Maintaining momentum and engagement under lockdown

Louise Walsh It’s incredibly uncertain, incredibly volatile at the moment. If that unemployment reaches 15%, suicide rates will increase by 50%. And I think of that figure, they’re estimating 20% to 25% of those suicides will be young people. But with this dual purpose that we’re doing, we’re delivering those investment returns and we’ve got this charitable social return. It does feel good to be supporting the community, at the same time, delivering those investment results.

When we do have a severe downturn like we’re in now, we’re going to go further into, we can actually at least maintain that current dividend level.

James Marlay Can you give me a quick synopsis on how you’ve been staying engaged with the fund managers and what activity you’ve being taken on the investment front?

Louise Walsh The whole strategy is very much to engage more closely with our shareholder base and also someone like our group of fund managers who very generously actually waived their fees to really help us make this happen on the shareholder front, we’ve added more investor calls. We’ve upped the ante with content in our newsletters. We’ve started a podcast series. I’ve wanted to do that for probably two years now.

And something like what’s happened with COVID has meant, “Okay, we can make this happen. It’s not actually that difficult to do.” So it’s a monthly series and I’ve just interviewed David Gonski with his thoughts on the positive impacts from COVID, which was really fantastic exercise to do. And it is about keeping as close to those shareholders as we can and updating them.

And also what we’re trying to do is seek more feedback from them than we’ve ever done before, whether it’s surveying them about something or in the lead up to our AGMs coming up. Making sure that we’ve asked questions in advance if they’ve got any questions that they want us to address.

On the fund manager front, we do have a fund manager engagement strategy. Because it’s quite important for us in the short and the long-term to make sure that these very generous fund managers stay with us, are very engaged in what we’re doing particularly on the charitable side of the business. Because one of the things they love is where the 1% that’s donated to charity where it goes. They’re very engaged with our focus on mental health.

So we do have a strategy there. We even did something fun back in February, where we hired the Open Air Cinema in Centennial Park in Sydney. And we invited all the fund managers, all of their team members and all of their families to come to a night where showed the remake of the Lion King. And it was really a genuine thank you. The event was very, very generously funded by the management company of Wilson Asset Management. So Jeff Wilson, the founder really helped us out there.

So we have got a bit of a plan of keeping them engaged. We have our first ever virtual investment forum coming up and this is obviously part of what I’m recording for today. And part of that will actually be getting each of our fund managers to present a written stock pick. So we’ve never, never done that before where we’ve got all of the fund managers, as many as we can to put forward their best investment ideas.

So again, that’s a great opportunity for them to be in front of our shareholder base and other advisors, which really helps them and their profile, but also means that we keep them engaged.

James Marlay In the ways that the mental, you touched on their mental health is just such a central focus for what you do. How does the situation we’re in now have an impact on mental health? It’s obviously putting this health issue, I guess, into the front of people’s minds.

Louise Walsh Look, James, it certainly is. I mean, it’s something that both boards and myself are very passionate about. We chose youth mental health as the cause area of choice for future generation global back in 2015. And we chose it because at the time that cause area was chronically underfunded by the corporate sector and by the philanthropic sector.

And we wanted to make a serious difference in that space. And we also decided back then that we wanted to play a leadership role and encouraging more philanthropic funders, more corporates to fund in that space too. And we’ve been gradually doing that role in the last two or three years. But I started to say about 18 months ago that I really feel that mental health is the health issue of our time. And little did I know back then that we were going to face what we’re facing now with COVID, but also the economic impact that of course, that has precipitated.

And it is a crisis like we’ve never seen before, the mental health impact. One of our FGG charities Brain and Mind Centre last week actually released some modelling they’d done. And they’re saying that as a result of COVID and the economic impact, their view is that suicides will actually increase by 25% in Australia, assuming we have 10% unemployment.

And then the other scenario is if that unemployment reaches 15% suicide rates will increase by 50%. And I think of that figure, they’re estimating 20 to 25% of those suicides will be young people. That hits us right there as a CEO and a board and we know our shareholders feel strongly about it. That’s something we do need to tackle.

And in fact, in two weeks time, we have a social impact manager starting with future generation. And that person will be charged with making sure that we can demonstrate impact from the charities that we fund in mental health. So like we’ve never done before and this person is a specialist in that space. And again we thank Wilson Asset Management for their generosity in helping make that happen with the companies as well. So it is a crisis, but in some ways we feel the timing is very interesting for us to really elevate what we’re doing in that space and seriously make a difference.

James Marlay So Louise, in the absence of being able to greet the many shareholders face-to-face. What’s the key message that you’d like to pass on to them at the moment?

Louise Walsh Really these two companies, as I think shareholders know, but I’ll reinforce it. We are about trying to provide that downside downmarket protection and also that portfolio diversification, so that in times like this, we can protect our shareholders and their investment. And that’s actually what we’re trying to do.

We really feel that’s the model and we have got some proven results so far where in down months, we have outperformed the benchmark or the index. And it’s incredibly uncertain, incredibly volatile at the moment, but with this dual purpose that we’re doing, we’re delivering those investment returns and we’ve got this charitable social return. It does feel good to be supporting the community at the same time, delivering those investment results.

I think the other important message is that on the dividend front, thanks to the wisdom of Geoff Wilson and his years of experience and also our board members, we’ve always had a dividend policy that we want to keep enough money in that kitty, in our profit reserve. So that when we do have a severe downturn, like we’re in now and we’re going to go further into, we can actually at least maintain that current dividend level. And that’s what we’re planning to do certainly in this next dividend announcement, which will be at the end of August. They’re not designed to shoot the lights out, but they are designed to really provide that protection.

James Marlay Great. Well, listen, nice to catch up. It sounds like you’ve been really busy and great to hear about the really important work you’re doing on the investment front, but especially on the mental health front. So thanks for your time, Louise.

Louise Walsh Thanks very much, James.