Mirrabooka Investments Limited (MIR) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to the 27th Annual General Meeting of Mirrabooka Investments Limited. My name is Greg Richards, Chairman of your company. Company's Secretary has confirmed that a quorum is present, and I will now open the meeting. I'd like to begin by acknowledging the traditional owners and custodians from all the lands we are gathered on today and pay my respects to their elders, past and present. I will now introduce those on the stage with me. We have our Managing Director, Mark Freeman.

Good afternoon.

And my fellow Non-Executive Directors, Paul Dwyer, Jackie Fairley, Annette Kimmitt and Tony Walls. We also have our company Secretary, Matthew Rowe, to my right, our Chief Financial Officer, Andrew Porter to my left, and our General Manager of Business Development and Investor Relations, Geoff Driver.

Good afternoon.

In due course, we'll be hearing from the portfolio manager, Kieran Kennedy and our assistant portfolio manager, Stuart Low. We are also joined by other members of the investment team in the front row of the audience. I'll also take this opportunity to introduce Kate Logan, partner of the company's auditors, PricewaterhouseCoopers, in the front row here, who is available to answer questions today on the audit and preparation and content of auditor's report at the end of the presentation. Today's presentation has been released to the ASX and made available on the company's website. I will remind shareholders using the online platform that whilst questions can be submitted at any time, I will not address them until the relevant time in the meeting. To ask a question, click on the Ask a Question button at the top or bottom of your screen. If you have not entered your shareholder number or proxy number, you will be required to provide these details before you can proceed. Once your shareholder or proxy number has been verified, you can choose to ask your question in writing or orally. If you require further guidance, please click on the virtual meeting online guide link on your screen. Please also note that your questions may be moderated or if we receive multiple questions on one topic, amalgamated together. I now declare voting open on all items of business, and I'll give you a warning before I move to close voting at the end of the meeting. To cast your vote, click on the Get A Voting Card button on your screen. Where prompted, please provide your shareholder or proxy number and follow the prompts. Once verified, a voting card will be issued, and you will be able to lodge your votes, click submit vote at the bottom of the voting card to lodge your votes. If you have multiple holdings, you will need to obtain a voting card for each holding. Shareholders, authorized representatives and appointed proxies in attendance here in Melbourne today would have been issued a yellow card to vote on each resolution. If you are eligible to vote and you have not yet received a yellow card or have any related questions, please see a representative of the share registry, MUFG Corporate Markets in the foyer. Now before we move to the business of the meeting, I would like to provide some additional comments. It has been another interesting year in the market with the 2025 financial year, delivering strong returns, both in Mirrabooka's mid and small cap investment universe, where the benchmark produced a return of 15.2%, including franking and in the large end of the Australian equity market where the S&P ASX 200 Accumulation Index produced a return, including franking of 15.1%. The healthy returns of Mirrabooka of 11.4%, including franking were delivered despite significant market volatility, which occurred at various times through the financial year. This is a credit to the team, which maintains its investment discipline in the face of volatility often driven by geopolitical pronouncements. As you would be aware, the environment also provided impetus for Mirrabooka to conduct a 1% rights issue, raising $85.1 million of additional capital. With the solid rebound in markets following the raising, we have taken a patient approach to deploying this capital to date with $84 million of cash on hand held on the 30th of September 2025. Total take-up for new shares under the entitlement offer and top-up facility was approximately 119%. A scale back was therefore completed. This was based on a multiple relative to existing entitlement and a minimum of $5,000 for those who had a very small number of shares but applied for a very large multiple of entitlement. We felt this was equitable for all shareholders, and we engaged an independent party to advise on the allocation process. Only a small number of shareholders did not receive the full amount of the application in the top-up facility. It is pleasing to see the shares are trading well above the share price offer at $3 -- which is at $3.06. On your behalf, the team remains committed to unconvering compelling, emerging listed Australian and New Zealand companies, while maintaining the long-term investment in high-quality growing businesses. We remain particularly focused on continuing to build relationships with outstanding executives and business founders, the likes of which have driven Mirrabooka's most successful investments to date. Moving on to the business of the meeting. I'll take the notice of meeting as read. With regards to the minutes of the 26th Annual General Meeting, they have been signed as a correct record and are available to shareholders for inspection today. Now, the first agenda item is consideration of the financial statements and reports for the year ended 30 June 2025. We will do this via a presentation, after which I'll ask shareholders to comment or to raise any questions either about the presentation or of the auditors if they have any questions about the audit. I'll now hand over to Mark, Kieran and Stuart to go through the presentation.

Okay. So thanks, Greg. Good afternoon, everyone. I'll just run through a couple of slides setting up what we're about in Mirrabooka and then Stuart and Kieran will talk through the major presentation. So just on to our disclaimer to say we're here to talk about the business. We're not here to give any advice as such. Just a bit of our purpose and approach. Obviously, Mirrabooka focus is on mid- to small cap stocks. I think this slide might be difficult to read because of the print, but I'll quickly go through this. So staying away from the 50 Leaders companies in principle. Sometimes, we have stocks that do really well as mid caps, so we won't sell them as soon as they move into the 50 Leaders index. But over time we tend to sell down those holdings. So what are we looking for? Given our approach, it will be more focused on industrial companies because business quality is really important to us. Ultimately, we measure quality through the ability to make returns. So return on capital employed that is attractive. That's really the ultimate test for a good business. So every dollar a company that invests if they make a good return that drives shareholder performance and earnings growth. So attractive return on capital and ability to grow the business over time. So we like companies that have plenty of opportunities to grow their business. Our financial strength has always been critical. We always see companies that take on too much debt often get into trouble. So we want a resilient balance sheet that's supported by strong cash flows and, I guess, like all companies, but especially with smaller ones. Management, the people behind the business are critical. And particularly, we look for companies where the owners either are the owners or they act like owners, have substantial shareholdings, experience, effective, passionate people. So they're some of the elements we look for in stock. So how we manage the portfolio? We do take a longer-term view of investing. We want to pay fair value for our holdings. We are wary of overpaying. And then holdings will often grow as performance comes through, and we want to build our positions as we get more confidence with the company. Dips in share price is the other time we get opportunities to add. And we will look to sell, if the story changes. We always have to be careful about sitting in stories that weren't the original case. And if we get concerned, we will get out. We do manage risk. So over valuation is a factor that sees us often sell or trim positions. And we do like to have a spread of holdings to provide a more consistent return profile. So some of the background of what we're looking for in small and mid-cap stocks. And if you go to the next slide, you can see this is where the share price has been trading against NTA going back to '21, '22, '23 -- sorry, mainly '21, '22. We're actually trading at quite a premium during the COVID period. I think the market really liked the consistent dividend you're getting out of Mirrabooka. But since then, Mirrabooka's pretty much traded close to what I'd say is fair value or the NTA over time, which is a good outcome for shareholders. So that really is my opening remarks, so I'll pass over to -- I think Kieran is going to start -- sorry, Andrew Porter, our CFO, to talk about the results.

Thank you, and good afternoon, ladies and gentlemen. So yes, as Mark explained, I'll run through some of the key financial metrics, and then Kieran and Stuart will go through the interesting part of the portfolio and investment performance. So firstly, the box on the top left shows profit for the year, down from $10.7 million to $7.9 million. A reminder that unlike most companies, Mirrabooka's profit is actually not all that relevant as dividends can be paid out of realized gains as well. The profit figure has always been volatile, and this year was no exception. The dividends that Mirrabooka received were down in the year from $11.6 million to $10.7 million. The main differences were caused by the sale of JB Hi-Fi from the portfolio, which has historically been a significant contributor to dividend income and the change in dividend payments from ALS which moved their final dividend to the current financial year, meaning we only got 1 dividend rather than 2 last year. The largest differences though in the portfolio -- in the profit figures came from options and the trading portfolio. Although over $600,000 was contributed by writing options during the year, which was historically on the high side, this was dwarfed by the previous year when $2.5 million was generated by writing options in stock such as James Hardie, JB Hi-Fi and REA Group. Without degenerating into a lesson on option trading, and I notice that some of our longer-standing shareholders are going pale at the thought of sitting through that again. Just to note that selling options over stocks that you own can generate additional income as it has here, but does come with a risk that you have to sell the stock for less than it's worth. So it is usually only done in Mirrabooka on stocks that are already considered fully valued. $500,000 was made on the trading portfolio, but this is down from the $1.3 million over the previous year when the company made over $900,000 in trading an excess Macquarie technology position. The dividend was $0.11 for the year. This was up $0.05 on the previous year's ordinary dividend. For that year, though, we do also pay a $0.025 special and no special dividend was paid this year. This was largely as a result of the capital raising. The Board thought it was appropriate to pay the full ordinary dividend on the new shares, which required an increased amount of franking credits, of course, but not an additional special on top of that. But after allowing for the payment of that dividend, Mirrabooka has enough frank of credits to pay $0.32 worth of franked dividend in reserve. So as ever, the Board will be guided on its dividend decisions by, amongst other things, what a prudent reserve of franking credits looks like bearing in mind the need to utilize realized gains to pay dividends and what the realized gains in any single year have been. On that note, it should be highlighted that all of the year's dividend was sourced from realized gains as it has been in recent years. This means that shareholders who pay tax as either an individual or a super fund can claim a tax reduction on that dividend. Those of you who were here yesterday and today would have heard me say this before, but I would recommend checking that your accountant has included this deduction on this year's tax return as it can be very meaningful, and some tax agents seem to be unaware of it. If anybody needs more details on this, by the way, happy to talk to them after the formal proceedings have finished. The portfolio return was below that of the market for the year but above for longer periods. And Kieran and Stuart will provide some background to that shortly. The MER or Management Expense Ratio is the last box on the screen. This is the measurement of the cost of running the company, and it's expressed as a percentage of the costs incurred over the average portfolio for the year. So 0.54% is equivalent, therefore, to $0.54 per year for every $100 invested and that's down from 0.56% the previous year. The outperformance of Mirrabooka has generated has meant that payments to staff that are dependent on such outperformance have been made as well as some salary adjustments required by the remuneration committee which explains a large proportion of the increase in actual costs, but the increase in cost was exceeded by the increase in the portfolio value, hence, the reduction in the MER itself. Hope that's clear. There are also costs associated with maintaining a company structure, which included in the MER. And again, I mentioned this the last couple of times, we do continue to believe that this LIC structure is one that has worked and continues to work very well for shareholders, providing transparency, the benefits of corporate governance and most importantly, the ability to create profit and franking reserves to help supplement the dividend when necessary, unlike an ETF unit, which has to pay out income as it is received and in a form that now requires additional components to your tax return and therefore, costs incurred by your accountant unlike Mirrabooka simple dividend. The Board always keep costs under close observation, and we continue to believe that for a company and portfolio like Mirrabooka, the costs and the MER remain very competitive. As ever, I will be here to answer questions either at the end of the presentation or after that over a coffee. So with that, I'll hand over to Kieran.

Thank you, Andrew, and good afternoon, everybody. So what I'd like to achieve today is to both inform the audience on how -- what's been happening in your investment portfolio, but equally to share some of the confidence that we have in the long-term outlook portfolio relative to other places you can invest in the equity market. Just firstly, to set the scene. We just wanted to describe some of the profound changes we're observing in the way equity markets operate of recent times. And we think this goes back to a legislative change that was made in 2021, some of the MySuper reforms. When you think about it, superannuation funds are the largest pool of capital investing in the Australian equity markets and what was enacted at that time was some tests to say that those funds that are underperforming on a regular basis can lose their ability to continue to attract funds into their business. So what that has done is it's actually redefined the way risk is assessed in the whole investment market. It's now very important for those funds to not underperform an index and therefore, other participants in the market who want to attract money from those super funds and build a business are very, very aware of their underperformance versus a benchmark. What that's led to is behavior where a lot of money has gone passive. So rather than taking a risk of trying to beat the index, it's just to make sure you're aligned with the index and to build the businesses that way. But those funds out there that are trying to actively beat an index are now very aware of the risks are falling behind even for a short period of time and what that does to the money you're managing. Essentially, what that's meant is there's been a lot of herd behavior. There's now a lot of focus on stocks that are in the index. People are hyper aware of it. If there's businesses they don't own in an index that may go up for a period of time, funds are very focused on potentially owning those businesses for a period of time to manage the risk of missing out on those. Other behaviors we've seen is people now are trying to predict the stocks that are going to go into an index next and buy them before they go in because they feel there'll be automatic buying that makes those shares go up. So it's caused a lot of change in the way that behavior is flowing through the market and the way prices are set, which matters a lot to some of the businesses and the smaller businesses that we look at in this portfolio. So what have we done in Mirrabooka in response to this? What we're doing is, we're staying the course. We continue to invest in a fundamental long-term way. We'd like to think about it in the way we think you would be investing if you were looking at the companies we look at and trying to do it on a long-term view in a way that sensibly accumulates and builds your wealth rather than thinking about where share prices are going to track because of index considerations. For us, the way we define risk is the risk of making a poor investment with your money. And really, that goes back to the share price we pay for a business. Its long-term prospects, the risk around it, its balance sheet, its people, the thing that Mark talked about earlier, making sure we can get a sensible fundamental return on that basis over the medium to long term relative to the risk you're taking when you're investing in equity because we're aware you can always put your money in the bank and get the interest rate for much lower risk. We need to comfortably beat that when we're allocating your capital into the market. So just moving on to recent performance. Those who've attended these presentations before will know that we typically encourage people to look at this slide from right to left, we're a medium to long-term investor and we're far more focused and interested in our 5 and 10-year numbers because that's what we're really trying to optimize. I guess in this instance, given the significance of the underperformance over one year, we're going to spend more time in this meeting explaining that one year underperformance and while we remain really confident in the long-term prospects of the portfolio despite that performance. And particularly so because when you've underperformed as much as we have over that 1-year period, obviously, that starts to impact the 5- and 10-year returns. And we're not seeing the typical outperformance that Mirrabooka has delivered over its history on that 5- and 10-year timeframe because of that 1 year underperformance. So what are the factors behind it over the one year? On this slide, we've really outlined the 3 key areas that are pretty equally weighted. It's around 12% under benchmark and around 3% to 4% is explained by each of these areas. So starting on the bottom left of the slide, these are the factors that aren't actually related to the stocks that we've chosen to invest in or chosen not to invest in. These are nonportfolio factors. Within that, when we present our performance figures. We do reflect the franking that has been paid out to shareholders, but the tax that we've paid that has not yet been paid out is, I guess, penalized in our numbers. It's a weight in our performance numbers until those franking credits are paid out to you. As Andrew mentioned, we didn't pay a special dividend with this final, but it's been a very buoyant market, and we've been generating quite significant capital gains. So there's been a buildup of franking and that's been around 1.7%. Greg mentioned earlier, we did the rights issue in April. Markets have since recovered very quickly. So we have all that capital in the bank. Obviously, we have been transacting since, but we do have largely $85 million in the bank today. So that has effectively created some dilution to near-term numbers from raising that capital and not putting into the market in a rising market. And then there's the typical costs that we always incur in managing the portfolio. On to the portfolio factors, so those in blue on the top right of the slide, this is where we had the money invested. And what we've done here is try to outline the key contributors, both positively and those in the portfolio that have been dragging on the returns over 1 year. It's important to note with those that are dragging, some of them actually aren't down that much, but we're talking about a very buoyant market where the index was up over 20%, so if we have a large weightings in positions that don't do a lot or go down a little bit, they do create a meaningful drag when markets are that strong. On the positive side, we've had a number of really strong performers, businesses like Temple & Webster, Cobram Estate, Objective, Life360, Hub24, AP Eagers. Some of those have doubled over the 1-year period. I mean, they've been good long-standing holdings in the portfolio that we continue to like going forward. Perhaps more interestingly, those that have dragged on the right-hand side. It's interesting to note that 2 of our largest positions, Macquarie Technology -- our 2 largest positions, in fact, Macquarie Technology and ARB are in this category. We will cover this later in Stuart's section. If these businesses were unlisted and didn't have a share price, we would conclude that their value has actually increased over the last 12 months. Their prospects are brighter. They're being run particularly well and there's more value to be realized. But markets do what they do. And over the last 12 months, they've actually dragged on our returns. So we're very comfortable with their prospects going forward. The other point I'd note about some of these detractors is there's only one of those logos that we've actually sold out of. So OFX is a business that performed poorly for us. We've moved on from that. We get that all the time in Mirrabooka. When you're investing in this end of the market, there will be businesses that don't work, and you need to cut them and move on. But importantly, there hasn't been a key contributor, having those sort of positions that have not worked in this period. It's more been the buoyancy of the market and trying to keep up. In other cases, businesses like Macquarie technology, IDP, EGL, ARB, we've actually been buying them and taking the opportunity that the market is providing us to add to our position and improve our returns going forward if our thesis is correct. And it's interesting to note, IDP was particularly painful for the portfolio, a very big drag over the last 18 months. But we continue to have our conviction, take a long-term view. We added to that position within the last 6 to 8 weeks. And on that incremental money we put into that business, the stocks recovered over 50% in the last 6 weeks. So now that's quite a significant rebound, but it does show you the importance of having your own view on these things and sticking with these businesses for the long term if we think the thesis is intact. The final area is those businesses that we don't own. And as I mentioned a number of times, it's been a very buoyant environment. I'll cover later why we're not really big participators in small resources stocks. And there's 2 areas there, gold and uranium that have been particularly strong, and therefore, have been a drag on our returns from not owning them. But we're typically far more interested in what's going on with what we do own because we think that's what matters in the long term. And it's quite interesting now. I mean, gold has become such a big part of the index, but it is having quite a meaningful impact on our relative returns for the moment. So getting to the key area of the presentation, why is our confidence in the long-term prospects for Mirrabooka undiminished despite the material short-term underperformance? There's 3 key reasons -- sorry, I'll move on. Thank you, Stuart, 3 key reasons, we list on this slide. The first, we've seen similar cycles like this before, and we'll go through those and explain what we mean by that. The second is, and importantly, the way we have been choosing to transact, we're still being continuing to add value. We think that's a really important health check in the way we're running the portfolio. And finally, and this is an area Stuart will cover later, our portfolio is in really good shape. Our key holdings when we catch up with those businesses, we come out more confident typically than not. Their businesses are being run well. They have really sound strategies and really good value to unlock in the medium to long term. So the cycles that we've seen before, this is actually the fifth time in Mirrabooka's 25-year history that we've had a period -- entered a period where we've been more than 10% behind our benchmark over 12 months. We list here what the common factors are, when that has occurred in the past and how similar they are to this time. So the first is, it typically happens when the market is very buoyant. So it's typically us struggling to keep up with a very strong market rather than us falling further than the market when the market has a correction. That relates directly to the fourth point listed on the far right of this slide. It's typically at a time when we're holding excess cash, scratching our heads a little bit at the buoyancy of the market and struggling to find really compelling opportunities to add to the portfolio holdings and at the moment, we have around 11% cash in the portfolio. The other key features are when mid and small resources stocks, those that we don't typically own a lot of are running really hard and running harder than the typical industrial stocks that we like to own in the portfolio. And the third point is an important one. What we're saying here is it often happens when we've cycled a period where we were outperforming quite strongly the year before the year in which we're underperforming. And what we mean by that because we're medium- to long-term investors, we're not trading the portfolio aggressively. We typically own companies for a long period of time. So when we have a period where they performed really well in the short term. There's often some mean reversion that happens after that where they start to unwind some of that and vice versa. And that's really just a feature of being a longer-term investor, not trying to optimize 12-month returns. And so that's our common feature of when we have had some underperformance. So just looking at a bit of a scorecard for this time around versus those prior instances. And what we're listing here is those -- the 4 other occasions in which we've been underperforming as much as we have when we've entered those periods. We won't go through all of them, but the ticks and crosses, just explain when those circumstances have been occurring versus when they haven't. So it's a pretty clear track record that we have seen cycles like this before. And this is not new to the portfolio. But if we stay the course in the long term, we think the portfolio returns do tend to look after themselves. So going to the numbers in the second bottom row of this, this is the average of the last 4 times that we've been underperforming as much as we have. So first of all, on the question is, is the market buoyant? On average, the -- sorry, the index, the mid- and small-cap indices has been up 18% over 12 months, this time around, it's 23%. So very similar. On average, have resources been outperforming? On average, the prior 4 times over 41% ahead of industrials, this time around is 31%. So again, very similar. The strong outperformance, yes, that has been the case. We've been on average, 6% ahead of our benchmark. This time around it was 8% immediately before this year. And again, we're on average, been holding excess cash as we are this time around. The interesting point to note is what happened in the 3 years following those prior instances where we were underperforming. And on average, in the past, and the past is no guarantee on future performance, of course. But we outperformed by 5% per annum in the 3 years following those periods of underperformance. So what that says is, if you sort of zoom out to a 4-year view, on average in the past, all the 1-year underperformance has been recovered. And on a 4-year view, when you're looking back, the portfolio has outperformed its benchmark over that period, which we take really good confidence from. So on to resource stocks. It's always good to question these things rather than just accepting them. Why are we structurally underweight small and mid-cap resource companies. I guess the key answer to this goes back to what Mark was describing earlier. We're trying to be a medium to long-term investor in companies that we think have a reason to win on a medium- to long-term basis that doesn't require us knowing when to trade in and out of them. The businesses themselves will deliver superior returns. And the important thing for us is to make sure we're owning them. So to pick those companies, you really need businesses with a sustainable, long-term competitive advantage. And if you think about what a resource company is, it's very hard for them to actually possess that. Resource companies, they go up and down on the whim of the commodity price that they're selling. They don't influence that commodity price. They typically have a finite asset life. So they're always having to reinvest to continue to have that asset life going forward, which makes them capital intensive. And they're obviously heavily cyclical. And what we do find, as we sort of outlined in the points at the bottom of this slide is the way those cycles will often work is you get a very buoyant market. And as that's happening, the cost of production in the industry often rise with the buoyancy in the commodity price. You get some sort of leveling out or correction in the commodity price and the profits can really fall away much quicker than you would anticipate because that sort of cost inflation that you see when times are really strong. And we've seen that in the past, and we see that in the slides, in the charts we present to you with the way the small resources particularly have sort of risen and fallen very aggressively over at the life of Mirrabooka. The other point is that there's a lot of resource stocks listed in Australia. There's very few of them that would have what we would say are really world-class positions on their cost curve, where they have that resilience that they can make money at any point in the cycle. They're more often businesses that have mid to high points in their cost curve, so they have more leverage when the cycle is going up and down, which makes them much more of a trading stock than they would be if they had a lower cost position. I will note, it's interesting to look at the slide on the right, the mid-cap resources. You'd look at that and say, yes, it's been cyclical, but sure has been pretty good as well over Mirrabooka's history, and that is correct. I think there's a bit of a quirk in this in the way the indices works. There's been a lot of areas of the market, so there's been lithium in the past, mineral sands, there's been a fertilizer boom, there's been -- there is gold now. Often what happens is those businesses get promoted into the mid-cap indices, they performed very well, and then they move out of the indices. And by the time they've sort of corrected and the cycle's turned against them, the index has effectively sold them. So what that says is the mid-cap index has been a really good home for those stocks when they're going very well, but it doesn't truly reflect the performance of those businesses have delivered over their history. So it probably tells you that they are trading stocks and the mid-cap index has been good at doing that. Moving on to the next point that I mentioned was a really key health check. Have our transactions been adding value while the portfolio has been underperforming? So there's a little bit of detail on this slide. But what we're really looking at here is looking at all the investments we've made in the portfolio, both buying and selling, and just tracking what's happening to the share prices of what we bought versus what we sold since we did the transaction. So what you want to see is markets have been rising. So both categories have been going up since we've bought or sold them. But you want to make sure over a period of time that what you're buying is going up more than what you're selling i.e., you're identifying value and then you're transacting -- you're adding to the value that the businesses are already delivering to the portfolio. So on the left, we outlined that for 1 year. To be honest, on a 1-year view, it's kind of interesting but not that instructive. One year is not really a sufficient enough timeframe to really judge us on what we're trying to do for the portfolio. But we thought it's important to put it up to say there's nothing wrong there. There has been value added on a 1-year view, so there's not a significant attraction that you should be aware of in the way we've been transacting in the portfolio. The 3-year number is far more interesting. So over that timeframe, what that's saying is our transactions have added $23 million pretax to the value of the portfolio in that way buying has gone up more than the selling since we did those transactions. And most importantly, it's just to look at the scorecard at the bottom of the slide on the buying over 3 years. We think the buying is the most important part. We've got to buy good businesses for the portfolio for the long term where you want to get good returns. And what that's looking at is just those that have added a meaningful amount to the portfolio versus those that have lost a meaningful amount for the portfolio. So we won't go through the logos, but it's very comforting to see it's a sort of a 10:3 ratio in terms of those that have added to the portfolio. And the important part of this part of the market is where you get one right, you can make multiples of your money, whereas where you get one wrong, you can sort of only lose one multiple of your money. So if you've got to skew in your favor, that's a really important determinant of the returns that you're receiving as an investor in the portfolio. So with that, I'll hand over -- sorry, Stuart, I'll hand it over to Stuart to go through that sort of third reason we have really good long-term comfort, and that's the strategic updates we've been getting from our key holdings recently.

Thanks, Kieran, and good afternoon all. As Kieran mentioned, we've spent quite a bit of time talking about the market settings and what's occurring in the broader portfolio. But at the heart of it, we really are fundamental bottom-up investors at Mirrabooka. So we -- what that means is we spend a lot of time meeting with management, understanding their businesses, and I thought we'd share some of our thoughts -- encouraging thoughts from the most recent reporting season, which just completed in August. So I thought I'd just detail some of our key holdings and I guess the takeaways from some of those meetings with management. The first one Macquarie Technology is the largest business in the portfolio. It had quite a weak couple of months in terms of share price reaction. We've seen it come out of the ASX 200 index. Kieran talked about the impact that has when something comes out of a passive index. But when we sit down and meet with management, that couldn't be further from sort of how management is viewing it. They're very relaxed. And just to give some context. They're developing their key data center in Sydney at the moment. It will triple their capacity over the next 4 to 5 years. That it is now -- the Super West facility I'm talking about is on budget and on time, which means they'll be ready to start in about 12 months, and more importantly, ready to start taking the first orders from what we believe will be some of these key hyperscale customers in the next 6 months. That'd be a real catalyst for the stock. And if we think about we read every day in the papers how buoyant these MAG 7 businesses are in the U.S., they're spending a tremendous amount of CapEx that feeds into data center capacity. And Macquarie Telco have a great position in Macquarie Park in Sydney there. That's some of the most desired real estate for a data center. So we think they're really well positioned with some positive news to come hopefully over the next 6 months. ARB, another one Kieran mentioned. This business, it's got a great position in Australia in 4 Wheel Parts. I think everyone recognizes their core brand, that red logo. They had a couple of issues in the distributor business in the U.S. probably 2 years ago now, a business called 4 Wheel Parts actually went into receivership. Fast forward another year, ARB, we're in partnership with another company who have bought that business for $30 million. And what they've been able to do in only a matter of probably 6 to 12 months since taking it over, they've got that business back to breakeven. And more importantly, this 4 Wheel Parts business has 50 stores across the U.S. So now under ARB's ownership, they're able to pull through a lot more ARB branded product into that market. So we think that really bodes well for the next 5 to 10 years of growth in the U.S., which is a real key market for ARB outside of Australia. ResMed, fascinating sort of 2 years in ResMed. We saw a lot of discussions with these GLP-1 drugs, the Ozempic, Wegovy, the weight loss drugs when people thought what will happen sleep apnea. Obviously, obesity is a leading cause of sleep apnea. There was a lot of fear in the share price. We saw that business halve. And what we've seen, as Kieran mentioned here, talking to the business 2 years later, it's never been in a stronger position. And what we think actually is occurring is that CPAP and ResMed machines are being used in combination with some of these GLP-1 drugs. And it's actually created a lot of acknowledgment of sleep apnea as a condition, how to treat it, and ResMed's really leaned into that. So incredible that it's probably up 100% since a lot of those fears were occurring in the market. Temple & Webster, this has been a really good one for us. Really strong year of revenue growth, growing 20% in the last year and talked to in recent months, up to 28% revenue growth. So clearly taking a lot of share, and we put that down to -- they've got a relatively unique business model. They don't -- it's a drop ship business model. They don't carry a lot of inventory. Normally, a lot of furniture, home wares companies, when you think about Harvey Norman, they've got a lot of money and their cash flow tied up in inventory waiting to sell. This business relies on the third parties to hold that inventory, so they're able to take that cash flow and reinvest it in marketing, grow their brand significantly. And this business is now doing $400 million of revenue, probably up from $100 million, maybe 5 or 6 years ago. So despite the strong growth, they're still less than 3% of the market. So we think they've got a really long runway of growth and really well-managed business. A couple of other businesses that are sort of key top 10 -- top 20 positions in the portfolio. Life360, this is sort of a fascinating one. A lot of people know Find My iPhone and some people may be users in this room with Life360, it's at its core a tracking app. But this business is staggering. It now has 90 million users globally, which is just an enormous number. They've been able to penetrate the U.S. They now have 15% of that market. And in some territories, some states like Texas and down south, they have 30% of that market, which is just an extraordinary number when you've been competing against sort of Apples and Googles and some of the best tech companies in the world. But I think probably the key that came out of our meetings with this company over the last 18 months is it's been able to move from being a great app to becoming a great business. And what I mean from that is it's been able to grow revenues quite substantially, now close to USD 400 million revenues. It's now creating free cash flow, which is one of our really important sort of tenets of investing for the companies to be able to survive without needing external capital. And it's now got a really robust balance sheet, probably $160 million to $200 million of net cash on the balance sheet. And what they're doing now, which is I think is really interesting. And I think this is part of the excitement from this business, which has seen its share price rise quite substantially is that most users are free users. So you do have some subscribers that will pay for a gold membership pay $10 a month, but most users are on the free version. But this business is now looking at advertising and how they monetize the 86 million users who aren't currently paying. And that means banner ads and other things like that, but also leaning into sort of partnerships with Uber and weather providers and using a lot of their really rich location backed data and how they can, I guess, work with advertisers and location-based businesses. So we think it's a really interesting future revenue stream. It's still small at the moment, but that's created a lot of excitement and interest in this business. Breville. This is one that was really caught, I guess, in the eye of the storm throughout that tariff period. For those who don't know, Breville produces 90% of their products out of China, 50% of their revenues come from North America. So that was a key channel that was going to be quite heavily tariffed, that impacted the share price quite a bit. But credit to management, they've lived through these cycles before. They were aware that sort of Trump had talked about tariffs in his last reign, So they had already begun to mitigate some of this and move production outside of China. And I think probably the stat is that in the next 18 months, all the sales that will go into the U.S. will come out of non-Chinese manufacturing so that we have moved to Mexico and other neighboring Asian nations. The other thing I'll mention here, too, we've talked about the coffee market being quite attractive. We spend a lot of time in our business thinking about disruption. What's AI going to do? We talk about it every day, ChatGPT, I think replacing a good cup of coffee is probably the last thing that AI is going to be able to do. So when we look out for the outlook for that business over the next 5, 10 years, I think that one looks reasonably solid. Vista, this is a fascinating company, not particularly well known, but they produce software for 50% of the cinema industry. And this business obviously had a pretty tough period in COVID, has come through that. And this business is now working with their customer base to migrate them from old what we call on-premise software to migrating to the cloud and a subscription-based business going forward. It has had a lot of interest from the customers to the point where they've probably had too much demand to move to the cloud versus what they could actually pour for the moment. So they've had to pause, I guess, the P&L growth and reinvest quite heavily in some engineering capability to help migrate that. We look through that short-term noise from the P&L and really look -- sorry, really like the outlook for that business over the next 5, 10 years and what that shift to cloud can do for their profitability. Objective Corp, this is a really well-run business. We've had in the portfolio for a number of years, occupied a great niche providing software to the local government, local council, the regulatory environment sector. And I guess the core products have been great for a number of years, but what excited us coming out of this reporting season with some of the emerging products where they've been investing for a number of years, a product like Build, which we mentioned, which accelerates planning, development, building approvals, an area which has been pretty clunky in the past has lack transparency. I guess we're quite excited about what Objective has been able to do with that product in New Zealand, and they've been able to now tailor it, looking to bring it to the Australian market. And I think there's a lot of demand for that. So outside of the core business, which we see growing really well. We think some of these emerging software products offer a lot of upside, which we're quite excited about. I'll now move to talk about the portfolio, I guess, in the context of the top 20, and I'll let Kieran talk on the outlook. We had this slide every time we present, we love it because we talk about being long-term investors, and I think this slide really does show that we do what we say. There's a number of businesses that have been held in the portfolio for 15, 19, 14 years, which is interesting in itself. Or I guess, what's the point? And the point to that is that in the small cap of investing, we like to take small positions, build trust with management, understand the businesses and grow with the businesses. I guess, let them compound. We talk about that a lot, but if we're always buying and selling, incurring tax, those sort of things, we're interrupting that compounding. So what we try to do is buy good businesses and hopefully get out of the way and just let them compound returns for shareholders. There's a lot of common names here. It hasn't been much changed, but I guess the one that stands out is Life360, I talked about it a little bit earlier. We tend to take small positions and add to them as they execute. We've done a little bit of that, but largely this has been price appreciation. So it's only been in the portfolio for 1.5 years, but it's now up to our sixth position in the portfolio and sort of it's quite a staggering number. It's a little bit unusual because it was in the April selloff, but it's up 150% since April. So that one has really grown into its position. But yes, also happy to take -- I'll pass to Kieran now, but happy to take questions on any of these companies because I know they're of interest to a lot of people. But I'll now hand back to Kieran.

Thanks, Stuart. So closing with our section with some few comments on the outlook. So I guess tying back to what I was saying earlier, we maintained really good confidence in the long-term outlook for our portfolio. But I did mention relative to other equity investments you could make. And I think the reason we're sort of putting that caveat in is because we can't really predict where markets are going. Anyone who says they can is wrong, but we can observe some of the behaviors, some of the valuation we're struggling with and really, what that says to us on a medium- to long-term view is that is a weight in terms of the returns you can expect out of equity markets from here. Behaviorally, we're seeing sort of speculation in lots of areas, things like hot commodities, crypto trading and some of the businesses that have been built around that and really some of the herd behavior I was describing was the way the index influences everything. It's sort of taking a lot of thought away from, does the fundamental analysis sort of stack up in some of these investments people are making. So observing a lot of those warning signs, we're struggling to really find compelling valuation and to aggressively buy the sort of companies we want to own. We're thankful that we're a long-term investor with fixed capital. So we don't have to do anything. We'll only invest when we think it makes sense, and we think you would want us to invest so we can play the long game here. But we think that sets us up well relative to what the market will do, but it does set us up for a period, I think, what could be quite challenging times at some point. And I think the final point on that is a lot is made of the sort of weight of money, people sort of struggle to see how a stock might fall or the market can fall when there's so much superannuation money that is in an index and passively buying these things. But our experience is as soon as some sort of risk emerges from left field that's not front of people's mind and people refocus on risk where valuation retraces to when that happens is to the fundamentals. And it goes back to what is the cash return that, that investment or index is going to give me versus just leaving the money in the bank. And so the more the way the money moves share prices around and deviates us from that, the more volatility will happen the next time there's an event that sort of recalibrates people's assessment of risk. So apologies for being quite bearish on that, but we sort of like to call it, as we said. We think the portfolio is in really good shape, but the sort of the buoyancy of markets does weigh on the future return prospects. And in the final slide, we won't go through this, but we just put this in as a placeholder. This is some of the new stocks we've been buying. People are always interested in. We just thought we'd show this. You're welcome to bring us back to this slide later on in questions if there's some particular areas of interest here. But with that, I'll hand back to Greg for the business of the meeting.

Great. Thank you, Mark, Andrew, Kieran and Stuart. I would now like to invite questions from shareholders. For those in the room, we have microphones available. And if shareholders could please state their name when addressing the meeting and ask all questions through the chair, that would be appreciated. There were no questions asked prior to the meeting concerning this resolution. However, if you have any questions on this item now, please submit them now via the online platform or raise your hand if you're in the room.

Okay. Geoff, do we have any questions via the online platform?

Yes. I have about 3 questions relating to the rights issue, Greg. So I'll sort of asked these in succession and you can answer that in context. So the Australian Shareholder Association holds proxy for 41 shareholders. We thank Mirrabooka for continuing to hold hybrid AGM meetings to maximize participation for shareholders. The ASA notes that there was scam mentioned in the annual report of the rights issue undertaken by Mirrabooka last financial year. You have been criticized over the lack of transparency disclosure around the allocation of shares to shareholders under this issue. What would you do differently next time? Sorry, there's another 2 related questions. I think you may cover it off in all of them. So how many of our circa 8,000 shareholders participated in the rights issue? How many apply for additional shortfall shares? What was the total amount of application received along with the dollar breakdown between entitlements and over? Companies increasingly disclosed the sort of data after retail offers, but withholding it -- by withholding, I should say, Mirrabooka just raised suspicion about the supersized allocations to associate LICs, AFIC and Djerriwarrh. Sunlight is the best disinfectant, so please disclose the data. And finally, who was the third party which provided the advice on the allocation for the rights issue? And why didn't you publicly announce precise policy as most issuers do when it's going back in retail applications? Were you embarrassed to disclose that policy that led to the huge allocations of 2 of our largest shareholders, associate LICs, AFIC and Djerriwarrh, whilst scaling back small independent shareholders? So there's quite a bit there in terms of the issue.

Thanks, Geoff. Look, just as a general comment, we're very happy with the amount of support we got for the issue and we've covered that off already in my speech. But in terms of specific questions, well, just -- so we felt there are no issues and it was actually fair and equitable, and therefore, we put out as much as we thought was required in the disclosure, as I've stated. In terms of the independent party that we engaged, I think we can reveal our Acacia Partners, who we've worked with many times over the last how many years, Geoff.

Yes, 15 years.

15 years, and they are extremely reliable and independent. In terms of AFIC and Djerri, they were our founding shareholders that seeded the institution. They have been long term holders of the stock. They are not related parties at all. They have independent boards as we do, and they have independent investment committees. In terms of details on allocations and take up and what have you, look, I note the comment, but at the time we felt that it wasn't necessary to provide that information, and I don't think we'll be putting out any more info. And Mark, did you have a comment on that?

I mean the only thing I'd add is that most shareholders got 100% of what they wanted. And so it was a choice to go in it. So those that chose not to go in it, obviously, got what they wanted, which was nothing because they chose not to go in it. And all those that chose to go in it, most people got 100% allocation and so they got what they want it. So there was only a small amount of people that didn't get what they wanted, and they tended to be people with very small shareholdings that bid for a lot of stock. So we did actually set a small minimum amount, so very small parcels holders or people who have small holdings, at least got a minimum amount. But yes, it's a -- very small number got scaled back because they are generally -- most of those were small shareholdings that bid for very large amounts. And so we did that scale back kind of pro rata basis based on your existing shareholding. But as I said, most people simply got 100% of what they wanted. So therefore, there really wasn't a lot to announce.

And since the issue, I think there's been about one comment that's been consistently aired from one party and nothing from shareholders.

We really haven't heard -- there's really only been a couple of sources of the negative comments to be quite frank.

Yes. And again, it goes back to that point most people got what they wanted. There's really not much to comment on.

We haven't had very -- we have very little complaints from shareholders. Well, the board is still very happy with how it went. Geoff, do we have any other questions?

Yes. No, sorry.

Do we have any more questions here?

So I've got another question here on the under general business. The AFIC is stable, LICs adopt a rare policy of lodging the annual report and the notice of meeting for the AGM as 1 PDF document with the ASX each year. This effectively buries the nominations report and an important document in its own right, plus needfully reduces the time shareholders have to access the annual report, which should be released in August with the full year results as most companies now do. We fix this problem by releasing the annual report with the full year results next year or at least a couple, the NOMs report and the annual report on the ASX.

As I'm aware, we comply with the ASX guidelines and protocols on this. Our results come out in mid-July on a preliminary basis. So annual report would not be ready then anyway. But look, we will take it on Board to see if we can decouple. But I also think that it's been a fairly good process so far, but I'll have a chat to Matthew about that and Andrew.

One of the reasons that we do it, of course, is to ensure that Mirrabooka shareholders get their dividend earlier than would otherwise be the case. And we think that shareholders generally prefer that option rather than delaying.

Another question about stock. Can you make any comments on your reasons for purchasing Australian Ethical?

Sorry, I thought we were doing the general business questions. So that's fine. So Australian Ethical, it's one we have owned before and we've reentered recently. We think it's still a really good brand as an Ethical focused investor. And there's obviously a strong and growing following for that type of investment vehicle. We think being a business that's 100% focused on that gives them a really good position in the market. And we think what they really -- valuable asset they've got is they're a super fund in their own right. So if you think a lot of young adults now are very ethically focused. They will choose to put their super into a fund like Australian Ethical. And if you get those members at a very young age, you get them before their wealth builds and their salary grows. And if you can hold on to them for a long period of time, you're not subject to the same sort of pension outflows you get when people reach that phase of their life. So we think an excellent brand, a really good long-term asset in super and that differentiation from others sets them up for really good long-term growth. And the other thing I'd add is it's been run with a more commercial focus than it had historically. The fees are now in market, competitive, and they're focused on growing the business while remaining an ethical investment vehicle.

Thanks, Kieran.

I have no more questions relating to this particular resolution. I've got some for the other.

Okay. we'll now move to the formal resolutions of the meeting. Your directors' recommendations are set out in the notice of meeting. I can confirm that where undirected proxies have been given to me as Chairman. I will vote them in line with the Board's recommendations on each agenda item. And voting today will be conducted by way of a poll on all items of business, representatives of our registry, MUFG, will oversee the conduct of the poll. Firstly, if there is any person present in the room who believes they are entitled to vote but is not yet registered to vote, would you please seek assistance from our share registry, MUFG. For those in the room on the reverse of your yellow admission card is your voting paper and instructions. I'll now go through the procedures for filling in the voting papers. In respect of any open votes, a proxy holder may be entitled to cast, you need to mark a box beside each resolution to indicate how you wish to cast your open votes. Shareholders also need to mark a box beside each resolution to indicate how you wish to cast your votes. When you're finished filling in your voting paper, please lodge it in the ballot boxes that will be available at the end of the meeting. The second agenda item is a resolution to adopt the remuneration report. This is required by the Corporations Act to be considered by shareholders annually and is an advisory resolution only. The remuneration report can be found in the company's 2025 annual report. This -- the report is only concerned that nonexecutive directors' fees as the company has no employees and utilizes Australian Investment Company Services Limited to provide day-to-day operations. I'll now show the proxies received in respect of this resolution, which are now shown on the screen. There were no questions asked prior to the meeting concerning this resolution. However, if you have any questions on this item, please submit them now via the online platform or raise your hand if you're in the room. Geoff, do we have any questions relating to this item?

No questions related to this item.

Thank you. So moving on to the third agenda item. It's a resolution to reelect Tony Walls. Tony was elected as a director by shareholders at the 2023 AGM. However, to facilitate the election of directors as required by the ASX listing rules, he is standing for reelection by shareholders today. In accordance with Rule 46 of the company's constitution, he retires from the Board of Directors and being eligible offers himself for reelection. Tony, would you care to say a few words before I put the resolution.

I'll give you -- I can give you a few, Greg. Thank you. Look it's been my privilege to work with the other Board members and the management team, really working on your behalf to make sure that we deliver a standout performance at Mirrabooka. I spent my entire career in tech and I guess more and more of the stocks that we own as shareholders involve either straight technology or influenced heavily by technology. So yes, my privilege to continue to work with Greg and the Board team.

Thanks, Tony.

No questions here, Greg, on this resolution.

Okay. So I will show the proxies in respect to this resolution first. I think, Geoff, there are no questions asked prior to the meeting concerning the resolution. However, if you have any questions on this item, please submit them now via the online platform or raise your hand if you are in the room. Geoff?

Yes. So this is from the ASA. The ASA likes to see directors have skin in the game, typically at the level of at least 1 year's fee value. Mr. Walls has served on the Board since 2023. He has acquired 0 shares in Mirrabooka. Does Mr. Walls intend to correct this situation?

I believe it has been corrected.

Yes. That's correct, Geoff. I'm pleased to be a shareholder now, and I look forward to owning many more shares going forward.

Second question, Mr. Walls is the CEO of Objective Corporation, a $2 billion company. How can shareholders be assured that you can devote the quality time to provide the necessary governance and oversight services for Mirrabooka?

If you like, Tony, we have an annual report put down the attendance record of each of the Directors. I think you can see Tony's record is excellent. In fact, Tony is technically only on the Board because of his time issues, but he has also invited to come to any of the investor committee meetings and the audit meetings, and he has attended all of the investor committee meetings, and I think of which there were 15 last year. And I should say that we are very pleased to have Tony on the Board, particularly as he is involved with a company like Objective where we get the value of his expertise and knowledge. And that's been invaluable, particularly outside the Board as well and working with the investment team.

Final question, Greg, I have related to this resolution. As the only director up for election, could Tony Walls comment on why Mirrabooka didn't limit the amount of additional shortfall shares investors could apply for in the $85 million rights issue as most companies now do. Was he aware having unlimited overs could lead to associate LICs, AFIC and Djerriwarrh securing around 2% of all shares sold when they started with around 7%? Do you consider rejecting some of these applications, given the effectively diluted nonparticipating retail shareholders, selling discounted shares to raise cash when we didn't need it?

Tony, if you like, I could say that Tony participated fully in the pre entitlement offer discussions and the policy of the Board going forward as a group was to actually do what we did, which basically encouraged top-up shares over the entitlements. And if Tony, if you should add any more of that, I don't think there's much more to say. I think we've covered it previously.

Okay. I have no other questions, Greg.

Okay. Thank you. Ladies and gentlemen, that concludes our discussion on the items of business. In a couple of minutes, I'll close the meeting. And for those participating online, please ensure that you have cast your vote on all resolutions and clicked on submit vote at the bottom of your voting card. You'll have 5 minutes from the close of the meeting to finalize and submit your voting card. For those in the room, may I now ask that you complete your voting card, staff from the share registry will collect your voting card at the end of the meeting. I would like to thank shareholders for your continued support and for the interest you have shown in the affairs of the company via your attendance in person or virtually today. Shareholders are reminded that the team will be holding shareholder meetings in Melbourne, Adelaide, Perth, Canberra, Brisbane and Sydney during March 2026. The results of these votes will be released to the ASX later today. I now declare the meeting closed. Thank you.