Navigator Global Investments Limited (NGI) Earnings Call Transcript

Thank you for standing by, and welcome to the Navigator Global Investments Annual General Meeting. I would now like to hand the meeting over to your first speaker today, Michael Shepherd. Please go ahead.

Good morning, ladies and gentlemen. As just mentioned, I'm Michael Shepherd, and I'm the Chair of Navigator Global Investments Limited and the Chair of today's meeting. I'm very pleased to welcome you to the Navigator Global Investments Limited 2025 Annual General Meeting. It's now after 10:00 a.m., I've been informed by the Company Secretary that a quorum is present. So I now declare the meeting open. The agenda for today's meeting will be as follows. After introducing our directors, I will give my chairman address. The Navigator CEO, Stephen Darke, will address the meeting, following which we will conduct the formal business of the meeting. And finally, there will be an opportunity for participants to ask any other questions they may have. Firstly, some housekeeping matters. Shareholders can participate online via webcast, which allows shareholders to watch and listen to the meeting and ask questions online. For those of you online who have a question that you would like to put to the meeting today, we suggest that you enter your questions now, and we'll use our best endeavors to address them at an appropriate time during the meeting. Due to time constraints, we may not be able to get to every question. If this happens, we'll be in touch as soon as possible to answer your questions after the meeting. Recording of this meeting will be available via our website shortly after the meeting is concluded. Shareholders who wish to ask a question by voice, please quick on the Ask Question button, select go to web phone and then click on the green phone button. When you dial in to the teleconference facility, you will be asked to mute your computer or devices and listen to the meeting by phone. If you wish to ask a question, you will need to dial star 1 on your keypad when we come to the relevant time. This will indicate to the moderator that you wish to ask a question. The teleconference moderator will require your name, and we'll introduce you before prompting you to ask your question and unmuting a line at the relevant time. In order to ensure that all shareholders have a reasonable opportunity to comment and ask questions, I request that shareholders do not ask more than 2 questions at a time. If we experience any technical issues today, a short recess or an adjournment may be required depending on the number of shareholders being affected. If this occurs, I shall advise you accordingly. And welcome again Today, I'm joined here by my fellow directors. Stephen Dark on the end is Chief Executive Officer and Managing Director; Roger Davis, Independent Nonexecutive Director and the Chairman following this meeting; Nicola Meaden, Independent Nonexecutive Director; Suvan de Soysa, Independent Non-Executive Director, Lindsay Wright, Independent Nonexecutive Director; and Marc Pillemer, Non-Executive Director. Also present today are Ross Zachary, the Chief Investment Officer and Head of NGI Strategic Investments; Amber Stoney, Chief Financial Officer and Company Secretary; and Nathan Young, our Audit and Assurance Partner from Ernst & Young, who is also present and available to answer any questions about the audit, the auditors report, the accounting policies adopted in the financial statements and the auditor's independence. Sean McGould, Chief Executive Officer and Chief Investment Officer, Lighthouse Partners, is an apology today due to travel commitments. Now for the meeting formalities. The notice of meeting was duly given, and the meeting has been properly convened. We will turn to resolutions later in the meeting. Please note that only shareholders, proxy holders or shareholder company representatives may vote. Voting on all resolutions will be conducted by way of call. Shareholders attending the meeting in person should ensure they have registered their attendance with the MUFG representative and have been issued with us voting card. Shareholders attending the meeting online will be able to cast their vote using the electronic voting card received when online registration is validated. Please refer to the virtual meeting online portal guide or use the help line specified. Following the voting, general business questions will be taken asking questions. Asking questions. Those watching online will be able to ask questions in written format via the online portal or by voice using the teleconference facility during the meeting. I will provide sufficient notice to shareholders to ask questions in these formats. Shareholders and proxy holders attending the meeting and wishing to ask -- attending the meeting online and wishing to ask a question through the virtual meeting website, please click the Ask Question button, type your question and click submit. If you're having any issue has been able to ask a question, please refer to the virtual AGM guide or call the help line number that is on your screen. I encourage shareholders who are attending the AGM online and have questions to submit those as soon as possible. In the event we received multiple questions on a similar topic, questions will be condensed so as to be able to answer as many questions as possible. I will endeavor to answer all relevant questions from shareholders during today's meeting. However, I reserve the right as Chair to rule questions as not pertaining to the AGM out of order and take questions on notice. I propose that the order of taking questions will be as follows. Firstly, from any shareholders in physical attendance at the meeting today; secondly, from shareholders using the teleconference facility by voice; and finally, from any shareholders who have asked a question online via written text. There were no shareholder questions received prior to the meeting. Right. It's my privilege to address you today for the final time as Chairman of Navigator Global Investments. After 16 years as a Director, 11 of those as Chairman, I'll retire at the conclusion of this meeting. Reflecting on my tenure, I'm very pleased with the growth of Navigator and the development of a strong and very highly committed team. This past year has demonstrated the power and the potential of the group. And I'll retire with a sense of satisfaction that 2025 was a year of strong performance and strategic growth for our group. I'll make one comment here. All the dollars on the slides and in my address, are U.S. dollars. If otherwise, we'll point that out. So if I slip up and just say dollars, now it's U.S. dollars. Looking back at our financial performance for the 2025 year, Navigator delivered record earnings and strong growth across our financial metrics. Revenue for the group was USD 204 million, an increase of 18% on the prior year. This was driven both by the NGI Strategic and Lighthouse segments of our business. Distributions from our partner firms totaled USD 80.1 million, a 10% increase on the prior year. This stronger revenue, coupled with an improved operating margin of 56%, drove record adjusted EBITDA for the second consecutive year, reaching USD 113.6 million, a 26% increase for the prior year -- on the prior year, I should say. This exceeded our original expectations, having upgraded our earnings outlook in May. These results were driven by outstanding investment performance from Lighthouse, which generated record performance fees of USD 35.7 million and higher distributions from our NGI Strategic Partner Firms. The group's net profit after tax grew to USD 119.4 million, equating to [ $0.0217 point ] of earnings per share. That is Australian earnings per share.

No, USD per share.

USD. Yes, beg your pardon. Sorry. Our strategy of investing in high-quality alternative asset managers continues to deliver our results. This year, we welcomed 1315 Capital partners to our family of partner firms. 1315 Capital is a private equity firm with over USD 1 billion in assets under management, specializing in growth equity and buyer capital for medtech, pharma outsourcing, health care services and health and wellness companies. This partnership expands our presence in private markets and introduces to a sector with significant growth opportunities. We're excited to support the talented team at 1315 Capital as they build on their impressive track record in health care investments. As announced on the 25th of August, with the release of NGI's financial year '25 results, the Board has undertaken a review of the company's capital management strategy, particularly as it relates to the payment of dividends. Our capital management priorities are to preserve our strong balance sheet, grow through adding new partnerships with quality alternative asset managers and ensure such acquisitions meet our investment criteria with a view to delivering long-term shareholder value. With this in mind, the Board solicited feedback from our shareholders and other external stakeholders, who decisively responded that our policy of an annual USD $0.03 to USD 0.04 per share unfranked dividend was not a key consideration for maintaining an investment in NGI. Following this review of our dividend policy and after feedback, the Board has concluded that the best current use of NGI's capital is to allocate these funds towards accretive growth opportunities. And the company will discontinue the payment of dividends following its last dividend paid in September of this year. This decision reflects our commitment to prioritizing long-term growth and shareholder value through strategic transactions and new partnership opportunities. And we believe this approach positions NGI for future growth and value creation for all its shareholders. The Board will continue to regularly review our capital management strategy, including assessing the best use of excess capital should that situation arise. With a robust and evolving pipeline of investment opportunities, we are confident that the change to capital management and dividend policy announced today is the best way to support continued growth of NGI. As I mentioned at the outset, after 16 years as a Director, I will retire at this AGM, and I'm not seeking reelection. It's been an honor to oversee NGI's transformation into a high-performing diversified global alternative asset management company. I'm confident with a strong Board and leadership team, a clear strategy and a robust balance sheet, NGI is well positioned for continued growth. The Board was pleased to announce the appointment of Roger Davis as an Independent Non-Executive Director effective the 26th of August of this year. Roger will assume the chairmanship upon my retirement. His extensive experience in financial services, governance and strategic leadership will be invaluable as NGI pursues its ambitious growth strategy. His appointment further strengthens our Board and reinforces our commitment to strong governance. Additionally, after 17 years on the NGI Board, Executive Director, Sean McGould, has advisers intention to retire as a Director at this AGM. Sean will continue as CEO and CIO of Lighthouse and remains a significant shareholder, committed to supporting NGI strategy. I would like to thank Sean for his support and advice over those years and particularly during my role as Chair. The Board intends to appoint NGI, CIO, Ross Zachary as an Executive Director to succeed Sean. On behalf of the Board, I would like to welcome Ross as a Director in due course. His contribution to the growth of the NGI Strategic portfolio has been and remains extremely valuable. Before concluding, I would like to reiterate our commitment to strong governance practices. The Board will continue to review remuneration policies and practices across the Navigator Group to ensure our compensation frameworks adapt to be competitive, equitable and aligned with both shareholder interest and industry best practice in the jurisdictions in which we operate. We focus on attracting, retaining and rewarding top talent while maintaining transparency and fairness across all levels of the organization. I'd like to take this opportunity to express my gratitude to our dedicated team, led by our CEO, Stephen Dark, whose focus and drive have delivered another successful year. The team's commitment, expertise and hard work are the foundation of our continued success. To our partner firms, thank you for your collaboration and shared vision. I would like to thank my fellow directors. Their contribution to Navigator is crucial, and I've enjoyed working alongside them over the last 16 years. The Board and management team have built a strong and resilient organization, and I am confident that our strong partnerships will continue to drive growth and innovation. Thanks also to our shareholders, both new and long-standing for your ongoing support. As I step down, I do so with great pride in NGI's achievements and confidence in its future. Thank you. We'll now hand over to Stephen for the CEO address.

Thank you, Mike, and congratulations on a great tenure as the Chair and Director of Navigator. Good morning, everybody. In FY '25, Navigate continued its ambition to build the leading ASX-listed alternative asset management firm, exclusively partnering on established and high-quality investment managers globally. We call them our partner firms. The drivers of Navigator's growth really been led by sustained investment performance by those partner firms, continuing to deliver strong relative and absolute returns and more recently, increased flows momentum across the portfolio. Our partner firms are continuing their successful track record of investing and growing across market cycles. However, it's not just about the quantum of the AUM, it's about the quality of the AUM managed by our firms and the resulting earnings power. Navigator's focus is on owning a diversified portfolio of equity stakes in leading alternative asset managers, each producing strong risk-adjusted performance for their investors. Such managers can command high base fees. They can generate resilient performance fees and operate on higher margins, which ultimately delivers more consistent distributions to Navigator. As the Chair mentioned, FY '25 was a very strong year, delivering strong revenue growth and record earnings. We delivered that robust growth across AUM, revenue and adjusted EBITDA. These results were achieved whilst maintaining stable management fee rates, increased performance fees and higher operating margins across both NGI's business segments. Resilient AUM and investment performance across market cycles underpin the profitability of any successful asset management business. In FY '25, our ownership adjusted AUM increased to USD 27.7 billion, up 6% from PCP. The key driver of growth was investment performance. The capital raising environment proved more challenging in the second half of FY '25 and since as well due to elevated market volatility and political uncertainty and the lack of liquidity and realizations in private market strategies. But against this backdrop, we saw net inflows into Lighthouse Investment Partner's direct hedge funds and navigate as private market managers for the September '25 quarter, providing good momentum for FY '26. Total firm-level AUM reached $84 billion as at 30 June, reflecting 12% growth in USD and 13% growth in AUD. This has increased to $87 billion as of 30 September. The strength of our AUM is supported by 3 key attributes. Firstly, diversification across -- as at June 25, our portfolio was diversified across 12 partner firms, with 46 strategies and 223 products currently represented. Secondly, performance. The growth is supported by both net inflows and investment performance reflected in the breakdown by AUM by partner firm. Strategic expansion, we are prudent and measured in our identification and assessment and execution of new investments as these are important long-term relationships with material they're diligently underwritten. The addition of new partner firms, including during the year 1315 Capital, further broadened our exposure and contributed to our overall growth. NGI's revenue composition demonstrates the strength and consistency of our diversified business model. We maintain a solid base of earnings with, on average, 67% of NGIs revenues over the past 4 years being base management fees. Performance fees have been robust and consistent, ranging between 26 and 47 basis points over the same period of our ownership adjusted AUM, reflecting our partner sustainable alpha performance across investment cycles as well as low correlation across our strategies and high performance fee rates. The growth in AUM, coupled with the underlying revenue and higher margins drove a record $113.6 million of adjusted EBITDA. Both the NGI Strategic business and the Lighthouse business pleasingly contributed strongly. NGI Strategic delivered adjusted EBITDA of $74.5 million, representing a margin of 95% on a total revenues, which is an incredible margin and very indicative of this type of business model have executed successfully. That's an increase of 11% on PCP, making a fourth consecutive year of strong consistent profit distributions. This highlights the value of portfolio diversification as well as the earnings power that a well-constructed portfolio can generate for shareholders. Our ongoing focus on the high revenue yield achievable for alternative asset management as well as increasing the proportion of our AUM invested in longer-term locked-up capital should further improve longer-term revenues, margins and the stability of our earnings stream. In terms of the Lighthouse business, whilst overall AUM was relatively flat, but up 1% for the financial year, the business delivered an adjusted EBITDA of $39.1 million, an increase of 61% on the prior year and reflecting a higher operating margin of 33%. Underpinning this result was an $87.1 million of management fees, 4% up, and Lighthouse recorded a significant improvement in performance fees, earning $35.7 million for the '25 financial year. During the year, Lighthouse continued its focus on direct hedge fund strategies. As the business continues to evolve, we expect that the proportion and quantum of AUM in those direct hedge funds to continue to increase, generating higher management fees and scaling the potential for higher and more diversified performance fees. The strong '25 calendar year performance to date across the Lighthouse strategies and their absolute return focus should support continued AUM organic growth over the medium term across the platform despite a challenging fundraising environment. Volatility in the lower-margin managed account services sector is expected, but it does not materially impact the overall revenue and earnings profile of Lighthouse. This is a slide that we first put up yesterday at quite a successful NGI Investor Day. Creating shareholder value underpins our focus at Navigator. Our key growth drivers include increasing AUM and supplemented by additional investments in new and growing partner firms. Our competitive advantage includes a strategic relationship with Blue Owl, our origination network as well as Navigator's permanent capital structure. We foster collaboration with our partner firms where with the assistance of the Blue Owl Business Services platform, we support their growth to create value. We look to continue to build out disciplined and measured investment of our capital, a larger and more diversified portfolio of partner firms that satisfy our investment criteria. NGI's earnings stability is driven by aligning our interest with those partner firms and their founders in principle and the high cash generation from alternative asset management firms with scalable and capital-light business models. I believe NGI has established a strong platform for future success, and we see further exciting opportunities to continue to grow I would like to thank the Board for their commitment and guidance this year. In particular, I extend a special thank you to Michael Shepherd and Sean McGould in his absence, both who are retiring from the board following this AUM -- AGM, after long periods of service and who have guided Navigator into a new era of growth. Mike, in particular, has steered us through many volatile markets over his 16 years as a Director. He can proud that he's handing the chairmanship to Roger at a time when Navigator is in a solid financial position and poised for continued expansion. Sean, of course, continues as a key executive of the group with his ongoing leadership of the Lighthouse business that he founded. I look forward to continuing to work with Sean as he focuses on the innovation and expansion of that business. Thanks, in particular, to the NGI management team led by Ross and Amber and the staff globally, who have worked tirelessly throughout the year. We also congratulate our underlying partner firms who you heard from a few of them yesterday for their continued successes in '25 and on the successful execution of their respective growth opportunities. My gratitude also to our shareholders, including many of you who attended the Investor Day for your continued support and interest in the Navigator story. With that, I'll hand back to the Chairman for the formal business of the meeting.

Thanks, Stephan. Stephan said, that does bring us to the formal business, the meeting. Matters requiring resolution, which are outlined in the Notice of Meeting. The Notice of Meeting was dispatched to all shareholders, and I propose that, that notice of meeting be taken as read. The resolutions for consideration today may only be voted on by shareholders, proxy holders and shareholder corporate representatives. Shareholders online through the virtual meeting platform have the opportunity to ask questions on each matter being put to shareholders. Now moving to the resolutions. I propose to call a poll on each of these resolutions. After outlining each resolution, I will invite any questions and then pause to allow voting via the electronic voting cards. Votes may, of course, be submitted at any time during the meeting. I confirm that whether Chairman has been appointed as proxy by a shareholder, I intend to vote the undirected proxies in favor of each item of business. I also note there are voting exclusions which apply to key management personnel in relation to some items of business. These excluded votes are included in the total of disregarded votes which will be displayed in relation to each resolution. Financial report. First item of order business is the tabling of the financial report, the directors' report and the auditor's report for the financial year ended 30th of June 2025. The reports are laid before the meeting as required by the Corporations Act 2001, but are not the subject of a resolution. The earlier addresses included a discussion of the company's performance for the 2025 financial year. I'll now invite you to submit any questions that you may have in relation to the reports I would ask that questions on any of the other items of business be deferred until we come to that particular item. Questions may also be asked of our auditor, Mr. Nathan Young, in relation to the conduct of the audit, the content of the audit report, accounting policies adopted by the company and the independence of the order in carrying out the audit. Are there any questions from shareholders with us here today in the room?

Chair, copy of the notice of meeting within my questions relate to the remuneration report. Is this at the moment to raise that?

Next resolution.

Next resolution. Could I ask you to wait until. Thanks.

David Kingston, Care Capital. My issues are more about sustainability. I think you had a fantastic year. You've doubled. Chair, you now, in particular, the volatility of the stock over your period. People fall in love with it and out of love with it. I congratulate the CEO. I think the market loves what you're doing, Stephen, so well done. I think he's a great guy. But my issues, and I'll give a little bit of background, Chair, to put context into the question, are all around about sustainability given the traditional volatility of the stock. If we look at it, congrats on a strong 2025 performance fees well up, not necessarily sustainable, but well up given the strong markets. Your market cap, your share price has doubled at $3, market cap $1.5 million. Volatile stock, as you know, Chair, it was in the $2 in 2017. You then paid $700 million for U.S. Lighthouse and the stock rocketed to over $5 in 2018, but it retraced itself to the mid-$1s in 2020. You then had a rights issue at the end of '23 at $1 and a placement to Blue Owl or at 140. So look, it's obviously volatile. And as I said, this is just a bit of background, but then I'll get to the question because my issue is all about sustainability. But look, Lighthouse, obviously, as we know, is a wholly owned hedge fund with absolute return focus, firm of USD 16 billion. You then have the 11 minority stakes in NGI Strategic with an attributable firm of $12 billion. Look, the key issues in valuing firm, as you know, Chair are several. Firm varies dramatically. Sometimes it's worth 1%, sometimes worth 10%. But the key issues are what portion of the revenue is annuity type management fees compared to performance fees. The fee terms and the stickiness, what portion of the fees are allocated to the funds management company compared to the executive management team and the fuds and also hard assets. Now you're in a good position with hard assets of USD 793 million. Your cap, as I said, AUD 1.5 billion, which represents slightly over 3% of ownership adjusted AUM, just probably around the mid-level funds. You've got L1 at a much higher level, Regal at a higher level. Some funds are at a much lower level. But my first question, Chair, either for yourself or for Roger or the Chief Executive is given the huge historical volatility over your tenure, how can you give shareholders confidence that the recent doubling in value is sustainable rather than being a kick because of the bull

Thanks, David. A couple of observations, and I'm very aware of the volatility of the stock and of the sector, for that matter. We -- 15 years ago or more, we were -- Lighthouse was the only asset. We -- it was operating in a market. It was a fund of funds in the hedge market. That sector has had a lot of headwinds and a lot of battering. We made a decision then to diversify away from just hedge funds and particularly fund of funds. We've done that. It's taken time. It's taken an awful lot of work. The -- a lot of our peers are no longer with us. That actually disappeared around the world. The volatility in our own share price has probably been exacerbated because of the lack of liquidity. We were a small company with a lot of concentrated holdings -- shareholdings. So that exacerbated it. Turning to the sustainability of the -- our current performance. The decision to invest in minority interest in bootie asset managers, was it's in a framework where we have a very strong desire for investing in diversity and in assets, fund managers that have that have a strategic operations and objectives, which are not correlated. So we absolutely tried to invest in a diversity where we have non-correlated assets and the performance of those assets. The reason being is, as you quite rightly point out, a large amount of the revenue is performance fee based. That is a factor -- that's a factor in the industry. And so when we look at investment, we look for those that are uncorrelated as much as possible and within reason, not always -- it's not the only consideration. So we hope that, that will present a much steadier flow of revenues. But having that I want to ask Stephen or Ross to add to that.

Yes, I'm happy. Good question, obviously, David, in terms of the sustainability of asset managers. I mean, 5 years ago, so it's before my time. So that's right that Mike is responding to that. But Navigator had 40% to 50% less AUM than it does today. There's one manager. We now have 11 after having sold the 12th to Group just recently. 67% of our revenues are base management fee. The rest of it, as UBS reported 2 weeks ago, has only a 14% variability on the performance fee side, and I would argue is undervalued by the market on a multiple of earnings. We do think of things that way as does the analysis compared to a percent evaluation on farm, even though that's valid. From a sustainability front, we put in every earnings report, a correlation and diversification analysis in the appendix, and that might just like seem like something we put in, but we're actively and we're doing that right now in relation to the pipeline of liquid alternatives that we see. We match it against our portfolio. It's no accident that 3 and 5 long-term returns years across the portfolio doesn't change much between net 7% to net high 9% over that period. This sort of environment, we saw the market sell off big overnight is perfect for sort of a diversified portfolio of alternatives. I think the question that you raised is probably going to have much more impact from my brethren in the traditional asset management land. But we are very focused on diversification, and we're very focused on sustainability. In the last couple of years, we've delivered that in terms of both bottom line and top line results. Ross, anything to add to that from your perspective?

I think you covered it. I think the question is great and helpful really because -- is this on? It's really the core of what we're doing today. If you look at that journey that you very accurately depicted, we were on a single asset that then grew, and I think the market overestimated the growth potential. As a result of that experience, as Mike mentioned, we then set a concerted strategy to diversify, and that's what you see in the earnings today. We welcome the performance fee aspect of the business because these are the businesses that will continue to grow in an underlying client engagement. We don't think nonperformance fee earning businesses in general are quite as sustainable or as attractive in the long term of the sector. So what we're trying to do is diversify the performance fees, and that's kind of where the sustainability comes. But you're right to call out some volatility as part of that.

Thanks, Ross.

Second question, Chair, on the accounts and the general strategic issues, which I think is critical to shareholder value and thanks, everyone, for those responses. Look, you've got majority of your attributable asset under management is directly owned through the direct entity, but then you've got the 11 funds that we've talked about. Now my understanding is the interest in the 11 funds can vary from high-single digits maybe to up to 20%. But Stephen, maybe you can clarify that. But they are minority interests will be protected by shareholder agreements. We all know that minority interest can be challenging, but it's good for alignment, because the underlying fund managers thinking, well, we own 80%, Navigator around 20%. We've only got to pay them 20% of the profits. If you get too high, it hurts the alignment. But there are challenges in being a minority holder. And I'm sure that with your experience, your shareholder agreements with all the underlying funds are tight, but they're never impregnable. We know that in funds management, there are huge egos. There's jealousy. There's a love for money. There can be a lot of fights over -- in funds managers. So it's not the easiest industry to run given the egos. But look, my issue is in Australia, there are 2 comparables, which have been around for a long time. One has been hugely successful. The other one to be frank, is drifted. The one that's drifted is treasury that was originally run by Mike Fitzpatrick, remember taking a placement 20 years ago, which did well, but it's gone up and down like a yo-yo. It's currently controlled by River Capital, who are capable people, but the stock has gone down. They're selling a hell of a lot of their minority interest. It's not really working. On the other side of the coin, you've got a brilliant performer being Pinnacle. I congratulated Ian at the AGM for the day. I think he's done an awesome job. He has 18 affiliates thing from memory, their balance sheet shows an investment in the affiliates of $340-odd million. Their market cap is about over $4 billion. So Ian done a brilliant job. But I said to Ian, how do you do it? Because it's like herding cats, and he laughed and he said, "Yes, it is like earning cats." So Stephen, I hope you're a cat lower because it's...

I have a Bret.

Okay, fantastic. And the final parallel, I'd say, which is a little bit different, but we all know that went overseas, bought some funds managers did failed measurably, and they destroyed a lot of shareholder value. So again, question either to your Chair or to Roger, who's good with the tone or to Stephen take your pick or your other colleagues. Why are you going to be a Pinnacle rather than a Pacific Current. It used to be called Treasury now Pacific Current?

Why don't I take that...

I'll just take you mentioned one thing, several one word several times, and that's alignment. And I totally agree with your comment that having minority interest means that you're not so painful to have on board. And our interests are aligned, and Stephen you might refer to Ross on the shareholder agreements that we have very strong agreements with these people. But the other thing I'd just say, this is not one-way street. This is not -- we're not just -- we are passive in the point of view. We're not involved in the day-to-day management of these companies. But through Blue Owl, particularly, we offer an awful lot of help to these companies in terms of we provide through Blue Owl will have an area where they can provide advice and a whole raft of issues. That level of expertise and breadth of expertise would not be available to these individual companies because they just couldn't afford it. So it's not a one-way street. It's a 2-way street. We do have alignment. The small percentage, a smaller percentage, I guess, 25% or 30% on that small does mean that the value of the other things we offer is in proportion, but having made those comments, Kevin, I'll hand over to you.

Yes. Thanks, Mark. Again, good question, David. It's interesting from -- we don't actually aspire to be a Pinnacle. I mean Ian's valuation when I had of yesterday, 22, 23 times, is obviously very appealing. He's a bit of a legend in the space and what he has built mainly in traditional long-only businesses and providing the distribution channel is, frankly, I think, world leading. But it's very important to note that there are different models of owning minority stakes in firms. And I didn't call on my colleague, Mark Pillemer perhaps to comment. But for over 20 years, and the reason you're asking this question is that the U.S. market is not as well known here locally, -- there have been minority stakes in leading hedge funds like DSO and private markets farms. In fact, Blue Owl was really the leader when they were sitting at Lehmans and then Newberger. So the alignment of interest that's so critical, and as you and I were talking about beforehand, ensuring that the compensation of the key principles is pro rata with our dividends. There's no accident that 95% of our earnings of our partner firms are paid to us as cash and that around that area. So between that and extremely strong contracts that are borne out of things going wrong historically. For the last 20 years, firms like Blue hour, Blackstone, Goldmans, and Navigator have been firming up the documents that cover incredible contractual points. So it's something that we can take off-line and talk about. If you get that wrong, which is what you're alluding to, you get the alignment wrong and you allow a team to pay themselves more money above the line, you have identified 1 of the key risks. What you've got at Navigator across the team is people that have seen this go right and seen this go wrong for multiple decades. And I'm not even referring to people like Sean McGould, who's built to $17 billion. We all know the power of partnerships. But if you get that, and I saw it go right and wrong at Macquarie. I'm actually more concerned with strategies that acquire control or majority stakes and firms because from that perspective, those members that have joined that firm don't have a lot of reason to stay and they can leave. And there's probably a reason why some of my former employer and others have challenged to be able to buy in the 20s, pay multiples for firms because I think the risk is, once they do that, those individuals can lose and the value in that firm goes. That doesn't exist in the Navigator model. So I would -- that's the way I would sort of respond to it. You're right to ask the question. I'd probably turn it over to Ross first and then Mark, but we wake up every day thinking about the issue that you just raised.

Yes. No, I think Stephen's final point is what I would really on, which is it's not how the partners treat us in the situation of minority stakes in alternatives, it's how they treat the internal human capital, the product development decisions, the operational decisions in that alignment. I would 100% agree with Stephen hence, our focus in the wholly owned or traditional space, you see bad products launched, human cap is treated, short-term And when you in our model, you're talking about very different decisions. And that's why firms really sustain over time. And then as Mike said, we can help them. So that's the key differentiator. And to your point, in comparisons, I think Stephen covered Pinnacle Well, that is the very key differentiator in what they did in treasury and pack over time. A lot of interesting different investments, but in firms that really were either more nuanced or less institutional than what Navigators focused on and by investing in very structured and different ways. These are true partnerships in scale and growing firms.

And just a brief follow-up. Look, I acknowledge Chair that Blue Owl are a major shareholder, and they can provide plenty of skills which can help your affiliates. However, I think the big differentiating factor is that Ian secret source is that, as you say, Stephen, they're acknowledged as leading operators, their distribution is outstanding. So when a fund manager in their orbit, 18 funds managers when they think that got 30% of them, they don't actually think there's 30% of their hard-earned profits going because they recognize that without that distribution they probably would only have half the fund. Pacific Current doesn't have that distribution expertise. And while you may well have the credibility of Blue Owl, I don't think anyone's got the distribution expertise the Pinnacle have, which, to me, is the glue that's really held it together because it makes it win-win. when most of the funds say, yes, we might have given or sold in 30%. But our 70% is worth more than 100% if we didn't have Pinnacle. But correct me if I'm wrong, but I'm not sure that you play a big role in the distribution for your 11 minority affiliates.

I might just very quickly say I'll hand you. That's absolutely true. It's not that we haven't considered it. We've considered. We've talked to our affiliates. I won't have very different ideas that their markets are very different and some of them in some ways do compete. So the we didn't feel it was worthwhile us building a distribution team because a lot of them didn't want it, didn't want it. But having said that, Stephen over to you.

David, you not speak a little bit I think you didn't have the benefit of joining yesterday's Investor Day, but we had, I think, 3 or 4 slides on the concept of decentralized distribution. And I'd certainly encourage you to go and take a look at that and we can talk about it more. We have 11 partner firms. Each of them have their own sales teams inside the business. I am absolutely convinced and perhaps Mark can talk to this across the Blue Owl portfolio that embedding a captive and specialized distribution team within each of the business that doesn't have bandwidth or conflict issues. The ego point you mentioned before is the absolute optimal way to build enterprise value, in which case, NGI sharing in that value uplift. So on our larger firms, we have 30 salespeople. They're just not a Navigator. Why would I want to apply 13x as of today multiple to 100 salespeople if it's not necessary, we put 30 in and all the way down to our new businesses, which could be only a couple of salespeople, and they are all not competing with each other, and they're aligned often with carry and sometimes equity in each of them manage the firm. So it's autonomy and independence. And Yesterday, we heard from both Jack Ross and and Jack has built the team over the last 10 years under a gentleman called Russ Andrews, and that team just raises money for waterfall. Some of the problems in the other models, and I don't want to call them out by name, is the conflict on which products because salespeople tend to go to whatever is easier to sell. That risk is not a risk that Navigator has to bear. So you're right from an Australian more traditional perspective, but in alternatives, it's just a very different approach. And frankly, it's the optimal approach I knew that sales team. I know Paul, mistakes were made around that. And to Ross's point, the firms were just so disparate often with revenue shares that it just wasn't an institutional model where that team could work. So look, our cost base at Navigator and the margins in Ross' business at 95%, why would we want to change that and build a team, which our managers don't -- are not asking for Navigator to provide. But I don't know, Ross, and maybe even Mark from a Blue Owl can comment. Mark, do you want to talk about Blue Owl?

Thanks. I don't really have much to add to it because I think Stephen captured it pretty well. I think that at Blue Owl, we've focused on exactly the same model, creating that centralized capability to provide advice and support, to help all of our partner GPs build out their own sales capabilities and to provide targeted introductions or wherever it may be helpful to them in building out their own. I think we now have 45 partnerships just in private markets firms and to be able to have -- if we were forced to be a centralized distribution network for all of those 45, it's really tough. We have 20 people who are focusing on client development and fundraising. And we're providing advice and structural -- how to actually structure the sales teams and advice on which of their products are salable in which regions and what type of investors and select introductions on top of that. That is the way to scale the business from our perspective. And ideally, as we add several managers here in the near term, we'll be able to continue to scale them with the resources that we have.

And just to clarify that Blue Owl services platform is available to Navigator and its partner firms. In fact, long reach is today, but they recently had a session where they discussed one of the products with BSP and how they could grow it. So what a great competitive advantage that is, which means Navigator just doesn't need to build that to Mike's original point. Did you want to add anything, Ross or...

I would just add one thing in terms of background. If you look at the hundreds of billions of flows into alternatives, a very small portion have distribution, placement agent third-party help in the institutional landscape and damage landscape, pension landscape insurance, they are looking for people internal to the firms and building those relationships for multiple funds and multiple decades. Ian's team, as Stephen said, is world-class, but they're selling it to very specific institutional channels and the wholesale channel. That's not where you're going to see the Navigator firms raising client.

That question is a good opportunity, Dave, for us to explain. Are there any other questions in the room for you?

About the financial reporting.

Yes, about the financial report or No, Okay. Any questions online about the financial report.

No. I assume no one on phone.

There's too many lines to communicate. That brings us to the remuneration report, I believe?

Yes.

Under the Corporations Act 2001, listed companies are required to include as part of their directors' report, a remuneration report, which includes specified information. The directors have prepared a remuneration report to the 30th of June 2025, and it is included in the annual report on Pages 20 to 38 and has been available to shareholders. The act also requires companies to put to shareholders a nonbinding vote to enable shareholders to voice their opinion on matters included in the report. The Board will consider the outcome of the vote and comments made by shareholders on the remuneration report at the meeting when reviewing the company's remuneration policies. On output resolution 2 to the meeting been that the remuneration report for the financial year ended 30th of June 2025, be adopted by passing an ordinary resolution as set out in the notice of meeting. Are there any -- and I know there is one question in the room. Microphone. Thanks.

My name is Malcolm Young. I'm a shareholder and also a member of Team Invest. And Mr. Darke certainly would know all about Team Invest having addressed one of the case SP-20 I enjoyed that earlier this year. My questions do relate to the remuneration report, particularly to Pages 24, 25 and perhaps a little bit of 26. So I want to start with the short-term incentive. And my first issue is the vagueness of who gets the short-term incentives. If you look on Page 25, at the top balloon under the heading Lighthouse STI. It just refers to senior management and investment staff in the U.S. And if you look down at the balloon relating to NGI and NGI Strategic SDI, it just refers to staff who directly contributed to the operation of the listed parent company and/or were responsible for the successful completion of the NGI Strategic investment transactions completed during the year. Now we focus very strongly and Team Invest on remuneration reports. And we're used to seeing the key management personnel who receive SDIs identified in the remuneration report, not this vague description that we've got here. The next issue is how the quantum of the SDI pool is fixed. And if you go to the bottom balloon on Page 25, the NGI and NGI Strategic balloon, the -- all it says is that the quantum is determined by a bottoms-up approach to determining individual staff awards, I don't know which staff, based on the performance of the business. Well, we're used to something a bit more specific than that in the remuneration reports of the companies we regard as wealth winners. The next question, what are the hurdles for getting an SDI for individual -- these individual members of the staff who are not identified. And finally, the quantum does seem to us compared to other remuneration reports we see extremely high. If you look at the bottom of Page 24, Stephen Darke's SDIs were over double his fixed remuneration. Mr. McGould were 3 times and Mr. Zachary were the best part of 3x his fixed remuneration. So we have concerns about those aspects of the report in relation to SDIs. On LTIs, long-term incentives, half appears to go from Page 26 on the basis of absolute TSR, or total shareholder return, something that we are in Team Invest. Why should an executive's remuneration be fixed and governed by gyrations in the stock market. You've only got to see the little chart on Page 24 to see how the stock price has gyrated quite unrelated to the growth in EBITDA. And when you think about TSR, it's not really fair to the good executive either. He can't control what the stock exchange does with -- Mr. Market does with the share price. What he can do is buy his endeavors, contribute to growing the net profits of the business. So we ask why not just have NPAT or perhaps NPAT adjusted to take out amortization, which I believe is referred to these days as NPA, why not have that as the measure. So those are my issues and appreciate your comments. I don't wish to sound an unhappy shareholder. I'm happy since listening to Mr. Darke and buying the shares. But I'm very concerned about the balance of the interest of shareholders, with those of staff is obviously to get large incentives and make sure that, that balance is a proper one.

Look, thanks very much for the comment, and not unique to this organization questions regarding remuneration and a couple of observations and probably not in the order that you've raised them. First of all, the details of people receiving incentives are for key personnel disclosed for people in general management who are not key personnel. I don't believe it would be appropriate for us to name them. And I guess it's an issue that the Board has -- the Board is well and truly aware of who receives the remuneration -- the incentive remuneration. But I don't think it's appropriate that they should be disclosed in annual report. As regards to ratio of STI to fixed remuneration, I actually believe that is a better alignment than having out the fixed remuneration, especially -- and I should maybe prefaced my comments. A lot of the people we're talking about are operating in the environment in the United States, which has a very, very different concept or remuneration, what should be at risk and what should be fixed than most of Australia. We have to operate in that market, and we have to attract good personnel. And so we're competing for talent, if I could put it that way. But I actually see a low-fixed remuneration and a higher at-risk remuneration as better alignment for the shareholders. So if the company does perform well, the individual receives the benefit and we're not locked into having very high fixed remuneration, but we can't. We just locked into it. Regard total shareholder return, and there's been plenty of debate around total shareholder return and what it actually means and what it includes. Part of the TSR is indeed internal earnings performance, and part of it is relative performance of the share price. And as I think you pointed out, it does cut both ways. But it's not totally the share price, nor do I believe it should be. So I'm not sure -- I think that the disclosure is appropriate as indeed, as the individual hurdle so that's one thing you asked, I didn't address. The individual hurdles are different for different people. And quite appropriately because their roles in the organization are different. And therefore, the areas they're focusing on are different. And therefore, it's appropriate they have different hurdles. And I don't think, therefore, it's appropriate that we put those, and I don't think many companies do put individual hurdles in their remuneration report. So can I just -- I'll pause there and ask, do you have any comments on that? Or do you want to explore any of those issues a bit more?

I just really -- I'll perhaps hear what the other staff at if I may, and then other executives say...

Well, I'm happy for them to do it, but can I say that it's a little difficult, I guess, because we're talking about their remunerations. And I'm happy if I want to say anymore, but I'm not sure -- this is definitely a board responsibility.

Yes, I'd like to make common relation to Sean and I can comment in relation to the others, but Sean is the Founder, CEO and CIO of Lighthouse Partners, which is a $17 billion multi-strategy hedge fund complex, probably the sixth largest in the world. He is -- he plays -- he's a very key person in that business and is responsible for new product development, and it's a business that's achieved strong returns. If you have a look at the EBITDA and he's focused on the growth of the business. He's also based in America and he's, frankly, one of very few people that can play that role. I believe in that context, I understand the question, and we're sitting here in Sydney. And I don't know if you had an opportunity to hear from Sean yesterday, but I believe that's an entirely fair, if not lower compensation for that person playing that sort of role. I can't comment on myself and Ross, but I would say that.

I've got some supportive comments, if I may.

Sure. Look, it is subjective, but I tend to agree with what you said, Chair, that it's more alignment if the majority of remuneration is at risk. If shareholders win, then the executives win. But I would also endorse what has been said that at the end of the day, in funds management like it or not, the amount of money made by the stars is huge. Like I think Macquarie at Stone Peaks probably made $10 billion. That's his return all at risk because he would have got nothing if he hadn't delivered the outcomes. Phil King is probably net worth is $1 billion here. Jeff Wilson at risk, he's created a business probably net worth $800 million. I think Stephen is doing a very good job. The market likes him. I think your $1.6 million, Stephen, is very, very reasonable. I think if Stephen wasn't here, you'd probably lose 10% of your market cap. So I would endorse what the Chair said and what Stephen said.

[indiscernible].

It goes to long-term incentives and the vice of TSR -- the natural -- I'm not suggesting this is true of the existing Board or the existing executives of this company, but the tendency with TSR is to encourage short-term announcements as the period for gauging the CEO, whether it is long term in the shares or whatever the benefit is to come out with short-term announcements to the stock market, which inflate the share price and thus increase the quantum of the long-term incentive. And so I'm not suggesting that's true of this company, but it is just a vice of TSR. There's a natural inclination to come up with announcements that inflate the share price because that will inflate the particular executive's total remuneration.

Okay. I comment on that. I totally agree, and I'm sure with all list of great number of companies where they've been guilty of that. That's where the role the Board becomes very important. There is no inclination I can tell you within management of Navigator for that. If there was, the Board would not -- we just wouldn't stand for it. That's one thing. Secondly, my experience in the stock market has been that whatever short-term sugar hit you get from in particular -- from a particular frothy announcement for one of a better word, you pay double that on the downside when the announcements turned out to be inflated, a bubble or whatever else you want to call it. So it is really a short-term thing. I'm not giving advice to other listed companies. But that's where it's important to have restrictions on equity that's granted. And most of sensible remuneration schemes have very significant equity components that the restrictions on the sale of those shares. So if a manager in -- on other company might be tempted to do that, we can't sell the shares into whatever good fortune might fall just because of our froth announcement. So as I said, it's the Board monitoring it and not talking generally here, and it's specifically, I can tell you it happens here. It's the Board monitoring and the fact that the shares cannot -- do not vest for some time. So short termism, and I totally share your concerns about short-termism, really certainly doesn't occur in this company. But the other side of it is because if the shares are held long time, the executive has to have a long-term view. If he wants to or she wants to get the value at the end of the period. Is there anyone else would like to you...

Can I just add one thing here, as per the Chairman's comments earlier on about our need to make sure that the overall compensation plan for the executive is contemporary, is up to date represents best practice. And we will be going forward over the next year as we do all the time to make sure that the plans that we have R&D, best practice, reward endeavor, attract staff and meet the standards that we would think of a company of our quality. So this is not just a sit and lock and do nothing for 10 years. We'll continue to look at it and make sure that we have the right results.

That is a topic for conversation I can assure you more once a year. Okay. Do we have any other questions on the remuneration report?

No.

None online? Okay.

Okay. Sorry. just one in. All right. So question online is did a proxy adviser caused restrike, what was the issue?

Did a proxy advise -- I'm sorry.

Sorry. So the question is did the proxy adviser cause a strike and what was the issue?

Well, it didn't cause. There's no -- I haven't had the vote yet.

Yes. So the proxies that are shown are only proxies, there is still on floor voting to determine the results.

But we will not know the results until the end of the meeting.

Until the end of the meeting and those in the room cast their vote.

So I think that answers the question, yes.

But if you do -- if you want to respond on the proxy advisers themselves, you can say whether they do or not, but not the reasons why, given that it's proprietary information in their reports. So you can say what the recommendations were but you can't provide the reasons given the reasons...

No, that was Louis -- anyone else...

Yes, so ISS recommended in favor of resolutions, glass was recommended in favor of all resolutions other than Resolution 2 on the rem report.

Okay. So that was -- I'm not sure that answers the question we can't we might not...

But we can't give the specific reasons to that.