Perpetual Equity Investment Company Limited (PIC.AX) Earnings Call Transcript & Summary

Good afternoon. I am Nancy Fox, Chairman of Perpetual Equity Investment Company Limited, which I will refer to as PIC from now on. It is 2:00 p.m., and as I have been advised that a quorum is present, I declare this 2021 Annual General Meeting open, and I welcome you to PIC's second virtual AGM. In the spirit of reconciliation, PIC acknowledges that the traditional custodians of country throughout Australia and their connection to land, sea and community, we pay our respect to their elders past and present and extend that respect to all Aboriginal people and Torres Strait Islander peoples today. Thank you for joining us. I hope you and your families are well during these very challenging times. While the COVID-19 pandemic has challenged the way, we would normally hold an AGM, I believe today's virtual AGM has also provided an excellent opportunity for more shareholders to participate regardless of their geographic location. Today, you will also have the opportunity to hear an investment manager update from PIC portfolio manager, Vince Pezzullo, who will be joining us on audio. I'd like to welcome our shareholders, proxy holders and guests. I would also like to take this opportunity to introduce to you those who are present with me today. In the room, I am joined by Virginia Malley, a Non-Executive Director and Chairman of the Audit and Risk Committee; Amanda Gillespie, an Executive Director; and our Company Secretary, Sylvie Dimarco. Karen Davis, in charge of PIC's Investor Relations matters will be the facilitator for the Q&A for the investment manager update, and Karen is present with us here in Sydney. So that we maintain social distancing, Non-Executive Director, John Edstein, will be joining the meeting via video. I would also like to welcome Jessica Davis, from KPMG, who is the company's auditor. Jessica is joining us today via video and his available to answer any questions that shareholders may have in relation to the financial year 2021 financial statements and the auditor's independence. Before we move on to the formal part of our AGM, on behalf of the Board, I would like to share with you some of my observations on PIC's activities and performance this year. Following that, I will ask Vince to deliver the investment manager update. Vince will be joined by 2 analysts; Clarke Wilkins and Rosemary Tan. At the end of Vince's presentation, there will be an opportunity to answer your questions. We have had a number of preregistered questions submitted, and you will also have the opportunity to submit questions over the phone. I note that the prepared AGM address from me has been released to the market. While financial year 2021 certainly had its challenges with COVID-19 continuing to impact our day-to-day lives and the border economy, we have also seen the resilience of individuals and markets. For PIC, we have had a very busy year with the continued focus on delivering to the company's investment objective and providing consistent, reliable income to shareholders by way of dividends paid twice a year. We have been able to move quickly and take advantage of market conditions and the opportunities presented. Today, I'd like to share with you my thoughts and the company's key activities during the year and the value created for you, our shareholders. In August, we announced our FY '21 results with the company posting a net operating profit after tax of $108.4 million and an operating profit before tax of $152.9 million. This represented a record profit for the company since listing on the ASX in 2014. The Board also declared a fully franked final dividend of $0.028 per share, bringing the total dividend for FY '21 to $0.056 per share fully franked. This represented an annual dividend yield of 4.3% and a gross debt dividend yield of 6.2%. The company's investment objective is to provide investors with an income stream and long-term capital growth in excess of its benchmark over a minimum 5-year period. We, as your Board, recognize the importance to shareholders of both components of this investment objective. In respect to the income stream, we are pleased that company has delivered fully franked dividends to shareholders each year since inception and believe that prudent capital management has enabled the company to continue to provide shareholders with a sustainable and attractive dividend yield. The Board is mindful of the potential for volatility in markets to impact the company's profits. We consider that consolidating on a year of record profit by continuing to build profit reserves and maintaining an appropriate level of franking credits for future dividend payments is a prudent approach. It also demonstrates our focus and commitment to continue to pay dividends to shareholders twice a year that are fully franked or to the maximum extent possible. Let's move to investment performance. The other key pillar of the company's investment objective is to provide shareholders with long-term capital growth in excess in the benchmark. Key to the achievement of the company's investment objective is our relationship with investment manager, Perpetual Investment Management Limited, The Manager, one of Australia's most experienced fund managers. Through their active management approach and with a disciplined focus on value, company fundamentals and bottom-up analysis, The Manager generated strong investment performance for FY '21. And pleasingly, this has continued in the first quarter of FY '22. For FY '21, PIC generated strong investment portfolio performance returning 42.4% and outperforming the benchmark by 13.9%. Total shareholder return also exceeded the benchmark by 22.7%, returning 51.2% for the 12 months to June 30, 2021. Strong investment performance has continued at the first quarter of financial year '22, with the portfolio returning 5.5% outperforming the benchmark by 3.7%. We remain confident in the investment management of PIC and optimistic in the positioning of the portfolio for FY '22. I would like to touch briefly now on the capital raising. Towards the end of FY '21, market conditions turned more favorable for the company and The Manager's investment style. The Board believed it was an appropriate time to raise capital. The company announced a share purchase plan, known as SPP, and a one-for-one bonus issue of options, enabling shareholders to participate in the potential anticipated growth of the company. The share purchase plan received strong support from eligible shareholders, raising over $30 million and bringing the company's market capitalization to $485 million as at June 30, 2021. The Board would like to reiterate our thanks to all shareholders who participated in the share purchase plan. All eligible directors also participated. In addition to the share purchase plan, eligible shareholders received, at no cost, PIC options under the one-for-one bonus offer. We believe the options provide a further opportunity for shareholders to participate in the potential growth of the company. They deliver value to shareholders, providing the ability to purchase additional shares at a fixed exercised price of $1.35, while incurring no brokerage or transaction costs. The options can be exercised by option holders at any time up until the expiry date of September 2, 2022. Option holders may also sell their options on the ASX at any time up until the expiry date, potentially providing additional value to shareholders. I would also like to provide an update on the Board and our governance. As your Board, we are committed to high standards of corporate governance and undertake rigorous processes over the year to provide oversight of the company's activity and performance. The Manager reports to the Board on a quarterly basis, providing detailed updates on the investment [indiscernible] insights. The Board receives regular information on investment compliance and challenges The Manager on matters such as the consideration and integration of environmental, social and governance factors within the investment approach. On May 31, 2021, the company welcomed Amanda Apted as Executive Director of PIC, following the resignation of David Lane from the Board. Amanda is the Group Executive of Perpetual Asset Management, Australia, and is also a Director of The Manager. She is responsible for leading the Australian Division of Perpetual Asset Management. The Board would like to welcome Amanda and also express our sincere thanks to David for his valuable contribution to the company. In September 2021, the company transitioned its custody and administration services from RBC Investor Services Trust to State Street Australia Limited. During this process, the Board undertook extensive oversight of the due diligence approach to select State Street and received regular updates on progress throughout the lengthy and comprehensive period of preparation for the transaction -- for the transition. Moving now to investor engagement. During the year, we have continued to focus on keeping shareholders and potential investors up to date with the company's activities and the performance of the investment portfolio. We are always encouraged by the level of engagement by our shareholders and potential investors, and thank you for your participation in events during the year. We understand the importance of keeping shareholders informed as well as attracting new investors to the company. The Manager participates in a number of events during the year, and we continue to provide a range of investment updates, insights and educational resources on our website. I encourage all investors to visit the website to stay informed. On behalf of the Board, I would like to thank you for your ongoing support of PIC. We've entered financial year 2022 with positive momentum, building on the company and the portfolio's strong performance in FY '21. We are confident that prudential management by the Board and The Managers' extensive experience in navigating markets will deliver to our shareholders over the long term. In a moment, I will hand over to Vince for the investment manager update. We will take questions following the update. Any questions related to the AGM resolutions will be addressed later in this meeting. If you are a PIC shareholder, you can ask a question or post a comment clicking on the Ask a Question box on your screen. A box will pop up and you are required to select the text question button. In the regarding section, please select investment manager update. For participants who are not shareholders, you will be able to ask a question over the phone. You can submit a question at any time during the update, and it will be addressed at the end. I will now hand it over to Vince. Thank you.

Good afternoon, and welcome to the 2021 AGM Investment Manager Update. As is customary in the AGM, we will, for the benefit of the new shareholders, explain the process and philosophy of how Perpetual invests shareholder capital. On Slide 14, the box on left titled our 4 quality filters. This is the first step that Perpetual undertakes to qualify whether a company is considered investable. All companies that Perpetual invests in must satisfy these 4 quality filters before they enter our investable universe. The first of which is, is it a quality business. Within this filter, we assess what has been delivered to shareholders from the perspective of returns on capital, earnings and dividends, and we assess the future risks and opportunity for the industry that the business operates in. We'll also assess ESG risk, and if these risks will adversely affect the company or industry. As we move to filter 2, we focus on conservative debt. This remains a make-or-break quality filter for Perpetual. We assess ratios of debt to equity and debt to EBIT and see if these are currently breaching our internal rules or are likely to breach in the future. If a company already breaches it, we will not be -- this company will not be allowed in the universe. And if there is a risk that it may breach in the future, we will take remedial action and discuss what tools the company has to lower the [ net debt ] gearing ratio. If we are not satisfied, the company will be removed the investment universe. If we own the company, we will exit the position immediately. Moving on to filter 3, sound management. Here we assess the management, whether they will maximize the return for shareholders. We assess where the management has undertaken the right strategy in different parts of both the industry life cycle and the business cycle, maintaining discipline when others are not and taking advantage of industry dislocation or a weak business cycle to invest at the right time of the cycle. And moving on to the final filter, filter 4, recurring earnings. This is where all companies that are in our universe must make a profit. It can be cyclical but must have a history of generating earnings. We do not buy concept companies that do not make a profit. This is because when the business cycle weakens, these businesses that don't generate a profit, we'll struggle to finance their businesses, and investors are more than likely to be significantly diluted. These 4 filters provide protection during weak times, but also opportunities as the cycle turns upward as those are now universe typically have strong balance sheets and can take advantage of any opportunities that are available. This is reflected in our quality and value style and can be expressed in our portfolio, which characterizes a high conviction -- some high conviction positions, which are actively managed through the cycle. As has been proved in the last 8 months in particular and is based with fundamental research of some in-person team of investors of Perpetual. This is shown by the very different and highly idiosyncratic nature of our investments from U.S. health care name in ICLR to small life insurance business like NobleOak and a cobalt mining and processing business in Jervois. The benefit of the PIC shareholders is these companies spend multiple countries and are a mix of small caps and large cap names. Turning to the next slide, we'll discuss our current views of the market, including risks and opportunities and how the portfolio is positioned based on these views. What we are seeing in the market is that from earlier in the year where the market was less than convinced about the strength of the recovery to now, the market is pricing a lot more of that recovery. The risk this year remains that geopolitics and domestic politics will threaten what has supported the recovery, which is a broad and significant levels of fiscal policy. The latest fiscal spending package in the U.S. is running into troubles, and the market may start to factor the risk of this not being passed or significantly reduced just as the Fed commences some form of normalization of monetary policy support. Our view still remains that the consumer and product sector remain in good health, and that the fact that inflation remained persistently higher than expected, coupled with these supply chain issues, will likely refocus companies to start looking at cost savings. And most of these being achieved by increasing CapEx and trying to move the company down the cost curve. This should provide more support to the economy and the consumers' propensity to spend should increase as activity and movement normalizes. Next is supply constraints. This is still an issue, will remain an issue because this has to -- is tied to the 2 other prevailing persistent issues. One being the increasing onshoring of strategic industries due to the trade war and are as varied as computer chip manufacturing to rare earth processing capacity. These are leading to a lengthening of the supply chain until the new capacity catches up to demand. This will ultimately lead to embedded -- high embedded costs into the supply chain and a follow on to higher inflationary pressures. The second issue to consider is the pursuit of deglobalization policies. These policies are inherently inflationary as industries are forced to adapt the business models and invested capital to adhere to decarbonization targets. And this will not go smoothly, as has been highlighted by the European and U.K. energy shortages. The oil and gas industry has acted sensibly in limiting their new capital into those markets due to forthcoming decarbonization policies. And this is leading to increased volatility in energy prices, which will be felt by consumers and businesses alike. This volatility will make it harder for businesses that are large consumers of energy to accurately forecast their costs and will lead to increased risk for their return on capital. This has been compounded by OPEC+ maintaining discipline around production supply. Again, this is another uncertainty that market will have to deal with going forward. What we believe are the consequences is that the higher inflation and more persistent inflation means that our portfolio needs to be exposed to businesses that are net beneficiaries of higher inflation or are in a position to offset the extra costs. One such industry is the insurance sector, both in the form of origination or underwriting, such as Suncorp or NobleOak to agency style type business, like Austbrokers, which is an SME insurance broker. These typically benefit from rising policy prices, which is typically tied back to inflationary costs on repair costs. Consistent with the inflation theme, there is some benefit and having some exposure to those middle markets, which will benefit from not only supply tightness but are a net beneficiary of electrification efforts, such as OZ Minerals, Western Areas and Jervois. Also, there still remains elements of market, which have yet to benefit the full opening up of the economy, one such name is Qantas, which is a direct beneficiary of travel restrictions being removed. Another is Aristocrat, which benefits from casino operations restarting, particularly in Australia. These businesses will have significant operating leverage as normalization of the economy occurs. The likelihood of extreme fixed income movements will likely place pressure on those business models I mentioned earlier, where they have no history of making any profit at all. We have extremely high multiples, which typically rely on lower rates and discount rates to justify their valuations. That's why investing in some controlling ideas, which may have been former market darlings and are having some issues can provide opportunities where we can look beyond the market's inherently short-term focus. Some of these issues may take some time to resolve but given the market has mostly priced in the majority of the downside, this provides us with an opportunity to buy a quality business for a sensible price. Businesses such as a2 Milk, Crown and IAG fit this, and they represent significant investments for the PIC. The final consequence that needs to be mentioned is we are in part of cycle where policy errors can have significant outcomes on the economy. As normalization of monetary policy and winding back of fiscal support will exposed business models that have heavily relied on these measures to grow or maintain earnings. These businesses will typically be found out when more volatility occurs. That's why focusing on having a broad set of investments that cover multiple sectors of the economy can help buffer some of this volatility. Moving to the next slide. We can see the allocation of investments, which currently stands at 72.4% in ASX listed companies, split between large, midcap and small caps. 20.9% in offshore and about approximately 6.7% in cash. On the right, the top 5 domestic companies displayed our ranges from Oil Search, which is an LNG gas business currently undergoing a merger with Santos to motorsport emerging tech cooling solutions business in PWI Holdings. Moving to Global. There has been some profit taken in 2 of our core positions in [indiscernible]. We have increased our investment in U.S. plumbing and HVAC supply business, Ferguson as we saw an opportunity to increase our weighting to that name due to some price weakness. As we move to the next slide, those positions are put into context of how our domestic and offshore positioning has changed over time. From inception, we can see the domestic exposures have moved between 55% the lowest point to a high of was 85% of the portfolio. Whereas global positioning has been as low as 2% to a high post the change of the investment guidelines in March 2020, where global allocation went from 25% to 35% to a high of at least 32%. We actively manage our positioning based purely on a bottom-up fundamental process and as opportunities arise due to either single stock opportunities where companies have short-term issues which the market overestimates the impact to broad market opportunities like in March 2020, where multiyear opportunities presented themselves. This shows that our domestic global positioning is an actual outcome based on opportunities rather than any macro top-down views. Moving on to the next slide. The position is placed into more context by the following chart, which shows which exposures have contributed total returns over time. What can be seen is that each exposure contributes to total returns. This has spread over investments across the entire market cap curve and internationally, and this provides a spread of contribution to returns. In particular, domestic mid-caps and global do a fair amount of the heavy lifting for the portfolio, which is quite unique to the PIC. Hopefully, this shows the benefit of being investing in a benchmark in a way concentrated by strategies portfolio. I would like to introduce Clarke Wilkins, who is Perpetual's Commodity and Energy Senior Analyst. Clarke will present 2 of the PICs positions, one in energy and other in cobalt.

Thank you, Vince. The first thing I'm going to talk about today is Oil Search, that is an LNG producer with their key asset being the PNG, LNG operation in Papua New Guinea. In addition to that asset, the company also has a development project in Alaska called Pikka. And the final part of the story has been the company has recently entered into a merger agreement with Santos that is going through regulatory approval. When we look at the next slide, just the opportunity for Oil Search. They are an LNG producer or liquefied natural gas. Liquefied gas is one of the key components that will allow the transition from sort of electricity generated by fossil fuels like coal, which are very carbon-intensive to a renewable future. So LNG is considered a transition fuel and it is a key to reducing emissions as well as allowing that transition over the next couple of decades to a net 0 future. The current project is operated by ExxonMobil, and there is also a plan to expand in PNG through the development of the Papua LNG project, which is expected to be approved next year. These are high-quality gas resources with a very long life and one of the lowest cost LNG producers globally. In terms of the social responsibilities in PNG, the company has been very proactive [ in regards ] to the Oil Search Foundation, and that sort of work has been highlighted recently in terms of the response to COVID and allowing us to continue operating in what has clearly been a very difficult time, largely uninterrupted due to the significant amount of work that, that Oil Search Foundation has done within PNG. Just in regards to the Santos merger. So Santos is also another Australian LNG producer as well as a significant producer of gas within Australia. And again, gas is critical for Australia's transition from coal, fire, electricity to being a lower carbon source of electricity as well as towards sort of net 0 future through renewables. The combination would effectively mean that also shareholders own 38.5% of the combined company, and we think this merger will unlock significant value in terms of synergies of $90 million to $115 million per annum as well as being able to sort of prioritize the growth projects of both companies. The combined balance sheet will have gearing sort of below 30%. There is potential to sell down assets like stake in the PNG, LNG as well as maybe the Pikka project in Alaska as well as some of Santos' assets, and the combination of the strong balance sheet, the proceeds from those asset sales will put the combined company in a very strong position to fund their future growth in Australia as well as offshore. In terms of the timing, this is going through regulatory approval with PNG. Approval's the key sort of stumbling block of the deal or is the key approval for the deal, and that is as expected to be received in -- before the end of the year, and shareholder expected to vote in December. So in conclusion, Oil Search is a critical producer of energy for the world through LNG. And we've seen clearly at the moment how high energy markets are with what's happening in Europe, with sort of electricity shortages as well as in China. So yes, energy prices are benefiting from that dynamic at the moment. They've got growth from their existing asset base as well as the -- in Alaska. And they're in the process of merging with Santos, which is expected to provide an even stronger company going forward as an investment thesis. Moving to next point, I'm going to talk about today is Jervois Global. So Jervois is a cobalt producer. Cobalt is one of the key metals used in batteries. And the more energy gains the battery, the more cobalt is typically used in that. The company has been developing the Idaho cobalt project in the U.S., which didn't really come onto our radar. It was only when they acquired the Freeport Cobalt operations in Finland recently, and the equity raising that they did to fund that, that is sort of met our investment criteria. This is a refinery, so operating for a long time. It generates margins through the cycle. And again, it sort of fits into the future-facing commodities pieces of both nickel and cobalt, which are materials that are critical for the electrification of the global auto fleet. The Freeport Cobalt operations. So this facility is operated by Umicore. The Jervois have a 40% interest in the -- basically in the business, and it makes them one of the biggest cobalt refiners outside of China in a world where increasingly, the companies like auto companies are conscious of where there -- what materials that come from and the supply chains that feed into their electrification of their vehicle fleet. The raw material for the refineries largely come from the DRC, but they are from responsibly managed and ethically run mines in the DRC given the critical aspect of that entails in terms of the downstream customers wanting to trace their raw material supply. In addition to this refinery which produces value-added products, as I said, the company is developing the Idaho cobalt operation in the U.S. That facility is fully funded, is expected to start producing in mid-2022 and will be an important addition to the global cobalt supply. That facility will likely send sort of the run of my -- material to the S&P refinery that they have in Brazil. So they're looking at restarting this refinery in Brazil to be an additional source of nickel as well as cobalt into the market by processing sort of the hydroxide and other material and effectively refining that through the final product to use in batteries. Again, these are high-growth commodities given the electrification the vehicle fleet is going to drive a significant increase in battery demand and [ chip wires ] ideally placed to the supply both the nickel and cobalt required for electrification of that vehicle fleet going forward. And with that, I'll hand over to Rosemary Tan, who's going to talk about ICON.

Thank you, Clarke. Hi, I'm Rosemary. I cover the health care companies within the team, and I'm very happy to talk to you and share with you what I know about ICON today. A few decades ago, drug makers did most of their own discovery work with every element of preclinical, all the way to Phase II and Phase III. Starting in the 1980s, they have decided to move to a more efficient use of their own capital and started outsourcing some of that capabilities. Most of the contract research or clinical research organization here forward being referred to CROs was founded around that period, and they initially started out doing just bits and pieces of that pipeline work, just initially on the preclinical and subsequently doing a whole range of that capability. Today, the CROs are invaluable partners of the pharma companies, and they brought with them all that technology, the patient data, global site capability. ICON was founded around that period by 2 scientists. They saw this opportunity, set the office in London and eventually, grew this business globally. We have known ICON for a while, and we have been shareholders previously. People we speak to in the industry speak highly of them. The pharmaceuticals who -- the pharmaceutical executives of the clinic that run the clinical trials in Pfizer, Bristol Myers that all speak highly of them. ICON has a tremendous earnings track record with solid recurring revenue stream. And with this acquisition that they are undertaking with PRA Health Services (sic) [ PRA Health Science ], the net debt will be slightly higher for the next 12 months due to this merger, but we have undertaken analysis of their ability to repay their debt and we are confident that they can do so with a healthy interest cover of 7x. Moving on to the next slide. I want to show you what's coming in terms of the innovation in the health care space. The outlook for this industry is favorable, it will benefit from large ships in terms of the innovation coming from the smaller biotechs. They tend to outsource a larger portion of that work and we're seeing also a large number of molecules in R&D pipeline with the large number of preclinical work that we are seeing, it's higher each year. And this is due to the fact that there are more ways to treat new diseases as well as coupled with a favorable funding environment. Turning to the slide -- next slide. We initiated the position in July 2021, when the market was still uncertain about the merger of ICON and PRA Health Services. The market first reacted to that news in February 2021. We continue to do our work, and we initiated a position after that. We like the merger of the 2 companies. PRA Health Services brings additional capabilities to ICON. And we are confident of their ability to manage this transition. Evaluation when we acquired ICON was around 17x price-to-earnings ratio with a favorable mid-teens EPS profile. Management have a strong track record of execution and already started winning new businesses on the back of the merged entity. And thank you, and now I hand back to Vince for his update.

Thanks, Rosemary. I would like to review the performance for the 12 months after September 2021. The last 18 months, we have recovered significant amounts of performance that was lost in 2019 through the opportunities which present themselves in 2020 and through FY 2021. And as previously mentioned, we are focusing on those -- on the market risks that is not being priced in today. When we look at single stock contribution, the biggest contributors have been PWR Holdings, Iluka, the zircon and rutile miner, and BlueScope Steel. This highlights the diversity of contribution to our outperformance. While the main detractors have been being underweight CBA, which is outperformed, the underperformance of Deterra Royalty company and Crown's underperformance for the last quarter due to the concerns around the Victorian Royal Commission. Turning to the final slide. I would like to reiterate a few points. The PIC maintains a highly flexible investment strategy, which allows us to maximize Perpetual's internal research effort that the PIC can take full advantage of. The performance we have generated reflects the benefit of this research and our strict adherence to the quality and value process, which has been tried and tested through many market cycles. And one final point, I'd like to highlight that we actively manage our franking account, whereby we look to ensure that we can 100% frank every dividend we pay. We are focusing on the building a buffer so we can look through short market sell-offs and maintain the dividend and the franking benefits to our shareholders. Thank you, and that concludes the investment manager update, and I'll hand back to Nancy.

Thank you, Vince, Clarke and Rosemary. We will now answer any questions received from shareholders or interested parties on the investment manager update. A reminder that any questions related to the AGM resolutions will be addressed later in the meeting. A reminder of the instructions to submit a question are now on your screen. Please note that the instructions differ depending on whether you are or are not a shareholder. Vince and I will now respond to online questions. Karen, do you have any questions?

Yes, we do, Nancy. I'll take some pre-registered questions first. So we have a question for Vince from [ David Goffige ]. He's asked how does the quality of FDJ compared to Tabcorp lotteries?

We assess all our international stocks the same way we assess domestic stocks. So when you look at the 4 quarters Vince and I went through earlier, if we just use that as a guide when we think about the quality of the business, FDJ's return on capital, it's only been listed for basically [ paying must ] nearly coming up to 2 years. Its return on capital is extremely high. It has a effectively monopolistic position, which they pay for because it's a license in France. And those returns, you can tell that they're going to be maintained because they are investing in the business to maintain those returns, so there aren't sort of any competitor type products. When we look at the conservative balance sheet or the debt, FDJ runs at the net cash balance sheet as compared to Tabcorp runs with some debt, FDJ runs with net cash. So as an investor myself, if I can get them on the same sort of multiple in the same quality, I always prefer and with the same opportunities in the business, you'll always defer to the one with a better balance sheet typically, and FDJ has got a fantastic balance sheet. When we think about sound management, as I mentioned earlier, you have -- it's a relatively newish company in the listed life. Dividend was onetime by the French government. But the management was tested pretty quickly with having to manage through corona, where they had a retail footprint where they sell lottery tickets through tobaccos and use pubs, et cetera, and they were all closed. So management did a very good job at managing the cost through that period. But more importantly, they recognize the opportunity to aggressively push the online lottery sales, which are very lowly penetrated in France only, at the time, 2% to 3%. And as we've come out the other side, the lottery sales are up to 10% of the total sales. And so they've been able to use what happened last year to forward the business and actually have improved the business in the last 12 to 18 months. Now Tabcorp is further down the road on the online sales component in particular. I think straight around 30-odd percent online sales. So we still think there's way more opportunity in FDJ as they grow that component of their business. And then finally, recurring earnings, even when it was owned by the French government, it made profit. Again, so as listed you're buying -- able to buy a market-dominant position that had a good balance sheet with good management and it was profitable the whole time for a listed side. When you look and compare the quality of the 2, you've got comparable quality across the board and then it was all about -- after that you've decided about the quality that it's about what do we pay for them? What's the value of the company? And is there an opportunity to get in with a fair amount of margin safety. And we took advantage of that, both at the IPO will be invested in it initially at the IPO. And then last year, when everything basically sold off in March, April last year, we got another chance to double down on our bad -- on our investment in FDJ and we took advantage of that.

Another question here, probably for you in the first instance, Vince, and then perhaps for Clarke to comment. It's from [ Peter Reed ], and he's asked, is the portfolio positioned to take advantage of green energy momentum, including battery materials, decarbonization and hydrogen production?

Absolutely. So when we think about -- this has been an ongoing theme for several years. So it's not a theme or a change in the economics of energy, et cetera, for the last 12 to 18 months. So -- but for us, prior to corona occurring, there's -- it was very difficult to be able to get exposure with our home to pay what we would -- we would say were quite ridiculous prices to businesses you were really overpaying typically and taking quite a bit of risk on board for what was pretty much an unknown investment still. What happened in the intervening period is last year, again because of corona, everything got sold off. And because of the size of the research team, we were actually able to act pretty quickly to expose the portfolio to that underlying scheme because the valuations of the underlying securities became so cheap. The risk we were taking is symmetry, the risk was there's far more upside in owning some of these positions versus the downside. Now I might hand over to Clarke now to talk about it, put a bit more meat on the bone and disclose some of the risks and opportunities and some of the complications of this. Clarke?

Yes. Thanks, Vince. When you look at sort of battery materials, I think everyone focuses on lithium-ion batteries. Inherently, the lithium gets a lot of the focus, but I think it's critical to understand that it's not just lithium in these batteries. So lithium batteries require nickel, they require cobalt. We talked about [indiscernible] earlier in terms of being sort of a global cobalt producer and so getting exposure through that angle. But last year's [indiscernible] yes, they are a nickel producer, we have a substantial position and its been a contributor to performance as well. So we do have exposure to nickel, which again is a critical part of these high energy density batteries that are required for the electrification of the vehicle fleet. So in addition to, I suppose, the battery side, the lithium is a bit of a challenge. It is something that I do a lot of work on, based a lot of lithium mines. The challenge is that, yes, earnings through the cycle has not really been a criteria that our investment thesis. So middle of last year, there was a lot of these lithium companies were burning from a lot of cash and generating certainly no earnings and a number of them had to raise equity. So they really didn't meet our investment criteria, but it is something that we always monitor and there could be an opportunity there in the future. Aside from batteries, when you look at sort of electricity distribution and generation, copper is clearly another key commodity. So copper is used extensively in wind turbines, electric motors, distribution of high-voltage electricity. So as Vince mentioned earlier, OZ Minerals is one of our positions that we sort of entered the last year, and that has been a sort of a key beneficiary of the strong demand growth and the strong price that we've seen for copper. And then yes, the other aspect I'd say in terms of -- when you look at the electrification of vehicles, it's not only the batteries you need, but it's also the electric motors and one of the critical components in electric motors is the magnets. Yes, one of the key critical components in the magnet is rare earth. And we've got a substantial position in Iluka. The main business for Iluka is in zircon, which is ceramics, also titanium dioxide feedstocks, which largely go into paint, but they're increasingly getting exposure to rare earth through a project that we -- I started shipping upon [indiscernible] which is like a precursor to the producer of a earth, but they're also doing a feasibility study on actually building a rare earth refinery in Western Australia, which would significantly increase their exposure to the railroad market and we think that's going to unlock significant value for the company as well. So there is quite a lot of exposure through the battery raw materials in those stocks in the portfolio. In terms of hydrogen, that's probably more of a challenging one in terms of where is the value going to be generated and the returns going to be generated in that sector. It's something we've done a lot of work on, look to understand the hydrogen market. But where the immediate opportunities are given the amount of capital cost reduction and operating cost reductions that are needed to make some of these projects economic and where the returns will actually be generated and will they generate sustainable earnings through the cycle is not immediately obvious. So again, it's something we monitor, and it's probably an opportunity for the future, but it's a little bit difficult to get exposure to that within our investment criteria at the moment.

Okay. Thanks, Clarke. So we've got another question. This one is from [ Dennis O'Hara ]. He's asked and probably you, Vince, it will be appreciated if the investment manager can provide an update in relation to holdings in Crown and [ Star ]?

Okay. So at this stage, we obviously have a rather large position in Crown. We don't own any [ Star ]. In Crown, we took an opportunity as it sold off, as I mentioned earlier, in the first quarter of this financial year to increase our stake in Crown. Now the reason behind that is I mentioned earlier about the symmetry of risk, these assets are highly priced still. And we do engage with these Boards pretty actively to discuss some of these issues about change that are acquired at the Board level, et cetera. And what's given us the confidence is if we do a score sort of valuation and try and understand if we're buying this company, what are we getting, and what is our risk to the downside and what's the risk to the upside. And with Crown, what we look at is don't forget there are probably assets within Crown, which they do own. The licenses have value also to operate a casino, but the underlying value of the assets is in the property because it can't be replaced. And the cost to replicate today is multiples of what they were originally built for. So with Crown, when it fell to $9 and below, that was our opportunity. We could see a little bit more downside and this is in the case of if they did lose their license in Victoria, but because they actually own the property and they have that position in the property down at Victoria, it's very difficult for any other operator to come in without owning that property. So there is value with it. And the base of that thinking is there are plenty of transactions in North America, in the casino market in North America where companies are -- casinos have been breaking up into an operating company and a property company, where they separate the 2. And only as recent as, I think, 4 or 5 weeks ago, [ Blackrock ] sold a casino in U.S. which they sold for basically evaluation of 20x rent -- implied rent of the property company. So when we apply similar metrics with a bit of a discount to be a little bit more conservative, we're getting valuations north of the current share price, well north of the current share price. Now there is also risk around the license in Victoria. But then we're looking at how the company has behaved since the New South Wales [indiscernible] Commission. And there has been significant changes to the company, almost entire Board's changed, the management's changed, they brought in significant compliance and regulatory expertise into the company now. Working with the regulators, the New South Wales gave a path out to becoming a -- we considered to be a fair, reasonable proper person to run the casino. So there is a path out. So we always look at it -- we always distill everything back to what are we paying, are we paying, is the risk built into this current share price? And if so, what are our opportunities to position and add more to the position or get out. And well, that's a daily assessment of every position or company we're invested in. It's a daily assessment as to the asymmetry of the risk. And that's why having a very -- pretty big team of analysts and portfolio managers, that's a dynamic process. So we still like Crown because of these prices, we think the asymmetry is on the higher side rather than the low side of where it's currently trading. Thanks, Karen.

So we've got a number of questions from [ Tim ]. The first one, I might direct to Nancy. [ Tim ] has asked, is there a dedicated global analyst team for PIC now that Perpetual doesn't have its own global fund or are global ideas sourced from Barrow Hanley?

Yes. Thanks for that, [ Tim ]. It's probably a little confusing. So actually, we still have global analysts here at perpetual. You're right, our global fund is now being managed by Barrow Hanley. But we still have analysts here, like Rosemary Tan that you saw that sources our global stocks. So that is still being handled here. On the second question you asked, I might refer back to you. So global ideas sourced from Barrow Hanley. Basically, we have our analysts here that we use. We have Tom Rice, we have Rosemary that we saw. So we still use the ideas from perpetual here in Australia. I think that about answers that. The next question now, I think, should go to Vince.

So thanks, Nancy. So the next question from [ Tim ] was will PIC invest in China shares as part of the global allocation?

I just want to just cover off on that global ideas space as well. A lot of the -- our Australian analysts, they -- just in the course of their job -- daily job is they always compare domestic stocks versus overseas stocks at all times. So we're all doing our comparable businesses offshore because you wouldn't need to assess -- Sometimes things happen overseas first in particular industries and sectors. So our team always is looking offshore for comparable -- for comps to compare to our domestic businesses. And when they're doing that, they sometimes come across businesses themselves, which look very interesting. And at Perpetual we don't try and restrict the analysts to thinking laterally, sitting vertically, we're trying to get to [ collaterally ]. So if I want to bring the stock into the universe, it's well within their rights to bring those stocks to the US. So a lot of the ideas come from within the Australian OECD. And that's what we want because we want our analysts to think quite broadly. So to the point on China, we haven't invested in China to date. The way I try to -- try to think about it is our perpetual style being a value -- quality value manager and our conservatism, which is inherent in everything we think about, we're trying to generate a return with lower than market risk. There's enough in the OECD in listed companies high-quality industrials and resource companies, materials where we don't need to -- we don't need to enter every market to find ideas. There are some listed securities where you can -- we only need 5 ideas in global, typically every year -- sorry, over the multiple years. So we don't have to exhaust ourselves by trying to cover every corner of the world. That's not necessary for us to generate a return. I think from the chart earlier, we've shown that we can generate returns from our global positions by having 30-odd percent in them, and that's typically 3 to 5 stocks. So at this point, we're not in China. We're just happy to just cover off on those other OECD markets. Thank you, Karen.

Thanks, Vince. Another one for you, this 1 on banks. So [ Tim ] has also asked, is there any value in Australian banks and particularly CBA and whether it's overpriced at its current price?

The perennial bank question. So I think there's some value in the banks. When I think about it, it's more on a -- as a relative investment versus the rest of the market, so your opportunity set in the whole market. What and where are the opportunities? I think the banks still look okay. We have a preference, I have a preference for [indiscernible] Westpac at this stage. We had -- we were -- we owned quite a bit of CBA prior. But after the buyback and the dividends we've sold on that position to finance those -- that money to newer positions because we've participated a few IPOs in the last couple of months. I think the banks, given they've never really benefited in the last several years from a rising interest rate environment and it is any steepening yield curve will typically benefit a bank, while the bad debt cycle is still very benign. So we're in that position now where they're sort of in the sweet spot. I think some CBA is probably priced a bit with perfection now. I think there is value in the other banks, particularly those with lower expectations like Westpac. So at this stage, we're sort of standing an extra door on CBA and we're investing in Westpac still as sort of our preferred bank. Thanks, Karen.

Thanks, Vince. So I have 1 more question. It's also from [ Tim ]. He's asked your view on inflation over the next few years and the impact that might have on stock selection.

Thanks, Karen. Well, fortunately, we devoted quite a bit of the presentation to it. So the way we tend to think about things is try and work out what the market is employing today and see if that's being priced into the market. So is it being priced to certain stocks. It's a very unique environment because I suspect a lot of people that are participants in the market, want to extend myself in particular, some of us may not have experienced, which happened in the '70s, hyperinflation or very strong rates of inflation where there are shortages, and I suspect, as I mentioned earlier, this all ties down to the experience of the trade war kicking off several years ago, tying into -- companies have been very, very pragmatic and sensible about and it usually happens in the very cyclical industries. Typically, they expand production at the top of every cycle, and then they've added too much production capacity, that leads to significant amounts of deflation through the bottom end of the cycle. And don't forget also, China was a large exporter of deflation for the last 20-odd years. That's sort of over. So you've got this underlying component to the economy, global economy, where you've got cyclical factors of tightness in most manufactured areas, most manufacturing areas and commodity areas and that's because of the way management is behaving. And then you've got some structural elements regarding, as I mentioned earlier, just policies regarding decarbonization. They do add to the cost base any time you change the nature of our company has to operate with any of its factors of production, whether it's capital or labor or like some of its biggest cost items like energy, then company -- it takes a while for companies to adjust. So where the portfolio is positioned for above-average inflation. And let me say that we're looking at when that's going to turn because at some point, that will normalize. And at that stage, the portfolio will probably have to look very different at that stage. But these are cyclical questions, whereas we still are looking for high-quality businesses that we can buy at sensible prices. And when you get that sort of rotation in the market, you will throw out some opportunities. Thanks, Karen.

And that's all the questions we've had for the investment manager update. So with that, I'll hand back to Nancy. Thanks, Nancy.

I will now move to the formal business of the AGM. Thank you very much, Karen. The virtual meeting online guide was lodged with the ASX and published on PIC's website. It outlines the steps to enable shareholders to participate in this meeting. On behalf of the Board, we are again, disappointed this year that we are unable to hold our usual informal get together over refreshments after the AGM. I promise, I hope we do it next year. We thank you for your support and for joining us today at the virtual AGM. In terms of business, we have the following items to consider: first, the FY '21 financial statements and statutory reports; secondly, the reelection of Virginia Malley as a Non-Executive Director; third, the election of Amanda Apted Gillespie as an Executive Director; fourth, the adoption of the remuneration report for FY '21. And lastly, the reinsertion of proportional takeover provisions in the company's constitution. The item of business relating to the FY '21 financial statements is not for voting, but for tabling and discussion. Further information about each of these items for consideration today is set out in the notice of meeting. I will take the notice of meeting as read. As described in the notice of meeting, proxy appointments were able to be lodged up to 48 hours before this meeting. where I, as Chairman of the meeting, have been appointed as a shareholder's proxy or become their proxy by default, then I will vote direct to proxies as directed in the proxy appointment, and I will vote any available undirected proxies in favor of each resolution. If you are participating as a shareholder and hold proxies, then you would have received an e-mail, setting out instructions for you on how to vote those proxies using the voting mechanism on the online platform. Now bear with me, I will now outline the procedures for voting online. It's a bit tedious. You make cast your vote at any time during the meeting now that the poll is open. You may also change your vote at any point until I declare the poll closed. The poll will remain open for 5 minutes after the end of today's meeting. At the conclusion of the AGM, you will see a red bar appear along the top of the online platform with a countdown timer of how long you have remaining to cast your vote. You may be logged -- you must be logged into the online platform to cast a live vote. You cannot cast a vote over the phone. Voting on each resolution of the AGM will be conducted by way of poll. Nicholas O'Hagan of Link Market Services is the returning officer for the purpose of the poll. Shareholders will be able to cast their vote using the electronic voting card received. To register a vote, click on the get a voting card button on the web page. The adjacent slide shows the page you need to access on the online platform to exercise your vote. You will need to enter your SRN or HIN and your post code. If you are appointed as proxy, please enter the proxy number issued by Link Market Services in the proxy details section, then click the submit details and vote button. Subject to any applicable voting restrictions, the Board recommends that shareholders vote in favor of each item. Voting restrictions for the resolutions are included in the notice of meeting. If you are experiencing any difficulties in the online platform or you are unsure how to vote or ask questions, there's a help line available, which is 1-800-990-363 within Australia and which is displayed at the top of the web page. The results of the voting will be known shortly after the AGM and advised to the ASX and posted on our website. Now, how to ask a question. I will introduce each resolution and there will be an opportunity to post written comments or questions. You do not need to wait until we get to that item of business. In fact, we encourage you to start submitting your questions now. [Operator Instructions] If your question concerns the FY '21 financial statements and reports, please begin your question with this. Shareholders are only able to ask a question after you have been registered to vote. The company secretary will read comments and questions to the meeting. The questions will be read out verbatim. I will then respond or designate someone to respond to the questions. Moving to how to ask a question by phone. [Operator Instructions] Following comments and questions, I will confirm the proxy votes received before the meeting. This will appear on your computer screen beside the video feed. Each resolution before the meeting today, except for resolution 4, that's the renewal of proportional takeover provisions is an ordinary resolution and will be passed by simple majority. Resolution 4 is a special resolution and to pass 75% of the votes cast by shareholders entitled to vote on the resolution must be in favor. We will first take questions from shareholders using the online platform, then take questions received over the phone. We will save asking each question until the relevant item of business. Okay. Here we go. The first item of business is to receive and consider the full financial statements, the reports of the directors and of the auditor for the financial year ended the 30th of June 2021. The accounts were circulated as part of the annual report in August. They were also published on PIC's website on the day we announced our full year results. I now formally table the financial report, the directors' report and the auditor's report for the financial year ended June 30, 2021. There was no voting on this item, but shareholders will have an opportunity to ask questions and make comments on this item using the online platform. As I've previously mentioned, Jessica Davis from KPMG is also available via video to answer shareholder questions on the conduct of the audit, the auditor's report, the company's accounting policy or the independence of the auditor. All questions to the auditor should, in the first instance, be addressed to me as Chairman. And if appropriate, I will ask Jessica to address the question. Please note that we will focus specifically on the remuneration report later in the meeting, and we will be taking questions on that and the other specific items of business when we come to them. I note that no written questions for the auditor were received in advance of the AGM. Sylvie, did we receive any questions prior to the meeting?

Yes, Chairman, we received the following question from Mr. John Cowling of the Australian Shareholders' Association. The question is what steps are the Board taking to ensure all investments made by PIC are sustainable in the light of ESG issues and specifically decarbonization and net zero emissions by 2050?

Thank you very much for that, John. PIC Board have not resolved to commit to net zero at this point in time. However, PIC's manager Perpetual has been a signatory to the UN PRI since 2009. The Board receives quarterly reporting on ESG risk related to the PIC portfolio. This report notes any specific ESG risks identified with the investment and any material news that has occurred during the quarter, which may impact ESG factors. I'd now like to throw to Vince and let him comment on how the manager incorporates ESG matters into its investing. Vince? No. Maybe I can explain that then because I can't reach Vince at this moment. The manager incorporates ESG matters into its investment analysis and decision-making practices, seeking to achieve the best risk-adjusted investment returns for the portfolio over specified time periods. This includes climate risk. The Board regularly monitors the carbon footprint of stocks held, and the Board continues to monitor developments in this area and will, as always, consider what is in the best interest of the company and, in turn, our fellow shareholders informing a view. Thanks for the question, John. Are there any online questions?

Yes, Chairman. We have another question from John Cowling of the ASA. Question is, how does the investment manager and Board ensure all companies in the investment portfolio have long-term sustainable businesses and are following ESG guidelines?

Vince is no longer on the line right now. Amanda, can I -- I'm going to have to ask Amanda to please comment on that, please?

Thanks, Nancy. So I'll probably answer it from 2 perspectives. So as Vince mentioned, when he talked about the investment process, we have a strong focus through our quality filters on recurring earnings and quality of the business. So through that process, the manager is ensuring that there's a strong focus on long-term sustainable investments. From an ESG perspective, the investment team is encompassing and thinking about E, S & G risks every day as part of their bottom-up research process and evaluating the likely -- the materiality of those risks and whether they pose an opportunity or a threat to the investments that they are looking to include in the PIC portfolio.

Thank you very much, Amanda. Were there any other questions online?

Yes, Chairman. We have a question from [ John Parrott ]. The question is, congratulations on the year's performance. The big disappointment was the size and late payment of the dividends. Was the smaller dividend due to a lack of franking credits? And do you have a policy of paying a certain percentage of profit as dividends as most companies do?

Thank you, [ John ], for the question. Sorry, we disappointed you. But maybe I can explain how we struck that amount. We try to strike an appropriate balance of providing income to shareholders while maintaining our profit reserves and franking credits for the future payment of dividends, so we can continue to generate a sustainable dividend. Regarding the franking credit balance that you had asked about, it was $8.6 million on June 30. We could have paid a fully franked dividend of $0.053 per share, making certain assumptions. After payment of yesterday's dividend, the remaining franking balance is sufficient to pay a fully franked dividend of $0.025 per share in the future and this is without taking into account anything that is earned in this coming year. Given the volatility we see in the future, we thought it was prudent to manage the balances that way. Sylvie, any other questions?

Yes, Chairman. We have a question from [ Robert John Brook ]. The question is, although I am generally happy with the total performance of PIC, I feel the recent options offer was rather stingy. I have another lick that set an exercise price at about $0.05 below share price at the time. The shares are now about $0.15 above the exercise price. I feel you should have set the exercise price at about $1.20 to $1.25 to reward loyal shareholders. $1.35 is too high. Comments?

Thanks for the question, [ Robert ]. The exercise price of $1.35 was based on the company's pretax NTA as at May 27. So in looking at it, we intentionally set the expiry date longer, so it expires on September 2, 2022. So there was more time for the option to run so that the share price would get up and over the $1.35, but it was a reflection of what the NTA was on the date that we struck the price. Are there other questions, Sylvie?

No, Chairman.

Thank you. Are there any questions on the phone? I'm so sorry. Are there any questions on the phone?

There are no questions from phone participants.

Thank you. It appears there are no further questions on this item of business. We now move to the 4 resolutions, which require voting. For each resolution, we will show you the proxies received prior to the meeting. The final number of votes, including the votes cast through the online platform voting from today will be correlated after the meeting and released to the ASX. I wish to confirm that I am holding open proxies in my capacity as Chairman, and it is my intention to vote all available undirected proxies in favor of all resolutions. The first resolution on today's agenda is to consider the reelection of Virginia Malley as a Director. Virginia Malley was first appointed as a Non-Executive Director of PIC in August 2014, and was last reelected at the 2018 AGM. She now stands for reelection. Details of Virginia's career are set out in the explanatory memorandum accompanying the notice of meeting. The Board, with Virginia abstaining, unanimously supports her reelection. I now invite Virginia to say a few words.

Thank you, Nancy. I am very privileged to have served on the Board and committees of PIC since its listing in 2014. Thank you. I offer the company and its shareholders the experience, skills and capacity to properly direct the company and serve for another term. My experience as a company director in the financial services sector spans more than 20 years. And I've honed my corporate governance practices over that time. I am financially and legally literate, and apply those skills in directing the company and overseeing the performance of our service providers, Perpetual Investment Management Limited, Link Market Services and now State Street. My skills and experiences are directly relevant to the governance of a listed investment company, particularly my past role of Chief -- as Chief Risk Officer of a global funds management business, where I led the risk management, investment compliance and regulatory compliance functions. My skills and experiences are complementary to those of my fellow directors. To strengthen my alignment with PIC, I have made and maintained a meaningful investment in PIC shares since the IPO and will continue to do so. In my role as Director and as Chair of the Audit and Risk Committee, I am constantly focused on PIC's financial performance and in line with our shareholders' goals, its ability to sustainably pay franked dividends. I have the available capacity to take on another term as Director. And I have recently relinquished a number of other commitments, including my role on the Perpetual Investment Management Compliance Committee. Thank you very much.

Thank you, Virginia. I will now respond to online questions. Sylvie, do we have any written questions received during the meeting?

No, Chairman.

Do we have any participants on the phone wishing to ask questions?

There are no phone questions.

Thank you very much. It appears that there are no further questions on this item of business. I note that the proxies received are as displayed on the screen. Please cast your vote now if you haven't already done so, by selecting either for, against or abstain for Resolution 1 through the online platform. The next resolution on today's agenda is to consider the election of Amanda Apted Gillespie as a director. Amanda Apted was appointed as an Executive Director in May 2021. Details of Amanda's career are set out in the explanatory memorandum accompanying the notice of meeting. The Board, with Amanda abstaining, unanimously supports her election. I now invite Amanda to say a few words.

Thank you, Nancy. Good afternoon, ladies and gentlemen. As Nancy mentioned, my name is Amanda Gillespie, and I am the Group Executive of Perpetual Asset Management Australia. As you know, Perpetual Asset Management in Australia is the manager of PIC. I joined the Board in May of this year as an Executive Director and as an Executive Director, PIC does not pay me for my role on the Board. By way of background, I have been in the investment management industry for more than 21 years. Earlier in my career, I spent time in investment roles in both global equities and asset allocation. Most recently and prior to joining Perpetual, 3.5 years ago, I was Chief Executive Officer of Lonsec, where I had overall responsibility for investment and superannuation, research, ratings and consulting capabilities. Having been exposed to many investment managers in that role, there were only ever a handful that I would have chosen to work for and Perpetual was one of them. It made my decision to join in early 2018 an easy one, and my time here has only reinforced that view. In my capacity as Group Executive, I am responsible for leading the Australian division of Perpetual Asset Management, which includes the Australian equities, credit and fixed income, global innovation share and multi-asset investment management teams. I'm extremely proud to lead the team, which supports the Board and the PIC investors. I also feel privileged and proud to serve on this Board and to serve the company and you, as shareholders. Thank you for your consideration of my nomination.

Thank you, Amanda. I will now respond to online questions. Sylvie, do we have any written questions received during the meeting?

No, Chairman.

Thank you, Sylvie. Do we have any participants on the phone wishing to ask questions?

There are no phone questions.

Thank you. It appears that there are no further questions on this item of business. I note that the proxies received are as displayed on the screen. Can you please vote on the resolution? Please cast your vote now if you haven't already done so. By selecting either for, against or abstain for Resolution 2 through the online platform. Moving on to the next item of business is the advisory resolution to adopt the remuneration report. The remuneration report forms part of the director's report and is included in the company's annual report for the financial year ended 30 June 2021. As you will note, the remuneration report contains the remuneration paid to its directors who are the key management personnel. The company has no paid employees. And accordingly, the 2021 remuneration report is simple and brief. I will now respond to online questions. Sylvie, do we have any written questions received during the meeting?

No, Chairman.

Thank you, Sylvie. Do we have any participants on the phone wishing to ask questions?

There are no phone questions.

Thank you. It appears that there are no further questions on this item of business. I note that the proxies received are as displayed on the screen. Please cast your vote now if you haven't already done so by selecting either for, against or abstain for Resolution 3 through the online platform. The next item of business is the inclusion in the company's constitution of proportional takeover provisions. This is a special resolution that requires at least 75% of the votes cast by members to be in favor. Further information on proportional takeover provisions are contained in the explanatory memorandum to the notice of meeting. I will now respond to online questions. Sylvie, do we have any written questions received during the meeting?

Chairman, there are no questions.

Thank you, Sylvie. Do we have any participants on the phone wishing to ask questions?

There are no phone questions.

Thank you. It appears that there are no further questions on this item of business. And note that the proxies received are as displayed on the screen. Please cast your vote now if you haven't already done so, by selecting either for, against or abstain for resolution 4 through the online platform. I will now take questions received on any other business brought before the meeting. Sylvie, please let me know if we have received any further questions.

Chairman, there are no further questions.

I now ask Link to advise if there are any further questions from shareholders on the phone?

There are no phone questions.

Thank you. I now ask you to ensure that you complete your voting for each resolution. If you are uncertain about any of these voting procedures, please use the help line available through the platform. Voting on all polls will close 5 minutes after I close this meeting. The results of the poll will be announced via the ASX this afternoon and will be made available on the AGM section of PIC's website. There being no other business, I declare this meeting closed, and thank you for your ongoing support and your attendance today.