Plato Income Maximiser Limited (PL8) Earnings Call Transcript & Summary

Okay. Good morning, fellow shareholders. It's 11 o'clock and I think we should get going. This is the Plato Income Maximiser Half Year Results webinar. We're going to cover the 6 months ended December 2023. I will cover that. My name is Chris Meyer. I'm a company director of PL8. I'm also a Director of Pinnacle, for many of you probably know Pinnacle does most of the Investor Relations for PL8. So it's great to have you on the call. I will be the host for today. But Don Hamson is our guest and always the main event PL8 webinar wouldn't be the same without Don and his insights into what's going on in the world of dividends and Australian shares. So Don, welcome. Don is a PL8 Director and Founder of Plato Asset Management, which is the manager of the PL8 portfolio. So as I said, my name is Chris Meyer. I'll run through the first half of the presentation. the first bit, which is -- most would think is pretty boring, but it's necessary as the disclaimer. We just want to make sure that you all understand, we're not here to provide personal financial advice. We don't know your personal situation. So please, this is general advice and any stocks that Don may talk about is not a stock tip for you, please. In terms of the agenda, we'll go through some of the highlights of the company, it's somewhat backward-looking given it was a December half. So we'll fly through that, and then we'll move on to the market update and take some questions from you at the end. If you do have questions, usual story, please type them into the Q&A box at the bottom of your screens, and we'll get -- Don and I will get to those at the end. So in terms of the company, I always like to frame these results in the context of the company's objectives. You can see that we've even put that as a bullet point right at the top of the slide. We believe PL8 is continuing to deliver on its objectives. Those are the twin objectives of PL8. One is to outperform its benchmark, which is really the ASX 200 benchmark, including franking, and the second is to perform the income of that benchmark. And so you can see, if you look at the third and fourth bullet point on that Slide #5, the total return of the company, up 8.4% for the 6 months to December. That's a nice capital gain or nice gain for the NTA of the company, a little bit ahead of its benchmark and it has done the same outperformance of its benchmark coincidentally since inception. So that's first objective met. The second objective is to outperform the income of the benchmark. And you can see there the distributed income for the 6 months was 3.9%, 1.1% ahead of the benchmark. And since inception, 2.2% ahead of the benchmark, which is obviously a per annum number. So not dissimilar to the level of outperformance for the 6 months to December. We also raised some capital in the period, and we'll get to that on a later slide. Just graphically, it's always helpful, I think, to look at the NTA movement over the 6-month period. And you can see we started the 6 months 1st of July, $1.04. It moved to $1.07, a little over $1.07 at the end of December. And this is kind of what you want to see, I think, on an ongoing basis for PL8 is a little bit of gain there you can see $0.07 from the portfolio performance, which is really a combination of the market's performance and the manager's performance. And then the red box, the larger red box is the reduction in the NTA that comes from the payment of the distribution. And so that's, I would say, if we could achieve that every 6 months, that would be a good outcome, a little bit of capital gain, a little bit of income is really the sort of the holy grail, if you like, for PL8. Interestingly, at the end of the year, the NTA was $1.07. It's more or less the same level where it is today, a little bit of growth from the portfolio in the year and we've paid some of that growth out as a dividend. In terms of performance, and Don will cover a little bit more of this in detail later, but this is Slide 7, you can see since inception, as I reflected on an earlier chart, has outperformed its benchmark by a little over 0.1%. 12 months was a more difficult period for the company, although obviously, pleasing returns on an absolute basis, up 7.4%. And on a relative basis against its bench market -- was behind the benchmark by 1.2%. I would say the one bullet point reason for that is really if you've read the press, you would have known that 2023 was really a year marked by strong performance from high-tech growth or AI, in particular, beneficiary companies. A lot of those companies don't really pay any dividends or pay very small dividends. And so it's not really in the wheelhouse for Plato, for PL8, to invest in those companies. And so when those companies drive an index return like it did last year, I think it's reasonable to expect that this portfolio might lag somewhat given high dividend paying stocks were not flavor of the year. But the good news is, from an income perspective, PL8, on the right-hand side really did a much better job than the index on the left-hand side from both a cash distribution which is the top numbers as well as franking. So you can see there the PL8 portfolio on the 12 months to January of this year, outperformed the cash distribution by a little over 1%, outperformed the franking by a little under 1%, which together means from a sort of a fully franked basis, PL8 outperformed by about 2%, it's benchmark. And if you remember from an earlier slide, that is more or less what PL8 has outperformed its benchmark since inception from an income -- a fully franked income standpoint around about that 2% per annum. If you look over the longer period of time, the same is more or less true. So what I commented on the earlier slide in terms of the income distribution. Those are the 2 bottom lines, the sort of more jagged lines, the black one being the PL8 portfolio and the light gray line being the benchmarks income return. And so that gap has grown over time at about 2% per annum, which has been the outperformance of the portfolio against its benchmark. And then the top 2 lines, the blue line being PL8 from a total return perspective and the gray line being the index from a total return perspective. Again, that gap has grown over time, largely as a result of the improvement in the income relative to -- or the outperformance of the income relative to its benchmark. This is probably the slide that shareholders love the most, which is just how metronomic the PL8 dividend has been. We've been sitting at that $0.55 per month for close on 2 years now. And you can see that that's been delivered very consistently on a monthly basis. It still is the only LIC. PL8 is the only LIC paying monthly, fully franked dividends. There are other LITs that are in the income -- credit space that pay monthly incomes, but this is the only LIC with a share portfolio that as far as we know, is paying monthly dividends. So it's quite a unique asset out there on the stock market. And that uniqueness, we think, has driven on Slide 11 it's premium to NTA. It's been pleasing that it's been fairly consistent at that level of around 10% if you look at that light blue line, which is the premium to NTA sort of in the 10%, if you had to take an average range over the last 4 or 5 years, sometimes it's been a bit higher, sometimes a little bit lower, but in general, around about that range. And that's more or less where it is today, $1.20 stock price, $1.07-odd NTA. So we're very happy with that outcome, and we thank you for your support that has driven some of that. In terms of the capital we raised at the end of last year. Again, thank you for your support, if you participated in the share purchase plan. We do get asked why do you raise capital in a vehicle, what's the objective. The main reason, it's not the reason for this slide but the main reason is we do get a lot of reverse inquiries from shareholders saying, we love PL8, but we would ideally like to deploy more capital at NTA or closer to NTA than at a premium to NTA. And so that's the main reason why we did a share purchase plan is to give shareholders that ability to invest more capital at closer to NTA. The other reason, which is the point of this slide is bigger companies do have benefits for shareholders. The first benefit being lower costs. And so you can see here the Corpus or the net assets of PL8 has grown from around about $300 million at the IPO back in 2017 to around about just over $800 million today. That biggest size enables us to amortize the costs of running the company over a bigger asset base, which means that the per share cost of running the company is lower for you as a shareholder. So that's the 1 benefit. And the other benefit is liquidity. So as the size of the company grows and the number of shareholders grows, generally, you get more turnover in the shares, which improves the liquidity, the on-market sort of shares that trade of PL8 that has certainly been the case of PL8 over its journey since IPO. So I think that's it from me. Don, over to you then on the portfolio and the market. Thanks.

Okay. Thanks, Chris. But just to put a number actually to the last slide that Chris was talking about in terms of the cost implication. When we first listed PL8, the MER, which is managing expense ratio, the costs to the asset base was just over 1%. And in the latest numbers we went through with the auditors only a week or 2 back, that has now fallen, the MER has now fallen to 0.9%. So there's been a 10% -- more than 10% reduction in costs because the company has got bigger. Interestingly now, the costs for PL8 are exactly in line with the cost of the underlying fund, the unlisted fund. So you can invest in the same assets whether you go into the unlisted fund or PL8, and the MERs are actually identical now at 0.9%. Even though there are additional costs in PL8 with directors' fees, not that Chris or myself get directors fees but external directors and ASX listing costs are quite large as well. But anyway, moving on to the market update. Before I get into it, I just reaffirm that the primary, I suppose, target audience for our PL8 are actually retirees, people who want to live off the income from their investments. Hopefully, if they've got their money in superannuation that up to the first $1.9 million can be tax-free. And that's just the first slide there, Chris. And the -- and we feel our philosophy is if you can generate enough income from the investments that you own to satisfy your lifestyle, you don't need to start selling down assets, and that means that you have less likelihood of having longevity risk of running out of money before you die. There has been some changes to tax rates recently we saw in the last couple of weeks the Stage 2 tax changes that the current government have put through. They don't really affect retirees or our target audience on the next slide. I mean all it does these new Stage 2 tax changes means it just changes when certain tax rates for higher income investors come in. At the moment, the very highest tax rate, the 45% plus 2% Medicare cuts in at $190,000. Under the initial stage 2 tax cuts, that would move to $200,000, but the current government have changed it to cutting it a $190,000. But for pension phase investors or indeed accumulation investors there's no change. So it is still the case that fully franked dividends are very, very valuable for retirees and indeed even for accumulators. What has changed, I think, though, in markets in the last 3 months basically, it is now very much a consensus that we are at the peak in interest rates. The likely next movement in Australia is probably going to be down and probably in the U.S. as well. And that has caused a bit of a surge in markets. We've seen some strong markets in December and January and an all-time peak actually on Friday. So we have actually -- markets have rallied strongly in the last few months. And this is on the back of the view that the next move in interest rates is going to be down. So I think it's probably about as good as it's going to get for term deposits, which is interesting because if we look at inflation and probably one of the reasons why -- the view is that interest rates are now going to likely to next move down, as it is very clear that inflation is trending down very strongly. Inflation in December 2022 peaked at 7.8% in December, but this quarterly inflation for the annualized inflation through the December quarter of 2023 fell from $7.8 million to $4.1 million. And the latest 2 monthly reads on inflation have actually been at 3.4%, which is below RBA forecast. And what that means though is that when you look at the interest rates, but you take off the current rate of inflation is that interest rates have only just actually exceeded inflation rates in the last quarter or so. And that's on the next slide. So it's the case that if you're looking at investing in term deposits, et cetera, you're just starting to get a real rate -- a positive real rate of return now at those higher interest levels because inflation has come down, remembering that real interest rates our interest rates after allowing for the underlying -- or for the rate of CPI or inflation. And it's really inflation coming down rapidly, which has caused these real rates to now just tip into positive territory. But that certainly has been a kicker for markets. I'm going to look -- talk about going forward. And so we'll talk mainly about the results season that it just happened in February. And by and large, it wasn't a bad results period. We focus mostly on dividends. And I suppose the headline number for us, looking at the basically the estimated the stocks that we follow is that the average dividend increase was around 6%, which is actually more the inflation rate. So dividends on average are keeping up with inflation. Although I think the preferred measure that we would like to look at is not the average, but the median because that average can be skewed by a couple of big dividend payers. So the median is actually, if you rank stocks from best to worst, it's basically the one in the middle. And how big -- what happened to the stock in the middle? And how big was its dividend change? And it was a positive 2.7%, so a bit less in inflation, but not bad, so still increasing. If you want to use a glass half-empty analogy, the actual dollar value of dividends of the stocks we follow that was declared in February, actually fell a bit. It actually fell by about 4% to about $35 billion. So I fell from $36 billion last year to $35 billion this year. And the 2 major corporates for that and the same corporates or BHP was the same corporate last year and this year, BHP cut its dividends by about 20%, announced some in U.S. dollar terms so you can argue the toss about where the exchange rates are, but it's roughly about a 20% dividend cut. And Woodside also cut its dividends significantly because oil prices have gone down. In the BHP's case, it's partly because of nickel. It's not just iron ore prices. In fact, iron ore prices were generally up. And BHP's competitors, Fortescue and Rio actually increased their dividends but BHP has quite a bit of nickel exposure and nickel prices have gone significantly down. In fact, so far down that BHP has written off it's nickel assets to not only a 0 number, but actually written them down to a negative value to take account of any cost of closing the assets. So it's really extremely worth nothing. It also took a negative from Samarco joint venture in there. But aside from Woodside and BHP, the results we thought were pretty good. You saw some very strong results from some of the insurers like QBE, a 60% increase in dividends, Insurance Australia, 67%. Some of the energy -- the electricity stocks for AGL and Origin increased the dividend substantially. Of course, you probably noticed your electricity prices have grown a lot in the last 12 months. That's the reason. But I think this is where you can have a hedge against inflation. If you own companies like Origin or you own companies like particularly the Insurance, you can offset the fact that when you open your insurance premium letter, it's getting bigger. There were some negatives, and I'll go through them in a minute, but it wasn't such a bad thing. I think the interesting one was a lot of areas that people thought would be quite negative, such as retailers. They often are surprised on the upside. Things weren't as bad as what people were expecting, I suppose. I'll move firstly a bit more detail on CommBank because it is the biggest bank in Australia and second biggest stock. We thought it was a pretty good result. Not a stellar result. But people have been calling the banks. And I think the 2 items I'd just point out, I'm not going to go through everything is that bad debts actually fell to 9 basis points. So if you think about strategists and economists last year, we're talking about the world's coming in, we've got this mortgage cliff. There's going to be huge arrears of mortgages and bad debts. It is not coming through from the Commonwealth Bank results. Their mortgage -- their bad debts are actually reduced in the half. It is the case though that probably their profits are about as good as they got -- they get. Another thing that we saw last year, and we're seeing in this year, but actually their profits were down for the half, but they actually increased their dividends by $0.05, so a small increase in the interim dividend there. That's all I want to note on Commbank. But one of the things I think that was interesting and CommBank has done it for the last couple of years. CommBank is the biggest bank in Australia. They have the biggest credit card book, they analyze the sales through their credit cards. So their big data and all that sort of stuff. They're able to look at the sales of all the -- on their credit cards. And what they're seeing is a bifurcated economy. The fact is that younger people are feeling the pain. They are spending less on discretionary items. So going out to dinner and those sorts of things. But older people, people particularly in the over 55 brackets are actually spending more partly because I think they have got money in term deposits that they're getting a higher rate of interest on it, et cetera, or they have savings and they probably don't have large mortgages. It is the younger people with -- who are either renting or have new mortgages that are feeling the pain. And so what we're seeing is that the spending of the older people are actually offsetting the cuts in spending of the younger people, meaning that actually the retail environment is not nearly as bad as what people were predicting. The other issue is this time around in the interest rate cycle, there's a lot less people with mortgages. A lot more people are now retired or nearing retirement and they've largely paid their mortgages off. So yes, generally speaking, things were not as bad as what people were expecting. That to me there's a catch phrase of this result. And you can see that in some of the sales results in Wesfarmers. You saw some very good results out of their Kmart division. And Kmart actually increased sales by 5% when analysts were expecting them to basically be flat and it was a big contributor to the profit of Bunnings. And there I say there's a bit of a jug there -- or sorry, Wesfarmers but really the sizzle in Wesfarmers wasn't for Bunnings. Barbecue was actually from the Kmart division. The other areas that we've been talking about for some time have been the insurers, and we did start to see some -- that coming through that the insurance divisions were going pretty well. QBE results were quite strong, earning -- cash earnings up over 100%, dividend up 60%. As I mentioned, for Suncorp, Suncorp is a bit of a conglomerate. It has insurance, but it also has a the banking division, which is now looking to sell to ANZ, has been looking for some time and probably their results highlight why they want to sell it. Their general insurance profit was up 52%, very strong. Their banking profit was down 25%. They're looking to get rid of that division. They're probably not paying much attention to it. So they'll be much better when they focus only on insurance. But yes, the insurers are benefiting from both those higher premiums that they're charging you but also the fact that they're investing in those premiums in cash and getting a higher level of cash. I mentioned before about Rio and Fortescue. Iron ore prices have stayed pretty strong, stronger than many people predicted, and we saw that increased dividends a 20% increase in final dividend by Rio and a 44% increase in Fortescue's dividend. So some pretty strong results relative to BHP, which is held down by its nickel operations. But I think one of the standout performance for me from an income point of view was Ampol, going to stock we have been talking up for a while. At Ampol's profits were fairly flat or its underlying profits. It actually increased its final dividend by 14% to $1.20. And on top of that, fully franked, of course, on top of that, it paid a special dividend, $0.60. And we've been talking about the likelihood that they would pay specials because Ampol's sitting on a big franking account balance, so it still has plenty of frank credits to pay out. And whilst it's paying out a lot of income, it actually has quite low CapEx. So continue to pay fairly significant dividends. And if you actually look at the amount of money and franking credits that Ampol will pay out in the last 12 -- over 12 months, it equates to essentially 10% if you include the special and you cut the franking credits, giving of their stock price back to the investors. There were a few low lights, though, and we try to avoid these and we did avoid these. But if you look at some of the stocks that we would -- that came up at our processes, dividend traps, it was Pilbara Minerals, which didn't pay a dividend at all. We had 100% probability of dividend cut at the end of the year. South32 significant cut in its dividends and Magellan also cut its dividends quite a bit. They were some of the dividend traps that we identified and avoided. And lastly, we have been showing this for a few -- for a while now, but we chart on Slide 26 looks at the -- is really a forward-looking indicator of where dividend expectations are, if you like. Whilst it is -- it comes out of our process, we actually forecast the likelihood that companies will cut their dividends. It's been a pretty good indicator if we went back through time and highlighted the significant cuts in dividends in 2020 during the pandemic. It forecast those very early in sort of March, April, that there will be a tough year for dividends. It also going back through time predicted -- correctly predicted a lot of dividend cuts in the GFC, noting on this slide that high level is bad, high probability is given cuts a bad at the market level. And what has actually happened, and this is the good news here is that whilst over the last sort of 2 years, the likelihood of dividend cuts have increased from quite a low level 2 years ago to slightly above average level, whilst it's small, but you can see that the actual probability of dividend cut is slightly reduced over the last a couple of months, actually. So as people are becoming more positive about the economic environment. So we're cautiously optimistic. We think interest rates are at their peaks. The next move is likely to be down, although I believe it's likely the second half of this year, not the first half, and I think it's only likely to be 1 cup this year. But we still see some pretty good dividends out there. So we're still confident we'll be able to deliver strong income clients. So with that, I'll hand back to Chris, and we'll see if there's any questions.

Thanks, Don. Maybe if I can be so bold to just take the first question because you showed this slide, which I thought was super interesting. But just to understand, so if the investor is invested in a Index fund, the ASX 200 Index fund, with the gray bar be more or less what their dividend experience was?

Yes, that's correct. Because that's really looking at -- if they owned everything, yes, it's really an Index way is the gray bar. So that's why that level dividends actually fell, which is a negative. But if you were in the right stocks, if you book the average stock, you actually might have got an increase and certainly there will be few. So I think it's a benefit of being an active stock figure and also avoiding those stocks that have big cuts in dividends is quite important.

Great. Thanks. Okay. Well, thanks for those comments, Don. Always interesting. Let's go to the audience for questions. We do have a few. And please, again, if you do have anything on your mind, just tap it into the Q&A box there. We'll try and do the speed dating style. So we get through everyone's questions. There's always lots in the PL8 webinars. First question. I mean I'm happy to take this. What is the per share amount of the cash reserve? I think the way I would answer that, I presume the question is about dividends and the ability to continue to pay dividends. And typically, with listed investment companies and the same is true with PL8 as your -- the lights have just gone off here, but that's okay. We'll get them back on. The biggest constraint is the franking account balance on the balance sheet. If you look at our December results announcement on PL8, we spoke about $0.055 equivalent fully franked dividend is what the franking balance on the PL8 balance sheet is. And given we're paying dividends every month at a level of $0.055 a month. We've basically got 10 months worth of dividend cover from a franking balance perspective. And if you look forward, some of that franking balance was diluted a little bit from the SPP that we did in December. And so going forward, as that capital has now been invested, that franking balance should drift up a little bit from that level where it was at the end of December. So we have more than enough cover to pay the current level of dividends, both from a profit and franking credit perspective. Don, the second question is just on the dividend outlook and stability. So you've given us sort of what happened in the period under review, and you've given us your dividend cut forecast, but is there anything you want to add in terms of the outlook?

Well, I think that last slide or the last chart I showed is actually, is the relevant one for that because it's really highlighting the likelihood of dividend cuts from here, and that line has actually fallen a little bit over the last few months, which means it looks like the dividend outlook are getting better. And it's basically, statistically in line with the long-term average. So things are looking okay.

All right. Don, there's one here from Nathan says congratulations on the performance of PL8 since inception. Any thoughts on establishing an international like PL8, so we can diversify our portfolios outside of Australia?

Well, we do actually have a global income strategy that it delivers -- I mean this is, I suppose, the difference is that globally income is much lower and you don't get franking. So it's been delivering consistently 6% income over time but that's substantially lower than PL8 because it has no franking, I suppose. But yes, we do have a vehicle there and we get enough support, then we would certainly be looking to launch that as probably, I think, an ETF in the current environment.

All right. Jeff asks in order to generate cash to pay dividends, does PL8 sell equities or use option trading strategies or something else? So you want to...

Well, we don't use any option strategies. I mean we basically buy stocks to collect their dividends. They do actively trade around stocks, but we buy stocks to get their dividends. So we are not using capital to pay out PL8 dividends at all coming from actual company dividends that we have received. So dividends from your BHPs, your CVAs, your Fortescue's, your Rio's, et cetera. So there's no capital gains included in that. It's purely dividends that we receive on the underlying portfolio of companies that we own.

Grant asks are you considering another capital raise this year? Don, maybe I'll answer on behalf of the Board and so far as to say that we'll only ever do a capital raise if we believe it's in the best interests of shareholders. And that's the first thing. And secondly, that the balance sheet of the company can handle some additional capital. So that's the sort of franking balance comments we were making a little bit earlier. But for PL8 -- and so I guess, we appreciate your feedback. If you've enjoyed the SPPs and you think that's something we should do more of than please write to us and tell us that if you feel the opposite, then please do the same. But we're always looking for feedback from our shareholders. What I was going to say is, for PL8, there's another constraint other than let's call it, just the company's constraint, whether it's its balance sheet or whether it's in the best interest of shareholders and that is the capacity constraints of the underlying strategy that Don runs. So Don, I don't know if you want to give us a reflection of that?

Yes. So look, we're very cognizant that we want to continue to deliver the good income that shareholders have been used to. So we don't want to grow just for growth sake. It can get too big for our boots and not be able to generate enough income because we actively trade our portfolio and we need to be able to continue to do that. So we assess that capacity, and we're getting pretty close to it. So we don't want to grow, say, and become too big for own boots and become an index fund and then not deliver on the objective. So I think at the moment, we would struggle probably be able to do another capital raise this year. Having said that, sometimes, we have some institutional clients and other clients that may go and which could free up capacity. But we just don't want to grow for growth sake and we want to make sure we deliver on the objectives of the company.

Right. Don, the last one is from Matthew and it's -- or maybe there's one more coming through yet. It's a tricky 1 for you because you've got you're wearing 2 hats today, but maybe if I can ask you to put your manager hat on, which is post the successful SPPs and the economies of scale and the growth of the assets in PL8, can investors expect a management fee reduction in the future?

Well, I suppose taking my other comments in hand that we have limited capacity in this strategy. So it's not like we're going to say we're going to keep growing and growing and growing and making a lot more money. We're pretty much at that capacity, in which case we probably would not be looking to reduce our fees. But you have since the listing of PL8 have seen that MER drop from over 1% to 90 basis points, which is now exactly the same as the MER and the unlisted fund. And we think we provide good value for money in both those vehicles.

I think it's fair to say, Don, I mean, Europe also, we're a shareholder as Pinnacle in your business, and you're always investing in your own business some of the new tools that you're deploying in the PL8 portfolio are things you've invested in over the last few years. And frankly, if it wasn't for the ability to grow assets under management, you wouldn't be able to make those investments. So there's no -- sort of no free lunch, if you like, if you want to generate the returns you've been able to generate, you have to carry on investing in your own business.

Yes. And we have invested within -- in the last 2 years, we've basically taken on 3 senior researchers and a couple of junior researches. So we continue to try and improve our process, add to the number of red flags and make sure we're investing to make sure we can still get those returns because it's pretty tough going. I would also add that there are no performance fees for PL8 when many links do have performance fees. We don't believe it's relevant for this product.

Good, Don. Okay. There's a couple more trickling in here. So let's crack on. Just do justice to everyone, says thanks for a great result. This is Sally. Can you explain how you work out that dividend outlook chart that we've got on screen in very general terms?

Yes. I didn't explain it completely. But -- so what we do is at an individual company level, so it could be a BHP or Westpac or what have you. Using bottom-up fundamentals, we have developed a tool which calculates the likelihood that, that company will cut its next dividend. So it only looks out at the next dividend. It's not 5 years or anything like that. It's just the next dividend. So I think it looks at things like dividend payout ratio. So if company has a very high dividend payout ratio, there's a likelihood that it will cut its dividends. If it's got a low payout ratio, it's less likely to cut us dividends. If its profits going up, it's good if this profits going down, it's going to be bad. So there's a number of these factors we use at the individual company level. That slide is actually not at the individual company level, but it's a market level. So we take all the individual probabilities and basically average them. But we average them based on the size of the company. So BHP and a Commbank will have very big weights and a small company, will have a small weight. But we're basically getting an aggregate picture of the likelihood of dividend cuts at the market level. So we think it's a pretty good indicator of future dividends.

All right. Well, probably akin to that or aligned with that question is AJ asks, are we expecting any increase in the level of current dividends? I presume you're referring to the PL8 monthly distribution. So I don't know if you want to take that one, Don?

Yes. So I think at the moment, the directors -- and I'm not the only one, but there are 5 of us on there. Consider that the dividends are about appropriate given market dividends. I didn't show you another chart, but if we look at -- yes, we really are dependent on the level of dividends paid by the market in general. Obviously, we're trying to pick the best stocks out of the market, so we should be able to do better than that. That's why we deliver a higher yield in the market. But for us to further increase the level of dividends, we probably want to see the market dividends, which is of a dollar value of dividends being paid by the market to go up. And as I said, they actually fell a little bit. So we have to be better at picking the right stocks to increase dividends or even maintain dividends in that situation but we think we can maintain dividends. And it comes on the back that last year, we did see -- again, we saw falls in the dollar value of dividends paid at the market level. So it's been a pretty tough environment from that sort of perspective to maintain I suppose those dividends. We increased them after the pandemic. We increased them back to the previous levels and then set a further high. But at this stage, we're not probably forecasting an increase. But we -- hopefully, as those interest rates cut in and we see better dividends at the market level in the future, hopefully, we can increase them. But it certainly -- we always have debates about this at the board about what's the appropriate level.

Don, let's make this last one is, do you have any plans to exit or retire?

No immediate plans. I mean, obviously, I will one day, but I enjoy what I do. I like getting feedback from clients. I like visiting clients, et cetera. And so I love my day job, and I want to keep doing it. But we are building up. We now have 15 people in the team. So whilst I think most people know myself and you may have met Peter Gardner, and there's actually 13 other people within -- and the average team experience is well over 20 years. So we do have a very strong team there, but I have no immediate plans to retire.

Yes. I'll vouch for that, Don. I've seen you travel in the last couple of weeks to all corners of Australia to go and meet with investors. So you've still got a good spring in your step. It's great to see, obviously you're enjoying it. Okay. I think that's pretty much it. Thank you, everyone, for your participation, as always. It's -- we get 100 or more on these calls. It's fantastic to see a very engaged shareholder base. Don and I and the rest of the Board, thank you for your participation in the share purchase plan, but more importantly, just your ongoing shareholding in the company. I would love to hear your feedback. If you have anything for us, we're always on the lookout for improvements or feedback, so please send it through. We will send you a replay of this on the e-mail. So you will have a copy of it in your inbox probably by the end of today. And Don, with that, I'll say thank you to you for your time, and we'll sign off.

Thanks, Chris, and thanks, shareholders.