WHSP Holdings Stock

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'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. 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.

Thank you, Courtney, and welcome to everybody joining us today. FY '26 was a significant year for Soul Patts. We completed the $15 billion merger with Brickworks, the largest transaction in our 123-year history. We 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'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, increase cash generation to underpin dividend growth and deliver those returns while actively managing investment risk. The next 3 slides discuss each of these objectives.

Starting with portfolio growth, we had a 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. If we exclude tax and look at the pretax NAV, the portfolio returned 10.2%, outperforming the index by 4.2%. Over the last 5 years, the pretax portfolio has returned 11.5% per annum, 3.5% ahead of the market. 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's 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 $572 million. On a per share basis, NCFI has compounded at 15% per annum over 5 years from $0.75 per share in FY '21 to $1.51 in FY '26. 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. 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 5 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. Another key objective is to manage risk. In the last 5 years, we have actively derisked 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. 5 years ago, the portfolio was $5.8 billion and 90% listed equities. 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.

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. Essentially, our allocations follow opportunity. We do not fill buckets with capital moving 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. The clearest evidence of this is what happens when -- 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 2 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 companies asset class. Since taking full ownership, we have been simplifying the operations. We repaid debt and certain legacy operating leases and worked with management on a cost-out program with annualized savings that will flow through from FY '27. 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 $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. 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. The relationship with Goodman began in 2005. Over 2 decades, land at once housed brick plants and clay pits was progressively developed into prime industrial estates and 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.

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 3 years where we have been building relationships with private market managers across private equity and credit in North America, the U.K. and Europe. 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 with a limited number of those kinds of opportunities in Australia at scale. Another 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'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 FY '26. We do the sourcing and diligence in-house and the relationships are already earning us co-investment opportunities on preferential terms. FY '26 was a very busy year with around $1 billion of new commitments made across 17 positions. 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 is around $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 diligence by the same team that has responsibility for direct investments.

So for example, a fund allocation to credit will sit within our credit asset class and be managed by our credit team. Return profile will take time to build and the target returns are indicatively above 20% for private companies and above 10% in credit. We believe that offshore markets not only provides 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. FY '26 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. 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. 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. 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. 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'll 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 $3.8 billion.

I'll hand over to David Grbin, our CFO, to take you through the group financial results.

Thank you, Todd. Good morning, everyone. It's a real pleasure today to present our 2026 results to our shareholders. They are a strong set of numbers, and I'll -- it is a delight to be able to do that today. 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. So I'll do my best to demystify some of these complicated accounting issues for you all today. So our reported or statutory net profit after tax for the year was $2.191 billion, up 502% on the prior corresponding period of $364 million. This year, we've presented our statutory NPAT in 3 components, and we've done that given the high level of portfolio turnover this year and our reduced reliance on associate earnings. 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? Firstly, we've bucketed up items into nonrecurring and they total a $1.5 billion gain. Around $1.3 billion of it came from the day 1 accounting gain and tax cost base reset on the completion of the Brickworks merger, which we don't expect to recur in 2027. The balance around $200 million is made up of 2 parts. Firstly, a gain of $436 million from marking to market our remaining interest in Tuas and Aeris. So we moved from equity accounting to fair value accounting during the year. And that was partly offset by just over $200 million worth of impairment restructuring and other nonrecurring costs. The second component is a total portfolio gains and losses, whether they be realized or unrealized. In FY '26, they totaled $343 million, up $107 million on FY '25. 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. Consolidated operating NPAT was $319 million for FY '26, down $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's the performance measure we believe best reflects the financial health of our portfolio. 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 $572 million, up 11.5% on FY '25. 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 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 FY '26. Over a 5-year period, NCFI per share has compounded at 15% per annum, starting from $0.75 in FY '21 and finishing at the $1.51 that I just mentioned in FY '26. 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 pretax 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 really -- that we previously carried has now become a deferred tax asset. In my terms, it means less tax to pay when we realize those assets in future. 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%. And that outperformance isn't a 1-year story. Over the 5 years, we have returned 11.5% per annum, outperforming the market by 3.5% per annum.

I'll now turn to tax assets. 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 FY '25. This change has arisen from the merger with Brickworks where the tax cost base of all of our assets was reset to market capital. 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 of 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. And 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'd 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 6 months. Around 40% of the portfolio is valued at market value, principal by 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. 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're subject to external audit.

An example of this would be our real estate assets, which undergo third-party valuations at least annually. Assets to 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. 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. This follows a review of credit ratings for each debtor and a specific market risk factor and company factors are included in that calculation. This approach is also externally reviewed and subject to external audit.

I'll hand it back now to Todd to walk us through the portfolio performance and individual asset classes.

Thank you, David. Let me now take you through the portfolio itself, asset class by asset class. At year-end, the portfolio was $13.7 billion on a pre-tax basis or $14.5 billion after tax. 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. 6 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. This is largely because Brickworks is no longer 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. 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 were very strong, returning 17.1% for the year and beating the ASX 200 benchmark by over 11%. To put that in context, roughly 3/4 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%. 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's only been running for a small part of the year, the income contribution so far is modest, but income will build into FY '27.

The book itself is conservative by design. It is currently in high-quality, short duration instruments split roughly 2/3 to global and 1/3 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 by no means is the 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. 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 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 FY '26. Cash generation improved, too. Net cash flow from investments rose 34% to $49 million, driven by stronger contributions from Ampcontrol and Carlile 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. Looking at the 4 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 FY '27.

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. Carlile 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. And 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 FY '26 to $97 billion. Ironbark 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. 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 9 positions with 6 added this year. Of that, $258 million was invested at year-end. Our global private company focus is on mid-market funds of roughly USD 500 million to $3 billion run by managers with deep expertise in a particular sector or strategy, where deal flow is more often bilateral than options 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. 2 of the 6 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. 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 FY '22. 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. The sign of good health of the 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% -- up close to 40% to $220 million, helped by a higher average invested balance and a record year for origination fees.

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 3 years. Those offshore positions account for $373 million of invested capital, and we've got a further $524 million committed but not yet drawn. We added 5 new offshore commitments in FY '26 and have a further 8 already lined up for FY '27. 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. 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.

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. Industrial is our largest exposure followed by energy, consumer, financials and materials with a smaller position in real estate and IT. Fortunately, we've 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'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. We turned down more than 80 deals in FY '26 because they didn't meet our return or structuring requirements. And since we started this strategy in FY '22, every single loan or one position we've 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 1.

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. 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. 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. We've now committed $1.5 billion across 19 positions with 8 more already locked in for FY '27. $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 1 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 Cobrum. 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 Cahaya. 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, alone 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 $6.52 per share. It meant that the impact this year was materially smaller than it would otherwise have been. Looking through this noise, our 3-year track record here remains strong, running comfortably ahead of the benchmark. During the year, we sold down around $1.7 billion of positions to derisk and free up capital for redeployment, and we're steadily building more offshore exposure through funds and co-investments. Real Assets is now 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. 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.

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. 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 derisking 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 for 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'll spend a moment 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. Our approach here is deliberately conservative. 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 taking -- 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. Each asset class has a clear strategy for growing value. Starting with listed companies, we are running an index unaware quality-focused strategy. 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. In private companies, Ampcontrol's move into data center power infrastructure is a good example of the growth we're looking for, an existing platform finding an adjacent market opportunity. In credit, there continues to be good opportunities for direct loans, and we've already got a further 8 offshore credit fund allocations committed in FY '27 to keep building that global exposure.

Emerging companies have been more selective following the Tuas outcomes. We're leading into structural themes like uranium and defense, where the current dislocation is creating opportunity rather than risk. And in real assets, data centers remains a growth engine for us. We're focused on progressing assets up the development curve. The FY '27 year is off to a strong start. While only the listed parts of the portfolio have been revalued to the 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%, 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. So 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. However, we're starting to see some real opportunity for cash generation across this asset class as the investments mature. And we go into FY '27 with real firepower on the tax side. A $1 billion franking credit balance, together with tax assets created by the Brickworks merger underpins our distribution capacity for years to come. And we also believe we're in a strong position in terms of the risk management across the portfolio. Our net cash and liquid investments have increased to $3.1 billion, taking available liquidity, including undrawn debt facilities to $4.2 billion. We deliberately established fixed income as a strategic asset class this year and is now benefiting from a rising risk-free rate. 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.

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're being very selective. 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. 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.

I'll finish on this last slide, which ties together everything we've covered today. Liquidity is the foundation of being able to fund good opportunities. The performance 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 $7.7 billion in assets and made $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. I'll hand over to the moderator for questions.

[Operator Instructions]

Your first question comes from Steven Sassine from Morgans.

A great set of results as always. I've just got a couple of questions, if that's all right. 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. I guess, is there a realistic time to redeploy those funds either into the market or new opportunities? And I guess the second part of that, is there a point where carry that much liquidity becomes a drag on NAV growth rather than keeping that optionality?

So traditionally, 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. 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. And I think the -- our prediction is that the year ahead might be more difficult than the year that 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. But that's 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.

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

That's great. And maybe if we just move across to the credit book. Obviously, pretty strong returns in there, but I think you mentioned $1.1 billion of new positions. I guess as you sort of scale and pedal 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?

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. So you can see that in our returns have been fairly consistent over the last 3, 4 years that we've been doing this. So even though the book has been growing, the returns haven't suffered. But there has been a view that in this market, we believe that there's better value at the higher quality end of the private credit universe 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're finding 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. And we might provide a sort of bridging solution. So actually, our -- 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's lots of reasons why we're getting outsized returns without having to take more risk.

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 credit private companies as well. 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. 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?

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's 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. And we also just like the opportunity set. As I said in my talk, the -- 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.

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. It's just that we can't access that deal flow. 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. So it's effectively the same process done by the same team.

That makes sense.

[Operator Instructions]

Your next question comes from Esther Holloway from Morningstar.

My peer there at Morgans had some pretty similar ones, so I'll try to go off the cuff. 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 supplies 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 sort of grow coverage in?

Yes. Well, most of the new commitments that we've made in the global private partnerships are in North America. So that bulk of it a little bit in Europe, but yes, it's largely North America.

Okay. And is the strategy to -- that enables greater sort of drawdown on that substantial franking credit balance, is that working as expected?

Well, it's early days yet, but the concept is quite simple. So we will earn offshore income. That offshore income when we bring it back to Australia has always already been subject to tax overseas. So it doesn't get double taxed in Australia. So when we go to pass that on to shareholders, we can then attach the franking credits that were already built up over time to that dividend that we pay to our shareholders. So it is just that way of utilizing that bank of franking credits that otherwise, if we'd 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.

Great. And on private credit, obviously, the spotlight has been on private credit and its risks lately. And I note that Soul Patts doesn't have a large exposure to real estate and no SaaS -- [ AIS ] businesses offshore. So I think that's 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?

Yes. 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's lots of headlines around it. 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 have to then go and deploy it. And if I'm a really, really large private credit manager and I've got 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. And it also means that it's going to the areas that are -- that have the most demand for the products.

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. And in the U.S., a lot of that is to sponsor-led private equity loans, which are highly levered loans to leverage buyouts. And in the last few years, a lot of those leveraged 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's not something that we wanted to do from the outset. We felt that Australia was a bit of a crowded space anyway. And what we wanted to focus on was a derivation of what we already do, which is we invest in equities in good quality businesses. But from time to time, we come across opportunities where that 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. And for whatever reason, they can't 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'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 has been some loose practices, 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. 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're very confident with the managers that we're partnering with globally.

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.

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

Yes. 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 has. 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. 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 opportunities. So the big one is in Victoria's Craigieburn. And in the U.S., we have the Mid-Atlantic site, both of which we think have good upside from rezoning.

Thank you. Another analyst, Ryan McCarthy 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? And 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?

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's expectations that there will be 2 or 3 rate rises imminently. 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. 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 extracting decent returns out of it.

The second part of the question was in terms of committed capital. So there's $2 billion of further commitments to global managers that are not yet drawn. We think that will be drawn over the next 2 to 3 years. But it's not perfect because in that time, there's also some stuff that will be returned to us, the allocation 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. So it might be a short-term strategy that exists for a while and then we redeploy that somewhere else. So right now, as it stands, there's $2 billion of commitments that we need to make over the next 2 to 3 years, but it may not be the full $2 billion.

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

Yes. So as I touched on earlier, I mean, 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. And occasionally, we find some situations where we can be more innovative and clever and get some outsized 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. 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.

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?

Well, it is dependent on the market conditions. And we have a look continually what our forward outlook would be. That payout ratio has ranged from sort of early 70% to up around 90% over the past 6 or 7 years. So it's something that we watch carefully, and we're very mindful of maintaining that 28-year track record of ever increasing dividend. So at this stage, we're comfortable where that sits.

Thank you. And a couple of questions now on our offshore exposure. Question here, are you likely to increase your exposure to global assets? And are there specific asset classes that we're looking at?

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 the -- that will slow quite a bit. But 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.

And on the same topic of offshore managers. At previous meetings, you stated you would be more transparent on managers that you're utilizing for private credit. 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?

Yes. 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. 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 global supersized 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. I mean we've gone through a very long and arduous process to build up the relationships with these people and to find them. 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. So we need to think about how we cleverly give our shareholders the detail about what the strategies are. And I think there's more for us to come as it builds out. 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.

Thank you. So we are at time, but I think we might do another couple of minutes of questions.

Keep going. People can drop off if they need to.

So next question is on the listed companies portfolio. What does a market-neutral strategy mean?

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

Thank you. A couple more on credit. So 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?

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. 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. 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's term sheets that get passed around town and everyone is just bidding on them, then there would certainly be a reduction in the quality and terms that I would be getting. But 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 $1 billion of new -- 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 3 or 4 years.

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?

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. 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 the risk-free rate has gone up significantly in recent times. All of these things affect your portfolio and you need to constantly assess it. So there are some big positions that we call out, which have -- which are a little bit -- they're 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. And that's not to say that we're constantly trading, but the book is churning a lot more than it used to.

Just another one similar to that. There's 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? And can you say which global partner you are involved with for data center development?

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 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 that passive flows from institutional money. And for that reason, there are a number of underpriced mid-cap stocks on the ASX that have been privatized, and we have a few in our book that are subject to a takeover. And so 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. We can 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 is 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. And unfortunately, in the meantime, it might see a lot of good companies leave the ASX.

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. Are those targeted returns inclusive of the ability to attach franking credits?

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 us getting a domestic 14% opportunity. 14% comes down to 10% after tax. So we think that it's another reason why we've been so excited about this offshore strategy.

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. So I think we'll wrap the call there, and there'll be a recording of this webcast on our website in a couple of hours. Thank you very much, everyone, for joining. Todd, is there any final comments from you?

I think that's great. I appreciate the interest and lots of questions. Sorry, we can't get to all of them, but hopefully, we can answer them in time.

Thank you.

About owning assets that behave differently across industries, asset classes, geographies and risk profiles. They don't all move in the same direction at the same time. So when 1 part of the portfolio falls out of favor and we have exposure, our portfolio can absorb it. That is by design. We also have permanent capital investing our own balance sheet. That means we can have strong conviction behind our investment decisions at times going against the grain with a contrarian view. We can hold our positions for the long term and compound great returns for shareholders. These are structural advantages that are genuinely hard to replicate.

And lastly, our structure is totally aligned with shareholders. When you invest with Soul Patts, you are not just buying a portfolio of assets. You are buying into an embedded investment company with a strong purpose, deep capability, networks and competitive strengths that have been built over 100 years. Our principles run deep and have been shaped over multiple generations of the founding family carried forward today by our Chairman, Rob Millner.

Our team is invested in the outcome with incentives tied to growing portfolio value and cash flow, not growth in funds under management. The compounding effect of all of that put together is what you see in our long-term track record. Over the last 5 years, our portfolio has evolved considerably. Back in January 2021, and the portfolio was $5.2 billion and heavily concentrated in equities, mainly Brickworks, New Hope and TPG. By early 2023, the portfolio was starting to see the benefit of the Milton merger, which had completed about 18 months prior.

We had begun the exercise of repositioning the equities portfolio we acquired from Milton into private asset classes. It was strategically important for derisking the portfolio by shifting more capital into these uncorrelated and diverse asset classes such as credit and private companies. Over the last 3 years, we have grown our credit book by more than 8x. Credit is uncorrelated to equity markets and exhibits more defensive qualities.

We have the internal capabilities to originate, structure and manage these investments in a way that generates a good return for the level of risk being taken. Private companies have grown nearly 4x over the same period. These are high-quality businesses that benefit from our capital, insights and long-term support. Today, we have a $13.8 billion portfolio spread across 5 distinct asset classes.

The key message I want to reinforce is this. By recycling and redeploying capital, we are actively managing risk. We are building the capacity to deploy this capital into higher conviction opportunities as and when they emerge. The Soul Patts portfolio has always managed risk well, Today, we are even more diversified and less correlated than ever before. Against our backdrop of Evolution, the strategy itself remains entirely consistent.

We have always measured ourselves against 3 clear objectives. First, we aim to increase cash generation from the portfolio to underpin dividend growth. The interim dividend has now grown every year for the past 28 years, the compound annual growth rate over that period has been 10.4% per annum. This track record is unmatched in the Australian market.

Second, we aim to grow the portfolio and outperform the market on a total return basis over the long term. Over the past 25 years, the annualized total shareholder return has been 12.9% and which is 4.6% higher than the market.

Third, our objective is to deliver strong financial returns while actively managing investment risk. This is fundamental. It means that we are constantly looking for outsized returns for the risk we are taking in any asset, and we construct a portfolio to protect shareholder capital on the downside. With a truly diversified portfolio, each asset class performs differently through the cycle, which adds resilience.

Over the past 25 years, whenever the market has had a negative month Soul Patts has outperformed by around 2% on average per month. This is how our company is structured to both grow and protect shareholder capital through market cycles.

Turning now to the first half. We had a very strong performance against each of those key objectives. On cash generation, net cash flow from investments of $334 million is up 15.4% on the prior corresponding period. This strong cash flow enabled the Board to declare an interim dividend of $0.48 per share fully franked, marking our 28th year of consecutive dividend increases.

On portfolio growth, the net asset value of $13.8 billion is an increase of $1.8 billion in the prior period. On a per share basis, the portfolio returned 9.7% in the half, outperformed the ASX 200 indexed by 6.6%. And on risk management, we executed $4.3 billion in transaction activity during the half with $2.1 billion in new investments. What these numbers tell you is that we are actively rebalancing the portfolio towards greater liquidity in what remains a volatile environment. I'll come back to this point later in the presentation.

We've been positioning the portfolio to be more resilient through challenging markets, and we ended the period with $472 million in available cash, which gives us strategic optionality. We also have undrawn debt facilities of around $1.2 billion, which gives us further flexibility.

I'll hand over to David Grbin, our CFO, to take you through the group financials in more detail.

Thanks very much, Todd, and it's a real pleasure to present a solid set of results for the -- which is the first set of results for the merged entity. On each of our key measures of performance we've exceeded the prior period or the balance at the previous financial year at the end of 2025. And we have an even stronger balance sheet post merger gearing is low, and we have ample liquidity to take advantage of any market dislocation. If we look at the group financial results now for the half, statutory or reported NPAT was $2.3 billion.

A little over $2 billion of that are nonrecurring or we don't expect to happen in further periods. They are as a result of the merger and the tax reset that took place at the time of the merger. So around $2 billion are nonrecurring items. $1 billion of that comes from these one-off accounting gains and tax cost reset as a result of the Brickworks merger.

During the half, we sold some shares in Tuas and ARIS and took a profit on those of around $300 million. And we -- as a result of those sell-downs no longer account for those investments as equity encounter investments. They now go to be set at market value. And on accounting, there's another $40 million gain from that reset.

And finally, there's a couple of hundred million dollars in that nonregular item of $2 billion resulting from unrealized gains from some of our trading stakes in the emerging companies portfolio. This really illustrates the difficulty of using profit as a measure of overall portfolio health.

To try and guide people with that, we do provide an underlying profit number, and that's the regular NPAT number, which you can see on the bottom of the slide there, a little over $300 million up nearly 7% on the prior corresponding period. That's arisen through 2 events. Firstly, we've got some fair value gains that came through in the portfolio both in the emerging company and an extra contribution from real assets, offset by lower results coming out of New Hope.

Overall, underlying profit up nearly 7% for the half. If we turn now to our preferred measure of portfolio health, which is net cash flow from investments. And for the half, it was $334 million, a little over 15% up on the prior corresponding period. And if we take into account the larger capital base because we raised more equity at the time of the merger, it's up 12.5% on any measure, a very strong result on the prior corresponding period.

Over the last 3 years, net cash flow from investments has compounded at a little over 9% per annum from $0.68 per share in the first half of 2023 to now at $0.89 per share in the most recent half. that consistent delivery of cash flows and consistent growth in cash flows really underpins the ability to us to continually increase the dividend that we pay to shareholders. and we've been increasing that dividend to shareholders every year for the last 28 years.

We always like to remind shareholders that Soul Patts has never missed paying a dividend since becoming a publicly listed company in 1903. And this includes major periods of disruption, including the global financial crisis, world wars, great depressions and even most recently, COVID. If we now look to the net asset value of the portfolio, the total NAV on a pretax basis was $13.8 billion, up $1.8 billion on the prior corresponding period, and as Todd mentioned, delivered close to 10% return for the half.

The portfolio outperformed the ASX 200 Index over that period by nearly 7%. And on a 12-month trailing basis, when we adjust for dividends, that return was 14.3%. This is an exceptionally strong outcome for our shareholders against a very volatile market climate. The primary drivers of the recent NAV growth were our equity holdings in stocks like NextGen Tuas, New Hope in ARIS, which all performed strongly for the half. The the merger that we took place with Brickworks in September was accretive to NAV, and that's around 2% of that return.

So even if you back that 2% out that comes from the merger, we've still got substantial outperformance for the half. And when we adjust the dividends, NAV has compounded a little over 11% per annum for 3 years. If I finally now turn to capital management. So as Todd mentioned, we have, at the half, nearly $500 million in available cash, and that reflects some of the equity raising proceeds that we've we raised back in September and also the cash generation over the last 6 months. We've got available debt of $1.2 billion. So we've got ample liquidity to take advantage of any of those market dislocation.

Importantly, one of the outcomes of the merger was that we were able to reset the tax cost base for all of the investments across the whole portfolio. So both in the old Saul Patts on portfolio and the Brickworks portfolio, and they've been able to be reset to market values at the time of the merger. This now means that going forward, we're not burdened with assets that have large unrealized capital gains tax liabilities. They've been reduced now because we've been able to reset up to market as at the date of the merger in late September.

This structural improvement in the balance sheet means that the investment team can rebalance the portfolio or make changes to the portfolio and there will be minimal tax friction. Importantly, the franking balance of both Soul Patts and Brickworks could be merged together and it now stands at a little over $1.1 billion.

I'll now hand back to Todd who will walk through the individual asset classes and our strategic direction.

Thanks, David. Let's now go through each part of the portfolio in turn. The portfolio, as I said, is now genuinely multi-asset class. Each of these asset classes plays a specific role whether this is to generate uncorrelated income streams, compound value or provide exposure to structural growth tailwinds.

Increasingly, we're diversifying the portfolio to include more international investments, which now accounts for 18% of the total portfolio value. And what we do with each of those international investments is put them into the relevant asset class bucket that you see on this slide. So it's not a separate asset class. I'll move through each of the asset classes and their contribution to the group results.

Listed companies now represent 32% of the total portfolio. That's down from 57% in the prior corresponding period. So in the last 12 months, that's produced. That reflects the removal of Brickworks as a listed equity following the merger. Brickworks is now sitting across private companies and real assets.

On performance, the total return for the half was 5.9% that outperformed the ASX 200 Total Return Index. Our performance was driven by our overweight position in LNG sector, which is predominantly our investment in New Hope. Net cash flow from investments was $150 million, down 23.9% in the prior period, which is a reflection of the reduced size of the portfolio.

Listed companies has a long legacy of strong performance built around businesses that generate cash and compound value over time. We look for businesses with durable competitive advantages run by quality management teams with a long-term orientation. And there's no better example of that than Apex Healthcare, a founder-led leading pharmaceutical group headquartered in Malaysia and one of the leading players in this market.

Apex shows what patient high conviction investing can deliver. Over the past 20 years, our investment has compounded at 20% per annum, and it began with a decision that had nothing to do with returns. It began with people. In the 1950s, our former Chairman, Jim Milner, arranged for Key taping, the founder of Apex to do his pharmaceutical apprenticeship with Soul Patts.

A decade later, [ Ketan ] established the first Apex pharmacy in Malaysia. He would then go on to expand the business into distribution and manufacturing, establishing a joint venture with Saul Patts under the name [ Zep Pattinson. ] Pictured on the right is the first manufacturing plant in Malaysia and its official opening ceremony attended by Jim Milner. When Apex listed on the Kuala Lumpur Stock Exchange in 2000, salads retained approximately 30% on alongside the founding family. Keith Sun, Kirk Chin, stepped up as the CEO.

At the same time, Soul Patts Chairman, Rob Milner joined the Apex Board and was instrumental in establishing Apex long-term track record of dividend payments. Apex was a phenomenal growth story. From a $65 million Malaysian wine company at IPO to MYR 1.9 billion business at the time of privatization. We supported that process and helped bring in a new partner to take Apex into its next chapter. And our stake was divested for over AUD 200 million.

Emerging companies is now 21% of the total portfolio, up from 16% in the prior period and the performance for this half was exceptional. Total return was 36.7% outperforming the small orgs benchmark by 19.4%. Net cash flow from investments came in at $81 million, up 161% on the prior period, driven by strong trading gains.

The outperformance was driven primarily by early high conviction exposures to energy, communication services and defense. Souls has had a strong track record of backing emerging high-growth companies. Large positions in this portfolio today include TAS, EOS and NextGen Energy. This portfolio capitalizes on our flexibility to invest in both listed and unlisted opportunities, a variety of industries as well as jurisdictions. The chart on the right reflects that breadth.

Credit is 12% of the total portfolio. The net asset value grew 36.5% to $1.6 billion. Net cash flow from investments was $103 million, up 9% on the prior period. And this was a pleasing result because the prior period was elevated by the timing of loan repayments, mainly EOS who repaid 1 of their previous loans ahead of time in the first half of -- we deployed $383 million of new capital during the half, including $67 million offshore and had $474 million of loans we paid, a healthy sign of a book that is actively turning over. To offset these repayments, we need to keep writing new loans, and this is the biggest challenge we have. Returns from this asset class are driven by the quality of our borrowers, the way we structure each loan and the interest we earn for the risk we are taking.

Soul Patts is structurally different to other credit funds in that we are deploying our own balance sheet, and we don't need to worry about duration mismatch. Our book is built through direct relationships -- the majority of the loans in this book have been sourced by our team. So our reputation gives us a meaningful advantage in this regard.

And with the preference for bilateral deals, this enables us to have a lot more control over deal structure, setting the terms and maintaining active oversight. The pipeline remains active, both onshore and offshore, with $367 million in undrawn but committed funds to offshore credit partnerships. We see the current environment as being potentially attractive for continued offshore deployment. Private credit is a deep asset pool and in recent times, has seen significant growth. However, we've all heard of the many large funds being in outflows, and this should create a better environment for future investment. Private companies now makes up 11% of the total portfolio.

The net asset value grew 49% to $1.6 billion, following the addition of Brickworks building products and other new investments. These are the new investments were predominantly offshore with $50 million deployed into strategic partnerships. While this is still a very small proportion of the overall portfolio, we believe that allocations to partners in offshore markets gives us access to unique opportunity sets and specialist expertise. Net cash flow from investments increased 32% to $37 million for the half.

What is unique about our approach to private companies investing is our flexible mandate. We have the ability to hold minority and majority positions, and we do not have a requirement to exit the investment quickly. Our edge is the access we get to these types of deals before anyone else sees them. This is evidenced by the current portfolio where 94% of the current assets in that portfolio were sourced through a proprietary deal origination. It tells you that we have high-quality relationships and a reliable reputation as a long-term capital partner.

When founders or business owners are choosing who they want as an investor. They want someone who will be there through cycles, who won't force a short-term exit and who can add genuine value alongside them. We work alongside management to actively shape strategy and unlock value, and we are continuing to build and grow these businesses as we constantly regenerate the portfolio.

Now I mentioned that the newest addition to private companies was the Brickworks Building Products business. The integration of Brickworks has gone extremely well. We've reduced the structural complexity in the business and enhanced financial flexibility.

In addition, the management of Brickworks are taking the opportunity to simplify the operating model. These are tangible improvements that make the business easier to manage and position it better for the cycle ahead. Building Products is our second largest asset in the private companies portfolio and one that we believe will perform well over time.

The current market environment remains challenging. While we are starting to see some recovery in the Australian market, particularly in multiresidential demand, the U.S. market remains soft. For example, the nonresidential market that Brickwork services is 27% below where it was 3 years ago. We knew that building products is a cyclical industry, but we have conviction in the quality of the underlying assets and the structural dynamics of the market they operate in over time. Real assets are now 22% of the portfolio, which is a large increase from the prior period.

The increase in NAV reflects the addition of the industrial property joint venture with Goodman Group, which came across through the Brickworks merger. Net cash flow of $24 million was driven by distributions from some of our existing property assets, which are exposed to industrial and residential development tailwinds.

The attraction of real assets is the combination of income generation and long-term capital growth with defensive characteristics that provide resilience through different market environments. Industrial property, data centers, agriculture and water rights are tangible assets tied to positive structural shifts in the economy. They benefit from demographic tailwinds such as the growth of e-commerce the demand for data infrastructure and Australia's high-quality agricultural land.

I'll now touch on how we think about capital allocation, and I think it's important to understand the principles that drive investment decisions, not just the outcomes. There are 3 principles at work in how we construct and manage this portfolio. The first is a bottom-up portfolio construction approach. Capital flows -- capital follows our highest conviction ideas. We are not allocating by filling buckets or trying to hit sector targets. Every asset is in constant competition with every other idea in the pipeline.

If something better comes along, the capital moves. And we manage risk dynamically, not by preset targets but by considering the portfolio as a whole. If the market changes or the opportunity set changes, we have the flexibility to respond.

The second is protecting shareholder capital, that means owning assets that exhibit strong fundamentals and resilience through cycles. We have a bias to companies with strong cash flows that are low cost, have high-quality management and strong balance sheets. We're also seeking asymmetric positions where the upside is meaningfully larger than the downside.

The question we are always asking is the same. Does the return we can generate more than compensate for the risk we are taking. That discipline never changes regardless of market conditions.

The third is we want to use our structural advantages. We seek to exploit our permanent capital and our flexibility to generate alpha. These advantages only compound in value over time and create more access to opportunities. Right now, we are being deliberate about building more liquidity in the portfolio because the world is very uncertain, but uncertainty creates volatility and opportunities for mispricing. In this kind of environment, permanent capital and flexibility are significant advantages.

This slide here shows you the -- those principles in practice. During the recent half, we transacted over $4.3 billion, and that excludes the corporate activity around Brickworks. That is a significant level of transaction velocity and reflects the dynamic nature of how we manage risk. The number is carved up between buying and selling.

We invested $1 billion into emerging companies, $0.5 billion into large-cap equities, $400 million into credit and circa $100 million into private companies. On the other side, we divested around $700 million from emerging companies. We sold $1 billion from large cap equities and had circa $500 million of credit loans repaid. So you can see that the credit portfolio was slightly decreased in size because we had more repayments than we could make new investments, but we did substantially reduce the size of the large-cap equities booked through the period. That rotation in and out, rebalancing, recycling is active portfolio management. and is how we maintain the quality of the portfolio over time.

We ended the period with a strong cash balance for strategic deployment. In the period since the end of the half, we've continued to increase the liquidity across the portfolio. It means that when the right opportunities emerge, be they mispriced assets, countercyclical plays or high conviction new positions will be ready to act.

Acting on behalf of shareholders is our team and a strong culture that comes with 92 years of combined service to sell pads. We've made a couple of changes to our executive leadership team during the half that I'd like to share. Deane Price, who first joined Soul Patts in 2008 was recently promoted to the investment team leader in addition to his current role as Managing Director.

As the portfolio grows, Dean ensures we are constantly collaborating across all investment teams to keep across emerging opportunities. Brent Smith, who also first joined in 2008 was recently promoted to Managing Director. A more recent appointment in January was Andrew Sutajewski as Managing Director. Andrew brings a diverse investment skill set from experience in Australia and internationally spending private equity listed equities and M&A. Former CIO, Brendan O Dea, departed the company to pursue other endeavors late last year, and we thank him for his contribution to the business, wishing him well for the future.

We often get asked about how we maintain a strong culture. This is a culture that has been passed down from generations of family oversight of the business. We are stewards of shareholder capital, and that duty is front of mind. And that culture has strengthened over time. Following our most recent culture survey, we received a very strong engagement score that outperformed the top 10% of companies operating within the financial services industry. We have very low staff turnover with a rolling annual attrition rate of less than 1%.

Our team is a one-to-one balance between investment and enablement staff generalists and specialists working along see each other, alongside each other as 1 team. Our team is a huge part of our competitive advantage. The portfolio is in good shape, and we've been preparing for this kind of environment for some time. The current priorities are: first, to actively manage liquidity. We are increasing the liquidity profile of the portfolio and managing cash -- this includes ensuring that we have leverage available to us for additional flexibility. At the same time, we are allocating to more defensive and liquid strategies.

Second, to reposition the portfolio -- we are continuing to ensure that the portfolio is resilient in what remains a highly volatile environment. And we are continuing to increase our international exposure where we see strong risk-adjusted returns and partnerships that can benefit from the current environment.

Third, to allocate opportunistically. We will continue to look from this price risk. We are prepared to be countercyclical and contrarian. We need to be in a position where disciplined analysis can generate outsized returns in periods of dislocation. It is in these environments where our structural advantages perform best.

Our permanent capital and unconstrained mandate allow us to take a long-term view when others are worried about liquidity and short-term performance. In closing, a recap of the key performance highlights for the recent half. The portfolio grew 9.7% per share over the first half, significantly outperforming the broader market.

Net cash flow from investments grew by 15.4% on the prior corresponding period. underpinning a fully franked interim dividend of $0.48 per share, which is up 9.1% on the prior year. And we continue to maintain liquidity and optionality with available cash close to $500 million and significant undrawn leverage and rebalance the portfolio with over $2 billion of new investment ideas made during the half. Over the longer term, our strong performance has enabled the Board to continue increasing dividends, which have increased for 28 straight years and compounded at nearly 12% per annum for the last 5 years.

Looking at total shareholder return, we have delivered an average return of 12.9% per annum over 25 years, outperforming the ASX 200 by 4.6% per annum, which means that over 25 years, an investment in Soul Patts has multiplied by around 20 times which is triple an investment in the ASX 200 index alone. That is the compounding effect of a consistent philosophy and disciplined execution. Thank you. Courtney?

Thank you, Todd, and thank you, David. We will now open up to the Q&A part, and we will start with analyst questions that may be on the line. Thank you, moderator.

[Operator Instructions]. Your first question today comes from Steven Sassine with Morgans.

Want to ask a couple of questions, and congratulations on another strong result. I've got 3 questions. I might just ask them 1 at a time if that's okay. I'll start with the private credit portfolio. I mean, Todd, you spoke to that quite a fair bit in your opening remarks. -- it's quite topical at the moment, and we're starting to see some sort of pockets of stress emerging globally. And obviously, there's elevated scrutiny. Can you maybe just talk to any concerns you have about this becoming more of a systemic issue? And I guess, your overall confidence around the quality of your existing credit investments.

Sure. Thank you. So my view on the private credit market is we haven't seen any real indications of structural stress in the system. We haven't seen the defaults increasing. What we're seeing is people's expectations of higher defaults I mean to date, what we've seen is a few select examples whether people call them cockroaches or otherwise. But there are a few examples of fraud. -- rather than structural issues.

Now you could argue that there's a structural issue that perhaps there was being too much money coming into private company so private credit land and people have had to deploy that quickly and maybe their credit standards has dropped and maybe that's why they were exposed to some of that fraud. But I think the broader issue that people are concerned about, in particular, in the U.S. is the exposure to SaaS and software loans.

Now I mean, what I always say about -- if you're worried about defaults of credit, then you should certainly be worried that the equity is more than impacted because at the moment where people can't repay loans, the equity has gone to 0. So I think to some degree, we haven't seen how that's going to play out. But I would say that the it's net positive for us because what we've been seeing in the general environment is a rush of funds into private credit. And what that has meant is that those funds have to be deployed.

And so generally speaking, we've seen loosening credit terms, and we've seen tightening spreads. And so what you saw with our portfolio in the last 6 months, is less deployment than repayments. So we were in net outflow. Now that wasn't because we were choosing to allocate less to this asset class, it was because we couldn't find as many good opportunities to replace the repayments that we were seeing. Repayments are a great thing because it shows that we provided loans to the right companies. They're now in a position to refinance them with cheaper money. So getting repaid is healthy. And the fact that we didn't chase the market down and provide lower quality loans, I think, is an important discipline.

So I don't think our thesis on private credit has changed. We're not seeing any stress in our book. The kinds of managers that we are partnering with offshore, we'll do better in this environment where we will see less money coming into private credit funds. And in fact, we're going to see outflows and that should be very beneficial for the type of people that we invest alongside.

Great. That makes perfect sense. And my second question is probably more of a broader question actually. Clearly, the portfolio performs pretty well in volatile markets, and we can see that with the uncorrelated returns and the current defensive positioning. But I mean, if we assume things normalize from a geopolitical sense, if you think sort of 6 to 12 months out, like how are you positioning the overall portfolio for growth, like where are the actual opportunities at the moment?

Well, I mean, we've fortunately been heavily invested in the right thematics. And I think that those thematics will be enduringly positive for some time. So we've always been tilted towards energy for a long time because we believe that there was significant growth in energy required for the electrification of everything and growing populations and urbanization and all those sort of things.

Then we saw the growth in energy demand as a result of the data centers in -- and now what we're seeing is energy dislocation from the war. So that's the theme that we think is enduringly positive for us. And so I imagine that we're going to do quite well out of that for some time. Fortunately, the other parts of our emerging companies portfolio is telco. So we've got to us in the emerging companies and TPG and the listed companies.

I think they are very defensive companies in that -- people are not going to switch off their mobile phone if they get into a more sort of recessionary or low-growth environment. So I think that they are high-quality assets we've got exposure to real assets. Now that's still generating a positive return for us, but it also has the additional benefits of being defensive and resilient in inflationary low-growth environment.

So I think everything that we've been positioning ourselves towards has done very well. But the reason why we're sort of just getting a little bit more liquidity is because the environment is uncertain at the moment that we want to be in a position to be able to strike wherever we see that next opportunity. And I don't know what that's going to look like, but I suspect the opportunity set looks better in a stressed environment than what it has in the last couple of years, where there's been lots of money flushing around the system and everyone's been risk on.

Great. And just my final one. 18% of the portfolio off the top of my head, I think, is allocated to offshore investments.

That's right.

Wwhat was sort of -- what sort of appetite is that to ramp that up? Like is there a target? Or will it be sort of more opportunity dependent? And I guess, secondly, if that does ramp up, can you just maybe touch on your internal capability to manage these? Like is there going to be additional headcount required?

Yes. So I mean like everything, we don't have a desired target of how much we want to allocate to these strategies. But it takes time. You can't just allocate all of it at once, firstly, because you need to find and develop the relationships with the right managers. But secondly, you want to sort of average into different vintages and not peak. When you're investing in a fund, you're sort of taking a 5- to 10-year view, so it's better to do that over time rather than all at once.

So we're being disciplined about the way that we're allocating it and it's probably increasing by sort of circa $500 million per annum. The way that we're managing that internally is we think of an allocation to a manager in the same way that we think of an allocation to a company. The difference being that -- we can't get to the underlying companies offshore because we don't have boots on the ground. We recognize that by the time we see that opportunity, it's probably been passed over all of the established people in the market.

And so what we're doing is that's why we're partnering with people who do have that expertise, but they think like us. And so the approach that we're taking from our team is to think about it just in the same way that you would an allocation to a company where we are hands on.

We're deciding that, that team is aligned with our way of thinking and they're good people to back. But we're also learning from all of their experience and on-the-ground expertise that we can then apply back here. So it's completely additive. I mean, not only are we getting them to make the investments, but we're also getting a lot of access to great quality data along the way.

Congrats on the strong result.

[Operator Instructions]. 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.

Thank you, moderator, and we do have quite a number of questions that have come through on the webcast Todd. Picking up on the credit thematic, which I know Steven asked you about, but there's a couple of follow-up questions to that. Firstly, can you comment on the mix of the current loan book in terms of the security, the spreads, whether there are defaults and the covenants?

Yes. So I mean we've avoided any kind of covenant light structure most of the book that we have has senior security, I would say probably 60% of it is senior secured. 15% is asset backed. About 15% is sort of junior in security and then there's other stuff like prep equity and other instruments in there. But mostly, we are looking at ways where we get elevated above a substantial amount of equity in the liquidation preference, ensuring that we have really strong controls around covenants and information and rights to step in if things getting to travel.

And another follow-up question on credit. A shareholder is asking, are you able to state which global credit funds that Soul Patts is invested in to give shareholders more transparency in terms of the industry and the risks associated with global credit managers.

Yes, there's a fairly long list of our exposures to credit and private equity funds. But if I'm just looking at credit, and I think maybe next time around, we'll have a separate bit of information around our approach to international investments. But I would say, to answer that in terms of credit, I would say that our focus is more around either funds that do well in distressed environments like special sits or distressed funds or asset-backed financing.

We have tended to avoid the sort of generic leverage buyout lenders, leveraged finance lenders. A lot of those are the ones that in the U.S. are going to be exposed to some of those SaaS companies and things. Our exposure to that is limited to nil.

Thank you. Moving on now to franking credits. David, I might ask you these questions. We have a couple of them. So franking credits highlighted is $1.1 billion. Could you comment on the Board's intended franking strategy, meaning buffer versus deployment and what constraints might limit franking utilization.

Well, the -- so at the moment, and we said in the presentation, there's about $1.1 billion of franking credits available. If you gross that up to say, well, how much of a dividend we could pay to eliminate that balance, it's about $2.6 billion. So that's the first point.

In terms of being able to use that, I think most of the constraints are not ours. They do come from restrictions that the various federal governments have put in over the last sort of 15 years. So it becomes very, very difficult to -- other than if you want to take on a fair way for gearing and then and pay that out as a dividend. That is an option, but we don't see the need to do that. Given that would prefer to use that gearing to reinvest into the portfolio.

What we are doing and what Todd mentioned in terms of putting more of the portfolio offshore, we can do that in a manner that earns higher post-tax returns and then attach franking credits to that to that -- to those earnings because they're offshore. They're not subject to tax in Australia, and we can then continue to attach franking credits to continue to use that balance and try and wear that down over time.

Thanks, David. Turning back to international. There's a question here about where Soul Patts is seeing the most attractive opportunities for the marginal dollar. And in framing itself as a listed family office, shouldn't there be a larger slice allocated to listed global equities, Todd?

So the marginal dollars are going into strategies that we think will perform over the next 3 to 5 years. So as I said, there is a bias in some of our deployment offshore to those funds that will do well in dislocation. And these are funds that have still managed to do quite well even in good times. So in the last sort of 5 years, they might have been able to still do 10% to 13%, but they would do much, much better in periods where there's a bit more distress -- the second part of the question was...

Inframing us ourselves as a talk...

About global equities Yes. Well, I mean when we did the analysis a few years ago, we looked at where -- even though we had a lot of ASX-listed companies, the proportion of international revenue in those companies was very, very high. And if I think about things like New Hope, as an example, it has almost all of its demand and revenue from offshore. And so we have always had an international flavor to the business.

But I think that we are being a little bit more active now in thinking about how we can get exposure to offshore equities, particularly in in emerging markets, I think, is probably the one where we have a bit of interest right now. And I think that gives us a fair amount of liquidity at the same time. So I think that, that is an opportunity for us to grow a bit more.

Thank you. And with a portfolio that has great allocation to private assets, does the liquidity advantage that Soul Patts has reduced over time as the listed equity position reduces?

It's a good point because a lot of those private companies are illiquid. But at the same time, when I talk about having liquidity and increasing liquidity across the portfolio, I don't mean the whole portfolio. I mean, it would be silly for us to give up on the advantage that we have with our permanent capital and give away that sort of premium for illiquidity by having the whole book capable of being liquid.

So we want to be thoughtful about it, but what we are doing is in the listed part of the book, we're increasing the liquidity. So we're broadening out the book and reducing some of the sizes of what we have, and that just gives us more flexibility. But you can see that the direction of travel has been to increase our exposure to private markets. But at 50-50, that is by no means compromising the liquidity that we have.

And a follow-up to that question, you talked about the lower risk that you are taking and yet continue to generate excellent returns. Could you give a couple of examples of this low risk in practice?

Well, I think there's lots of examples. I mean, credit, as an example, is, in my mind, a defensive asset class in the sense that when something goes wrong, equity is going to experience much, much more downside before even $1 of its debt is impacted and so we think of the equity in those companies has been our buffer. And so we've got $1.6 billion in in credit, but it's been generating sort of 14% return for the last 4, 5 years fairly consistently.

Now that's better than the long-term returns available to equity market. So you're getting the best of both worlds. You're getting outsized performance, but lower risk. And so I think that's probably the easiest example to point to that where we can find opportunities that are lower risk, but generating still very strong returns.

And a question here on how you think about the disconnect in the first half between the strong NAV outperformance, which was 6.6% above market and our share price underperformance.

Yes. I think -- I mean, there's a couple of things at play there. I mean the share price frequently has a little bit more volatility than the portfolio does, and that's dictated for a range of reasons. But -- in the last 6 months, we had an elevated starting position because we'd already announced the Brickworks merger. So some of that was being reversed. But also I think the market probably hasn't been aware of the quality of the underlying performance and some of the traditional share price to NAV that we usually trade at the premium has been eroded. So we're seeing a little bit of share price weakness in the last 6 months, but hopefully that will wash through.

And I've got a question here on the team. Can you provide a bit more information about the depth of the team and the intelligence resourcing to support a totally unconstrained investment mandate across multiple asset classes that includes private credit.

Well, the private credit team is I mean it's one team looking after 1 portfolio. And where we do best is when we share ideas and market intelligence across the firm. So it's extremely powerful in terms of the the network effect that we can generate from seeing new opportunities and learning about what's happening in the market because we're not focused on 1 asset class, we're focused on lots of asset classes.

So I would say that's actually additive rather than being difficult for people to understand more information because I think more information is always better. And so with that information, we become really high-quality generalists that are capable of understanding what's happening in the market, but also analyzing what and investment in 1 asset class looks like relative to what we could be getting in another asset class.

So I think that our team does particularly well in that environment. As I said, we don't have high turnover. There's roughly 56 people, 28 investment professionals. The biggest team is in credit because it does require some specialist skills. We've recruited people with insolvency and restructuring backgrounds. There's probably 3 or 4 people in the team who have those backgrounds. That's a fairly unique attribute and something that will be particularly valuable in this market. But when you team up that kind of knowledge with people who have the expertise in M&A, private companies, equity investing, then we can put all of that together, it's a very powerful combination.

And now a question on Tuas, just whether we have any concerns with no longer having Board representation.

No, I think that's a business that is obviously you're overseen by David Teo. He has been an exceptional telecommunications investor and manager of businesses to someone who we are very comfortable with. And there was nothing more for us to add. In doing that, Rob Milner is trying to focus more on what's happening with sole pads. When you think about the amount of activity that we are doing here, he's focusing his attention there and less on the satellite companies that -- particularly those that are performing well and we don't need to have oversight on.

I've got a question for you now, David. A question here about tax, how much tax is payable on recent asset sales?

So very little, if any. And the reason for that is that the rules for tax consolidation meant that at the time of the merger, we could reset all the tax cost basis of the assets up to their market value at the date of the merger, which was late September 2025. So any subsequent sales after that, the cost base of the assets is restated up to that market value. And if it's -- if we sell it at a profit, sure, there'll be a little bit of -- there could be some tax to pay, but we also have capital losses and some revenue losses that we can use to offset that. So for the next sort of foreseeable future, there shouldn't be very much tax friction attached to the investment portfolio.

Thanks, David. I think we have time for 1 more question. Todd, we've been getting quite a few about the situation in the Middle East and questions about how Soul Patts is managing its business in this context? Are we going more into cash? Are we looking at buying more equities, more distressed assets? Would love your thoughts on that.

Well, we're really a period of peak uncertainty. And even before the war, there was every day or every week, you are reading about some industry that was going to be significantly disrupted by AI. We were already at a point where we were late in the cycle, asset prices were fully valued. And so it was a pretty tough environment to invest into, but it's only gotten worse.

Now with the oil price shock and inflation that was already present but now being added to, I think it's a very difficult time, but this is the environment that we've been preparing ourselves for 5 years. We've been saying for 5 years now that we're going to broaden out the portfolio. We're going to add uncorrelated assets. We're going to increase the diversification.

We're going to remain defensively positioned and we're increasing our liquidity, and we've always had cash and we've been net cash rather than being geared through that part of the cycle. We want to be geared when the opportunities get a lot better, and that's when we can deploy capital. So we've been preparing ourselves for this. We typically do have always done better in more volatile markets. And you can see that play out in the last 6 months, in fact.

But I think if things get worse from here, we've built in mechanisms for our portfolio to be resilient, but also ways for us to take advantage of those situations.

Thank you very much, Todd. We're at time. So apologies if we didn't get to your question, but there will be a recording of today's presentation on our website shortly. And Todd, I'll throw back to you for any closing remarks.

Well, I think we've summed up lots of great questions. I think it's covered everything that I wanted to say, but I really appreciate people's focus on us and their time today.

Thank you.