Platinum Investment Management Limited (PTM) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to today's Annual General Meeting. My name is Guy Strapp, and I'm delighted to address you as Director and the Chairman of Platinum Asset Management. Due to COVID-19 and the guidance from New South Wales government, we thought it prudent to refrain from hosting a physical public gathering and instead to hold the virtual meeting. We hope that in doing so, we are able to encourage broader participation amongst our shareholders by accessing the weblink provided in the Notice of Meeting, shareholders are able to listen to the meeting, view the meeting slides and actively participate in the meeting by asking questions. Before I begin, I would like to acknowledge that I'm speaking to you today from the lands of the Gadigal people. I also acknowledge the traditional custodians of the various lands on which each of you join the meeting from today. I hereby pay my respects to their elders, past and present. I note that my formal address and an informal update from Platinum's Chief Executive Officer, Mr. Andrew Clifford, to follow afterwards, are being recorded, and a playback will be available in a few days' time on the Platinum website. That's the formalities. Today's meeting is being held via an online platform. This allows shareholders, proxies and guests to attend the meeting virtually. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes. [Operator Instructions] Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated or if we receive multiple questions on 1 topic, amalgamated together. [Operator Instructions] Finally, due to time constraints, we may not get to answer all of your questions. If this happens, we will answer them in due course via e-mail or posting responses on our website. Voting today will be conducted by way of a poll on all resolutions. In order to provide you with enough time to vote, I will shortly open the voting. At that time, if you are eligible to vote at this meeting, a new voting tab will appear. Selecting this tab will bring up a list of resolutions and present you with the voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or [ enter vote ] as the vote is automatically recorded. You do have the ability to change your vote up until the time I declare voting closed. Now to the formalities of the meeting. I table the Notice of Meeting dated in 15 October 2021. Notice of the Meeting was duly given and the meeting has been properly convened. I'm advised that there is necessary quorum is present. I therefore declare voting open on all items of business. The voting tab will soon appear. Please submit your votes at any time. Voting will close immediately prior to Mr. Andrew Clifford's address. I will give you a warning when voting is about to close. Please allow me to introduce your Board of Directors who are with me in the room today. Firstly, the Executive Directors, Mr. Andrew Clifford, Chief Executive Officer and Co-Chief Investment Officer; Ms. Elizabeth Norman, Director of Investor Services and Communications; and Mr. Andrew Stannard, Finance Director. And my fellow nonexecutive directors Mr. Kerr Neilson, Co-Founder; Ms. Anne Loveridge, also Chair of the company's Audit, Risk and Compliance Committee; Ms. Brigitte Smith, also Chair of the company's Nomination and Remuneration Committee; Mr. Stephen Menzies and Mr. Tim Trumper. We also have present, Ms. Rita Da Silva, the Ernst & Young partner in charge of auditing the company's accounts. Rita will be available to answer any questions you may have in relation to the conduct of the audit later in the meeting. The agenda for today will be as follows. First, my Chairman's address followed by the formal business of the meeting, which includes the resolutions of the meeting and ending with an informal address for Mr. Andrew Clifford. Moving on to my address. November 2020 turned out to be somewhat of an unusual time to take over the role of Chairman, with COVID-19 restrictions resulting in many virtual Board meetings and a generally more challenging environment in which to get to know Platinum's people and business. Despite these challenges, I was fortunate enough to be able to meet with the entire investment team and all of the Platinum's business leaders in person before the imposition of the COVID-19 lockdowns. These meetings and discussions reinforced my early perception of Platinum, namely, that is a company whose competitive advantage resides largely at the breadth and depth of its talented team, a team united by a common philosophy of generating strong, long-term absolute returns for investors while protecting against loss of capital. I will come back to this shortly. But firstly, in relation to COVID-19, whilst the lockdowns have certainly been challenging for most people on a personal level, fortunately, from a business perspective, Platinum's operations have been -- have not been interrupted, with the majority of employees working from home since the start of the lockdown. During this time, the Board has continued to receive regular updates from Platform's management to understand how Platinum's investment and operational risks are being managed and how the welfare of Platinum's employees is being considered. In this respect, Platinum was quick to adapt its business development and investment research processes, moving to virtual online meetings in light of the travel restrictions, of course. Platinum also strengthened its engagement with clients and advisers through the development and enhancement of its webinars and increased delivery of online content. From an employee perspective, Platinum's Social Committee was active in setting up different online social events in order to connect staff and foster a sense of cohesion. In addition, a number of wellness initiatives were launched during the period with a focus on employees' mental health. With restrictions loosening from 11 October 2021, employees are starting to return to the office, albeit with some trepidation. Platinum's Diversity and Inclusion Committee has in the meantime been tasked delivering on Platinum's Future of Work project, having regards to the new hybrid working models that are emerging more broadly. Looking at investment returns, the last financial year was an exceptional period for equity investments, with the global stock market up 28% for the year ending 30 June 2021. Platinum's strategies all delivered strong absolute investment returns with Platinum's flagship international and Asian equity funds both providing returns of approximately 26% for the year ended 30 June 2021 after fees and costs. Platinum's largest fund, PIF, delivered one of its strongest results for any financial year in its 27-year history, although in a relative sense, it lagged the MSCI All Country World Index in A dollars by approximately 2%. Given this relative underperformance, Some investors may be questioning the benefits of investing with an active manager like Platinum, where the market is currently able to deliver more. I would therefore like to take a few minutes to explain Platinum's differentiated investment approach and how this approach has successfully delivered results over time. As you may already now, Platinum's style of investment management is focused on seeking the out of favor and overlooked parts of the market through its contrarian and index-agnostic approach to stock selection. Platinum's belief is that investment returns in the long run will be determined by the price paid from investment and the future earnings and cash flows produced. As such, Platinum's portfolios are built from a series of individual stock selections rather than from a pre-determined asset allocation or regard for benchmark weightings with a key focus on valuation. This active and contrarian style of investing means that Platinum's investment portfolios look very different to the MSCI indices to which they are often compared. This requires an absolute return mindset. Platinum is also acutely focused on avoiding permanent impairment of capital and seeks to do so by reducing -- [ producing exposures ] to equity markets by shorting the market and managing cash levels, particularly during times of market uncertainty. Unfortunately, these attempts to manage risk can also act to drag on returns versus the broader market, especially during long bull markets. We're currently in the midst of the longest bull market in history with some of the most extraordinary valuations. It is, therefore, unsurprising that managers like Platinum are lagging the broader market over the short to medium term. As such a degree of patience is required and we understand that this can feel very uncomfortable at times. However, we have been there before. Looking again at PIF's investment returns for this financial year. Whilst PIF underperformed the MSCI All Country World Net Index in A dollars by approximately 2%, this return was delivered despite an average exposure to equity markets of around 80%. In other words, only 20% of PIF's portfolio was not invested in the market as a measure of downside protection and in an environment where many stocks appear expensive. In this context, I believe that Platinum delivered an extraordinary result whilst maintaining true to label. Platinum's recommended investment time frame for an investment in PIF is 5 years or more, and Platinum's performance, and particularly its strength in managing downside risk, is no more evident than if we look at how PIF has performed over 255 monthly rolling 5-year periods since inception. On this measure, PIF has provided a positive return of 96% of the time since inception to 30 June 2021, versus 65% of the time for the index. PIF's largest annualized gain for any such rolling 5-year period was 26% compared to 23% for the index, and its largest annualized loss was a negative 1% compared to negative 8% for the index using the same measure. Moreover, looking at investment performance over the longer term, PIF's since inception return to 30 June 2021, was 12.1% per annum, versus the index of 7.6% per annum, clear evidence that Platinum's investment style does work over the long term and through different market cycles. Mr. Andrew Clifford, Platinum's Co-Chief Investment Officer; and the co-portfolio manager for the Global and Asia ex Japan strategies will spend time during his address to discuss investment performance and our positioning and outlook for the funds and global markets generally. I will now turn to the company's financial results. Profit before tax increased 6% to $234 million for the year ended 30 June 2021. Earnings per share was up $0.014 to $0.282 per share. Total revenue and other income increased by 6% to $316 million. There was a significant increase in gains from Platinum's seed investments, which was partially offset by a decrease in management and performance fee income. Funds under management or FUM at 30 June 2021 was $23.5 billion, an increase of 10% from the 30 June 2020 closing FUM of $21.4 million. The increase in FUM was driven primarily by strong absolute returns, but partially offset by net outflows. Average FUM for the year decreased by 2% to $23.4 million from an average fund of $23.7 million in the previous year. The key revenue contributor of investment management fees declined 3.8% due primarily to the reduction in average FUM. The Board declared a 2021 final fully franked ordinary dividend of $0.12 per share. This, together with the interim fully franked ordinary dividend of $0.12 per share for total dividends for the 2021 financial year to $0.24 per share. The $0.24 per share annual dividend represents a 5% yield based on the share price at 30 June 2021. With our share price trading at current levels, I can understand shareholders are likely to be disappointed with the share price performance. The share price is predominantly a factor of the fund's relative underperformance vis-a-vis the broader market, which, in turn, impacts the net fund flows and investment management fees. This has also been compounded by the recent sell-down by a large shareholder. Whilst this transaction has depressed the share price further, it has also led to a more diversified institutional shareholder registry. We see this as a long-term positive for shareholders more broadly. In addition, the diversification of the company's shareholder base has been a catalyst for certain market indices to re-weight Platinum. The knock-on effect for index tracking funds should result in deeper liquidity in the stock in the future. Some shareholders may also be asking why at the current stock price, we have not implemented a buyback, particularly given that we have been rolling the buyback for a few years now. As we have previously stated, the Board would only envisage implementing the buyback in very extreme circumstances, including if, in the Board's view, the stock is significantly undervalued. Our stock is currently trading at about 13x consensus 2022 earnings. This is broadly in line with the other listed competitors. Given our recent investment performance and client redemptions, we do not appear to be undervalued right now. That said, the optimal timing and pricing for any buyback will very much depend on equity market conditions prevailing at the time as well as what is going on with Platinum's business. We would also note that Platinum tends not to use buybacks for normal capital management because the company generates large amounts of franking credits, which makes the payment of fully franked dividends, an attractive after-tax option for shareholders. Our shareholders have benefited from Platinum's ability to distribute profits in the form of fully franked dividend payments over time, with the company delivering an average dividend yield over the past 5 years of 5.8%. Moving to business development. Globally, Platinum embarked on a number of advertising campaigns across the range of media, including print, digital and social media. As already mentioned in response to COVID-19, we've also modified and expanded our adviser and client engagement offerings, with a mix of webinars, virtual adviser meetings as well as commitment to adviser industry events. During the period, Platinum also significantly uplifted its all leadership content, improving accessibility, and we continued with our digital strategy by enhancing the use of our data and embarking on new social video campaigns. From a product development perspective, Platinum launched the new Platinum Investment Bond in collaboration with Australian Unity. This product provides investors across -- provides investors access to Platinum's flagship international and Asia equity funds through a tax-effective investment bond wrapper, issued and administered by Lifeplan Australia Friendly Society Limited. With respect to the Platinum Trust Funds, we introduced the new fixed cash distribution option to provide investors with the option to elect to receive a fixed cash distribution yield currently at 4%. In relation to business development offshore, the limitations on travel imposed by COVID-19 presented challenges as did the relative underperformance of the flagship international and Asian strategies vis–à–vis, the broader market. Despite this, our team of 3 London-based employees was active in developing prospective relationships with U.K. and European investors through attendance at a number of virtual conferences and seminars. Our Dublin domiciled funds are currently available to professional investors in the U.K., Ireland, Switzerland, Singapore, Germany, Finland, Sweden, Italy and Spain. We remain confident that these efforts, while hampered in the short term by investment performance in certain strategies, will ultimately result in a more diversified business. With travel restrictions easing, our investment specialists have been able to resume international travel once again, with members of the team currently abroad, resuming face-to-face meetings with clients and prospects in the U.K. and with a trip to the U.S. to follow shortly. An enduring aspect of Platinum's investment approach continues to be the analysis of environmental, social and governance or ESG considerations to investing. During the period, Platinum recruited a dedicated ESG investment specialist to work with the investment team to further [ embed ] and refine these considerations with the new, making Platinum's long-standing integrated ESG investment approach more explicit. We introduced our new carbon emissions calculator in order to provide investors with an estimate of their exposures to carbon emissions via their investments in the Platinum Trust Funds. Investors can use this information to consider ways in which they can offset emissions generated by their investments. We are also currently working on the design of a new thematic hub which we will expect to launch in Q1 next year. Lastly, Platinum launched its inaugural Modern Slavery Statement with the Australian Border Force in March 2021 and adopted a new anti-bribery corruption policy in August of this year. Platinum has continued to assess the modern slavery risks in both its investment portfolio and corporate supply chain throughout the year, with its Modern Slavery Statement due to be launched by December 31, 2021. There have been a few changes to the Board throughout the period, not least with my appointment in August of 2020, and my subsequent assumption of the role of Chairman following Mr. Michael Cole's retirement at the last Annual General Meeting. As previously announced to the market, Mr. Kerr Neilson retired as an executive of Platinum, assuming a nonexecutive director role, and becoming a member of Platinum's Audit, Risk and Compliance Committee and the Nomination and Remuneration Committee with effect from 1 September 2020. Unfortunately, we say goodbye Mr. Tim Trumper, who will retire from the Board after the close of this meeting. I would like to thank Tim -- I would like to take this opportunity to thank Tim for his valuable and considered contribution. We are currently conducting a search for a new independent nonexecutive director to replace Tim, and I hope to be able to make an announcement soon. In the interim, to the extent that it may be necessary, I intend to use my Chairman's casting vote to maintain the independence of the Board's decision meeting authority. Lastly, I wish to advise that after serving 4 years as Chairman of the Nomination and Remuneration Committee, Mr. Steve Menzies passed the baton to Ms. Brigitte Smith on the 26th of October 2021. Stephen remains on the Board of Platinum as a member of the Platinum's Audit and Risk Committee and Nomination and remuneration. Turning to corporate governance. This is the first financial year the company has disclosed against the ASX Corporate Governance, Council's Corporate Governance Principles and Recommendations 4th Edition. This resulted in the Board reviewing an uplift in its corporate governance policies and procedures to address any gaps. In the regulatory space, the industry has continued to be faced with a raft of regulation. Particularly of note that the new product design and distribution obligations introduced by ASIC in respect of the retail financial services industry. These took effect from the 5th of October this year. In order to meet the new requirements, Platinum issued new target marketing determinations of all its retail managed fund products and enhanced its existing product governance arrangements. Moving to remuneration measures. Although some shareholders will already be familiar with Platinum's remuneration philosophy framework, it may be useful to take a step back. As a fund manager, Platinum essentially provides professional services that are more akin to a legal or medical practice into a bank or a mining business. Platinum is consequently quite different to a lot of other companies that are listed on the ASX. In particular, unlike miners or banks, fund managers have little in the way of assets on the balance sheet to manage and Platinum's clients can easily join or leave at will. To borrow a term from Warren Buffet, there is therefore a little in the way of a competitive moat that acts to keep Platinum's clients locked in no matter how the underlying business is going. Much like a law firm or medical practice, the people who work at Platinum consequently make up almost all the value of business. Attracting and retaining the very best in talent is, therefore, absolutely crucial to future shareholder returns. Indeed, it is probably the only thing that really matters in the long term as it is only the Platinum team that can attract and therefore retain Platinum's clients. Platinum's historical approach to this challenge has been to both pay what the market demands in terms of salary and short term variable remuneration whilst also ensuring that crucial staff have meaningful equity in the business, such that much of their personal wealth is tied to Platinum's future success. This approach helps to ensure a strong alignment is maintained between shareholders and key staff. Over the last couple of years, Platinum has begun a period of transition, with Kerr Neilson stepping back from the business and new leadership led by Andrew Clifford emerging to take the company forward. Shareholders may therefore be surprised that employee equity ownership outside the founding shareholders is presently less than 2%. This is manifestly inadequate for a business that relies entirely on the skills of its employees. The Board is addressing this risk to the future of the firm as an urgent priority. Getting the remuneration arrangements right for the new crop of talent, [ housed ] especially by ensuring that staff only earn equity in the company when it succeeds, is absolutely crucial. It is in this context that shareholders should consider both the 2021 remuneration report and today's shareholder resolutions. Turning to KMP remuneration for financial year 30 June 2021. I note that Mr. Andrew Clifford, Co-Chief Executive Officer and Co-Chief Investment Officer, did not receive any variable awards for the 2021 financial year. This is the third consecutive year in which Andrew has received no variable award. The other 2 executive KMP is Elizabeth Norman and Mr. Andrew Stannard, both received variable was this financial year with approximately 50% of this amount being deferred in the form of a grant of equity rights to vest 4 years from the date of grant conditional on continued service. Variable awards for the executive KMP are subject to the rigorous scrutiny of the independent Nomination and Remuneration Committee. These awards are discretionary. And as the case for other non-investment team members, they are based on qualitative rather than quantitative measures. This is largely because of the context of these roles, formulaic measures can yield diverse outcomes. Whilst investment performance is a key determinant of variable remuneration for members of the investment team, the measurement of performance of other areas of the business, such as corporate and fiduciary and marketing and communications is much more nuanced. That said, we have taken on board feedback from our shareholders' around award hurdles and scorecards for our executive KMPs, and we'll look to introduce more transparent measures in the forthcoming year. In accordance with good corporate governance principles, the nonexecutive director fees for the 2021 financial year consisted of fixed cash amounts and superannuation contributions. There were no changes to remuneration from the 2020 financial year, with the exception of an increase to the Chairman's fee of $60,000 effective from the date of my appointment. This increase was approved by the Board following an informal benchmarking exercise having regard to the fact the Chairman's fee has not changed since the company's initial listing. In addition to the resolution on the company's full year 2021 remuneration report, there are also a number of other important resolutions pertaining to remuneration, which require shareholder vote at today's meeting. Specifically in relation to the approval of the equity incentive plan and potential termination benefits. The equity incentive plan is the umbrella plan, under which the existing deferred remuneration plan and the new Platinum partners' long-term incentive plan both sit. The new Platinum partners' long-term incentive plan is designed to provide a high proportion of total remuneration at risk in the form of awards of deferred equity rights that have both TSR performance hurdles over 4 years and a continuous service condition of 8 years. As such, the awards are intended to support the retention of talent and maximize team stability over time whilst ensuring the alignment of employee remuneration with shareholder outcomes. Having regard to the recent departure of a key member of the investment team, the Board is strongly of the view of such plans are necessary to retain and incentivize key staff members. As stated in the Notice of Meeting, the company is seeking shareholders' approval to carve out awards of up to 30 million deferred equity rights from the 15% equity placement cap. Assuming that all 30 million rights are issued over the next 3 years, and the TSR hurdles and service conditions are subsequently met. It is our intention that any new set shares, which are ultimately issued in satisfaction of those rights would be less than 5% of the issued share capital. To date, awards are being made to members of the investment team with such awards being granted for financial year 2022. Awards to KMP have not yet been made under this plan. That said, given Mr. Andrew Clifford's dual role as Chief Executive Officer and Co-Chief Investment Officer, it would be the Board's intention to give shareholders full and early disclosure about a proposed future award to Mr. Clifford under this plan for financial year 2022 as a matter of good governance by putting to Resolution 5, approval for the grant equity to the Managing Director and Chief Executive Officer, as referred to in the Notice of Meeting to shareholders for approval. However, after carefully considering the feedback received from shareholders, specifically that the elapsed time between the shareholder vote and eventual award date, approximately 8 months later, is too long and introduces too much uncertainty as to the eventual size and value of the award. The Board decided to withdraw this resolution. The company made a market announcement to this effect on Monday, 15th November 2021. Accordingly, shareholders will not be required to vote on Resolution 5 in the Notice of Meeting today. The Board intends to bring back a revised proposal to shareholders for approval at the 2022 AGM. Lastly, Resolution 6 in the Notice of Meeting namely the approval of potential termination benefits is being put to shareholders for approval. Deferred equity rights generally involve conditions which require that vested rights can only be exercised subject to a period of continuous employment, with forfeiture of unvested rights on cessation of employment. However, the LTIP includes limited exemptions to the forfeiture of deferred rights both vested and unvested, which include genuine retirement, death or total and permanent disability. In some cases where the Board may apply these exemptions, the resulting benefit may be considered a termination benefit for the purposes of the Corporations Act and ASX listing rules requiring shareholder approved. Accordingly, shareholder approval is being sought at this meeting. Turning to the outlook for 2021-2022. At 31 October 2021, Platinum's FUM was $21.6 billion, which represents a decrease of 9% from the 30 June 2021 FUM of $23.5 billion. Investment returns reduced aggregate funds under management by 6% in the first 4 months of the new financial year with net outflows contributing another 3%. In recent months, Platinum's investment approach of seeking our unloved, undervalued corners of the market has led us to take significant and early positions in both China and semiconductor stocks while continuing to avoid inflation-sensitive growth stocks. This position has clearly yet to be rewarded by the market. With the already expensive U.S. stocks, in particular, continuing to rally off the back of strong short-term earnings results, M&A transactions and buybacks. Each of these factors seem to provide an indication of the equity market is in the late stages of a very long bull run. So our portfolio managers have also taken steps to reduce the fund's net equity exposure in an effort to reduce the risk of permanent loss of capital for our investors. Platinum's clients are therefore poised to benefit from either a recovery in undervalued stocks that are largely located outside of the United States or alternatively from having a measure of downside protection should overheated markets ultimately correct. The impact of either of these events on Platinum's earnings and share price is impossible to discern. It is for this reason that the Board does not provide earnings forecasts. To the business of the meeting. Ladies and gentlemen, we now come to the items which comprise the formal business of the meeting, which are outlined in the Notice of Meeting. Voting on all resolutions will be conducted by way poll. Each resolution set out in the Notice of Meeting is to be considered as an ordinary resolution and as such, must be approved by a simple majority of the votes cast by shareholders entitled to vote and voting on the resolution. I will address any questions or comments that have been received at the end of each item of business. I will take questions firstly from any shareholders who have asked questions online via phone, followed by any questions from shareholders using the audio facility. Shareholder questions received prior to the meeting which are relevant to the business of the meeting will also be addressed under the relevant item of business. As previously mentioned, Andrew Clifford will also deliver an informal address following the conclusion of the meeting. He will also take any investment-related questions that you may have after his address. Item A, the financial and statutory reports, so this is not for voting on. With respect to [ up ] to item A in the notice of meeting, I hereby table the consolidated group's financial report, director's report and auditor's report for the financial year ended 30 June 2021. At this point, I will take questions or comments on the financial and statutory reports and questions for the auditor relevant to the conduct of the audit. I will also take questions relating to the general business of the meeting. Firstly, are there any questions from shareholders who have sent their questions via the online portal?

Mr. Chairman, I have a question from [ Jared Matt ] Has Platinum, because of its long-term underperformance, become a manager that no one wants and thus the reason for the habitual outflows?

Thank you. We touched on this a little during my Chairman's address. The share price for Platinum is largely a function of investment performance, which, of course, dictates flows in and out of the business and revenue. And although, as I indicated, we've provided strong absolute returns, certainly for the last financial year, in the 2 flagship FUMs, they were marginally below the index. And as I also said, this probably shouldn't come as a surprise to clients and shareholders given that although we strive to produce good absolute returns, we also seek to protect clients from significant falls in the share market. And so in doing that, we effectively take out insurance. And it's that cost of providing protection to the downside that has reduced Platinum's overall returns. If it comes to an inflection point in these markets, particularly after a bull market of this duration, one has to ask whether they are prepared to keep paying the insurance or perhaps leave and head for a manager with full exposure. And perhaps that exposure could be to the very speculative end of the market. That's a decision for investors to make. I also reflect on, and it's been a long time since the global financial crisis, but I also reflect on just how bad the experience is when workers and investors see their hard-earned savings evaporate at the time of market turning points. So I think that there's a very clear reason for stock price behavior in the context of the current market and the way the portfolio is positioned.

Mr. Chairman. Our next question is from [ Jared Matt ]. Has the rise of ETFs, with some now dealing with cryptocurrencies, made active managers like Platinum less attractive, especially with millennials?

The ETFs now coming in a range of forms, having originally been designed pretty much to track the indices. There are now a range of actively managed ETFs, including our own, our stock exchange with about $500 million of FUM. The original [ guidance ] of the ETFs was one heavily linked to the [ EC ISM ], which are a fairly naive way of investing, if you like. And at Platinum, our philosophy is much more around generating absolute returns and not focusing, as I said in my speech, on the construction of a portfolio that looks a lot like the index. So our approach is much more flexible and introduces an element of downside protection, as I just mentioned, which, of course, ETFs cannot achieve. [ Having ] all that, a range of exposures, both active and passive in strategies and in the ETFs, if you like, maybe suitable for clients and for investors in terms of having diverse exposure to the marketplace. So I encourage that as a [ thought ]. Just on cryptocurrencies, they are at the speculative end of investment. So one only has to watch the pricing behavior. Bitcoin, as an example. And [ a lot at ] Platinum is a global investment apps, offering investors exposure to diversified portfolios and equity stocks. As of to date, we have not felt it desirable to enter into crypto markets in those portfolios, but it's a -- in view, part of that portfolios.

Mr. Chairman, our next question is from [ Jared Matt ]. Are financial services, such as netwealth and HUB24, providing attractive alternatives to Platinum?

Those 2 that have mentioned there are platforms, if you like. So they're not asset management firms, but they are a financial services provider of a range or a platform of multi-manager solutions. And so their main inroads have been around taking market share from the banks who have previously been the central point for those sorts of large platforms. I'd comment that the Platinum have our funds on both those platforms and participating in those services.

Mr. Chairman, our next question is from Mr. Stephen Mayne. which of the proxy advisers or independent shareholders specifically raised issues about the CEO's LTI grant? And couldn't it have been passed anyway by the Neilson interests? Were the Neilson's not intending to vote on this item?

Okay. Thank you for that. I'll ask Mr. Andrew Stannard to address that.

So I can confirm that 2 out of the 4 proxy advisers raised the issue around that the shares that highlighted around the time gap between the resolution and the eventual award. Sorry, and what was the second part of the question? In terms of voting, I can confirm that at the time that we withdrew it, the vote, we would have -- it would have passed. But we figured, from the perspective of good corporate governance, that we should take into account the significant minority view of shareholders.

Mr. Chairman, our next question is from Mr. Stephen Mayne. In future years, could Platinum adopt a conventional AGM model where the Chair and CEO first deliver formal addresses, after which we move to general Q&A and then deal with each resolution sequentially? Like some other companies, we could then have another session of general questions at the end. One of the problems with the current format is that the CEO's informal address is not lodged with the ASX.

Sure. And we could certainly look at that. I think the reason that Andrew's updates have not previously been part of the formal meeting is because they're focused on investment performance in markets in his role as Co-CIO. But happy to take that feedback onboard.

Mr. Chairman, our next question is from Mr. Stephen Mayne. Could you, Chair, Guy Strapp, and Founder, Kerr Neilson, please outline the full history of their relationship? Did they work together at BT? Are they friends? Was a headhunter used for the selection process? And were any other candidates considered? Normal best practice in these situations is that a new Chair is chosen from someone who has been on the Board for at least 2 years. Why didn't this happen at Platinum?

Okay. Thank you. I'll answer the first part, then pass to my colleague. No, I had no overlap with Kerr at BT. I joined BT in 2002. And Platinum, they have been up and running at that stage for 8 years. I knew of Kerr, obviously. I was at JPMorgan when Kerr was producing wonderful results at BT in the late '80s and early '90s. And we have a collegiate and professional relationship. In terms of selection?

Yes. So we retained an external search firm and had a handle of candidates, all independently sourced by the search firm and to go with the candidate that we like best. We were looking for funds management experience specifically in our Chair, and that was not a skill set that any of the existing nonexecutive directors had at that time, which was the reason that we got -- we sought a Chair with that experience. And even though Guy has not been on the Board for 2 years, he became the Chair because of that funds management experience.

Mr. Chairman, our next question is from [ OJ ] Group Limited. Approximately what percent of your shares are held by non-tax residents of Australia?

So I'll take that one. Overseas institutional investors and retail investors are a very small proportion of our shareholder base. Less than 10%.

Mr. Chairman, our next question is from Mr. Stephen Mayne. Well done for not seeking any funds from the widely [ routed ] JobKeeper scheme when other fund managers, such as Pinnacle and [ Nulis ] joined in the feeding frenzy and suffered negative publicity. Did we consider applying for JobKeeper? And would we have qualified under the rules of the scheme if we did?

Sure. So I'll do that one as well. Like all businesses, we did look at that, but we felt that in light of the likely recovery and the profile of the way that this disease was likely to unfold that it was most unlikely that we would need to actually draw down on it. And also given the size of our balance sheet, we had significant reserves on hand to deal with the unlikely event that became significant. To answer your question more narrowly, no, when we did our simulations, we at no stage thought that we would qualify for that many amendments.

Mr. Chairman, our next question is from Mr. Stephen Mayne. Given the interesting discussions across a range of topics today, could the Chair undertake to make an archived copy of the webcast plus a full transcript of proceedings available on the company's website? Nine Entertainment Chairman, Peter Costello, who appreciates the benefit of a [ parliamentary ] has a transcript, where NPs don't have to scroll through old videos to find out what was said, made this change last week and had a full transcript of Nine AGM online before the end of the day.

Sure, sure. The webcast will be available. I think I mentioned that in the speech on the website and -- is we can take the transcript under consideration.

Mr. Chairman, this question is from Mr. Stephen Mayne. Judith Neilson sold 16.6% of the company for $292 million when the shares were near a record low in October. She now owns less than 5%. Was the Board or any of the directors aware of -- this was going to happen before it did? Could Kerr Neilson, please comment on whether he has any intention of also selling down his stake.

I'll comment on the first part, and Kerr, if you comment on that on the second. In respect to the first part, the answer is simply no. None of the directors had that information. It's public knowledge that there was a standstill agreement in place, which was removed in early October, I think, from memory. And that at that time, Judith's holdings became entirely her personal matter, and therefore, not covered under any of our personal dealing policies within the firm. And so we had no insight that there was to be a transaction.

I have no intention of selling my shares. The holdings are there for a fair while. So I think that answers that. Just in terms of the focus on performance. I think sometimes we get shoehorned into observing the performance of 2 funds when we, in fact, have a family of funds. And if you look at their general performance, it's pretty, jolly good. So I think there's an overdue focus on the International Fund and the Asia Fund without looking at the health care fund, the Brands Fund, Japan Fund and so on. So may I leave you with that idea. Thanks.

Mr. Chairman, our next question is from Mr. Stephen Mayne. Putnam was one of the first fund managers to list on the ASX and is today capitalized at $1.66 billion. Rival fund manager, GQG recently listed on the ASX and has a market capitalization of $5.75 billion. Does Andrew Clifford believe that the availability of rival fund managers on the ASX is contributing to the drag on our share price? And why is GQG more than 3x as valuable as Platinum?

Thank you for the question. I mean I don't particularly think the stock market works in that way, in -- at least in the long run. So maybe in the short term, there will be investors, particularly institutional investors who want a particular exposure to types of businesses who might make that kind of switch. But broadly, I believe our share price will be driven by the outcomes that we produce in our business. And that will be the long-term driving force. So if you like, it is the difference, as -- I don't know if it Buffett or Graham who talk about the market, in the short term it's a voting machine, but in the long run is a weighing machine. As for GQG, I don't have a great feel about them. They are really an offshore manager, as I know them. A growth -- more of a growth style manager. We don't really compete with them directly. They are one of the thousands, tens of thousands of people who we compete with globally. Their numbers are good. Their flows are good, and that will be why the valuation is where it is today.

Gentlemen, our next question comes from Mr. Stephen Mayne, When disclosing the outcome of all resolutions today, will you publicly disclose how many shareholders voted for and against each item, similar to what happens with a scheme of arrangement? This will provide a better gauge of retail shareholder sentiment on all resolutions, and was a disclosure initiative recently adopted by Metcash and Southern Cross Media after their AGMs. Could you please also disclose the proxies on Resolution 5 seeing it was withdrawn after proxy voting had closed? This is no different to many companies disclosing the proxies on various contingent ESG resolutions, even when the earlier constitutional change resolution is defeated.

So the short answer is yes, we will disclose the votes for and against each item and as well as the proxies for Resolution 5.

Mr. Chairman, our next question is from Algona Proprietary Limited. I have a question for the Chairman with respect to capital management, as outlined in his speech. Whilst his speech looked to outline the temporary hurdles that have led to continued underperformance in Platinum funds, excessive valuations in the U.S., he then seeks to anchor his logic for not using the surplus capital that resides on the balance sheet to undertake a buyback by anchoring the share price based on 1 year consensus profit expectations. Wouldn't it be more sensible to look through the cycle at the underlying earnings power of the business? The Chair then stated that franked dividends are the preferred form of capital management at Platinum and favorable as an after-tax option for shareholders. Is it not prudent to acknowledge that franked dividends are more favorable for some shareholders than others and also to understand that franked dividends and the buyback need not be a binary consideration.

Yes. So look, in respect of the balance sheet and capital usage, I think that the firm has utilized excess cash on the balance sheet well over the recent years with seed investments, et cetera. Not only in terms of getting a return on those seed investments, but helping us create and bring new products to markets and geographies. And I think that's a sensible use of that cash. The reference point to PE comparables is simply one. And I think that there are a raft of considerations to take into account when thinking about the appropriateness of when to potentially go for a share buyback. And we would want to be considering just where the market is in its cycle. I mean it's quite possible that from here, for example, that a reversal in the bull market would see share prices fall further across the board. And that could be a better time for us to choose, if we were to, to engage in a buyback. I don't know if, Andrew, you've got thoughts on that specifically, but...

I think -- everything that's covered.

Okay. And indeed, look, in terms of the tax question as to, which is preferable. We come from a point of view that the franking benefit is a significant one. But each tax -- each shareholder is going to have their own tax position in terms of capital gains or losses depending on entry or exit and how that may affect their tax position. But we would take it from the point of view that distributing dividends in fully franked -- in fully franked method is a very favorable way for rewarding shareholders.

Mr. Chairman, there are no further questions via the online portal at this time.

Okay. So now we take questions from audio participants.

Mr. Chariman, there are no questions from audio participants at this time.

Okay. Thank you for that. Now moving into the resolutions that will require a shareholder vote. I intend to vote any open proxies given to me in favor of each resolution. Resolution 1, the reelection of Andrew Stannard as a Director. The first resolution that will require a shareholder vote, is the reelection of Mr. Andrew Stannard as a Director. The screen shows proxies received for and against this resolution. In regards to open proxies given to me, I will be voting in favor of this resolution, Andrew retires in accordance with the company's constitution and being eligible has offered himself for reelection as Director of the company. Andrew will now say a few words outlining his credentials.

Thanks, Guy. Through my 6 years as Director, I'm pleased to say there's always been a very strong focus that the Board has on both client and shareholder returns. And as an Executive Director, I think I'm well positioned to provide practical support to the majority nonexecutive director Board. By way of background, I have over 30 years' experience in asset management, infrastructure investments and financial services generally, having started my career as an auditor. I hold an Honors Degree in Financial Economics, a post-graduate in department implied finance and I am still Fellow of the Institute of Chartered Accountants. I thank shareholders for their continued support.

Thank you, Andrew. The motion before meeting is that Andrew be reelected as an director. Firstly, are there any questions from shareholders in sending in their questions via the online portal?

There are no questions via the online portal at this time.

I will now take questions from the audio participants.

Mr. Chairman, there are no questions from audio participants at this time.

Okay. Moving to Resolution 2. reelection of Ms. Brigitte Smith as a director. The next item that will require a shareholder vote is the reelection of Ms. Brigitte Smith as a Director. The screen shows the proxies received for and against this resolution. In regards to open proxies given to me, I will be voting in favor of this resolution. Brigitte retires in accordance with the company's constitution and being eligible has offered itself for reelection as a director of the company. Brigitte will now say a few words outlining her credentials.

So I have been on a Platinum Board for 3 years. My executive background is first as a strategy consultant with Bain & Company and then about 20, 25 years as a venture capital investor, working with high-growth businesses with small highly skilled teams which is very relevant, I think, to what we do here at Platinum with our [ I ] teams and very concentrated and skill team. I recently become the Chair of the Remuneration Nomination Committee, and my qualifications in terms of degrees are a Bachelor of Chemical Engineering, an MBA, a Master of Arts in [indiscernible] and diplomacy and I'm a Fellow at the AICD.

Thank you, Brigitte. The motion before meeting is that Brigitte to be reelected as a director. Firstly, are there any questions from shareholders who have sent in their questions via the online portal?

Mr. Chairman, there are no questions via the online portal at this time.

We will now take questions from the audio participants.

Mr. Chairman, there are no questions from audio participants at this time.

Thank you. Turning to Resolution 3, the adoption of the remuneration report. The next item requiring shareholder votes, the adoption of a remuneration report. Whilst it should be noted that the resolution is advisory only and nonbinding, the Board takes shareholder input in this seriously. We note the institutional proxy advisers ASA, Ownership Matters and ACSI have each recommended a vote in favor of the remuneration report. The screen shows the proxies received for and against this resolution. In accordance with the Corporations Act the company will disregard any votes cast by key management personnel whose remuneration details were included in the company's 2020 remuneration report or by and in closely related party or proxyholders of any such persons. In regards to open proxies given to me, I will be voting in favor of this resolution. Firstly, are there any questions from shareholders who have sent in their questions via the online portal?

Mr. Chairman, there are no questions via the online portal at this time.

Thank you. I will now take questions from the audio participants.

Mr. Chairman, there are no questions from audio participants at this time.

Thank you. Turning to Resolution 4, approval of the company's equity incentive plan, previously referred to as the deferred remuneration plan. The next item requiring a shareholder vote is the approval of the company's equity incentive plan. We note the institutional proxy advisers, ASA, CGI Glass Lewis, Ownership Matters, ACSI and ISS have each recommended the vote in favor of this resolution. The screen shows the proxies received for and against this resolution. In accordance with the ASX listing rules, the company will disregard any votes cast by or on behalf of a person who is eligible to participate in the equity incentive plan and any of their associates. In regards to open proxies given to me, I will be voting again in favor of this resolution. So firstly, are there any questions from shareholders who have sent in their questions via the online portal?

Mr. Chairman, we have a question from Ian Anderson of the Australian Shareholders' Association. The explanatory memorandum specifically states that shares available to awardees under the Platinum partners' long-term incentive plan to be issued without further shareholder approval, thus leading to dilution of shareholder equity. Under the vesting conditions of the long-term incentive plan, the ceiling of 30 million deferred rights, which may be issued over 3 years consequent on approval of this resolution, could potentially vest as 60 million shares, representing over 10% of shareholder capital. Can you please explain why shareholders should approve such a significant additional dilution of their equity in the company rather than have the shares purchased on market?

So two aspects on that. Thank you. Firstly, we've stated that ultimately, we would -- our intention would be only to issue no more than 5% of issued share capital through new shares. And additionally, of course, the way in which the scheme is structured, were the 30 million deferred rights to vest as 60 million deferred rights would require a compounding of 15% per annum TSR over each of test periods end of years 1, 2, 3 and 4. So in respect of a percentage of shareholder capital, there really wouldn't be dilution because the share price at that point in time would be well on its way to doubling. So the mathematics would lead into an outcome where in terms of value, there is no dilution.

Mr. Chairman, there are no other questions via the online portal at this time.

I'll now take questions from the audio participants.

Mr. Chairman, there are no questions from audio participants at this time.

Resolution 5, the approval of the grant of equity to the Managing Director and Chief Executive Officer. As I mentioned earlier, this resolution has been withdrawn by the Board. As such shareholders are no longer required to vote on this resolution, but I note the comments that were made in the Q&A, and we'll follow up on that. Resolution 6 is the approval of potential termination benefits. This is the last time requiring a shareholder vote, is the approval of potential termination benefits. We note the institutional proxy advisers ASA, Ownership Matters and ACSI have each recommended a vote in favor of this resolution. The screen shows the proxies received for and against the resolution. In accordance with the ASX listing rules, the company will disregard any votes cast by or on behalf of any member of the company's key management personnel on the day of the meeting -- on the date of this meeting and their closely related parties who are eligible to participate in Platinum long-term incentive plan. In regards to open proxies given to me, I will be voting in favor of this resolution. Firstly, are there any questions from shareholders who have sent in their questions via the online portal?

Mr. Chairman, there are no questions via the online portal at this time.

I'll now take questions from the audio participants.

Mr. Chairman, there are no questions from audio participants at this time.

Thank you. That concludes the formal business of the meeting. Voting will remain open for 30 seconds, following which I will close the meeting. Please ensure that you have cast your vote on all resolutions. [Voting]

I now declare the meeting closed and call on Andrew Clifford to provide an informal address on his investment outlook for the company and the future challenges and opportunities. He will also take any questions you may have. Please ensure that you stay online to hear Mr. Clifford.

Good morning, everyone, and thank you for joining our AGM today. I'd like to take you through the markets' environment investment outlook to begin with before turning to matters of our business strategy and how that is being developed and delivered on for the company. I think we are likely in one of the greatest speculative periods in history. It's certainly far more spectacular than anything I've seen in my 30 years. And that includes some of the great bull markets of Asia in the mid-'90s, the tech bubble of 2000, the China boom are leading up to the GFC and beyond. That evidence is everywhere you look. As we've already mentioned, in the stock market, you can see it in the extraordinary valuations being attributed to high-growth companies. These, however, have probably exceeded, through the stories you see on the front page of the AFR most days, where private companies are raising money at even more extraordinary valuations. It's not to mention the trillions of dollars invested in bonds at negative interest rates. You should not stop being surprised by this, even shocked by it, even if it has been the case for a number of years. The probably most impressive example that is in front of us every day at the moment are residential property prices, not just here in Australia but around the developed world and much of the developing world. And yes, Australian residential prices always, they seem [ phrenally ] high. People have been complaining about it for 30 years. But on top of those high or already high prices, to go up another 30%? Or in coastal areas to see properties trading at two, three and fourfold prices you would have expected a year ago. This is pretty wild. And of course, there are plenty of things to worry about in the world. We're in the midst of a pandemic. We've got major political tensions between the West and China, now very fast becoming the world's largest economy, an economy itself, which is undergoing major, and in some places, problematic economic performance. But this speculation is happening in the midst of such an uncertain environment, makes it all the more extraordinary. The explanation for all of this or generally, the simplest explanation is the best. Money supply around the world has exploded as a result of government spending and central bank intervention. In the U.S., money supply is up over 40% over 2 years, in China and Europe, 25%, well ahead of any need of those economies, day-to-day needs. And this explosion in money supply is driving asset markets of all kinds. This is the market backdrop, as I speak to you today. So where to from here? There are 2 key issues for markets today. The first of these is the regulatory reform that is underway in China. I'm sure you've read about the reforms across a range of industries, e-commerce, education, property. The Chinese economy, as I know, is an incredibly vibrant market economy. I say this from 30 years of meeting with companies in China and talking with the Chinese business people. It is loosely regulated. It is the wild west that the government is looking to regulate, to bring in safeguards against monopolistic behavior, all in the pursuit of common prosperity, is really not that extraordinary nor is it to be feared. The idea that Chinese entrepreneurial zeal will be squashed by these reforms is far-fetched. The idea that China's access to capital will be cut off misses the point that the rest of the world relies on Chinese capital, not the other way around. However, there is one reason to be concerned about what is going on in China and that is the property market. But again, it's for very different reasons to what you read on the front page of the paper. There is no bubble. There is no overbuild. And you can look at previous material we have published on this on our website. And it's not the indebtedness of every brand and the other property developers. So certainly, that's going to be a concern for them, their shareholders and their banks. The issue in the property market in China is that the government is trying to regulate this industry and turn it into a utility-like affair. And the goal here is to control affordability. They face the same social pressures to do that, that we do here in Australia and around much of the developed world. The concern for one as an investor is this, these regulations have created extraordinary uncertainty for buyers and also for developers. And the result is that sales of new properties have fallen harder. The question is for how long? And it is, of course, very relevant for economic activity in this country, where construction is a very significant contributor and for derivative items such as demand for commodities such as iron ore and copper. But to be clear, this isn't the government intention to crash construction activity. The country has a clear problem of not having enough modern housing stock. And we have seen historically, the Chinese policymakers are very adept at changing where they've made errors. In 2018, the financial reforms in the banking system created extraordinary tightness in the availability of credit and the regulators quickly backtracked and on their reforms, but they continued down the same path but just in a more steady fashion. We would expect the same here and the signs are already there, but it's happening. The course is unknown, and there could be some downside for markets as a result of it. But it's much more likely that this is a great buying opportunity for companies that have been affected by the concerns around China and the property market and the other regulatory reforms. The biggest concern, I think, for investors is inflation. And of course, it is now all over the pages of the paper, and the implication for interest rates. There are many discussions about supply chain issues, shortages, issues with logistics. And typically, most commentators feel that it's just a question of time for these things to resolve. And I wouldn't disagree with that point of view. But the concern really here is inflation is much more deep-seated, that is the result of the money printing that I outlined at the outset. Many of you will recall Milton Friedman's idea, very simply that inflation is always a monetary phenomenon. It's an idea that has been discredited over the years, particularly post the GFC and the quantitative easing because inflation that was meant to appear never did. But it completely misses the point that it did appear. It appeared in bond markets, it appeared in asset prices broadly. If this is the cause of the inflation we're seeing, it will not so easily recede. Again, traditionally, it's been expected that monetary policy works with long lags of 12 to 18 months, which means we're only just starting to see the inflationary impacts of the large money printing that happened in the middle of last year and that continues today. And we're now starting to see it spread out to more and more markets, rental markets, labor markets. When you think about the cost of labor that is accelerating quickly, it is odd given that generally the level of employment is still well below where it was pre-COVID. And this is before service industries fully open up, retail, leisure, travel and start to compete for what is a very much shrunken labor supply. The lesson from the '70s and '80s was this: the longer you let inflation run, the harder it was to control and using the mechanism that we ultimately found to control inflation, putting up interest rates, the higher they had to go. Meanwhile, we have all the central banks saying everything is okay, and we won't be raising rates till whenever. If they're good to their word, that is only going to make things much worse. A simple conclusion, and I must admit we are in a complex and uncertain environment. So there's plenty of ways to make errors here. But the simple conclusion is that we're in the era of 0 and low interest rates is likely to be in its last days. What's important about this for investors is the impact that, that has on valuations, not just at the stock market, but all the highly leveraged and unlisted assets such as property, infrastructure, private equity and so on. So what are we doing for our clients here? Well, we're buying the assets others are avoiding, yet still have great long-term prospects. Materials businesses such as copper and coal. There will be long-term -- our view is there will be long-term tight supply for both these materials as the world transitions to fossil fuels -- away from fossil fuels, I should say, and as the world tries to eliminate single-use plastics. We have investments in companies that are driving the EV revolution. LG Chemical, the leading provider of batteries for electric vehicles, but also companies like BMW and Toyota that are doing much with their electric vehicle initiatives to drive down emissions. We have investments in semiconductor business, enablers of e-commerce and electrification that are seeing strong demand and are in short supply. And we have investments in travel-related businesses, online travel agents, low-cost airlines, aircraft engine makers that are all poised for a boom as we progress to a full opening up. And we continue to protect portfolios through maintaining cautious net exposures to markets through cash and short positions. But in sum, we're investing in businesses that have great prospects, reasonable valuations and are away from the crazed part of the market. To move on to investment performance, much of this has already been discussed, but I'd like to go through it again. One of the outcomes of our investment approach, where we look to protect the downside for our clients, is that in strong bull markets we're likely to underperform. Again, as mentioned, our flagship Platinum International Fund in the 12 months. In this case, I'll use numbers for September, had a strong absolute performance of 24%, slightly behind the index, but it is worth making up -- it's worth noting the return that make up these returns. Our long investments for shares that we actually owned were up 33%. Our stock selection in this period has actually been strong. The difference between that and the final result is primarily a result of the cautious positioning of the fund in terms of cash and shorts. Now in the months since the end of September, you may have noted that our performance relative to markets deteriorated again, as markets have rotated back towards growth stocks, as central banks have continued to reassure the world that the inflation we are seeing is temporary and there will be no rate hikes for the foreseeable future. I appreciate this is an uncomfortable position to be in. It's uncomfortable for our clients, for our investment team and for our shareholders. However, it is part of our commitment we have made to clients to look after their money through the full cycle of bull and bear markets, and there are a few others who are prepared to do this. And it has been navigating through these difficult periods in the past that this business was built upon. At this point, I'd like to address a common question that we get from clients and shareholders alike, which at its simplest level is if what we're doing isn't working, why not just change what we do? Well, firstly, I'd like to assure you that at a daily -- at a level of our Platinum Investment decisions we're constantly reassessing the companies, our positions in them, our broader thinking about the economy and markets. The underlying investments change on an ongoing basis in response to our changing views. And we are absolutely focused on all the exciting things that are happening in the world, whether that be in the area of technology, biotech and elsewhere. It's actually a staple of what we've done for 28 years. And there is plenty of evidence in the investments we've made currently and in the past that we do invest in high-growth and exciting areas. But there are some things that cannot be changed in the investment world. And one of these is that the price you pay for any investment you make will determine the return you earn in the long run. We cannot change this, Platinum can't change because, you can't change this. This is the landscape in investors operate in whether they want to or not. It is in the same way gravity impacts our day-to-day life, it is always stay here. And to ignore this and simply buy what looks good, irrespective of price, will be to put our clients at risk and a fundamental departure from our commitment to them. Very simply, our clients and our advisers expect a consistency in our approach to investing. And indeed, our clients will have us as only one of a number of options in their portfolio. They will have managers, all different types, some who will be anticipating potentially in the exciting speculative mania that is underway. But we are in their portfolios for a very specific reason, and we must stay true to that. So to talk -- move on to the strategy for the business, and indeed I've already been talking about it. The #1 thing that we have to do to succeed is to continue to deliver strong investment returns. And I've already talked about how we intend to do that, even if in the short term we are lagging perhaps some of the more excited outcomes that are out there. The other thing we do to deliver our strong investment returns ongoing is to continue to refine and develop our processes and people, which is an ongoing part of what we do every day. We have a strong position in our business in Australia and New Zealand, and we wish to maintain and grow this. We have continuing efforts to increase engagement with our advisers and clients. This has been underway for a number of years, whether it's through events such as webinars and roadshows, the creation and distribution of high-quality content that is now distributed over a range of different platforms. And the other thing that we've been doing is product development. The most important product development today is our ESG initiative. ESG has long been integral to our approach but we have been working hard at developing this further, and we'll be showcasing this in months to come. I believe we can have a highly decade offer based on what we're doing in ESG. The third thing we're doing is trying to capitalize on the offshore opportunity for us. We've established our London office and our partnership with AccessAlpha in the U.S. Unfortunately, travel restrictions over the last 2 years have made it difficult to progress these initiatives. However, we've recommenced our engagement in these markets, with our first visits to Europe already underway and trips planned to the U.S. in December. We have to maintain a strong team and culture. We are actively working with our people to develop an effective hybrid working environment for the post-COVID era, one that works for our individual employees, the whole team and for our clients. And we continue to increase training and development opportunities for our people. Finally, we need to ensure an efficient and scalable infrastructure, the nuts and bolts of making things work around here that's often not in your full view. We're in the process of a full review of our system or operating model and are making ongoing investments at the moment in new systems to improve our efficiency. To sum up, I do appreciate that shareholders are frustrated by the lack of progress and the stock price. Just remember, I am one of you. I understand your frustrations and I share them. But underneath the surface, I want you to know this. There is much that has been going on to develop and improve our business even if there are not outcomes to show for it. When I came in as CEO in 2018, I said our success will be dependent on us delivering for clients. And that very much remains the case, and very much remains my focus. Thank you very much for your attention and very happy to take any questions you may have.

Mr. Clifford, we have 2 related questions on investing in China. Firstly, from [ Jared ] Matt. Why is Platinum investing in China when the unpredictability of investing can often be dependent on the whims of one man? And secondly, from Mr. Stephen Mayne. We were an early believer and investor in the China story. But could both Kerr Neilson and Andrew Clifford please comment on the risks they currently see from the increasingly belligerent and authoritarian positions being taken by the Chinese government, including the recent attacks on various billionaires and privately owned sectors of the economy such as independent education providers.

Thank you, Mr. Matt and Mr. Mayne. Absolutely. I mean, I think much of what we're talking about here is being mischaracterized. I mean the regulatory -- the whim of one man is a complete misrepresentation of what is happening here. Undoubtedly, there's huge influences politicians have everywhere. But to mischaracterize, to represent the regulatory environment in China, I think, is a significant mistake. What generally we're seeing, the regulation is being brought in, for example, around privacy of data or vehicle emissions that are, by and large, exactly what we have in the West and have modeled on what we have in the West. And I know that Chinese regulators go around the world talking to their counterparts how their regulation -- regulatory systems work and seek to understand them very deeply. So I think part of what you're saying is a representation. Nevertheless, if we were to try and make these changes in Western markets, we would have long parliamentary inquiries, we would have DOJ investigations and it will be a very drawn out affair and entrenched interests in our own system would have a much better chance of fighting off the changes government might like to make. So it is a difficult and more problematic environment. But I love this idea of uncertainty. Uncertainty is where we make money. And in China over the last 5 years, we continued to make good returns being in and out of the market. So for example, we had of the order of 15% in China earlier this year. We now have around 1/4 of our money there because of the opportunities, this uncertainty is brought up. So that is why we're there. As for a tax on billionaires, I mean, the back story has to be looked at around what we're specifically talking about Alibaba and Jack Ma and Ant Financial. Please understand, Ant Financial's behavior would have attracted the attention of any regulator anywhere in the world. And some of these -- so they were selling a -- to provide as a, let's call it, subprime credit, a credit reference, which is a perfectly fine thing to do. But then taking a massive part of the spread while taking no risk. No financial regulator is going to let that continue. That's an incredibly dangerous situation. And the company knows about it and still tries the list. Same with TD, where the regulator made it very clear they were concerned about privacy and data. I mean I don't think any Australian company knowing asset were unhappy with their behavior, would be just ignoring it and risking. Yes, the outcomes are rather different where, in terms of the way it's processed, Mr. Ma disappeared for a while. I believe he is enjoying himself in Spain somewhere at the moment. But I think that there is a context here that you need to be aware of. Kerr, would you like to add more to that?

Thank you for that interesting question. I'm a little less supportive of what's going on in China. When [indiscernible] says we're more questioning about when you have such absolute power work need and historically it caused the country to have some pretty bad felons and what have you because there is too much to bring to the notice of the emperor. What was going on in the countryside. and we will certainly see that recur, I believe. However, our job is to find opportunities in the investment world. And we have to appraise those opportunities against risk. And clearly, there is greater political coercion in China than in other countries, in terms of dealing with quasi-monopolies, dealing with the state-owned companies. But these can be priced, and it's about pricing risk that we try to exercise our judgments. So overall, I think the opportunities are significant. Do remember that the measurements of GDP is largely on nonsense. So if you look at the physical size of the Chinese economy, it exceeds that of U.S. So if you are running global funds, to exclude perhaps a fifth of the world's output of goods and services is quite an interesting position to take. So I leave you with the thought that the statistics about the size of the U.S. versus China are not so interesting, they are somewhat misleading. The opportunity set in China is great. They have quite clearly set themselves on a course to become technological leaders in many areas. And I remind you that if you've got a distribution curve that's normal, if you've got a population of 1.35 billion people you will have some extraordinary outcomes in terms of inventive horsepower. Do you really want to go without that because of your concerns about the political risks, that's for you to contend? Thanks.

Mr. Clifford. Now next question is from Bleecker Street Proprietary Limited W4 Superfund Account. Are we investing in China through variable interest entities, [ VIEs ]?

Some of our investments are, but this has been a question for investors for the last 20 years. And for me, it's a really interesting one because otherwise, anywhere else in the world, we're investing in companies via something called typically ordinary shares. Ordinary shares are a legal construct. They don't actually exist in real life. They're a pure concept. So are [ VIEs ]. So you're worried about that, I understand, but these are well-established legal entities under U.S. law. I don't see what there is to be so concerned about.

Mr. Clifford, our next question is from Jared Matt. Underperformance has been going on for such a long time, how can this be resurrected?

Well, I think you'll find, Mr. Matt, that there are times where our portfolio is so vastly different to the market. And you saw this last November, December, March -- through to March, where that underperformance can be readily turned around.

Mr. Clifford, our next question is from [ Jared ] Matt. Given Mr. Quicken's public assertions that the market is mad and a crash is imminent, is this the long hood for platinum's revival?

I do not come to work each day, hoping for a crash, Mr. Matt. And I do think simply that the value that is represented in our portfolio will, over a period of time, result in far superior returns for investors. Whether there's a crash or not, I don't believe I've actually ever quite said it's imminent. I have, at best ever said, it's a possibility. And to be clear, I've never said the market is mad. But anyway, I understand the sentiment.

Mr. Clifford, our next question is from Bleecker Street Proprietary Limited W4 Superfund Account. Are there reasons other than underperformance as to why investors are redeeming funds?

Well, there are always other reasons. So our clients have a typical life of around 8 years. So even when things are going well. So there's always money incoming and going. And I would note that the numbers you see are the net numbers. There are. There is money that comes in the door every day. So there are investors who are still investing with us. So -- but as our long-held experience that performance -- and it's not just underperformance against the MCI, it will be performance relative to a whole range of other assets. At different times our performance was good, it was good against the index but Aussie shares were doing much better. Other times, it might be our performance is good, but as we have at the moment, it's been a lot simpler simply to own managers who are very focused in high-growth areas who are doing better. So there's a range of things there. But ultimately, we do believe that continues to be the primary driver.

Mr. Clifford, the no further questions from the online portal and no questions from audio to dispense at this time.

Thank you, Andrew. Ladies and gentlemen, the results of the poll will be announced to the ASX later today. And on behalf of the Board, I would like to thank you for your ongoing support.