WHSP Holdings Limited (SOL) Earnings Call Transcript & Summary

Well, good afternoon, ladies and gentlemen, and welcome to the 119th Washington H. Soul Pattinson Annual General Meeting. My name is Rob Millner. I'm Chairman of the Board, and I'm advised there is a quorum present. Therefore, I formally declare the meeting open. For safety of our shareholders and staff, today's AGM is being held online. There are three parts to today's meeting. First, I'll provide an overview of the result for the financial year ended 31st of July. Then Todd Barlow, the company's CEO, will take you through the result in greater detail. Following this, the formal items of business will be considered, and we will respond to shareholders' questions or comments on items of business or management of the company. To assist with the orderly conduct of the meeting, please do not wait for discussion of the formal items of business if you wish to submit a written question. Please note there will also be an opportunity for shareholders to ask questions during the formal business. Instructions on how to vote and how to ask questions can be found on the home page on your screen. All Board members have attended today's meeting apart from Josephine Sukkar. Seated at the table is Todd Barlow, our Managing Director; Michael Hawker, our Lead Independent Director; Tom Millner; Warwick Negus; and Rob Westphal. Tiffany Fuller is joining us virtually from Melbourne. At the table seated to the left of me is Ida Lawrance, our Company Secretary; and seated next to Todd is David Grbin, our CFO. Ryan Fisk from the company's auditors, EY, is also present and available to answer questions shareholders might have concerning the conduct of the audit, preparation and content of the auditors' report, the company's accounting policies and the auditor's independence. To allow those who intend to vote during the meeting and to lodge their vote at any time during the meeting, I will now formally open the poll on all items of business set out on the Notice of Meeting lodged with the ASX on the 4th of November. Voting will be conducted by a poll on all items of business. I would like to begin my presentation by thanking all shareholders for their continued support over the previous period. A highlight of the year has been the merger with Milton Corp, which brought together two of Australia's greatest investment companies, and I would like to welcome all our new shareholders to today's meeting. Washington H. Soul Pattinson's objective is to provide superior returns to shareholders over the long term by creating capital growth along with steadily increasing dividends. The company again increased the dividend paid to you, shareholders, this year to $0.62. Washington H. Soul Pattinson is now the only company in the top 50 listed companies in Australia to have increased its dividend every year over the last 20 years. We're extremely proud of the fact that this company has never missed paying a dividend since listing in 1903. And that gets us back through the war years, the depression years, and [indiscernible]. The table on the slide shows the total shareholder return for Washington H. Soul Pattinson's shares for various periods and compares them to the ASX All Ordinaries Accumulation Index, which also includes the reinvestment of dividends. The TSR performance has been strong over the period with WHSP outperforming the index over each of the periods shown on the slide. As a long-term investor, our focus is on delivering outperformance over the long term. Over the last 20 years, annual TSR outperformance was 13.4% per annum. This outperformance has a material impact on shareholder returns. During this time, an investment in WHSP appreciated approximately 11 times while an investment in the index increased by just 4x during the same period. And this performance has been maintained for a long period of time. If a shareholder had invested $1,000 in 1980 and reinvested all dividends, the shareholding would have appreciated to $239,182 as at the 31st of July this year. This equates to a compound annual growth rate of 14.7% on year of 40 years. The growth does not include the value of franking credits, which have been passed on to you as shareholders by WHSP. On behalf of the Board, I would like to thank our senior management and all staff at the company for their efforts during the previous year. As I mentioned earlier with the merger with Milton, plus other activities you're looking at, it's been a very, very busy year. And most of you can understand a lot of that is have to be done at home. And thank you very much for all those people that have the homeschool as well and work and do all sorts of things. On behalf of the Board, I'd like to thank you all for your support at the previous 12 months. As part of the Board's ongoing renewal, Rob Westphal retires at the close of today's AGM. On behalf of the Board, I would like to thank Rob for his significant contribution after 16 years as a director. Following Rob's retirement, Tiffany Fuller will be appointed Chair of the Audit Committee. Warwick Negus and Michael Hawker are both standing for reelection today. Both Warwick and Michael have significant investment experience and will make a strong contribution to the Board deliberations. With the reappointment of Warwick and Michael, the Board, as a whole, has an appropriate mix of skills and experience to effectively meet this Board's responsibilities. Both Michael and Warwick have confirmed that they have time available to effectively fulfill their role, and the Board supports their reelection. I'll now hand over to our CEO, Todd Barlow, for his report.

Thank you, Chairman, and good afternoon, ladies and gentlemen. WHSP offers a unique investment product in the Australian market. During 2021, we built upon our long history of investment success and positioned the company to be one that continues to be attractive to the investment community well into the future. Through WHSP, an investor has the opportunity to gain exposure to a range of asset classes and industries, investment strategies that have delivered above market returns for decades, steady and growing dividends and a management team with a strong track record of execution and active stewardship of capital. Our investment philosophy defines our strategy and competitive advantage. We invest in a diverse range of uncorrelated investments across listed equities, private equity venture capital, property and structured credit. A key advantage is our unconstrained and flexible mandate, which allows WHSP to invest in and support companies from an early stage and grow with them over time. We are disciplined and value-focused and willing to invest through market cycles to deliver returns over the long term. As outlined by the Chairman, we have an excellent track record of paying a consistent and growing dividends for over 20 years. We're also focused on protecting capital by investing in a portfolio of assets which generate reliable cash through market cycles and, therefore, perform better in market directions. We aim to be a trusted capital partner with attractive companies and management teams who will value our long-term stable and supportive approach. The calendar year 2021 has been a transformational year for WHSP. As the Chairman indicated, we have continued to grow dividends by ensuring we generate solid cash flow from our investments. We remained extremely active. While we are long-term investors, we are continuously shaping the portfolio and taking advantage of new opportunities and the changing macro environment. In the past 12 months, your management team, and is quite a small team, has transacted over $5.4 billion in acquisitions and disposals. The biggest contributor to this transformation and deal activity was the completion of the merger with Milton Corporation to create a company with a market capitalization of over $11 billion and over 55,000 shareholders. The NTA per share for the last 12 months has grown at over 17%, which compares very favorably to the market index, which is up 11.3%. The share price has appreciated 12% in the last 12 months to 8 December, which is also above market. There has been some volatility in the share price this year, and a number of shareholders are curious about recent movements. And what you can see on this graph is a significant increase in the share price following the agreed merger with Milton from event-driven arbitrages and passive index funds who were required to buy the stock as it's now a bigger component of the relevant indices. Following the completion of the merger in October, some of that unwound, and we saw a drop in the share price. However, the share price is now 8% higher than it was when we announced the merger in June. An important thing for Milton shareholders is that 8% share appreciation since 21 June is on top of the implied 20% premium announced at the time of the merger. It's clear that both Milton and WHSP shareholders have done very well out of the merger. And before the merger took effect, we also released our full year results for the year ending 31 July 2021, where we reported a group regular profit of $328 million, and that was 93% increase on the prior year. That shows that the companies in our portfolio are performing well, and as I'll discuss in this presentation, that continues to be the case. And I should add that all of this has been achieved through these challenging COVID-impacted times. The Milton merger was completed on the 5th of October, and we believe that the merger has had some material benefits to our company and positions the company very well for the future. Some of the key benefits include, firstly, there was a greater portfolio diversification and additional liquidity for future investments. Secondly, the addition of the Milton portfolio will increase cash generation across the company. And thirdly, we now have over 55,000 shareholders, which should increase liquidity. Fourthly, there's a significant uplift in capital -- the capitalization of the business and free flow, which increases WHSP's index participation and ownership by passive index funds. And lastly, the Milton investment team complements nicely the existing capabilities that WHSP has. Immediately, you can see that the gross value of the portfolio increased from around $6.5 billion to around $9.7 billion on merger. The concentration of our strategic investments in Brickworks, New Hope and TPG, which were close to 60% of the portfolio have now reduced to around 40%. There's been a large increase in the portfolio weighting to the diversified large-cap portfolio. However, these assets are highly liquid and give us an opportunity to reallocate to other parts of the portfolio as we see new opportunities arise over time. Following the merger, we now manage the portfolio by asset class, and you can see the allocations across the various portfolios on this slide. The total portfolio has grown to over $9.5 billion. The strategic portfolio is now less than 45% of the portfolio, and large-cap equities has growing to 36% of the portfolio by adding the Milton portfolio. If we look at the net asset value on a per share basis, the asset backing has increased by 17.3% in the year to 30 November 2021. The working capital position is a positive number, which means that cash and receivables exceeds the debt position. And since this is the best time we publicly divided our portfolio in this way, I'll go through each of the portfolios in a little bit more detail. As at the end of November, the strategic portfolio was valued at $4.3 billion or 45% of the total portfolio. The strategic portfolio comprises large stakes in publicly listed companies where we have bought representation. And this includes TPG, Brickworks, New Hope, Tuas, Apex and Pengana. Interestingly, four out of these six companies have evolved from private equity investments of WHSP. And the other two, Brickworks and Apex, have been in the portfolio for several decades. During the year, we sold our stake in API to Wesfarmers in connection with its proposed acquisition of that company, and if the transaction completes, there's further upside for WHSP. We also sold down our stake in New Hope from just over 50% to just under 40% through two transactions, and this is down from 60% 4 years ago. TPG share price has declined a bit in the last 12 months. It is one of the large -- one of the few large assets in our portfolio to do so. However, our interest in TPG remains our largest asset with a value of $1.6 billion. TPG's latest results for the half year to 30 June, where they reported EBITDA of $886 million on over $2.6 billion of revenue. The integration of TPG and Vodafone is progressing well with synergy realizations on track. However, COVID has had an impact on revenue with lower roaming and international businesses to Australia. We see telecommunications as a very attractive long-term industry and TPG having a strong competitive advantage with a low-cost structure and strategic infrastructure. And you may recall that Tuas was spun out of TPG prior to the merger with Vodafone, and its share price has performed extremely well in the last 12 months, up over 200%. Tuas is a new mobile entrant in Singapore with a very disruptive pricing model. Its infrastructure rollout is progressing well along with customer acquisition, and the rollout of 5G will aid the next phase of growth in customers. Brickworks share price has performed well over the last year, increasing 22%, giving us a valuation on our shareholding of $1.5 billion. For the 2021 financial year, Brickworks reported a record underlying NPAT of $285 million, which was 95% up from the previous year. Australian building products EBIT was up 36%. However, the U.S. operations continue to be impacted by COVID, but the strategy remains on track to develop an integrated efficient brick business in the northeastern states of America. Brickworks continues to seek solid growth in the value of its developed Property Trust, which ended the year at $911 million. That number does not include the significant amount of undeveloped land or the uplift in values from land currently under development, and you can see that this page the huge Amazon shed nearing completion in the foreground and the Coles facility in the rear. These assets alone will add significant development profit, increase in the valuation and increased rent going forward. The New Hope share price has performed strongly over the last 12 months as well, up 41%. Our investment in New Hope comprises just 7% of the total portfolio. The company is experiencing very strong coal prices at present, and while price has recently peaked at over AUD 330 a tonne, they're sitting at around $250 a tonne. And you can see from this graph that, that is well above the prices over the last 5 years, which have traded in the range between AUD 70 and AUD 140 a tonne. As a result of the current pricing environment, New Hope has recently announced that it produced $242 million of EBITDA in the first quarter of this financial year. That is 2/3 of the EBITDA generated for the whole of the last financial year. So we're seeing very strong financial performance out of New Hope, and we expect that to continue for this financial year. New Hope is a responsible steward of coal assets through the energy transition. As we have stated before, we believe that during the energy transition that will take place over the next few decades, there will continue to be demand for high-quality Australian coal. New Hope operates a low-cost mine and is a responsible owner of these assets. Being a responsible steward of these assets includes looking after the workforce, the community, shareholders and rehabilitating the land. And you can see a couple of photos on this slide, demonstrating New Hope's excellent rehabilitation of land in areas where we've recently ceased mining. The large-cap portfolio has significantly grown in size through the Milton merger and is now worth approximately $3.5 billion or around 1/3 of our total portfolio. It's an actively managed portfolio that does not replicate an index and takes a fundamental long-term investment approach. Most of this portfolio is highly liquid and able to provide a source of liquidity for new investments in other asset classes, however, at present, is generating strong investment returns through tax effective income and supporting investment conditions in public markets. Some of the factors leading to this supporting environment include lower global interest rates, strong growth in company earnings, strong balance sheets, with the global recovery post COVID and high level of corporate activity. WHSP is also actively investing in emerging companies, which are companies outside the ASX 100, and are exhibiting strong growth and are generally benefiting from technological and structural changes. The portfolio has grown significantly in the past year to $545 million. Not only do we see outsized returns on these types of companies, it provides us with valuable insights into disruptive forces in the market and an opportunity to back companies on their growth journey. The composition of the largest companies across the world is increasingly dominated by younger disruptive companies, and we believe we are well positioned to see these opportunities and get on them at an early stage. While many early stage in tech investments can sometimes feel like a gamble, we continue to apply the same investment techniques that we have developed elsewhere. We invest in good managers, we are disciplined about valuation, and we undertake careful research and analysis. Our private equity portfolio is around $640 million in total value, and we continue to look to grow these portfolios. We're aiming to develop a portfolio of platform assets that we can grow with further investment over time. We're actively seeking to invest in businesses who want to be aligned with a partner to take their business to the next level. We have identified a number of themes we have interest in. And these include energy transition, financial services, health and aging, food and agriculture and education. Our biggest assets in the current portfolio are our agricultural assets and Round Oak Metals. And after spending a few years developing various projects in Round Oak Metals, the FY '21 year was an excellent year, with the company generating EBITDA of $183 million and returning $70 million of capital to WHSP. Round Oak Metals is focused on meeting the demand for copper and other base metals, which we believe will be in huge demand with the growth in industrial activity, electrification and transition to renewable energy. In addition to this, copper is suffering from dwindling supply as discovery rates fall and the capital cost of new production increases. This should be very positive for long-term commodity prices. Now that we have achieved some scale at Round Oak, we have been considering our options for the business in the future. However, the IPO that we had entertained recently has been withdrawn because we believe our shareholders will be better served by us maintaining these assets for now. We're seeing some very positive signs from exploration, which should materially expand the life of mine at Jaguar in Western Australia and add significant value to the company. Through the year, we invested a further $60 million in the agricultural portfolio, bringing our total investment to around $200 million. The agricultural portfolio is focused on developing high-value horticultural crops to supply premium domestic and export markets. The portfolio includes citrus, table grapes, kiwifruit, stone fruit and macadamia nuts, all targeted to take advantage of premium domestic and export market pricing. You can also see that there's a good geographic spread to derisk the business and also take advantage of different harvesting times to ensure consistency of supply and attractive premium pricing. In addition to this, we've invested in water entitlements to ensure consistency of price and availability of this valuable input cost. We have $360 million invested in our structured yield portfolio, which comprises investments in quality companies where we can structure investment that carries a high cash yield, is downside protected and can provide some equity-linked upside. We currently have 29 investments across a range of industries, and each asset is highly structured and may take the form of a loan, convertible note or other structured products to deliver yield. We are targeting greater than 10% returns from this portfolio, and the current portfolio is generating a running cash yield of around 7% per annum with equity upside across a number of investments, which we expect to combine to deliver total returns greater than our targets. We believe that this asset class is very attractive -- is a very attractive way to diversify market risk on equities and can provide long-term returns above the market due to innovative structuring in a niche market not serviced by many other capital providers. Our property portfolio comprises nine assets with a value of around $170 million. During the year, we have acquired a few small industrial sites in Kirrawee and Narellan, and we tend to focus on opportunistic acquisitions where we can generate outsized returns through development or repositioning. And while we remain active in property from a portfolio allocation perspective, we're conscious of our look-through exposure to property in Brickworks and other property-backed companies. Also in the portfolio is our retirement development in partnership with Provectus. The development of Sage by Moran in Cronulla is progressing very well, and presales are stronger than expected with 19 of the 37 apartments already sold. And finally, our working capital position is net cash at the moment of around $78 million. We have around $600 million of debt in the portfolio, but our current cash and net receivables position exceeds that level. The cost of our debt is extremely low, aided by the convertible bond offering that we conducted at the start of this year. The average cost of our debt is around 0.7% per annum, and betting in a net cash position against a portfolio of $9.5 billion means that we have significant access to further debt should we need it. WHSP has always maintained conservatism when it comes to gearing levels. With access to liquidity from our large-cap investments as well as debt capacity, we believe we have plenty of firepower to continue to reshape the portfolio. We've demonstrated the capacity to execute on new investments for many years, and we have no shortage of deal flow in front of us. We'll continue to be disciplined, long-term investor focused on continuing the long-term track record of outperformance while maintaining our desire to pay every increasing dividends to shareholders and protecting capital. To all of our shareholders, I thank you for your support and the faith you're putting us to manage your wealth. It's a duty we take seriously. We take great pride in delivering for our shareholders. I also want to thank the entire management team for their tireless work through a difficult year, including our newest employees who joined us from Milton. Despite the impact of the pandemic, our team performed brilliantly in the most active year in the company's history. Their performance and commitment to the company has us well positioned for the future. I want to welcome the Milton shareholders to the company. We hope you'll be long and happy shareholders, and we firmly believe that the future of the company is much brighter together. And finally, to the Chairman and the Board, I thank you for your guidance and assistance over the last 12 months. And I think shareholders can be very comfortable in the knowledge that there is a high-quality, diligent and focused Board overseeing their interest. Thank you.

Well, thank you, Todd. Once again, an excellent presentation. And then just before I go to the formal part of the business, I'd just like to remind shareholders that your dividend will be paid to you on the 14th of December. The instructions on how to vote are on the home page of your screen. To type a question or to vote, select the messaging or voting tab at the top of the home page. To speak at the meeting or ask your question, go to the homepage, pause the broadcast and then click here. You will be connected to the audio questions line. To assist with orderly conduct of today's meetings, questions sent by the online meeting platform will be moderated to avoid repetition. And if questions are lengthy, we might need to summarize them. To allow us to respond to your questions from shareholders as a whole, we will answer one question from each shareholder first before returning to answering your second question from that same shareholder. To deal with all items of business in a reasonable time, we will limit the number of questions from a shareholder to no more than two questions per item of business. The formal items of business are set out in the Notice of Meeting. They include the normal items of business as well as the formal appointment of EY as WHSP's auditor and adopting changes to the company's constitution. They are on the screen, and I will take them as read. We will take questions on each item of business before moving to the next item of business. Please remember to include your name and the item of business your question refers to when you submit a question. I can confirm that no questions were submitted ahead of the meeting for the auditor relating to the content of the auditors' report or the conduct of the audit. Before we start taking questions from shareholder, the screen now shows you the details of proxies received prior to the meeting. Proxy voters -- proxy voting was strongly in favor of all resolutions before the meeting, except changes to the constitution. I will start by taking questions on item 1 before moving on to the next item of business. We have received questions from shareholders ahead of the AGM, and we'll include these questions in the discussion of each item of business. We will now discuss questions or comments on the management of the company or questions for the auditor of EY. Ida, do we have some questions? Would you like to read out for me?

Chairman, we have a question from [ Mark and Emily's butler, Dr. Ernten ] and [ Michael Brown ]. They've all asked, is the company considering a DRP or equivalent in the near future?

Thank you for that question. At this stage, we have no plans to implement the DRP. Ida, do we have some more questions?

Chairman, we have a question from Tolliday Self-Managed Super Fund. They've asked, why are there so few female directors on the Board? Why are there so few females in senior management? This is indefensible in a company in the 21st century.

Okay. Thank you very much for that question. At the present stage, there are two women on the Board. And obviously, as I mentioned before with Rob Westphal's retirement after today's AGM, we'll have 29% of the Board as female. Women currently represent 25% of senior management. This compares very favorably with the investment industry. So now Todd is going to join now here. So well, depending on which question is asked, either Todd or myself will answer those questions. So Ida, do we have another question, please?

Chairman, a few shareholders have asked why the share price has varied so much.

Todd?

As I discussed this in my presentation, so obviously, the merger transaction created some volatility. But the main point is that the current share price represents an 8% increase over the share price. That was the day of the merger back in -- on the 21st of June when it was announced. WHSP shares have also outperformed over the last 12 months as well as -- as the Chairman showed in his earlier slides for the long term as well.

Thank you, Todd. Ida, do we have another question?

[ Andrew Fitzsimons ] has asked, what more can our company do to engage with customers and suppliers to reduce our carbon footprint?

Todd, could you answer that for me, please?

Thank you. So when we consider our carbon footprint, we think about it in two dimensions. The first dimension is our own carbon footprint. And our office is an office that has about 40 staff out of one office, which is certified at the highest level for environmental efficiency. Most of the team we have run, walk, cycle, catch public transport to and from the office. So the annual carbon footprint of our office on a per person basis is much less than the output of a typical family car. Post-COVID, we might expect some of our additional flights might increase our footprint. We would certainly look to reduce the amount of flying that we do through the use of technology, and we're also exploring carbon offsets and other ways to further reduce our footprint. The second dimension, of course, is what influence can we have through our investment activities. And we have introduced a Sustainable Investment Policy, which means that we not only take sustainability into account in our investment decisions, but we also encourage our investees to examine their own sustainability, including their own carbon footprint. And for those interested in the progress being made, our major investees, such as TPG, Brickworks and New Hope, have all released sustainability reports to the exchange, and they're all available to the public.

Ida, do we have any other question?

[ Dr. Michael Colin ] would like to know, what are you doing to get to net zero pollution and emissions by 2030?

Todd?

Well, I think I answered that part about the carbon emissions in the previous question. But on the question of why we aren't investing in large-scale renewable energy, the short answer is we haven't found anything that meets our return hurdles. There's a lot of money chasing these kinds of assets, and they're being priced as infrastructure, which generates lower returns than the kind of returns we are seeking. We do, however, believe that there's a massive investment in these kinds of renewable assets over the coming decades. And we believe that we're better suited to investing in companies that will be beneficiaries of this level of investment, such as our investment in copper and our electrical engineering company.

Ida?

[ Mr. Neil Williams ] and [ Mrs. Judith Langley ] have asked, does the company anticipate a significant decrease in the value of its fossil fuel assets in the next 5 to 10 years? If so, does the company have a plan to divest itself of those assets?

Well, as I outlined in the presentation, our exposure to fossil fuels through New Hope is now around 7% of the portfolio. And over the coming years, I would expect that to decrease. New Hope has a finite resource of coal. And as it mines that coal, it pays dividends back to shareholders, and the valuation of what is left decreases. And it's eventually worth 0. That's not a bad thing and certainly doesn't make it a bad investment. What's important is that the sum of the cash flows over the life of the mine in today's dollars exceeds the current share price. And on the issue of divestment, we make financial decisions about all of our investments. We do not believe that simply selling our shareholding in New Hope will make the carbon problem go away. While there is demand for coal, there will continue to be coal operators and miners. And we believe that it's better to have responsible Australian companies manage these assets through the energy transition to ensure that the wind down takes place as in regard to the interest of all stakeholders and ensuring top-quality environmental rehabilitation takes place.

[ Mrs. Ruthood ] has asked a question on a similar topic of exiting destructive fossil fuels and wants to know what's being done to accelerate a move to 100% renewable energy use.

Well, as I said earlier, I mean, in terms of renewable energy use, our carbon footprint and energy use at our head office is very low. And in terms of sustainability, we have in our annual report published our sustainability section. And I hope that outlines that we are responsible and sustainable company that thinks about these sorts of things.

Ida?

Representative from AMEQC PTY Limited is interested in the future of coal mining. He's asked, is there really a clean coal?

Well, the issue of the future of coal mining, we agree with the views expressed by New Hope in its sustainability report, which was recently released on the ASX. We recognize and support the need to transition to a lower-carbon economy. However, we do not believe that, that transition occurs overnight. Coal is currently around 35% of global power generation, by far, the largest source of power generation. It will take many years to build the alternative generation capacity to replace power from coal. This task will be made more difficult by increasing global demand from energy as populations increase in urbanization and electrification increases. As we see a gradual reduction in the demand for coal, there will not be additional supply and high-cost mines producing poorer quality coal will leave the market. We are invested through New Hope in low-cost, high-quality coal assets, which we believe will continue to be in demand for many years to come. And on the issue of clean coal, that term doesn't really describe the coal itself. It refers to a coal-fired power generation where the carbon is captured and stored. There are a number of projects around the world where carbon from coal-fired power plants has currently been captured and stored. However, that -- despite there being a lot of investment in research in this space, these projects are not yet commercial. We're not ashamed that any of this carbon capture is commercialized as part of our investment thesis in New Hope, but obviously, if that was to become economic, that would be a significant uplift to the -- provide longer life to thermal coal miners.

We have a question, Chairman, from Mr. Stephen Mayne. He asks, did any of the main proxy advisers, ACSI, Ownership Matters, Glass Lewis and ISS recommend a vote against any of today's resolutions? Which of the proxy advisers are covering us? And has there been a material proxy protest vote against any of today's resolutions? Will you disclose the proxy votes before the debate? I can answer that question Mr. Mayne may have.

Thank you, Stephen, for your question. The proxy government adviser recommends are not ours to disclose. They provide companies with our report and the condition that those companies keep those reports confidential. Ida, do we have any more questions?

Mr. Millner, could you please -- [ Mrs. Melody Carew ]: Mr. Millner, could you please comment on demands for New Hope's thermal coal from Asia and pricing, including forward sales and any resultant effect for WHSP?

I think Todd's covered a lot of that in his presentation, but I might add that -- I don't know whether you've seen in the press, but they're talking about a very cold Northern Hemisphere winter again. And when that generally happens, the demand for coal increases. And as Todd has explained, we're seeing some remarkable pickup in the coal price, and we've been able to lock in some future sales of over $200 for New Hope going forward. So things are looking pretty rosy at New Hope. That report in the first quarter with that [ money growing ] $240 million. Current EBITDA was at $240 million in the first quarter. So the price of coal will be helping us at the moment. Ida, do we have any other questions?

We have another question from Mr. Stephen Mayne. Why did David Teoh quit TPG? What did you do to try and keep him? And is it a fair assumption that he will continue to sell his shares in accordance with the escrow arrangements like what happened last week? Are you still in regular contact with David Teoh as a major shareholder in TPG?

Thank you, Stephen. Obviously, I can't comment on what David Teoh is doing, but I'll obviously see him at the Tuas Board meetings once a month, and he looks very well. So thank you very much. Ida, don't we have any more questions?

I have a question from a representative from Mariza Proprietary Limited. There were two very large transactions that stand out during the recent period. And may, with your knowledge and disclosure to us, give us some of the explanation. They referred to a transaction on the 21st of September for 12.3 million shares with a value of over $400 million and a transaction on the 25th of November with 9.6 million shares with a value of around $300 million.

Yes. I don't know the specifics of those transactions that you're referring to. But around the merger, there was quite a lot of activity, as I mentioned, from a range of forces, and some of them are event-driven arbitrages who play the value differential between the acquirer and the target. And that drove the value and volumes in both Milton and WHSP through the period of the transaction. And what we also saw at the end of the transaction was a rebalancing of sales as -- in the various indices. And that, of course, causes all of the passive investment funds to have to acquire shares. So there would have been a lot of transactions that occurred around that. But yes, from our perspective, all of that is just noise. What we really wanted to achieve through the merger was a best quality company that had the scale and diversification that I spoke about in my presentation and gives us the firepower to keep growing the business in the way that we want to grow it. Those share price, some of them I can explain, some of them I can't explain.

We have another question from [ Mrs. Melody Carew ]. This question's for Mr. Barlow, with further consolidation of the care subsector through Japara being taken over by the Little Company of Mary's, Calvary health care, do possible opportunities remain for WHSP? And are these being reviewed?

Well, as I mentioned, health and aging is a key thematic that we're looking at. We're looking at a multitude of ways to play that theme. Obviously, in 2020, we came out and said that we were interested in [indiscernible] as an asset. Since that time -- I guess when you become public, then you're looking at aged care assets. Everybody in the aged care sector approaches you to have a look at their assets. So I think there's still opportunities for us, but I guess we're, as always, very cautious and patient about the way that we invest.

We have a question from NMS Nominees Proprietary Limited. Is it possible that at some point in the future, the BKI portfolio would be considered for acquisition to further increase available liquidity and raise dividend yield?

Thank you very much for that question. That subject has not been discussed at the Washington Soul Pattinson Board. Ida, do we have any more question?

We have a further question from a representative from NMS Nominees. Milton shareholders have experienced a decline in dividend yield following the merger, notwithstanding the share price, capital appreciation and special dividend. However, going forward, we now expect a lower income from our investment. Is the Board and management actively pursuing dividend growth to close the income gap?

As we both mentioned in our reports to shareholders today that Soul Pattinson has an enviable track record improving our dividends each time of the report, and obviously, with the Milton acquisition now, we will look to grow those dividends even further. And Milton shareholders need to remember that last year in the pandemic, that dividend was cut dramatically because -- obviously, companies like BHP and some of our other investments, where were their dividends? So if you sold Pattinson shares, how will you increase your dividend? Last year was, unfortunately, the Milton shareholders went backwards. So we've got every intention of trying to increase their dividend as much as we can going forward.

We have a further question from Mr. Stephen Mayne. The cross shareholding arrangement with Brickworks remains an anachronism but was thankfully diluted by the Milton takeover. Is there anything stopping us doing a distribution of Brickworks shares to Soul Patt's shareholders as a tax effective way to fully unwind the cross shareholding arrangement and also build a takeover premium into the Brickworks share price? Have we looked at this? And why wouldn't we do it?

Thank you, Stephen. And obviously, Brickworks is in our portfolio, and it's one of the companies that's quite often discussed, particularly at strategy meetings and Board meetings. So at this stage, we have no intent to doing any of those questions that you have asked.

We have an audio question from [ Michael Standal ] on financial risks.

Thank you. You mentioned in your address the excellent returns are focused on capital. And my question goes to that [ basic ] comment on the energy transition [indiscernible] taking much lot of time and resources. In your response to a shareholder question [indiscernible] should consider the implications of [indiscernible] emissions globally by 2050 because [indiscernible] because of a Phase 3 project and earnings produced in [indiscernible]. If the International Energy Agency found it as a [indiscernible] scenario, no new or [indiscernible] and unabated coal-powered generation will be [ phased ] out [indiscernible], which will severely reduce thermal coal demand within the [indiscernible]. My question is [indiscernible] assessed the risk [indiscernible] scenario, why haven't we [indiscernible]?

Thank you very much. Unfortunately, the question didn't come across very clearly. But Todd will do his best to answer it.

Yes. I think I picked up that the question was around, to what extent have we modeled the scenarios that the International Energy Agency has forecast in relation specifically to coal consumption going forward? And the answer is absolutely yes. So we look at all risk across all of our portfolio, and obviously, climate change and the energy transition that's taking place is one that we obviously can't ignore. So we've done a very detailed analysis and give a lot of thought to the various scenarios in the IEA. And these are probably best outlined in the sustainability report published by New Hope. But under any credible scenario analysis, we believe that at lower cost, Australian high-quality coal will have a future for some years, and we believe that under any of those scenarios, our investment is going to give us a good return.

Ida, do we have any more questions?

We have another audio question from [ Jen McNichol ].

Yes. Can you hear me?

Yes go ahead.

Yes, thanks. I'll just probably check on the [indiscernible]. The broadcast? Yes, I haven't. All right. Is that better? Can you hear me?

[indiscernible]. It's stopping.

All right. My question is -- no, this is -- okay. My question is significant -- this isn't working. I'll try again. Thank you, bye.

Sorry. We can't hear you.

Is that better? Can you hear me?

I'll give you one more opportunity. We can't hear you. [indiscernible] clearly. Go ahead.

My question is -- okay. My question is... [Technical Difficulty]

I'm really sorry, [ Jen ]. But we -- it's not coming through. We can hear you say my question is, and then you cut out. So I'm going to stop the questions at the moment, and we'll keep going through the agenda, and there will be opportunities for further questions as we go through. So that just concludes the discussion on item 1.

I will now move to item 2. Does any shareholder have any questions or comment on the rem report? Ida, do we have any questions on the rem report?

There are no questions on the rem report.

Thank you. Michael Hawker and Warwick Negus are standing for reelection as director of the company today. Are there any questions relating to their reelection? Ida, do we have any questions on?

Yes. We have questions. There's a question for Michael Hawker. You have listed lots of reasons -- the question from Mr. Mayne: You have listed lots of reasons for taking over Milton but still haven't addressed the question of why now. Could Michael Hawker please explain what has changed such that you didn't do this 5 or 10 years ago? Also, why were all of the Milton directors [ fact ] rather than offering one or two of them Board seats as often happens in these situations?

Thank you for the question. But as far as the Soul Pattinson Board is concerned, as I mentioned earlier, we're very, very happy with Michael's contribution to what he makes to this company. And as, I think, you can see by our performance over a long, long period of time [indiscernible], certainly we have the ability to pick very good people. So we are more than happy to keep supporting Warwick Negus and Michael Hawker on our Boards. Ida, do we have any another question?

We have a question from Mr. Mayne for Warwick Negus. Could Warwick please comment on why he supported the Milton takeover now rather than years ago and why no Milton directors were offered Soul Pattinson Board seats and what he and the other directors did to assuage the loud opposition to the takeover of Milton's founders, the Church family?

Well, obviously, as I mentioned before, there was a decision by the Soul Pattinson Board and the Milton Board, and Warwick obviously contributed as a Board member of the Soul Pattinson contribution. So I don't have any other comment on that.

And one final question on Warwick Negus' election. Treasury Wine Estate has voluntarily moved to annual elections for directors, in line with best practice that occurs in both the U.S. and the U.K. Dual-listed companies like News Corp, BHP and Rio Tinto all do this due to the laws in the U.S. and the U.K., and BHP has pledged to continue doing it even after its DLC ends next year. Can both Warwick Negus and the Chair comment on whether they will support Soul Patt's exploring whether to follow this lead and move to annual elections of directors at the 2022 AGM?

Thank you, Stephen. But obviously, we're not listed in the U.K. So that doesn't apply to us. So as -- again, we're happy to follow the practice that we are -- we do. Directors come up every 3 years. And as I've mentioned before, we're very, very happy with the Board we have at the moment. And again, one of the reasons why this company -- Stephen, as a shareholder, you should be extremely happy. It's probably the only company that you invest in that's had an increase in dividends over the -- since the last 20 years. So thank you.

There are no further questions on the reelection of directors.

Thank you, Ida. Item 4 deals with the granted performance rights to the Managing Director. Ida, do we have any questions on that item?

We have no questions on that item, Chairman.

Thank you. Does any shareholder have any questions on the appointment of EY as our company's auditor? I don't think we have any questions on.

There are no questions on the appointment of EY as auditor. Sorry, there is a question from Mr. Stephen Mayne. When disclosing the outcome of all resolutions today, including this appointment of the auditor, will the Chair support the idea of publicly disclosing how many shareholders voted for and against each item, similar to what happens with the 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.

Obviously, we'll look at that appropriately. We might -- we will release it this afternoon if people are in agreement. Ida, do we have there any other questions before we move on to the constitution?

No. No other questions on the auditor.

Alright. The final item on today's agenda relates to the amendment of WHSP's constitution. Does any shareholder have a question relating to the proposed amendments?

We have a question from Mr. Stephen Mayne. Given the interesting discussion across a range of topics today, including this constitutional amendment, 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, hence our transcript, where NPs don't have to scroll through old videos to find out what was said, recently made this change and had a full transcript of Nine's AGM online before the end of the day. Can we match this?

There's no transcript of today's meeting. However, we'll make available the Chairman's address and presentation, which has already been released to the ASX, which is standard procedures before we have a meeting, as well as our website. All right. I think we've had a reasonable opportunity for shareholders to ask questions. I'll now finalize voting before closing the meeting. So I'll give you a minute or so just to put your votes through, and then we'll close the meeting. [Voting]

All right. Well, thank you very much, ladies and gentlemen. That concludes today's meeting. The final results of the meeting will be lodged to the ASX after the meeting as soon as they are available. And again, I thank you for your support, and hopefully, we can continue this growth that we've seen over a long period of time. So thank you very much.