Full Year 2026 Washington H Soul Pattinson and Co Ltd Earnings Call

September 24, 2026

Speaker #1: Good morning, and welcome to the Soul Patts Financial Results presentation for the financial year 2026, being the 12-month period ending 31 July 2026. My name is Courtney Howe.

Courtney Howe: Good morning, and welcome to the Soul Patts financial results presentation for the financial year 2026, being the 12-month period ending 31 July 2026. My name is Courtney Howe. I am responsible for corporate affairs and investor relations at Soul Patts, and I am pleased to introduce our presenters for today. Todd Barlow, MD and CEO, will address performance highlights and major transactions completed during the year. David Grbin, CFO, will cover the group financial results before handing back to Todd to step through portfolio performance and the outlook. We will respond to questions at the end, starting with analyst questions on the line. As usual, there is the option for written questions to be submitted at any point during the webcast, and you will see a question box on the bottom of your screen. Over to you, Todd.

Speaker #1: I'm responsible for Corporate Affairs and Investor Relations at Soul Patts, and I'm pleased to introduce our presenters for today. Todd Barlow, MD and CEO, will address performance highlights and major transactions completed during the year.

Speaker #1: David Grabin, CFO, will cover the Group financial results before handing back to Todd to step through portfolio performance and the outlook. We will respond to questions at the end, starting with analyst questions on the line.

Speaker #1: As usual, there is the option for written questions to be submitted at any point during the webcast, and you will see a question box at the bottom of your screen.

Speaker #1: Over to you, Todd.

Speaker #2: Thank you, Courtney, and welcome to everybody joining us today. 2026 was a significant year for Soul Patts. We completed the $15 billion merger with Brickworks, the largest transaction in our 123-year history.

Todd Barlow: Thank you, Courtney, and welcome to everybody joining us today. FY26 was a significant year for Soul Patts. We completed the AUD 15 billion merger with Brickworks, the largest transaction in our 123-year history. We have simplified our structure and strengthened the balance sheet. The combined group is already delivering value and outperformance for shareholders. Our portfolio is more diversified and more liquid, carrying more capacity to act than at any point before. We are also expanding the portfolio geographically with a growing number of global investments embedded across the broader portfolio. We aim to grow the portfolio and outperform the market over the long term, increase cash generation to underpin dividend growth, and deliver those returns while actively managing investment risk. The next three slides discuss each of these objectives. Starting with portfolio growth, we have a strong outperformance against the ASX benchmark.

Speaker #2: This simplified our structure and strengthened the balance sheet. The combined group is already delivering value and outperformance for shareholders. Our portfolio is more diversified and more liquid, carrying more capacity to act than at any point before.

Speaker #2: We're also expanding the portfolio geographically, with a growing number of global investments embedded across the broader portfolio. We aim to grow the portfolio and outperform the market over the long term.

Speaker #2: Increased cash generation to underpin dividend growth and deliver those returns, while actively managing investment risk. The next three slides discuss each of these objectives.

Speaker #2: Starting with portfolio growth, we had strong outperformance against the ASX benchmark. Post-tax net asset value on a per-share basis grew 27.2%. This includes significant tax assets that arise from the Brickworks merger.

Todd Barlow: Post-tax net asset value on a per share basis grew 27.2%. This includes significant tax assets that arise from the Brickworks merger. If we exclude tax and look at the pre-tax NAV, the portfolio returned 10.2%, outperforming the index by 4.2%. Over the last five years, the pre-tax portfolio has returned 11.5% per annum, 3.5% ahead of the market. That is a phenomenal track record in an environment where many fund managers have found the market very difficult. Looking at the growth from the perspective of total shareholder returns, last year the 16.8% growth was 10.8% above market. What matters more to us is the long run. Over 25 years, Soul Patts has returned 12.8% per annum against 8.4% for the index. Compounded, that is a total return of more than 1,900%, just about tripling the market value. Net cash flows from investments grew 11.5% to AUD 572 million.

Speaker #2: If we exclude tax and look at the pre-tax NAV, the portfolio returned 10.2%, outperforming the index by 4.2%. Over the last five years, the pre-tax portfolio has returned 11.5% per annum, 3.5% ahead of the market.

Speaker #2: There's a phenomenal track record in an environment where many fund managers have found the market very difficult. Looking at the growth from the perspective of total shareholder returns, last year the 16.8% growth was 10.8% above market.

Speaker #2: What matters more to us is the long run. Over 25 years, Soul Patts has returned 12.8% per annum, against 8.4% for the index. Compounded, that is a total return of more than 1,900%, just about tripling the market value.

Speaker #2: Net cash flows from investments grew 11.5% to $572 million. On a per-share basis, NCFI has compounded at 15% per annum over five years, from $0.75 per share in FY21 to $1.51 in FY26.

Todd Barlow: On a per share basis, NCFI has compounded at 15% per annum over five years, from AUD 0.75 per share in FY21 to AUD 1.51 in FY26. That cash flow reflects the health of our portfolio, and importantly, is what funds the dividend. Today, the company announced a final dividend of AUD 0.63 fully franked, taking total dividends for the year to AUD 1.11, up 7.8% on the previous year. This marks our 28th consecutive year of dividend growth, and over that period we are very pleased that dividends have compounded at over 10% per annum. One comparison I want to draw out here is Soul Patts' dividend growth relative to the broader market. Over the past five years, our dividends per share have compounded at over 12% per annum, whereas dividends across the ASX 200 have been fairly flat at around 1% growth per annum and were negative last year.

Speaker #2: That cash flow reflects the health of our portfolio and, importantly, is what funds the dividend. Today, the company announced a final dividend of $0.63, fully franked, taking total dividends for the year to $1.11, up 7.8% on the previous year.

Speaker #2: This marks our 28th consecutive year of dividend growth, and over that period, we are very pleased that dividends have compounded at over 10% per annum.

Speaker #2: One comparison I want to draw out here is Soul Patts' dividend growth relative to the broader market. Over the past five years, our dividends per share have compounded at over 12% per annum, whereas dividends across the ASX 200 have been fairly flat at around 1% growth per annum and were negative last year.

Todd Barlow: One comparison I want to draw out here is Soul Patts' dividend growth relative to the broader market. Over the past five years, our dividends per share have compounded at over 12% per annum, whereas dividends across the ASX 200 have been fairly flat at around 1% growth per annum and were negative last year.

Speaker #2: Another key objective is to manage risk. In the last five years, we have actively de-risked what was an equity-centric portfolio into one that is genuinely multi-asset.

Todd Barlow: Another key objective is to manage risk. In the last five years, we have actively de-risked what was an equity-centric portfolio into one that is genuinely multi-asset. Today, we are more diversified and less correlated than ever before. The shape of the portfolio shows how actively we manage this. Five years ago, the portfolio was AUD 5.8 billion and 90% listed equities. Today, it is a AUD 13.7 billion portfolio and listed equities are 40%, including all of the listed equities across listed companies and emerging companies. The balance of the portfolio sits across asset classes that behave differently through the cycle. This year, we turned over AUD 12.7 billion in total buying and selling, and we hold AUD 2.7 billion of net cash and liquid investments in the fixed income strategy. Essentially, our allocations follow opportunity. We do not fill buckets, with capital moving to where the risk-adjusted returns are most attractive.

Speaker #2: Today, we are more diversified and less correlated than ever before. The shape of the portfolio shows how actively we manage this. Five years ago, the portfolio was $5.8 billion and 90% listed equities.

Speaker #2: Today, it is a $13.7 billion portfolio, and listed equities are 40%, including all of the listed equities across listed companies and emerging companies.

Speaker #2: The balance of the portfolio sits across asset classes that behave differently through the cycle. This year, we turned over $12.7 billion in total buying and selling, and we hold $2.7 billion of net cash and liquid investments in the fixed income strategy.

Todd Barlow: The balance of the portfolio sits across asset classes that behave differently through the cycle. This year, we turned over AUD 12.7 billion in total buying and selling, and we hold AUD 2.7 billion of net cash and liquid investments in the fixed income strategy. Essentially, our allocations follow opportunity. We do not fill buckets, with capital moving to where the risk-adjusted returns are most attractive.

Speaker #2: Essentially, our allocations follow opportunity; we do not fill buckets. Capital moves to where the risk-adjusted returns are most attractive. Our aim is to exceed market returns with a portfolio that carries lower risk than the market.

Todd Barlow: Our aim is to exceed market returns with a portfolio that carries lower risk than the market. The clearest evidence of this is what happens in down markets. Over 25 years, when the ASX has had a negative month, Soul Patts has performed 1.8% better per month on average. We protect shareholder capital when markets fall and keep pace when they rise, and this is the biggest contributor to our track record. Let me turn to the two major transactions that occurred through the year. First, the merger with Brickworks completed in September 2025. This simplified the structure, increased free float and liquidity, and grew our shareholder base by 35% to 84,000. It also transformed our tax position from a constraint into an asset, which David will cover in detail. Brickworks Building Products is now the largest investment in our private company's asset class.

Speaker #2: The clearest evidence of this is what happens in down markets. Over 25 years, when the ASX has had a negative month, Soul Patts has performed 1.8% better per month on average.

Speaker #2: We protect shareholder capital when markets fall and keep pace when they rise, and this is the biggest contributor to our track record. Let me turn to the two major transactions that occurred throughout the year.

Speaker #2: First, the merger with Brickworks completed in September 2025. This simplified the structure, increased free float and liquidity, and grew our shareholder base by 35%, to $84,000.

Speaker #2: It also transformed our tax position from a constraint into an asset, which David will cover in detail. Brickworks Building Products is now the largest investment in our private company’s asset class.

Speaker #2: Since taking full ownership, we have been simplifying the operations, repaid debt and certain legacy operating leases, and worked with management on a cost-out program, with annualized savings that will flow through from FY27.

Todd Barlow: Since taking full ownership, we have been simplifying the operations. We have repaid debt and certain legacy operating leases and worked with management on a cost-out program with annualized savings that will flow through from FY27. The merger triggered pre-existing rights held by Goodman, which gave rise to the sale of our industrial property interests, which completed in June 2026 and delivered AUD 1.9 billion of net cash proceeds. This was a very positive result for Soul Patts. The portfolio was substantially developed and stabilized and priced at full market value at a time when listed industrial property is trading at a meaningful discount to asset backing. Subsequent to the transaction, long-term bond rates have been increasing, putting further pressure on future returns. We are confident we can redeploy the proceeds from this transaction into meaningfully higher returns.

Speaker #2: The merger triggered pre-existing rights held by Goodman, which gave rise to the sale of our industrial property interests. This completed in June 2026 and delivered $1.9 billion of net cash proceeds.

Speaker #2: This was a very positive result for Soul Patts. The portfolio was substantially developed and stabilized, and priced at full market value—at a time when listed industrial property is trading at a meaningful discount to asset backing.

Speaker #2: Subsequent to the transaction, long-term bond rates have been increasing, putting further pressure on future returns. We are confident we can redeploy the proceeds from this transaction into meaningfully higher returns.

Speaker #2: We retained about $400 million of real estate exposure from Brickworks, now within Real Assets, and, importantly, a number of good development sites with further upside.

Todd Barlow: We retained about AUD 400 million of real estate exposure from Brickworks, now within real assets and importantly, a number of core development sites with further upside. The relationship with Goodman began in 2005. Over two decades, land that once housed brick plants and clay pits was progressively developed into prime industrial estates. The returns over that period were exceptional. It is one of the best examples I can point to of what patient capital and the right partner can compound into. Shareholders will have heard us talk about our desire to allocate more to private markets and how that was taking us offshore. This strategy has been developed over the past three years, where we have been building relationships with private market managers across private equity and credit in North America, the UK, and Europe.

Speaker #2: The relationship with Goodman began in 2005. Over two decades, land that once housed brick plants and clay pits was progressively developed into prime industrial estates.

Speaker #2: The returns over that period were exceptional. It's one of the best examples I can point to of what patient capital and the right partner can compound into.

Speaker #2: Shareholders will have heard us talk about our desire to allocate more to private markets and how that was taking us offshore. This strategy has been developed over the past three years, during which we have been building relationships with private market managers across private equity and credit in North America, the UK, and Europe.

Speaker #2: The strategy evolved from the fact that the asset classes we like are quite niche in Australia. In private equity, we look to back high-quality companies with growth capital, in partnership with founders, management, or owners.

Todd Barlow: The strategy evolved from the fact that the asset classes we like are quite niche in Australia. In private equity, we look to back high-quality companies with growth capital in partnership with founders, management, or owners. There is a limited number of those kinds of opportunities in Australia at scale. The other area we like is private credit, where we can invest in a structured way to protect our downside and get access to good risk-adjusted returns. There is a natural ceiling to the size of our direct book in Australia, but there is a very deep pool of opportunities globally. The team has mapped more than 1,800 prospective partners and reviewed over 300 in depth to arrive at 17 commitments for FY26. We do the sourcing and diligence in-house, and the relationships are already earning us co-investment opportunities on preferential terms.

Speaker #2: With a limited number of those kinds of opportunities in Australia at scale, the other area we like is private credit, where we can invest in a structured way to protect our downside and get access to good risk-adjusted returns.

Speaker #2: There is a natural ceiling to the size of our direct book in Australia, but there's a very deep pool of opportunities globally. The team has mapped more than 1,800 prospective partners and reviewed over 300 in-depth to arrive at 17 commitments for FY26.

Speaker #2: We do the sourcing and diligence in-house, and the relationships are already earning us co-investment opportunities on preferential terms. FY26 was a very busy year, with around $1 billion of new commitments made across 17 positions.

Todd Barlow: FY26 was a very busy year with around AUD 1 billion of new commitments made across 17 positions. Post-year-end, we have agreed to allocate another AUD 660 million. It should be noted that these are just commitments, and the funds that have actually been invested to date is around AUD 600 million. But over the coming years, our commitments will be drawn down as opportunities present themselves and money is called. Each position is sourced and diligenced by the same team that has responsibility for direct investments. For example, a fund allocation to credit will sit within our credit asset class and be managed by our credit team. Return profiles will take time to build, and the target returns are indicatively above 20% for private companies and above 10% in credits.

Speaker #2: Post-year end, we have agreed to allocate another $660 million. It should be noted that these are just commitments, and the funds that have actually been invested to date are around $600 million.

Speaker #2: But over the coming years, our commitments will be drawn down as opportunities present themselves and money is called. Each position is sourced and diligenced by the same team that has responsibility for direct investments.

Speaker #2: So, for example, a fund allocation to credit will sit within our credit asset class and be managed by our credit team. The return profile will take time to build, and the target returns are indicatively above 20% for private companies and above 10% in credit.

Speaker #2: We believe that offshore markets not only provide depth of opportunity, but also serve as a good diversifier for the portfolio and offer an opportunity to derive foreign income, which we can attach our franking credits to.

Todd Barlow: We believe that offshore markets not only provide the depth of opportunity, but also a good diversifier for the portfolio and an opportunity to derive foreign income that we can attach our franking credits to. FY26 was an extremely productive year. In addition to the merger of Brickworks, we transacted AUD 12.7 billion, which is our highest on record. Sometimes I am asked how this level of activity reconciles with being a patient long-term investor. I do not believe the portfolio activity is inconsistent with our historical approach. The market environment is changing rapidly, and we need to adapt. In addition to the portfolio adjustments we have been making, we believe we need to be agile and build the liquidity to act when the time is right. We are positioning the portfolio to be even more diverse and resilient than ever before. We are also opening up exciting new asset classes and opportunities.

Speaker #2: FY26 was an extremely productive year. In addition to the merger of Brickworks, we transacted $12.7 billion, which is our highest on record. Sometimes, I'm asked how this level of activity reconciles with being a patient, long-term investor.

Speaker #2: I don't believe the portfolio activity is inconsistent with our historical approach. The market environment is changing rapidly, and we need to adapt. In addition to the portfolio adjustments we have been making, we believe we need to be agile and build the liquidity to act when the time is right.

Todd Barlow: The market environment is changing rapidly, and we need to adapt. In addition to the portfolio adjustments we have been making, we believe we need to be agile and build the liquidity to act when the time is right. We are positioning the portfolio to be even more diverse and resilient than ever before. We are also opening up exciting new asset classes and opportunities.

Speaker #2: We are positioning the portfolio to be even more diverse and resilient than ever before. We're also opening up exciting new asset classes and opportunities.

Speaker #2: However, our approach to being disciplined, patient, and long-term in terms of thinking beyond the short-term randomness of market volatility is consistent with the way we've always acted.

Todd Barlow: However, our approach to being disciplined, patient, and long-term in terms of thinking beyond the short-term randomness of market volatility is consistent with the way we have always acted. Last year, we sold AUD 2.7 billion more than we bought. This was a deliberate strategy and a desire to build up liquidity in a fixed income portfolio that I will discuss shortly. In addition to the cash we have accumulated, we also have access to attractive debt that would assist with further acquisitions. At year-end, the total liquidity was over AUD 3.8 billion. I will hand over to David Grbin, our CFO, to take you through the group financial results.

Speaker #2: Last year, we sold $2.7 billion more than we bought. This was a deliberate strategy and a desire to build up liquidity and a fixed income portfolio that I will discuss shortly.

Speaker #2: In addition to the cash we have accumulated, we also have access to attractive debt that would assist with further acquisitions. At year end, the total liquidity was over $3.8 billion.

Speaker #2: I'll hand over to David Gribbin, our CFO, to take you through the group financial results.

Speaker #3: Thank you, Todd. Good morning, everyone. It's a real pleasure today to present our 2026 results to our shareholders. They're a strong set of numbers, and it's a delight to be able to do that today.

David Grbin: Thank you, Todd. Good morning, everyone. It is a real pleasure today to present our 2026 results to our shareholders. They are a strong set of numbers, and it is a delight to be able to do that today. As always, I would like to remind investors that statutory profit is not a measure that we always use to assess performance, given the number of one-off items running through the financial report this year, particularly following the Brickworks merger. I will do my best to demystify some of these complicated accounting issues for you all today. Our reported or statutory NPAT for the year was AUD 2.191 billion, up 502% on the prior corresponding period of AUD 364 million. This year, we have presented our statutory NPAT in three components, and we have done that given the high level of portfolio turnover this year and our reduced reliance on associate earnings.

Speaker #3: As always, I'd like to remind investors that statutory profit isn't a measure that we always use to assess performance, given the number of one-off items running through the financial report this year, particularly following the Brickworks merger.

Speaker #3: So I'll do my best to demystify some of these complicated accounting issues for you all today. Our reported, or statutory, net profit after tax for the year was $2.191 billion—up 502% on the prior corresponding period, which was $364 million.

David Grbin: Our reported or statutory NPAT for the year was AUD 2.191 billion, up 502% on the prior corresponding period of AUD 364 million. This year, we have presented our statutory NPAT in three components, and we have done that given the high level of portfolio turnover this year and our reduced reliance on associate earnings.

Speaker #3: This year, we've presented our statutory NPAT in three components. We've done this given the high level of portfolio turnover this year and our reduced reliance on associate earnings.

Speaker #3: So we think the regular and non-regular NPAT split is no longer a meaningful way to look at our financial results. So, how have we done this?

David Grbin: We think the regular and non-regular NPAT split is no longer a meaningful way to look at our financial results. How have we done this? Firstly, we have bucketed up items into non-recurring, and they total a AUD 1.5 billion gain. Around AUD 1.3 billion of it came from the day one accounting gain and tax cost base reset on the completion of the Brickworks merger, which we do not expect to reoccur in 2027. The balance, around AUD 200 million, is made up of two parts. Firstly, a gain of AUD 436 million from marking to market our remaining interests in Tuas and Aeris. We moved from equity accounting to fair value accounting during the year, and that was partly offset by just over AUD 200 million worth of impairment, restructuring, and other non-recurring costs. The second component is total portfolio gains and losses, whether they be realized or unrealized.

Speaker #3: Firstly, we've bucketed items into non-recurring, and they total a $1.5 billion gain. Around $1.3 billion of that came from the day one accounting gain and tax cost base reset upon completion of the Brickworks merger.

Speaker #3: Which we don't expect to reoccur in 2027. The balance, around $200 million, is made up of two parts. Firstly, a gain, $436 million from marking-to-market our remaining interest in Q2 and Eris.

David Grbin: Firstly, a gain of AUD 436 million from marking to market our remaining interests in Tuas and Aeris. We moved from equity accounting to fair value accounting during the year, and that was partly offset by just over AUD 200 million worth of impairment, restructuring, and other non-recurring costs. The second component is total portfolio gains and losses, whether they be realized or unrealized.

Speaker #3: So, we moved from equity accounting to fair value accounting during the year. That was partly offset by just over $200 million worth of impairment, restructuring, and other non-recurring costs.

Speaker #3: The second component is total portfolio gains and losses, whether they are realized or unrealized. For FY26, they total $343 million, up $107 million on FY25.

David Grbin: For FY26, they total AUD 343 million, up AUD 107 million on FY25. They will go depending on market conditions and where we want to take the portfolio. Finally, we are left with what we call now operating NPAT, which is the NPAT from subsidiaries, associates, plus our portfolio income, for example, dividends, interest, fees, and distribution, less any of our expenses that we have to pay on the portfolio and our corporate costs. Consolidated operating NPAT was AUD 319 million for FY26, down AUD 36 million on the prior corresponding period, largely due to a lower profit contribution from our New Hope investment. If I now turn to our key performance metrics that we do focus on. Net cash flow from investments is the first one. It is the performance measure we believe best reflects the financial health of our portfolio.

Speaker #3: And they will go depending on market conditions and where we want to take the portfolio. And finally, we're left with what we call now operating NPAT, which is the NPAT from subsidiaries associates, plus our portfolio income, for example, dividends, interest, fees, and distribution, less any of our expenses that we have to pay on the portfolio and our corporate costs.

Speaker #3: Consolidated operating NPAT was $319 million for FY26, down $36 million on the prior corresponding period, largely due to a lower profit contribution from our New Hope investment.

Speaker #3: If I now turn to our key performance metrics that we focus on, net cash flow from investments is the first one. It's the performance measure we believe best reflects the financial health of our portfolio.

Speaker #3: It captures income received in cash from the portfolio, including dividends, interest, fees, and distributions, as well as any realized gains or losses on trading assets.

David Grbin: It captures income received in cash from the portfolio, including dividends, interest, fees, and distribution, as well as any realized gains or losses on trading assets. NCFI for the year was AUD 572 million, up 11.5% on FY25. That growth was given by a larger than average credit book, which delivered strong returns and higher dividend distribution income from our real assets portfolio through the industrial property joint venture businesses and some property development activity, and the cash generative businesses in private companies. On a per share basis and reflecting the increased capital base following the Brickworks merger, NCFI grew 8.3% to AUD 1.51 per share in FY26. Over a five-year period, NCFI per share has compounded at 15% per annum, starting from AUD 0.75 in FY21 and finishing at the AUD 1.51 that I just mentioned in FY26.

Speaker #3: NCFI for the year was $572 million, up 11.5% on FY25. That growth was driven by a larger-than-average credit book, which delivered strong returns, and higher dividend distribution income from our real assets portfolio through the industrial property joint venture businesses and some property development activity.

Speaker #3: And the cash-generative businesses in private companies. On a per-share basis, and reflecting the increased capital base following the Brickworks merger, NCFI grew 8.3% to $1.51 per share in FY26.

Speaker #3: Over that five-year period, NCFI per share has compounded at 15% per annum, starting from $0.75 in FY21 and finishing at the $1.51 that I just mentioned in FY26.

Speaker #3: This consistency in cash flow growth is what underpins our unbroken 28-year record of dividend increases. I'll now turn to net asset value. We look at net asset value on both a pre-tax and post-tax basis.

David Grbin: This consistency in cash flow growth is what underpins our unbroken 28-year record of dividend increases. I will now turn to net asset value. We look at net asset value on both a pre-tax and post-tax basis. Following the Brickworks merger and the resulting step-up in market values of all of our assets in the combined group, our post-tax NAV is now higher than the pre-tax NAV. The deferred tax liability that we previously carried has now become a deferred tax asset. In plain terms, it means less tax to pay when we realize those assets in future. Post-tax NAV increased 31.4% in the year to AUD 14.5 billion. That is an extra AUD 8.15 per share or a 27.2% increase on a per share basis. On a pre-tax basis, NAV was AUD 13.7 billion, a return of 10.2% for the year, outperforming the market by 4.2%.

Speaker #3: Following the Brickworks merger, and the resulting step-up in market values of all of our assets in the combined group, our post-tax NAV is now higher than the pre-tax NAV.

Speaker #3: The deferred tax liability that we previously carried has now become a deferred tax asset. In plain terms, it means less tax to pay when we realize those assets in the future.

Speaker #3: Post-tax NAV increased 31.4% in the year to $14.5 billion. That's an extra $8.15 per share, or a $27.2 increase on a per-share basis. On a pre-tax basis, NAV was $13.7 billion, a return of 10.2% for the year, outperforming the market by 4.2%.

Speaker #3: And that outperformance isn't a one-year story. Over five years, we've returned 11.5% per annum, outperforming the market by 3.5% per annum. I'll now turn to tax assets.

David Grbin: That outperformance is not a one-year story. Over the five years, we have returned 11.5% per annum, outperforming the market by 3.5% per annum. I will now turn to tax assets. The Brickworks merger has also transformed our tax position. We now hold a net deferred tax asset of AUD 792 million or AUD 2.09 per share, compared with a deferred tax liability of AUD 1.4 billion in FY25. This change has arisen from the merger with Brickworks, where the tax cost base of all of our assets was reset to market value. This is important for our portfolio as it means we can transact in the future without tax friction. In addition, our shareholders have the benefit of a franking credit, just over AUD 1 billion or AUD 2.75 per share.

Speaker #3: The Brickworks merger has also transformed our tax position. We now hold a net deferred tax asset of $792 million, or $2.09 per share, compared with a deferred tax liability of $1.4 billion in FY25.

Speaker #3: This change has arisen from the merger with Brickworks, where the tax cost base of all our assets was reset to market value. This is important for our portfolio, as it means we can transact in the future without tax friction.

Speaker #3: In addition, our shareholders have the benefit of a franking credit just over $1 billion, or $2.75 per share. That balance grosses up to a potential dividend of $2.4 billion of untaxed income that's able to be distributed to shareholders fully franked.

David Grbin: That balance grosses up to a potential dividend of AUD 2.4 billion of untaxed income that is able to be distributed to shareholders fully franked. Given the increasing exposure to offshore assets in our portfolio generating foreign income, Soul Patts can continue to pay a fully franked dividend to our shareholders by drawing down on this bank of franking credits. Before I hand back to Todd, I would like to touch briefly on how we value the portfolio, given the increasing diversity of asset classes we now hold. We apply a rigorous valuation methodology to each asset class every six months. Around 40% of the portfolio is valued at market value, principally our listed holdings, which are valued at the market prices at the end of each reporting period. A further 31% is subject to third-party valuations.

Speaker #3: And given the increasing exposure to offshore assets in our portfolio, generating foreign income, Sol Patts can continue to pay a fully franked dividend to our shareholders by drawing down on this bank of franking credits.

Speaker #3: Before I hand back to Todd, I'd like to touch briefly on how we value the portfolio, given the increasing diversity of asset classes we now hold.

Speaker #3: We apply a rigorous valuation methodology to each asset class every six months. Around 40% of the portfolio is valued at market value, principally by listed holdings, which are valued at the market prices at the end of each reporting period.

Speaker #3: A further 31% is subject to third-party valuations. These are assets held in externally managed funds and are valued at the assessed valuations provided by the managers of those funds, or based on observable market data.

David Grbin: These are assets held in externally managed funds and are valued at the assessed valuations provided by the managers of those funds or based on observable market data. We subject these assets to our own analysis, and of course, they are subject to external audit. An example of this would be our real estate assets, which undergo third-party valuations at least annually. Assets at directors' fair value applies to a further 21% of the portfolio. These are predominantly private companies, not held in funds. They are directors' valuations informed by valuations reviewed externally by independent valuation experts. The final 8% is our private credit assets that are held at what is called amortized cost. As required by accounting standards, we apply an expected credit loss methodology. This follows a review of credit ratings for each debtor and a specific market risk factor, and company factors are included in that calculation.

Speaker #3: We subject these assets to our own analysis and, of course, they're subject to external audit. An example of this would be our real estate assets, which undergo third-party valuations at least annually.

Speaker #3: Assets that directors' valuations apply to account for a further 21% of the portfolio. These are predominantly private companies not held in funds. They are directors' valuations informed by valuations reviewed externally by independent valuation experts.

Speaker #3: And the final 8% is our private credit assets that are held at what's called amortized cost. As required by accounting standards, we apply an expected credit loss methodology.

Speaker #3: This follows a review of credit ratings for each debtor, and specific market risk factors and company factors are included in that calculation. This approach is also subject to external audit.

David Grbin: This approach is also externally reviewed and subject to external audit. I will hand it back now to Todd to walk us through the portfolio performance and individual asset classes.

Speaker #3: I'll hand that back now to Todd, to walk us through the portfolio performance and individual asset classes.

Speaker #1: Thank you, David. Let me now take you through the portfolio itself, asset class by asset class. At the year end, the portfolio was $13.7 billion on a pre-tax basis, or $14.5 billion after tax.

Todd Barlow: Thank you, David. Let me now take you through the portfolio itself, asset class by asset class. At year-end, the portfolio was AUD 13.7 billion on a pre-tax basis or AUD 14.5 billion after tax. At the end of the H1, the portfolio held less than AUD 500 million in cash, and today it is 20% of the portfolio. A deliberate and tactical position to manage liquidity across the group in the current environment. Six asset classes make up the portfolio today, and every one of them now carries a global component. I will step through each one. Listed companies have come down to 30% of the portfolio from 57% last year. This is largely because Brickworks is no longer a listed holding following the merger. It now shows up in private companies and real assets.

Speaker #1: At the end of the first half, the portfolio held less than $500 million in cash, and today it's 20% of the portfolio. A deliberate and tactical position to manage liquidity across the group in the current environment.

Speaker #1: Six asset classes make up the portfolio today, and every one of them now carries a global component. I'll step through each one. Listed companies have come down to 30% of the portfolio from 57% last year.

Speaker #1: This is largely because Brickworks is no longer a listed holding following the merger. It now shows up in private companies and real assets. In addition to the delisting of Brickworks, we sold down $2.8 billion of equities through the year, including $910 million of TPG.

Todd Barlow: In addition to the delisting of Brickworks, we sold down AUD 2.8 billion of equities through the year, including AUD 910 million of TPG. We reduced the size of this book through the year to hold 39 positions, targeting reliable income and long-term compounding. New Hope remains our largest position alongside TPG. Performance for listed companies was very strong, returning 17.1% for the year and beating the ASX 200 benchmark by over 11%. To put that in context, roughly three-quarters of active Australian equity managers failed to beat the benchmark during that period. Performance was driven by our overweight position in energy, exposure to resources, and deliberate rotation into defensive names. Fixed income is a new addition to the portfolio this year, now sitting at 20%.

Speaker #1: We reduced the size of this book through the year to hold 39 positions, targeting reliable income and long-term compounding. New Hope remains our largest position, alongside TPG.

Speaker #1: Performance for listed companies was very strong, returning 17.1% for the year and beating the ASX 200 benchmark by over 11%. To put that in context, roughly three-quarters of active Australian equity managers failed to beat the benchmark during that period.

Speaker #1: Performance was driven by our overweight position in energy, exposure to resources, and deliberate rotation into defensive names. Fixed income is a new addition to the portfolio this year, now sitting at 20%.

Speaker #1: We established it specifically to actively manage the group's liquidity and give ourselves more flexibility, funding it through equity sales and proceeds from the industrial property divestment.

Todd Barlow: We established it specifically to actively manage the group's liquidity and give ourselves more flexibility, funding it through equity sales and proceeds from the industrial property divestment. Because it has only been running for a small part of the year, the income contribution so far is modest, but income will build into FY27. The book itself is conservative by design. It is currently in high-quality, short-duration instruments, split roughly two-thirds to global and one-third domestic, carrying an average AA credit rating and is fully hedged back into Australian dollars. This liquidity gives us real optionality to deploy as opportunities emerge. However, this is by no means a parking spot for cash. We are now seeing opportunities in fixed income that look relatively favorable and attractive. The way that the yields are increasing means we are receiving reasonable compensation for holding cash, which we have not seen for a number of years.

Speaker #1: Because it's only been running for a small part of the year, the income contribution so far is modest. But income will build into FY27.

Speaker #1: The book itself is conservative by design. It is currently in high-quality, short-duration instruments, split roughly two-thirds to global and one-third domestic. It carries an average AA credit rating and is fully hedged back into Australian dollars.

Speaker #1: This liquidity gives us real optionality to deploy as opportunities emerge. However, this is by no means a parking spot for cash. We are now seeing opportunities in fixed income that look relatively favorable and attractive.

Todd Barlow: This liquidity gives us real optionality to deploy as opportunities emerge. However, this is by no means a parking spot for cash. We are now seeing opportunities in fixed income that look relatively favorable and attractive. The way that the yields are increasing means we are receiving reasonable compensation for holding cash, which we have not seen for a number of years.

Speaker #1: The way that yields are increasing means we are receiving reasonable compensation for holding cash, which we have not seen for a number of years.

Speaker #1: To put it in perspective, the current yield on this portfolio would have beaten the total return of the equity markets over the past year, and we are taking very little risk.

Todd Barlow: To put it in perspective, the current yield on this portfolio would have beaten the total return of the equity markets over the past year, and we are taking very little risk. The private company's portfolio continues to build and nearly doubled in NAV this year and now represents 17% of the total portfolio, largely on the back of the Brickworks Building Products addition, alongside strong underlying value creation across the book. We generated an IRR of close to 32% in FY26. Cash generation improved, too. Net cash flow from investments rose 34% to AUD 49 million, driven by stronger contributions from Ampcontrol and Carlisle Swim. This is a diversified book of 15 investments, 89% of the value is held directly. The other 11% of value sits with our allocation to offshore funds and co-investments, which continue to grow.

Speaker #1: The private companies' portfolio continues to build and nearly doubled in NAV this year, and now represents 17% of the total portfolio, largely on the back of the Brickworks Building Products addition, alongside strong underlying value creation across the book.

Speaker #1: We generated an IRR of close to 32% in FY26. Cash generation improved too. Net cash flow from investments rose 34% to $49 million, driven by stronger contributions from Ant Control and Carlisle Swim.

Speaker #1: This is a diversified book of 15 investments. Eighty-nine percent of the value is held directly, and the other eleven percent of value sits with our allocation to offshore funds and co-investments, which continue to grow.

Speaker #1: Looking at the four largest direct investments, Building Products is now our largest in its asset class. We are streamlining the platform with the cost-out program and realizing value as we look into FY27.

Todd Barlow: Looking at the four largest direct investments, Building Products is now our largest in this asset class, where we are streamlining the platform with the cost-out program, realizing value as we look into FY27. Ampcontrol, a partnership now in its third decade, continues to benefit from the energy transition and is increasingly finding opportunities in data center power infrastructure. Carlisle Swim has brought together several swim school brands under one national platform, now running 31 centers. It has a best-in-class curriculum, recently receiving a national award for excellence. Ironbark is a leading national wealth platform that has been growing at scale and now with total funds under management and advice increasing 12% over FY26 to AUD 97 billion. Soul Patts has a long history of backing private businesses. What makes our approach different is structural. We have no time horizon, no pressure to sell.

Speaker #1: Ant Control, a partnership now in its third decade, continues to benefit from the energy transition and is increasingly finding opportunities in data center power infrastructure.

Speaker #1: Carlisle Swim has brought together several swim school brands under one national platform, now running 31 centers. It has a best-in-class curriculum, recently receiving a national award for excellence.

Speaker #1: And Ironbark is a leading national wealth platform that has been growing at scale, and now has total funds under management and advice increasing 12% over FY26 to $97 billion.

Speaker #1: Soul Patts has a long history of backing private businesses. What makes our approach different is structural: we have no time horizon, no pressure to sell, we use low leverage, and focus on long-term value creation.

Todd Barlow: We use low leverage and focus on long-term value creation. This is why founders like to partner with us. Alongside our direct holdings, we are continuing to build out our offshore relationships. At year-end, we have committed close to AUD 580 million across nine positions, with six added this year. Of that, AUD 258 million was invested at year-end. Our global private company focus is on mid-market funds of roughly US$500 million to US$3 billion, run by managers with deep expertise in a particular sector or strategy, where deal flow is more often bilateral than auctioned and leverage is lower. We are looking to find emerging managers who have something genuinely differentiated. We are often among the first Australian investors in these funds. Backing the right managers earns us access to individual deals alongside them on preferential terms. Two of the six new positions this year came through exactly that route.

Speaker #1: This is why founders like to partner with us. Alongside our direct holdings, we are continuing to build out our offshore relationships. At year-end, we've committed close to $580 million across nine positions, with six out of this year.

Speaker #1: Of that, $258 million was invested at year-end. Our global private company focus is on mid-market funds of roughly $500 million to $3 billion, run by managers with deep expertise in a particular sector or strategy.

Speaker #1: Deal flow is more often bilateral than auctions, and leverage is lower. We are looking to find emerging managers who have something genuinely differentiated.

Speaker #1: We are often among the first Australian investors in these funds. Backing the right managers earns us access to individual deals alongside them on preferential terms.

Todd Barlow: We are often among the first Australian investors in these funds. Backing the right managers earns us access to individual deals alongside them on preferential terms. Two of the six new positions this year came through exactly that route.

Speaker #1: Two of the six new positions this year came through exactly that route. Looking at the split of commitments by strategy, the capital sits primarily across growth equity, which is consistent with our focus domestically.

Todd Barlow: Looking at the split of commitments by strategy, the capital sits primarily across growth equity, which is consistent with our focus domestically. Credit sits at 12% of the portfolio and delivered a total return of 13.5% for the year, an excellent result for an asset class that has been performing consistently since FY22. NAV came down slightly to AUD 1.7 billion, reflecting net repayments of AUD 117 million over the year, even though we deployed AUD 1.1 billion into new positions. The sign of good health of a credit book is when you get repaid. But we do have to work really hard to constantly originate new opportunities to remain invested in this asset class. NCFI was up close to 40% to AUD 220 million, helped by a higher average invested balance and a record year for origination fees.

Speaker #1: Credit sits at 12% of the portfolio and delivered a total return of 13.5% for the year—an excellent result for an asset class that has been performing consistently since FY22.

Speaker #1: NAV came down slightly to $1.7 billion, reflecting net repayments of $117 million over the year, even though we deployed $1.1 billion into new positions.

Speaker #1: The sign of good health of a credit book is when you get repaid. We do have to work really hard to constantly originate new opportunities to remain invested in this asset class.

Speaker #1: NTFI was up close to 40%, to $220 million. This was helped by a higher average invested balance and a record year for origination fees.

Speaker #1: The book today spans 38 positions, 34 positions I should say, 24 direct investments, and 10 offshore. Given the high level of new origination, the average remaining loan term of the direct book is around three years.

Todd Barlow: The book today spans 38 positions, or 34 positions, I should say, 24 direct investments and 10 offshore. Given the high level of new origination, the average remaining loan term of the direct book is around 3 years. Those offshore positions account for AUD 373 million of invested capital, and we have a further AUD 524 million committed, but not yet drawn. We added five new offshore commitments in FY26 and have a further eight already lined up for FY27. There is more growth to come as funds are drawn down. What differentiates our credit book is that we are not constrained to any one part of the capital structure. We can lend senior, junior, secured or unsecured wherever we see the best risk-adjusted return. This year, that meant fewer, larger positions, each individually structured with real downside protection.

Speaker #1: Those offshore positions account for $373 million of invested capital. We've got a further $524 million committed, but not yet drawn. We added five new offshore commitments in FY26, and have a further eight already lined up for FY27.

Speaker #1: So there's more growth to come as funds are drawn down. What differentiates our credit book is that we're not constrained to any one part of the capital structure.

Speaker #1: We can lend senior, junior, secured, or unsecured, wherever we see the best risk-adjusted return. This year, that meant fewer, larger positions, each individually structured with real downside protection.

Speaker #1: Right now, the book is weighted firmly towards the top end of the capital structure, with senior secured lending making up the largest single component.

Todd Barlow: Right now, the book is weighted firmly towards the top end of the capital structure, with senior secured lending making up the largest single component, complemented by junior secured and asset-backed positions, and only a small allocation to unsecured preferred equity and reinsurance. It is also diversified by sector. Industrials is our largest exposure, followed by energy, consumer financials, and materials, with a smaller position in real estate and IT. Fortunately, we have always avoided real estate developer loans, which make up more than half the private credit industry in Australia, and we have not allocated to SaaS businesses offshore, which is where we see the most stress building in the market. We are not making a concentrated bet on any single part of the economy. That discipline shows up in what we did not do as much as what we did.

Speaker #1: Complemented by junior secured and asset-backed positions, and only a small allocation to unsecured, preferred equity, every reinsurer. It is also diversified by sector: Industrials is our largest exposure, followed by Energy, Consumer, Financials, and Materials, with smaller positions in Real Estate and IT.

Speaker #1: Fortunately, we've always avoided real estate developer loans, which make up more than half of the private credit industry in Australia. And we've not allocated to SaaS businesses offshore, which is where we see the most stress building in the market.

Speaker #1: We're not making a concentrated bet on any single part of the economy. That discipline shows up in what we didn't do as much as what we did.

Speaker #1: We turned down more than 80 deals in FY26 because they didn't meet our return or structuring requirements. And since we started this strategy in FY22, every single loan or bond position we've exited—22 in total—has been repaid in full with no capital losses.

Todd Barlow: We turned down more than 80 deals in FY26 because they did not meet our return or structuring requirements. Since we started this strategy in FY22, every single loan or bond position we have exited, 22 in total, has been repaid in full with no capital losses. This is the result of careful borrower selection and structuring from day one. We continue to believe this asset class presents strong risk-adjusted returns. We invest in companies we think are good quality or have a strong asset base that provides us with structural downside protections. We are targeting low double-digit returns through faster realization events, strong origination economics, and the benefit of rising base rates, not by taking on more risk. Our flexibility and ability to design solutions also enables us to earn higher fees. Alongside our direct lending, we have built a global network of credit fund partnerships.

Speaker #1: This is the result of careful borrower selection and structuring from day one. We continue to believe this asset class presents strong risk-adjusted returns. We invest in companies we think are good quality or have a strong asset base that provides us with structural downside protection.

Speaker #1: We're targeting low double-digit returns through faster realization events, strong origination economics, and the benefit of rising base rates—not by taking on more risk.

Speaker #1: Our flexibility and ability to design solutions also enables us to earn higher fees. Alongside our direct lending, we've built a global network of credit fund partnerships.

Speaker #1: We've now committed $1.5 billion across 19 positions, with eight more already locked in for FY27. $373 million of that is currently invested. These commitments are sourced from a matched universe of more than 1,000 managers globally, reviewing over 50 of them in detail. Each manager we back has a distinct strategy and a track record spanning more than one credit cycle.

Todd Barlow: We have now committed AUD 1.5 billion across 19 positions, with eight more already locked in for FY27. AUD 373 million of that is currently invested. These commitments are sourced from a mapped universe of more than 1,000 managers globally, reviewing over 50 of them in detail, and each manager we back has a distinct strategy and a track record spanning more than one credit cycle. We spread capital deliberately across strategy and manager, drawing commitments down gradually over one to 3 years rather than all at once. All of these strategies target returns in excess of 10%. Emerging companies came down to 12% of the portfolio from 16%, and it was a mixed performance. This asset class captures a range of investments we hold for growth and includes listed, unlisted, and large strategic stakes. Listed assets include NextGen, EOS, and Cobram.

Speaker #1: We spread capital deliberately across strategy and manager, drawing commitments down gradually over one to three years rather than all at once. All of these strategies target returns in excess of 10%.

Speaker #1: Emerging companies came down to 12% of the portfolio from 16%, and it was a mixed performance. This asset class captures a range of investments we hold for growth, and includes listed, unlisted, and large strategic stakes.

Speaker #1: Listed assets include next-gen EOS and Covrim. Strategic assets are assets that are derived from our previous strategic portfolio and include 2S and ARIS. We also have unlisted investments in companies like Rocket, North Harbor, Clean Energy, and Cahir.

Todd Barlow: Strategic assets are assets that are derived from our previous strategic portfolio and include Tuas and Aeris. We also have unlisted investments in companies like Rocket, North Harbour Clean Energy, and Carlisle Swim. Our listed and unlisted positions both performed well, outperforming their benchmark. Listed assets returned 4.3% versus the index of 1.8%, and unlisted assets returned 8.9%. Strategic assets, however, dragged on performance. In the second half, Tuas was hit with an unexpected regulatory intervention in Singapore. The loan cost us 8% of performance within emerging companies and around 2% at a group level. Fortunately, we had already reduced our exposure in Tuas well before the intervention. Our holding reduced from 25% to 14% over the period, as we sold more than 40 million shares at an average price of around AUD 6.52 per share. It meant that the impact this year was materially smaller than it would otherwise have been.

Speaker #1: Our listed and unlisted positions both performed well, outperforming their benchmarks. Listed assets returned 4.3%, versus the index of 1.8%, and unlisted assets returned 8.9%.

Speaker #1: Strategic assets, however, dragged on performance. In the second half, Q2 was hit with an unexpected regulatory intervention in Singapore. The loan cost us 8% of performance within emerging companies.

Speaker #1: And around 2% at a group level. Fortunately, we had already reduced our exposure in 2S well before the intervention. Our holding reduced from 25% to 14% over the period, as we sold more than 40 million shares at an average price of around $6.52 per share.

Todd Barlow: Our holding reduced from 25% to 14% over the period, as we sold more than 40 million shares at an average price of around AUD 6.52 per share. It meant that the impact this year was materially smaller than it would otherwise have been.

Speaker #1: It meant that the impact this year was materially smaller than it would otherwise have been. Looking through this noise, our three-year track record here remains strong, running comfortably ahead of the benchmark.

Todd Barlow: Looking through this noise, our three-year track record here remains strong, running comfortably ahead of the benchmarks. Through the year, we sold down around AUD 1.7 billion of positions to de-risk and free up capital for redeployment, and we are steadily building more offshore exposure through funds and co-investments. Real assets is now 10% of the portfolio. We are now up 77% on the back of the Brickworks merger and higher data center valuations. Even after the industrial property sale to Goodman, we will be retaining around AUD 400 million of Brickworks-related properties. That includes a 50.1% interest in the manufacturing trust, which holds 13 long-leased manufacturing plants, plus AUD 235 million of wholly owned surplus and development land with rezoning potential. Cash flow this year came from distributions on the industrial property assets held ahead of the divestment, together with income from the rest of the property book.

Speaker #1: Throughout the year, we sold down around $1.7 billion of positions to de-risk and free up capital for redeployment, and we're steadily building more offshore exposure through funds and co-investments.

Speaker #1: Real assets now make up 10% of the portfolio, with NAV up 77% on the back of the Brickworks merger and higher data center valuations. Even after the industrial property sale to Goodman, we retained around $400 million of Brickworks-related property.

Speaker #1: That includes a 50.1% interest in the Manufacturing Trust, which holds 13 long-leased manufacturing plants, plus $235 million of wholly owned surplus and development land, with rezoning potential.

Speaker #1: Cash flow this year came from distributions on the industrial property assets, held ahead of the divestment, together with income from the rest of the property book.

Speaker #1: Our strategy with respect to real assets is to gain exposure to hard assets that can ultimately benefit from a repositioning and value uplift through de-risking over time.

Todd Barlow: Our strategy with respect to real assets is to gain exposure to hard assets that can ultimately benefit from a repositioning and value uplift through de-risking over time. Our current portfolio spans real estate, agriculture, data centers, and retirement living. Performance in real assets was dragged down by the fact that a large proportion of its assets through the period were the industrial property assets that were sold at the end of the year for the market price at the start of the year, meaning that we did not get a portfolio return other than a small yield. I want to spend a moment on data centers specifically because it is an area we get asked about often. We are valuing this exposure at AUD 344 million currently, with a further AUD 118 million of committed equity still to deploy. Our approach here is deliberately conservative.

Speaker #1: Our current portfolio spans real estate, agriculture, data centers, and retirement living. Performance in real assets was dragged down by the fact that a large proportion of its assets through the period were the industrial property assets that were sold at the end of the year for the market price at the start of the year, meaning that we did not get a portfolio return other than a small yield.

Speaker #1: What has been the movement on data centers, specifically, because it's an area we get asked about often. We're valuing this exposure at $344 million currently, with a further $118 million of committed equity still to deploy.

Speaker #1: Our approach here is deliberately conservative. We partner with a developer and operator of global assets, who secure the power and lock in a signed customer contract to improve the value before construction.

Todd Barlow: We partner with a developer and operator of global assets to secure the power and lock in a signed customer contract to improve the value before construction. We believe this approach clearly fits our real estate, sorry, our real asset strategy. There is a downside protection with asset backing of industrial land with access to power. There is upside if we can secure a long-term contract and approval for redevelopment. This is a cloud data center strategy. We have limited direct exposure to the AI-specific compute demand that gets a lot of attention in this space. Again, we believe this is a lower-risk segment of data centers with proven demand and economics. Let me close by talking through the outlook, and I want to frame it in the way we measure our performance, grow the portfolio, increase cash generation, and manage investment risk.

Speaker #1: We believe this approach clearly fits our real estate sorry, our real asset strategy. There is a downside protection with asset backing of industrial land with access to power.

Speaker #1: There is upside if we can secure a long-term contract and approval for redevelopment. This is a cloud data center strategy. We have limited direct exposure to the AI-specific compute demand that gets a lot of attention in this space.

Speaker #1: Again, we believe this is a lower-risk segment of data centers with proven demand and economics. Let me close by talking through the outlook, and I want to frame it in the way we measure our performance.

Speaker #1: Grow the portfolio, increase cash generation, and manage investment risk. Each asset class has a clear strategy for growing value. Starting with listed companies, we are running an index-unaware, quality-focused strategy.

Todd Barlow: Each asset class has a clear strategy for growing value. Starting with listed companies, we are running an index unaware quality focus strategy. This year we are developing a market neutral strategy to run alongside the core book, specifically to lower our correlations to the broader listed market. In private companies, Ampcontrol's move into data center power infrastructure is a good example of the growth we are looking for. An existing platform finding an adjacent market opportunity. In credit, there continues to be good opportunities for direct loans. We have already got a further eight offshore credit fund allocations committed in FY27 to keep building that global exposure. Emerging companies have been more selective following the Tuas outcome. We are leaning into structural themes like uranium and defense, where the current dislocation is creating opportunity rather than risk.

Speaker #1: And this year, we are developing a market-neutral strategy to run alongside the core book, specifically to lower our correlations to the broader listed market.

Speaker #1: In private companies, AMP controls moving into data center power infrastructure is a good example of the growth we're looking for—an existing platform finding an adjacent market opportunity.

Speaker #1: In credit, there continue to be good opportunities for direct loans, and we've already got a further eight offshore credit fund allocations committed in FY27 to keep building that global exposure.

Speaker #1: Emerging companies have been more selective following the Q2 outcome. We're leaning into structural themes like uranium and defense, where the current dislocation is creating opportunity rather than risk.

Speaker #1: And in real assets, data centers remain a growth engine for us. We're focused on progressing assets after the development curve. The FY27 year is off to a strong start.

Todd Barlow: In real assets, data centers remains a growth engine for us. We are focused on progressing assets up the development curve. The FY27 year is off to a strong start. While only the listed parts of the portfolio have been revalued to market, we have generated strong outperformance in the period to 22 September. Our net asset value has increased 4.3% against a market that is -1.1%, a 5.4% outperformance. In relation to our objective to increase cash generation, we are continuing to see rising base rates, which will work in our favor because the majority of our credit book is floating rate. As rates move up, income from that book moves with it. Rising rates are also beneficial for our fixed income portfolio. To date, many of our private companies have been focused on growth.

Speaker #1: While only the listed parts of the portfolio have been revalued to market, we have generated strong outperformance in the period to 22 September. Our net asset value has increased 4.3% against a market that is negative 1.1%, representing 5.4% outperformance.

Speaker #1: In relation to our objective to increase cash generation, we are continuing to see rising base rates, which will work in our favor because the majority of our credit book is floating rate.

Speaker #1: So, as rates move up, income from that book moves with it. Rising rates have also been beneficial for our fixed income portfolio. To date, many of our private companies have been focused on growth.

Speaker #1: However, we're starting to see some real opportunity for cash generation across this asset class as the investments mature. And we're going into FY27 with real firepower on the tax side.

Todd Barlow: However, we are starting to see some real opportunity for cash generation across this asset class as the investments mature. We go into FY27 with real firepower on the tax side. A AUD 1 billion franking credit balance together with tax assets granted by the Brickworks merger underpins our distribution capacity for years to come. We also believe we are in a strong position in terms of the risk management across the portfolio. Our net cash and liquid investments has increased to AUD 3.1 billion, taking available liquidity, including undrawn debt facilities, to AUD 4.2 billion. We have deliberately established fixed income as a strategic asset class this year, and it is now benefiting from a rising risk-free rate. That level of liquidity means we are well positioned to capitalize on new opportunities as they emerge, and to fund the offshore commitments we have already made without needing to sell anything else down.

Speaker #1: $1 billion franking credit balance, together with tax assets created by the Brickworks merger, underpins our distribution capacity for years to come. We also believe we're in a strong position in terms of risk management across the portfolio.

Speaker #1: Our net cash and liquid investments have increased to $3.1 billion, taking available liquidity, including undrawn debt facilities, to $4.2 billion. We've deliberately established fixed income as a strategic asset class this year, and it's now benefiting from a rising risk-free rate.

Speaker #1: That level of liquidity means we're well positioned to capitalize on new opportunities as they emerge, and to fund the offshore commitments we've already made without needing to sell anything else down.

Todd Barlow: That level of liquidity means we are well positioned to capitalize on new opportunities as they emerge, and to fund the offshore commitments we have already made without needing to sell anything else down.

Speaker #1: We remain patient and disciplined. That means continuing to diversify the portfolio and maintaining a defensive stance. We're closely monitoring how rising rates are affecting risk-adjusted returns across every asset class, and we're being very selective.

Todd Barlow: We remain patient and disciplined. That means continuing to diversify the portfolio and maintain a defensive stance. Closely monitoring how rising rates are affecting risk-adjusted returns across every asset class, and we are being very selective. We would rather wait for high conviction opportunities than deploy capital just for the sake of it. On geographic diversification, this is where the scale of what we have built really shows. We now have AUD 2.6 billion of total commitments across our global private partnerships spanning multiple asset classes. These established relationships provide access to increased diversification, ongoing deal flow, and opportunities for us to leverage information and learnings from some of the smartest people around the globe. I will finish on this last slide, which ties together everything we have covered today. Liquidity is the foundation of being able to fund good opportunities.

Speaker #1: We'd rather wait for high-conviction opportunities than deploy capital just for the sake of it. And on geographic diversification, this is where the scale of what we've built really shows.

Speaker #1: We now have $2.6 billion of total commitments across our global private partnerships, spanning multiple asset classes. These established relationships provide access to increased diversification, ongoing deal flow, and opportunities for us to leverage information and learnings from some of the smartest people around the globe.

Speaker #1: I'll finish on this last slide, which ties together everything we've covered today. Liquidity is the opportunity. The permanence of our capital on our balance sheet is a strategic advantage and allows us to be long-term focused.

Todd Barlow: The permanence of our capital on our balance sheet is a strategic advantage and allows us to be long-term focused. The quality of our opportunity flows from our deal flow. Our ability to be flexible and our reputation is what feeds us the opportunities. These are our strengths. Portfolio allocation comes from selecting the best ideas and ensuring there is a contest for investments. The recycling of capital is an important discipline. New ideas are funded by selling existing investments. This year, we sold AUD 7.7 billion in assets and made AUD 5 billion in new investments. That activity is regenerating the portfolio. A simple model executed well and exploiting our competitive advantages creates enduring success for our shareholders. 16.8% total shareholder return this year, 12.8% a year for 25 years, and 28 straight years of dividends growing at over 10% per annum. Thanks very much for your time this morning.

Speaker #1: The quality of our opportunities flows from our deal flow. Our ability to be flexible, and our reputation, are what feed us these opportunities. These are our strengths.

Speaker #1: Portfolio allocation comes from selecting the best ideas and ensuring there is a contest for investments. The recycling of capital is an important discipline; new ideas are funded by selling existing investments.

Speaker #1: This year, we sold $7.7 billion in assets and made $5 billion in new investments. That activity is regenerating the portfolio. That simple model, executed well and exploiting our competitive advantages, creates enduring success for our shareholders.

Todd Barlow: This year, we sold AUD 7.7 billion in assets and made AUD 5 billion in new investments. That activity is regenerating the portfolio. A simple model executed well and exploiting our competitive advantages creates enduring success for our shareholders. 16.8% total shareholder return this year, 12.8% a year for 25 years, and 28 straight years of dividends growing at over 10% per annum. Thanks very much for your time this morning.

Speaker #1: 16.8% total shareholder return this year, 12.8% a year for 25 years, and 28 straight years of dividends growing at over 10% per annum. Thanks very much for your time this morning.

Speaker #1: I'll hand over to the moderator for questions. Thank you. For the analyst participants, if you wish to ask a question via the phones, you will need to press the star key, followed by the number 1 on your telephone keypad.

Todd Barlow: I will hand over to the moderator for questions.

Operator: Thank you. For the analyst participants, if you wish to ask a question via the phones, you will need to press the star key followed by the number 1 on your telephone keypad. If you wish to ask a question via the webcast, please type your question into the ask a question box. Your first question comes from Steven Sassine from Morgans. Please go ahead.

Speaker #1: And if you wish to ask a question via the webcast, please type your question into the Ask a Question box. Your first question comes from Steven Sasin from Morgans.

Speaker #1: Please go ahead.

Speaker #2: Thank you, and good morning. Good morning, team. A great set of results. As always, I've just got a couple of questions, if that's all right.

Steven Sassine: Thank you, and good morning. Good morning, team. A great set of results as always. I have just got a couple of questions, if that is all right. Maybe, Todd, I will start with you. I guess the cash war chest that has been accumulated by AUD 2.7 billion of net cash and liquids, which is what? 20% of portfolio sitting in that fixed income sleeve. I guess, is there a realistic time to redeploy those funds either into the market or new opportunities? I guess the second part of that is there a point where carrying that much liquidity becomes a drag on NAV growth rather than keeping that optionality?

Speaker #2: Maybe, Todd, I'll start with you. And I guess the cash war chest that's been accumulated: $2.7 billion of net cash and liquids, which is, what, 20% of the portfolio sitting in that fixed income sleeve.

Speaker #2: I guess, is there a realistic time to redeploy those funds, either into the market or new investments? That is, is there a point where carrying that much liquidity becomes a drag on NAV growth, rather than keeping that optionality?

Speaker #3: So, I mean, traditionally, in recent times, people will have seen a large cash balance as a drag on returns and maybe signs of a lazy balance sheet.

Todd Barlow: I mean, traditionally, or I guess in recent times, people will have seen a large cash balance as a drag on returns and maybe signs of a lazy balance sheet. We do not see it like that. We actually see it as a strong risk-adjusted return asset class right now. As I said, the current returns we are getting are what we saw out of equity markets last year and on the ASX. I think our prediction is that the year ahead might be more difficult than the year that we have just seen. So it is a very deliberate strategy to maintain capital, take a defensive stance, and we are getting paid for it along the way. That is not to say that we always will have an allocation to fixed income. It certainly is the easiest and most obvious target for liquidity if we ever saw some good opportunities emerge.

Speaker #3: But we don't see it like that. We actually see it as a strong risk-adjusted return asset class right now. As I said, the current returns we're getting are what we saw out of equity markets last year, and on the ASX.

Speaker #3: And I think our prediction is that the year ahead might be more difficult than the year we’ve just seen. So it’s a very deliberate strategy to maintain capital, take a defensive stance, and we’re getting paid for it along the way.

Todd Barlow: So it is a very deliberate strategy to maintain capital, take a defensive stance, and we are getting paid for it along the way. That is not to say that we always will have an allocation to fixed income. It certainly is the easiest and most obvious target for liquidity if we ever saw some good opportunities emerge.

Speaker #3: But that's not to say that we will always have an allocation to fixed income. It certainly is the easiest and most obvious target for liquidity if we ever see some good opportunities emerge.

Speaker #3: Now, we've already earmarked a lot of that capital for the allocations that we've made globally. As I said, we're up to $2.6 billion in commitments, of which only $600 million is drawn.

Todd Barlow: Now, we have already earmarked a lot of that capital for the allocations that we have made globally. As I said, we are up to AUD 2.6 billion in commitments, of which only AUD 600 million is drawn. So there is another AUD 2 billion of funding that will take place over the next couple of years as we build out that portfolio. We think that we have largely set a lot of our ambition in terms of how we want to allocate globally, but the funds will take some time to draw down.

Speaker #3: So, there's another $2 billion of funding that will take place over the next couple of years as we build out that portfolio. We think that we've largely set a lot of our ambition in terms of how we want to allocate globally.

Speaker #3: But the funds will take some time to be drawn down.

Speaker #2: That's great, thanks very much. Maybe if we could just move across to the Credit book—obviously, pretty strong returns in there, but I think you mentioned $1.1 billion of new positions.

Steven Sassine: That is great. Thanks very much. Maybe we just move across to the credit book. Obviously, pretty strong returns in there, but I think you mentioned AUD 1.1 billion of new positions. I guess, as you scale and pedal pretty quickly to redeploy some of the capital that rolls off, are you having to move down the capital stack or accept any tighter spreads at all?

Speaker #2: I guess, as you sort of scale and pivot pretty quickly to redeploy some of the capital that rolls off, are you having to sort of move down the capital stack or accept any sort of tighter spreads at all?

Speaker #3: My spreads are still very tight in the system. But because of the niche way that we play private credit, we haven't had to do that.

Todd Barlow: I mean, spreads are still very tight in the system. Because of the niche way that we play private credit, we have not had to do that. So you can see that in our returns have been fairly consistent over the last 3, 4 years that we have been doing this. So even though the book is been growing, the returns have not suffered. There has been a view that, in this market, we believe that there is better value at the higher quality end of the private credit universe, because the spreads are so tight, it does not necessarily reward you for taking a lot of risk. What we do to earn that extra outsized return is we find companies that need a flexible solution that we work with. We spend a lot of time and effort to construct something that works for them and for us.

Speaker #3: So you can see that our returns have been fairly consistent over the last three or four years that we've been doing this. So even though the book's been growing, the returns haven't suffered.

Speaker #3: But there has been a view that, in this market, we believe there's better value at the higher-quality end of the private credit universe.

Speaker #3: Because the spreads are so tight, it doesn't necessarily reward you for taking a lot of risk. But what we do to earn that extra, outsized return is we find companies that need a flexible solution that we work with.

Speaker #3: We spend a lot of time and effort to construct something that works for them and for us, and we might provide a sort of bridging solution.

Todd Barlow: And we might provide a bridging solution. So actually, the fact that we get repaid quickly, while it's frustrating for our team because they have to keep going and originating new deals, it actually makes the returns look better if we get paid back more quickly. So there are lots of reasons why we're getting outsized returns without having to take more risk.

Speaker #3: So actually, the fact that we get repaid quickly, while it's frustrating for our team because they have to keep going and originating new deals, it actually makes the returns look better if we get paid back more quickly.

Speaker #3: So, there are many reasons why we're achieving outsized returns without having to take on more risk.

Speaker #2: That makes sense. I might push my luck and ask one more, if I can. Maybe switching to offshore. Obviously, you're building out a pretty meaningful offshore co-investment across your credit private companies as well.

Steven Sassine: That makes sense. I might push my luck and ask one more if I can. Maybe switching to offshore. Obviously, you're building out a pretty meaningful offshore co-investment across your credit private companies as well. Can you just remind us how you're resourced to monitor some of those global managers? I think you mentioned the resources will be within that existing portfolio domestically. Can you maybe just remind us of the expertise within each of those portfolios to manage that? And maybe the second part, if I can, is there a target offshore weighting at all?

Speaker #2: Can you just remind us how you resource to monitor some of those global managers? I think you mentioned the resources will be within that existing portfolio domestically.

Speaker #2: Maybe just remind us of the expertise within each of those portfolios to manage that. And maybe the second part, if I can, is there a target offshore weighting at all?

Speaker #3: I mean, we don't really have targets on anything, but we do want to balance our overall allocation globally with the fact that there are some very exciting opportunities for us.

Todd Barlow: I mean, we don't really have targets on anything, but we do want to balance our overall allocation globally with the fact that there are some very exciting opportunities for us. It's a great avenue for us to be able to get offshore income back into Australia, and utilizes our franking credit balance. If we keep investing in Australia, we keep paying tax in Australia, and it's hard for us to eat into our franking credit balance. Whereas this is a really great opportunity for us to get outsized returns.

Speaker #3: It's a great avenue for us to be able to get offshore income back into Australia and utilize it as our, frankly, franking credit balance. If we keep investing in Australia, we keep paying tax in Australia, and it's hard for us to eat into our franking credit balance.

Speaker #3: Whereas, this is a really great opportunity for us to get outsized returns. And we also just like the opportunity set. As I said in my talk, it's a deeper pool of opportunity—really, really great managers that we're developing partnerships with, who can do things that we would love to be able to do here, but the scale just doesn't exist.

Todd Barlow: And we also just like the opportunity set. As I said in my talk, it's a deeper pool of opportunity. Really, really great managers that we're developing partnerships with, who can do things that we would love to be able to do here, but the scale just doesn't exist. So in terms of your question around, the team's ability to do this, the stuff that we're allocating to is consistent with the kinds of investments that we do domestically. It's just that we can't access that deal flow, and we don't have boots on the ground to be able to do it offshore.

Speaker #3: And so, in terms of your question around the team’s ability to do this, the stuff that we’re allocating to is consistent with the kinds of investments that we do domestically.

Speaker #3: It's just that we can't access that deal flow, and we don't have boots on the ground to be able to do it offshore. So, the way that we look at it is: if we were going to do a credit investment that was $100 million, or allocate to a fund that was in credit for $100 million, it's the same level of diligence, research, structuring, and relationship development as it would be to a fund as it is to a domestic opportunity that we do directly.

Todd Barlow: The way that we look at it is if we were going to do a credit investment that was AUD 100 million, or allocate to a fund that was in credit for AUD 100 million, it is the same level of diligence, research, structuring, and relationship development as it would be to a fund as it is to a domestic opportunity that we do directly. It is effectively the same process, done by the same team.

Speaker #3: So, it's effectively the same process, done by the same team.

Speaker #2: That makes sense. Hold on—again, same thing. Thanks, Todd, and thanks, DG.

Steven Sassine: Well done again, team. Thanks, Todd, and thanks, DG.

Speaker #3: Thank you.

David Grbin: Thank you.

Speaker #1: Thank you.

Speaker #4: Thank you. Once again, to ask a question via the phone, please press star 1. Your next question comes from Esther Holloway from Morningstar. Please go ahead.

Operator: Thank you. Once again, to ask a question via the phones, please press star one. Your next question comes from Esther Holloway from Morningstar. Please go ahead.

Speaker #5: Oh, hi. Good morning. Thank you for taking my question. My peer there at Morgan's had some pretty similar ones, so I'll try to go off the cuff.

Esther Holloway: Oh, hi. Good morning. Thank you for taking my question. My peer there at Morgans had some pretty similar ones, so I will try to go off the cuff. Franking credit balance. On slide 7, you mentioned that the franking credits can be attached to distributions from offshore investments, and I recall you mentioned that this applies where the investments are from with similar tax systems to Australia and locations. Which geographies are these most exposed to these offshore investments, and which are you trying to grow coverage in?

Speaker #5: So, franking credit balance. On slide 7, you mentioned that the franking credits can be attached to distributions from offshore investments. And I recall you mentioned that the supply was the investments from similar tax systems to Australia in locations.

Speaker #5: Which geographies are these most exposed to, these offshore investments, and which are you trying to sort of grow coverage in?

Speaker #3: Yeah. Well, most of the new commitments that we've made in the global private partnerships are in North America, so that is the bulk of it.

David Grbin: Well, most of the new commitments that we have made, in the global private partnerships are in North America.

Esther Holloway: Okay.

David Grbin: That is bulk of it. They are a little bit in Europe, but, it is largely North America.

Speaker #3: A little bit in Europe, but, yeah, it's largely North America.

Speaker #5: OK. And is the strategy that enables greater sort of drawdown on that substantial franking credit balance—is that working as expected?

Esther Holloway: Okay, and is the strategy that enables greater drawdown on that substantial franking credit balance, is that working as expected?

Speaker #3: Well, it's early days yet, but the concept is quite simple. We'll earn offshore income. That offshore income, when we bring it back to Australia, has already been subject to tax overseas.

David Grbin: Well, it is early days yet, but the concept is quite simple. We will earn offshore income. That offshore income, when we bring it back to Australia, has already been subject to tax overseas, so it does not get double taxed in Australia. When we go to pass that on to shareholders, we can then attach the franking credits that we have already built up over time to that dividend that we pay to our shareholders. So it is just that neat way of utilizing that bank of franking credits that otherwise, if we had invested in Australia, as Todd said, we would just continue to just keep building it up and shareholders would never get the benefit of it.

Speaker #3: So it doesn't get double-taxed in Australia. When we go to pass that on to shareholders, we can then attach the franking credits that we've already built up over time to the dividend that we pay to our shareholders.

Speaker #3: So it is just that neat way of utilizing that bank of franking credits that otherwise, if we'd invested in Australia, as Todd said, we would just continue to keep building it up and shareholders would never get the benefit of it.

Speaker #5: Great, thank you. And on private credit, obviously, the spotlight has been on private credit and its risks lately. I note that Soul Patts doesn't have a large exposure to real estate, and knows AAS businesses offshore.

Esther Holloway: Great. Thank you. On private credit, obviously the spotlight has been on private credit and its risks lately, and I note that Soul Patts does not have a large exposure to real estate or, and no SaaS businesses offshore. So I think that is an important context, but, has this sort of given any light to sort of improving your due diligence process, or are you pretty happy with your strategy as it is?

Speaker #5: So I think that's an important context. But has that sort of given any light to improving your due diligence process, or are you pretty happy with your strategy as it is?

Speaker #3: Yeah, thanks. We've actually got quite a few questions coming in—written questions about that. So maybe I'll spend a bit of time on how we view private credit, because there are lots of headlines around it.

David Grbin: Yeah, thanks. We have actually got quite a few questions coming in, written questions about that. So maybe I will spend a bit of time on how we view private credit, because there are lots of headlines around it. I think what we are seeing are some potential problems in the asset class because a lot of money has flowed in very quickly, to global managers who have to then go and deploy it. If I am a really, really large private credit manager and I am getting money thrown at me, I need to go and find ways to deploy it really quickly. So that would tend to mean that they are sharpening the prices, so the risk spreads are contracting. It also means that their diligence might be a little bit looser. It also means that the terms and the structuring of that loan is poorer than it should be.

Todd Barlow: Yeah, thanks. We have actually got quite a few questions coming in, written questions about that. So maybe I will spend a bit of time on how we view private credit, because there are lots of headlines around it. I think what we are seeing are some potential problems in the asset class because a lot of money has flowed in very quickly, to global managers who have to then go and deploy it. If I am a really, really large private credit manager and I am getting money thrown at me, I need to go and find ways to deploy it really quickly.

Speaker #3: And I think what we're seeing are some potential problems in the asset class, because a lot of money has flowed in very quickly to global managers who then have to go and deploy it.

Speaker #3: And if I'm a really, really large private credit manager, and I've got money being thrown at me, I need to go and find ways to deploy it really quickly.

Speaker #3: So that would tend to mean that they're sharpening the prices. So the risk spreads are contracting. It also means that their diligence might be a little bit looser.

Todd Barlow: So that would tend to mean that they are sharpening the prices, so the risk spreads are contracting. It also means that their diligence might be a little bit looser. It also means that the terms and the structuring of that loan is poorer than it should be.

Speaker #3: It also means that the terms and the structuring of that loan are poorer than they should be. And it also means that it's going to the areas that have the most demand for the products.

David Grbin: It also means that it is going to the areas that have the most demand for the products. In Australia, what does that mean? Well, over half of the private credit lending in Australia is to real estate, particularly to real estate development. In the US, a lot of that is to sponsor-led private equity loans, which are highly levered loans to leverage buyouts. In the last few years, a lot of those leverage buyouts were SaaS companies, which are now of course under threat by AI. So, fortunately for us, we have never been in real estate. It is not something that we wanted to do from the outset. We felt that Australia was a bit of a crowded space anyway. What we wanted to focus on was a derivation of what we already do, which is, we invest in equities in good quality businesses.

Todd Barlow: It also means that it is going to the areas that have the most demand for the products. In Australia, what does that mean? Well, over half of the private credit lending in Australia is to real estate, particularly to real estate development. In the US, a lot of that is to sponsor-led private equity loans, which are highly levered loans to leverage buyouts. In the last few years, a lot of those leverage buyouts were SaaS companies, which are now of course under threat by AI. So, fortunately for us, we have never been in real estate. It is not something that we wanted to do from the outset. We felt that Australia was a bit of a crowded space anyway. What we wanted to focus on was a derivation of what we already do, which is, we invest in equities in good quality businesses.

Speaker #3: And in Australia, what does that mean? Well, over half of the private credit lending in Australia is to real estate, particularly to real estate development.

Speaker #3: And in the US, a lot of that is due to sponsor-led private equity loans, which are highly levered loans to leveraged buyouts. In the last few years, many of those leveraged buyouts were SaaS companies, which are now, of course, under threat by AI.

Speaker #3: So, fortunately for us, we have never been in real estate. It's not something that we wanted to do from the outset. We felt that Australia was a bit of a crowded space anyway.

Speaker #3: What we wanted to focus on was a derivation of what we already do, which is investing in equities in good quality businesses.

Speaker #3: But from time to time, we come across opportunities where the person whose business we like doesn't want to raise equity. For example, they might think that their share price is too low, and they want to bridge themselves to a point where they can raise equity at higher prices.

David Grbin: But from time to time, we come across opportunities where that person whose business we like does not want to raise equity. For example, they might think that their share price is too low, and they want to bridge themselves to a point where they can raise equity at higher prices.

Todd Barlow: But from time to time, we come across opportunities where that person whose business we like does not want to raise equity. For example, they might think that their share price is too low, and they want to bridge themselves to a point where they can raise equity at higher prices.

Speaker #3: And for whatever reason, they can't access bank debt, so we come up with a structured solution. The way that we see this asset class is, rather than it being risky, we see it as a defensive asset class, because all of the equity that sits behind us in terms of ranking is our buffer.

Todd Barlow: And for whatever reason, they cannot access bank debt. And so we come up with a structured solution, and the way that we see this asset class is rather than it being risky, we see it as a defensive asset class because all of the equity that sits behind us in terms of ranking is our buffer, it is our margin of safety. If something goes wrong, the equity gets chewed up very quickly, and the debt stack is preserved. So, when we think about the issues that are emerging in the sector, sure, there has been some loose practices, but the equity is far more exposed in those industries than we are as debt. But for us, it is about being selective.

Speaker #3: It's our margin of safety. If something goes wrong, the equity gets chewed up very quickly and the debt stack is preserved. So when we think about the issues that are emerging in the sector, sure, there have been some loose practices.

Speaker #3: But the equity is far more exposed in those industries than we are as debt. But for us, it's about being selective; we pick the right companies.

Todd Barlow: We pick the right companies, we pick the right asset classes, we pick the right instruments, we do the diligence, we structure effectively, and we price appropriately, and I think that we are very confident with our book and also we are very confident with the managers that we are partnering with globally.

Speaker #3: We pick the right asset classes. We pick the right instruments. We do the diligence. We structure effectively. And we price appropriately. I think that we're very confident with that book.

Speaker #3: And also, we're very confident with the managers that we're partnering with globally.

Speaker #5: Thank you.

[Analyst]: Thank you.

Esther Holloway: Thank you.

Speaker #2: Thank you. There are no further questions from the analysts on the line at this time. I'll now hand back to Courtney Howe for any written questions on the webcast.

Operator: Thank you. There are no further questions from the analysts on the line at this time. I will now hand back to Courtney Howe for any written questions on the webcast.

Speaker #5: Thank you, Harmony. We have quite a number of written questions that have come through. A couple more analysts are in the written Q&A, so I will start with Simon Fitzgerald from Jefferies.

Courtney Howe: Thank you, Harmony. We have quite a number of written questions that have come through. A couple more analysts are in the written Q&A, so I will start with Simon Fitzgerald from Jefferies. He is asking: Todd, after the Goodman transaction, Soul Patts retains interest in manufacturing assets and development land. How should investors think about the embedded value creation opportunity that is still remaining within those assets?

Speaker #5: He's asking Todd, after the Goodman transaction, Soul Patts retains interest in manufacturing assets and development land. How should investors think about the embedded value creation opportunity that is still remaining within those assets?

Speaker #3: Yeah. So there's about $400 million of total real estate that came across from Brickworks that was not sold to Goodman. A bit over half of that is in the manufacturing trust, which houses a lot of the operating assets that Brickworks have.

Todd Barlow: Well, there is about AUD 400 million of total real estate that came across from Brickworks that was not sold to Goodman. A bit over half of that is in the manufacturing trust, which houses a lot of the operating assets that Brickworks have. There is some redevelopment opportunity. As we have been consolidating sites, we open up the ability to redevelop some of the assets in that portfolio. Generally speaking, it is a stabilized asset, and the opportunity is more limited. The other part of that portfolio, just under AUD 200 million, is across a number of surplus assets that have real development opportunities. The big one is in Victoria's Craigieburn and in the US we have the Mid-Atlantic site, both of which we think have good upside from rezoning.

Speaker #3: Now, there is some redevelopment opportunity. As we've been consolidating sites, we open up the ability to redevelop some of the assets in that portfolio.

Speaker #3: But generally speaking, it's a stabilized asset, and the opportunity is more limited. The other part of that portfolio, just under $200 million, is across a number of surplus assets that have real development opportunity.

Speaker #3: So, the big one is in Victoria's Craigieburn, and in the US we have the Mid-Atlantic site, both of which we think have good upside from rezoning.

Speaker #5: Thank you. Another analyst, Ryan McCourty from MSD Financial. Credit versus fixed income—you spoke about the running yield of fixed income above equity market returns.

Courtney Howe: Thank you. Another analyst, Ryan McCortey from MST Financial. Credit versus fixed income. You spoke about the running yield of fixed income above equity market returns. Could you quantify what you see forward running fixed income yield is? You mentioned a fair bit of committed capital. Do you have a time frame for that deployment? Should we expect fixed income to remain a significant percentage of overall assets?

Speaker #5: Could you quantify what you see as the forward running fixed income yield? And you mentioned a fair bit of committed capital. Do you have a time frame for that deployment?

Speaker #5: Should we expect fixed income to remain a significant percentage of overall assets?

Speaker #3: So, the running yield on our current fixed income book is about 150 basis points above the RBA cash rate. Now, we're seeing that rate obviously come up a lot, and there are expectations that it will be two or three rate rises imminently.

Todd Barlow: The running yield on our current fixed income book is about 150 basis points above the RBA cash rate. We are seeing that rate obviously come up a lot, and there are expectations that there will be two or three rate rises imminently. So, 150 above is a short duration book. There might be a time where we actually chase a little bit more duration and a little bit more yield. But of course, you are taking a little bit more risk on future rates at that point. But right now, it is managed a lot more like cash, but extracting decent returns out of it. The second part of the question was in terms of committed capital. So, there is AUD 2 billion of further commitments to global managers that are not yet drawn. We think that will be drawn over the next two to three years.

Speaker #3: So, 150 above is a short duration book. Now, there might be a time where we actually chase a little bit more duration and a little bit more yield.

Speaker #3: But of course, you're taking a little bit more risk on future rates at that point. But right now, it's managed a lot more like cash, but we're extracting decent returns out of it.

Speaker #3: The second part of the question was in terms of committed capital. So yeah, there's $2 billion of further commitments to global managers that are not yet drawn.

Speaker #3: We think that'll be drawn over the next two to three years. But it's not perfect, because in that time, there's also some stuff that will be returned to us.

Todd Barlow: But it is not perfect because in that time, there is also some stuff that will be returned to us, that the allocations that we have previously made will receive distributions and repayments along the way. Also, some of the stuff that we have allocated to, we have liquidity in. So it might be a short-term strategy that exists for a while, and then we redeploy that to somewhere else. So right now, as it stands, there is AUD 2 billion of commitments that we need to make over the next two to three years. But it may not be the full AUD 2 billion.

Speaker #3: The allocations that we've previously made will receive distributions and repayments along the way. And also, some of the stuff that we've allocated to, we have liquidity in.

Speaker #3: So it might be a short-term strategy that exists for a while, and then we redeploy that to somewhere else. So, right now, as it stands, there's $2 billion of commitments that we need to make over the next two to three years.

Speaker #3: But it may not be the full $2 billion.

Speaker #5: Thank you. Next question. A strong 13.5% return in private credit, but you noted you're targeting returns of 10% per annum.

Courtney Howe: Thank you. Next question. A strong 13.5% return in private credit, but you noted you are targeting returns of 10% per annum. Are you seeing opportunities worth the additional risk over and above fixed income running yield?

Speaker #5: Are you seeing opportunities worth the additional risk, over and above fixed income running yield?

Speaker #3: Yeah. So, as I touched on earlier, we are targeting low double-digit returns. But when we get repaid more quickly, the IRR on that investment goes up because we get some big upfront origination fees.

Todd Barlow: Yeah. As I touched on earlier, we are targeting low double-digit returns. But when we get repaid more quickly, the IRR on that investment goes up because we get some big upfront origination fees and structuring fees. Occasionally, we find some situations where we can be more innovative and clever and get some outside returns. So overall, we are certainly focused on going down the risk curve and getting stuff that is backed by a lot of assets or a really high-quality business that we really like. Through various mechanisms, we are able to extract a little bit more out of it. So that is why you see that 13.5% total return for the year versus a target that is much lower.

Speaker #3: And structuring fees. Occasionally, we find situations where we can be more innovative and clever, and get some upside returns. Overall, we are certainly focused on going down the risk curve and getting stuff that is backed by a lot of assets, or a really high-quality business that we really like.

Speaker #3: But through various mechanisms, we're able to extract a little bit more out of it. So that's why you see that 13.5% total return for the year versus a target that's much lower.

Speaker #5: And then one on the dividend, maybe for you, David. Given the proportionately higher percentage of assets going into income-returning products, like fixed income and credit, can we expect the NCFI payout ratio to increase from the 73%?

Courtney Howe: And then one on the dividend, maybe for you, David. Given the proportionately higher percentage of assets going into income-returning products like fixed income and credit, can we expect the NCFI payout ratio to increase from the 73%, or is this dependent on market conditions?

Speaker #5: Or is this dependent on market conditions?

Speaker #3: Well, it is dependent on the market conditions. And yeah, we continually have a look at what our forward outlook would be. That payout ratio has ranged from the early 70% to up around 90% over the past six or seven years.

David Grbin: Well, it is dependent on the market conditions. We have a look continually what our forward outlook would be. That payout ratio has ranged from early 70% to up around 90% over the past six or seven years. So it is something that we watch carefully, and we are very mindful of maintaining that 28-year track record of ever-increasing dividends. So, at this stage, we are comfortable where that sits.

Speaker #3: So, it's something that we watch carefully, and we're very mindful of maintaining that 28-year track record of ever-increasing dividends. At this stage, we're comfortable with where that sits.

Speaker #5: Thank you. And a couple of questions now on our offshore exposure. A question here: are you likely to increase your exposure to their specific asset classes that we're looking at?

Courtney Howe: Thank you. A couple of questions now on our offshore exposure. So question here: are you likely to increase your exposure to global assets? Are there specific asset classes that we are looking at?

Speaker #3: Well, I think we are largely set in terms of the partnerships that we intend to have and the allocations we intend to make. The exposure will increase as those commitments are drawn down.

Todd Barlow: Well, I think we are largely set in terms of the partnerships that we intend to have and the allocations we intend to make. The exposure will increase as those commitments are drawn down. But in terms of making a lot more new commitments, I think that will slow quite a bit. What we will see is co-investment opportunities, which are completely in our discretion. But through these partnerships, we do get shown some very good deal flow, which are too large for the manager to be able to invest solely in their fund, so they come to people like us to co-invest with them, and the economics on those tend to be very strong.

Speaker #3: But in terms of making a lot more new commitments, I think that will slow quite a bit. But what we will see is co-investment opportunities, which are completely at our discretion. Through these partnerships, we do get shown some very good deal flow, which are too large for the manager to be able to invest solely in their fund.

Speaker #3: So they come to people like us to co-invest with them, and the economics on those tend to be very strong.

Speaker #5: And on the same topic of offshore managers, at a previous meeting you stated you would be more transparent about the managers you're utilizing for private credit.

Courtney Howe: On the same topic of offshore managers. At previous meetings, you stated you would be more transparent on managers that you are utilizing for private credit. With so much capital deployed in this area, can you give any more information on which partners you are choosing and the investments that shareholders are involved in?

Speaker #5: With so much capital deployed in this area, can you give any more information on which partners you're choosing and the investments that shareholders are involved in?

Speaker #3: Yeah, I mean, we need to balance transparency so people can see what we're investing in with a few things. I mean, one is just the level of detail that we can go into in a presentation like this.

Todd Barlow: Yeah, we need to balance transparency so people can see what we are investing in with a few things. One is just the level of detail that we can go into in a presentation like this. Secondly, if we were to give you the names of the funds, they would not really mean much to you anyway. These are not well-known global super-sized global managers. These are discrete boutiques that we find that we think, and the evidence is, that those smaller boutique managers perform much better than the hyperscale managers. Thirdly, this is our IP. We have gone through a very long and arduous process to build up the relationships with these people and to find them. We need to respect the fact that they do not like being spoken about, and secondly, we do not necessarily want to give away our IP.

Speaker #3: Secondly, if we were to give you the names of the funds, they wouldn't really mean much to you anyway. These are not well-known, supersized global managers.

Speaker #3: These are discrete boutiques that we find, and we think—and the evidence is—that those smaller boutique managers perform much better than the hyperscale managers.

Speaker #3: Thirdly, this is our IP. I mean, we've gone through a very long and arduous process to build up the relationships with these people and to find them.

Speaker #3: And we need to respect the fact that they don't like being spoken about. And secondly, we don't necessarily want to give away our IP.

Speaker #3: So we need to think about how we cleverly give our shareholders the details about what our strategies are. And I think there's more for us to come as this builds out.

Todd Barlow: We need to think about how we cleverly give our shareholders the detail about what the strategies are, and I think there is more for us to come as it builds out. At the moment, it is AUD 600 million. Next year, it will certainly be a larger allocation. So we do want to build out how those funds are performing, what the strategies are, whilst also managing some of those other competing concerns.

Speaker #3: I mean, at the moment, it's $600 million. Next year, it will certainly be a larger allocation. So we do want to build out how those funds are performing, what the strategies are, whilst also managing some of those other competing concerns.

Speaker #5: Thank you. So we're at time, but I think we might do another couple of minutes of written questions.

Courtney Howe: Thank you. We are at time, but I think we might do another couple of minutes of written questions.

Todd Barlow: Maybe keep going. People can drop off if they need to.

Speaker #3: I'm just going. People can drop off if they need to.

Speaker #5: So, the next question is on the listed companies' portfolio. What does a market-neutral strategy mean?

Courtney Howe: Next question is on the listed companies portfolio. What does a market neutral strategy mean?

Speaker #3: So market-neutral is taking a long and a short position. And what we are trying to do there is to pick winners that enables us to generate alpha but takes away the market risk, the general market risk.

Todd Barlow: Market neutral is taking a long and a short position. What we are trying to do there is to pick winners that enables us to generate alpha but takes away the market risk, the general market risk. What it does, it is a supplement to our long-only book, our equities book, but it gives us another source of returns that are uncorrelated to the way that the market as a whole moves. This is us just trying to find and exploit the fact that we can generate alpha and pick the winners and also pick the losers and make money on both ends. This will be a very small strategy when compared to the size of the long book, but it is just another source of uncorrelated returns.

Speaker #3: So what it does is it's a supplement to our long-only book, our equities book. But it gives us another source of returns that are uncorrelated to the way that the market as a whole moves.

Speaker #3: So this is us just trying to find and exploit the fact that we can generate alpha, and pick the winners and also pick the losers, and make money on both ends.

Speaker #3: But this will be a very small strategy when compared to the size of the long book, but it's just another source of uncorrelated returns.

Speaker #5: Thank you. A couple more on credit. Simon Fitzgerald from Jefferies again. Credit was highlighted as a major contributor to NCFI growth. Can you discuss current underwriting standards?

Courtney Howe: Thank you. A couple more on credit. Simon Fitzgerald from Jefferies again. Credit was highlighted as a major contributor to NCFI growth. Can you discuss current underwriting standards, expected returns on new vintages, and whether competitive intensity is affecting risk-adjusted opportunities? Have your underwriting standards changed recently given some of the issues more broadly with collateral and defaults?

Speaker #5: Expected returns on new vintages, and whether competitive intensity is affecting risk-adjusted opportunities? Have your underwriting standards changed recently? Even some of the issues more broadly with collateral and defaults.

Speaker #3: Well, fortunately, we haven't—there's nothing that we've seen in the environment that has caused us to think twice about what we're doing. We are not exposed to the areas where risks and cracks are emerging in the industry.

Todd Barlow: Well, fortunately, we haven't. There's nothing that we've seen in the environment that has caused us to think about what we're doing. We are not exposed to the areas where risks and cracks are emerging in the industry. The other fortunate thing is the private credit that we do has very few competitors. There's not many people who are set up to be able to engineer the kind of flexible solutions that we do. Therefore, we are not as exposed to the competitive pressures. If I was in the scale product, the stuff that everyone is allocating to, the stuff where there's term sheets that get passed around town and everyone's just bidding on them, then there would certainly be a reduction in the quality and terms that I would be getting.

Speaker #3: So, and the other portion of the thing is, the private credit that we do has very few competitors. There's not many people who are set up to be able to engineer the kind of flexible solutions that we do.

Speaker #3: So, therefore, we are not as exposed to the competitive pressures. If I was in the scale product—the stuff that everyone is allocating to, the stuff where there are term sheets getting passed around town and everyone's just bidding on them—then there would certainly be a reduction in the quality and terms that I would be getting.

Speaker #3: But what we are seeing is no real change to what we've done in the past. Last year, I mean, we almost turned over the book entirely.

Todd Barlow: What we are seeing is no real change to what we've done in the past. The last year, and we almost turned over the book entirely last year. We had as many repayments back to us as we made new loans. So the book is a fresh one essentially. In terms of our direct loans, we've got AUD 1 billion of newly written loans in the last 12 months, and our feeling is that those loans are no worse than the quality of what we've been doing for the last three or four years.

Speaker #3: We had as many repayments back to us as we made new loans, so the book is essentially a fresh one. In terms of our direct loans, we've got $1 billion of newly written loans in the last four months.

Speaker #3: And our feeling is that those loans are no worse than the quality of what we've been doing for the last three or four years.

Speaker #5: Thank you. A couple of questions on the emerging companies' portfolio. The first one is: this portfolio has become increasingly more opaque. You've only called out NextGen and To Us as investments.

Courtney Howe: Thank you. A couple of questions on the emerging companies portfolio. The first one is: This portfolio has become increasingly more opaque. You've only called out NextGen and Tuas as investments. Would you think about, in future, sharing a top 10 listed investments for this asset class?

Speaker #5: Would you consider, in the future, sharing a top 10 list of investments for this asset class?

Speaker #3: Well, we're not trying to be opaque. It's just that you can see by the amount of activity that occurs across the portfolio, that things are not as stable as they used to be.

Todd Barlow: Well, we're not trying to be opaque. It is just that you can see by the amount of activity that occurs across the portfolio, that things are not as stable as they used to be, and there's a lot of good reasons for that. The market is changing, the market dynamics are changing, the market structure is changing, and the set and forget portfolios of the past, I think, are not something that we can be in. We need to constantly think about technological change. We need to think about the fact that risk-free rate has gone up significantly in recent times. All of these things affect your portfolio, and you need to constantly assess it.

Speaker #3: And there's a lot of good reasons for that. The market is changing. The market dynamics are changing. The market structure is changing. And the set-and-forget portfolios of the past, I think, are not something that we can be in.

Speaker #3: We need to constantly think about technological change. We need to think about the fact that the risk-free rate has gone up significantly in recent times.

Speaker #3: All of these things affect your portfolio, and you need to constantly assess it. There are some big positions that we call out, which are a little bit—they're more the sort of cornerstones of the portfolio.

Todd Barlow: There are some big positions that we call out, which are a little bit. They are more the sort of cornerstones of the portfolio, but everything else, it churns so much that to call them out would be of no utility because they might not be there in a few months. That is not to say that we are constantly trading, but the book is churning a lot more than it used to.

Speaker #3: But everything else, it churns so much that to call them out would be of no utility, because they might not be there in a few months.

Speaker #3: And that's not to say that we're constantly trading, but the book is churning a lot more than it used to.

Speaker #5: Thank you. Just another one similar to that. There’s many small and mid-caps being taken off the ASX into global private equity hands. Has Sol Patts had a closer look at them before delisting?

Courtney Howe: Thank you. Just another one similar to that. There are many small and mid-caps being taken off the ASX into global private equity hands. Has Soul Patts had a closer look at them before delisting? Can you say which global partner you are involved with for data center development?

Speaker #5: And can you say which global partner you are involved with for data center development?

Speaker #3: I mean, I touched just then on the market structure. And the reality is that a lot of the money in the Australian market is going into the large-cap names that are participants in the indices, and that's where a lot of the focus is.

Todd Barlow: I touched just then on the market structure, and the reality is that a lot of the money in the Australian market is going into the large cap names that are participants in the indices, and that is where a lot of the focus is in pushing up valuations. For a whole range of reasons, a lot of the smaller cap stocks are being left behind, because they do not get that passive flows from institutional money. For that reason, there are a number of underpriced mid-cap stocks on the ASX that are being privatized, and we have a few in our book that are subject to a takeover. I think that that is an unfortunate consequence of the market structure. It might be an opportunity for us. We can certainly look at taking stakes in those undervalued companies.

Speaker #3: ...and pushing up valuations. And, for a whole range of reasons, a lot of the smaller-cap stocks are being left behind because they don't get those passive flows from institutional money.

Speaker #3: And for that reason, there are a number of underpriced mid-cap stocks on the ASX that are being privatized. We have a few in our book that are subject to a takeover.

Speaker #3: And so, I think that is an unfortunate consequence of the market structure. It might be an opportunity for us. Yeah, we can certainly look at taking stakes in those undervalued companies.

Speaker #3: We could certainly look at being a participant to privatize those assets and get some good assets. So definitely, that's why we have the Emerging Companies portfolio.

Todd Barlow: We could certainly look at being a participant to privatize those assets and get some good assets. Definitely that is why we have the emerging companies portfolio, is to identify exactly those types of opportunities. I think there are a lot, and I do not know that the market structure is going to be corrected overnight, and unfortunately, in the meantime, it might see a lot of good companies leave the ASX.

Speaker #3: It's to identify exactly those types of opportunities. And I think there are a lot, and I don't know that the market structure is going to be corrected overnight.

Speaker #3: And unfortunately, in the meantime, we might see a lot of good companies leave the ASX.

Speaker #5: And just on those targeted returns for offshore, we've got the 20% IRR for private companies and 10% for credit. I've got a question here.

Courtney Howe: On those targeted returns for offshore, we have the 20% IRR for private companies and 10% for credit. I have a question here: Are those targeted returns inclusive of the ability to attach franking credits?

Speaker #5: Are those targeted returns inclusive of the ability to attach franking credits?

Speaker #3: No, they don't include franking credits in those numbers. It's a good point. So, the way that we look at that is: if we get a net 10% return from a credit fund offshore, that is, to us, the same as getting a domestic 14% opportunity.

David Grbin: No, they do not include franking credits. No, Sam.

Todd Barlow: It is a good point. The way that we look at that is if we get a net 10% return from a credit fund offshore, that is, to us, the same as us getting a domestic 14% opportunity. 14% comes down to 10% after tax. We think that it is another reason why we have been so excited about this offshore strategy.

Speaker #3: Fourteen percent comes down to ten percent after tax. So we think that's another reason why we've been so excited about this offshore strategy.

Speaker #5: Thank you. Well, there are a couple more questions, but we did answer the highest priority one—the ones that we got the most of.

Courtney Howe: Thank you. Well, there are a couple more questions, but we did answer the highest priority ones, the ones that we got the most of. I think we will wrap the call there, and there will be a recording of this webcast on our website in a couple of hours. Thank you very much, everyone, for joining. Todd, are there any final comments from you?

Speaker #5: So, I think we will wrap the call there, and there will be a recording of this webcast on our website in a couple of hours.

Speaker #5: Thank you very much, everyone, for joining. Todd, are there any final comments from you?

Speaker #3: I think that's great. I appreciate the interest and all the questions. I'm sorry we can't get to all of them, but hopefully we can answer them in time.

Todd Barlow: No, I think that is great. I appreciate the interest and lots of questions. Sorry we cannot get to all of them, but hopefully we can answer them in time.

Courtney Howe: Thank you.

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