Magellan Financial Group Limited (MFG) Earnings Call Transcript & Summary

Welcome to Magellan Financial Group's 2020 Annual General Meeting, which is now formally open as there is a quorum present. For those of you who don't know me, my name is Hamish Douglass, and I'll be chairing this meeting of shareholders. This is the first time the company's annual general meeting is being held virtually, and welcome to my study. Due to COVID-19 restrictions on public gatherings and for the health and safety of our shareholders, the Board agreed that it was appropriate to host this year's AGM virtually from my house. I'll remind all shareholders that they will be able to vote and ask questions during today's meeting. If you have any issues during the live stream, please contact our share registry, BoardRoom, on 13 00 005 016 or on 02 9290 9600 or contact our offices at Magellan on 02 9235 4888. You can also find these contact details in the announcement that was lodged on Wednesday with the ASX. This is also available on our website. The instructions to view today's presentation in full screen now appear on the screen. To view the presentation in full screen, please click on the square at the top right-hand side of your screen. To return back to the split screen view, which will allow you to ask questions and vote, click on the arrow pointing right at the top right-hand side of your screen. If there are any questions from shareholders or proxy holders during the annual general meeting, we will, of course, be happy to address them. Questions will be addressed immediately after the presentation by myself or Brett Cairns, our Chief Executive Officer. Questions relating to the items of business will be addressed once we reach the relevant resolution. The instructions to submit a question during the meeting now appear on the screen. [Operator Instructions] I would now like to introduce your directors. Our directors are Hamish McLennan, Brett Cairns, Robert Fraser, John Eales, Paul Lewis and Karen Phin. So welcome to all of our directors. I would also like to introduce our Company Secretary, Marcia Venegas. A brief biography of each of these appear in the company's annual report. We would also like to welcome Clare Sporle, a partner of the company's external auditors, Ernst & Young; representatives of our share registry, BoardRoom Pty Limited; and Sarah Thorne from our Investor Relations Group, who will be moderating the questions that are received today. The notice of annual general meeting has been forward to all shareholders. I will take the notice of annual general meeting as read, unless there are any objections. If there are any objections, please let us know by using the question function on the Lumi platform on your screen. Moderator, have we received any objections to the Notice of Meeting?

Chairman, no objections have been received.

What a relief. Thank you very much. I'll now take a moment to outline this morning's agenda. I will shortly make some opening remarks before handing over to Brett Cairns, our Chief Executive Officer, for his presentation. After Brett's address, we will respond to questions received to -- received from shareholders. Following this, we will consider the formal items of business, which are the receipt of the company's financial statements and reports, voting on the remuneration report and the reelection of 3 directors: John Eales, Robert Fraser and Karen Phin. On the screen is a formal disclaimer regarding any forward-looking statements that any of the directors may make today. I suspect this is particularly directed at statements I may make today. All comments are subject to the formal disclaimer shown on the screen. The minutes of the previous general meeting of members of the company, which was the annual general meeting held on 24 October 2019, have been approved by the Board. These minutes are tabled and are available for inspection by any shareholder wishing to see them by contacting the company. I would now like to move on to my formal Chairman's address. Firstly, I would like to welcome you all to the 14th Annual General Meeting of Magellan Financial Group Limited. Today, I will touch upon some of the company's activities over the last financial year and the firm's strategy. COVID-19 has brought considerable uncertainty and market volatility in 2020. We are proud of the results of our investment team and the investment process that has been produced in these times. Downside protection is a key component of our investment objectives, and something that we discuss with our clients in depth. We continue to manage our portfolios to protect the capital of our investors. We're very proud of how our business and people have adapted during the second half of the year. We seamlessly moved from work-from-home arrangements and whilst our employees have faced various challenges, including full-time home schooling and turning a dining room into an office and back again in the evening, it is a testament to the quality of our people we employ that we got on with the job of servicing our clients without distraction. Overall, we believe Magellan's financial results for the year ended 30 June 2020 are more than satisfactory. For the year, Magellan's net profit after tax increased by 5% to $396 million. Magellan's adjusted net profit after tax increased by 20% to $438 million. Adjusted net profit is an important measure of our underlying earnings as it excludes noncash accounting amortization relating to the acquisitions of Airlie Funds Management and Frontier Partners, the unrealized gains on our principal investments portfolio and the costs associated with capital raisings for our funds. Net profit before tax for the Funds Management segment increased by 21% to $558 million. Total dividends, interim final and performance fee dividends increased by 16% to $2.149 per share. We have a dividend policy of paying dividends amounting to 90% to 95% of the after-tax profit of the Funds Management segment. Our team has been very busy on the business development side this year. During the financial year ended June 30, 2020, we completed the initial public offer of the Magellan High Conviction Trust, our second closed-ended listed investment trust, which raised $862 million. Consistent with our partnership approach, Magellan funded the issue of valuable bonus units to investors who participated in this offering. We have been on a journey over the past 5 years to simplify and improve the efficiency of how investors can access fund management products in Australia. In 2015, we launched active ETFs to enable investors to access our funds simply on the stock exchange. In 2017, we launched a closed-ended listed investment trust, the Magellan Global Trust, which enabled us to demonstrate the power of partnerships benefits via funding attractive bonus units and ongoing discounted distribution reinvestment plan. In 2020, we established the next-generation of active exchange-traded funds, with the launch of the Australian -- sorry, the Airlie Australian Share Fund, with a single unit that acts both as a listed fund and an unlisted fund. This is the first time this has been done in Australia. We believe this will open a pathway for other managers to make their existing unlisted funds available on the stock exchange, which should benefit investors generally who are seeking to invest in managed funds and understand the simplicity of trading on the stock exchange. On the 3rd of August 2020, we announced a groundbreaking restructure proposal to simplify Magellan's global equities retail products via a consolidation of the unlisted open-ended Magellan Global Fund, the listed open-ended Magellan Global Equities Fund and the listed closed-ended Magellan Global Trust. The merged fund, the Magellan Global Fund, will have 2 unit classes; an open-ended class and a closed-ended class. At current unit price, the merged fund will have a total value of around $16 billion, excluding the proposed capital raisings that we intend to undertake at the beginning of next year, and it will be the largest managed fund listed on the ASX. The merged fund will undertake a $1-for-$4 entitlement offering and a bonus option issue post-implementation of the merger. Magellan is paying for the benefits being offered to investors pursuant to the entitlement offering and the bonus option issue. These costs are likely to be significant and will impact reported profits in the 2020/'21 financial year. Importantly, the Board excludes these expenses from profits when determining the appropriate level of dividends. As I've previously written, we firmly believe this partnership approach is a win-win outcome for investors in our funds and for our shareholders. Partnership benefits increase investor engagement, promote loyalty and can attract more investors over time and provide valuable benefits to investors. We view the cost of Magellan to fund these partnership benefits as a highly attractive investment in the future of our business. In August, we also announced a number of new product launches. The first is the launch of the MFG Core Series. This initiative has been under development for a number of years and is consistent with our approach to think deeply about solving problems for our clients and leveraging our core competencies to address their needs. The MFG Core Series aims to offer clients who are seeking lower cost alternatives an attractive investment proposition that leverages Magellan's expertise. The MFG Core Series comprises 3 funds: MFG Core International Fund, MFG Core ESG Fund and MFG Core Infrastructure Fund. The funds will offer investors more diversified portfolios of high-quality companies based on Magellan's investment philosophy and proprietary research. The core infrastructure strategy has a very successful institutional track record, has substantial funds under management and has been available to institutional investors for the past decade. The MFG Core Series funds will charge a management fee of 0.5%, which we believe will be highly appealing to investors who are seeking a lower cost alternative. We intend to launch the MFG Core Series as active ETFs listed on the stock exchange by the end of this year. This is a large and growing space, and we believe that it could become a material part of Magellan's funds under management over time. The second initiative is the launch by the end of this year of the Magellan Global Sustainable strategy as a listed exchange-traded fund. The Global Sustainable strategy has now established a 3-year track record, and we are seeing considerable interest in sustainable investing from advisers and from retail investors. We continue to make progress on our retirement product for the Australian market and look forward to being able to share more with you shortly. I would now like to talk about the evolution of our Principal Investments segment, which we believe will be an important and strategic part of Magellan moving forward. It has the potential to add to our intellectual capital, provide meaningful diversification beyond our Funds Management business, importantly, generate substantial shareholder value over time. Historically, our principal investments primarily comprised of co-investments in our funds, for investments in the Magellan Global Fund, the Magellan Global Trust, the Magellan High Conviction Fund, the Magellan High Conviction Trust and the Magellan Infrastructure Fund. And it has also provided capital to seed new strategies such as the upcoming retirement product. Co-investment in our funds is an important alignment of interest between Magellan as the fund manager and our clients. We believe in eating our own cooking. We have set a pretax investment hurdle of 10% per annum through the investment cycle for our principal investments. At 30 June 2020, we had total assets in our Principal Investments segment of $373.7 million and generated return of 15.7% per annum over the past 10 years. In considering our principal investment beyond investing in our own Funds Management products, the Board has applied the following tests. Firstly, we do not want these investments to complicate our simple and scalable Funds Management business model nor distract us from delivering for our clients. To be considered in our Principal Investments segment, the business needs to be fully autonomous from Magellan with an outstanding management team in place. If they need our management expertise to run the business or develop the business, we're unlikely to be interested. In most instances, we'd be seeking a noncontrolling investment. Secondly, we look for opportunities that can contribute to the intellectual capital of our business. The ability of an investment to contribute to intellectual capital may not always be obvious to outside observers. We are simply not seeking more expertise in the Funds Management industry, although we may consider investing in an investment management business under this model. For instance, intellectual capital could include experiencing developing a direct retail consumer model, digital engagement expertise, experiencing or access to other important geographic markets or technology innovation that could assist our business. Thirdly, we are ideally seeking to make investments in high-quality businesses that could make a meaningful contribution to our future earnings increase -- and increase optionality for Magellan. We may make smaller investments from time to time if they meaningfully contribute to our intellectual capital. We do not want to build a portfolio of subscale investments that do not move the needle. We would prefer fewer larger investments. This is important to create long-term optionality and diversification. Lastly and importantly, we want to make investments that have the potential to create shareholder value over time by earning very attractive returns on the capital that we commit. We are very pleased we have recently announced our first meaningful principal investment, beyond our investments in our funds as a foundation investor in Barrenjoey Capital Partners, a newly established Australian full services financial services firm. Barrenjoey will offer Australia and international clients a full suite of financial services, including corporate and strategic advisory, equity and debt capital markets underwritings, cash equities, research, prime brokerage as well as traditional fixed income services. With a partnership model that leads control, equity ownership and core decision-making with executives, Barrenjoey can apply a nimble, aligned and entrepreneurial approach, which we believe uniquely positions the business in the Australian market. Barrenjoey is led by an standing team of experienced executives, including Guy Fowler, Brian Benari, John Cincotta, Matt Hanning and Chris Williams. We're also delighted that Ken MacKenzie will be joining Barrenjoey. Barrenjoey is already off to a flying start, having recruited some outstanding people with more outstanding people approaching the business on a daily basis. Barclays has also become a foundation investor with a 9.9% economic interest and will assist Barrenjoey with global product distribution, research, cross-border advisory and debt capital markets as well as making significant balance sheet capacity available to Barrenjoey to support its clients. We believe our investment in Barrenjoey meets all the criteria we have established for our principal investments. Firstly, we have taken a noncontrolling 40% economic interest, and Magellan will have no day-to-day involvement in the business. Brett Cairns, our Chief Executive Officer, will sit on the Board to oversee our investment as a non-executive director. Secondly, we believe that Barrenjoey has the potential to contribute meaningfully to our intellectual capital through staff training programs via the exchange of ideas, which I can tell you is already occurring, and potentially via the co-development of investment or business opportunities. In this sense, the investment in Barrenjoey increases our ability to attract and train outstanding people and provides more optionality when considering new opportunities. Thirdly, we believe our 40% economic interest in Barrenjoey has the potential to make a meaningful financial contribution to Magellan over time. The market opportunity for Barrenjoey is large and likely to be beyond Australia and New Zealand in the longer term. We believe combining outstanding people and capital in the right ownership structure with properly aligned incentives has the potential to deliver outstanding results over time. Lastly, and very importantly, we expect that we will generate attractive returns for our shareholders over time from our investment. We note whilst our investment in Barrenjoey of approximately $155 million is meaningful, it is actually very modest in the context of the size of Magellan and our financial resources. We are excited about the prospects for Barrenjoey, and it reminds me of the early days here at Magellan. 14 years later, it is incredible to see what can be achieved by talented people who are aligned in a common goal with a common purpose backed by a strong balance sheet and not being constrained by existing systems or processes. We would like to express our sincere thanks to all the principals of Barrenjoey and to Barclays for partnering with Magellan. We are truly honored. I would also like to briefly highlight another principal investment we're in the process of making. We have entered into a commitment to make a $20 million investment in FinClear for a minority interest in the business. FinClear is a provider of technology, trading infrastructure and ASX market access services to wealth, stockbroking, platform and fintech customers that require trading access and asset hosting on the ASX. This business has an outstanding management team, and we will have 1 non-executive director on the FinClear Board. Whilst this investment may not be material from a financial perspective, it does deeply add to our intellectual capital in understanding the ongoing simplification and digitalization of the financial plumbing of the financial services industry in Australia. We have been at the forefront of innovation in this area, and we believe our investment in FinClear will augment what we are doing and lead to further innovation and simplification for our clients. I'd lastly like to thank, firstly, to all that are involved at Magellan, and thank you, our shareholders, for your support of the business. I would now like to hand over to Brett for his CEO's review.

Well, thanks, Hamish, and a virtual good morning to everyone, and thank you for joining our meeting. If you're in your office or indeed on your lounge suite at home. Thank you for attending. And if I could have the first slide, please? Just to drill into a little bit more detail from what Hamish has just outlined. We do believe we had a very good year, notwithstanding the dislocations that occurred, obviously, in March. And our key management and services fees, as it says here, increasing 25%, which is roughly in line with the increase in funds under management of -- averaged over the year. The performance fees this year, whilst we always note that they are lumpy and do come in different times, came in very close to what happened in 2019 and $81 million, leading to an adjusted revenue increase of 20%. Our adjusted expenses at the group level were just under $120 million, leading to a net adjusted profit before tax of $573 million, an increase of 21%. As Hamish outlined, we review and think about our adjusted profit in a comparative sense and look to adjust out those strategic initiative costs related to financial capital raisings within our funds. And indeed, the amortization of intangible expenses, as Hamish noted, particularly those relating to Frontier and Airlie. Importantly, dividends for the year came in at just under $2.15 per share, including an annual performance fee dividend of $0.134 being franked at $0.75 -- 75%. And to the next slide, please. If we drill now into the Funds Management business, you'll see that the management fees, the base management fees, increased 26% over the previous year, which is in line, as it says down into the key statistics area there, with the move in the average funds under management also up 26%. Within the Funds Management area, our expenses came in at $116.8 million, which was at the lower end of the range that we indicated of $115 million to $120 million. There are a few factors that move that around, which I'll discuss in a moment. And importantly, our cost-to-income ratio, excluding the positive impact of performance fees, was around 20%. Or if you want to turn that around, the business enjoys a healthy margin of 80%. Next slide, please, [ Ang ]. With regard to expenses, as Hamish noted, and we've noted a number of times, costs relating to strategic initiatives, we consider those to be outside the day-to-day expenses of the Funds Management business and therefore, excluded from when we -- when the Board considers dividends, pay up dividend payouts. As I noted, the cost-to-income ratio was a very healthy 19.7%. And at that level, expenses, whilst obviously important, and we pay a lot of attention to them, the key profit driver, of course, becomes revenue, which, in turn, becomes a function of funds under management and the movement in those funds under management. For the coming year, we expect the Funds Management business expenses to be in the range of $110 million to $115 million, which is slightly less than what it was last year. This is a result of a number of factors, one of which is less expenses around things such as travel in this new environment. But also, we took the opportunity, which I'll discuss in a moment, to reorganize some of our deferrals around previous bonuses, and we did not pay a deferred bonus this year, which impacted -- which will impact the expenses for this coming year. Next slide, please, [ Ang ]. Just briefly on tax and dividends. Our tax rate for the 12-month period to 30 June was 23.1%. Just as a reminder to people that lower tax rate than the 30% company tax rate is a result of us being a -- declared an offshore banking unit and enjoying a 10% concessional tax rate on eligible offshore earnings such as fees that we may earn for managing money -- for clients overseas. Dividends, as I said, for the 6-month period were $1.22. For the 6-month period, 75% franked, with a final dividend of $0.9166 per share and a performance fee dividend of $0.304 per share. We look, as a matter of policy, to pay those dividends as promptly as possible, this year being paid on the 26th of August. As Hamish noted, our dividend policy for interim and final dividends is to pay out between 90% and 95% of the profits of the Funds Management business, excluding crystallized performance fees, and then we look to pay an annual performance fee dividend of 95 -- 90% to 95% of those crystallized performance fees. The combination, of course, of a payout ratio in that range with a lower than 30% tax rate leads to a partially franked dividend. Next slide, please, [ Ang ]. Just a very quick update on COVID. Not much since we last updated at the results presentation. Hamish mentioned, we did transition very, very seamlessly from the working -- from the office environment to home, which largely we're still involved with at home. There are some movements back to the office, but it is optional and largely, people are still working from home at the moment. I did note in the annual report, one of the features that Magellan has maintained for many years, really since from the inception, is a very strong balance sheet. And that strong balance sheet, we believe, has always been in clients' interest and therefore, shareholders' interest. And we do think that, that helped in this period, particularly in March, where, obviously, things were very uncertain as what was likely to play out. The Board and Hamish and I, we moved to reassure staff that there would be no reductions, and there'll be no reduction in hours and/or salaries. We did, however, want staff and the business to act prudently in that regard, given the uncertainty that was around. And so we did elect to freeze salaries, and we did pull back on variable bonuses. And for some very senior people, that meant some very meaningful reductions in bonuses. But we also understood that households require -- or would require cash flow in these uncertain times, particularly for those that may have lost an income earner. So we elected to pay out previously deferred earned with deferred bonuses and not to defer these rounds of bonuses. Within that, I'd like to thank everyone who have -- for contributing to that. Hamish and I were in the same boat here. We elected to waive our bonus, and indeed, the Board also elected to waive scheduled fee increase. So thank you, everybody. Next slide, please, [ Ang ]. Just looking very briefly at our funds under management, which we put out basically every week. You can see the growth in our funds here. The mix of the funds between retail and institutional has been relatively stable over that time. Importantly, our average base management fee remains at 62 basis points, that move from 2018 to '19 of 65 to 62. As I've said previously, as a result of the mix, if you like, it's the introduction of Airlie has a slightly lower institutional base management fee. Our funds under management that attract the performance fees steady at basically 1/3 of those funds under management are subject to performance fees. Next slide, please, [ Ang ]. Importantly, very necessary part of running a Funds Management business is the investment performance. And pleasingly, across all time periods and across all our product offerings, our investment performance has been extremely good. I would agree with Hamish through this period, I both think he and the team have done a very wonderful job in managing through these very choppy times. And I think that's shown through this in the next slide, which I'll talk about in a moment, in the way that we construct these returns, particularly the downside protection as being a part of Magellan's investment return offering. Importantly, here, also our friends at Airlie, their track record is beginning with the Australian Share Fund. And again, I'm reminded here that Matt and Emma and John have been around for a long period of time. Safe hands and experience does shine through, particularly in these times, as you can see from these numbers. Next slide, please, [ Ang ]. As I mentioned and Hamish rightly mentioned as well, which is not apparent when you first look at those previous performance numbers, is what happens when markets go down. Here, a very important part of Magellan's investment processes that consider the downside and indeed build as much downside protection that we can within that investment offering. And here, you can see the results of this for Global Equities. Largely over a long period of time now, you see that the upside is basically 100% captured, but very importantly, on average, downside markets, we only experience all the -- the global equity strategy only experiences a 50% downward market capture. And that is very important in protecting investors' capital in adverse markets. It does provide, of course, optionality as markets move in downward directions to consider your investment alternatives. If we move to the next slide, which is showing the same downside protection for infrastructure, slightly differently shown. Unsurprisingly, if you look at the right-hand side here, global listed infrastructure as a benchmark tends to move down and up as a fraction of the overall market, it's a subset of that market and it has those characteristics. But very most importantly, Gerald and the investment team, after the infrastructure strategies produce a downside capture of 0.3, which is extremely relevant. I would note what's not noted here, and I did say this at the results. It's also very important to note here that the correlation between infrastructure, our infrastructure and global equity offerings is remarkably low. You can combine that with these downside protections that are inherently built into this investment process. It gives you a very interesting and low volatility outcome, which is an important aspect when considering a retirement income solution. Next slide, please. Just look at the flows briefly and at institutional flows and retail flows totaled $5.7 billion for the 12 months. Pleasingly, our retail flows this year were quite strong. If we could go to the next slide, [ Ang ]. Just teasing that out a little bit further. You can see that split out between global equities, the global infrastructure and Australian equities. You can see the net inflows totaling $5.7 billion, and investment performance of $5.4 billion gave a June 30 funds under management total of $97.2 billion. I would note that as of 30 September, our last fund announcement, those funds have now grown another 5% to $101.2 billion. If we look at the mix of those funds under management, in raw funds under management, it's 72% institutional, as we define it, and 28% retail. But of course, the fee structures for each of those are quite different. And so if you rebase that on base management fees, it's about 55% comes from retail and 45%, if you like, comes from institutional. We believe it's a very well balanced business. If you look at our institutional client base, within that, we have a very diversified group of clients, some over 140 institutional clients. Of which, of course, there is a tail. But of which, the top part of those clients, as it says here, the top 5 of those clients represent something like 20% of our services fees. So we do have, we think, a very good spread of institutional clients. The #1 client there, which many people know, is St. James's Place. That relationship continues to go from strength to strength. It's become a very, very good partnership over the years, in my opinion. Their business is a very, very good business and is growing. And of course, we wish them and indeed, all our institutional clients very, very well, particularly during these times. Next slide, please, [ Ang ]. If you then look at a subset of the retail part of that, think about the listed unitholders that we have through our active ETFs and now the closed-ended funds. This is a chart we've put up for a number of years now just to track how that's been growing. Of course, the active ETFs started in March 2015. So we had 0 at that point. And you can see the growth of these open-ended funds and the introduction, if you like, of the closed-ended funds, MGG and MHH, around that time. Currently, we have a bit of -- I looked at it this morning, a little bit over 102,000 unitholders combined across these platforms, and they continue to grow. If you look at -- some of you may remember the previous AGMs around the time we did MGG, you'll see a small dip there, which looks very small now on this chart. That was a result of a little bit of switching that was going on around that partnership offer for MGG. But of course, that thankfully and pleasingly recovered. If you move to the next slide, [ Ang ]. This teases out that a little bit by looking at what happens on those active ETFs on the open-ended funds and looking at the daily change, if you like, of those unitholders. It's a very noisy set of data, so we've sort of rolled that across a 20-day rolling average. And you can see that little dip in 2017. I spoke about where it went negative, quickly recovered. And importantly, over the last year, on average, we welcomed about 55 new unitholders each day in the last 12 months into our active ETFs. What's also interesting and not shown here is that within our closed-ended units, those units and the number of unitholders there do fractionalize over time as some investors might sell a portion of their holding and introduce new unitholders through that in conjunction with what we've done in UPP, for example, in MGG. And when we look at that as well, though not put it here, over the last year, the fractionalizing in the closed-ended funds added another 20 unitholders per day to that tally. Thanks, [ Ang ]. As Hamish mentioned, very quickly, it seems like an age ago now, but it did happen last financial year, we raised $862 million in the High Conviction Trust, MHH. That attracted loyalty units which, as Hamish rightly pointed out, we consider to be a very good investment for the firm and also our partnership with our investors. Those material one-off costs relate to those strategic investments I spoke about earlier and excluded clearly from Funds Management and the dividend payout. MHH now, again, I looked at it this morning, is basically $1 billion under management currently. Well, good news. The next one, [ Ang ]. The other thing that Hamish also mentioned that occurred during the year was the launch of the Australian Share Fund, the Airlie Australian Share Fund. And whilst the Airlie Australian Share Fund actually already existed as an unlisted fund, what we did do was take that existing unlisted fund and also make it available essentially via exchange. And whilst that might sound a logical next step, there was a lot of work to do to get that to work, notably at the registry level. But essentially, what happens now is that these open-ended funds can be accessed by -- both directly by our application and redemption from both directly through the RE as a normal unlisted fund, but also importantly, can also trade as an active ETF on the exchange, Chi-X or on ASX. And importantly, investors who may wish to come in, let's say, via the directorates through an application form can then exit [indiscernible] exchange. And that does not constitute an event in a sense of a tax event, where you're selling 1 unit class or buying another and those sorts of things. It's merely moving from a subregistry of -- issuer sponsored to a HIN, share-sponsored registry. And we think that brings great choice and indeed great efficiencies to both what we can do and also, as Hamish mentioned, potentially for the wider market as well. If we can move to the next slide, [ Ang ]. And so as Hamish rightly pointed out, we have been on a journey. I'm not sure we all knew we were embarking on a journey when we started a lot of this. But we have been on a bit of a journey, and it's been interesting to sort of reflect and look at how a lot of this has come together. This really tries to put it into a bit of a time frame. We've discussed a lot of this at the moment, but really started with the introduction of the active ETFs. An important part there, which indeed we have nothing to do with, but it is an important part of the efficiency, I think, of how managed funds will evolve over time is the introduction of what's known as AMIT, which stands for Attribution Managed Investment Trust. The key acronym there or the key letter there is: A, the attribution part of that, it allows managers to manage investment trust now differently to what was the regime previously, particularly around taxation. And it's an important part of what our restructure is currently undertaking. As Hamish noted, we began our first closed-end funds back with MGG in 2017 and introduced the partnership offers. And very importantly, also funded those usual setup costs for those funds. Ourselves rather than allowing that to be part of the unitholders. So unitholders investments were employed fully in investments without any dilution. We followed that up again with MHH. And then, of course, as we've just spoken about, Airlie, the next generation of active ETFs, which leads today to the restructure that Hamish mentioned that we're currently undertaking. And if we go to the next slide. And that restructure really is bringing together the 3 global equities retail funds into a single trust, as Hamish mentioned, which will have 2 unit classes. And one of those unit classes will be a closed-ended unit class and the other unit class will be an open-ended unit class. Both those unit classes will be accessible on the ASX. Closed-ended class will trade under the listing rules. The open-ended class, like the active ETFs, will trade under the APRA rules. And like Airlie, that open-ended class will also be accessible directly off-market, if you like. We think that this is, really, as I said, the culmination of this journey and provides a very simplified proposition now, which hopefully will allow investors great access and flexibility in really accessing our flagship global investment strategy. We also think, over time, this has the potential to add more efficient secondary trading in closed-ended units, which is one of the features of close-ended units, particularly discounts to net asset value. And it really does consolidate a lot of progress, as it says here, that we've made over time to reduce friction for investors and make that experience more seamless and hopefully offer a greater choice. I must say that there is a lot involved in this restructuring. It certainly does highlight that simplifying things requires a great deal of work. The increase in complexity that naturally occurs in these things doesn't require a great deal of work, and I'd like to thank everyone who's put in a lot of work into this restructure. In particular, unitholders as well who now will be asked to vote on these restructures at upcoming meetings in late November. Just as a quick update. We recently received the first court orders on Tuesday, which has allowed the explanatory memorandum to go out. So many investors may have seen that over the last day. They are very large documents, unfortunately, but we do encourage everyone to read those, the Notice of Meeting, the notice that's gone out this morning, and we look forward to those meetings in late November. Just graphically here, just to sort of work through quickly the restructure. The global equities -- or the global fund, the Magellan Global Fund, which is the large unlisted fund, that becomes the main trust and those that own units in that trust continue to hold those units, albeit we're going to call them open class units now, but that's the only change. The -- those that hold it on a platform, there was no change in anything, but will happen will continue to hold the same units. MGE will exchange their units on a NAV-for-NAV basis and receive open class units. MGE and the global fund, of course, have exactly the same investment strategy. MGE unit price is slightly higher than the global fund's unit price, so MGE unitholders will receive the scaled up number of units in exchange for their open class units. MGG, which is the closed trust, will exchange their units for closed class units in the global fund. The investment strategy of MGG will become the global fund strategy. The managed investment -- the managed currency hedge, it will be no longer, and the global fund will be run in an unhedged currency -- for currency in a unhedged format. Importantly, both classes will have a distribution. We've announced a distribution policy targeted a 4% cash distribution paid semi-annually across both of those classes. And so ultimately, post implementation, where we end up as 1 trust with 2 classes, as I said, the closed class was roughly $2.3 billion, $2.5 billion prior to the capital raising, will be traded on market as MGG currently is. And the open-ended class will be also traded on market via the active ETF process, and also, as I said, directly accessible by application and redemption form as it currently is now with the global fund. Next slide, [ Ang ], please. Again, as Hamish mentioned, and we've spoken a bit about this post the restructure, the intention is to offer a capital raising. Firstly, it's the second dash on the second bullet point there. Those coming into the closed class unit from MGG will receive a bonus option on a 1-for-2 basis when they come into that closed class. And that option -- well, although the terms are not written here, that option will be available for 3 years to buy closed class units at a 7.5% discount to the net asset value, and that will be exercisable daily. The intention is to also make those options tradable on the exchange. So for those that do not wish to exercise that option, they have the opportunity to sell those to someone who may wish to do so. Also, in conjunction with the restructure, the intention is that the Magellan Global Fund now, the consolidated Magellan Global Fund will have a -- will offer a $1-for-$4 entitlement offer to all unitholders, so closed-ended and open-ended unitholders, to subscribe on a 1-for-4 basis for closed class units and receive an additional 7.5% bonus loyalty units, again, funded through Magellan. Each one of those new units that are subscribed under that entitlement offer will also carry an attached option on exactly the same terms as that I've just described. As we have done previously, and as Hamish have noted previously, all these partnership benefits, restructure costs and all the discounts will be funded by Magellan and will not impact on unitholders. And we will fund those via our existing resources and potentially drawing down on a corporate debt facility. As we talked briefly at the results presentation, we have been on a progressive journey, if you like, of diversifying and adding some resilience to our business and our revenue streams. There's been an ongoing growth, clearly, in our Infrastructure business, which has now reached almost $16 billion. It's been a very, very successful business. We've developed a direct retail strategy through the launch of the active ETFs. There are now -- about 42,000 has already grown since this was put together at about 45,000 individual unitholders, with a substantial amount of FUM attached to those. We, of course, purchased Airlie that we've spoken about in 2018, which gave us a $7 billion applied in the Australian market. We've launched those -- the 2 closed-ended LITs, the High Conviction Trust and the Global Trust were totaling over $3 billion of FUM, and we provide ongoing partnership benefits through that. We've spoken about the restructure of those global equity funds. Hamish has mentioned, and I'll pick up, to the global MFG core funds for retail investors. We're looking to launch the sustainable -- launch the sustainable strategies, and we're looking to launch the sustainable strategies and active ETFs, as Hamish mentioned, before the end of the year. And of course, there is an intention once we get through some regulatory issues to launch a retirement income product. So next slide, [ Ang ]. Just graphically, just to try to put a little bit of the same context. If you think back to 30 June 2015, when we just embarked on the active ETF, about 8% of our business was not aligned, if you like, to platforms in the global equity strategy in that regard. If we zip through forward to today, that's moved to about 28%, obviously, made up of some of the things we've mentioned, infrastructure, the non platform active ETFs at Airlie and those closed-ended funds. And of course, we keep chipping away at some of these aspects. Next slide, please, [ Ang ]. Speaking very briefly because Hamish has touched on this, the MFG Core Series. We're on schedule to launch 3 of these active ETFs in mid-December. As Hamish mentioned, we believe that this is a very natural extension of what our research and our investment philosophy allow us to provide. There's been a lot of work and a lot of research and a lot of thinking in the construction of these. We do believe the total addressable market in this is very, very large, as Hamish rightly points out, and they're a very scalable opportunity. If I could have the next slide, please, [ Ang ]. This is, again, as Hamish mentioned, will cover MFG Core International, MFG Core ESG and MFG Core Infrastructure. And again, that infrastructure fund has been going now for 10 years, and I'll speak about that in a moment. These portfolios are going to be actively constructed and then subsequently rebalanced in a systematic manner. But it does importantly leverage the core skills and the core investment philosophy and research of the Magellan team, and that's a big differentiator. Attractively priced, as it says here, with 50 basis points for those seeking a lower cost solution, and we intend to launch those on Chi-X hopefully by the middle of December. Next slide, [ Ang ], please. As I said, just -- it's perhaps not apparent because it has been an institutional product, but the MFG Core Infrastructure strategy, which leverages this approach, has been going now for over 10 years, very, very successfully. It's attracted over $8 billion of funds under management. And it's produced, we think, very, very, very good results. And we believe that this approach is going to be very useful in the international fund and also in ESG as it unfolds over time. [ Ang ], next slide, please. So the Magellan Sustainable Fund, as I said, just very quickly, intend to make that available to retail investors, again, hopefully, by the end of the year. We've got a lot on our plate, but that's the intention at the moment. And then on retirement income, which I understand there is a lot of interest. We did receive a private binding ruling from the ATO on the structure. We continuing discussions with regulators. COVID has knocked around our timetable a little on that. And indeed, we are working through some issues to resolve a few things with the regulators. Once we've resolved those, we are -- we'll be in a position and look forward to launching that product. Next slide, please, [ Ang ]. Just quickly picking up on Hamish's comments on principal investments. As Hamish mentioned, we are thinking about principal investments in 2 ways, if you like. One is an internal investment, which largely is alignment with our clients by investing in our funds or seeding new strategies. And then thinking about things from an external investment outside our Funds Management business, provided, as Hamish outlined, that certain criteria have been met in terms of scale, contribution of intellectual capital; very, very importantly, no management distraction. Another is, I think, we have spoken about Hamish and I and the team have seen many, many proposals, many ideas on that. And we've spectacularly done not very much at all in that. And it's largely because these criteria, the hurdles here are actually quite high, and it's quite difficult to find those types of opportunities, particularly around the management distraction. Generally, across our principal investments, of course, we want discipline around using shareholders' funds in this regard. And so the Board has set a pretax hurdle over the business cycle because things take a bit of time, obviously, of 10% per annum as a benchmark. Next slide, please, [ Ang ]. To date, as I think Hamish also mentioned, principal investments have been largely housed in the internal investments, i.e., in our funds and our -- and listed shares for seeding our portfolios. You can see here -- and this is a slide we put up most years. You can see the growth in our principal investments. It now totals, at least at 30 June, at over $2 per share. And you can also see the return investments on the right -- the investment returns on the right. Notably, the 5-year plus returns being above that 10% benchmark that I noted. And then finally, [ Ang ], if we do look at the external investments on the next slide. Just to put in some -- in a little bit of a framework, which Hamish outlined. The criteria that we really are looking for is, as I said, a very important part is not to distract us from our core Funds Management business. And therefore, we don't want operational involvement by Magellan or Magellan staff in any material way that could distract this. And when you think about that, we are, therefore, solving for people and high-quality management in what we would like to engage with. Ideally, of course, those -- those companies, those higher quality companies would be meaningfully scaled in this sector that have advantages in that or -- and/or -- and as Hamish again rightly points out, contributes to the intellectual capital of our business, maybe the Funds Management side of it or provides meaningful optionality for us to do things and consider things that we may not be able to do inside the core of what we do. And notably, of course, it needs to have strong financial returns. Hamish has mentioned Barrenjoey. I won't spend time on that. But clearly, Barrenjoey Partners and now FinClear as an investment, which we have to complete in the next week or so, are now fitting into those external principal investments. So Hamish, with that, I might leave it there, and perhaps we can pick up things through Q&A if there is any.

Well, thank you very much, Brett. What a comprehensive review of the year and some vision for where we might be headed in the future. We're now going to move on to the Q&A opportunity for shareholders really in relation to the business and other matters. If there are questions, of course, we're happy to address them. Questions relating to the resolution, such as the remuneration report and the election of directors, maybe if we could leave those questions until we get to those formal resolutions. There were some earlier problems about logging on as a shareholder rather than a guest on the Lumi system. Their Q&A has now been opened up to everybody on the line. So I think everybody is able to submit a question. The priority will be given to shareholders identifying themselves as shareholders. [Operator Instructions] I assume we've probably already got a few questions, but we're very happy for them to keep coming through. The harder and more challenging, the better, I would say, so serve them up to Brett and I. Always a little more difficult when we're all not face to face. But if you've got a question, please submit them. We'll try and get through as many as we reasonably can. So Sarah, you will be collating the questions, and you will be reading them out and asking the question. So maybe, Sarah, I could hand over to you and ask us through the questions. Brett and I haven't seen these questions, so they're live, and we'll do our best to get through them.

Thanks, Hamish. We'll just wait for any questions to come through the Lumi platform. But in the meantime, we'll go to a question that we received prior to the meeting from a shareholder. And I'll direct this one to you, Chairman. When will a DRP happen or a share purchase plan or a rights issue?

Well, that's a two-folded question really. In terms of a share purchase plan or a rights issue, that would be a capital raising for the group. And we would only be undertaking a capital raising if we actually needed the capital. So last year, when we undertook a capital raising, it was a very, very small raising, slightly less than 5 million shares. We undertook that as a share placement at a very, very tight discount to the market after the share price had gone up substantially. We decided getting it done in that form was in the best interest. If something was much more material, obviously, we would contemplate other forms of capital raisings, including rights issues or share purchase plans, but they have to be considered in the scheme of the size of them and the discount in which they would be offered. In terms of a dividend reinvestment plan, we haven't activated at all a dividend reinvestment plan. Again, we don't -- we haven't been seeking to raise more capital over time and issuing new shares. We could offset that with purchases on market. We haven't had a lot of desire from shareholders to have a share purchase plan at market. It really saves people probably really just the brokerage. It wouldn't be offered at a discount to our share price. But if there was a large demand from shareholders of wanting a sort of on market DRP, it's something we could look at as a Board, but we haven't had a lot of interest in that in the past. Brett, do you have any comments on that?

No, no. I think you've covered it, Hamish.

Okay. We do have 1 question. It's from [ Stephen Dear ], and he's a guest. His question is given the state of ASX's CHESS Replacement project, what is the promise you see in the investment in FinClear?

Well, I'm going to hand that one to Brett.

Okay. Well, I'm not sure what you're referring to in terms of the state of it. But indeed, the CHESS Replacement is of interest in the way that we're thinking about a number of these things. I think FinClear provides an opportunity, and we'll see, but it does provide an opportunity for us to expand our intellectual capital, as we said, in this process. You think about Airlie, it's really brought unlisted and listed open-ended funds together. They're now one thing essentially in that. There's still a lot of friction, we believe, in the system. There's a lot of unnecessary, for example, listed investments being held in custody. And there's clearly various ways that you can think about adding more efficiencies to that process and indeed, making that investment process have less friction in that and make that more appealing, particularly across listed and also unlisted assets. And so look, it's a broad question, and I don't have a full answer on that. And partially, that's one of the reasons why we've actually made this investment in FinClear, is to have effectively a seat at the table because a lot of that is getting reshaped. Without putting too much in FinClear's mouth, FinClear have been working on a number of these initiatives. And we think that there's great scope there. Albeit the pitch has not been fully been developed to add something to that, particularly for our clients generally and also as we think about how we might interact with our products. So that's the rationale. It's very much an intellectual capital exercise in our mind. We certainly agree we don't know everything about the plumbing and indeed where this might go. And so we'd like to partner with people who can help and indeed add to that intellectual capital collectively.

Yes. And Brett, I would add to that, we believe in ongoing simplification for clients and taking out frictional costs. There's a number of things in the CHESS system where we have looked at doing certain things in the past, but really the way the current CHESS system works, the frictional costs are actually too high for doing some things that we would potentially contemplate doing. FinClear is very aware of that. They're in discussions with the exchange. We'd love to have a seat at that table at how that new sort of CHESS simplification works out. They're very interested in the whole HIN as a platform, and there's a lot of data that comes with -- on the HIN side of things. So as the exchange is evolving, and as FinClear is looking to effectively link right into the plumbing of that evolving exchange, we think there's a lot that could be done on sort of the product development or even within our existing products and how we can better serve clients, and things are changing. And so being -- we've been looking at this from the outside. And often, we will just speak to the exchange and things. But having a seat at a table with FinClear, who's at the -- really at the forefront of what was happening and deeply engaged with the ASX and Chi-X and others, we think, is in our interest to have a person on the Board and to be speaking with the FinClear people because there's things we're looking to do, and this evolution, they will open up further simplifications and benefits that we can address for our investors.

Yes. I certainly agree with that, Hamish. And I think, look, part of the question around where CHESS Replacement's at is that I try to say it with regard to our simplification, simplifying these -- our restructure, I'm saying, simplifying these things is not simple perversely. It does take a lot of work, and there's a lot of hurdles to get through. But there's a large push, I think, to do this, and I couldn't agree with Hamish more. I think our existing suite of products and how they may evolve in all that, we know that there's more that can be done there. We just don't know exactly how that may play out in the seat at the table when people are connected into that, we think, is very valuable.

We'll move on to our next question coming from [ David ], who is a shareholder. His question is, will the Core Series cannibalize your existing business with higher fees?

Well, at the end of the day, the answer to that is, it is possible that they could cannibalize. But we really don't think of it like that. If there are investors who generally want to invest in lower cost solutions, we don't have any solution there. And therefore, we have investors that would genuinely leave maybe Magellan and end up in an index bundle or something, offering people an alternative who are contemplating that. We may well catch that leaving investor. There could be somebody who just switches, who decides, well, this is close enough, I will switch. So that's a cannibalization. But then there is a massive part of the industry who have already moved or are moving to sort of passive and semi-passive solutions or lower cost solutions. And we're not participating at all, and it's probably the major growth end of the entire industry. And we believe we could attract some of that money that's already moved there. So we're pretty confident that even if there's a little bit of cannibalization, the opportunity for us to win new business is much, much bigger than somebody who may switch some money from one product to another product. And giving people more choice and letting them choose, we think that's a great thing for consumers, and if someone wants to do that is -- we have no issues with that as well. But overall, we think, net-net, this is a real opportunity of upside for Magellan. But of course, there could be a small amount of cannibalization, and that's not going to make any difference to how we think. I think people who worry about those type of things are the class of people who get caught in the incumbent sort of dilemma. They never innovate because they're scared that if they do something like that, that someone could switch in their business. And I think that's exactly why incumbents get overtaken by people who innovate. And it's in our interest to do this, and we -- cannibalization is not something that we're concerned about. Really, at all, the extent it happens, we think, we will pick up a lot more business on the other side of that. Brett, do you have any comments on that?

I don't. I think you hit the nail on the head. I think those that perhaps have read Christensen's Innovator's Dilemma and those sorts of things would sympathize with what you're saying, Hamish. On that, I would point out, of course, that the products are differentiated, so there is a decision to be made around that. The full fee-paying global equity strategy is run by Hamish. It's a concentrated strategy, and it's actively managed. The international share fund at 50 basis points has its roots, obviously, in that deep investment philosophy and the research, but it's run differently. It's more diverse, and it's run a bit differently around that. And so could there be cannibalization? Yes, there could, but there's also a clear choice here. We think net-net, the totable addressable market when you add the lot together is large. And it's in Magellan's interest to effectively have, what I call, a $0.50 product.

Yes. And I think, ultimately, here, we're expanding the addressable market, and that's the important thing to understand here, with a very, very good product, in our view.

Yes, agreed.

We'll move on to our next question coming from [ Luke Rathbone ], who is a shareholder. The question is, whilst Barrenjoey appears well down the path in recruiting talent, are you aware of any progress in revenue generation, i.e., any advisory or other transactions? And if none as yet, what is the likelihood of impending revenue?

Look, I'm not really going to get into in any way. We said the business is really going to be launched next year. So while people are joining, most of the people who are joining are on gardening leads. So most of the people who are employed are the infrastructure people, and we've got a lot of people, 60 to 70 people employed in developing all the compliance and legal and trading systems and everything else. So there is a larger amount of expenditure going on in the business. And most of the people who have been employed recently have resigned from jobs and won't be available to turn up for the next 3 months. And of course, they can't speak to clients during that period. We do have some of the principals who were in the business. All I will say is the business is getting very good feedback from both institutional clients and from corporate clients that we feel very good where it's headed. But this isn't a story about what revenue will be earned in the next 6 months. And if it's 0, we simply couldn't care less if there's no revenue in the next 6 months. If you offer me in 6 years, and there's no revenue, I think we would have -- we would have some great concerns. But that's not going to be the case. You get very good people in a business like this, we're pretty confident the revenue is going to follow. But the next 6 months is more about building the business than it is about revenue. But there are some clients we're discussing things with some of the people, but there's not a lot of sort of front office principal people who are free of gardening leave arrangements at this point in time. Brett?

I'm not sure I could add much, Hamish, other than, look, the -- there's a process here and that needs to be worked through. But I wouldn't underestimate the work that's already been done. Hamish pointed out the 60-odd people who have been -- they're working for many, many months now. The systems and processes are well advanced in all that. So when a lot of these things come together early next year or the middle of next year, the business will be very well advanced. So I would agree with you. It's just a process for getting the business into a position to start earning revenue, [ Luke ].

Thank you, Brett and Hamish. No further questions at this time.

Well, Brett, that was pretty easy.

Yes. [indiscernible]

Sarah, do you want to just give it another 30 seconds in case a question comes through?

Sure.

So we'll just give it another -- if anyone's got a question, we're just going to leave that open for another 20 or 30 seconds. If there's no further questions, we will have another section during the formal business of the meeting. So we'll just wait maybe another 10 or 15 seconds just in case it was someone who was having trouble getting through. Sarah, if there's no more questions. I'll now turn to the formal business of the meeting.

We did just receive 1 question in. I'll just review it. So it comes from [ Wayne Perry ], who is a shareholder. His question is, will the new retirement income product compete with or complement the existing Global Equities product suite?

I'll hand that to Brett.

Look, it will complement, in my view. The Global Equities products, of course, can be used as part of a retirement strategy. And indeed, many advisers do use the Global Equities strategy as part of that overall portfolio management post-retirement. One of the things that you may have noticed we've done is aligned our distribution policies effectively across all our products to give certainty around those distributions. And that does help, obviously, in terms of generating predictable or somewhat predictable distributions from our funds, and that does enhance their applicability into retail -- into a retirement income fund. The retirement income fund that we're working on really is looking to address something slightly different in that regard, where we're looking for what is a known effect of the inflation-adjusted distribution. That also takes into account and tries to mitigate what we've spoken about previously being sequencing risk. And so it does sit differently, we believe, and indeed some of the analyses that we've had done independently differently within a portfolio, and it does have a different portfolio impact for those considering post-retirement portfolio construction. And so would it materially cannibalize what's going on in Global Equities usage? It could impact that somewhat, but I do think it's complementary over time.

And I agree with you, Brett. I think it's very complementary. I think we're really at a point where there's a massive amount of people who are moving really through demographics into the retirement phase. We're at a point in history where interest rates are effectively headed to 0 and creating sensible retirement solutions for people without having enormous equity risk in their portfolios with consistent and indexed income in their retirement is a real problem. And for many of those solutions, Magellan is not present in the solutions that are currently really being offered. We made a little bit of global fund or something in some of them. But reality in retirement models that people are still really thinking through how to do them, there's going to be a massive amount of money that may be moving out of equities and into different styles of products, and that's become more challenging. I think we're going to find ourselves as something that will be front and center in a lot of retirement models, and we're not really there at the moment. We may be in a few, so I don't view it as cannibalization in that sense. So I think it's a massive market, and there's a massive problem for investors at the moment and how do you get a decent income in retirement without a lot of risk when interest rates are at 0. It's -- and without sort of going -- reaching for yield in sort of highly risky credit products. It's a big dilemma. So we're not going to be the only solution there. There's lots of people who are putting sort of retirement income sort of products together. And hopefully, ours will be something that will be additive and a great value proposition for people.

Thank you, Hamish and Brett. Confirming no further questions have been received at this point.

Okay. Well, thank you very much, Sarah. If there are any additional questions, people can put them through and we could address them during the formal session. So I'm now moving to the formal part of the business. I'm advised by the company's secretary that holders of approximately 110.3 million of the company's ordinary shares have sent in proxies. In my capacity as Chairman of the company, I've been appointed as proxy by the holders of between 86.3 million and 109.6 million of the company's ordinary shares, depending on the relevant resolution being decided today. Where any of these proxies are open and not subject to voting exclusions, votes will be cast in favor of the resolutions to be put to the meeting. There will be opportunities for shareholders to ask questions concerning the resolution before the motion is put to a vote. I will announce the proxy voting results after the vote is taken for each resolution. I know there are some people who prefer that we put up the proxy information before each resolution. And we also know there are shareholders who do not like the proxy vote being put up before each resolution. At each annual general meeting, we have always put the proxy results up after each resolution. There is no exact correct way to do this, but we do hear from the people who are strongly opposed that they like to exercise their vote without being actually influenced or thinking that the result is already determined by us putting up how all the votes have come in, and therefore, people then assuming that their vote is irrelevant. Every vote counts, in our view. Every shareholder should have the opportunity to participate. And therefore, we have decided, as we consistently have, is announcing the proxy voting results after everybody has had an opportunity to exercise their rights. We know not everybody shares that view. There are people on both camps. But I just wanted to mention that, that it is conscious, and we know shareholders have different views on when we announce that. But we're going to put the proxy voting results after the vote has been taken. The proxy voting figures will be at the last closing time for receipt of proxies, which was at 11 a.m. on Tuesday, the 20th of October 2020. These figures may change if the shareholders who submitted a proxy has attended the meeting today and revoked their proxy. The constitution of the company, together with the Corporation Acts (sic) [ Corporations Act ], provide that a resolution put to the vote at a meeting should be decided on a show of hands, unless a poll is demanded. A poll can be demanded by the Chairman. As the Chairman, I'm requiring each of today's resolution be decided by a poll. I'm not sure how I do a show of hands in a virtual annual general meeting. The instructions to complete your vote now appear on the screen. I declare that the polls are open and that resolutions and voting choices currently appear on the Lumi AGM portal. Shareholders and proxy holders who have lodged into -- who have logged into the Lumi AGM portal using the unique logging details will have access to the resolutions and the voting choices. You will need to submit your voting choice in order for your vote to be counted. Shareholders who wish to vote for the resolution, please mark for the for box. Shareholders who wish to vote against the resolution mark the against box. Shareholders who wish to abstain from voting on the resolution should mark the abstain box. Abstentions will not be counted in computing the required majority for the poll. If you are a proxy holder, you must comply with the direction of the shareholder if you wish to lodge a valid vote. If you've already submitted a proxy vote, your existing vote will be canceled if you vote again on the Lumi platform. Please note there is no button to submit or send your vote and instead, your selection will be automatically counted. If you change your mind and wish to change your vote, you can modify your vote at any time before the polls are closed. I appoint Geoff Noonan from BoardRoom Pty Limited as the returning officer. The returning officer will arrange for counting of the votes in accordance with the voting exclusions set out in the Notice of Meeting. Following the polls, the meeting will be closed and the votes tallied. Results of all the polls will be released to the ASX later today. They will also be posted on Magellan's website. I now propose to proceed with the items of business, which were set out in the Notice of Meeting. Item 1. The first item of business on the agenda deals with the financial statements and reports for the year ended 30 June 2020, including the director's report and the auditor's report and have been tabled. Please submit a question through the Lumi platform if you have a question regarding the company's financial statements and reports for the financial year 30 June 2020. No resolution is required in relation to this agenda item and no written questions solely of the company's auditors have been received from shareholders. Again, now is the opportunity, if anyone present that has questions or comments regarding the financial statements of the company and the reports of the directors and auditors. Sarah, have we received any questions from shareholders or proxy holders in relation to the financial statements?

Hamish, no questions have been received at this point.

I will just wait another 10 seconds, Sarah, to make sure we give everyone the opportunity. Well, thank you. Now let's turn to the resolutions that require shareholder approval. Adoption of the remuneration report. This report forms part of the director's report, which is contained in the company's annual report. The resolution you will be voting on now appears on the screen. Unless I hear to the contrary, I will also take the resolution as read. I now move to consider item 2, adoption of the remuneration report as contained in the Notice of Meeting and as it appears on the screen. Please submit a question if you have any questions or comments regarding the remuneration report. The Corporation Acts (sic) [ Corporations Act ] requires that a resolution of the remuneration report be adopted must be put at the -- put to the vote at the company's annual general meeting. I'd point out that the vote on this resolution is advisory only and does not bind the directors or the company. Before putting a -- putting the motion to a vote, I'd like to invite any questions or comments on the remuneration report. If you wish to ask a question, please submit a question through the Lumi platform. Sarah, again, I would ask if we have received any questions from shareholders or proxy holders on the remuneration report.

Thanks, Hamish, at this stage, no questions have been received.

Again, I -- we will just wait for 10 seconds or so just in case there is a delay of a question coming through. Well, if there are no questions, I'll now proceed to voting. As the Chairman, I exercise my power to direct that the vote on item 2 is to be taken by way of a poll. As set out in the Notice of Meeting and subject to voting exclusions, I will vote all undirected proxies in favor of this resolution. I'm just leaving an opportunity to make sure all shareholders are able to record their vote. [Voting]

Now I'm going to show the proxy voting results for this resolution, and it can be seen on screen. It looks like we'd scrape through on that one. I now want to move forward to the reelection of John Eales. Item 3(a) concerns the reelection of John Eales to the Board. By now, you have had an opportunity to read the explanatory notes that accompany the Notice of Meeting. The explanatory notes provide a brief biography of John. Please submit a question through the Lumi platform if you have any questions or comments regarding this resolution. John was originally appointed to the Board in July 2017 and was elected as a director at the company's annual general meeting in October 2017. He retires in accordance with the company's constitution and ASX Listing Rule 14.4, and being eligible, offers himself for reelection. The Board, excluding John, unanimously supports Mr. Eales reelection. I will now provide an opportunity for John to address the meeting regarding his reelection. John, over to you.

Well, thanks very much, Hamish. And I thank all shareholders for the opportunity to stand again for election as a director of Magellan. Over the last 3 years, I've certainly enjoyed my time as a director and shareholder of Magellan immensely. And I've certainly enjoyed contributing around a table of executives and directors for whom I have the highest regard. Magellan is a unique business with a unique culture where the diverse contributions from all directors are respective -- respected and certainly additive to the direction of the business. For all its success, though, Magellan is a humble business which doesn't rest on its past results, but continually strives to embed the basics while improving on performance right across the board. Each of the directors brings a diverse skill set to the table. I feel that I bring a skill set deep in aspects of people management and performance as well as broader international business experience across a range of industries as a consultant to and investor in unlisted and listed opportunities. I've also had the experience, significant experience, as a director in both public and private company arena, including global businesses like Flight Centre Travel Group and also the Palladium Group, the latter of which I was both a shareholder and non-executive director until I stepped down in September this year after we had over 10 years of significant growth and success. If today's vote is in the affirmative, I look forward to continuing to serve Magellan Financial Group and our clients and shareholders in my capacity as a director. Thanks very much. Thanks, Hamish.

Well, thank you very much. John. And I'd like to reiterate the incredible contribution that you've made to Magellan and our boardroom since you've been a director. The precise resolution we'll be voting on now appears on the screen. Unless I hear to the contrary, I also take the resolution as read. I now move to consider item 3(a), the reelection of John Eales, is contained in the Notice of Meeting and appears on the screen. Before I put the motion to a vote, does anyone have any comments about this resolution or have any questions of John? If you wish to ask a question, please submit a question through the Lumi platform. Sarah, I would again ask, have we received any questions from shareholders or proxyholders in relation to the reelection of John Eales?

Thanks, Hamish. No questions have been received at this point.

Again, I'll just wait for 10 seconds or so in case there's a lag in anything coming through. Well, thank you. We'll now proceed to voting. As Chairman for this resolution, I exercise my power to direct that the vote on item 3(a) is to be taken by way of a poll. As set out in the Notice of Meeting, I'll vote all undirected proxies in favor of this resolution. Please submit your vote in relation to item 3(a). [Voting]

I'll now ask that the proxy results for this resolution to be put on the screen. Well, thank you very much. And John, it appears you've been reelected as a director. So congratulations.

Thanks very much, Hamish. And now I'm going to move to item 3(b), the reelection of Robert Fraser. By now, you will have the opportunity to read the explanatory notes that accompanying the Notice of Meeting. The explanatory notes provide a brief biography of Robert. Please submit a question if you have any questions or comments regarding this resolution. Robert was originally appointed to the Board in April 2014 and was last reelected as a director at the company's annual general meeting in October 2017. He retires in accordance with the company's constitution and ASX Listing Rule 14.4 and being eligible, offers himself for reelection. The Board of Directors, excluding Robert Fraser, unanimously recommend that you vote in favor of the reelection of Robert Fraser. I'll now provide Robert the opportunity to address the meeting regarding his reelection.

Thank you, Mr. Chairman. I hope you can hear me clearly. Good afternoon, ladies and gentlemen, and thank you very much for the opportunity to address you briefly at this meeting. As John said, it's an absolute honor to continue to represent shareholders on this exceptional company. In terms of my formal qualifications, you will have read I've got an economics degree, majoring in economics and accounting and an honors degree in law from Sydney University. But I think for better or worse, I'm now described as a financial type, having lived and breathed financial markets for all of my life as a director and investor for over 40 years, and as a corporate adviser on mergers and acquisitions for over 30 years. For the last 16 years, I've been a professional company director, and I have 3 other nonexecutive directorships with ARB Corporation, which is a world leader in its field. I'm very proud that it's a company that's achieved compound growth in net profit after tax of 15% for the last 30 years. It's a standout. F.F.I. Holdings, which is a successful Australian food company. And that's somewhat of a rarity, given that, that market is dominated by multinationals. And MFF Capital Investments, which, of course, is the original Magellan flagship fund managed by Chris Mackay. All of these companies have clear strategies. They've provided excellent returns for shareholders. And they've employed capital management policies that clearly demonstrate an understanding of shareholder value and how it's generated. I'm very fortunate to have been an investor in Magellan since it was formed by Chris Mackay and Hamish Douglass in 2006. As a result, my shareholding in Magellan aligns my interest in a very substantial way with those of all shareholders. However, no matter how much skin in the game I might have through my shareholding at Magellan, that's actually not the most important thing because the Magellan shareholders do not come first. What is the most important is my strong alignment with Magellan's core principle of acting in the interest of our clients and our employees at all times. And that's even if it comes at the financial cost to our short-term reported profits. I fundamentally believe in Magellan's mindset that this is the best way to create significant long-term shareholder value. Exposure of memorandum in the Notice of Meeting summarizes my professional experience in more detail and the Board skills matrix in the Corporate Governance Statement also covers my areas of experience. The only areas where I don't have are human resources and marketing. And as you just heard from John, we've got that very capably covered by other members of the Board. However, leaving aside box ticking for corporate governance purposes, the most valuable skill is the ability, I believe, to contribute independently, constructively and collegially with both management and the Board. In this regard, I believe I made a positive contribution by complementing the existing skills and the experience of the Board, chairing Magellan's main operating subsidiary, Magellan Asset Management, or MAM, in a professional manner; chairing the Audit and Risk Management Committee diligently and participating as a member of Magellan's Remuneration and Nominations Committee. Most recently, I've been active as a member of the Board subcommittee in the due diligence committee for the simplification and restructure of Magellan's global equities retail funds and also the subcommittee for the launch of the Magellan High Conviction Trust. As Brett mentioned, that was only 12 months ago, but it seems like an awfully long time now. I've also participated in the subcommittees on various other Magellan projects both past and present. In my view, the Magellan Board is highly engaged with the business, and Board discussions are always vigorous and very constructive. It's a pleasure to work with such a professional and dedicated team. I'd like to congratulate Hamish on another outstanding year and also to thank Magellan Senior management, particularly Kirsten Morton and her finance team, and Marcia Venegas and her team for their outstanding work with the MAM Board and also the Audit Committee. Finally, I'd like to thank my fellow Board members for their confidence and wise counsel. With shareholder support, I look forward to making a positive contribution to the success of Magellan in the future. Thank you, Mr. Chairman.

Well, thank you very much, Rob, and I'd like to reiterate many of the comments you've made. I think you're one of the best independent directors I've come across in my career. You chair now, our main operating subsidiary, Magellan Asset Management. You chair our Audit and Risk Committee. Incredible amount of diligence and detail you go into. You've sat on so many subcommittees and things that shareholders can't even see. And I'm very pleased to say that you're probably one of the most underpaid nonexecutive directors in the country with the job that you do at Magellan. And like I was saying with John, the incredible contribution that you make on behalf of the shareholders, I'd really like to thank you on behalf of the Board. The precise resolution you'll now be voting on now appears on the screen. Unless I hear to the contrary, I'll also take the resolution as read. I'll now move to consider item 3(b), the reelection of Robert Fraser is contained in the Notice of Meeting and appears on the screen. Sorry, I've just lost -- just bear with me shareholders. This is technology getting the better of me. Here's on the screen. Before putting the motion to a vote, does anyone have any comments about this resolution? If you wish to ask a question, please submit a question through the Lumi platform. Sarah, have we received any questions from shareholders or proxyholders in relation to the reelection of Robert Fraser?

Hamish, no questions have been received to date.

Well, thank you. We'll now proceed to voting. As Chairman, I exercise my power to direct that the vote on item 3(b) is to be taken by way of a poll. As set out in the Notice of Meeting, I will now vote all undirected proxies in favor of this resolution. Please submit your vote in relation to item 3(b), the reelection of Robert Fraser. [Voting]

I'll now ask the proxy voting results for this resolution to be put on the screen. Well, congratulations, Robert. Appears you've been reelected. I do just want to make one comment here. People may note that there is a vote against Robert Fraser by some shareholders. There was a proxy adviser to some institutional shareholders who recommended against the reelection of Robert on the basis he's an independent because 3 years ago, his firm, which is a stockbroking firm, participated in the raising as many other firms did in the raising of the Magellan Global Trust. That wasn't -- I don't believe that was a required disclosure. We did it for complete list 3 years ago. And they have, in their wisdom, decided that because Robert Fraser firm earned some commissions 3 years ago, he's no longer an independent director and recommended to their clients that they vote against Robert Fraser's reappointment. I think this is the most ridiculous recommendation I practically ever seen. Rob is one of the most independent directors I have ever come across, and one of the most talented directors I've ever come across in my life. It's a pity that some of these property advisers do that. And of course, next year, a 3-year test, which was a voluntary disclosure of ours, rolls off. So next year, he will be an independent director by their test. And probably next year, though, if he was up next year, would have recommended they vote in favor. But to Rob, congratulations. We value you enormously on the Board, and I just wanted to make that comment.

Thank you, Hamish. It's much appreciated.

Now I want to move to item 3(c), the reelection of Karen Phin. By now, you would have had an opportunity to read the explanatory notes that appear in the Notice of Meeting. The explanatory notes provide a brief biography of Karen. Please submit a question you have or any questions or comments regarding this resolution. Karen was originally appointed to the Board in April 2014 and was last reelected as a director at the company's annual general meeting in October 2017. She retires in accordance with the company's constitution and ASX Listing Rule 14.4 and being eligible, offers herself for reelection. The Board of Directors, excluding Karen Phin, unanimously recommend you vote in favor of the reelection of Karen. I'll now provide Karen the opportunity to address the meeting regarding her reelection.

Thanks very much, Hamish, and good afternoon, everyone. My professional background is in capital management and capital markets, and my training is in finance and law. I spent over 20 years as a corporate adviser at 2 different investment banks where I analyzed corporate balance sheets, advised on M&A and financing strategies, including how to raise capital and how to hand back capital and distribute franking credits to shareholders. I have considerable experience dealing with regulators, including the ATO on the ASX, and I even spent 12 months working in the corporations team at ASIC, and this has given me a broader perspective on governance and valuable insight into ASIC's decision-making processes. I currently sit on the boards of 2 other Australian-listed companies, and I'm a member of the federal government's Takeovers Panel. That's a very quick summary of my professional background and relevant experience. So what do I bring to the Magellan Board table? Well, Magellan is a very dynamic, innovative business, and the team is always striving to find better solutions to improve the client experience. As a nonexecutive director, I'm focused on reviewing management proposals with an unbiased, commercial but critical judgment. I try to find the right balance between supporting management and constructively challenging their proposals. We often need to work within very tight time frames and make collective decisions quickly. I really enjoy working closely with the other Board members. And as I no longer hold an executive position, I can make myself available at short notice and commit whatever time is required. Finally, I also think it's important to bring an ethical perspective to our Board decisions. So I'm always thinking about whether we're doing the right thing by our clients and also importantly, by our employees. In this way, I think we best look after shareholders' interest. And like the other directors, I feel it's a real privilege to sit on the Magellan Board and work with such a talented and hardworking management team. With shareholders' approval, I hope to continue to do so in the future. Thank you very much.

Well, thank you very much, Karen. And I would also like to reiterate many things that you have said. You have just made an outstanding contribution since you've been on the Magellan Board. You're almost Rob Fraser's partner in crime. We put you on nearly every due diligence subcommittee that we have in the group. We throw a lot of balls. You are always the first to roll up your sleeve. You give incredible advice to the rest of the Board from those subcommittees. But critically, you provide incredibly insightful advice to Brett and myself and the rest of the management team when we're putting up ideas and proposal to the Board. So I very much would welcome you being reelected to the Board, and we greatly value your input and support. So thank you.

Thank you, Hamish. It's a pleasure.

The precise resolution we'll be voting on now appears on the screen. Unless I hear to the contrary, I'll also take the resolution as being read. I now move to consider item 3(c), the reelection of Karen Phin, as contained in the Notice of Meeting and as it appears on the screen. Please note that this is a final -- this is a final resolution. This is the final resolution to be voted on, and I'll declare the poll closed shortly after the proxy voting results for this resolution are displayed on the screen. Before I put the motion to a vote, does anyone have any comments about this resolution? If you wish to ask a question, please submit a question through the Lumi platform. Sarah, again, ask, do we have any questions from shareholders or proxyholders in relation to the election of Karen Phin?

No questions received so far.

Well, thank you, Sarah. We'll now proceed to voting. As Chairman, I exercise my power to direct that the vote on item 3(c) is to be taken by way of a poll. As set out in the Notice of Meeting, I will vote all undirected proxies in favor of this resolution. Please submit your vote in relation to item 3(c). I'll just give the shareholders a little while longer just to record the votes. [Voting]

The proxy voting results for this resolution can now be seen on the screen. Well, Karen, you have been reelected as a director, and congratulations. I look forward to working with you again into the future.

Thank you, everyone.

Everyone should now have had the opportunity to vote on the resolutions. I now ask that you ensure that you've completed and submitted your voting choices as I will be declaring the polls closed. I'll just wait maybe 30 seconds or so for anyone to finalize any of their voting on screen. I now declare the polls closed for the vote on each of the resolutions, and that concludes the voting on the resolutions of the meeting. The votes cast will now be tallied. Having regard to the proxies and the number of votes on the floor today, it is expected all the resolutions will be passed. The results of the voting will be released to the ASX later today and posted on Magellan's website. I think you can now see a view of all the directors on screen. I'd like to thank each of the directors for all of their contributions this year. Brett and I ask a lot of you, you challenge us, and you're always putting customers, shareholders and employees at the forefront of your thinking. There being no further business, the meeting is closed. Thank you for your attendance today and your ongoing interest in Magellan Financial Group.