NZX Limited (NZX) Earnings Call Transcript & Summary

Good morning, everybody. My name is Sara Wheeler. I'm the General Counsel and Company Secretary here at NZX and I would like to welcome you to NZX's 2024 Annual Shareholder Meeting. Before we begin, I will quickly go through some housekeeping. The toilets are located in front of you to your right, but on your left as you come out of the lift. In the event of an emergency, please follow the green signs or follow me or one of the NZX team who will help direct you outside. In terms of the agenda, first, we will hear from NZX's Chair, John McMahon, who will give a welcome and a strategic overview. Secondly, we move on to the NZX CEO, Mark Peterson, who will provide a report on financial and business performance. Finally, John will return and will make some comments on the performance of the business for Q1 2024 and some comments on our outlook for the remainder of the year. We will then move to the formal part of the meeting. We have 4 resolutions today. Firstly, that the Board be authorized to determine the auditors' fees and expenses for the 2024 financial year. Secondly, that John McMahon, appointed by the Board as a Director with effect from 10 May 2023, who retires and is eligible for election, be elected as a Director of NZX Limited. Thirdly, that Lindsay Wright, who retires and is eligible for reelection, be reelected as a Director of NZX. And finally, in relation to the approval of Directors' fees to take effect from 1 July 2024. We will attend to voting, and then we will move to questions. I'd like to remind you that only shareholders and valid proxy holders are entitled to ask questions at this stage of the meeting. If you are intending to ask a question, please signal to us, and we will bring a microphone to you. Please note, shareholders will be able to cast their vote online using the voting tab where you will need to enter your CSN holder number for validation. Please refer to the virtual meeting online portal guide or contact the team at Link on 0800-200-220 if you require any assistance. Following the meeting, we invite you to stay for refreshments. I will now hand over to our Chair, John McMahon.

Thank you, Sara. Good morning, everybody. And to those folks online, I'm John. And as the Chair of NZX, I'm delighted to welcome you here today, whether you're in person or online, to NZX's 2024 Annual Shareholder Meeting, which we're obviously holding as a hybrid, I assume. As Sara noted, shareholders participating online, we'll be able to ask questions, and you can submit these at any time using the tab at the bottom of your screen. I encourage shareholders who have questions relating to the business of the meeting to send those questions through as soon as possible. Please note that only shareholders, proxy holders or shareholder company representatives may vote. For those of you in the room, our directors and management team always enjoy these opportunities to chat with investors. So please stay on after today's meeting for refreshments. I'm pleased to confirm that we have a quorum and, therefore, declare the 20 -- the Annual Shareholders Meeting of NZX Limited to be open. I'm pleased to introduce to the NZX Board, Dame Paula Rebstock, who was the Deputy Chair of NZX. We have Elaine Campbell, who was the crossover Director onto our NZ RegCo board. We have Peter Jessup, who is Head of our Technology Committee. We have Lindsay Wright, who's Head of our Audit and Risk Committee. We have Frank Aldridge, who is Head of HR, the HR Committee, and we also have Rachel Walsh, who is Head of our Clearing Committee. And for the first time in its 157-year history, the NZX Board has a majority at 57% female representation. In terms of Director changes, Dame Paula Rebstock was appointed to the Board -- the NZX Board effective 1st February 2023, and she was appointed Deputy Chair on 25th of August last year. That recognizes Dame Paula's considerable governance experience and the key role she is playing to help improve New Zealand's economic productivity. Rob Hamilton resigned from the Board effective 20th of March 2023. I was reappointed onto the NZX Board effective 10th of May 2023. James Miller retired as Chair from the Board effective 17th of May 2023. James served nearly 13 years as an NZX Director and for part of that as Chair through a time of significant change and development for the company and the exchange. He oversaw the stabilization and modernization of the NZX Group business, development of a long-term strategic growth plan and the development of strategic partnerships with NASDAQ, SGX and EEX. We thank James for his significant contribution not only to NZX but also to New Zealand's capital markets. Following James standing down, I was appointed NZX's Chair effective 17th of May 2023. And lastly, Sara [ Wheeler ] completed her tenure on the NZX Board on the 31st of December as our fifth future Director. Also sitting with the Board are our CEO, Mark Peterson; and Company Secretary, Sara Wheeler, and we have most of the senior leadership team here in the audience at this meeting. NZX's auditor, KPMG, is represented here today by Brent Manning. I'm pleased to outline the continuing progress NZX is making delivering its strategy. NZX is well positioned for the future through the growth strategy we have been implementing since 2018. This has involved focusing on product additions to our core markets business, plus refinement and alignment around regulation, pricing and market infrastructure, along with significant investment to expand our funds management and funds administration businesses. I would point out global market conditions remain very challenging in 2023. There's been a general absence of IPOs right around the world, and cash market liquidity has come off broadly in the range of 10% to 15% across a range of European, North American and Asian markets. Despite the difficult economic conditions globally, the New Zealand market continued to deliver on capital raising capacity to meet our listed issuers debt and equity requirements. Alongside this, the diversity of NZX's product offering and earnings base meant the company continued to make steady progress on our long-term strategy of expanding our product range in capital markets and driving both scale and operating leverage across Smartshares, our funds manager, and NZX Wealth Technologies, our custodial investment administration platform. NZX's Chief Executive, Mark Peterson, will shortly outline the 2023 financial results and provide further insight into the performance of the business. Mark was appointed as Chief Executive in 2017 with an initial employment term of 5 years and an option to extend that for a further 2 years. That option was exercised in December 2020, extending the employment term to April 2024. And in August 2023, the NZX Board agreed to an open term agreement. Mark's new employment agreement ensures stability of leadership and is maintaining momentum across our businesses. In setting the expectations of Mark, the Board has taken into account shareholder interest and medium-term performance objectives. Greater transparency of the Chief Executive's remuneration was provided in the 2023 Annual Report, and that 2023 Remuneration Report format that was guided by output from the Corporate Governance Institute and that included input from the New Zealand Shareholders Association. The NZX Group has a clear work program in front of it that requires focused and proven leadership. This includes successful delivery of initiatives and products under NZX's capital markets growth strategy that includes NZX20 Index Futures and NZX Dark, along with more size, scale and efficiency in our clearing and settlement, Smartshares and NZX Wealth Technologies businesses. I'll now hand over to our CEO, Mark, to provide an update on financial and business performance. I'll then return and outline our 2024 key performance indicators, outlook for the year, and then we'll move to the formal part of the business, the resolutions. Thank you.

Thank you, John. Good morning, ladies and gentlemen, and thank you for joining us. My name is Mark Peterson, and I'm the Chief Executive here at NZX. And can I welcome all shareholders with us today and those attending online. In 2023, NZX produced a solid operating financial result in what was another challenging year for Global Markets. Elevated inflation and interest rates remained and that continued to impact our equity markets activity alongside creating movements in asset prices over the year, which flowed through to Smartshares and NZX Wealth Technologies. NZX's trading and clearing volumes through the market were down 9.7%, the lowest activity levels in 9 years. Value traded is a key earnings driver for the company, so we did face a considerable earnings headwind in 2023. The key determinant to activity increasing in the market -- or the key determinant to activity increasing is the market believing inflation is under control and more generally, the stronger economic outlook for New Zealand is on the cards. We believe the equity market downturn hit more than $4 million worth of negative impact to NZDX revenues and there was little cost associated with that revenue. So the decline dropped through constraining our operating earnings growth. As markets recover, we would expect these revenues to return again with minimal associated costs. The overall trading patterns we are seeing are not hugely different to the similar markets around the world. Approximately half of the 61 World Federation of Exchange members had a reduction in traded value of 15% or more in 2023. Despite these difficult conditions, NZX lifted operating earnings or EBITDA, highlighting the resilience of the company through market cycles. Normalized operating earnings, excluding acquisition, integration and restructuring costs, were $40.1 million, up 9.6% on last year. If we include acquisition, integration and restructuring costs reported operating earnings were $38.9 million, up 10.9%. Since the first year of implementing our growth strategy in 2018 underlying operating earnings, that is excluding any one-off acquisition integration or restructuring costs have increased by 47%. Net profit after tax was $13.6 million, down 4.3%, largely due to the increased interest and amortization costs, and I'll talk about -- I'll talk more about those costs shortly. Our group revenues lifted to $108.4 million, up $12.7 million or 13.2% on 2022. Breaking this down at a high level. Capital Markets revenues were 1.2% lower than last year. Several almost offsetting elements to call out here. As I mentioned, trading and clearing revenues were 11% lower, and we had slightly lower data audit and energy consulting revenues off the highs of 2022. However, we had good growth in dairy derivatives, indices and data subscriptions and license revenues. Smartshares revenues were substantially up, almost 51% as we incorporated the ASB Superannuation Master Trust and QuayStreet acquisitions. Revenues in the core Smartshares business also saw a lift of 24.8%. NZX Wealth Technologies saw funds under -- sorry, NZX Wealth Technologies saw funds under administration based revenue growth of 21%. $14.2 billion of capital was listed and raised on our market over the year which was softer than our previous 4 years. The environment was more conducive to debt capital raisings with $6.8 billion of new debt issuance raised through the market, and this was similar to 2022 levels. Secondary capital raise totaled $7.4 billion and also favor the debt and fund markets over equity. ESG and green designated bonds continue to be in favor by issuers and now account for more than 29% of the total debt market issuance. Secondary equity raisings were strong in the first half with the Ryman and Infratil raisings. And this didn't follow through into second half and market conditions made it difficult for IPO activity, which has resulted in postponements until conditions improve. We are not alone. Similar conditions have been felt across most developed public markets around the world. The origination team has continued work seeking out new company listing prospects, which remains at healthy levels, and they are also supporting our issuers telling their story to the wider market through our investor events podcast, spotlight videos and educational workshops. And our audience for this information continues to grow. NZX and friends of the capital markets community are engaging with government to encourage [ settings ] that we expect to further facilitate growth in public markets. And we've been encouraged by the Minister of Commerce who said the government has capital market settings on its agenda for the second half of 2024. NZX remains confident that as economic conditions improve, equity market activities levels should also increase. Our strategy to grow capital market activity includes developing and launching new products such as our anonymous midpoint trading venue, NZX Dark, which will be ready for participants to connect to in May. We also continued our efforts to launch our equities futures market with an NZX20 Index Futures product, which is intended for later this year or early next. We're also keen to increase scale in our operations and settlement capability. Depository assets in custody grew to $7.9 billion, which was up 25.5% on last year. We're always looking for more participants to join our depository and take advantage of the improved market efficiency and in this vein we are pleased to welcome trustees executors as a depository participant. Information Services continues its steady growth trajectory. The revenue line has had a compound average growth rate of 7.5% since 2018. Subscriptions and license revenues grew 7.1% in 2023, reflecting the continued growth in data usage. However, we are starting to see a slowdown in audit and backdated data license revenues as these are now being captured in the reoccurring revenue lines. We have invested in our data and website infrastructure, which puts all our client-facing technologies into the cloud and now gives us the opportunity to create a wider range of data products and deliver these to market for a number of modern technology delivery mechanisms. This will assist in the continuation of growth of our Information Services business. Turning to dairy. Our partnership with SGX continues at strong levels of growth. Lots traded were up a further 35% on last year, a new record. And revenues totaled $3.6 million for the year, which is up 88% on 2022. Market price volatility and a number of -- and a greater number of end users using the market is driving the increase in lots traded. A favorable exchange rate and increased levels of margin are held also driving revenue growth. Global dairy trade is beginning to see the benefits of the ownership change with new potential sellers and showing interest in joining the platform and the planned GDT strategic initiatives are also progressing well. Smartshares continues its strong growth track. Despite some global asset price volatility, funds under management as at 31 December was $11 billion, up nearly 33% from 31st of December 2022. This is through a combination of positive cash flows and market returns and the acquired QuayStreet Asset Management business coming into the Smartshares fold. Revenues lifted 51% to almost $37 million. In August, we delivered the integration of the ASB Superannuation Master Trust business onto the Smartshares platform and have released significant synergies, which are now coming through the revenue line. To achieve this, we had to bring in-house some operational support capability, and I'll explain more fully in a moment, these matters. Similarly, we have already integrated elements of our QuayStreet business into Smartshares with more to come. And the distribution opportunity with Craig's Investment Partners is beginning to bear fruit. Anna Scott joined the team as Chief Executive. Anna is driving a focus on balancing our growth opportunities we have while increasing our efforts to improve our operational efficiency. We remain focused on hitting our goal of $15 billion to $20 billion of FUM by the end of 2027. The biggest change to NZX Wealth Technologies business over the period, besides the 3 client transitions we achieved, is the winning of 12 new clients in 2023. This means our team has a full client transition program in 2024. Our product, reputation and team are seen as strong and reliable by the market. And the client transition experience we have been able to provide has been positive. We continue to field new client inquiries. The key challenge in front of the team is transitioning all the new business opportunities we have in front of us and coordinating the transitions around our clients' timing constraints. Well led by Lisa Turnbull, the team is up for that challenge. NZX Wealth Technologies funds under administration has grown from $2 billion in 2018 to $11.5 billion at the end of 2023. And as at the end of March this year, the figure now stands at $13.8 billion. We have more confidence than ever in achieving our target funds under administration levels and we remain confident about achieving cash flow breakeven by the end of 2024. Cost control remains a priority. However, in 2023, our headline operating expenses did increase by 15.5%. This figure read in the absence of understanding the various component parts creates a misconception of our cost base change. To explain this further, just under half of this change related to the integration of the ASB Superannuation Master Trust and Smartshares. Offsetting this, the increase had a positive impact on revenue. More specifically, prior to the completion of the integration of the ASB Superannuation Master Trust business. Smartshares paid ASB, operational -- paid for operational support of the business, and this cost came out of the revenue line. The integration plan hits Smartshares high the operational support staff directly, which now appears in our cost line. When integration occurred, the revenue drag disappeared. The overall result was a $1.2 million annualized increase to our operating earnings. We will have something similar occur when the final steps of the QuayStreet integration are completed. The remainder of the group's cost changes relate largely to inflation-driven employee compliance and technology costs. In addition, over the last 18 months, we have dedicated effort to reviewing head count, managing project priorities and rationalizing supplier contracts across the NZX group. We have prioritized key projects that will deliver our strategy, putting on hold other projects and negotiated supplier savings opportunities. We continue to focus on this. Overall, across the NZX Group, we don't expect any major cost surprises in 2024. And in general, cost changes should be largely inflationary driven. We also have further synergy and operational efficiency opportunities in Smartshares, which we are focused on delivering. Overall, NZX's 3 largest cost areas are employees, which is around 60% of operating costs. Technology spend is around 28% of operating costs and amortization totaled $13.3 million per annum. Amortization is a noncash charge, as you know. The amortization of the acquired funds management businesses account for around 23% of NZX total amortization charge and amortization of the capitalized NZX Wealth Technologies costs accounts for around 48% of the total amortization charge. NZX Wealth Technologies capitalizes the staff cost and a portion of its overhead relating to these client transitions. This has and continues to result in a meaningful capital investment into the business to reach the stage where it's now nearing cash flow breakeven. This has resulted in a significant rise in the amortization charge to the income statement, which has acted as a constraint to the bottom line growth and net profit compared to the growth in operating earnings or EBITDA. The investment in the Wealth Technologies and the associated amortization over time is the cost of building this business. It is an investment in the future, we believe, will have significant earnings and [ NPAT ] upside over time. It is also worth noting the amortization of the investment into NZX Wealth Technologies is over 5 years, and the typical life of a client is closer to 10 to 12 years. This will mean that whilst we're running an amortization bubble at present, as the business matures and the investment in client transitions, if it start to tail off, there will be a significant positive impact to NPAT. As I previously noted, NZX Wealth Technologies is expected to be cash flow breakeven by the end of the year and a contributor to group cash flow thereafter. As an aside, we have recently completed our New Zealand and Australia investor roadshows. We met with more than 20 current and prospective investors, and we felt the meetings were positive. The general sentiment was that our capital markets business is well set for a lower inflation, lower interest rate environment. Investors also see the growth opportunities ahead for Smartshares and Wealth Technologies. And we are pleased to see the higher trading activity in the NZX stock that has occurred post those meetings. In 2023, NZX achieved net carbon zero certification from Toitu Envirocare for the third year in a row. Under the new mandatory climate-related disclosure framework, NZX as a climate reporting entity has reported our climate change obligations regarding governance, strategy, risk management metrics and targets. In 2023, we also undertook stakeholder and materiality assessment to grow and deepen our stakeholder understanding and relationships. Support and further -- this will support and further inform NZX's strategy execution and will guide us for future ESG prioritization targets and reporting. This will assist with the implementation plans in 2024. As our stakeholders told us, public markets will continue to play an important role in facilitating the flow of capital towards decarbonizing New Zealand's economy. We continue to take seriously the operating culture we have at NZX and this remains a priority since I became Chief Executive. Our people continue to show huge commitment to the business and the opportunities we have in front of us. Staff turnover continues to reduce as the employment environment changes. Operations and technology teams continue to be accurate and day-to-day activities and system uptime was again 100% for the second year in a row. Our risk management function is maturing nicely under the leadership of our Chief Risk Officer, Ronnie Redpath. The Financial Markets Authority's annual NZX market operator obligations review again showed positive progress across all areas. Staff engagement continues to be strong, and we recently had a record staff engagement score. We also have a balanced mix of age, tenure and gender diversity. Our gender pay gap is 16.6%, which is higher than we would like, but lower than other New Zealand financial institutions. Our overall gap is primarily at the senior and manager levels and is driven purely from not having enough females in those leadership positions. Our recruitment and promotional efforts are focused on improving the situation balanced with ensuring we hire the best skills in those roles. Finally, before I hand back to John, I would like to thank you, our shareholders, for your continued support and confidence in NZX. Thank you.

Thanks, Mark. As Mark has highlighted, NZX is now a more integrated and resilient financial markets infrastructure and services business with a platform for strong growth prospects, and this will create further value for our shareholders. Growing markets is fundamental to what we do, helping businesses get access to capital and providing investors with opportunities to grow their wealth by investing in debt, equity or fund securities. Our ambition is to round out our capital markets product offering in areas such as equity derivatives and carbon markets, which will broaden our earnings base plus add scale to our settlement and clearing activities. We are globalizing our footprint across a number of our businesses as evidenced by the various partnerships we have with Singapore Exchange for dairy derivatives, the European Energy Exchange for carbon auctions and both Fonterra and EEX in global dairy trade. Global partnerships will help us achieve scale in these businesses. In addition, most exchanges have some level of diversification. And in our case, for the Smartshares and NZX Wealth Technology businesses, these have long-term structural market tailwinds that will support strong growth in both. With Smartshares, we intend to create further products to ensure investors can use the NZX markets to get exposures globally. Our group strategy to 2027 is clear. Round out our product offering and capital markets in line with other exchanges internationally and drive scale and operating leverage across the broader business to increase our revenue base. Moving on to dividends. The NZX board declared a final dividend of $0.031 per share, and that was paid in late March, and that contributed to a full year dividend of $0.061 per share fully imputed. As a reminder, the dividend policy is to pay 80% to 110% of adjusted net profit after tax over time, subject to regulatory capital requirements. The increase in amortization relating to that investment in NZX Wealth Technologies that Mark explained has been a significant factor in constraining NPAT. Furthermore, global economic conditions meant market trading volumes and capital -- mean market trading volumes and capital raisings are currently running below their long-term averages. Both these factors have constrained NPAT, and therefore, our ability to grow the dividend in the last few years. While the current dividend is above the payout ratio, the Board has an expectation that subject to usual market risks such as trading volumes, capital raised and the level of the NZX 50 Index that earnings growth will not only support future dividends, but will allow for future dividend growth. Current free cash flows after the ongoing investment in Wealth Technologies remain positive and support the dividend NZX has paid out. In looking at the KPIs for the year ahead, our organizational priorities and performance indicators are: First, to obviously deliver on the earnings guidance we have in the market. Secondly, to deliver initiatives to grow core capital markets, such as our midpoint order book in NZX Dark and the NZX20 Index Futures product. For NZX Wealth Technologies, that's to be cash flow breakeven by end of 2024. We want to deliver more scale and efficiency in our settlement and clearing business. We want to deliver operating efficiencies across Smartshares and its acquisitions and invest in the technology platform for improved scalability. And we must also meet expectations for risk and compliance, staff culture and engagement and our ESG metrics, including climate and the gender pay gap. When increases to the Director remuneration fee pool was sought in 2022, NZX signaled its intention at that time to do it in several bites by returning to shareholders over the following 2 years, 2022 and 2023 to seek those further adjustments over those 3 years, progressively bring Director fees into line with the market median, and that's what we are proposing today. Prior to this, NZX Director fees had not been independently reviewed since 2001. NZX has subsequently received a fresh -- a refreshed Independent Director fee benchmarking report from PWC and the results of this process are outlined in a summary report available on our website. PwC's report identified the following: The market median fee pool across the agreed comparator group of 20 NZX-listed companies was $725,000. The NZX current fee pool of $564,000 has a comparative ratio of 78% of that market median. The market median Board Chair fee across the comparator group is $166,000 while for nonexecutive directors, it is $88,200. The NZX Board and Nonexecutive Director fees each currently trail the market median observation at 78% and 74%, respectively. 21 of the 22 or 95% of the comparator companies pay a committee fee to the Chair of their Audit and Risk Committee and the median fee is $15,300 and 17 out of 22 or 77% pay a fee to the Chair of their Remuneration Committee, and that's a median payment of $12,000. Now to attract and retain talent for the Board and ensure strong governance of New Zealand's Stock Exchange, the Board considers that it is essential that NZX pays market rates for those fees. Based on the independent benchmarking information undertaken in 2024 and subject to shareholder approval today, the Board proposes to increase Director fees to $88,000 with $166,000 payable to the chair and that's an increase of $23,000 or 35.4% for directors and an increase of $36,000 or 27.7% for the Chair. That would bring both Director and Board Chair fees into line with the market median set out in PwC's benchmarking report. In addition, the Chair of Audit and Risk Committee would receive a fee of $15,000 and the Chairs of other committees, excluding the Nominations Committee, would receive a fee of $10,000. Currently, the Chairs of NZX's committee receive no additional fees. The crossover Director for both NZX and NZ RegCo will be paid Director fees solely by NZX, including continuing rate of an additional $20,000 component for their role on the board of NZ RegCo. The Nonexecutive Director, who sits on the board of NZX Wealth Technologies will continue to be paid an annual fee of $20,000. These fees were previously paid out of the Director fee pool. Previous fees have been approved on the basis of a Director fee pool. This resolution will instead approve the fee payment based on the Director's role. The resolution will result in an increase in the level of Director fees to $779,000 which is 38.1%. This would bring the total approved fees above the market median of $725,000. And this difference against the market median is the result of several factors. In the first one, and the obvious mathematical one is the Board has a greater number of directors than the median number of directors on the comparator boards in the PwC report. The comparator pool has a median of 6, we have 7 directors. And the Board considers the greater number of directors is appropriate given the particularly broad and specialized range of domain knowledge required to operate the wide range of businesses within NZX. And reflecting that range of businesses within NZX, there are additional specialized committees for technology and for our clearing house. And also, including inclusion of a crossover Director for NZ RegCo and a Non-Executive Director for NZX Wealth Technologies. On a per Director basis for NZX, the fees proposed are in line with median amounts in PwC's report. Now it does remain the policy for at least 50% of the increase from each of the FY 2023 Directors' fees to be applied towards on-market acquisition of NZX shares each year subject to legal requirements. Accordingly, 50% of any increase this year will be used to buy shares, and I ask you for your support for this resolution today. Moving on to our outlook for 2024. We are off to a good start. Our markets business is performing in line with our key metrics. There was soft market activity over Q1 2024, but that's been offset by cost management and we did achieve some one-off revenue from an index audit. This has resulted in capital markets operating earnings slightly ahead of Q1 2023. In our funds management business, we are seeing the benefits of FUM growth and the synergies of the QuayStreet and Super Master Trust acquisitions. And Wealth [ Tech ] continues to track against forecast increase in annual recurring revenue as new clients transition on to the platform. So overall, first quarter revenue reached $28.8 million, which is up 14.8% and noting that this does include the one-off audit fee item, which was around $0.9 million. And operating earnings, again, including the one-off audit fee, was $11.4 million, which is up 23.5% on the same time last year. With its growth activities NZX -- with the growth activities, NZX has underway across the business. NZX is today reaffirming that the business should deliver operating earnings, and that's excluding integration and restructuring costs that will be comfortably in the range of $40 million to $44.5 million. And obviously, the statement in our current operating earnings guidance range is always subject to the usual market risks and outcomes. Right. We'll now move to the formal part of the business. All items of business are ordinary resolutions and are required to be passed by a simple majority, being more than 50% of the eligible votes cast. And the resolutions that we will be voting on today are as follows: The first is for auditor's fees. The second is for the election of myself as a Director of NZX. The third is for the reelection of Lindsay Wright as a Director of NZX. And the fourth is for the approval of an updated Director fee pool. As stated in the voting proxy form, all voting at today's meeting will be by way of poll. And accordingly, in my capacity as Chair, I require that a poll be held for each of the resolutions. Shareholders on Link's virtual meeting platform will be able to cast their vote using the electronic voting card received when online registration is validated. Voting will be open until the close of the meeting. Please refer to the virtual meeting portal guide or use the help line which is 0800-200-220. That's 0800-200-220. And to vote. For those online, you will need to click Get Voting Card within the online meeting platform. You'll be asked to enter your shareholder or proxy number to validate. Please then mark your voting card in the way you wish to vote by clicking either for, against or abstain on the voting card. Once you have made your selection, please click submit vote on the bottom of the card to lodge your vote. Voting will remain open until around 5 minutes after the conclusion of the meeting and the results of the vote will be announced via a market announcement on nzx.com. Your Board supports each of these resolutions and intends to vote undirected proxies in favor of these 4 resolutions. I will now introduce each of the resolutions in turn for discussion. The first one relates to our auditors, KPMG, and that relates to the Board being authorized to fix the fees and expenses of KPMG as the company's auditor for the 2024 financial year and KPMG is the current auditor of NZX. So I move as an ordinary resolution that the Board be authorized to determine the auditors' fees and expenses for the 2024 financial year. Are there any questions from the floor on this resolution? Are there any questions from shareholders online? No, not in relation to this matter. There are no questions on this matter from shareholders online, and there appears to be no further discussion. I will now move on to Resolution 2, which relates to the reelection of myself as a Director, and for the purposes of this resolution, I will hand over to Dame Paula Rebstock to chair this part of the meeting.

Good morning, everyone. John McMahon was appointed a Director of NZX in May 2023. John retires in accordance with the listing rules and the company's constitution and offers himself for reelection. The Board recommends John McMahon to you as a Director of NZX and unanimously supports his reelection. Being eligible, John has confirmed he is available for election. I now would like to invite John to address the meeting on his proposed election.

Thank you, Dame Paula. NZX holds a very privileged position as the sole provider of a stock exchange for New Zealand. It's a complex business. It's also highly regulated, as it should be, given its critical role in the financial ecosystem around capital formation, capital allocation and capital pricing. And these are essential elements of a well-functioning economy, and they help to promote economic growth and development for the whole country. NZX has a diverse range of business operations. And consequently, the breadth of Director domain knowledge required is extensive. My bio, which I'll take as read indicates that I have directly worked or been involved in businesses that encompass much of NZX's operations. So I do understand the economics and nuances of how these work. I also have a broad range of commercial experience and I also have governance experience across several other listed companies, two of which I also chair. And it's a privilege to be able to chair NZX which is such a unique and essential component of New Zealand's financial market ecosystem. I thank my fellow directors for their confidence and entrusting me with this position. NZX has a portfolio of financial infrastructure businesses that have significant potential to drive growth and to add shareholder value. And I think it's particularly important for the chair to be well aligned with shareholder outcomes and I note that I have a holding of 300,000 shares in NZX. So I can assure you that I am very, very focused on growing the economic value of NZX and in seeing that reflected in both the share price and higher dividends. Thank you.

Thank you, John. I move as an ordinary resolution that John McMahon be elected as a Director. Are there any questions from the floor on this resolution? Can do a lot of planning, but you can't plan for that.

[indiscernible] shareholder. I would welcome John, to be very honest with what you have said in terms of shareholder value. That is one of the real issue for any shareholder, especially at NZX for the last 10 years. And I do appreciate what you've said. And I hope it follows up with the right results. Because it's very important, a stock market to any economy, any country is very important. And I think I'm sure you're going to take it to the law makers of New Zealand who understand welfare very well, but I don't think they understand the value of a stock exchange. And New Zealand needs one, and I hope you are the right person to probably quote it with the Prime Minister and the Finance Minister as well in really understanding how important a stock exchange is for a country. So I would appreciate John, and I'll say that. Thank you.

Thank you for that comment. And there's a lot of insight into that comment, and I think the Board in supporting John as Chair took really a lot of account of his commitment to the market and the importance it holds in New Zealand. So really appreciate that comment. I'll now ask if there are any further questions from the floor. If not, I'll ask if there are any questions online? None. Thank you very much. Then if there are no more questions from shareholders, I will hand the meeting back to John. Thank you.

Thank you for that, Dame Paula. Resolution 3 relates to the reelection of Lindsay Wright. Lindsay Wright was appointed a Director of NZX in February 2019. Lindsay retires by rotation in accordance with the listing rules and offers herself for reelection. The Board recommends Lindsay Wright to you as a Director of NZX and unanimously supports her reelection. Being eligible, Lindsay has confirmed she is available for reelection and I now invite Lindsay to address the meeting on her proposed reelection.

Thank you, John. Good morning, shareholders. My name is Lindsay Wright, and I stand before you this morning to seek reelection as a Director of NZX Limited. You'll be aware of my background from the materials provided. However, I'd like to thank you actually for this opportunity to tell you a little bit more about myself. Firstly, I have strong domain knowledge and experience in financial services over 30 years -- 30-plus years, both here in New Zealand and globally, principally in capital markets, and asset management. In particular, and I think relevant here at NZX, I have very deep asset management experience across the entire value chain, leadership and management, governance, strategy and business development, investment, both in the public, private, active, passive and alternatives arenas, operations, trading, data and technology, finance, risk and compliance. Asset managers on behalf of their funds and clients are large and very important investors in our public markets and understanding and representing this perspective to the NZX is very important. Secondly, I have extensive commercial experience. not just in functional roles, but as a CEO and regional global leader. Examples being the CEO of the funds management unit at Sun Hung Kai, the largest listed family office in Hong Kong, and previously holding APAC CEO roles for some of the leading global asset managers, Bank of New York Mellon Investment Management, Invesco, Deutsche Asset Management and Matthews Asia. Plus I had the opportunity to lead the alternative unit of Harvest Fund Manager or [indiscernible] in China, second -- China's second largest manager. I'm an experienced business builder having grown successful businesses, both organically and inorganically, and this commercial experience, I believe, adds value and perspective at the Board table. Thirdly, I understand regulation. I have operated in highly regulated markets my entire career and understand the importance of regulation and its critical role in protecting investors, maintaining orderly markets and promoting financial stability. Importantly, I have demonstrable experience in governance. I've held executive directorship roles for regulated asset managers, securities firms, banks, private fund managers and funds across the APAC region. I've also held a range of non-executive directorship roles here in New Zealand. Firstly, The Guardians of New Zealand Superannuation Fund, both Deputy Chair and Chair of ARC, Kiwibank and Kiwi Wealth and I'm currently on the Board of Milford Funds Management plus the Chair of the Audit and Risk Committee and ASX-listed Alternative Investment Manager, Navigator Global. I'm a Fellow of the Hong Kong Institute of Directors and Responsible Officer type 149 at the Hong Kong Securities and Futures Commission. I strongly understand public markets both domestically here and foreign and also importantly, foreign investors. Having run businesses to some of the world's largest asset managers who manage money on behalf of the most sophisticated investors here in the region, who invest in public markets, including the NZX, with a significant proportion of investors by value being offshore investors on the NZX, I have an important perspective to offer the Board in NZDX. I understand the importance of diversity. I'm culturally very aware and have lived and worked around the world, Auckland, Sydney, Tokyo, Singapore, New York, Beijing, Hong Kong. I value strongly diversity, but most importantly, I value the diversity of thought and experience. I know this leads to better outcomes, and I bring this important perspective to the NZX. I support net carbon zero targets and climate-related disclosure frameworks. I believe public markets will continue to play an important role in capital allocation and achieving decarbonization -- decarbonizing targets. And finally, I'm intellectually curious. I'm passionate about the role, purpose and importance that an efficient, well-run capital markets ecosystem contributes for economies, businesses and individuals and in this case, for all New Zealanders. I believe strongly in the further development and success of New Zealand capital markets, of which NZX is at the center. As you're aware, I was elected to the NZX Board originally 6 years ago, my current Board responsibilities are the Chair of the ARC, which I've chaired for the entire 6 years, and I'm currently a member of the Clearing Committee. Prior committee roles have been the Chair of Smartshares, Lead Independent Director and a member of Remuneration and Noms Committee. The last 3 years since I stood before you have passed actually really quickly. I'm proud of the progress that we've made in delivering on the strategy and the ongoing repositioning of NZX through deliberate strategic change that has led to a step change in growth and long-term value for NZX in particular, and John and Mark have commented on it earlier, this is focused on the development of a more resilient markets business with a stronger focus on growth and innovation plus refinement and alignment around regulation, pricing and market infrastructure. The growth in development of funds business, both organic and inorganic. Significant development, investment and majority of our risk management framework, including tech and cyber, global exchange partnerships that are driving really long-term value and establishment of RegCo in creating a best practice approach to regulation of the market in line with our global peers. I believe we have built a more robust business in capital markets platform with stronger sustainable value for you, the shareholders. We've also taken meaningful key steps to meet our long-term goal of becoming a more vibrant and diverse participant in New Zealand's capital markets ecosystem. We also understand, and I certainly understand that we have more to do. Over the last 3 years, we've had some challenging times and we remain very focused on learning, listening and improving the ways we respond to these challenges. Key examples of obviously been dealing with COVID, responding to cyberattacks and more recently, the elevated inflation and interest rates, which is affecting many sectors of the economy and continues for 2024. I'm proud of the important role and response that NZX has played and continues to play at these more difficult times. I stand before you and seek reelection principally for 3 reasons. One, importantly, I have the necessary skills and experience to continue to drive support and deliver on the strategic repositioning and forward growth and development of the business. Secondly, I have made a strong contribution to the strategic repositioning growth and value of NZX over the last 3 years, and I believe I will continue to do so. And finally, I'm a passionate New Zealander and want a growing, vibrant and well-diversified New Zealand capital markets with NZX at the center that delivers for all stakeholders. Importantly, you, the shareholders, but also importantly, our issuers, participants, investors and staff. I would also like to take this opportunity to advise shareholders that I will be returning to New Zealand permanently in June this year after 22 years working offshore. My prior conflicts, which precluded me being able to purchase NZD stock expires on May 21, and I will proceed at that time to purchase stock in the NZX. I very much believe in the growth story. I fully understand my obligations and duties if I'm elected by you as a Director and take these responsibilities extremely seriously. Shareholders, its a privilege to stand here today seeking reelection as a Director of New Zealand's Exchange who will represent -- representative on the Board. I ask you for your support, and I thank the support of the existing Board. Thank you.

Thank you, Lindsay. I move as an ordinary resolution that Lindsay Wright be reelected as a Director. Are there any questions from the floor on this resolution?

Thank you, Lindsay, for probably the detailed outlining of what you are made of. But I see you here, you've been a director since 2018, and I understand that role was played as an overseas and not being a local -- I mean not present in New Zealand. One question I have is it's been outside 2018 to 2023, 5 years, 6 years, take the 2 years of COVID away. Are you happy with the shareholders' returns? And I ask you that is I mean is in perspective to dividend and shareholder -- share price as well because I don't want the dividend and the share price to fall. So you're giving my capital back. So I would like to know from you 5 and 6 years, and you've got a very descriptive history of you've done so much. So I want to know from you whether you're happy with what you have done as a Board and especially as a Director in terms of it's fair for shareholders to expect what we are today.

I've got some shareholder return [ data here if you want ]? Shareholder returns from 2018 to 2023. Do you want me to go through that?

Yes, probably. Can you just provide the shareholder...

I'll just provide a little bit of data in terms of context. We started the current strategy during 2018. So it's been going for just slightly over 5 years. So what I did was I had to look at -- used Bloomberg to have a look at the 5-year returns for NZX, which basically covers the period where we've been implementing the current strategy. And so I ran that -- our head of data team run that from the end of 2018 to the end of 2023. And when you run that, you find that the return for the NZX 50 Gross Index, was -- in total, over that period, was 34%. The return for what we probably regard is our closest comparator company, which is the ASX Stock Exchange in Australia, that was also had a total return over that period of 34%. NZX over those 5-year date period had a total return of 49%. So I would like it to be more, but it has actually slightly outperformed the market and had slightly outperformed what we regard as probably our nearest benchmark comparators. So maybe Lindsay can answer in the context of that data.

Thank you. And obviously, I think the data speaks for itself. I think in any circumstance, do we want to do better and move more quickly and drive value to specifically share? Of course, we do. In addition to what we have achieved, all I would say is that equally, we have built, and I'm proud of that, a far more resilient business. The diversification we've put in to the business from the strategic point of view and the further strengthening of the core markets business, I think we've done a reasonable job here. So I'm proud of that. But particularly with the diversification, I think what we've achieved to date, albeit there's always more work to do around the funds business and the significant growth, both in assets under management, but also revenue and bottom line and its contribution to the broader business, I think, has been very, very good. And certainly, the output that we're starting to see from the investment over the last 5 years in Wealth Tech is starting to begin to pay off. So I'm very pleased with the progress we're making in there. But specifically, our strategic focus around building a more resilient markets business, I think is very, very, very, very good. And that's been -- from my point of view, as Chair of the ARC, we've been working in tandem and have significantly strengthened the risk framework, particularly around technology and cyber. And I think that's a significant benefit here to the company, but to shareholders and to New Zealand. So yes, good progress. But of course, like I said, I would always like to do more.

We have a question online from [ Wengen Chan ], who asks, I appreciate Lindsay's experience overseas. My question is, what is your view on bringing in overseas investors and particularly from APAC to invest in the New Zealand market?

I think increasing investors both in the NZX stock and across all companies on the exchanges is vitally important. Foreign investment is absolutely important to the growth of businesses in New Zealand, including our own.

Thank you, Lindsay. I move, as an ordinary resolution, that Lindsay Wright be reelected as a director. And as there are no further questions on this matter, there appears to be no further discussion, so we will move on now to resolution 4. Resolution 4 relates to directors' fees and it seeks approval for the annual remuneration payable to each Director of NZX to be set at $88,000, the Chair's annual remuneration set at $166,000 with the Chair of the Audit & Risk Committee to receive an additional annual fee of $15,000 and the Chairs of each of the Clearing, Human Resources & Remuneration and Technology Committees to receive an additional annual fee of $10,000, for any directors -- any NZX directors who are appointed to the Board of NZX Regulation Limited, that's RegCo, to achieve an additional annual fee of $20,000. That's the current fee level that we pay at present. And for any nonexecutive directors appointed to the Board of NZX Wealth Technologies to receive an annual fee of $20,000, which again is the same as the current level or with effect from 1 July 2024. Now as noted earlier in my presentation, when increases to the director remuneration pool was sought in 2022, NZX signaled its intention to do this in 3 bites and to return to shareholders over the following 2 years, 2023 and 2024, to seek those further adjustments, to bring director fees into line with the market median. And that's what we are doing today. NZX subsequently received a refreshed independent director fee benchmarking report from PwC and the results of this report are outlined in a summary report available on our website. As I mentioned earlier, attracting and retaining talent for the Board and ensuring strong growth for New Zealand Stock Exchange means the Board considers that essential that NZX pays market rates. The Board unanimously supports the proposed resolution, and I do note that voting restrictions apply to this resolution. So I move, as an ordinary resolution, that the annual remuneration payable to each Director of NZX Limited is set at $88,000. The Chair's annual remuneration is set at $166,000, with the Chair of the Audit & Risk Committee to receive an additional annual fee of $15,000, the Chairs of each of the Clearing, Human Resources & Remuneration and Technology Committees to each receive an additional annual fee of $10,000, for any directors -- for any NZX directors who are appointed to the Board of NZX Regulation Limited to receive an additional annual fee of $20,000. And for any nonexecutive directors appointed to the Board of NZX Wealth Technologies Limited, to receive an annual fee of $20,000, all with effect from 1st of July 2024. Are there any questions from the floor on this resolution?

[ Eden ]. I'd first of all like to acknowledge the stellar work you've done in the funds management space, especially with [ direct fund, we believe in Bill ]. We love that. I would like to speak against the resolution 4 on increase directors' fees when NZX has substantially underperformed [ peers ], especially on a like-for-like basis. I do note that in the PwC report, it was -- comparator companies were mostly mid-caps. If you compare peers like ASX, NASDAQ, et cetera, it has underperformed, especially net of dividends. So we believe and I believe, in [ reported ] performance, and I think and NZX is certainly on the way. However, that's sort of my issue, it's underperformed.

And I noticed your comment was in relation to 2 other companies, one was NASDAQ and one was ASX, and I also note your comment was on a net of dividends basis. So in other words, not a total return basis. NZX is a relatively high-yielding company. And quite frankly, I couldn't conceive of any other way of measuring returns other than on a total returns basis, including dividends. Secondly, I'd look at the 2 comparator companies you quoted. One was ASX, and I outlined, I think, some figures a few minutes earlier. We are looking at the 5-year period where we've largely been running our current strategy. ASX' total returns, including dividends, was 34%. NZX's total returns, including dividends, was 49%. On that basis, we have outperformed the ASX. I do not have the numbers for the NASDAQ available. However, I would note that is a fundamentally very different business. Firstly, it is very tech-heavy. And most of the returns that you look at in that North American market have been concentrated in a small handful of tech companies, you're talking Apple, you're talking Amazon, you're talking Google, Facebook, Tesla, NVIDIA. There are a small handful of companies that have driven global companies that have driven the bulk of the returns in that market. Secondly, NASDAQ has a significant technology business in its own right. NZX, for example, uses NASDAQ technology for its trading engine. And in our RegCo business, we use a system called NASDAQ SMARTS to monitor activity in the market and trigger alerts around things like suspicious trading or anomalous price moves. NASDAQ has a global software business where it sells software to other exchanges. And there are other components to it as well. I would dispute that, that's a good like-for-like comparison. I don't think there would be many exchanges in the world that would actually measure up against NASDAQ in terms of that scale and capability. It's a great -- we agree on that. It is a great business. And New Zealand has got a couple of, I would call, global scale companies on our exchange. The obvious example would be Fisher & Paykel Healthcare, where as a genuine global player in its sector. But if you look at the sort of the composition of our top 20, there aren't a lot of companies like that. Mainfreight is another one, which operates very -- globally, but then you look at a range of companies like our gentailers, which are predominantly domestic in nature. So I think the market composition is extremely different, and we just don't have that global technology business that NASDAQ owns. But I appreciate your comments. Thank you, [ Eden ].

As far as realizing the fees with what has been put under reservation. We are happy to do that as far as you are happy to deliver for the shareholders.

That is my [ view ].

And when we say that, it's related directly to the increase over there we see on the screen. And we want to ensure that shareholders get more return than what you're going to get. And I would say that when you said NZX has returned 49%, it's a bit of a surprise to me, but because -- the comparison has to be with the share price as well. So when you look at the share price, and the dividend...

It's the share price plus the dividends. And I would say a big portion of that return does relate to the dividend component.

No, that's fine. But I'm a bit surprised to that. And I would appreciate next time when you are showing up all the slides, you put that slide as well.

I'd be happy to do that.

So we come to know exactly because I don't see that happening. So I'll rather talk to you when we are finished, just how you came at 49%.

Just to be clear, one of our data teams sourced that information from what is the world's leading information platform and financial services. It's a platform called Bloomberg. Bloomberg provides that. You put in the start date, you put an end date, Bloomberg gives you the total return metric. And I'm happy to provide the data next time.

Yes. But John, I think you must appreciate a shareholder as well because a shareholder, who knows his pocket and the money he has put in your company, sees his books every year, and he can see the share price dwindling, you may have paid the dividend. So when you say 49% return, it's quite [ amusing ] in terms of it. Okay, you've got fixed thing, Bloomberg, the formulas all said and good, but I think the share price has not performed. We have lost capital value.

The share price has been very volatile in the last 5 years. It's been extremely -- much more volatile than I would have expected. I could -- depending on the period you wanted to pick, I could show you periods where the share price has halved in that last 5 years. I could also show you periods where the share price has doubled in the last 5 years. There has been a lot of volatility.

[indiscernible] but that's not on the price. What I'm looking at is the shareholder and the return on [indiscernible]...

Yes. Thank you for your comment.

[ Derek Tan ], shareholder. Can I add a couple of points to what the gentleman has said. What you left out is comparison with the Aussie market. The ASX share is about how much is there? $63. The share market is trading -- yesterday's trading was $5.3 billion -- $5.8 billion, and the NZX was probably about $120 million. So that's about 44x the size of the Aussie market compared to NZX. And the share price, $63, and what was our share price, $1.10. So that's about 57x. So according to the comparison, which wasn't included in this directors' fees, what you call, benchmark. I think that NZX share price should be around $1.45. So you are about 30% down.

I'll comment on that -- well, sorry, I won't comment. We won't provide an opinion on the share price. But yes -- no, but what I will provide is information. We have around about 3 analysts from broking firms who do provide analyst coverage on NZX. So while we won't provide you with a view on what we think our share price should be, I can state that the share price range that those analysts have as their fair value estimate ranges, I think it's between about $1.25 and $1.40. So it's actually not far away from your estimate. And so that's, if you like, an external view from outside the company of what they think the share price should be.

So undervalued, underperformed, but directors fees have gone up. And the other thing is a couple of years ago, we had the rights issue. We paid too much for it, $1.27.

$1.40.

Is it $1.40? $1.27, I think. Yes. So all we want as shareholders is just breakeven. $1.27, is that the target?

That is a very good target. And look, the short answer, in the short run, we don't control the share price. It's influenced by a variety of things. And at the moment, as Mark noted in his address, we're in an environment where we have high inflation. We have high interest rates, and that typically isn't an environment where share markets performed particularly well.

So basically, it is just the wrong time to ask for a pay raise, isn't it?

Well, we said we would do it over a 3-year period. And in terms of the timing around it and before putting this resolution up, we discussed it with our major shareholders, also the international proxy advisers who advise those shareholders and the New Zealand Shareholders' Association. And we received a report from all of them for proceeding with the final leg of this increase at this time. I don't think it's ever a good time to be asking for a pay raise to be blunt.

So you are happy with the directors' fee increase, but are you happy to share price?

I won't give a target on it, but let's just say I would like it to be higher. I would like it to be higher than it currently is.

We have some questions online.

We have some questions online. Could you read those out? Please, Sara?

You speak of ensuring to continue to attract good talent for the directors' roles. Do you plan to continue this in respect of NZX employees and ensure their salary meets the market median also. This is from shareholder [ Melissa Robinson ].

I'll let Mark comment on the remuneration process that we run internally for the employees.

Yes. So certainly, thank you very much for the question from the shareholder. Internally, we have a number of measures, if you like, or a number of research reports that we subscribe to, which actually give us a good sense of what salary bands are for different roles across our organization. And we do align our salaries, if you like, for employees to -- between the roles that they currently have to the bands that are actually in those reports. So I think we actually do, do what this question is referring to. I think the answer to your question, [ Eden ], is no, they're not. But you'll also note in the [ room ] report that we had in our annual report, all of the details around what we're known across our salary bands.

Here's just another comment from [ Andrew Art ], who says given the -- the incredible complexity of NZX's business, I support the increase in directors' fees and the strategy commenced in 2018 has clearly had huge benefits for shareholders. Thank you.

Thank you. There are no further questions on this matter from shareholders joining online. There appears to be no further discussion. So we will now turn to voting for any shareholders who have not already cast a postal or proxy vote. Shareholders should now submit their votes please select for, against or abstain alongside each resolution. Voting will be open until the close of the meeting. Once all the votes have been cast, they will be counted by the company's share registrar, Link Market Services and scrutinized by the company's auditors, KPMG, who are in attendance at the meeting. The results of today's meeting will be released to the market on the completion of verification of voting. Now at this point, we will open up to any questions from shareholders in attendance and online relating to the financial results, the business update or any other matters you would like to raise. And if you could please complete your voting forms while we take questions.

So are there any items of general business from the floor to be discussed?

[ Johnny Blundell ], we are long-term shareholders and very satisfied shareholders in NZX given the absolute quality of the Board, governance management. But I've never attended a meeting previously but was sufficiently moved this morning to raise a couple of issues, which I've already run past Chairman. First one, quite straightforward. We get a great 170-page report but many companies report a 10-year rolling history on 1 page, key financial data. And I would very much like to see that on our next year's annual report because the nature of the business is a little bit lumpy, and trends are important. So that's my first relatively straightforward and simple request.

Sorry, that's our CFO, Graham, just advising the investor presentation highlights some of that data, but I completely agree with you. Putting it in the annual report on a one-pager, more [ easy ] format, that's an extremely good idea, and we will look to implement that for next year.

Second point is more a philosophical issue. And just let me get my notes. Okay. We start up. It's really about dividends and inflation. Most of it, not of your making. For example, we had shares [ 258 and 278 ], 324 million. So we've had a 15% decrease in -- sorry, a 21% increase in equity. Now that has driven a 21% increase in dividend payout. But of course, individual shareholders have received nothing. And I have to say, we are very happy shareholders with both the nominal yield we receive and the total shareholder return. We never look at the share price. Not going to sell. So I suppose I'm burnt from observing inflation in the '70s as many will not have been and the very insidious effects this has had on a lot of people. The Reserve Bank CPI deflator shows something like 20% and over 20% in the last 7 years, 6 years, which means that our dividend payout, if you like, in real terms, as you would be well aware, Mr. Chairman, has gone down by well over 20%. And there's really only 2 ways of keeping us up with real returns. No issue was nominal. And that is turning off the equity tap so we don't raise more equity. That has constraints. I'm aware of that. And the other one is we're great Buffett followers. And this business has a tremendous moat around it in Buffett terms. It's very deep. It's very wide. You're a one-off. And with that comes pricing power, and I'm just interested in your thoughts as to the extent to which you can exercise some pricing power in an attempt to perhaps try and keep real returns to shareholders as part of your thinking, if you like. I mean shareholders are wearing the results of the knuckle-draggers as I call them, in Wellington, who thought that 0 interest rates and printing money would deliver a goldilocks economy despite being warned, all it would lead to is high inflation and bloated asset prices. And some of you probably forget but as I call it, Zimbabwe, Deja Vu and there are some real issues out there today. The nontradable economy. Inflation came in at 5.8%, down from 5.9% while statistically, it hasn't moved. So I would really just ask you to perhaps reflect on the issues of how -- and to what extent you can maintain real dividends to shareholders over time, given we haven't had an increase for, I think, it's 6 years now. So just reflections, not a criticism, just an issue, as I said. It moved me sufficiently to actually attend the meeting.

Thank you for your comment. I'll ask Mark to comment on the pricing PowerPoint.

Happy to do that. And thank you for your question. And certainly, agree with the point around inflation being rather evil, especially at the moment. We're an interesting business in [indiscernible] because whilst we may look like we are a monopoly and in some elements, we are a monopoly in New Zealand, we're certainly not absent of competition. And when you think about our listed issuers, there is a choice that listed issuers could make in the sense that they could either choose to list here. They could choose to list in Australia. They could choose to list up in the states and some have. Or they could choose to list on a number of markets. So whilst it looks like we're a monopoly in many respects, we've got to think like we're in a world where there is quite high competitive pressures. And when we think about sort of that pricing and the competition element is definitely all incorporated into the way we think about price and price increases. When we think about our data business, again, data can come from all over the globe, and we've got to really think carefully about how we set pricing relative to those other markets around the world. And then those other aspects of our group operations, be it Smartshares and Wealth Technologies, they are very much in a competitive environment. So I absolutely agree with the inflation point. It was more just a comment to maybe broaden people's horizons on where some of those competitive pressures actually are for us.

Thank you, Mark. Do we have any other questions from the floor?

John White from Century Group. Couple of questions. First one is on the ecosystem in New Zealand. Pre-Christmas, we saw the emerging of 4 broking houses into 2. And one of your directors said she appreciated diversity in New Zealand. Well, we certainly do, too. But we're finding that the diversity of thought research-wise is shrinking. The grim reality in New Zealand now is there's only 3 broking houses of substance for the retail investor. And I remember years ago, Brian Gaynor making the comment that we really needed a deep pool of intermediaries to cover the stocks in New Zealand. A lot of stocks in New Zealand now are not covered at all. Now the upshot for our organization is we don't invest in New Zealand now broadly at the margin, we might tinker around, but most of our capital now is going offshore. And I think a lot of fund managers doing exactly the same thing. And I think it's really sad actually, because I think we're witnessing the shrinking of the New Zealand stock market. And you guys are doing the logical thing. You're in the fund management business, so you're getting revenues from that [ data ]. So on a shareholder value note because we're a shareholder as well. And I note back in 2021, the stock price was over $2, and it's now $1.12. And I share the angst of other questioners here. Return for us capital-wise is pathetic. So that's not good. Now in order to review some capital value for shareholders, when are you going to list the Smartshares business and the Wealth Technology business?

Do you want to take that?

You take that one, Mark.

Interesting, sort of thought. And I guess the first sort of part of your question in terms of the diversity of organizations across New Zealand. Certainly, the theory has that the more you have, the more ideas you have, the healthier that would be. In many respects, consolidation, especially with the compliance costs and the regulatory costs and things does allow for more diversity of research because they've got, obviously, the financial capacity to do that. And I guess the question will be, will they? But we don't have a whole lot of control around that. That's the tough part in many respects. So we've got to work with it. I think the -- your point around having more brokers connected to our market. We absolutely agree with. And when we think about liquidity and we think about the product set, the NZX 20 Futures product becomes incredibly important. And with that should come a couple of -- at least a couple of international brokers back into the New Zealand market. That's what we're looking to try and achieve with that strategy. It's liquidity growth and another product range and some more connectivity to global banks. So we're doing what we can in that regard. With respect to the share price, maybe John, you want to take that one, the $2 down to the $1.12. I've got some thought.

I was on the Board previously. I guess the couple of comments are I can -- and I think I said it earlier when I talked about what the total return was over the 5 years that we've been running this strategy, and it's around about 49%. But I agree with you, the bulk of that is from the -- is from the dividend component. That's been a significant portion of that return. And also that dividend has been significantly affected in the last several years or the constraint around the dividend has been significantly that investment in Wealth Tech, which is on the cusp now of turning to cash flow breakeven. And I think subject to us continuing to deliver on the pipeline that we have in place will be a significant contributor to shareholder value and growth in the next -- over the next few years. And the same with Smartshares, both of those businesses have long-term structural tailwinds from the growth of savings pools from things like KiwiSaver. And at the moment, we think there's a lot of money and value still to be extracted from those businesses. The opportunity we have in both of them at the moment right now is massive. So we don't have any current plans to sell them is the short answer.

Why don't you sell down or sell out?

Yes, I think just to add to that point, those businesses have -- and in fact, all that across all our businesses, we have got so much value in front of us right now. When I think about the quality of the organization, the resilience and the security and the presence, if you like, in the market, especially across Wealth Tech and Smartshares, we need to press on. We absolutely need to press on. We need to get the operating leverage right. We need to get the Wealth Technologies business to cash flow breakeven and then beyond that. And that is our #1 priority right now. What you wouldn't want to do is do some sort of transaction, structural transaction at the wrong time. And certainly, we see our primary focus at the moment is to grow. And certainly, the investors that we've been talking to post the full year results totally agree with us.

Well, I do second the gentleman sitting next to me to what he has said. And when you said that probably the businesses which you have bought. One, it's very simple. You bought something from the bank, which is the [ ASP ] bank. And second business you bought from a broking house. I'm really surprised because when the bank sells, I presume they don't see much in it, okay? Okay. It's good that you bought. And as our CEO is saying that probably you are waiting for a cash flow breakeven and all that. I hope everything is on track, and it doesn't mean that after a few years, we come down and say, we got to write off something here now. So what gentleman is trying to say is we should be open to selling it as well when you are getting a good price. Buy right, sell right. Why not?

Do you want to comment?

Yes, certainly -- we don't disagree at the end of the day. But as I said before, we've got so much growth opportunity in front of us that our primary focus right now is [ to presell ]. With respect to the Superannuation Master Trust opportunity, I guess the difference between ourselves and maybe where ASP was at was that we do have a superannuation business already, and we can fold that and obviously, extract the operational synergies that goes with it. So there is -- whilst they might have sold and not seen value who knows. I don't know whether that was the reason. Certainly, we saw value when we modeled it out, and that's what we talked about in the operational update.

Do we have any further questions online, Sara?

Yes, we have a couple of questions online in relation to the general business. The first one is, could you please explain what depository assets are?

I can take that. This is sort of a market structure sort of educational comment. So if you think about our ecosystem, you have the exchange at the kernel, you have a trading, clearing and settlement system. Outside that, you have the brokers; outside that, you have the investors. They could be retail. They could be institutional. An institutional investor will have a custodian that sits underneath the assets that they look after. And that custodian needs a depository. There are 2 depositories in New Zealand. One is NZClear, that is run by the Reserve Bank. The other is our depository which is obviously run as part of the settlement and -- or the settlement and operational systems that sit behind our trading system. So the depository when we refer to it, are the assets held at the very core that represents the assets of those custodians who then look after those on behalf of institutional investors. And the benefits, I guess, of holding it without depository are that it's combined and intertwined with our settlement system. So it's very efficient for holding, managing corporate actions and settling market transactions. If they held at NZClear, then they need to be shifted from NZClear to us, if they're traded over the market. So we had some advantages in our depository business, which is being marketed to a range of custodians, institutional custodians in the marketplace. And those custodians or some of those custodians are seeing that advantage. So that's what -- so depository is the very bottom of the institutional stock holdings in a way and is used to linked to the settlement system.

And we have one final question, which is in general business, which I think has probably been answered in the directors' remuneration section. But the question is your company share value has dropped 27% since this time last year. Do you feel you deserve better remuneration as we lose our shareholding value. And this is from [ Murray Bain ], shareholder?

I think I've answered the question about the process in relation to fees, director fees, the process we followed and how that worked. So I think that part has been answered. The 27% is -- does not seem correct to me. If I think I go from last meeting to this meeting or the day before, it's actually -- I think the total return is flat. I think the share price is down by [ theory -- ] if it's not exactly, it's very close to the amount of the dividend. So while over a 5-year period, it's about 49% on a 1-year period. It's roughly flat. And there are no further questions online. So that brings this meeting to a close.

So probably the Board knows the shareholder value is a question. And the returns are question as well. It's come from all corners of the shareholders who have attended online as well. And the second most important thing, which I will request John and the Board is to interact with the government of New Zealand to ensure that how retail investors are able to participate more in terms of some sort of tax incentives in the coming budget. Because if you look at the participation in New Zealand is very, very poor. Because what we know is property and nothing else. In fact, the reality is this is something which is required for every country to grow, is a strong, robust capital market with companies able to come and raise money. And the shareholders get the right returns. I think we are much, much undercapitalized in totality. Even if we sized with New Zealand, we should be having triple capital. So I would say that John and the Board should take some time off to call maybe, invite Nicola Willis or maybe [ shout ] and say, "Hey, hey, this is something required. Let's move with the time and forget the property " and try to save only property.

I would make one observation. I agree with you. If you look at the asset allocation of households in aggregate in Australia, in the U.K. or in New Zealand or in the U.S. or the U.K., it is very different from the asset allocation in New Zealand. The aggregate asset allocation in New Zealand is extremely high to residential property. On the point about government, I'll just pass over to Mark because we have been having a number of interactions with government around regulatory settings, possibly not quite the one you're after though.

And as I said -- thank you for the question. And as I said in my address, we have been interacting with the current government. In fact, we started our interactions with the people that you referred to prior to the fact that they became government. And the basis of those discussions come from the work that was done in 2019 when a very broad industry group came together to develop what was commonly known as the Capital Markets 2029 report. And that has a range of suggestions from the community. And it is the ecosystem, the broader ecosystem as well, which covers regulatory settings, tech settings, KiwiSaver settings, sort of opportunities that the markets have and that government has. And we've pulled out a selection of those items and have been talking to various ministers around how they might apply to New Zealand. And particularly right now, we all feel that public markets have an incredibly important role to play in helping the government and helping New Zealand. Clearly, there are some constraints, financial constraints that the government has at the moment. But on the other hand, there's $105 billion worth of KiwiSaver money that could actually help out. So we've been speaking to them about how that could be possible. We've also been speaking to them about making sure that capital market settings have neutrality between our markets and other markets, particularly Australia and also against potentially some of the burden that may or may not be placed on private companies. Because you do want that playing field to be as level as possible and remove that regulatory arbitrage between countries. So we've been talking to various ministers and officials. We've been really, really pleased with the interactions that we've had. And I think as I said in my address, Minister Bayly actually made a public comment that says he's really keen to look at capital market settings in the second half of this year. So that would be a big step forward from where we've been in recent years. So thank you for the question.

Thank you very much. There appears to be no further business for discussion. That brings this meeting to a close. Ladies and gentlemen, thank you very much for attending and that's the end of the formal business for NZX' Annual Shareholder Meeting. Thank you.