IDP Education Limited (IEL) Earnings Call Transcript

Good morning. Welcome to IDP's 2026 Annual General Meeting. My name is Tracey Horton. I'm the Chair of your company. It's now 10:00 AM, and I declare the meeting open. I'd like to begin by acknowledging the Gadigal people of the Eora Nation, the traditional custodians of the land on which we're meeting today. Pay my respects to their elders, past and present. On behalf of the Board, I'd like to welcome all shareholders, guests and other visitors attending both in person and through the online platform. Shareholders will have the opportunity to ask questions of the Board, management and IDP's external auditor during the meeting. Instructions are set out in the Notice of Meeting and online meeting guide, which are available through the online platform. We will endeavor to address all questions today. Where questions cover a similar topic, we may group them together. Any questions we do not address during the meeting will be followed up afterwards. As we move through the items of business, I will take questions from the room first, followed by questions submitted through the online platform. There will be time at the end of the meeting for general questions. I now formally open the poll on all resolutions, and the poll will remain open until 5 minutes after I announce the close of voting later in the meeting. Joining me today are my fellow directors, Ariane Barker, Andrew Barkla, Anne Brennan, Paul Rogan, Professor Colin Stirling and Michelle Tredenick. Also present are Tennealle O'Shannessy, our CEO and Managing Director; and Ashley Warmbrand, our Company Secretary and General Counsel. A copy of the Chair's and CEO's addresses were released to the ASX this morning and are available through our Investor Center. IDP is a global leader in international education. We've been trusted for more than 50 years to help students around the world transform their lives through education. While the industry has historically experienced decades of growth, changes in government policy settings have had a significant impact on market volumes and dynamics over the past 3 years, with international student volumes in our key destination markets down over 50%, following record highs in 2023 and 2024. This has impacted IDP's earnings and share price. We recognize shareholders have experienced a significant decline in value, and we appreciate shareholder concerns. As a Board, our focus has been on financial resilience, balance sheet strength and ensuring we have a compelling strategy delivered by an experienced management team to set the business up for future success. The market changes that we've experienced are unprecedented, and our response has been commensurate. In fiscal year '26, the CEO and CFO have done an exceptional job managing all elements of financial performance within their control to deliver material cost reduction and margin improvement, significantly mitigating the impact of lower volumes on profitability. We remain a profitable, cash-generative business with the capacity to invest for the future. We are partway through a multiyear transformation to make IDP a more agile, flexible and technology-enabled business. This will position IDP to capitalize on changing industry dynamics to grow and diversify future revenue streams and focus on areas of profitable growth. The transformation program is designed to significantly improve operating leverage to amplify and accelerate shareholder value creation when student volumes stabilize and improve. In fiscal year '26, IDP reported revenue of $795 million and adjusted EBIT of $122.9 million. Both were down on the prior year, but consistent with guidance provided at the beginning of the year. The result reflects management's focus on quality, yield and cost discipline, improving cash generation and working capital and reducing leverage. Revenue significantly outperformed volume, reflecting a strong yield performance and the earnings outcome reflected very good progress on cost. Our net debt-to-EBITDA ratio came down from 1.4x to 1.0x at financial year-end. And this, coupled with strong cash generation, provided us with an opportunity to undertake active capital management. We paid $25 million in dividends. And in June, the Board approved a share buyback program of up to $50 million of issued capital, reflecting our confidence in IDP's transformation and intrinsic value. The buyback reflects an efficient use of capital and an opportunity to enhance shareholder returns while maintaining the Board's commitment to a strong balance sheet. So far, we've executed approximately $11 million of the buyback. Last month, we announced that the Board had received and rejected an unsolicited indicative proposal from a global investment firm to acquire IDP. The Board gave the proposal due consideration and ultimately rejected the proposal because it was highly opportunistic and fundamentally undervalued the business. The offer failed to recognize the future earnings potential of the business and the upside from the transformation program. IDP has been well led by a highly credentialed team with a strong track record of delivery. We have a clear strategy to position the business for the future and the capacity to continue to invest in the business through organic cash flow generation, supported by a strong balance sheet. Your Board is very focused on realizing shareholder value and has every confidence that we will do that through the disciplined delivery of our transformation agenda. Board renewal has been an important area of focus over recent years. Several directors have retired over the past 3 years, and we have 3 new directors, decreasing the size of the Board by 2. Paul Rogan joined the Board in September last year and now chairs our Audit and Risk Committee. Paul has strong commercial acumen and experience across audit and risk as well as strategy, international markets and digital-first growth. Anne Brennan joined the Board last month, bringing broad commercial and financial experience from her executive career and deep and long-standing Board experience in finance, risk and governance across multiple industries. Anne will address the meeting later. Tracey Ah Hee will join the Board next month and has decades of experience in data and analytics, digital transformation and customer experience. I'd like to take the opportunity to thank our long-standing Board members, Andrew Barkla and Ariane Barker, who are retiring at today's AGM; and Chris Leptos, who retired in June. Andrew, Ariane and Chris have been involved with IDP since its listing on the ASX in 2015, all serving as directors with Andrew initially serving as CEO and Managing Director for 7 years. Together, they've played a very important part in the development of IDP. And on behalf of the Board and the company, I'd like to thank them for their contributions and wish them every success for the future. Board succession planning and renewal has been designed to ensure we have the right mix of skills, experience and perspectives to provide strong governance and to support IDP's strategy and long-term success. The Board is committed to having responsible business practices and high standards of quality. Cybersecurity, data privacy and artificial intelligence continue to be important areas of focus. In addition to our annual report, corporate governance and modern slavery statements, this year's corporate reporting suite includes IDP's first climate-related financial disclosures under Australia's new mandatory reporting framework. Finally, I'd like to acknowledge Tennealle, the global leadership team and all of IDP's people. We have an outstanding leadership team who are setting a compelling vision for the future, managing financial performance and executing the transformation agenda at pace and with discipline. The Board remains confident in IDP's strengths, its strategy and the actions being taken to position the business for sustainable long-term performance. I now invite Tennealle to report on fiscal year '26 performance and the next phase of IDP's transformation.

Thank you, Tracey, and good morning to everyone joining us here in Sydney as well as online. FY '26 was another challenging year for the international education industry. With policy settings continuing to constrain global student mobility, international student volumes declined more than 25% across our key destination markets. This was consistent with our planning assumptions, and we managed the business accordingly, maintaining our focus on quality, yield and financial discipline. Importantly, we continue to deliver for our students. More than 90% of students trust or highly trust IDP, and our Net Promoter Score remains above 70. Against that backdrop, FY '26 was a year of disciplined execution. We delivered on our financial commitments. We strengthened the balance sheet and continued to prepare IDP for the opportunities ahead. Let's begin with an overview of our FY '26 performance. The further contraction in the international student market saw student placement volumes decline by 27% and IELTS volumes declined by 8%. Revenue of $795 million was down 11%, significantly outperforming volumes as our continued focus on quality contributed to strong yield performance. Student placement yield increased 11% and IELTS yield increased 7%. Adjusted EBIT was $122.9 million, in line with guidance we provided at the beginning of the year. We also exceeded our cost reduction target, delivering a $32 million net reduction in the cost base against our $25 million commitment. Strong cash generation and working capital discipline enabled us to significantly reduce debt and leverage. These results demonstrate disciplined execution in a dynamic market. Throughout FY '26, we also continue to invest in the products, markets and capabilities that will support our future growth. Technology and AI are already improving how we engage with students, how we increase conversion and how we support our counselors. Our AI assistant is now live in 10 countries and is capturing more than half of our unique student profiles and delivering 7% more applications than other channels. Our FastLane product is helping connect students with suitable courses and institutions more efficiently, while our IDP student community now has more than 50,000 registered students, providing valuable peer advice and strengthening trust. We also expanded student placement into Malaysia, opening new destination opportunities for students and supporting the diversification of our revenue base. In IELTS, we launched 13 test centers in China during FY '26 and have since opened a further 12, bringing the total to 25. This gives IDP a presence in the world's largest English language testing market. Last year, we outlined a multiyear transformation strategy to simplify the business and invest in the technology, data and AI capabilities that we need for the future. Against this agenda, we have made strong progress. In Phase 1, we delivered ahead of our cost reduction target and have identified further savings for FY '27. We are now focused on using our technology, AI and data capabilities to improve conversion, productivity and student experience. Over time, this will support a more efficient business and create opportunities for growth. Ultimately, our goal is to build a stronger and more resilient business that can deliver sustainable, profitable growth for our shareholders. Before I turn to the FY '27 outlook, I would like to acknowledge our people around the world. Throughout a period of rapid change, our teams have demonstrated resilience, agility and a strong capacity to embrace new ways of working. Our global engagement survey showed that our people continue to feel a strong connection to IDP's purpose and values with employee engagement remaining above the global benchmark at more than 70%. That connection is also evident in the way our people have continued to support our students, test takers and university partners. Maintaining outstanding student trust and Net Promoter Scores in this environment is an achievement of which everyone at IDP should be incredibly proud. We've also welcomed new talent to the global leadership team, bringing valuable experience, ideas and energy as we progress on our transformation. I want to thank all of our people for their hard work and unwavering commitment to our purpose. Turning now to our expectations for the year ahead. Today, we are reaffirming the earnings guidance we provided in August at our full year results announcement. We are focused on continuing to manage our financial performance while we deliver the transformation. The actions we are taking will strengthen IDP's competitive position and capacity to capture growth when market conditions improve. While the near-term environment remains dynamic, we believe IDP is well positioned for the future. The international student recruitment market is changing. The matching process between students and university partners is becoming more complex with value shifting from primarily delivering volume through the funnel towards delivering quality matching outcomes. For both students and university partners, trust, quality signals and dynamic matching are becoming even more valuable. Now this very much plays to IDP's strengths. We have trusted reach through our brands, our global counselor network, our digital channels and more than 1,000 established university partnerships. We also have a significant data advantage with visibility across student behavior, applications and outcomes at a global scale. Our transformation is designed to bring these strengths together. By combining our people, our reach, our data and technology, we can deliver more personalized student experiences, better outcomes for our university partners and greater productivity. While the near-term environment remains dynamic, we believe these strengths position IDP well for the future and give us the capacity to capture growth as market conditions improve. FY '26 demonstrated our ability to execute. We met our earnings guidance. We exceeded our cost reduction targets. We strengthened the balance sheet, and we continued investing in future growth. To our shareholders, thank you for your continued support. And to our people around the world, thank you for your commitment to our students, our test takers and our partners. I'll now hand you back to Tracey.

Thanks, Tennealle. I'll now turn to the formal business of the meeting. Notice of Meeting has been made available to shareholders and is also available through the Investor Center. Before discussion of each resolution, the proxy position will be displayed on the screen. Subject to the voting exclusions described in the Notice of Meeting for resolutions where the Chair has been appointed as proxy and is permitted to vote, I intend to vote those proxies in favor. Shareholders and proxy holders may ask questions or make comments on each item of business as we move through the meeting. We will now proceed to the items of business set out in the notice of meeting. Online questions will be moderated to facilitate the orderly conduct of the meeting. The first item of business is to consider and receive the financial reporting documents for the financial year ended June 30, 2026. There's no resolution to be put to shareholders on this item. Our external auditor, Deloitte, is represented today by Travis Simkin. Travis is available to answer any questions relating to the audit, the auditor's report, the accounting and sustainability reporting policies or auditor independence. Please direct any questions for our auditor through me. I now invite questions on this item. David?

Thank you, Chair. Good morning. David Kingston, K Capital. Look, I won't dwell unduly on the past, but I think it's worthwhile saying that shareholders have had a fall from $37 to low $2s in the past 5 years, which is a pretty horrendous fall, $9 billion of lost value from the peak. The university owners were lucky they exited for over $3 billion around 2022, but the market cap today is just over $600 million. Welcome. Nice to meet the new CEO, albeit in your first 3 years, the stock has fallen 90% from over $20 to current level. I note Blackstone's indicative offer. I note the response, Chair, from the Board IDP is in a strong financial position to continue to invest in the business in part through its strong balance sheet. Just firstly like to explore the balance sheet. You've got $252 million of borrowings. Yes, you've got $135 million of cash, but you've also got current payables of $154 million. Importantly, your current assets, Chair, $276 million, are only slightly above your current liabilities of $256 million. So not sure I would say it's a massively strong balance sheet, bearing in mind you're operating in an industry that is subject to political interference with the vagaries coming from that. If you look at the balance sheet, there's $560 million -- $563 million of intangibles versus shareholders' funds of $398 million. Page 85 of the annual report says the group has conducted sensitivity analysis, which indicated that no reasonably possible change in key assumptions would result in an impairment loss. I do have a question for the auditor on intangibles in a minute. Challenge is, if you deduct the $563 million intangibles from shareholders' fund, you end up with negative NTA of $165 million. I appreciate there's a lot of relationships. It's been a long-standing company, as the CEO says, your Net Promoter Score is good. So clearly, there are intangibles. But in my view, I wouldn't say it's monumentally a strong balance sheet. If we look briefly at P&L, Chair, then I will come to couple of questions. With the statutory EBIT last year of $62 million, multiple adjustments increased adjusted EBIT to $123 million. Some people focus on statutory, some people look at the adjustments. Your statutory NPAT share is only $13 million, $0.044 per share. Again, multiple adjustments increase the claimed NPAT to $57 million, which is $0.20 a share, but the ongoing large add-backs do impact upon quality of earnings. Not everyone accepts all of those impacts as one-offs. I note you have done a good job, Tennealle, if I can pronounce that Irish name, I presume correctly. Irish is taking over with Anne Brennan here. Watch out. We all like the Irish, but you have done a good job in cost out. And certainly, you have downsized the balance sheet. You've significantly reduced working capital, which has enabled you to drop debt and well done on that. You have reduced the headcount, which you have to do given the revenue is declining and certainly excess working capital is being taken out. But the incremental net savings have probably peaked, Chair. I note that you're looking to spend $40 million on transformation costs in the FY '27 year, and only $15 million of incremental savings. So, good work. Congratulations on what you're doing with improving the balance sheet and the cash flow, but it looks as though the incremental gains are peaking. I note you are guiding to $95 million to $115 million adjusted EBIT for '27. Macquarie report says the top end is challenging. There are few cynics out there who don't believe what you're saying. And there are capitalized flows coming out such as the cash flow impact of $40 million transformation process. Question, please, Chair. I'd just be grateful if you or Chief Executive could give shareholders some comfort that while you're doing some good things, there's also been massive disappointment for shareholders and massive shareholder value loss. But your FY '27 revenue is likely to be down 20% or more. I appreciate you're stripping another $15 million out in costs. But normally, when your revenue is down 20% or more, your actual EBIT falls significantly. But you are on your forecast indicating that EBIT is down at the midpoint, just 15%. So your midpoint guide is $105 million versus $123 million last year. So my first question is, I'd just be grateful if you could give shareholders some comfort as to why this is not an optimistic forecast, but a forecast that you can deliver on because superficially, with revenue down that much, you would normally expect that EBIT would be down more than 15%.

I'll just make one comment. And we have reaffirmed our guidance today, as you heard in Tennealle's remarks, we're very conscious of our requirements to disclose to the market if that's changed. So we will update our guidance if we're required to. But I'll let Tennealle speak about the confidence in meeting those targets.

Thank you very much for your comments. And firstly, I would like to acknowledge and appreciate that shareholders are disappointed with the share price at current levels, and we too are working very hard at the underlying drivers of the business. As you noted in your comments, industry conditions continue to be dynamic, but remain well outside our control. Specifically, as it relates to your question, I think what you're doing there is emphasizing the management team's focus on disciplined execution. So as we navigate these dynamic market conditions, our focus firmly remains on those things within our control. So you will see a dedicated focus on driving yield improvement through quality and continuing to increase market share and a continued discipline around cost. It is those factors that underpinned our FY '26 performance where you saw that our revenue performance strongly outperformed the underlying volumes. That is what gives us confidence in our ability to execute. At the same time, we are taking steps through our transformation to build resilience into our business model and making investments that will serve to support earnings growth, not only in the period as you referred to the $15 million benefit in period, but setting us up for growth and future opportunities in later periods. So I particularly call out the work we're doing in investing in things like our foundational infrastructure to support productivity within the business as well as investing to build out unique propositions in student placement that will underpin conversion improvements and market share growth. So market conditions are challenging, no doubt, but we are absolutely focused on delivering on those things within our control while we reposition the business for growth. And I think our results in FY '26 demonstrate our ability to be able to do that. Thank you.

I think just a brief follow-up. Look, again, I respect what you've done with cost out and working capital has been reduced and that's strengthened the balance sheet from, in my view, a moderately weak position. But I'll just give you a bit of feedback. The market is skeptical. There are brokers who are saying they are not particularly confident in your forecast, even though it's been reaffirmed today. It's just so critical to the credibility of this company to deliver on that forecast. Obviously, shareholders -- long-term shareholders, I'm a short-term shareholder, but have been smashed. So it's up to this company to actually prove it can deliver and turn around the absolute malaise and shareholder value. Chair, second question on the account is...

Can I just respond to that, David, if I may, just for a minute because we have just spent actually quite a considerable time over the course of the last 3 or 4 weeks speaking with our longer-term shareholders. So Michelle Tredenick, who's the Chair of the Remuneration Committee and myself have met with shareholders who account for more than 60% of our invested shareholder capital over the last few weeks. And they share your disappointment in the performance of the share price. It obviously gives them a difficult experience. They're also very confident in the performance of the management team and the Board to respond to the current conditions. In terms of any kind of uncertainty regarding the forecast, it doesn't reflect the ability of the management team to respond to a changing environment. It reflects their uncertainty about the environment itself. And so you'll find if you go to those analyst reports that you're referring to that the volumes -- student volumes and their assumptions on what they might be are the driver of those differences.

And look, good luck. You've certainly done some good work in FY '26, but the jury is still out, which is why the share price is so low.

No one knows what will happen to student volumes until it happens.

And look, as we know, in sport or in business, you focus on what you control and you control costs. You've done some encouraging work there. So that's a step in the right direction. Look, my second question, Chair, is to the auditors. Just be appreciate if they could amplify because I don't think it was listed as a key risk, whereas I thought I would think it should be a key risk auditors. What testing have you done to confirm you're comfortable with $563 million value on intangibles, bearing in mind, we all accept what you say, Chair that there are a number of unknowns out there, government policy -- Pauline Hanson, bookmakers have a 4:1 to be the next Prime Minister, which would be a bit scary. That's my view anyway. So there's a lot of unknowns. So interested in the auditors, what testing have they done to confirm $563 million intangibles is legitimate. And what is a realistic worst-case scenario for revenue, obviously, they've got to look at revenue and DCF. Given the major tightening, political tightening in student visas. Clearly, when they assess $563 million, they do a DCF and various other things. So I'm just intrigued as to how they've assessed it. Thank you, Chair.

Thanks, David, and we'll direct that question to Travis.

Thank you, shareholder. In terms of my response, I'll frame it in the context of the conduct of our audit, so responding to the work we performed on the impairment testing. I might ask management or the committee to discuss anything specific you have questions around the business or key assumptions. Ultimately, they're responsible for the preparation of those models and the financial report as a whole. Just for context, our responsibilities are set out in our audit report, which is included in the annual report in terms of the scope of our audit and the context of our work. For the goodwill, in particular, our focus has been on looking at the future cash flows in terms of understanding the forecasted period and also the growth assumptions factored in. In terms of the risks and opportunities that are presented for the group at the moment, we took into account our understanding of current market conditions. Management performed sensitivity analysis on those assumptions. And what we found was that there was sufficient headroom at the point in time to support the carrying value of those assets. There is undoubtedly volatility in the market. And so certainly, in terms of the disclosures in Note 12 to the financial statements, you can see the assumptions that are set out in there. And there is some discussion around estimation uncertainty in key markets, in particular, with the English language testing business. But ultimately, our conclusion was that there was no impairment at 30 June this year.

Thank you. Any other questions on this matter? Okay. So agenda Item 2 relates to the election of Anne Brennan as a Director. Anne was appointed as an Independent Nonexecutive Director on the 14th of September this year. And in accordance with the company's constitution and ASX Listing Rule 14.4, offers herself for election. Her experience, skills and qualifications are outlined in the Notice of Meeting. I now invite Anne to say a few words.

Thank you, Tracey, and good morning, everyone here today. As Tracey said, I joined the Board on the 14th of September, and I'm standing for election today. I'm an experienced Nonexecutive Director and have been for the last 18 years. I've served on a wide variety of Boards, including Argo Investments, Charter Hall, Spark Infrastructure and Tabcorp. I'm also on the Board of GPT and The Lottery Corporation. During my executive career, I was the CFO at CSR and Finance Director at Coates Group. And prior to that, I was a partner in 3 professional services firms, Ernst & Young, Arthur Andersen and KPMG. Initially specialized in audit, but really substantially spent my time in corporate transactions. I bring a range of extensive commercial finance, governance, risk management and capital management experience and from a portfolio of executive and nonexecutive roles. IDP is a market leader in student placement and English language testing. Its global reach and unique offering enables IDP to add more value to all stakeholders, students, communities, universities and shareholders. IDP has a clear strategy to navigate challenging market conditions that we've all heard about today with a focus on market share growth, margin management and innovation to drive long-term value for shareholders. If elected to your Board today, I look forward to working with your Board and the management team to deliver the company's strategy and deliver increased value for shareholders. Thank you, and I hand back to Tracey.

Thank you, Anne. The proxy position in relation to this resolution is now set out on the screen. I now invite questions or comments on this resolution. David?

Thank you. Look, I've had the pleasure of meeting Anne before. So welcome, Anne. I do think as well as being part of the Irish mafia, it's also the GPT mafia here, joke. But look, I think Anne's background is perfect. I think education is a fantastic industry, but there are a number of people in my experience in education who get carried away with the beauty of education and the importance of education and don't spend enough time on the financial returns. And in my view, that's probably one of the reasons this company has underperformed so substantially. But look, I think, Anne, you've got a terrific financial background. So I think your credentials are excellent for this company. Go hard, Anne, because you're going to be judged on the actual financial performance. The market has had a gut full of excuses. And there are some things outside the company's control. But at the end of the day, the share price malaise is so severe. So I think Anne's background is fantastic. But just one question for Anne. In my opinion, and I've got a bit of experience, I think every successful business person has a degree of paranoia. Paranoia is good to a degree, confidence to paranoia. What keeps you awake at night, Anne, before you decided to join this Board, what keeps you awake at night? What are your biggest concerns as to potentially risks going forward for this company? I appreciate your thoughts.

That's a huge question. Unfortunately, I haven't had any sleepless nights so far. Look, it's -- I mentioned that it's a global business. And there's such a range of different policy settings right throughout the world in what is a really important sector. And I think what the management team has set as a strategy and the Board fully endorses is that we need to be able to navigate the varying settings that there are in terms of policy. And in that sense, that is variabilizing the costs and improving the balance sheet. You talked about that quite a lot earlier so that you can navigate those changing circumstances, many of which are outside our control. So really, what I'm looking forward to is working with the team to implement the strategy and to be able to navigate what policy settings that were dealt with.

Thank you. Before we proceed to Item 3, I would like to pause to acknowledge the tremendous contributions that have been made by outgoing directors, Ariane Barker and Andrew Barkla, who will retire from the Board at the conclusion of today's meeting. Ariane and Andrew have each made significant contributions to IDP during their service as directors. Ariane is a long-standing Chair of the Audit and Risk Committee; and Andrew is the previous CEO, whose insights into the industry have been invaluable. I now invite Ariane, followed by Andrew to say a few words.

Thank you, Tracey. And it has been such a privilege to serve -- to have served the IDP Board since our successful IPO in 2015. Our mission is real to me like many of you, I was an international student. My parents migrated to the new world from the old. I myself immigrated to Australia, and I participated in the economy here contributing back. Most migrants, most international students are hardworking, and we contribute strongly to the economy. My mother taught me that I -- my mother was a teacher, and she taught me that an education is nonnegotiable, like many of you. My story is far from unique. More than 6 million students now study outside their home country, a global market valued at over $200 billion, growing at more than 4% a year. The projections are that this number is going to grow to 9 million to 10 million students by 2030. Most migrants who take this path are well educated. We contribute to the fabric of society, apply our skills and experience and pay taxes to support and build stronger economies for the countries that we call home. I believe in the benefits of the international education system, which enriches individuals, enriches communities and contributes to growth. During my tenure, we have ridden waves of remarkable growth, technology innovation, steered the organization through unprecedented challenges, including COVID. Yet through every cycle, IDP's core purpose has remained steadfast. Navigating these turbulent waters is only possible when you have the right people in the room. I want to pay tribute to our leadership team. This sheer quality, high caliber and extraordinary work ethic of this group led by Tennealle are world-class. It's been a privilege to work alongside each of you. To our shareholders and community, I leave you with this conviction, international students will not give up on their ambitions. We are resilient, determined and adaptable. Students will continue to navigate the winds of change, and IDP will be right there beside them, guiding their way. Thank you to my fellow directors for your collegiality and strength of skills to equally serve the IDP Board and mission. I step away knowing that this company is in remarkably safe hands. Thank you for your trust, your partnership and your support. I'll now hand over to Andrew.

Thanks, Ariane. Thanks, Tracey, for giving me this opportunity. And good morning, everyone. What I've valued most throughout my journey with IDP is really the mission to help improve the lives -- people's lives through international education. Our students aspire to make the world a better place for themselves, their families and the communities they contribute to. Our education clients trust IDP to deliver outstanding quality outcomes in support of their international student goals. IDP is the global leader, and I'm incredibly proud to have contributed to that journey through the successful IPO in 2015, followed by a period of strong growth and technological innovation. The challenge of navigating COVID and the integration of a number of acquisitions to support our ambition through my time as CEO. Moving from CEO to a Nonexecutive Director presented a unique challenge. But larger than that challenge really was the shift in the operating environment that our Board and our new CEO, Tennealle, had to face an environment where political pressure led to unpredictable and negative policy settings required swift shifts in our strategy. I mean this is a test for any Board. We, as an aligned Board and executive had to take some strong actions to optimize IDP for this new environment. The relationship between the Board and the management team has really been hardened by fire through the last couple of years, and I believe is absolutely aligned to what needs to be done to continue to build on our leadership position in the industry. I'm personally very confident in the international education sector. It plays a large role in contributing to the economies of the countries that IDP operates in, and it's also very strongly aligned to the skills required for the innovation in those countries that they critically need. To my fellow directors, thank you for your camaraderie and dedication to the mission. I mean, Tennealle and the broader IDP team, I've been immensely impressed with how you've responded to the recent industry challenges. The culture and engagement of the team remains extremely strong. You've built a more resilient IDP through improvements across our geographies and operations whilst also driving a significant transformation and innovation agenda to create even a stronger company going forward. I'd also like to today acknowledge the shareholders who continue to believe in and support our company. IDP is in strong hands, and my IDP experience will always be a very treasured part of me as I leave this position, and I wish you all the best in the future. Thank you. Thank you, Tracey.

Thanks, Ariane, and thank you, Andrew. So back to the formal business of the meeting and turn to Item 3, the adoption of the 2026 remuneration report. The proxy position in relation to this resolution is now displayed on the screen. Based on the proxy voting, more than 25% of votes cast on the remuneration report were against the resolution, resulting in a strike against the remuneration report. It's obviously a disappointing outcome for us. As I mentioned earlier, we have been pleased with the engagement with shareholders. We've spoken with more than 60% of our shareholders, also the proxy advisers about our remuneration settings. The important changes that we've made to the remuneration framework in recent years have been welcomed by shareholders, but we do recognize the concerns expressed about the remuneration quantum in the context of the impact of market conditions on IDP's market capitalization. Boards consider this feedback carefully. Our responsibility is to strike the right balance between responding to shareholder expectations, aligning executive and shareholder interests and retaining and incentivizing the high-performing team that's needed to deliver IDP's strategy and long-term value. Are there any questions on the remuneration report? David?

Thank you, Chair. Look, you're absolutely right. Balance is important. There are 3 stakeholders here. The students, great company. As we've heard, Net Promoter Score over 70%. And that's essential to have the relationship with the students and the reputation of integrity. So well done on that. The second level is management. Look, I'm a huge believer in paying good remuneration for quality management. So I don't, in principle, have a problem with that, albeit I'll make some comments in a second. I think some of the things are excessive. The third thing is the third key stakeholders, shareholders who have expressed an opinion as we see another strike. I think there's a strike last year as well, I think. So it's ongoing, and I'll make a couple of specific comments. I think the remuneration is too high. I'm an investment banker by background. So I love high remuneration providing this performance. But Tennealle seems very capable, but a total maximum remuneration of over $4 million. I believe actual remuneration last year was around about $2.2 million. The finance plus [indiscernible] maximum nearly $2.5 million. Actual last year, $1.2 million. Now they're big numbers for $600 million market cap company. And as I said, I'm not negative on remuneration. I welcome people getting paid well for results, providing shareholders receiving an outcome. Andrew Barkla spoke very well before, but he received $37 million back in 2019. So that was a nice bonus, Andrew. I welcome you, Tracey. You're a very decent person, very fair, very experienced. So you've only been Chair for a year. I'm sure you'll make a good difference. I think there's plenty of work to be done because I think the Board has indicated to be frank, it is tone deaf. We'll get to Resolution 4(a) and 4(b) later. But in my view, Chair, it's embarrassing to put forward Resolution 4(b) to turn it down, amend it and then have to actually withdraw it. That's embarrassing. And in my view, it's excessive. I don't think it should have ever been put forward. But at the end of the day, I welcome you as the new Chair, Tracey, I think you're very capable. I just think you've got to get the right balance. I don't think you've got the balance at the moment because the shareholders at a terrible run and yet the remuneration in this company for a $600 million company is very high. Thank you.

No question.

Do you agree? Does that make any impact? And you've now had another strike. Do you think you are being tone deaf, or the Board rather, Chair of the Remuneration Committee, Who's the Chair of the Rem Committee?

Michelle?

Michelle, I think you're being tone deaf. I think you're putting forward things that the shareholders are extremely unhappy with. They rejected 4(b), and they're now giving you another strike. I think you don't have the right balance. That's my opinion. But Chair, do you think you are going to change this significantly going forward?

Well, let me comment on that. Obviously, we don't think we're tone deaf. Otherwise, we wouldn't be here talking to shareholders, and we wouldn't have spent a considerable amount of time over the last several weeks consulting with shareholders and proxy advisers. We like to think of ourselves as receptive to feedback actually. We've consulted with shareholders quite considerably over the course of the last 3 years. I preceded Michelle as Chair of the Rem Committee. And so both of us together have spent quite a lot of time consulting with shareholders about our remuneration framework over the last several years. It's fair to say that there did need to be a change in the structure of remuneration as we enter difficult times, and we have made considerable changes. I mean I know you're only a recent shareholder, so you may not have had a chance to look at the cumulative changes over the last several years, but we have made some significant changes to our remuneration to make it more adaptable to declining profitability. The main concern that we hear from our shareholders is about, as you pointed out, David, the magnitude actually of fixed rem in comparison to the market capitalization of the company. I will point out that in terms of pay being linked to performance, over the course of the last 3 years, there has been 0 payout on the long-term incentives. The long-term incentives will not -- are very unlikely to pay out at all this year as well. So those maximum figures that you mentioned have no hope of being reached at all in the last several years. And on the STI performance, the KMP that you referred to have received less than 50% of the potential STI that they can achieve should they meet all of the KPIs that are set for them by the Board. So there is a linkage to performance in the pay. The balance that is faced by the Board is around fixed rem. And from our perspective, the fixed rem is not something you play around with on a year-to-year basis. So we do think that -- we've been responsive. We don't consider it embarrassing to pull the TPI. We consulted with shareholders. I mean the way that this Board has to work and the management team has to work in this environment that we're in over the course of the last several years is that we have to be nimble. We have to be quick. We have to respond to conditions as they unfold. And so it was our view and remains our view actually that retaining people who are critical to getting the transformation program completed in the shortest period of time. This is one of the most important programs that IDP has ever undertaken. And it will not be -- it's not a trivial thing to substitute people in and out should someone leave during that period. And so we judged that, that was an important thing. But we listened to shareholders. And in fact, several shareholders, almost all of our shareholders that we spoke to and who are active shareholders in IDP, some of them had voted against the rem report. But when we pulled the TPI, they changed their vote. So I think that, that is an example of constructive shareholder dialogue and engagement.

Just one brief follow-up. And you're a very intelligent person. Great to have you as Chair from last year. So we welcome that. But the company used to be a $10 billion company. It's now a $600 million company. Shareholders have been torched if they've been in there for 5 years. I totally agree with you, Chair. You cannot react month-to-month, year-to-year, but this has been a 5-year malaise. And in my view, actual rem of a couple of million dollars, maximum over 4, throwing in extra incentives under 4(a) and 4(b), in my view, was tone deaf, and you may not agree with that, but the shareholders have voted and you've withdrawn 4(b). But all I ask is that people get the right balance. Quality of product for students is essential. Without that, you don't have a business. Looking after the management team beautifully, fine. I'd love you to be able to get $4 million, providing the share price goes up. But you've got to be fair to the shareholders and the shareholders have been treated very poorly by this company from before your time, Chair. Thank you.

Thank you, and thank you for your comments. We'll now turn to Item 4.

Sorry, there's an online question. So we'll move to online questions. Stephen Mayne. There was a 38% rem strike today. Which of the proxy advisers recommended a vote against the remuneration report? What reasons did they give? Also, what proportion of our share register do we estimate is still owned by universities? And did we have any engagement with those university shareholders about remuneration issues and voting that is playing out with today's strike? Will we make changes as a result of the strike? Or does the Chair think it is more just shareholders rushing out due to the share price performance?

I think I've actually answered most of the content of this question, but I'll try and answer the parts that I haven't seen -- that I haven't answered already. So all the proxy advisers voted against the remuneration report. They were very influenced by the transformation award, but also the reasons that I articulated earlier -- sorry, Ashley, can you go back to the question?

Yes. Just going back to the question.

Yes. In terms of the proportion of our share register is owned by university, it has declined significantly from the 50% that it used to be, and it is about 5% now. We do engage with universities, but it's actually quite a difficult exercise because they don't have a kind of Investor Relations person who's the obvious person to liaise with. But when we know the right people, we do engage with them. I don't think many of them actually voted before -- certainly before this meeting. And shareholders do tell us that one of the reasons that they vote against the rem report is because the share price performance is so low. It's a shareholder experience reaction. So it does influence the votes, absolutely. Thanks, Ashley. Were there any other online questions?