foundation allocations, which is focusing on areas in which our staff live and work because this helps us leverage the community impact by having our people also give their time and their skills to drive the outcome that our funds are hoping to deliver. And so we allocated 40 grants across the world. I think about 1/3 of it was in the Australasian region, and then just over 20% throughout the Americas, in Middle East, Africa and Europe and in global allocations each. And in terms of India, we have about 1,700 people working in India. And during the pandemic -- about 18,000 staff, we had 600 people who had COVID, just over 600 so far. The vast majority of them were our colleagues in India. And I guess thankfully, we only had a handful of fatalities more recently, but again, very sadly and tragically, all of them were in India. So we had colleagues and their families impacted in India. And the Indian team, despite being one of the hardest hit regions for our business with the pandemic, stepped up and delivered our financial results at the end of last year, first bank to announce globally with everyone working remotely and did an incredible job. They did the same thing for the half year results last year, the full -- last financial year in the full year results with last financial year, upgraded our general ledger, which was a huge project, all of this while working remotely and suffering devastating effects. And in addition to that, I have to say the Indian team have been wonderful where we've made donations in India and stepping up alongside our money and driving the outcomes and really caring about the community. So that was the reason that we allocated -- or the Foundation Committee allocated -- about 5% of the $20 million in India. There were many other developing markets. And I have here the details that there were 6 organizations that we allocated to that were providing food, rations, care kits, access to health information to the most vulnerable families impacted by the second wave of COVID-19. And we're also looking at some other places to invest in terms of immediate relief. So hopefully, that explains why a portion of the funds were allocated to India along with other countries in need.

The next question is from Mr. [ Peter Joel Sharp. ] Is the Macquarie Foundation looking at any opportunities to assist COVID-19 vaccination rollout in developing nations?

Again, Shemara, can you respond, please?

Thanks, Peter. Thanks, Mr. [ Sharp ] for that question as well. Yes, the Foundation has allocated some of its money to developing nations because, as you know, they're the ones that are struggling the most in terms of access to vaccines, and so having the most devastating impacts of all of this. So the $20 million has -- out of the 40 grants -- been allocated a lot to countries struggling to access vaccine. I did want to note that our business as well, I noted, we have people working in many of these regions. We are also stepping up with tailored solutions by these developing countries to help our staff and also their families and loved ones access vaccines as well. So yes, thank you. That's an important issue and we're trying to respond. Thanks, Peter.

The next question is from Mr. [ John David Hall. ] Do pay for performance criteria or benchmarks include community engagement? If not, will this measure be considered for future rewards?

Yes. I can say that community engagement certainly does feature in our way we look at our performance and the performance of our people. I think as set out in the remuneration report, when you look at the factors that are taken into consideration when deciding individuals' remuneration, they include financial performance, risk management and compliance. And the third item is business leadership, including outcomes for customers and the community. And then finally, it's people leadership and professional conduct, consistent with our codes of conduct and what we stand for. So outcomes for our communities and engagement with our communities is certainly a key item that we take into consideration when deciding remuneration.

Mr. Chairman, the next question is from Mr. Stephen David Mayne. AusNet agreed to request to release the proxy votes and the formal addresses lodged with the ASX before its July 15 AGM in order to facilitate better AGM debate. Afterpay did likewise last year. Why did Macquarie reject a written request to do the same and instead resolved to withhold disclosure of the proxies until after all questions are asked today when this also goes against Australian Shareholders' Association AGM guidelines. Can you cite anyone who supports withholding proxy disclosure like this?

Well, thank you for the question, Stephen. It's our view that we have taken in the past and continue to hold is that by releasing the results of the proxy votes prior to the discussion at the AGM, we in fact inhibit debate rather than encourage debate. In our view, it's like the general election, the outcome for postal votes being declared before the polls open, which is certainly not done. So -- and we do note that while some companies are happy to release their proxy voting early, that is by far from the standard for most companies.

Next question is from Mr. Stephen David Mayne. There are 5 proxy advisers in the Australian market. Ownership Matters, ISS, CGI Glass Lewis, ACSI and the Australian Shareholders Association. We know that ASA is recommending and voting against the reelection of Chairman, Peter Warne, on tenure grounds. Have any of the other proxy advisers recommended against any of today's 8 resolutions? If not, does that mean proxies in favor exceed 95% with all resolutions?

The -- thank you again, Stephen. The ASA recommendation is the only one resolution recommendation that is against that we're aware of, and we'll see the results of the -- all the proxy votes very shortly.

Mr. Chairman, the next question is from Mr. David [ Linescrap. ] The Commodities and Global Markets business is the group's most profitable segment and is heavily reliant on demand for oil and gas. For example, for several years, we promoted ourselves as the second largest physical gas marketer in North America. Yet in order to achieve the Paris Agreement's goal of limiting warming to 1.5 degrees, research from leading scientific organizations and the UN demonstrates oil and gas production must fall by 4% and 3%, respectively, by 2030. How would these declines impact the profitability of our CGM business? Has this been incorporated into our TCFD reporting? And what steps has the group taken to shift its business activities away from oil and gas, in line with anticipated market developments?

Thank you for the question, and I'm going to pass that question to our CFO, Alex Harvey, please.

Yes. Thanks, Peter, and thank you for the question. I'd make a few comments, I guess, in response to that question. Maybe more generally, I'd firstly highlight that one of the key strengths, obviously of the CGM business is the diversity of the business. It's a very diverse business by product, by capability and also operates in many different markets around the world. As you say on your question, one of the key parts of that business though is our presence in the North American gas and power market, and we've obviously been active in that market now for many years. And we do think, obviously, on a medium-term basis about how that business is positioned as the world evolves. Obviously, there is a changing environment that we're faced with, and we're also talking to our clients about the changing outlook for their businesses. As you say, decarbonization is having a profound effect on the global energy landscape, and we're very mindful of that. And we continue to work with our clients to achieve a managed transition to a net zero. We do, however, recognize that the world still has a high degree of dependence on oil and gas to power economies, and that will be the case until new commercially viable alternatives at a cost-effective basis become available. And we'll continue to support our clients in these sectors, and we're engaging with them to design both finance and technology solutions that will help them deliver a managed transition to decarbonize and reduce energy-intensive emissions in their activities. I'd note also that in addition to this, we're also very active across a number of other areas in the energy transition, including investing in projects that build capacity in carbon capture and storage. We're leading in voluntary and compliance carbon markets and establishing a new business within CGM called Global Carbon. We're also structuring and executing tailored solutions in smart metering, green power, purchase -- power price agreements, on-site generation and storage, peaking power, waste and zero emission transport. As far as the TCFD is concerned, we've just published our latest TCFD report, which includes Macquarie's progress on implementing the 4 pillars of the TCFD recommendations: governance, strategy, risk management, metrics and targets. And this year, we continue to evolve our approach to scenario analysis, including in relation to physical risk analysis of selected parts of Macquarie's equity portfolio of infrastructure assets, including our exposure to oil and gas and power generation and an assessment of the operational resilience of our businesses to the changing physical climate. So hopefully, that provides an indication of the focus that the CGM team has on the energy transition. It is a very diverse business, as I mentioned earlier. We are working very proactively in with our clients over what will be a medium-term journey to a net zero outcome. Thank you.

The next question is from Mr. Stephen David Mayne. Did we really enjoy a $300 million windfall from the Texas storms earlier this year? And please provide an update on any backlashes against this in terms of litigation, consumer anger or regulatory intervention. Is Texas likely to impose a gas reserve policy? And how does pocketing super profits from a natural disaster that hurts a community sit within our ESG framework?

I want to ask Alex to respond to that question as well.

Thanks, Stephen, for the question. Obviously, we don't comment specifically in relation to the returns from that particular event. I would note, however, that in February, obviously, we did update our guidance to the market, which reflected the impact of that event on the group's results for March '21. More generally, we've obviously -- as I mentioned before, we've obviously been in the gas and power business in North America for a considerable period of time. And one of the things that the team in CGM and in North America has built is built a portfolio of access to a range of transportation and storage assets, which are vital assets in terms of moving product from where it's actually produced to where it's needed. And the events in February, were obviously an acute situation, and the team did step up meaningfully to respond to what was a very difficult situation for our clients in North America. And I think that has been, I guess, one of the byproducts of the significant investment the team has made and the experience the team has developed over the last 15 or so years in that market. So we do see it's a medium-term story, and we do see ourselves and our team playing a very vital role in the U.S. and across markets in actually moving product from where it was produced to where it was needed. And obviously, February was a very significant time in terms of needing to meet that customer demand at time in the U.S.

The next question is from Mr. Stephen David Mayne. How do we manage the potential conflict of interest when Macquarie decides to invest, in principle, with its own balance sheet rather than using one of its many managed funds? Please explain the different approaches with the recent $3.5 billion Vocus telecommunications takeover, Nuix, the recent $450 million profit from the sale of the industrial smart meters business in the U.K. and the recent purchase of Wavenet in the U.K. by Macquarie Capital. Were all these shareholder investments? Or were they shared with managed funds? Do clients ever complain about missing out on some of the best deals?

Shemara, can I ask you to respond to that question, please?

Yes. Stephen, all of our businesses have a very clear mandate in terms of where they invest. So we don't have instances where something is an investment that qualifies for the funds or the commodities business or for the Macquarie Capital business. So you mentioned, first of all, an investment that was made by our funds here in Australia. The funds are typically investing in more infrastructure-like businesses. So they invest in real assets that are usually -- for example, in renewable energy, they'd be investing in operational assets that are typically more mature and lower return assets but much lower risk. And that's where a lot of our funds pension fund investors want their capital put, whereas the balance sheet will invest earlier stage in more development projects, where there is much more complexity and risk but, hopefully, higher return. So you mentioned Nuix, that was, when we invested in it, a venture business. It had $5 million of earnings, and it's now, as you know, when -- the year before it listed, it had $176 million. So it was a very early-stage investment where the balance sheet will invest. So things like Wavenet, et cetera, are earlier-stage investments that don't fit into the mandate of the funds, the funds investing in infrastructure assets, in real estate, in private credit, in transport, in agriculture and also in mature renewable assets, so other sorts of assets or assets of the balance sheet. In terms of the metering portfolio, that's a business where we're leasing meters. It's core business and is specialized in asset finance business in CGM. So it's not in the mandate in Macquarie Asset Management to run that sort of meter-leasing business. It's also not something Macquarie Capital is expert at. Commodities and Global Markets, where specialized asset finance business sits, does a whole lot of leasing of telecom handsets, meters, et cetera. So the mandates of our operating groups are very distinct, and hence, the investments they make are very distinct.

Mr. Chairman, the next question is from Mr. [ Craig Holcomb Lyons ]. One of the principles mentioned by Peter Warne in the opening address was accountability. Macquarie made windfall profits from the IPO of Nuix, yet the prospectus was put together ignoring a history of missed earnings forecasts, management dysfunction and a huge staff churn. Whilst Macquarie made a windfall, many Macquarie shareholders who bought Nuix based on the prospectus and the good faith held in Macquarie-led IPO have made substantial losses. Some realized and some paper. How is Macquarie showing accountability on this ongoing Nuix issue?

Shemara, would you like to respond to that, too, please?

Yes. Thank you, Peter. And I think I addressed a number of these points in my previous answer, where I said in terms of us showing accountability, we remain aligned as the largest shareholder of Nuix. We have 30% of Nuix still. We also are a customer of Nuix, but we remain a committed medium-term customer and shareholder. But we have to respect that Nuix is now an independent-listed company with its own high-quality Board, its own management, and we have to be guided by the Nuix Board as to how it would like us involved. We're committed to supporting in any way we can. And I also mentioned in relation to the IPO that there was rigorous due diligence undertaken there, consistent with all Australian IPO standard requirements and the standards our team meet in all IPOs they do. But for unforeseen circumstances, Nuix has missed its maiden dividend. I just mentioned that we've been an investor since 2005 -- 2011, apologies. When it started, it was a very small company. We've seen it grow consistently. As with all of these businesses, there can be times when it grows a little faster, sometimes a little slower. And then external events, obviously, have impacted Nuix, unfortunately, in its first few months since listing. As I said, we have no further information than other shareholders on what the specific impact has been, but we've seen an articulation of that by Nuix and its Board and a commitment by Nuix and its Board to continue to deliver and win back investor trust, and we're committed to be with them for that journey.

Mr. Chairman, the next question is from Mr. Stephen David Mayne. Independent books have been written about BT, Afterpay, Twiggy Forrest, Kerry Stokes, James Hardie and many other Australian corporate topics. Why hasn't Macquarie ever proactively collaborated for a comprehensive book about the millionaire factory? Given that we are now a remarkable global success story with a market capitalization of $58 billion, Shemara and Chair Warne, what discussions about a Macquarie book have occurred during your combined 49 years with the company?

Well, I would say, a very flattering statement you've given us, Stephen. Thank you for that. But our focus is really on running the business and meeting our obligations to clients, shareholders, staff and the community. We think we're best to deliver the right outcomes for our shareholders by running the business and focusing on our obligations rather than writing a book.

Mr. Chairman, the next question is from Mr. Stephen David Mayne. The spin doctors bought in by Nuix after the float when various issues blew up have basically been blaming Macquarie Group in briefings with journalists. Is that fair? Macquarie floated Nuix at $5.31 last December, receiving $565 million after selling down from 76.18% to 30.1%. The stock is now trading below $3 after hitting a low of $2.16 in late June, making Nuix one of the worst IPOs in recent history. Shemara told journalists this morning that Macquarie is committed to remaining a Nuix shareholder in the medium term. What is the current book value? And does that mean we won't be selling any of our 30% stake before next year's AGM, even though it comes out of escrow next month?

Again, this is another operational matter, so I'll refer to Shemara.

Yes. Thank you, Stephen. I think I've extensively commented on Nuix and said that we are committed for the medium term. We don't comment on specific book value of individual assets. But as I've said, we are committed for the medium term. We believe in this business as a customer and as a long-term shareholder, and we believe that it has great value over the medium term. Thanks.

Mr. Chairman, the next question is from -- actually, 2 questions are from Mr. [ John Sabliak ]. The first question relates to Nuix. The first is the ASX listing of Nuix appears to have inflicted material reputational damage on Macquarie. How did this occur and with a stringent risk management framework you have in place? The second question is, I have a premium Macquarie Visa credit card, yet it does not have the functionality to make a BPAY payment in the future. When transacting, it indicates, currently, you cannot make BPAY payments for a date in the future, yet this functionality is available from my big 4 credit cards. When will this be rectified?

In relation to the Nuix question, I'll just pass to Shemara again for that.

Yes. Thank you, Peter, and thank you, Mr. [ Sabliak ], for the question. In relation to Nuix, as I've said, we deeply regret the impact that there have been on investors in Nuix. And we also, in terms of Macquarie's standing and reputation, are committed to proving to the market that, first of all, we're committed to Nuix but seeing Nuix through in terms of its demonstrating to the market that it does have good medium-term prospects. I think that's all I can say in relation to Nuix. And then in relation to your personal situation, we'll refer you to our investor -- customer relations team, who will deal with you specifically on that. Thank you.

Thank you, Mr. Chairman. We'll now go to the teleconference. [Operator Instructions] Your first question comes from [ Diane Bretherton ]. Your next question comes from [ Rebecca Hinojosa ].

Hello, can you hear me?

Yes, we can.

I am [ Rebecca Hinojosa ], a resident of the Rio Grande Valley region in Texas impacted by NextDecade. Proposed Rio Grande LNG project that Macquarie Bank is advising, our community has made it clear that we oppose Rio Grande LNG. Our communities have passed anti-LNG resolutions, are legally challenging the project and have stopped 2 overseas customers in Ireland and France that would have imported gas from Rio Grande LNG. We will continue to do everything we can to stop LNG in our community. Today, we have delivered over 11,000 petition signatures from the U.S. Our Australian allies have delivered 20,000 petition signatures urging Macquarie Bank to immediately [ console ] the Carrizo/Comecrudo tribe of Texas, the Australian First Nations and withdraw from Rio Grande LNG and fracking in Australian basins. Why is Macquarie Bank continuing to advise the Rio Grande LNG project and finance fracking in Australia when there is fairly tremendous oppositions.

Well, in relation to the Rio Grande project, I'd just like to clarify again that -- as I've done it in the past that our role in this proposed project is limited to a financial advisory role. We're not an investor or a sponsor of this particular project or providing any finance ourselves. We have limited influence as an adviser on whether this project will proceed or not. Having said that, given the concerns raised previously, we have continued to engage with NextDecade, who are the sponsor and promoter of this project and our client, to -- on environmental and social issues above and beyond which would normally be expected for a financial adviser. This includes an understanding of the client's compliance with the relevant standards, including engagement with the -- under the Equator Principles, which include robust standards for traditional landowners, labor standards and consultation with local communities. We've also engaged directly, and that includes me personally, with the community groups to listen to their concerns, and we have relayed those concerns to NextDecade. In relation to the Northern Territory fracking issue, Shemara, perhaps you might answer the question.

Yes. I'm happy to speak. I think that was the question just generally in relation to fracking. And what I might say as a precursor to that is that we, at Macquarie, as you know, have been very committed to addressing climate change for a very long time. We started first investing in renewable energy projects in 2005. And since 2010, we've invested $63 billion or a range that amount as well is invested. And for every dollar of investment, as Peter said, in conventional energy, we have $6.64 we invest in renewable energy. And it's not just in energy, we're also working in transport and electrification of transport, in agriculture through precision agriculture, farming techniques, et cetera, to reduce emissions. Now having said that, we recognize that we cannot get to where we need to get to overnight. It's got to be an orderly transition to get to the path we want to achieve and that this orderly transition, particularly in energy, we can't move overnight to, for example, a solar and wind-fired energy system because we will have all sorts of disruption happen from that from the intermittency with blackouts, price surges, potentially job losses. Now in terms of the transition fuels we use for firming, gas is obviously a much lower emission fuel than coal and even than oil. And we're finding now in the U.S., which has become an exporter of the gas, 2/3 of the gas is produced from fracking. That gas is now being exported to developing countries and replacing coal. So it's playing a very important role in the climate transition, be it the gas here or from Australia. I don't think the question was specifically into a fracking project where we have a small shareholding in Australia. But if it is, happy to answer that, but I might stop there for now, Peter.

Thanks, Shemara.

Yes. My question [ was about ] fracking in the Beetaloo Basin in the Northern Territory.

Right. Thank you for that. And I'll let Shemara to answer that question as well.

I'm happy to answer that. Yes, we are involved as an investor, a small investor, sub-5%, in a company called Empire Energy that is undertaking a shale gas project in the Northern Territory. Now the Northern Territory had a rigorous government inquiry in relation to shale gas activity. And there was an extended moratorium there while the industry implemented all of the recommendations coming out of that inquiry. And whilst we don't control Empire, we are aware that they have observed all those requirements and have a robust approach in terms of making sure that they protect the water quality in a wide region around their project. So for example, they invest in triple casing in terms of the water aquifers. They also do ongoing monitoring of upstream and downstream water to ensure quality of the water. So we're comfortable that, as I said, there's a need for shale gas in this transition that we're all trying to support, and that Empire is a responsible investor in terms of observing the environmental implications as they work to deliver this firming source of energy being the shale gas.

Your next question comes from [ Nicholas Fitzpatrick ].

I'm [ Nicholas Fitzpatrick ]. [indiscernible] in the Northern Territory. [indiscernible] is very sacred to us indigenous people, and it is very well connected to our beliefs and cultural values. With these dangerous and risky methods of extracting gas and oil like fracking, it's just not worth it. It's been proven that fracking is a dangerous industry and is banned in a number of places around the world because of that very reason. It's too threatening to our water. We are a very dry continent, and we shouldn't be doing anything that threatens our water. Is Macquarie Bank aware of the risks that fracking poses to water? And if so, why does Macquarie Bank think that it's okay to risk [indiscernible]?

Shemara, would you like to answer that, please?

Yes. Thank you, Mr. [ Fitzpatrick ]. I think I answered the question in relation to fracking and the particular project where we have a 4% shareholding in Empire Energy, where, as you would know, there was a rigorous government inquiry in relation to shale gas activity in the Northern Territory. And as I mentioned, there was an extended moratorium after that, and the industry has taken, conceded time to implement the recommendations. And particularly, I respect, in relation to your water, it is important to ensure the quality of that water. And whilst we are not the person driving the project, we know that Empire has taken a very robust approach in protecting the water aquifers, as I said, with triple casing well activity and monitoring water quality up and downstream. I also wanted to note that we, as Macquarie, certainly respect our indigenous people and the culture and the rich heritage they bring. And Australia has one of the most robust forms of legislation around protecting land rights for our indigenous communities and rightly so. And so in relation to Empire, I know during their seismic acquisition program that they did a lot to monitor traditional owner cultural heritage. And they had their work crews in terms of their approach to minimizing environmental impact and other activities really focus on this. In addition to that, we know that they have been engaging, hopefully, with you as well as traditional land owners and that they have consulted widely and obtained, we understand, full and informed consent from all of the group -- relevant groups in relation to their current and future work programs. And under the Australian Aboriginal Land Rights Act, as you know, no exploration or production activity can be carried out without such consents. So we understand they have obtained all the relevant consents to make sure they comply with this.

Your next question comes from [ Shikiara Sun ].

I just wanted to ask, like, is the -- if you could please explain to shareholders how funding Empire Energy to open new fracked gas exploration and production sites in the Northern Territory is good for Macquarie Bank's international reputation, particularly given the U.S. and Europe are considering a carbon tax on trade and that Australia is not doing enough to reduce emissions.

I think we have answered some of that question, but Shemara, is there anything else you would like to add to previous answers?

No. I think we've spoken extensively about why we think not just Australia but the global community needs gas as a transition fuel. And even in the Paris 2050 case, it's envisaged that gas will be providing 15% of the world's energy needs at that point. But certainly, at this point today, we are not at a point where we can transition away from conventional fossil fuels and gas is at the lowest emission or at the low end of emissions of those fossil fuels. So to the extent we're replacing coal, oil, et cetera, gas has an important role to play for all of us in this transition at this point. And in terms of our international reputation, we certainly make sure we comply with all global regulatory frameworks and the transition that each of the regions in which we operate is tailoring for its journey. And at the moment, in the U.S., as I mentioned, 2/3 of gas in the U.S. is produced from fracking. And as things evolve in the U.S., we will continue to observe and respond to helping them in that transition journey. The same for Europe; the same for Australia.

Your next question comes from [ Michelle Serawak ].

Can you hear me?

Yes, we can.

At last year's AGM, we raised the issue of Macquarie's links to companies involved with the Adani Carmichael thermal coal project in Queensland, namely Macquarie stakes in Marsh & McLennan, Adani's insurance broker; and Stifel, one of the few banks left still willing to raise debt for Adani's coal port in the Great Barrier Reef World Heritage Area. Macquarie has previously engaged with Marsh & McLennan on the Adani issue, but it has had no effect. On Stifel, Macquarie said it would take our question on notice, but never followed up. Will Macquarie remain invested in these companies, which are supporting a massive new thermal coal mine despite its expectation regarding coal exposure and net-zero commitment?

Thank you for the question. I'd, firstly, like to say that Macquarie is not involved in the Adani Carmichael coal project at all. In relation to the investments in Marsh & McLennan and Stifel, they are investments held by our funds management business -- our listed funds management business in the U.S. It's my belief that we are no longer a significant investor in Marsh, that a decision is being made to liquidate that particular shareholding. And I believe that -- although I believe we still have a shareholding in Stifel. We don't talk about -- in detail about the conversations we have with investee companies, but I can say that evaluating ESG factors is an important part of investment decision-making. And those issues are certainly raised with our investee companies -- with all our investee companies when we engage with our investee companies.

I'll now hand back to Macquarie.

Mr. Chairman, the next question is from the Australian Shareholders' Association. On the 9th of February 2021, Macquarie said, anticipate FY '21, down slightly on FY '20. On the 22nd of February 2021, Macquarie said, expect group results to be up by 5% to 10% on FY '20. During those 13 days, there was a severe winter storm in the U.S.A., especially Texas. It is estimated that the storm increased revenue by up to $300 million. NPAT in 2021 increased by $284 million. Was this because of the Texas storm? If not, what else?

Thank you for the question. I think as we have said previously and today, FY '21 was a very different year with financial performance of the company changing considerably as we moved throughout the year, making forecasting at year-end results even more challenging than usual. But I'll pass to our CFO to comment on your particular question.

Thanks, Peter, and thank you for the question. As you will no doubt be aware, we're obviously very focused on meeting our continuous disclosure obligations. And as Peter just mentioned, it was a challenging year for providing clear feedback to the market and guidance, but we were very mindful of those obligations throughout the year. We are a very diverse business, as you're aware, and of course, things can change rapidly, and things did change rapidly between the update we provided to the market at our operational briefing, and then the update we provided to the market on the 22nd of February 2021. So in the context of that, obviously, the severe weather in the United States in early to mid-February meant that the transportation assets that I referred to in answer to an earlier question that we have access to within the CGM business became increasingly important as power and gas was required in various parts of the United States, in particular, in Texas and Oklahoma. And the team in the United States really stepped up at what was a very challenging time for communities to make sure that supply of gas and power went to markets that were absolutely necessary at that time. But as we indicated in our announcement of the 22nd of February, those -- that abnormal weather event meant that we needed to update our guidance for the year. And so we moved from slightly down to what we said at the 9th of February to up between 5% and 10% for the year. Again, a challenging period of time, it was a significant event, and we, obviously, as we always do, were very mindful of making sure we provide accurate guidance to the market as quickly as we possibly can. Thank you, Peter.

Mr. Chairman, the next question is from the Australian Shareholders' Association. The IPO of Nuix contributed $524 million to Macquarie Capital revenues. Understanding there were costs involved and accounting standards mean profits were shown and will be shown over a few years, what is it estimated that this IPO contributed to the group 2021 NPAT?

Let me just pass that question to Alex Harvey as well.

Thanks, Peter. Thanks again for the question. We've obviously not disclosed this level of granular information in our financial statements. I guess there's a point that I would make that the profit outcome is not sufficiently material to require separate disclosure in our financial statements. Thank you.

The next question is from Mr. Stephen David Mayne. The federal government is currently proposing tougher regulation on proxy advisers, including that they be forced to show companies copies of their reports before they are published. Do any of the proxy advisers currently do this with Macquarie? And does Macquarie support the proposal? Are there any concerns that such a move could set a precedent where our analysts could be forced to show companies drafts of their reports before they are sent to clients and investors?

Thank you for the question, Stephen. I think over the years, we have received in advance copies of draft research work done by the proxy advisers, and they have been provided to us for checking of factual information. It's usually given to us 24, 48 hours before the published date, and we have been invited to check for accuracy and provide comment. So that -- it's not -- doesn't happen every time, but it certainly does happen. It's a matter of principle. I think that is a good practice. It certainly doesn't help shareholders in analyzing the recommendations from proxy advisers if there were errors contained. So to get a copy of a draft report to check for accuracy, I think, is of value to our shareholders and, obviously, to the proxy advisers themselves.

The next question is from Mr. Stephen David Mayne. Including the $60 billion in assets under management with the recent AMP fixed interest business that we bought, total funds under management are now at a record $753 billion. It was only $534 billion when Shemara was announced as CEO in 2018. What is the likely time frame for Macquarie's assets under management to crack $1 trillion of the $300 trillion managed globally? And are we yet in the top 20 in terms of the world's biggest asset managers?

Thank you, again, for the question, Stephen. I might pass that question to the Head of our Macquarie Asset Management team, Mr. Ben Way. Ben, could you answer that question, please?

Sure. Thank you for that question. Look, we have a plan over the next 10 years to continue to grow our assets. It will likely be a mixture of organic and inorganic growth. We don't have -- it's hard to forecast given market situations, given flows from our various investors when we'll actually reach that point. But it's certainly our ambition to continue to grow our assets under management. I think the most important thing is we obviously do that not for the sake of just growing our assets from a scale point of view, but rather we do it based on making sure that we can provide the right solutions to our clients, and we can do it in an appropriate fashion in terms of returns and profitability.

Mr. Chairman, the next question is from the Australasian Center for Corporate Responsibility. Can the Board explain the investment rationale for its positions in Central Petroleum and Empire Energy, both of whom have plans to frac new gas basins in the Northern Territory? How are these plans consistent with Macquarie's climate commitments?

Again, I think we've addressed those questions in previous questions. The answers which were provided to a number of questions in the past cover those, I think. But is there anything else you wish to add, Shemara?

No, only to say that, as we understand, Central is not involved in fracking in the Northern Territory. And I think I've spoken about not just Empire but our need for gas as a global community as we transition to address the climate change challenge.

Mr. Chairman, the next question is from the Australasian Center for Corporate Responsibility. The Chairman's presentation made much of Macquarie's investments in renewable energy. Can the chair confirm what percentage of Macquarie Asset Management's $562 billion in assets under management is invested in fossil fuel or petrochemical infrastructure?

Again, I might pass that question to Ben Way. Ben, could you respond to that, please?

Thanks for the question. Thank you, Peter. As you'd be aware, we've committed to a net-zero commitment by 2040, which is 10 years ahead of the Paris Accord. We're one of the first major global asset management players to do so. This obviously means that our portfolios are in transition away from fossil fuels. Today, less than 0.5% of our private markets portfolio is involved in coal. And in terms of our public investments portfolio, less than 5% of our investments are in energy companies and less than 1% are in coal. I would say that we do see that there is a responsibility for market leaders like ourselves, particularly as it relates to the infrastructure sector, to play a role in transition. So every investment we make goes through a rigorous ESG screen, but we also see that we have a responsibility within the marketplace to help the economy transition. And so that may mean that we invest in assets that do not have an ideal carbon footprint today but where we can see a near-term plan, where we can be a responsible owner to invest in that business to allow it to get to net-zero as fast as possible.

Mr. Chairman, the next question is from Mr. Stephen David Mayne. According to Myriam Robin of the AFR's Rear Window column, our CEO had lunch with AMP Executive, Boe Pahari, and one other party at Sydney restaurant Balcon on Thursday, August 20, 2020, right in the middle of the public controversy about sexual harassment issues involving Mr. Pahari at AMP. Could Shemara please provide the context behind, purpose and outcome of this lunch meeting? Was it a mistake in hindsight given the optics?

Shemara, would you like to comment on that?

Yes, of course. It was a personal lunch and not relevant to Macquarie Group.

The next question is from Mr. Stephen David Mayne. Our auditor, PwC, was paid $35 million to audit Macquarie Group last year, and we paid them an additional $12 million for nonaudit services. How long has PwC been our auditor? When did we last tender the audit contract? And was it a mistake to have PwC as the auditor of Nuix, even though it was only 78% owned at the time. How deep does the PwC relationship go into our various funds, subsidiaries, associates and investments such as with Nuix?

I'll need to refer to some of those questions to Alex. The PwC relationship has gone back a long time. The process that we have is that PwC is obviously a global organization, and we need a global organization to audit Macquarie's very vast global activities. The arrangements with PwC are really very restricted to our audit activities and other assurance activities. The other fees that were mentioned, they're primarily in relation to other assurance activities, but not particularly the statutory audit. The annual process we go through is that following the audit, the Audit Committee of the Board and the senior management carry out a performance assessment of the auditor and go through a debate to see whether we believe that we have had -- received appropriate service and for a reasonable price to -- has the audit been to the quality and added value to the extent that we would expect? And then the Audit Committee makes a recommendation to the Board about whether the -- about that level of service and whether the audit appointment should be continued. That's the process we undertook this year. And as I said, we've undertaken the performance assessment back many years. In relation to the funds activities, I will have to pass to Alex who might be able to help me on that.

Yes. Thanks, Peter. Maybe just to say, firstly, in relation to the payment of fees to PwC, as you said, Peter, of the $12 million of nonaudit services, about $9 million of that is for assurance activity, so -- which is really akin to -- it's not an audit, but obviously a very similar process to the audit. So the vast majority of fees we pay to PricewaterhouseCoopers is in relation to audit or assurance-type activity. In relation to, I guess, the second part of your question, which relates to the work that PwC did in respect to the Nuix IPO, obviously, PwC were involved in the investigating accountant's report, which was a decision of Nuix as part of the float of that particular company. As Peter said, I think, in terms of the work that PwC does for us that's outside the audit remit, we have a very strict policy approach to that, where matters in excess of a relatively small amount go to the Chair of the Board Audit Committee, and they're very few and far between. So I think the Board and, of course, management are very mindful of the independence of PwC. That's probably what I'd say, Peter.

Just in relation to PwC's involvement in our funds?

Yes. So PwC -- we have to come back with the specifics of the policy. There is a policy around the appointment of PwC as auditor for the funds. We'd probably need to come back on the specifics of that, Peter. I think Kristin can add there.

We might just ask Kristin Stubbins to make a comment about auditing of the funds.

Thank you, Chair. We audit anything obviously that is controlled within Macquarie Group. So to the extent that any fund is controlled, we are the auditor of that fund. We are also auditor of some of the other funds, not all of them. I don't have the exact percentage, Chair.

Chairman, the next question is from the Australian Shareholders' Association. There has been speculation that the accounting procedures leading up to the Nuix IPO were not what would have been expected. Have Macquarie's investigations revealed that there was any practice that wouldn't be deemed acceptable according to the high standards the group demand of its employees?

Shemara, could you comment on that, please?

Of course. I think I've said previously that we undertook the Nuix IPO process to the rigorous standards we always apply to IPOs and have looked again at the work done and are comfortable that our team applied the high standards that we always do. And at the time of the IPO, neither our team nor the vast broader team involved in the IPO had any reason to doubt the forecasts that were given. Clearly, unexpected circumstances have occurred since then that have been articulated by the company as a separate listed independent company. But at the time of IPO, we're comfortable we had no reason to doubt the forecast that were in the prospectus and undertook a very rigorous process, as I've mentioned.

Mr. Chairman, the next question is from the Australian Shareholders' Association. Macquarie has indicated that its role in Nuix was as a minority owner. However, Dr. Castagna, a full-time consultant of Macquarie, was appointed in 2005 to turn Nuix around. Dr. Castagna served time on fraud and money laundering charges for which he was later acquitted and has received a significant payment on options that were not recorded properly in Nuix registry. Could you inform us of Dr. Castagna's relationship with Macquarie since he first joined as a consultant in 1998 and with regard to his activities in Nuix.

Shemara, could you respond, please?

Yes. I'd just say Dr. Castagna's consultancy with Macquarie ended in 2013. He was involved in Nuix when we invested in Nuix. But we, as you know, were a separate large shareholder in Nuix.

We'll now go to the teleconference. Over to you.

Your next question comes from [ Charlie Cooks ].

Hi, there. You claimed that...

Sorry, your line seems to have dropped out. Can you repeat the question, please? Not getting anything at this end.

Your next question comes from [ Kit Chisholm Holmes ].

Regarding the commitment we made in May to align our financing activity with net-zero emissions by 2050, what changes were made to our systems and processes [indiscernible] activities consistent with that commitment?

Sorry, could you repeat -- your line was breaking up again. We missed half the question. Could you repeat that, please?

Oh, sorry. Can you hear me now?

Yes.

Regarding the commitments we made in May to align our financing activity with net-zero emissions by 2050, what changes were made to our systems and processes to ensure our financing activity is consistent with that commitment? And could you please elaborate on the steps involved in assessing whether a particular finance deal is compatible with net-zero 2050, including who is responsible signing off such an assessment? Are the directors in satisfaction of their duties to the company and [ thought ] themselves that [ process assessment ] systems are adequate?

Thank you. I'll ask Shemara to comment on that.

Yes. In making our net-zero commitment, there were 4 things that we committed to. One is, getting our operational emissions to net zero by 2025, and we are well progressed towards that. The second one was in terms of working on investing in a bunch of new renewable projects, which we're well advanced on as well. And then we're also committed in terms of our financing activities to work on bringing those to net zero, and lastly, working with our clients in terms of their activities and helping them with an orderly transition. So what we said when we made the commitment is that we will look to put in place targets by the end of 2022, and that's the work we're now doing.

And the second part of the question was, what's the process of determining whether a project...

That's something that we're going to be doing work on to the end of 2022 in terms of setting the targets on the processes' reevaluation. And so we've committed to make further disclosure on that as we move forward by -- we'll be setting science-based targets, and we're evaluating currently a number of methodologies to do that, and we'll provide further information in our plan over this next coming year.

Your next question comes from [ Margarita Gonzales ].

Hello, can you hear me?

Yes, we can.

My name is [ Margarita Gonzales ], and I'm a resident of the Southwestern Rio Grande Valley region in Texas. Macquarie is the adviser for the Rio Grande LNG industrial project, a project which would indisputably be an environmental disaster for my community. On the local and global stage, we are facing a time-sensitive climate crisis that requires actions, urgent actions to ensure that we are able to mitigate the worst, most extreme effects that will affect everyone on this planet of looming worsening climate change. Rio Grande LNG, respectfully, is a step in the wrong direction. This project would release more climate-killing greenhouse gases into the atmosphere, carbon emissions, the equivalent of 40 plants per year. I am here today to demand that Macquarie divest from Rio Grande LNG and all projects involved with fossil fuel destruction on sacred indigenous lands, just like the Beetaloo Basin in Australia and invest in a just, equitable, overdue transition to renewable energy, a transition that will accelerate us into an entirely new political economy consistent with the Paris Agreement goals of net zero by 2025. We know that these ambitious goals will not be met with incremental market-based solutions, and we already have this renewable energy technology, Shemara. So Mr. Peter Warne, Alex, Shemara, Ben and Kristin, if you are serious about standing true to Mr. Warne's opening remarks about Macquarie's net-zero plan, that must be released immediately, which would honestly be in line with the legal opinion by the centers of policy development. And so my question to all of the corporate executives and partners who are just named, will you agree to consult with the Carrizo/Comecrudo tribe, who are the native original people of the region?

I think we've answered most of your question already. But again, thank you for your question and the comments. I think we need to just to reiterate that in relation to the Rio Grande LNG project that we -- that Macquarie is not an investor in that project. It is as a role -- as an adviser only. So there is no -- we have no investment to divest. And in relation to the other comments, I think we've covered all of those in our previous answers. So I'm not sure that there's anything we can add.

Your next question comes from [ Edith Shepherd ].

I'd like to draw all of you and your shareholders' attention to the current inquiry into subsidies into hydraulic fracturing in the Beetaloo Basin in the Northern Territory. You've made frequent reference to the Pepper inquiry, which I note ended in 2018. However, just yesterday, the inquiry heard evidence that most of the recommendations from the Pepper inquiry that you cite are not implemented with many failed, delayed or yet-to-be actioned. Given this, how can you claim that the recommendations are implemented. The 3 casings that you cite do not make the process safe given the presence of steel- and concrete-eating bacteria being present in the water of the Beetaloo Basin. The Aboriginal Areas Protection Authority, which is the body responsible for registering sacred sites, noted that the practice of shale gas hydraulic fracturing could have significant impact on sacred sites [indiscernible] arising from interference with either surface water or groundwater in the Northern Territory. And considering the fallout from the destruction at the Juukan Gorge in WA a bit over a year ago, will Macquarie ensure that projects and corporations that it lends to and advises have a comprehensive cultural water mapping survey undertaken to better understand the cultural interconnection between groundwater and surface water across and near the Empire Energy permits in the NT? Will you review this? And if you find out that these things are not implemented, will you pull out?

Shemara, can I ask you to respond to that?

Yes. Well, I guess I'll commence by just noting again that we don't control Empire Energy. We're a 4% shareholder in Empire Energy. And as I mentioned earlier, Empire Energy did consult with all the indigenous tribes in the area to make sure that under the Australian Aboriginal Land Rights Act, they were getting the consents before they could do any work. So as we understand, they conducted an extensive surveys to identify the sacred sites and other sites of cultural significance. And in those -- and other sensitive areas where the traditional owners did not consent to exploration, these were removed from the permit permanently. And we've shared with you the activities that Empire itself is undertaking and its commitment to making sure the environmental issues involved are met as well. And as a 4% shareholder, all we can do is consult with the company we invest in and listen to their feedback, challenge it, et cetera, which is what we've been doing.

The next question is from Mr. Stephen David Mayne. Macquarie's constitution mentions 10 as being the maximum number of directors, and we currently have 10 directors. Macquarie is one of the only ASX 100 companies with no constitutional room for Board expansion to accommodate a non-Board-endorsed external candidate. Will you consider amending the constitution at next year's AGM to either adopt the Rio Tinto model of having no Board size cap or matching AMP's cap of 16, ANZ's 15, BHP's 20, Scentre Group's 16, Westpac's 15 or the many listed companies, which have a maximum of 12 directors?

Stephen, thank you for your question. It's not an issue that the Board has really considered, so I can't make any commitments on behalf of the Board. But all I can say is that in terms of a cap on Board members, it has never been an issue for the Board. So that's something I'll reflect on and discuss with the Board.

Mr. Chairman, the next question is from Mr. Stephen David Mayne. When COVID first hit, the RBA slashed interest rates to 0, started lending cheaply to banks and committed to unprecedented money printing by buying $5 billion of federal and state government bonds a week, which has led to purchases exceeding $200 billion. Please summarize the impact and involvement of Macquarie in all of this. How much have we effectively borrowed from the RBA? And have we been active participants in buying up the record amounts of federal bonds being issued to fund programs such as JobKeeper?

I'll refer that question to Alex Harvey to answer. Please, Alex?

Thanks, Peter. And thank you for the question. Like all ADIs in the market, obviously, the -- when COVID-19 first hit last year, we moved very quickly to provide significant support to our retail and our business customers who are affected by the pandemic. And that support included loan deferrals and relief. And obviously, we continue to provide access to credit for those customers that needed it. And we saw that, I guess, the outcome of that through the growth in our portfolios last year with our mortgage business up 29% and our small and medium enterprise lending business up 13% for the year. So we saw the support that the group had provided to customers over the course of the last 12 months. Using the formula offered by the RBA, the RBA, obviously, did extend the term financing facility as a way to make sure that the financial institution -- the financial market was liquid to provide that credit. And Macquarie, as one of the ADIs, the market did access the TFF as one source of the funding that we made available to clients over the course of the last 12 months. Obviously, what we're able to do is use that funding together with our other sources of funding to provide a competitive low interest rates for customers and to support businesses as they navigated the challenging climate over the last 12 months. As we said at the full year results in March, our initial allocation of the TFF was $1.7 billion. We've now drawn down an additional $9.5 billion, which was the additional allowance or the supplementary allowance, which was determined as a function of the amount of credit that you've provided to the market over the course of the last 12 or so years. So in total, we've drawn $11.3 billion of TFF, and we've been able to put that money to work into the economy to support our retail and our business clients. Obviously, we do have -- as part of our cash and liquid management, we do invest some of that cash and liquids into high-quality securities like government bonds. But I guess that covers the question, Peter.

Thanks, Alex.

Mr. Chairman, the next question is from the Australian Shareholders' Association. As Macquarie is widely known as a company at the forefront of change, why is this not reflected on the Board? Why are new directors not people sought out who are knowledgeable and at least one of the rapidly changing technology-led disruption in which we undertake financial transactions, the emerging world of fintech, cybersecurity or the area in which you are rapidly becoming a global player, alternative energy?

I think the main point in talking about the composition of the Board is that the Board collectively possesses the skills, experience, tenure and diversity necessary to govern an ASX-listed global diversified financial organization. And this covers a very broad range of activities. The areas that you've mentioned are rapidly moving and broad, but they're also integrated into various other aspects of our business and strategy and the experience that our directors have gained through their executive roles -- their prior executive roles and other Boards that they're on. When additional knowledge in specific areas is required on the Board, Macquarie engages with external advisers. It conducts site inspections and site visits, Board workshops, and we can request and have requested more detailed reporting from management in relation to technology, cybersecurity, digital disruption, and there are examples of this approach. So it's a -- we have many sources of -- to generate the knowledge, skills and experience. But the real point is to have a very diverse range of skills and experience across a broad range of industries and backgrounds.

Mr. Chairman, the next question is from the Australian Shareholders' Association. Mr. Warne, you have performed well as the Chairman, but why after 12 years on the Board, the last 5 as Chairman, did you not ensure that there was a replacement Chair on the Board?

Thank you for the question. The -- my extension of time on the Board is just really a timing issue. Given the level of changes in board composition over the last year or 2 and in the regulatory environment and in the overall external world due to the COVID pandemic, the Board considered that it was in shareholders' interest for my term to be extended by a year. The Board and Chair renewal is an ongoing process, and we have excellent candidates on the Board for my Chair replacement.

The next question is from Mr. Stephen David Mayne. What was the Macquarie Group's Board view on the widely [ lauded ] $90 billion JobKeeper program? It was very easy to qualify by just forecasting a drop of revenue even if it didn't eventuate. Competitors such as Moelis participated in the scheme, whereas other companies like Scentre Group took the moral high ground and refused to apply. How did Macquarie play JobKeeper, including in the many Australian businesses that we managed for third parties? Did any entities we control later pay back any JobKeeper claimed?

Shemara, can you answer that question?

Yes, sorry, Peter. We didn't participate in the JobKeeper scheme, and we don't believe any of our portfolio companies participated, but we can take that on notice and check, but certainly, Macquarie Group didn't participate in the scheme.

The next question is from Mr. Stephen David Mayne. The explosion last week at the German Currenta business is very serious with at least 2 dead, 30 injured and others missing. As the world's biggest infrastructure manager, is this the most serious accident and damage that has occurred on our watch? And what sort of implications could this have on Macquarie? When we are a financial services company, why do we take the risk of directly owning and managing dangerous assets such as chemical plants without any industry partners?

Shemara, can you respond to that, please?

Yes, Stephen. Look, at the moment, our focus, as Peter said, is very heavily in terms of response in terms of -- we still have people unaccounted for. So we need to identify what's happened there. We still have people hospitalized and injured, and we still need to secure the site. So that's the first priority. After that, we will work with the Currenta team who will lead this and the authorities in Germany to try to understand the root causes and what we can do to manage the situation and situations like this going forward. As you know, in our infrastructure assets, and this is an asset that provides services to chemical industrial parks, so large German chemical companies and services like utilities, water, wastewater, logistics, et cetera. That is core infrastructure-type business. And we do this all over the world. We have roughly just under 150 assets. We've been investing in this for many decades. So these are areas that have been core to our business. And we have 130,000 employees working in these assets across all the global regions in which we invest. Workplace health and safety is very important to us. And so we have practices in place as we go into these assets to do rigorous due diligence but also to have a culture where our people feel accountable for ongoing performance of these assets. And we have ongoing monitoring. We do independent checks periodically, et cetera, in terms of what we do with workplace, health and safety. And when incidents like this happen, we have a rigorous process for undertaking investigations, understanding what went wrong, learning lessons, working to correct them but also ensure they don't happen again. For now, as I said, this incident has only just happened, and our focus is very much on immediately trying to ensure that we, in terms of the human lives impacted, are doing what we can early to respond.

The next question is from Mr. Stephen David Mayne. How much is the big 5 bank tax cost in Macquarie each year? And is it fair that we have to pay the tax but foreign competitors and smaller rivals like Bendigo and Bank of Queensland are exempt? Are we lobbying to have this unfair tax either removed or applied equally to all banks in the Australian market? Or is it a bipartisan position that is unlikely to change? Has Josh Frydenberg given any indication of potential relief from this unfair tax?

Alex, I want to ask you to respond to that.

Thanks, Peter, and thanks, Stephen, for the question. Just in relation to the amount in FY '21 to the March 21 year-end, the bank tax for us, the levy for us was about $80 million for the year. And then obviously, in relation to the broader question, we operate in a range of jurisdictions, and we have to deal with a range of different legislative environments and tax environments. And so in the context of the Australian landscape, we are faced with the bank tax here and have now had it for several years, and we'll continue to operate in that environment.

The next question is from Stephen David Mayne on CEO tenure. Shemara owns $155 million of shares in Macquarie and has received almost $15 million in dividends since becoming CEO in 2018. She turned 60 this financial year and has been with Macquarie for 34 years and clearly doesn't need to work. Tony Berg was CEO for 8 years; Allan Moss ran Macquarie for 15 years; and Nicholas Moore was in charge for 10 years. Can Shemara imagine a scenario where she would serve for as long as any of her CEO predecessors? And what is her current view of retirement?

Well, as I mentioned, Shemara is very much engaged and enjoying her current role, but I'll ask her to respond about how she feels about it.

All right. Thank you, Peter. And Stephen, I'm sorry, it's unnerving for you that we could have a 60-year-old running -- being the CEO of Macquarie. But I, obviously, am very passionate about this business and have been committed to it for a very long time. I've only been in the CEO role a couple of years. And so my focus has always been on what I can contribute. And in this role, there's a new range of things that I feel I need to contribute, an important part of that being building the broader team at Macquarie, but particularly the immediate team of leaders under me to position the business to take it through to the next generation. So just like all of Tony Berg, Allan Moss, Nicholas Moore, who you've mentioned, I think all of our focus has been on this business that we've devoted a lot of our lives to and making sure that we deliver what we can to position the business to move forward to its next natural stage. So yes, I may be old, but I'm certainly enthusiastic and energized to continue to contribute for as long as it is in Macquarie's best interest.

The next question is from the Australian Shareholders' association. As we all know, the required statutory accounting means that remuneration tables contain a number of factors that may or may not happen. So why not join a growing number of the ASX 100 and publish the actual take-home remuneration of your CEO, indicating the cash she was paid and the value of the shares that vested to her during the financial year.

Well, thank you for the question. And we did -- have mentioned this in previous years and when you have asked us the same question. The reason we don't publish awarded -- sorry, don't publish take-home pay is that the rem report really focuses on awarded pay. It's about determining the -- how we determined the remuneration for the last year of performance in the Macquarie case because take-home pay is mostly made up of earnings from previous years. And in Shemara's case as a CEO, that's back 7 years that the take-home pay has very little to do with current year's remuneration. It's actually got to do with what was awarded over the last 7 years and what's happened to the share price of Macquarie over that 7 years. So it's somewhat meaningless to look at the take and pay and judge about the most recent year's performance. It's not directly related. So we think it's a bit not necessarily meaningless, but it is a -- gives a false impression by focusing on the take-home pay. The real number to look at is the awarded pay, which is -- which we focus on. That's how we -- that's what we look at the current year's performance and decide on awarded pay. And that's why the remuneration report is focused on awarded pay in addition to the statutory tables, which we have to do for legislative purposes.

Thank you, Mr. Chairman. The next question is from Mr. Stephen David Mayne. When Shemara joined the Macquarie Board in August 2018, she owned 800,000 ordinary shares, which at the time were worth about $100 million. Today, she owns 992,881 shares worth $155.5 million. Is Shemara aware of another public company financial services CEO with a bigger shareholding than hers? And can she confirm that she intends to maintain her magnificent record of never selling a share in Macquarie Group whilst employed by the group since 1987?

Again, Shemara, can you respond?

Look, I'm sure there are other people who have founded businesses who have very, very large shareholdings in the companies at which they work. In my case, yes, I've never sold the Macquarie share. You seem to be better across my finances than I am, Stephen, which is great. But I view this not as a financial asset, but it's part of my alignment to Macquarie. And as long as I'm here, hopefully, beyond, I continue to believe in the business and want to be a shareholder, and I'm not looking to sell shares. Hopefully, that covers it.

We'll now go to the teleconference.

Your next question comes from [ Kit Chisholm Holmes ].

Given the International Energy Agency's finding that new oil and gas fields are incompatible with achieving net-zero emissions by 2050, it appears our prospective loans for the new 10,000 barrel a day Patola oil project off the coast of Brazil is incompatible with this commitment, as would be any further funding for the West Erregulla gas field in Western Australia. In light of this finding, will Macquarie rule out any further funding for these projects and any other projects incompatible with the IEA's net-zero scenario conclusion.

Shemara, can you respond to that?

Yes. Look, as I've mentioned, we're committed to supporting the climate transition. We made our own net-zero statement just recently. And as part of that, in addition to our own investing activities, you're talking here about Scope 3 financing activities, and we've said that we also want to, by 2050, make sure that we move to net-zero emissions with our financing activities. But as I said previously, that will be part of the glide path, and we'll be setting our science-based targets, et cetera, and sharing them over the next year, and we'll operate consistent with that.

Your next question comes from [ Emilia Telford ].

Can you hear me?

Yes, I can.

Great. During yesterday's Senate Committee Inquiry hearing into oil and gas exploration and production in the Beetaloo Basin, Empire Energy CEO and Managing Director, Alex Underwood, confirmed that representatives of Macquarie Bank were on a paid chartered flight, returned from Darwin to Borroloola to Empire Energy's fracking site, which sits on Aboriginal land in the Northern Territory. [ The NT ] traditional owner, [ Ricky Gank ], also spoke to the hearing yesterday and confirmed that Empire have not sought proper consent to frac on her land? Given that you have claims that consent has been sought, however, this is being disputed by traditional owners and given that you've claimed in this AGM that the Pepper inquiry recommendations have all been implemented when in actual fact the majority of recommendations have not yet been implemented, can you make a commitment that Macquarie will investigate these discrepancies, noting that this could cause significant reputational and financial risk to the company?

Shemara, could you respond?

Yes. I'm happy to say, we will look into the discrepancies. We understand Empire is participating in the inquiry, but the information we have from Empire is that they have -- the industry has been complying with all the recommendations from the 2018 inquiry. And also, as I've mentioned several times that they have sought consents, and where they haven't been achieved, excluded the land from the permitted area. But after the questions you've raised, we will definitely go and double-check on all of that. And as I mentioned, we're a 5% shareholder. So in that capacity, we'll go and check.

The next question is from Mr. Stephen David Mayne. The last Macquarie Group Chairman, Kevin McCann, in Mr. Mayne's view, inappropriately went off and joined a listed competitor, Evans Dixon, serving on their advisory board. Could Chairman, Peter Warne, confirm that on retiring from Macquarie Group next year, he won't offer his services to any competitor of Macquarie? Also, are there any external headhunter firms being used to support the search for the next Chair of Macquarie? And does this search include assessing external candidates such as former Macquarie CEOs?

It can be assured, Stephen, that I would not take a role that would be in conflict with anything Macquarie is doing. So I can give that guarantee. The -- in terms of the shareholder -- sorry, the Chair succession process, that is a process that we are handling ourselves amongst the current Board. So there's no external person involved at the moment there.

The next question is for Mr. Stephen David Mayne. What repercussions have flowed from the problems APRA identified with the bank. And as Chairman of the Risk Committee with a background in banking regulation, could Glenn Stevens comment on the Board's involvement? Is it correct that some institutional shareholders such as CalPERS have chosen to vote against Glenn's re-election today to show some accountability at Board level for the APRA sanctions. Is that fair?

I'll answer the second part of the question first. The -- I've seen in the press that 2 U.S. pension funds have voted against the reappointment of Glenn Stevens. It's our understanding that, that is a standard process that those 2 funds have. In the U.S., there is a requirement for an annual vote for the -- on the appointment of the external auditor. Those 2 funds expect to see that in every company that they are a shareholder in and around the world. It is despite the fact that, that is neither an obligation in Australia or standard practice in Australia, but they vote now accordingly. That's not new. They have done it in previous years in relation to Macquarie election. So that's a standard practice. In relation to the APRA process, I can ask Glenn if he could make a comment in relation to what Stephen has said.

Thank you, Chairman. Yes, the Board is actually very involved in overseeing and helping to craft the company's response to the situation that has arisen regarding the APRA matters. The APRA matters themselves are a matter of public record, of course. So I have no further comment on that, but what's happening at the moment is that the management are working very hard at a very extensive program to remediate the issues, some of which go back quite a long time, and we'll be engaging with APRA very closely in rectifying these over the quite near term. And the Board -- the Risk Committee and the Board more generally are quite involved -- quite actively involved in oversighting what the management are doing here, and we are directly engaging with APRA ourselves. So it's been taken very seriously as it must be. And as I said in my prerecorded remarks earlier today, I've supported strengthening in our regulatory engagement and compliance framework because that is critical for us reaching our full potential as an organization. So they'd be my remarks, Peter. Thank you.

Thank you, Glenn.

The next question is from Mr. Stephen David Mayne. Could Remuneration Committee Chair, Jillian Broadbent, comment on the laudable decision this year to ditch fair value when calculating incentive grants and also whether she has considered also following the ASA argument for Macquarie to disclose actual take-home pay rather than just what the accountants calculate? Also, how has Jillian found chairing the Macquarie Rem Committee given the complexity of pay at Macquarie across its global operations?

Jillian, would you like to respond to that?

Thanks, Peter. Thank you, Stephen. Firstly, the remuneration process at -- and policy at Macquarie has been -- it is complex, but it's been a very effective one over very many years. I think Peter addressed earlier the issue of -- the focus of our disclosures is really on the current year remuneration rather than the actual take-home amounts for the reasons that he outlined. The remuneration approach is a very dynamic one. We continue to adjust and tweak the policy to align with regulatory and shareholder expectations. And I think we've worked to -- in the remuneration report to continue to review that report to ensure that it's as clear as it can be in conveying to everyone the challenge we have to use remuneration effectively and meet all of the stakeholders' requirements. I think the third part of the question was, have I found it challenging? I think, as I said, it's complex, but it's effective. And we feel -- I feel I and my colleagues on the Remuneration Committee are up to the task.

Thank you, Mr. Chairman. The next question is from Mr. Stephen David Mayne. There has been a lot of interest in territory covered during today's AGM. In addition to the webcast archive, will Macquarie also publish a full transcript of the Q&A session on its website? Judges are not told to wade through video recordings of court proceedings and nor should shareholders. Please join the likes of Transurban, IAG and Woolworths and get with the AGM transcript program.

Thank you, Stephen. The meeting, as we said earlier, is being recorded, and you can view that webcast on Macquarie's website this afternoon. As we've said in previous years, we don't have an intention of providing a transcript.

Mr. Chairman, I confirm there are no more questions.

As there are no further questions, I now ask for a summary of the proxy voting to be shown. Please note that all open proxies given to the Chairman will be -- of the meeting will be voted by me in favor of all items. As you can see, the proxy votes were strongly in favor of all proposed resolutions. If you have not yet cast your vote, I now ask you to do so. Link Market Services, our share registry, will act as returning officer and determine the results of the polls. Could everyone who wishes to vote ensure they have now done so? [Voting]

Thank you, ladies and gentlemen. The polls will now be closed. The results will be announced to the ASX as soon as practical this afternoon. That concludes the business of this Annual General Meeting, and I close the meeting. Thank you for your attendance and your support. We'll now play a video of more business activities conducted by Macquarie during the last year.

I'm Scobie Mackay, and I'm the Managing Director in CGM based here in Houston. CGM is supporting clients to meet their energy transition commitments. One example of this is a product that we delivered in partnership with Oxy Low Carbon Ventures, an arm of Occidental Petroleum. In January 2021, CGM arranged and executed the world's first major carbon-neutral petroleum shipment on behalf of Oxy. To achieve this, we measured and then offset the greenhouse gas emissions associated with the entire crude life cycle, thereby delivering 2 million barrels of carbon-neutral oil. With this bundled carbon accounting, physical oil and offsetting product, we delivered a solution that we hope will be a catalyst for a new market in climate differentiated commodities. Our expectation is that this will drive investments in longer-term industrial scale decarbonization. Oxy's vision is to use direct air capture technology to capture carbon dioxide directly from the air and permanently sequester it as part of their enhanced oil recovery operations. This will take years and require large amounts of capital. Understanding this, we propose an immediate carbon-neutral solution that enables the development of a market for carbon neutral crude while they deliver on their longer-term strategy. We believe that pragmatic solutions like these are a necessary part of the wider energy transition. Tara from our legal team will provide more background on the project. Over to you, Tara.

I'm Tara Teeter, and I'm an Associate Director in the CGM Legal team, also based in Houston. As Scobie mentioned, carbon offsets play an important role in supporting organizations on their transition pathways to net zero and carbon neutrality. This is particularly true for firms operating in hard to abate sectors, as they strive to advance their climate objectives but are unable to do so by reducing absolute greenhouse gas emissions via existing methods. Carbon offsets are also an important mechanism that bridges the gap while technologies in this space, such as carbon capture, are under commercial development. The mechanics of this transaction with Oxy were interesting. We arranged for specialized carbon supply chain accounting to calculate greenhouse gas emissions for the full life cycle of the crude oil cargo. This is significant because we were the first to offset emissions from oil extraction, transport, storage, shipping, refining and ultimate use for combustion of the crude. The legal team at Macquarie used bespoke transaction documentation, which was developed in-house to directly link the underlying commodity transaction with the carbon offset transaction. We were pleased to be able to support our client, Oxy Low Carbon Ventures, on this front, and our hope is that this project will create -- help create a new market for climate differentiated commodities and other sectors. We could not have executed this transaction without outstanding teamwork across all of Macquarie. This was a really exciting project to be part of and a great example of Macquarie's purpose in action, empowering our client to help build a better future.

Thanks, Tara. The whole team in the Americas is excited to have been involved in this deal and is looking forward to similar deals that represent our purpose in action.

I'm Ed Northam, Head of the Green Investment Group in Europe, and I'm pleased to share more about how we're building a better future in EMEA. With ambitions to cut emissions by at least 55% by 2030, Europe needs to accelerate its energy transition fast. Thankfully, it's a region rich in sources of renewable power, in particular, solar. Solar's costs have fallen by 82% since 2010, making it one of the lowest cost forms of new energy in most markets. These low costs, combined with an abundant resource, has led to significant deployment across the region, and there's much more to come. At GIG, we've been working hard to accelerate this transition. Over the past 2 years, we've grown our solar development portfolio to over 8 gigawatts, one of the largest in Europe and assembled a team of world-class experts to deliver these projects into construction and, ultimately, operation. In February, we launched Cero generation to take that portfolio and the Cero team on the next stage of their journey as an independent company. A development-focused business, backed by GIG's global expertise and reach, Cero is singularly focused on solar across Europe. It sits alongside our solar development businesses Blueleaf in Asia and Savion in the U.S. Collectively, they're taking forward over 20 gigawatts of solar development, innovating and investing for a greener global future. Alina, part of the GIG team that created Cero and now working in the business, is going to tell us more.

Thanks, Ed. I'm Alina Goldie, Operations and Development Manager at Cero. A net-zero future for this and every generation is Cero's mission. Cero is Spanish for zero. We pursue that mission alongside our partners, clients and communities, specializing in the development of utility-scale solar PV projects, on-site generation and integrated storage, taking projects from development through construction and into operations. As I've mentioned, I was part of the GIG team that secured Cero's solar development portfolio. We did that by investing in development companies and projects and forming joint ventures with local partners. Now I'm part of a team of 40, working to bring world-class industrial, commercial and technical expertise to our projects and clients. The creation of Cero was a team effort across Macquarie, with Mac Cap, FMG, RMG and COG, working closely together to create its brand and vision and launch a new website, establish new offices and IT infrastructure, transition existing colleagues and hire new ones, set up new entities and more. It's been fantastic to be part of Cero's journey so far and to help build the business. Our ambition is to transform Cero into Europe's leading solar energy company and help deliver the continent's net-zero ambition. Back to you, Ed.

Thanks, Alina. With solar being one of the fundamental pillars of Europe's energy transition, we're proud to be part of this important journey.