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

Okay. Good morning, all. My name is Michael Hans. I work in the Corporate Development and Investor Relations team at Magellan and will be moderating today's Annual General Meeting. Before we commence today's proceedings, I would first like to acknowledge the traditional owners of the land on which we meet, The Gadigal People of the Eora Nation and pay my respects to their elders past, present and emerging. I will start with some housekeeping matters. Today's AGM is an in-person event being live streamed for those who could not make it today. If there are any questions from shareholders or proxy holders during the AGM, we will be happy to address them. Questions will be addressed immediately after the Chairman and Managing Director's address. Questions relating to items of business will be addressed once we reach the relevant resolutions. I will now provide an overview of how to ask questions and how to vote. To ask a question, please raise your blue or yellow card, and we will call upon you to ask your question. Once called upon, a Magellan representative will come over to you with a microphone. Please do not ask your question until you have received the microphone. We request that you ask a maximum of 2 questions to allow other shareholders an opportunity to ask their questions. Please also state your name and where appropriate, state who you are representing before asking your question. Moving on to how to vote. Upon registration, shareholders and proxy holders eligible to vote would have received a blue voting card that provides for the holding of a poll on the resolutions put to shareholders. You will need to complete this card in order for your vote to be counted. Shareholders who wish to vote for the resolution, please mark 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 have already submitted a proxy vote, your existing vote will be canceled if you vote again today. I would now like to hand over to Magellan's Executive Chairman, Andrew Formica, to formally open today's meeting.

Good morning, ladies and gentlemen. I am Andrew Formica, Executive Chairman of Magellan Financial Group Limited. On behalf of the Board, I welcome you to our 2024 Annual General Meeting, which is now formally open as there is a quorum present. I also extend a warm welcome to those shareholders who are watching today's live stream. I would now like to introduce our directors, John Eales, Deborah Page, Hamish McLellan, Cathy Kovacs and David Dixon. And we're also joined by our Managing Director of Magellan Asset Manager, Sophia Rahmani. Our Company Secretary, Marcia Venegas joins us in the audience and a brief biography for each will appear in the company's annual report. We also welcome Clare Sporle, a partner from the company's external auditors Ernst & Young and representatives of our share registry, Boardroom Proprietary Limited. The meetings of the previous Annual General Meeting that were held on the eighth of November 2023 have been approved by the Board and signed by me as the Chairman. These minutes are tabled and are available for inspection by any shareholder wishing to see them by contacting the company. The notice of Annual General Meeting has been made available to all shareholders. I will take the notice of meeting as read. I will now take a moment to outline this morning's agenda. We have allotted sufficient time for today's meeting, and it should conclude at approximately 12:30 p.m. Following the conclusion of the meeting, I would invite shareholders to meet our investment teams who will be set up outside. Out there, we have representatives from Magellan's global equities and infrastructure teams, from Airlie, our Australian equities team also our ESG specialist team and Vinva Investment Management. I encourage you to ask them about their investment processes, their portfolios and their market insights. I will shortly make some opening remarks and then I will hand over to Sophia Rahmani, Managing Director of Magellan Asset Management Limited to make her address. Following this, we will then consider the formal items of business, which relate to the receipt of the company's financial statements and reports, the adoption of the remuneration report; the reelection of each of Cathy Kovacs and David Dixon as directors, the grant of performance rights and restricted shares to Ms. Sophia Rahmani under the Magellan Financial Group Equity Plan and the Magellan Financial Group equity plan approval as well. The formal items of business also include the spill resolution at Item 6 of the notice of meeting. This is a conditional resolution that only need to be considered if at least 25% of votes cast are against Item 2, which is the vote on the remuneration report for the year ended 30th of June 2024. Given that the outcome of the vote on item 2 will not be known until the results of today's votes have been tallied, the spill resolution will be put to the meeting as a contingent pole. This means that if after tallying the vote, more than 75% of votes cast are in favor of item 2, then the spill resolution will be withdrawn. Shareholders should complete their poll card with the understanding that Item 6 may be withdrawn. On the screen is a formal disclaimer regarding any forward-looking statements that any other directors may make today. All comments are subject to the formal disclaimer that is shown here on the screen. Turning now to my Chairman's address. Thank you for giving me the time to address you all today. I am pleased to report that since I presented to you at last year's AGM, we have made significant progress in restoring stability to the business for our clients, staff and shareholders. An important part has been the successful implementation of our transitional leadership arrangements with Sophia Rahmani commencing as Managing Director of our Asset Management business in May. We have also resolved the share purchase plan loans for the vast majority of our team. And in July this year, we completed the conversion of the Magellan Global Fund Closed Class Units into the Open Class Units, eradicating the discount between these two classes for our clients. With these important matters behind us, we have been able to turn our attention to the future of Magellan and to our forward-looking growth strategy as we continue our focus on delivering long-term excellence to our clients. We recognize that our clients have a choice of who they trust to manage and protect their wealth. So we are pleased to see funds under management flows start to stabilize with outflows slowing quarter-on-quarter over 2024 financial year and funds under management at the 30th September 2024 of $38 billion, which is higher than the average funds under management for the full year 2024, which was $36.8 billion. While this has been supported by the strength of the financial markets we have seen, it also reflects early signs of a turn in our fund under management profile back towards growth. This has been underpinned by some recent client wins. This was especially the case in the institutional channel, where we saw inflows of approximately $600 million in the fourth quarter of full year '24 and we saw further inflows in July 2024, demonstrating the renewed confidence new and existing institutional clients have in Magellan. In 2024, the business generated over $19 million in performance fees, primarily as a result of strong investment performance in the second half in our Global Equities strategy which returned over 15% in the period, the highest half yearly return since full year '21. Our focus remains on sustaining strong performance across all of our strategies consistently over the long term. This is critical to our ongoing success adding value to our clients, which will, in turn, add value to our shareholders. Client engagement within our Global Equities and Infrastructure strategies has also improved, and our Airlie business continues to go from strength to strength building momentum with both retail and institutional clients. We are also pleased with the continued growth of our Associates with a positive contribution to our net profit after tax of $11 million versus a loss of $11.5 million in full year '23. This is a significant turnaround year-on-year. A major highlight in the year was our announcement in August that Magellan has entered into a strategic partnership with Vinva Investment Management, a high-quality systematic equities investment manager based here in Australia. This is an important development for the future of our business and highlights the embedded strength and attractiveness of our platform to leading investment firms and teams like those at Vinva. It also highlights the unique pathways available to Magellan for growth through either investments in stakes via our established Associates business or via wholly owned opportunities. Both pathways allow investment firms to access and benefit from our strong operations and extensive global distribution platform and demonstrates that Magellan can become a diversified financial service provider of choice and enhance the high-quality product offerings that we bring to clients in doing so. Turning now to our financial highlights. Magellan's financial results for the year demonstrated resilience and stability. The group's adjusted net profit after tax for the year was $177.9 million representing a 2% increase on the full year 2023. While management fees were down 22% for the year at $257.9 million the contribution from performance fees of $19.2 million, the highest we've seen since full year '21 supported the group adjusted revenues. We also saw a strong contribution from Associates, with our share of net profit reaching $11 million, this is a significant increase on the $11.5 million loss that we saw in full year '23. In line with the increase in adjusted group net profit, our adjusted diluted earnings per share were also up 3% on full year '23 to $0.982 per share. The business maintained substantial financial strength in the form of our robust balance sheet, which as of the 30th of June, comprises $912.2 million in net tangible assets and no debt. This profitability, strong operating cash flows and broader balance sheet strength allowed us to pay total dividends to shareholders of $0.651 per share. I would like to take a moment now to talk about the resilience and strength of Magellan's business as it stands today. Across all parts of the business, we have a high-quality team who are collaborative, dedicated and entrepreneurial. We have a client-first culture and are focused on delivering investment excellence to our clients. Our operating business, Magellan Asset Management, is anchored by our investment capabilities across Global Equities, Infrastructure, Airlie and now Vinva. These investment capabilities are supported by our highly regarded distribution team, which services retail and institutional clients in Australia and New Zealand, the U.S. and across the rest of the world. We have an impressive institutional grade platform, characterized by the culture of operational excellence and the efficiency and scalability of the platform. The platform also has depth with our mutual fund platform in the U.S. and our UCITS platform in Europe. This is all underpinned by a strong risk management framework. We also have significant in-built brand equity in Australia and offshore as well as widespread recognition of our strong investment capabilities and continued value in the long-standing relationships of our people across the market. Additionally, on the right-hand side, we also have our Associates, select minority investments in very high-quality businesses that we believe represent attractive growth areas for Magellan. Our associates are comprised of Barrenjoey Capital Partners, a full-service investment bank, FinClear Holdings, a provider of financial markets technology and infrastructure services as well as Vinva, a systematic equities fund manager, which I would now like to turn and talk a bit more about. So turning to our strategic investment with Vinva. As I noted earlier, this is a significant step forward in our strategy to diversify the business by attracting high-quality investment teams to our business through aligned strategic partnerships that leverage the strong capabilities we already have in our organization. Our strategic partnership with Vinva represents the coming together of 2 culturally aligned businesses that are firmly focused on delivering for clients. We see significant potential for our highly regarded distribution team to distribute Vinva's products to clients globally and to certain retail and wholesale clients in Australia, which we see as a key lever of future growth. The team at Vinva, led by the Managing Director and CIO, Morry Waked, are specialists in systematic equity strategies and have accumulated knowledge investing in global equity markets for over 30 years. Their strategies are high-quality and insight-driven, investing in the Australian and global market across the risk spectrum, with their product suite, including both long-only and long-short strategies. Vinva's investment process and business is underpinned by significant investment in their intellectual property, which they continually evolve as well as a very scalable business platform. As you can see on this slide, performance in Vinva's key strategies is excellent with strong alpha generation across its Australian equities and global equity strategies. Since the date of our announcement to enter into a strategic partnership with Vinva, their fund under management have increased approximately $1.6 billion to $23.1 billion, and they have a leading position in Australia's systematic equities managing approximately $18.1 billion in these products as well as growing global equities business, which currently manages approximately $5 billion of funds under management and has significant runway to further growth. The majority of Vinva's existing funds is from Australian-based institutional clients. From a financial perspective, Vinva is highly profitable, and we expect to see an immediate contribution to Magellan's share of after-tax profit from Associates as well as dividends, which will be commencing from 2025 financial year. Partnering with Magellan on distribution will allow Vinva to focus on what they do best, investing for and generating superior returns for clients whilst growing their asset base outside of Australia and adding new investment products for existing and new clients. We are pleased with the relationship that is developing between the teams at Magellan and Vinva and today announced the launch of new Vinva products that will be distributed by Magellan in Australia. Sophia will discuss these in more detail later in the presentation. We envisage this relationship as one based on partnership, alignment and collaboration where Magellan can bring not only distribution capabilities, but also access to Magellan's expertise in product innovation, seed capital and future opportunities for Vinva to leverage the operational excellence on Magellan support functions. Vinva is a great example of the high-caliber teams and opportunities we can attract to our platform, thanks to the quality of our brand, our platform and our distribution reach. In addition to Vinva, the other main associate investments we have are Barrenjoey Capital Partners and FinClear. We are very pleased with the success Barrenjoey is seeing as it continues to grow market share and deliver strong financial results. As a reminder, Barrenjoey was established only 4 years ago, and to its achievements in the short period of time and nothing but outstanding. With all key businesses now established, Barrenjoey saw revenue growth across all businesses, particularly in its fixed income business. In full year '24, this resulted in Barrenjoey delivering net profit after tax of $34.7 million, a result of record revenues that were up over 40% and disciplined cost management. The business maintains a strong capital position, well above the minimum requirements with 4.9x at year-end. The strong cash generation within the business has allowed all working capital facilities to be repaid. Pleasingly, the growth in earnings, cash generation and capital has also allowed Barrenjoey to declare its first dividend totaling $11 million, of which Magellan will receive its proportionate share. In the 2024 financial year, FinClear's contribution to Magellan improved as a result of revenue growth from a recovery in market trading volumes and contributions from new cash and FX solutions that target the changing needs of their broker clients. The business has a diverse client base with $160 billion of underlying client assets as at the end of September, which positions them as a leading provider of financial market infrastructure with long-term relationships across more than 250 wholesale intermediaries. After a period of consolidation, they are now looking at cross-selling across their client base to generate revenue growth and have made significant progress with the establishment of the innovative private company and fund platform, FCX, which expects to be fully operational later this year. As I noted at last year's AGM, governance has been a key priority under my chairmanship. The board and I have been focused on restoring Magellan as one of Australia's leading financial service providers. A necessary step in setting up Magellan for the future was to ensure that we have the right leadership in place. As I mentioned at the start of my presentation, we have successfully implemented a transitional leadership structure with myself as Executive Chairman; and Sophia Rahmani as Managing Director of our main operating subsidiary, Magellan Asset Management. We intend to appoint Sophia as Group CEO within 6 months, at which point I will return to the role of Non-Executive Chair. We have also completed the Board renewal process, which commenced in November 2022 and was designed to bring a broad range of skill sets required for the future of Magellan. Our Board renewal process has included my appointment initially as Non-Exec Chair and then as Executive Chair as well as the appointment of David Dixon, Deborah Page and Cathy Kovacs as non-Executive Directors. Hamish McLellan is retiring from the group -- from the Board of Magellan Financial Group at the conclusion of this meeting, following 9 years of service, and we anticipate appointing a new non-exec director in the second half of 2025 after a further review of Board capabilities. I would like to thank Hamish for 9 years of dedicated service as a non-exec director including stepping in as a non-exec Chairman at the important point for the company's future. Following Hamish's retirement, Deborah Page will be appointed to the position of Deputy Chair at the conclusion of today's AGM. As you're aware, resolving the employee share purchase plan legacy issues and finalizing and launching our new remuneration framework has been a key priority over the past year. To resolve the share purchase loans held by our staff, we announced additional retention payment in October last year. During the year, we saw the total loan balance of current employee loans reduced by 42%, which was reduced further with retention payments that were made in September this year. We anticipate that the majority of loans of current employees will close out by September 2025. The second step has been the design, structure and implementation of our new equity-based remuneration framework for key management personnel and senior management, which we announced details of in our annual report. The new remuneration was designed and structured incorporating feedback from shareholders, proxy advisers and our staff. It is comprised of both short-term and long-term components and outcomes based on both qualitative and quantitative measures to key management personnel and senior management for the 2025 financial year and onwards. I believe the new framework sets a strong foundation for the future by incentivizing, motivating and retaining our high-quality team and aligning their success to that of our clients and our shareholders. Importantly, it addresses the feedback received from various stakeholders last year. As you can see on this slide, the new Managing Director's fixed remuneration is set at $850,000, significantly less than the previous CEO and we propose undertaking further benchmarking upon Sophia's formal appointment to the CEO role. More broadly for the senior management team, including the executive KMPs we have introduced, from full year 25 specific financial and non-financial measures aligned with our strategy and values. These include financial hurdles relating to the Net-profit after tax, our Earnings Per Share, our Investment Performance, our Funds Under Management Flows and non-financial metrics relating to People & Culture, Clients, Growth & Risk, Regulatory Management and also ESG matters. In terms of the STI entitlements, we have increased the deferred proportion for the executive KMPs as well as other senior managers from 35% to 50% and will deliver these entitlement as restricted equity as opposed to the previous cash entitlements. In terms of full year '25, these will vest in 2 equal installments over 2 years, and this will increase to 3 years from full year '26. We have also introduced a new long-term incentive plan, which comprises a 3-year performance period and relative TSR performance measures assessed against a group of assets and fund management peers that are listed on the ASX. This is structured so that there is 0% vesting if our ranking is below the 50th percentile, 50% vesting if we hit the 50th percentile and 100% vesting if we're at or above the 75th percentile. Board discretion is retained if hurdles are met, but payment of entitlements is not felt in the interest of shareholders. I can also confirm that no further cash retention awards were provided to executive KMPs or former executive KMPs in full year 2014, except for current or former KMPs who had an outstanding employee share loan as part of our firm wide plan to address participants' loan shortfalls. For broader staff, we have also introduced a one-off equity grant of $5,000, in the form of performance rights, as well as an equity matching plan offered to encourage and increase employee share ownership. I was pleased with a number of staff who took up these. Turning now to our capital management position. We continue to maintain a strong balance sheet and capital base which has provided important protection for the business against the challenges faced in recent years. If we look to our balance sheet, at 30th of June, we had liquid assets of $694 million, which comprises of cash of $323 million and net fund investments of $371 million. Following our investment in Vinva, which was funded from existing cash reserves, our cash reserves have decreased by $139 million since the period end. In September, we paid the final dividend as well as the performance fee dividend and also bonuses to our team. We continue to deliver strong distribution to our shareholders, as demonstrated by our dividend payment and also our ongoing share buyback program. Our dividend policy remains unchanged, allowing us to continue to pay attractive dividends to shareholders and our on-market share buyback program was extended to April 2025. To date, we have bought back approximately 7 million shares since inception of the buyback, of which approximately 2 million shares were bought back in August and September this year at an average purchase price of $9.23. Taking into account cash movement since 30th of June, Magellan's liquid asset position as of the 30th of September 2024, is $501 million which comprises cash of $136 million and net fund investments of $365 million. As I outlined at our full year results in August, as we think about our forward capital requirements, the Board has regard to this capital across a number of uses. As you would expect, we have corporate requirements which include our regulatory capital and capital reserve for commitments and operational risk purposes. In addition, we maintain a proportion of seed capital, which we think of as capital required to develop and support the growth of funds and strategies on our platform while they begin investing and attracting flows. Looking over the next 12 months, we consider our Seed Capital requirements to be approximately $50 million, and we have recently approved the addition of $20 million to our Airlie Small Companies Fund following a successful national roadshow as well as an exceptional start to performance since it was launched in April 2023. Taking all this together, it leaves us with approximately $351 million of Strategic Capital & Stability buffer. Our strong capital position has protected the business from the challenges that we have faced in recent years and has given clients the confidence that Magellan has the financial strength and capacity to provide the service level they quite rightly expect. It also provides shareholders comfort that we will not be driven by short-term decision making, and we'll continue to focus on creating long-term shareholder value. Over time, we anticipate the business will require a lower level of protection. Importantly, this capital also plays a pivotal role in realizing our strategic objectives, which include continuing to assess strategic growth opportunities for the business as demonstrated by the strategic partnership with Vinva. The Board continues to assess strategic growth opportunities, balanced with an active review of capital management, and we intend to update shareholders in February 2025 of any proposed changes to our capital management position. I'd now like to welcome and hand over to Sophia Rahmani, who will run through the performance of our fund management business over the last 12 months and to provide her observations on Magellan's platform. Thank you, Sophia.

Thank you, Andrew, for the warm welcome. It's my absolute pleasure to be speaking to shareholders today and to provide an update on our business. I'll start by walking through the movements in funds under management for the year before turning to the strength of Magellan's platform and distribution reach and our efforts to execute on the strategic partnership with Vinva. We concluded the financial year with funds under management of $36.6 billion. The reduction in FUM over the course of the year was driven by net outflows of $5.9 billion and $0.5 billion of distributions, offset by positive investment returns of $3.3 billion. It's noteworthy that the rate of net outflows slowed half-on-half across our retail and institutional channels, generally with consistent improvements each quarter. In our retail channel, we continue to see strong momentum with Airlie who just completed a very successful national roadshow attended by nearly 600 advisers. We've received excellent feedback from clients. And in the 12 months to June 2024, the Airlie Australian Share Fund was in the top 10 of all Australian equity funds for flows. It's also worth exploring some of the one-off impacts connected with the Magellan Global Fund conversion. In Q3 FY '24, we saw retail outflows partly offset by the exercise of MGF Options prior to their expiry on 1 March 2024. The effect of the exercise of the options where holders benefited from the 7.5% discount to the net asset value at the time was approximately $0.3 billion in inflows during that period. We completed the conversion in late July, and as expected, experienced elevated outflows in Q1 FY '25 as a result of that, outflows which were primarily driven by a small number of specialist investors redeeming post conversion, which contributed to a net retail outflow for Q1 of $1.8 billion. We expect the second quarter to be more reflective of the underlying business given the one-off nature of the impacts of the conversion. We continue to see interest in support for our global equity and global infrastructure products within their existing client bases and beyond and had over 800 adviser attendees to the national roadshow in March. This demonstrates the strong following we have for these strategies from which we can build. Institutional client flows are trending in the right direction, and it was encouraging to see positive institutional net flows of $0.6 billion in Q4 FY '24 and $0.8 billion in Q1 FY '25. These flows came from a win in our infrastructure business and Airlie securing mandates of $1.4 billion in July. While institutional flows tend to be lumpy, these successes are reflective of the positive momentum we're seeing in the business and the relationships we have with our existing and new institutional clients. As you can see on this slide, at 30 September 2024, FUM has grown to $38 billion and is well balanced across both asset classes and distribution channels. With $38 billion of FUM and a diverse mix of retail and institutional clients globally, Magellan continues to be a prominent financial services provider of scale. The team is exceptionally high quality with experienced investment personnel, a client-led culture and dedicated teams across the business, focusing on delivering investment and operational excellence for our clients. Notably, by demonstrating leading practice in our commitment to responsible investing, Magellan was recognized as a Responsible Investment Leader in 2024 by the Responsible Investment Association Australasia. We have an institutional grade platform, characterized by its highly regarded distribution function and high-quality non-investment functions. Importantly, the continued strength of Magellan's brand amongst clients, consultants and other stakeholders has been evident across the many discussions I've had in my time at Magellan. We have significant in-built brand equity, global awareness and recognition of our investment capabilities with deep and long-standing relationships across the market. It is these characteristics that have made Magellan an attractive partner for Vinva, and we now have an exciting opportunity to build on the progress made to date, to bring high-quality investment capabilities to our clients, which will ultimately benefit our shareholders. Turning to our distribution capabilities. Magellan's distribution platform stands out as a significant asset, characterized by the team's extensive global relationships and reach into major markets. We have a collaborative, highly experienced and tenured 26-member team with a proven ability and track record of successfully incubating, launching and growing new funds, such as the Airlie Australian Share Fund. For our retail clients in Australia and New Zealand, the team has end-to-end coverage of the retail service model with dedicated teams to manage adviser, research house and platform relationships. Importantly, this domestic distribution capability is well positioned to adapt and benefit from the changing industry landscape, thanks to its size, widespread geographic coverage in all major Australian cities and connectivity across the market. Our accomplished institutional team has strong relationships and access to global investors and consultants as well as enduring relationships with local institutions. Internationally, we continue to see the U.S. as a key growth market given its size and scale. We are well placed to strategically leverage and capitalize on our existing distribution infrastructure to penetrate this market across retail and institutional channels. We're also actively exploring opportunities to deploy capital into expanding the platform's capabilities further, particularly in the retail market. With our strategic partnership with Vinva, we have a significant opportunity to distribute Vinva's strong performing innovative systematic equity products to this market and drive growth over time. Shifting now to our rest of world institutional distribution capabilities, which span the U.K., Europe, the Middle East and Asia. These markets are covered by Magellan's experienced distribution team with many strong existing client relationships. We're looking to continue to invest in our distribution team to cover these markets as we continue to uncover new distribution opportunities in an increasing number of localities. Our distribution capabilities remain a key strength of our business, and are a key attraction for high-quality investment managers. As I've mentioned, this is an area of the business we will continue to invest in. Taking a deeper dive into our mobilization of the Vinva's strategic partnership. Since announcing Magellan's partnership with Vinva, we've been working closely with the Vinva team across our business, including to develop an initial product range that will bring Vinva's systematic investment capabilities and its track record of delivering strong investment performance to the Australian retail market. I'm really pleased to announce that today, we have launched 2 new Vinva products for the Australian market, the Vinva Australian Equity Fund and the Vinva Global Equity Fund. Both of which are long-only systematic equity strategies. Shortly, we will also launch a third fund, the Vinva Australian Alpha Extension Fund, which is a 130:30 long-short strategy that we hope to make available to investors in November. Each of these funds provides retail and wholesale investors access to Vinva's investment capabilities and are in areas where we see significant client demand. For those in attendance today, please connect with the representatives from Magellan's distribution team and Vinva who are set up outside to learn more about these new funds. Our focus for the remainder of FY '25 will be to expand on the distribution of these funds across the Australian market, develop second phase funds, which will include a global long-short strategy and to continue to work with our distribution teams to open up distribution for Vinva strategies in North America and the rest of the world. I look forward to updating you on our progress on these initiatives over the next 12 months. Before I hand back to the Chairman, I'd like to talk about our priorities for the year ahead across our 3 foundational pillars: Colleagues, Clients and Capabilities. Within colleagues, we've commenced implementing our new remuneration framework, which is being rolled out to our staff and executive team. We continue to focus on providing targeted training and development to our team, which alongside other holistic well-being initiatives, are aimed at delivering improved employee engagement and performance across our business. We're also adding to our executive team to support the renewed organizational structure and priorities. We, of course, remain highly focused on delivering outstanding outcomes for our clients and to do so, must deliver strong investment performance across all our strategies. We're excited about the prospect of broadening our presence in the U.S. market and across the distribution team globally, which represent a significant opportunity for us in the coming years. Finally, a key focus of our attention in the near-term will be the distribution of Vinva's investment products to our client base. A review of our corporate structure and governance processes is also on the agenda to ensure we are organized effectively and continue to consider what is best practice for our business. Thank you again, and I will now hand back to our Chairman.

Thank you, Sophia. I'll now provide a brief summary before we then move to questions. While we acknowledge the journey ahead, we are encouraged with the progress we are making and believe our business is strategically poised for future growth and to deliver returns to shareholders as a result of the steps we have taken this past year. We have strengthened Magellan's governance with completion of our Board renewal program, and we now have a highly qualified, focused and stable board. We have improved the fund under management flow, positioning us well for future growth and we have in place a high-quality team across the business, which we are looking to expand. Coupled with our institutional grade platform, our strong brand and our highly regarded distribution function, we have significant opportunities to expand capabilities further and to leverage growth opportunities in both locally and globally that will enable us to diversify our revenue streams. Our profitable business and financial strength provide us with the firepower to execute on our growth agenda, whilst continue to generate strong cash flows that support the generation of attractive dividend to shareholders. We will now move to answering shareholder questions. We will start with questions that were received in advance of the meeting from shareholders before then opening it up to those of you present in the floor. Questions relating to items of business, that will be addressed once we reach the relevant resolution. I'd now like to ask Michael to return to lectern and to read out the first pre-submitted question.

What actions are Magellan doing to ensure that the company's investments and operations contribute positively to the global sustainable development goals? And how is this being monitored, improved and reported?

Thank you, Michael. We've made significant progress on our ESG and responsible investment in recent years. And this is culminated in Magellan being recognized as a Responsible Investment Leader in 2024 by the Responsible Investment Association of Australasia. What this means is that we were placed in the top 20% of organizations that they assist, demonstrating the leading practice in our commitment to responsible investing, our explicit consideration of environmental, social and government factors in investment decision-making and our strong and collaborative stewardship. Our transparency in our reporting and including this society, societal and environmental outcomes that were being achieved. I would also encourage all shareholders to read our corporate sustainability and responsibility report that forms part of our annual report for 2024 as well as our first ever climate report that we published in 2024 which details the strong progress we've made in this area. Whilst we don't specifically map to the sustainable development goals, we do highlight the focus areas of Magellan as a corporate and the companies that we invest in, for example, in climate change and also human rights. Our investment team assess and monitor companies in our portfolio for the management of these ESG risks and progress towards our engagement objectives and report on this in our annual stewardship reports. I'm also pleased that today, our Head of ESG, Amy, will be outside after the conclusion of the AGM, and we'll be very happy to talk to any questions shareholders have on the actions we are taking in this area.

Regarding Mr. McLennan's role on Magellan Asset Management, why does the Board have confidence that he is the best candidate for his position? Would he be appointed as the preferred candidate in an open field and what specific value is he adding that can't be achieved from others?

Thank you. Hamish has extensive experience and capabilities in corporate leadership and governance oversight both in Australasia and also globally. This has helped Magellan navigate through a period of significant transformation and change. The Magellan Asset Management Board will continue to benefit from his specific knowledge of the business following his 9 years of service for both Magellan Financial Group and Magellan Asset Management Board. For these reasons, Hamish remains a valued member of the Magellan Asset Management Board.

Thank you, Chairman. That concludes the questions received in advance of today's meeting. We will now move to questions from the floor. Please raise your blue or yellow card to ask your question. Once called upon, a Magellan representative will come over to you with a microphone. Please do not ask your question until you have received the microphone. [Operator Instructions] We have a first question.

I'm [indiscernible], shareholder. Just in regards to the $350 million that's earmarked in cash -- that's earmarked for a potential acquisition. What acquisitions -- what's the strategy for acquisitions as in regards to -- are you looking at acquiring smaller fund managers, a bit like Pinnacle is done and growing? Or can you just talk a bit to that strategy you're trying to achieve?

Thank you. The first thing I'd say is that $350 million is capital that we have that we call our strategic capital and buffer. It's not just earmarked for acquisitions. And as we've said, well, in February, we'll actually give a greater outline of our capital management position. But in terms of how we look and what areas we look for areas of acquisitions, we are sort of agnostic to the ownership structure. So for example, in 2018, we bought the Airlie business 100% owned by Magellan. That's been a great investment team, very well regarded by clients. And then you have the Vinva transaction that we announced just recently, where we have just less than 30% ownership. So we feel both can be part of the Magellan's table and contribute to our success in our forward plans. So we -- where someone like a Pinnacle, as you mentioned, tends to only have a minority interest in boutiques and tends to also add more and more boutiques. I don't know whether they're up to getting close to 20 boutiques at present. We would tend to see us having a fewer number of areas that we focus on, and we're investing alongside and with those businesses to develop those. In terms of new areas, we remain always attractive to areas that we feel clients will benefit from. Part of the work that Sophia is doing since joining is to identify with the Board what are those areas that we should be looking at. That work is still very much at the early stage. And it's something that as that work concludes, we'll bring to shareholders at that point. But you should think -- see us doing smaller number by number, but where we are much more longer-term commitment to those businesses where we see they have a real strength in what they offer, relative to other competitors in that space and where we feel they have significant opportunity for forward growth.

Hello, Mr. Chair, Alan Golden from ASA. I'm a shareholder in my -- security holder in my own right and representing 98 unitholders. One of your first points was about the movement in the share purchase plan. I know you're reducing it by retentions, particularly among existing stock. Just trying to understand that a bit. In your annual report, it said the SPA loans with the difference between the face value of them and the aggregate value of shares, options and dividends, was $14.7 million. That's only a $700,000 movement from 2023. And I understand that the variation is going to depend on what the Magellan share price is in the future. But to get some idea of the ongoing difference, how much will the retention payments reduce the outstanding loans by the end of 2025 or 2026?

I think I might direct that question to our CFO.

Alan, there are some loans that have been repaid with shares that have actually been sold. So there's been some redemption proceeds offset though. So the proceeds have reduced in the set of 2024 accounts you've seen. There are some shares that remain held by some employees as well and other holders of those loans and the dividends are only repaying those at the moment. It's a couple of million dollars to answer your question in terms of what's been repaid from the retention payments and there are some retention payments that were also settled in September 24, which won't have been included in the reduction as well. So you've yet to see those come through.

End of 2025, saying the share price stays constant, which, of course, none of us want. We don't want it to be much higher, we'll be still talking about a difference of about $10 million?

Yes, there'll still be a loan balance in there. That's right, and supported by the shares, the equity, which, of course, we can't recognize as a reduction against that loan, but there is some security against those lines.

Sorry, John Eales would just like to add.

I was just -- I think Kirsten just answered it really effectively there. I think there will still be some that are outstanding after that point in time. But largely, the ones with employees working within the business will have been resolved by that stage.

Right. I understand there's some who are not in the business, will still have outstanding amounts. Yes. My second question, looking at the distribution graph on the funds, and it was a quick addition, so I'm probably wrong. I saw that in the institution, $14 billion comes from overseas, and I think it's about $8 billion comes from Australia. I first say I was surprised because after all, you are an Australian company, and I would have thought that we'd see much more from the institutions in Australia. Does this mean that the future growth in institutions you really see coming from overseas as opposed to from Australia? Or will things be done to significantly increase the amount of institutional money from Australia.

I'll start by addressing that question, and Sophia may have some additional points. I think we have seen historically very strong success institutionally globally. We still retain some very strong long-term relationships over there who have been very supportive. They aren't just in our global strategy, also in our infrastructure strategy. The Australian institutional market is a much more difficult market particularly over the last few years, given the predominance of the large super funds to both consolidation you've seen as well as a lot of in-sourcing. That's impacted quite heavily areas such as Australian equities, even though we still retain a lot of institutional business from there. And actually, Vinva has seen significant strength in that market. So it will be a component of our growth continuing to work with the large superannuation funds in the institutional market here. But I would say that the opportunity set globally outside of that area is probably greater than the domestic market just because of the nature of the dynamics that are happening in our core market here in Australia.

If I can add 2 small points to that. Firstly, we've also already mentioned looking to continue to invest in our offshore distribution capabilities because we really do see that as an opportunity for us. And secondly, when we look at managers like Vinva and back to the first question about other opportunities we might see of investment capabilities to add to the firm, for them to be able to be distributed globally is something we also look to do. So the 2 of those things work together to maximize the value for our shareholders.

Charlie Kingston from K Capital. Just following up on that first question around M&A going forward. And -- it's a 2-part question, but I think you mentioned with Vinva, you said it would contribute to profits, which is good, given you spent $140 million. But I don't think you ever mentioned the multiple you paid for that acquisition. So just if you can comment on the multiple, and I suppose why -- it was more accretive to shareholder value than say a buyback or your other options. But -- also just on the other point around M&A. And I agree, I think the Vinva approach is sensible, taking the partnership, the Pinnacle type model, given Pinnacle has clearly been very successful in that. But conversely, we've seen a lot of evidence in M&A for funds managers recently that have been absolutely diabolical for shareholder returns, specifically the perpetual M&A with Pendal. And Deborah, I think you are on the Board of Pendal and great sale by you to sell the company. That was a great outcome for shareholders. But the buyers really haven't done very well. So I was just hoping for more I suppose, color around what you're looking for going forward given all the disastrous M&A that we've seen, what are you going to avoid and what lessons have you taken from that. Why is M&A going forward more accretive than a buyback or other options? That's the first question, please.

Thanks, Charlie. First, to take on the financial details associated with our purchase of just under 30% of Vinva, we haven't disclosed that, and it is confidential, and therefore, we expect that through time, we'll be able to demonstrate very clearly the results from that. It's fair to say that there is significant momentum in the Vinva business in terms of not just as investment performance, but the client engagement it has as well as the very scalable investment platform that it has where it doesn't require significantly much more investment and could increase their assets under management quite substantially. Together with our distribution support, we think we can accelerate their already very strong plans and growth opportunities. I would add that as part of the Vinva transaction, we have entered a distribution agreement, which means as we do introduce clients to the business, and we grow those -- the Vinva business. We profit for those assets directly as a distribution fee as well as obviously profit as our equity ownership in that business. You highlighted the structure we put, we're very methodical about how we look at asset management businesses. I don't agree with the position of some people say that all M&A in asset management is value destructive. But I do agree that there's been significant examples where it has been. So I think you've got to be very, very careful. You got to have a very disciplined approach. The first and foremost, you've got to start with, is there a strategic alignment between the 2 businesses coming together. And is there a cultural alignment in terms of what they're trying to do. You have to assess the quality of the business and the attractiveness for clients, both in the current position, but also the long-term position. It's a pretty high hurdle, I think, to do M&A. And you mentioned against whether it's share buybacks or other forms of investment we could make in the business? Absolutely, we have to sit there and be assessing against that. We'd be expecting much, much higher return on our investments for a transaction, given the nature of risk that can come from that. So for that point, I don't see M&A as the only forward path for growth of our business. We have a lot of high-quality teams and capabilities within the business, and they are really a priority to us. It doesn't mean we shouldn't be alert to other opportunities, but they're not the forefront or the driving force of management and executives in terms of our time. So that being said, there's not -- I wouldn't say that we have gaps in our existing lineup for us to succeed as a business and deliver growth for shareholders as we stand today. If we see opportunities to expand that like we did with Vinva, we should actively on behalf of shareholders look at it, but we're not actively looking to try and find that. So I hope that answers your question.

And then just the second question. Again, well done for resolving the discount to NTA issue with MGF. I think it was a very fair outcome. But the $100 million that you paid for the options, I'd just like to ask about that. Again, I'm probably jaded because I wasn't on the trade, and it was a great trade for those who were buying the options at $0.01 or $0.02 before you paid $0.10. So I just noted, but it seemed like a very big price to pay $100 million from Magellan shareholders for those options. I think it's probably 3 months to go before they expire, worthless. You probably got to pay at a lower price. I'm not sure, but it did seem like you had a lot of other options in front of you, which would have been much less costly for Magellan shareholders. So I was just hoping to get your thoughts as to why you paid 5x or 10x what the market is pricing those options at so soon to their expiry and what sort of benefit did that have, I think you've mentioned some strategic investors in the fine left as a result of that transaction, but did it allow you to retain more FUM or I mean, does just seem a very big price that maybe you could have avoided, so any thoughts would be great.

I'm not trying to say it's not a large number, but it was $75 million, not $100 million that we spent on the options. The strategic position there was, obviously, we would welcome shareholders who wish to convert and the long-term holders of the global fund following the conversion. We had an obligation, so we purchased the options at around $0.10 in the market -- at $0.10 an option, if they -- if anyone converted those options, we were obliged to pay $0.15. So our liability was actually $0.15 for all converted options. You mentioned whether those options would have expired, and then we wouldn't have had any obligation. It was our very clear understanding that there would be conversions that would happen. So in some ways, the liability on our balance sheet was for the full extent of that. And by buying it back at a discount to that full liability, we were able to save shareholders' money in that regard. The risk of the situation was quite fraught because of the large number of what I would call active participants in that register who were probably actively against the interest of the long-term shareholders in the fund. That registered already moved to over 40%. And the agitations and risks they could do could be quite detrimental to long-term shareholders who are interested in the growth and opportunity that our investment team would bring. It's a judgment call, and it's one that we -- the board and I didn't take lightly, but we do consider what is in the best interest, not just for shareholders but also for the clients in our fund. And one of the reasons we were very clear that the options we purchased, we didn't just purchase from those active agitators in the fund but we gave opportunity. And we sat in the market for a good 6 or 7 weeks so that all shareholders of the fund had the chance to benefit, not just those who either were more market savvy or pushing in that sense. I think that has actually been recognized by our overall client base. The feedback from our distribution team and the contacts they have at the adviser network is that it went a long way to restoring confidence and trust back in the Magellan brand. Now that's an intangible. I can't demonstrate hard value to associate with that, but I can demonstrate through both my own conversations and those of my team that, that was seen very, very positively in regard to that. So I think we reduced significantly a liability on our business that could quite extensively be much higher than the money we spent on behalf of shareholders. I think we had the risk of disruption to the overall business, not just in the Closed Class but the broader position in our business quite could be -- have been quite significant. And at the same time, it was an opportunity to show a real commitment to putting our clients at the front of our decision-making.

Fred Wollard, shareholder. You mentioned earlier the teams that you've got. Funds Management is an industry where your success in part is due to the guys and girls who turn up every day and work hard to create value for the clients. What's your pitch to them as to about retention and recruiting? People have got talent can find lots of places to work. What's your pictures to why they want to come to work here?

Thanks very much for the question. I think that's a really good question for Sophia to take as she spent the last time in the business really working with the key managers.

Sure. Thank you, Fred. Look, there's absolutely no doubt that our people are our strongest asset right across the business, investments and non-investments absolutely. We are running a couple of recruitment processes at the moment across all of those parts of our business. And seeing strong interest in joining Magellan, which is really important to us that we can continue to attract and retain high-quality people. Our pitch to them is we are and continue to be a high-quality firm looking into a phase of growth. So to be able to work with other high-quality personnel in a high-performing culture, where we're client-focused and actually focused on delivering and doing things and getting things done, continuing to work in an innovative organization that has, I hope, quite an exciting culture. And again, people buying into the bright future we have ahead of us, does seem to be resonating with -- again, with the candidates we're speaking with at the moment and our existing team. I guess also really important to incorporate into that answer is our remuneration policies and approach. And certainly, over the last 12 months, as we know, a lot has been done around that to make sure we have the right alignment for all of our staff and, in particular, our senior staff, with our clients and our shareholders. So our staff are aligned and working in everybody's best interest.

Angus Gordon, I spoke to you at the meeting last year, Andrew. And I've just noted that the funds under management seem to always dissipate and in turn the management fee revenue. And just when we talk about having these great people, I'm wondering why we're losing funds under management and revenue.

Angus, we still continue to be impacted by departure and changes in the senior investment leadership, particularly in the Global Equity side of our business. That meant for a number of years, we were actually put on hold where a lot of platforms would actually allowing people to buy new units in the funds, but we're allowing redemption. So we've been able to address that and a number of platforms that now reverse those decisions and put us back on to those. We were in a lot of recommended list. Once we removed -- once those changes happen, we were removed from those recommended lists, which meant that other managers were put in place of us. It's now hard to get back on those. It's not -- it's something we're actively about, and we will -- it's a key priority for us, but that's been a challenge that we've had to overcome. We also had a senior departure in our Airlie business, which saw a lot of assets under management decline [indiscernible] in retirement. Thankfully, the team and the processes in place have been very solid and continue to deliver exceptional results for clients, and we've been able to restore that and grow those assets and they have a very strong path forward. So there, it is an area of key focus for us at getting this back. But a lot of it is just about people wanting to see the investment teams that's running the money, how they do through different periods and cycles. So we're now well over 2, approaching 3 years since those leadership changes in the investment teams. We've been able to demonstrate how well the investment process being continually invested. That's starting to resonate, but it just takes time. And unfortunately, that's the nature of that game. Linked to that, you also question on revenues, it should be -- it is just a truism of the industry that fees and revenues for the assets you manage continue to be under pressure. We're seeing a lot of consolidation. I mentioned earlier at the superannuation fund, but also in the adviser networks and a lot of the other core markets we talk to. And as part of they -- as they consolidate, they look to consolidate the managers they do and they look to do it at a lower fee than they've done historically. And that's just part and parcel of the nature of the industry. Why we need to keep focusing on our efficient platform, so that we continue to take costs out of the business and to be able to run very efficiently because we will continue to see pressure on that topline through the revenue we receive for the services we provide.

The second component was that I think I read in the annual report that employee cost in the Funds Management business represented about 67%. So again, I'm wondering why we wouldn't think about IT and maybe being a lower cost operator, particularly if the margin squeezes are occurring?

Angus, that's a good point and a true point. The people in our business are our highest overall cost. But there are opportunity sets to continue to invest in technology. the technology leads that you're seeing out there do enable us to take some of the more menial tasks that we do and to be able to sit there and make them much more efficient. And that's a core component of what we're doing. I know, Sophia and the executive team, one of the priorities they have set themselves for 2025 is to look at what areas technology can play to improve that. Now that's not saying that we'll be taking the existing resources of our business down. It means it's holding -- getting the people in our business focused on the areas that can add the most value and taking off tasks and make them far more productive.

Okay. Good morning, Michael Jackson, Australian Shareholders Association. We believe that a long-term incentive scheme should test against at least 2 criteria. Welcome the Chairman's presentation indicated that you were considering adding a second performance measure. I think we've all -- the entire conversation this morning supports the fact that we see funds under management as a key health indicator for the business. Would the Board consider adding a second test increase in funds under management over an extended period, say, 4 years?

Thank you, Michael. And as you highlighted and as you point out that at this time, the introduction of an LTI was something we didn't have in place and following consultation, we have adopted just one measure for now. There have been some shareholders who urged that we consider 2, as you've highlighted. What that second one would be, should that be the appropriate decision we take, one of those could well be, that we'll take that under advisement. For now having gone from no LTI to just putting one in place, it is important for us to first see how that goes. Interestingly, when we talk -- we do talk to a broad base of shareholders, one of the things that come through clear in that is everyone's happy in the direction of travel, but everyone has differences in terms of the final position of where you land. So some are very happy with what we've adopted and so we've got to take it all in the round. And also, it's for management to be comfortable they feel it's the appropriate and stretch target that is both achievable but also represents strong delivery. I agree with you that the health of the business through fund under management is important. But also I want to make sure that's achieved through the right way, which is through investment performance and through the organic growth of what we do. You can easily achieve fund under management through acquisitions or you can do it through a very low-margin business. So we would have to make sure that whatever we were looking at really was aligned with shareholder interest in that regard. So we'll take it under advisement. But it's -- I wouldn't say at this point that we'd be committed to introducing that as a second one.

Secondly, we have members in all states and territories, and we strongly feel that the hybrid meetings that allow people in remote locations to participate actively is the way to go. You've got a live stream only in place today. Will you consider moving to a hybrid next time so that people who can't get here can participate fully.

Yes. Thank you for that. And it is something we did take under consideration, and we continue and welcome shareholders thoughts and views on that. I do feel personally, it's a richer conversation to have shareholders in the room. And as part of that, our commitment for shareholders is when we finish and conclude the formal part of the meeting, we do have all our investment teams out there to engage with and answer any questions shareholders have of our investment processes, our investment outlook and insights, which is -- obviously, you can't do it in hybrid. But I do recognize for some people, that's a hard challenge to get here physically. I think post COVID people have recognized that there are alternatives. So at this point, we wanted to have the meeting as we've had it set up today, but we do take it under continual evaluation, and we do welcome people's feedback on whether they feel in person only is the appropriate one that we wish to stay with or whether we should adopt hybrid, which we can do for the next meeting. Interestingly, when I've talked to my fellow directors, who sit on many other boards, some that have been hybrid have actually been actively considering and looking in the future years to move back to the only in-person meetings. So it's 1 of those things where I think we're still in an evolving period post COVID, but we do take it under constant evaluation.

I think given the timing we are going over to 1 or 2 more questions.

I have only got 2 maybe. You said you're looking for a new director. What skills are you looking for?

Well, actually, one of the parts with Sophia joining is the Board is actively working through the forward strategy, which includes our capital management policy. That's something we expect to have concluded by February and at the time of our half year results, to be in a position to be able to talk to shareholders about that. At that point, with any agreed forward strategy position adopted by the Board, that will give us a much greater understanding of what skills we have both around the Board table and what would the board benefit to execute that strategy on a forward basis. So actually, we're thinking very methodically about this around starting with what is the forward strategic position in the business led by executive team of Sophia and her team putting forward to that, supported by the Board and then assessing the directors' skills against that strategy, and that will highlight to us, areas that we may need. So rather than speculate what that might be today, it's a formal part of the process we're doing.

So you are not actively looking -- you start looking once you've done your next stage on capital management. That's good. My last question, the base management fee costs increased to 70 basis points. That was at the end of '24. Has it continued to increase.

The base management fee, as you said, moved up from 67 basis points to 70 basis points. It does move around based on the mix of business we have. As we have highlighted, we actually saw quite a lot of assets under management from the conversion go out, and that was a higher than that 70 basis points. And we've also seen success in our institutional channel, as we were discussing earlier on fees, so that institutional success will be lower than that 70 basis points. So on average, I would say, you should expect to see that 70 basis points come down over the forward period, this year just based on that mix effect.

Okay. So we can see it coming back down 63, which is what we had in 2022 or 67 that we had in [ '20 ], but downward definitely. Okay.

Okay. This will be our final question.

Yes. Scott Jones, I'm a retail holder also a member of Teaminvest. Just only on the long-term incentives that you've built those around the TSR. I think given that the TSR is very much influenced by the share price. And the market is very irrational. How do you feel having the long-term incentives based around in a rational market?

Scott, I think the point is, at the end of the day, shareholders are in that irrational market, and they are the other -- we're trying to assess other financial services companies that you as a shareholder could choose to invest in. we should be at least in the top half of that and hopefully, in the top quarter. We acknowledge the fact that there will be always some challenges within -- in either individual businesses or the like. Some of those businesses have very high growth, but they've also got very high share ratings and multiples at the moment that is they disappoint. You could see that reverse and change quite quickly. There's no perfect measure. I think if there's a perfect measure, we'd all adopt them. And we feel this is the best outcome to align with shareholders, but also the management team to have incentives for delivering ultimately what shareholders want to see, which is a strong share price and a return they get from the investments they've made. If we find that we've got that wrong, we'll adjust forward of future grants of the LTI. But for now, we feel after looking at, as I said, an imperfect field, we think we've landed on the best possible outcome, notwithstanding the fact that there are definitely imperfections in that.

Thank you for your questions today. It's now time to conclude the Q&A and move on to the order of business for today.

Thank you, Michael. I'm advised by the company's secretary that the holders of approximately 92 million of the company's ordinary shares have sent in proxies. In my capacity of Chairman of the company, I have been appointed as proxy by the holders of between 90.9 million and 91.8 million of the company's ordinary shares depending on the relevant resolution that is being decided today. Where any of the proxies for items 2 to 5 inclusive are open and subject to voting exclusions, votes will be cast in favor of those resolutions to be put to the meeting. Where any of the proxies for item 6 are open and subject to voting exclusions, votes will be cast against the resolution. There will be an opportunity for shareholders to ask questions concerning the resolution before each motion is put to the vote. Unless there is a strong objection, I will announce the proxy voting results before the vote is taken for each resolution. The proxy voting figures will be as at the closing time for receipt of proxies, which was at 11 a.m. on Sunday, the 20th of October 2024. These figures may change if a shareholder who submitted a proxy who attended the meeting today and has revoked their proxy. I would like to appoint David Parkinson from Boardroom Proprietary Limited as returning officer. The returning officer will arrange for the counting of the vote in accordance with the voting exclusions as set out in the notice of meeting. Following the polls, the meeting will be closed and the votes tallied. Results of the polls will be released to the ASX later today. They will also be made available on Magellan's website. I now propose to proceed with the items of business, which were set out in the notice of meeting. The first item of business on the agenda deals with the financial statements and reports for the year ended 30th of June 2024, including the directors report and the auditors report and have been tabled. No resolution is required in relation to this agenda item and no written question solely of the company's auditors have been received from shareholders. I will now take questions from the floor in relation to this item. If you wish to ask a question, please raise your blue or yellow card. I see there are no questions. So let's turn to the resolutions that will require approval. Item 2 concerns the adoption of the company's remuneration report. This report forms part of the director's report, which is obtained in the company's annual report. The resolution you will be voting on now appears on the screen. I will 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. I point out that the vote on this resolution is advisory only and is nonbinding. The Board has taken feedback on this matter seriously. And as outlined today, we have made significant changes to address the concerns raised by shareholders and other stakeholders, particularly at last year's AGM. The progress we have made in the full year '24 remuneration report reflects our first important step in that direction. However, there remains further work to be done. While the poll on the remuneration report has not been completed, based on votes already received, less than 25% of votes cast are against this resolution, which means that the company is not expected to incur a second strike. We also expect, given that Item 6 which relates to the calling of a spill meeting will be withdrawn. Before putting the motion to a vote, I would like to invite any questions or comments on the remuneration report. If you wish to ask a question, please raise your blue or yellow card now.

Thank you. A very good start on the remuneration report, considering that you had a very poor one before. So that is great. Just a couple of things. On the STIs, you're talking quite general as to what the criteria are going to be. I'm just wondering you -- as you have said before, your employee engagement is very low. Has there been any recent surveys to see if that has increased? And is that going to be a key factor in your STI?

That's a very good question and it is one of the factors that are considered for Sophia and for the executive team is an improvement in that employee engagement score. You are absolutely right, highlighting it. It's a lot lower than we would like and expect it to be. In terms of when the next one will be, we tend to conduct them annually at the end of November. So we're expecting about a month from now, we'll be going to staff to see if we see any improvement in that. We did do a 6 monthly pulse check, a smaller cut down one in June, we saw a modest improvement but still below where we'd expect. So yes, we'll be conducting one at the end of November, and we'll update shareholders on that at our February results or the outcome for that and I can confirm it is part of the STI metrics and KPIs associated with that.

Great. The second thing is something that we discussed. I just want to make sure that I'm correct on it, and Sophia also mentioned it, this is the fact that in the annual report, the new measures are only talked about being relating to 2 people, the 2 executive KMPs whereas we see other reference to the same sort of randomness. Can we be assured if this is going to go all the way through?

Correct. So whilst we have the named KMPs, they apply to them specifically in that sense, but also as Sophia is building and running her senior leadership team, the metrics and basis of that forms their remuneration as well. So it isn't just to the named KMPs, which we are by law required to disclose in annual report, it also applies to the senior management executive that sits under Sophia. Are there any other further questions on the remuneration report? Well, thank you. With no further questions, the proxy voting results for this resolution can now be seen on the screen. We will now proceed to voting. As 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. Please submit your votes now in relation to item 2. Turning to Item 3A. It concerns the re-election of Catherine Kovacs, also known as Catherine Stanton to the Board. Cathy was first appointed to the Board with effect on the sixth of November 2023 and elected at the company's AGM on the eighth of November 2023. She retires in accordance with the company's constitution and ASX Listing Rule 14.5 and being eligible, offers herself for re-election. I'll now give Cathy the opportunity to address shareholders regarding her reelection.

Thank you, Andrew, and good afternoon, everybody. It's a pleasure to be able to address you today as I stand for reelection to the Board. I've been a Non-executive Director at Magellan Financial Group since November 2023. We I won't repeat my CV as it's included in the annual report and the Notice of Meeting for today's AGM. Suffice to say, I've been in and around equity markets since I began my executive career in 1991 and I have been a Non-executive Director for 9.5 years, which has given me a diverse range of skills that are directly relevant to Magellan and in particular -- with a particular interest in technology and how it applies to financial services. As Andrew discussed, since I joined Magellan last year, we've executed a large program of work. I've been very pleased with the way my Board colleagues have worked together to make the decisions that we've made and the pace at which we've been able to move. I've also had the opportunity to spend one-on-one time with Sophia, the management team and our investment managers. I found all those interactions to be very impressive. We have a very credible team of people, all highly motivated to deliver great returns for our clients and our shareholders. Magellan, Airlie and Vinva are some of the best quality investment managers that I have come across. Whilst the Board has made good progress on our reset, there is definitely plenty more to be done. I look forward to working with my colleagues on the next phase, particularly on our strategic growth agenda and capital management plans. Thank you for your ongoing support.

The Board, excluding Cathy Kovacs, unanimously support her re-election. The precise resolution shareholders will be voting on now appears on the screen. Unless I hear to the contrary, I'll also take the resolution as read. I now move to consider item 3a, the reelection of Catherine Kovacs as contained in the Notice of Meeting and as it appears on the screen. We'll now open for any questions on this resolution from the floor. As before, if you wish to ask a question on this resolution, please raise your blue or yellow card now. As there are no questions, the proxy voting results for this resolution can now be seen on the screen. We will now proceed to voting. As Chairman for this resolution, I exercise my power to direct that the vote on item 3A 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 3A now. If we now turn to Item 3B, and this concerns the re-election of David Dixon to the Board. David was first appointed to the Board on the 15th of December 2022, and was elected at the company's AGM on the 8th of November 2023. He retires in accordance with the company's constitution and ASX Listing Rule 14.5 and being eligible offers himself for election. I will now give David the opportunity to address shareholders regarding his reelection.

Thank you, Andrew. Good afternoon. When I joined the Board in December '22, it was during a period of significant challenges for the company. It is a pleasure to be able to address you today with a sense of stability restored and increasing optimism in the business. For those who are not familiar with my background, I spent over 30 years in the investment management industry, most recently as Chief Investment Officer until 2020. Over the course of my career, I have been responsible for and managed investment teams in Australian equities, Global Equities and many other asset classes and investment functions. The early part of my career was also as an equities analyst and portfolio manager. I think it's also worth mentioning that I served for many years as a member of industry panels with ASIC and the Financial Services Council. My some experience gives me an excellent understanding of the funds management industry and the changes and challenges it has experienced over decades. As discussed, in today's presentation, we have made significant changes across the business in order to restore stability for clients, staff and shareholders and to position the company for its next phase, where I believe my experience and knowledge will be beneficial as we consider the addition of high-quality investment capabilities to our platform. I consider it a privilege to serve as Director of Magellan and with your support, I will continue to work closely with my fellow Board members and management to ensure that we remain focused on improving performance and long-term value creation. Thank you.

Thank you, David. The Board, excluding David, unanimously support his election. The precise resolution shareholders will 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 3B, the reelection of David Dixon as contained in the Notice of Meeting as it appears on the screen. If you wish to ask a question on this resolution, please raise your blue or yellow card now.

Sorry for raising it too soon. I didn't mean to interrupt you. Mr. Chair, I know that the company has no minimum shareholding requirement for its non-executive directors. I note that Mr. Dixon has been on the Board for 2 years. I see that he has recently purchased 3,000 shares. And through you, I'd like to ask him if he is planning to increase that number in the near future.

I'm happy to answer that. Thank you for your question. Yes, I recently purchased shares in the company. I actually wish I bought more. I would have bought shares earlier. However, I had major personal financial asset restructure in 2024 financial year that effectively precluded me from buying more shares earlier. But definitely, an intention to buy more.

Charlie Kingston again. Just a question for David. Given your extensive experience in funds management at First Sentier, I think, was the last executive role, I was just hoping to have your thoughts on M&A going forward given that experience just because it is a highly risky business, given I think First Sentier, they had a few funds recently closed down. So it is a people business. You can get the odd home run, which we've seen in M&A. But I think if we look at the Pinnacle examples with Hyperion, I think they got in very early and almost seeded that fund and shut the lights out. Similar examples like Pacific Current with Investors Mutual and GQG, I think absolutely had a few home runs there. But seems like where you win, I'm sure there are other examples, but is when you get in early, and there is a degree of luck, but just with your experience, I was hoping for you to point towards some successful M&A that you've seen and that you would hope to emulate for Magellan and Magellan shareholders going forward, just noting how you can't get the old home run, but there is certainly a lot of zeros as well. So any examples that you could point to would be great.

So absolutely agree with you. M&A is very difficult, and you clearly need to be very, very disciplined when you're looking at opportunities. And at Magellan, we'll see opportunities from time to time, actively involved in supporting the Vinva strategic partnership as well. But again, it's -- you'll often won't get credit for the things you turn away essentially. And that's very important. You've got to be able to say no. At my most recent role at First Sentier, we spent a lot of time doing more product extensions rather than acquisitions. In other words, increasing the capability of teams and products rather than focusing on specific acquisitions. But you've seen acquisitions throughout the industry go terribly wrong, which we've mentioned before. In terms of other acquisitions, there are a number of boutiques that have been set up as well that have been highly successful coming out of major institutions and so forth. So in total, it takes time to get acquisitions and you'll only know with time whether or not some of these have been successful. On top of my head, Charlie, I can't -- Andrew, can you think of any?

You've been involved in a number as well.

Yes. Look, it goes back, I said earlier about acquisition is successful where there's a strong alignment between the strategic intent of the group and what that brings. Early in my career as a Chief Executive, I bought a business called [ New Star ], which was actually all about the distribution reach that it came and it was folding the investment. The investment capabilities of that business actually were better run by our existing managers, and it was about giving scale to our business, but also improving the distribution reach. Equally have done one where, as you said, very, very small businesses. Attunga Capital was a business we bought down here in Australia, which had a very interesting agricultural side to its business. small number of assets, large potential, we were able to grow that. A similar example down in the Australian market was the Perennial fixed income business, which actually Sophia worked on. This was a business that had huge representative across a number of the core agencies and adviser network, support by consultants and was in a lot of model portfolios. That was around $7 billion of assets at the time. It's probably, I think, today, still managed by that team that bought that business. It's about $22 billion, $23 billion. More importantly, because of its representation in the model portfolio and support it had for consultant, it was acted as a halo to enable that team at the time and continue today to engage with clients that they weren't otherwise engaged with. So it had a number of strategic benefits, not just in that sense. There's a couple of examples. As you said, there's probably a lot more of ones that haven't worked. I'm aware of those and some in this market, some globally. So as David said, it's something you've got to take -- you've got to be very, very cautious on.

In summary, Charlie, my list of nose is substantially longer. An example of setting up a business more so than actually acquiring it would have been the global infrastructure business at First Sentier, starting with a $5 million seed, turning that business into an above $10 billion business. So you don't always have to go out and acquire if you can source the right capability.

Thank you for those questions. The proxy voting results for this resolution can now be seen on the screen, and we will now proceed to voting. As Chairman for this resolution, I exercise my power to direct that the vote on item 3B 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 3B now. We'll turn now to Item 4, which concerns the proposed grant of performance rights and restricted shares to Ms. Sophia Rahmani under the Magellan Financial Group Equity Plan. Details regarding the proposed grant are set out in the notice of meeting. Schedule 1 to the notice of meeting contains a summary of the key terms of the MFG equity plan, under which it is proposed that the performance rights and restricted shares are to be issued. The Board of Directors unanimously recommend that you vote in favor of Item 4. The precise resolution shareholders be voting on now appears on the screen. Unless I hear to the contrary, I will also take this resolution as read. I now move to consider item 4, the approval of the grant of performance rights and restricted shares to Ms. Sophia Rahmani under the Magellan Financial Group equity plan as contained in the Notice of Meeting and as it appears on the screen. If you wish to ask a question on this resolution, please raise your blue or yellow card now.

Mr. Chairman, [ I cannot support this ]. You said that the performance of the company at the beginning has gone up 2%. But the inflation is 4.6%. And -- so in real terms, the company has gone backwards by 2.6%. Is that not correct?

I understand your point you're making there. In regard to the resolution we have today. This is about attracting and retaining our future CEO of the business. And as part of her joining the business, she had a ongoing obligations or awards that she would forfeit and we're looking to replace those. Sophia was not involved in the business over the last 2 to 3 years. She is not representative of that. We're not looking at awarding her this based on the company performance. We're awarding her -- We're asking for the support by shareholders to recognize what she's forfeited to come and join the business and to lead the business going forward. If there's no further questions, the proxy voting results for this resolution can now be seen on the screen. We will now proceed to voting. As Chairman for this resolution, I exercise my power to direct that the vote on Item 4 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 4 now. Now moving to Item 5. This concerns the approval of the Magellan Financial Group equity plan. Details regarding the MFG equity plan as set out in the notice of meeting. Schedule 1 to the notice of meeting contains a summary of the key terms of the MFG equity plan. The Board of Directors unanimously recommend that you vote in favor of Item 5. The precise resolution shareholders will be voting on is now shown on the screen. I will also take this resolution as read. I now move to consider Item 5, the approval of the Magellan Financial Group equity plan as contained in the Notice of Meeting and as it now appears on the screen. If you wish to ask a question on this resolution, please raise your blue or yellow card now. With no questions, we'll take the proxy voting results and put them forward that they can be seen now on the screen. And we'll now proceed to voting. As Chairman for this resolution, I exercise my power to direct that the vote on Item 5 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 5 now. The final item of business on the agenda is Item 6 which is a conditional resolution to convene a spill meeting. The adoption of the remuneration report is being considered on a poll, and the results will not be known until the end of the meeting. The result of this resolution will only be valid if Item 2, which concerns the adoption of remuneration report receives less than 75% support from all votes cast. If more than 75% of votes are cast in favor of adopting the remuneration report, the spill resolution will be withdrawn. If Item 6 is not withdrawn and the resolution is passed, the company must hold a further general meeting referred to as a spill meeting within 90 days after today's AGM. In that event, a separate notice of meeting will be provided to shareholders with details of the spill meeting. At the spill meeting, all of the current directors other than Hamish McLellan, who will be retiring after today's AGM will cease to hold office immediately before the spill meeting. Each of the directors would be eligible to seek reelection at that spill meeting. The Board of Directors unanimously recommend that you vote against Item 6. The precise resolution shareholders will be voting on now appears on the screen. I will also take this resolution as read. And I now move to consider Item 6, the resolution to convene a spill meeting. If you wish to ask a question on this resolution, please raise your blue or yellow card now. Given there are no questions, the proxy voting results for this resolution are now shown on the screen. While the poll on Item 2 has not been completed, based on votes already received, it is expected that the resolution to approve the remuneration report will pass, which means that the spill resolution will be withdrawn. We will now proceed to voting. As Chairman for this resolution, I exercise my power to direct that the vote on Item 6 be taken by way of a poll. As set out in the notice of meeting, I will vote all undirected proxies against this resolution. Please submit your vote in relation to Item 6 now. Thank you. That concludes the items of business. I will now pause to allow you time to finalize any of your votes. Please ensure that you have cast your vote on all resolutions as I will declare the polls closed after this pause. I now declare the polls closed. Please hand your voting cards to the returning officer on your way out. The results of today's votes will be released to the ASX later today and made available on the Magellan website. There being no further business, the meeting is closed. I'd like to thank you all for your attendance today and your interest in Magellan. My fellow Board members would be delighted if you could join us for tea and coffee outside as well as to taking the opportunity to connect with our investment team and that of Vinva's who are set up outside. Thank you.