Mirrabooka Investments Limited (MIR) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Mirrabooka Full Year Results Briefing. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the call over to your first speaker today, Mr. Mark Freeman, CEO. Please go ahead. Thank you.

Okay. Good afternoon, everyone. I'm Mark Freeman, the CEO and Managing Director of Mirrabooka Investments. Welcome to this full year result briefing. This is the first time we've done after the full year result release. 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 both past, present and emerging. Joining me in the meeting today, we have Kieran Kennedy; and Stuart Low, who manage the portfolio; Andrew Porter, our CFO; Matthew Rowe, our Company Secretary; and Geoff Driver, who's the General Manager of Business Development. Before we start the presentation, just a bit of housekeeping on the webinar. This briefing is based on the material available on the company's website. If you are using your computer to access the presentation via the webcast, the slides will change automatically. If you are accessing by phone only, the PDF of the slides with page numbers is available on the website. [Operator Instructions]. So I'll now turn to the presentation and start on Chart 2, which is the disclaimer, just to say we're here to talk about the company, what we're doing, we're not here to give any advice. Just moving on to Slide 4. Just an overview, just to remind everyone, Mirrabooka is a listed investment company. It specializes in investing in small and medium-sized companies both on the Australian and New Zealand stock markets. Our general definition of small- and medium-sized companies is companies that sit outside the 50 Leaders Index and we're aiming to provide long-term capital growth along with an attractive stream of fully franked dividends. And in that respect, it's very pleasing to see the special dividend we have paid out with this final result, which returns payable franking credits back to the shareholders. And with that, I'll pass over to Andrew Porter, our CFO, to talk about the results.

Thank you, Mark. So on Slide 6, and I'll run through these boxes in order. The profit for the year was $11.3 million, which is up $4.6 million or 68% on last year. Now Mirrabooka's income really can be variable. It bounces around all over the place, to use an accounting term. The dividends, for instance, were up $0.9 million and a large part of that $0.7 million was actually from Oz Minerals itself. They had paid a special dividend when they were taken over by BHP to release their franking credits, which was very welcome. Trading was up $4.2 million on last year. That's mainly from 2 positions that we held in the trading portfolio. And these are stocks that we hold for a short time that the team have brought with the intention of exiting in fairly short order in order to capture a real perceived short-term undervaluation. And those are Medibank and AMP, which was actually sold during the year. And the options were up about $0.5 million. There's a bit more option activity this year to capture a bit more income on stocks where the team thought they were slightly overvalued and that we could earn additional yield from them at the time while still holding on to them. Tax and expenses were also up, and overall, I said the profit up to $11.3 million. So taking on perhaps to the next box, which is obviously will be of great interest to all shareholders, the Board decided to not only pay the $0.065 final dividend, but also a $0.045 special dividend. So those special dividends, and I'll come on to another slide later on. [indiscernible] Effectively, if you look at this year's results, we had $0.087 of capital gain per share and $0.059 of ordinary earnings. So that's just over the $0.146 per share. The portfolio return, which is our third box, the one on the bottom left, up 17.9%. That includes the reinvestment of dividends and asset backed franking. And that compares to the combined indices that we use for comparison, which were also CapEx on the same basis of 14.2%. Importantly, though, as the team have stressed, our longer-term performance continues to be good. But Kieran and Stuart will go through the drivers of that later. The total shareholder return by contrast was actually down 1.3% for the year. And again, I'll come on to that in a moment. The market expense ratio this year was 0.59%. Now that was compared to 0.46% in 2022. So that means it's $0.59 for every $100 that you have invested. Now that has increased. How the MER is calculated, it is the expenses as a proportion of the average portfolio over the year. We had expected and we foreshadowed last year that expenses were likely to go up due to a reallocation of costs. But also the average portfolio was down. So over 50% of the increase was due to the average portfolio being down. Just to put it into perspective, the MER in 2020 was 0.63%, in 2019 it was 0.61%. So the 0.59% is within historical norms. However, we are conscious that it is an important figure for shareholders. And hopefully, as the portfolio increases in size, that MER will come down, and that reallocation of cost has largely been done. The last box is the total portfolio, and at $566.4 million at the end of June 2023. So if we move on to Slide 7, you'll see that -- and I'm sure long-term shareholders will be aware of this. Mirrabooka has had a history of paying specially franked -- special fully franked dividends over the last 10 years. But over the last 10 years, including the one we announced, this week, it's been $0.465 per share in total. So it is very variable the special dividend, hence its name. And it does depend on the Board's view of what adequately reserved for the future looks like in terms of what we got in the kitty or in the tank, plus the level of realized gains that we've made in any one or more years. The question we're often asked is, so what does that tank, what does that kitty look like? After we pay the final dividend, we still got franking capacity to pay $55 million worth of dividends. So the Board consider that an adequate reserve to hopefully see us through any possible downfall in dividend. And if I then move on to Slide 8, you will see the share price relative to NTA. You'll see at June, we're at a discount to the NTA. The NTA was $2.94. The share price was $2.74. That is the size of discount that we haven't seen for quite some time. Now LICs generally have been trading at a discount in very recent times. But that is quite a large discount. That's narrowed a bit since we had the discussion since we have announced the result. But it's not -- it's something that is out of our control. So with that, I will hand over to Kieran, but obviously, I'm around happy to take any questions after the presentation.

Thank you, Andrew, and good afternoon, everybody. So I'm starting on Slide 10, which covers our portfolio performance for various periods through to the 30th of June 2023. So pleasingly, across these numbers, you'll see that the blue bars exceed the orange, overall reported periods, which is obviously a pleasing outcome and something we hope to achieve. I'll come back to some discussion around some of the nearer-term performance numbers on subsequent slides and how they are tracking versus the broader ASX 200. But the most interest to us on this slide, we tend to start over on the right-hand side as long-term investors and really focused on whether we're meeting our objectives on a 10-year and beyond view. You'll note this year, we've actually included an additional bar, which is the gray box showing the ASX 200 Accumulation Index over 10 years. Our thinking here really is that while our returns in this part of the market will naturally deviate from ASX 200 in shorter-term time frames, it's most important to us that we can show that we're delivering outperformance in the long run against that benchmark because investing in small and midsized companies, there's naturally going to be some more volatility, a wider range of outcomes when you're looking at individual companies. So for that extra risk that you do take on, we think it's fair to assume that you get some extra return in the long run. Looking at this over the 10 years that we're reporting to 2023, the benchmark has met this theory at 10.6% versus the ASX 200 at 10.1%. So there has been some extra return. But pleasingly, when you look at Mirrabooka in blue at 12.4%, that's quite a healthy outperformance against both those numbers, which when you compound that through over 10 years, does deliver real extra value in the pocket of our shareholders. Before I move on from this slide, I'll just make a couple of comments about tax because we think this is very important. The way we present these numbers is to gross up our returns for franking credits. So that's effectively saying that these are the returns that you achieve if you're a zero taxpayer if you get full benefit back from the franking credits. In doing that, it's important to note that we're only doing that for the franking credits that we've actually paid out to date. So there are some surplus franking credits on the balance sheet, some of which we're paying now in subsequent periods, but some more there as well. That somewhat understates our numbers because they haven't been returned to shareholders yet. And then I think the more important point on tax is that most people do have a tax rate. Tax is real. So the numbers that you achieve individually, they're obviously hard to present because it's different for every shareholder. But we pride ourselves on being long-term investors with lower turnover. So that leakage you might see from other investments you make where turnover is higher, we think that's less in our fund where our turnover is around 20% per annum. We are holding for 5 years and beyond, and we think that's an important benefit to note for shareholders. So moving on to Slide 11 and looking at some of those near-term metrics, what we're showing here really is just that this part of the market, the small and mid-cap sectors, have underperformed somewhat in recent times and particularly so on the right of this slide when measured over 2 years. You can never really be sure why things are happening in the market. Everyone has theories, but they're very hard to prove, obviously. Our contention on this is it's just a period where we think given the wide range of events we have seen, there's a risk weariness still in markets. I think where people are participating in equities, they're more prone to do so in larger, well-known blue-chip companies at the moment and probably a little bit wary of going down into higher returning -- potentially high-returning smaller companies. You can particularly see that in the bottom right of Slide 11, where you look at the small industrial index and the extended that underperformance versus the ASX 200. There's probably 2 features of this for us which is pleasing. One is that we're naturally more skewed to industrial companies. So this is a bit of a headwind of our relative performance versus resources. But we've been able to overcome that with good stock selection, which is pleasing. And it also gives us a bit of encouragement that the work that Stuart and I are doing kicking over a lot of rocks, setting a lot of companies, we think there's some reasonably good prospects of uncovering some companies at the smaller end of the market that can deliver good returns given that underperformance we have seen over recent times. Moving on to Slide 12. Notwithstanding this underperformance in this area of the market as is often the case with small and mid-cap companies, there are always some winners to uncover. There's a wide range of outcomes in our markets, and there's always reward on offer for finding good companies that are either undiscovered or growing at a faster rate than is currently appreciated. We've highlighted a number of companies on this slide. We're trying to be balanced in what we present by showing some of those that we have benefited from, but also highlighting at the bottom of the slide, there are a number of really good companies that we do look at that have been missed opportunities as well as the ones we picked up. But just touching down quickly on those that have benefited our performance, firstly, in the emerging part of the slide, there's 2 companies that are probably not particularly well known to our shareholders but have been fantastic contributors to these results. The first one, IPD Group is an IPO that we participated in, in late 2021 calendar year, so less than 18 months ago. It's an electrical products distributor in the Australian market. We thought it was fairly modestly priced. We took a shine to the people, thought they were really good honest operators. We thought they had some reasonable prospects and we felt it was worth taking a reasonable investment, but seeing if it could develop and we could build on that going forward. It's fair to say we've been stunned at the progress since. I think they've had 5 profit upgrades since we bought into the business. They've delivered on everything they said they would and some more. And importantly, we have seen them keep very measured. They're the same people presenting it in the same way as they were when we met them the first time we did. And they haven't sort of lost their way, with dramatic mergers and acquisitions and really try to take over the world, and we think that's really encouraging, as is the fact that they've kept all their money invested in the company. And so that alignment is still there. So we'll continue to hopefully benefit from that for a long time to come yet. Gentrack is a small software utility software company operating out of New Zealand. We followed this company for a long time. It went through a good period and then a very rocky period when we were nonowners. But following the company, we think they've got a good product. And having met them again, we met new management and really saw some energy in the way they're reinvesting in the business and some prospects of better fortunes going forward. Again, our timing on that one has been really good because we bought it at now what looks very compelling value. And again, we've seen some really good announcements in the market since. And so I've had more than 100% return in 12 months on that one, which is I guess the lure in this part of the market that keeps you coming back to try and find these on a go-forward basis. Looking at the other companies that have benefited us recently, there's a couple of different themes through those. I guess I'd characterize it as continued strong performance from companies like Carsales, Realestate.com and AUB Group, which have been long-standing holdings in the portfolio. They kept delivering and have been rewarded in the way they've been rated in the market. But we've also seen a number of companies that have had a pretty hefty rebound through 2023 financial year. I mean this is, I guess, a reward for our long-term patient approach, companies like Nanosonics, Temple & Webster and Eagers Automotive. We focus on the fundamentals and in doing so really captured some really good rebound in those share prices by not panicking when the shares were falling in prior periods. Moving over to Slide 13. One part of the market that we're not exposed to in a meaningful way that has been the strongest part of our index has actually been mid-cap resources. You'll see on the slide, they've been up over 33% for the financial year-to-date -- of the financial year, which is more than double the return of the ASX 200. We benefited from those minerals in this space but have had a number of companies that we don't own that have performed very well. I guess it's worth just touching on the way we do look at resource companies. We don't exclude them from our considerations. But in being a long-term investor that we're trying to own things through good and bad times and really try and compound the long-term returns out of companies. It's harder to do that with the resource companies because when the cycle turns against them, if they don't have something differentiated, times can get very challenging. So we really look at the quality of what they have on a global basis. You have to have a really high-quality asset and a competitive position that means it's a business that we can own through those challenging parts of the cycle. And looking at it that way, it means you naturally tend to have less exposure in this part of the market. And we think that can provide some volatility in our returns in a short-term sense, but in the long run, tends to sort [ itself ] out as we've demonstrated with our returns. Just moving over to Slide 14 and some recent material transactions. There are smaller ones underneath this, but just looking at the largest for the year, starting with the disposals. There's a number of holdings we've had for quite a period here. I guess the first theme around those has been companies where we see a maturing of their fortunes and earnings growth just being harder to generate going forward. In that category, we put companies like InvoCare, IRESS and Ansell, and we did see that, I guess, highlighted yesterday with the downgrade of Ansell's profit looking into FY '24. So pleasing to be out of that one. The second category is really around just the return on capital not being what it was. So this relates to NEXTDC. We think the growth here is fine, but it is a capital intensive business, and we just think they won't generate quite as attractive returns on future projects as they have on past projects. So we felt that was one to move on from. And then I mentioned the Oz Minerals takeover by BHP was the other disposal. Just quickly touching on the new purchases because I realize this is always of interest to shareholders. There's some different companies here, some we've owned before, but different thematics around each of them. Ardent Leisure, we saw a really compelling value in this one. This is the operator of the Dreamworld Theme Park on the Gold Coast. Obviously, there's been a tragic history to that asset. But we think they're doing the right things with the operator in place now to really reinvest in the asset, get it back on its feet. There's a lot of cash on the balance sheet of this company, and we think the valuation is very modest for that asset. So we think in the fullness of time, there's really good potential to drive some returns out of that. OFX is a foreign currency provider for both private individuals and businesses. It was a high-profile IPO a number of years ago, a bit of a market darling at the time. It disappointed people after that because it was very exposed to the private individual market, that's very competitive. We think they've got an excellent management team, and we think it's been missed that they've really developed their corporate business substantially in recent times. That's a much higher quality book because there's better loyalty, more frequent transactions from those customers, and you can really build a business around that, which we see they're doing. So we think that one is a really good opportunity we've been accessing recently. Vista Group is a software provider to the cinema industry out of New Zealand. It dominates its industry globally. It's quite incredible what they've been able to achieve in doing that. And they're going through that phase now of really lifting the spend per customer as they migrate all their customers from an on-premise offering to really doing the full cloud service for the whole cinema industry. We think that gives a really good visible growth profile for the next 5 years and beyond, and we've started to see a recognition in that in recent times in their share price, which is encouraging. THL is Tourism Holdings. This is a recreational vehicle camper van business. It was a merger through the COVID period when times were troubled. It really now dominates its space, particularly in Australia and New Zealand. We think that is a really good dynamic going forward, good market position and good people that have been there a long time operating that business. And Lynas Rare Earths. It really goes back to what I was saying about the way we look at commodity companies, you need to have something unique, differentiated from the supplier side. This is the dominant player in producing rare earths outside the Chinese market. We think that's a really strategic position, very hard to replicate because these are hard materials to produce. And we've seen a few issues recently just with soft pricing in their market and some transition of production from Malaysia back to Kalgoorlie. It's given us an opportunity in the share price, we think to take a position for the medium to long term there. I'll just hand over to Stuart to quickly cover IDP. This is an important one because this is -- it was our largest purchase during the year and it's really risen up the ranks of our holdings.

Thanks very much, Kieran. As Kieran alluded to, IDP has been in the portfolio for a little while. And this is a really high-quality business that we've admired for a number of years. It's the leader in student placements taking a lot of students from all across the world to place them into universities in Australia, the U.K., Canada and the U.S. And they are also the market leader in high-stakes English language testing. I guess the fact that we recognize that quality was not lost on the rest of the market, and it has traded at a very high valuation for a number of years. So the reason we were presented with an opportunity to add to the holding. Probably about a little bit over a month or so ago, there was a -- they had a small slice of their business had a little bit of a monopoly position providing English language testing to students into Canada and the Canadian government opened that up to a number of other providers, which is basically the structure across the rest of their organization. So we probably estimate that this is a short-term hit to earnings anywhere from 5% to 10% and will probably be restricted to next year's earnings before market share settles again. So what we did see though was a pretty heavy year rerating down. The stock is probably nearly 30% over a period of a couple of weeks. So we think this business still has an outstanding outlook. It's still the leader, especially in the student placements business, which is not at all affected by the Canadian changes. So we've used that opportunity to buy what we think is a really outstanding business, and we pushed it from probably the middle of the pack of our holdings up until probably a top 5 position now. So we think the outlook looks really interesting for a great business for the next 5, 10 years. But I'll just hand back to Kieran for further discussion.

Thank you, Stuart. So I'm now on Slide 15, just looking at our top 20 holdings I guess this -- I won't go through all of these companies in detail. It would take too long. But this could be a good place for shareholders to go back to in terms of questions will ask for at the end of the presentation. Happy to take any questions on any of these companies or any others indeed. The way we present this slide, we think it's interesting. The orange bar here really shows that long-term investment approach. So we're looking at the ownership period for these companies. There's actually a few of them that we're in for a second and third time, which means we know these companies really well. We think that gives great comfort for a small and mid-cap portfolio because it's a volatile world. You can have volatility in company's fortunes. But the fact that we look at our portfolio and we have such good familiarity with both the businesses and the people running them, gives us a real sense of resilience to weather different circumstances that come our way, which we think is important. The other feature of this presenting it this way is it really highlights that we don't typically take dramatic positions in new companies. Everyone comes to us telling us that they've got something fantastic. It takes a while really for that conviction to build to become one of our largest holdings in doing that. We tend to really progress those holdings along as our conviction builds. So you'll see most of those -- these companies have been here for a long time and a similar names to what we've seen in prior periods. Interestingly, on that front, you'll note that IPD Group and Gentrack at 1.5 years and 1 years of holding have actually appreciated so much in share market terms since we bought them as well as we did. But they've actually been able to live up into the top 20, which is -- just shows the extent of that performance in recent times. So just moving over to outlook comments -- a couple of outlook comments before we take questions. I guess for people who have been following us for a long time, they'll note that we are typically fairly cautious in the way we look at the outlook. We think that stands us in good stead. I guess it's a bit of a sense of prepare for the worst in terms of the different circumstances that can happen in markets because that can happen. The way we do that is to try and have your money invested in the very best companies and the most resilient companies we can find, so that we can deal with different circumstances that come our way. But we don't -- we sort of stick to, I guess, what we know, which is good companies and being invested. We're trying to remain fully invested. We don't try and pick markets and try and work out when it's time to move in and out because we think that is a mug's game and will just cost long-term performance. So we are fairly cautious at the moment. We're a bit surprised that the market has risen as much as it has in recent times. Some of the multiples have gone up to fairly high levels again, particularly in light of the higher interest rates. And we are reminded that when interest rates do rise as much as they have, there are lagged economic impacts from that. So we're watching the earnings outcomes that are going to come from the companies that we own. And we're just being a little bit more fussy with the valuation for new things that come along, just making sure that we're buying real value to deal with different eventualities that may come our way. So I guess that just means that a bit of a patient, cautious approach to adding new things to the portfolio. But as I said, we'll remain pretty close to fully invested in really good quality companies going forward. And with that, I'll pause and hand back to Geoff for queuing some questions.

[Operator Instructions] So we have a few questions here. So I'll start in order. The first 1 was really about what attracted Mirrabooka to invest in Oz Minerals originally, and I might go back to the sense of what you're talking about why you invest in certain resource companies and some we don't.

Yes, sure. Thanks, Geoff. So this is an interesting one because it's a good way to shine a light on what we're saying about resource companies, as Geoff mentioned. Oz Minerals copper assets from a global scale point of view and cost position point of view, were not outstanding. They were good to very good, but not outstanding. But what got us over the line in this one was really looking at the difficulty of finding the copper supply in the market to meet the long-term structural demand. And the fact that as that difficulty only grows, you had a really good well-run company in a jurisdiction like Australia, and they really had demonstrated an ability to, I guess, buy new options in the portfolio, new interesting deposits that they could develop and then a capability to do so. We think Andrew Cole is probably the best resource CEO -- amongst the best resource CEOs we've seen in our time investing in the market. He is an excellent operator, very rational. So that effectively got us over the line. And we did buy the shares at sort of sub $10. So they were at 3x to 4x return on our investment, which was fantastic. Kind of sad to see it go because that [indiscernible] is really interesting, and it's sort of [indiscernible] second in terms of finding another one. But at the same time, we think the return for shareholders was quite good as well.

Thanks, Kieran. A couple of questions here on the financials. Andrew, you mentioned the $55 million in reserves. What that equate to in terms of per share? I guess it's more about the frank credits per share that we've got that are more important.

That's about $0.29 to $0.30 per share. So about 3 years' worth of that current ordinary dividend. The profit reserve per share is a little bit more because of the way that we account of them for capital gains in terms of choosing parcels. But as we try not to pay an unfranked dividend, you're right, Geoff, it's that franking per share that's relevant.

And just to remind shareholders, the performance numbers we show that picks up the franking credits that we've actually paid out. It doesn't include the franking credits that are still sitting within the company.

Thanks, Mark and Andrew. So a question here about we sort of keep the special dividend and add to the final dividend at the end of each year. Have we thought about how we might apply that potentially to the interim dividend? So I guess the question is really coming from the perspective of balancing up those 2 dividends.

That's a good question. It's probably one I'll take away. We are conscious there's quite an imbalance there between the 2 halves. So yes, I'd probably like to take that on notice. It's probably something we take back to the Board and have a discussion around in terms of the unevenness between the interim and the final, yes.

This question is slightly different in terms of dividends. So does Mirrabooka hold any companies yet to pay a dividend?

Yes. So the short answer to that, Geoff, is yes, we do. You'll typically find sort of looking at the top 20 holdings and the companies that have sort of graduated to be larger positions in the portfolio. They're typically more established and therefore in a dividend paying state, but we're really trying to use our experience, expertise to capture the future winners as well. And in doing so, you've got to be fairly flexible in making sure that companies that are in that heavy reinvestment phase are captured in the portfolio as well. We think it is rational to have that approach when you're very early stage as a company to sort of keep putting everything back into the opportunity that you see in front of you. We do like to see our companies. They get to a point where they can demonstrate that they can do both, that they can put a dividend in place even if it's small and grow it at the same time as retaining some funds to invest in the great opportunities they had ahead of them. So that is our preference, but we are open minded about it.

Thanks, Kieran. So is the investment team looking at any of the REITs, especially office REITs that look to be out of favor, but may be a long-term opportunity for investment?

Yes, look, we have, it's a part of the market that we haven't naturally had a lot of investment in. We have had a few from time to time. I guess the view we've taken is that the valuation is looking more interesting in some parts of this sector because of, I guess, the stated discounts to net asset backing. They have underperformed somewhat. But I guess what we have countered that with is just looking at interest rates from where they are now. We're not smart enough to know where they're going next. And if we look at the spread that you get between the dividend yield, they're paying in those interest rates. That valuation land suggests that they're not compellingly cheap. And we think in the long run, picking a good growing industrial company will generate us good return. So we wanted to see the close that are compellingly cheap to really get up the picking order in terms of the things we're looking at.

Thanks, Kieran. The questions come about Carsales overseas expansion, what are we expecting from that in terms of the overall company's outlook, I guess?

Yes, look, it's an interesting one. It's been fairly rapid fire in terms of some of the acquisitions they've done recently. So they bought a half of a business called Trader Interactive in the U.S. and then the other half. And then they've actually increased their ownership of the South American businesses as well. And it's a little bit of a flag for us. We do look at offshore acquisitions. And in our history of doing this when you see them and you see the frequency and size of the increase, you do sort of wonder a bit about how is the core business going. It just leads to a few more questions. In this instance, though, if we look at the track record of this company, we have a lot of trust in their operator -- the way they operate this business, they're fantastic. We're seeing no signs of any real slowing of the fundamentals in the core Australian business. So it's a little bit watchful at the moment. And the other thing I would say is the delivery on what they've done overseas has been fantastic to date. And we would like to see it slow down a bit. We think it will. And we'd like to see them really start to execute some of that value-add from these acquisitions offshore.

Kieran, you rest for a second. So with the current share price, any consideration of a buyback, I mean, share price come back quite substantially close to NTA. So anyway, Mark?

Look, we would only really consider buying back stock. We saw a substantial discount. And it's -- yes, for a sustained period and certainly where the share price is, I guess, today, it's probably trading around NTA. So that's a long way off where we would even be considering and doing a buyback. And our preference is the market sort of works out where that value sits. And we'd rather investors had opportunities to buy stock when it's really cheap rather than us getting involved. But look, it's something we look at. It has to be something well beyond a 10% discount because [indiscernible] can move around. So certainly, it's not a focus for us right at this point in time.

The other thing that we talked about this earlier on that you can see the performance and payment of dividends, particularly listed investment companies. Discounts don't tend to last.

No, it's one close, very quickly, [indiscernible] rather investors get that opportunity to buy stock at a discount rather than us buying it [ both ] which, to this point, what's happened, yes.

Question about Objective. Do we still own it? If so, what's the percentage of the portfolio that represents? And what are its prospects beyond financial year '23, where the cost base has been reset to some degree?

Yes, so the short answer is, yes, we do. I'm just pulling out the actual specifics of the percentage. It's around sort of a middle of the pack holding now in terms of where it ranks in the portfolio.

1.5%

1.5%, thank you, Andrew. So a little bit of history, perhaps first. This has probably been one of the best investments in Mirrabooka's history. We bought the stock originally at sub $2. We've got a cost base of not far north of $2. The shares ran all the way up to $19 as it delivered on its growth and was discovered by the market. We were buying it when it was very illiquid very early on in the piece, really. As we saw that discovery phase happen, we just felt that the valuation was getting to a level where it was just, I guess, making the company need to deliver it perfectly on execution and just making the position a bit riskier. So we took a fair bit of out of that holding. But we've now sat back at a level where we're comfortable with our position because we think this -- the track record of this company is outstanding. It is -- sorry, it's a software business for the government sector. It's remarkable the way they're able to generate returns, cash flow without the need for extra external capital. One of the best examples of that we've ever seen. So we just think it's now in a phase of a period where you do see this from time to time where the growth and fundamentals need to catch up with a bit of the hop in the share price. Once they do that, we think this company will sort of progress on its merry way with the great organic growth that it's delivered since inception.

So I guess this is a question on the other side of the buyback. Are we thinking about doing a share purchase plan in the near future?

Look, it's something we keep looking at, and we tend to do it when we feel there's good opportunities in the market. I think the team are probably a little bit cautious at this point, but markets can change very quickly. So look, it's always on the agenda. And one of the things we analyze when we're looking at an SPPs, we don't want to get too big where we can't get full value from some of the really small opportunities. So and the [indiscernible] talked about getting in the IPD IPO. If we were a much larger fund, it's harder to get a decent position and really enhance the returns. And we don't have a focus on making the fund bigger for the sake of getting bigger. We want a site where we can generate great returns for investors. So look, it's always on the agenda, but it's more when we think opportunities are presenting here.

And I guess, the other point, Mark, is we don't have a remuneration structure, which is based on the size of the portfolio, the fee so...