NAOS Emerging Opportunities Company Limited (NCC.AX) Q2 FY2026 Earnings Call Transcript & Summary

Good morning, everyone. Hopefully, everyone can hear me. If you do have any issues with the sound or what I'm doing on this computer -- and I'm not aware, please, obviously, write something in the Q&A box or send an e-mail to inquiries that they ask.com.u. For those of you who don't know me, my name is Sebastian Evans. I'm the Chief Investment Officer of NAOS Asset Management. And this morning, I'll be joined by Rob Miller, my fellow portfolio manager at NAOS as well as the team at H&G Group, who will speak later on about their particular business. This morning, we'll be going through yet or a new year, but in this case, the second quarter of FY '26 and the general investor update and Q&A section we hold for all of our listed investment companies. So the only bit of housekeeping, we'll say is there is a Q&A box on Zoom. If you do wish to ask a question, please use that box for H&G specific questions, we'll be referring to those questions after their presentation, which is roughly in the middle of this presentation. Anything in regards to NAOS will let the H&G team leave and we'll touch on those and go through each and one of those questions towards the end of the presentation. Quickly, just the disclaimer. I've gone through this many a time. As you know, we do tend to speak about individual stocks in this presentation, as you would know by now, don't treat this in any way, shape or form is advice for your individual circumstances. Please refer to people who have the expertise. You can understand your own personal requirements and circumstances and seek their independent advice. The acknowledgment of country. Firstly, I'd like to acknowledge the traditional owners of country throughout Australia and recognize their continuing connection to Lance Waters and communities. We pay our respects to the Aboriginal and Torres Strait Islander cultures and to elders past, present and future. Just 2 slides on NAOS for any newbies on the webinar today. We are NAOS, what makes us a little bit different. And I suppose a little bit we are extremely different in many ways to some of our peers. We are very hands on investors. We're active, long-term focused on compounding capital and hopefully growing dividends for our fellow shareholders. We are very aligned. I don't own any shares outside of the Nellix staff and directors across NAOS and the LIC themselves generally some of, if not the largest shareholders across the like, so we are aligned with all shareholders, whether not you own 10 shares or 1 million shares -- and finally, we are concentrated. So we generally take large minority investments in businesses, 5% to 35% ownership in some of them. We're not activist. We want to partner with proven people who have a good track record of compounding capital and run businesses that, in our view, have a moat and are exposed to industries hopefully, that are conducive of long-term growth, earnings growth. And finally, this will be topical, but we are completely indexed unaware. So less than 1% of all of our investments don't form any part of the small ordinaries index. And as many of you would know, we only invest really in cash flow positive, small microcap businesses for the not other resources, I suppose, nature or early-stage technology, so anything else in between. To give people an idea of where we invest and what we invest in. So even though we are concentrated, we are quite broad across industry exposures, as you can see on the chart on the left. We can invest in private investments. We do own 2 private investments across the group as a whole, one being in NAC and 2 being in NCC to give you an idea. And then you can see from a market capitalization perspective, the one thing that's probably changed here, maybe a little bit more notable, our exposure to businesses of $0.5 billion or more has probably started to increase. Whereby probably will vary down the size curve there. We have started to inch up ever so slightly. Thankfully, in most part because of the performance more recently of some of our investments and also probably because some derating in some larger businesses made them quite attractive from an investment standpoint in our opinion. The portfolio summary slide from a performance perspective, it does feel like an alternate go, but it was pleasing to see Q2 carried off from Q1. Generally, overall, some very strong performance across the LIC. NSE was probably the 1 that didn't perform as expected, that had probably a much stronger performance than NCC and in the 2 prior quarters. But pleasingly, from a yearly perspective, good to see to put up some positive performance for NCC and NAC, in particular, obviously, NCC was down 2%, but as I'm sure everyone on this call would know, given the circumstances of what happened with BSA and that obviously accounted for roughly almost 20% of that negative performance it does show you the rest of the performance has actually contributed as we expected, if not exceeded our expectations over the 12 months. From a benchmark perspective, many of you would already know that, yes, the benchmark, the Small Ords accumulation index was up small resources accounted for almost 20% of that gain over the past year. And that probably does show you the significant discrepancy and performance between the NAC benchmark and the small ordinaries accumulation index given the NAC benchmark is just large cap industrial. So we're seeing -- have seen some significant divergence across the market as a whole, and I'll touch on that in the next slide. So some of the themes, obviously, touching on calendar year '25 here. I did mention that in the previous slide, but -- the interesting part was the small orders came drawing back to life after many years of underperformance and many fund managers have spoken about. Interestingly, though, I think we all spoke about the undervalued small ordinaries or smaller businesses in general, but the outperformance has actually come from resources as opposed to those industrial businesses that probably many of us are exposed to. And that was the highest or the largest difference between the 100 index and the small or since 2009 coming out GFC. You can see that small resources are up over 70% from an index standpoint compared to small industrials with just a 5% return. And it was a very volatile and dynamic year as many of you would understand on this call. It was called -- there were rate cuts earlier in the year. That's now translated into sort of potential some inflationary concerns, productivity concerns as well, which may lead to always the interest rate increases potentially today. And that's led to all sorts of price outcomes over calendar year '25. Interestingly, we saw some significant underperformance from ASX 50 businesses, facing business-specific issues, Treasury Wines, CSL, which has been a market darling for as long as I've been in the industry for the last 20 years, had some significant headwinds. I think a lot of people are asking themselves, are they really blue chip businesses? And can they continue to compound and give me the returns that I expected or have achieved over the past 10 to 20 years. And we saw a little bit of a return to initial public offerings. There's been a lot of talk about the ASX shrinking, the lack, I suppose, of investable businesses that actually make money outside of resources. We saw a few come back to the market late in the year, and I'll touch on this again. But what -- unfortunately what occurred was some pretty poor short-term results, but we would argue the quality of those particular businesses is probably not what market participants were after to see some positive short-term returns, but that may change in the next 3 to 6 months in our opinion. This is just a visual -- obviously, a graph of what occurred in commodity prices in general over the past 12 months. We have the pleasure of being directly opposite a billion store where people can buy gold, physical gold and silver, and we see the queues of 50 to 100 people every day around Martin Place. And this is a thematic that has not gone away, even with the recent pullback yesterday. Interesting to see that a lot of people continue to buy the dip and in our opinion, yes, it comes from inflationary concerns, macro concerns just geopolitical concerns. I think it does show you that a lot of people probably are losing a little bit of faith in the so-called financial system and governments in general, and therefore, instead of owning U.S. dollars. Even ETF as an example, people prefer to whole physical, in this case, commodities where they believe they will hold their value or even a pressure over time. From an Australian perspective, obviously, this is leverage on leverage for many resource companies. The cost of producing commodities in this country continues to increase in RM when gold companies were able to produce at $1,000 an ounce. Today, I think the average cost of the gold mine is closing in on $2,000 an ounce. So it shows you as prices increase, leverage increases and gives minus, as opposed the ability to continue to mine in deeper lower-grade ore bodies, which I will also touch on that gives more work for mining services companies. There is a flow-down effect, hopefully that we will also benefit on even though we don't invest in resource companies specifically. Just everyone likes to look at a list of the outperformance of the year that was and the one thing that stood out was it was pretty much all made up of mining and defense businesses. We had a lot of feedback from our own investors about exposure to mining and defense. Obviously, it's hard for us. It was impossible for us to have a direct mining exposure, but we can have exposures to the second and third order effects. From a defense perspective, those 2 businesses draw and shield and electric optic systems. I know they get a lot of press. Obviously, we're seeing significant outperformance for the year. Medical, the business we've met through a couple of times. They got their FDA approval for their specific technology. And then the share price has re-rated significantly over the past 6 months with that business recently raising $150 million and hopefully on the start of revenue growth runway for many, many years, and I'm sure a lot of people are thinking potentially something similar to Pro Medicus. Yes. But what you would say, if you look at those businesses in general, I would argue somewhat speculative in nature at some stage in time. Haven't really seen any valuation rerates from a multiple or earnings perspective. It's very much a play on commodities or potentially a binary aircrane contract announcements for those sort of things. IPO, as I mentioned before, $3 billion across 28 companies, so not definitely wasn't the stellar IPO season that many, I'm sure would have hoped. The largest IPO was actually Gen Life Communities business that operates in that sort of quasi retirement space, a market that is obviously growing for all the reasons that we're aware of, did perform reasonably well. And even though the average IPO was up almost 17% for the year, pretty much all of that was due to mining companies. As you can see there, Bella mining up 180%, I think if you weighted that from a portfolio perspective or market cap weighted perspective, you would see the actual end result would have been negative as opposed to just using a simple average. And as I touched on, we saw [ Salutedical ] Towards the end of the year, Cama, which is sort of like a digital platform for used cars and also Epimonda from memory, probably the larger and more industrial type and all significantly underwater. So 10, 20, 30, I think, in some cases, 40% from their IPO price. So it will be interesting to see how the market reacts in the first quarter of this calendar year to see if there's any appetite for IPOs, but probably more importantly, what sort of IPO. So I think people are looking for growing profits as opposed to potential profits in the future based on promises, I suppose. And then just to finish off before I pass over to H&G, the team there I think the thing a lot of people are talking about and I think what we're very focused on is the productivity issue in this country. I think A lot of our businesses, as you would know, are sort of on the ground type businesses. They're end of the ground. They know what's going on in the real economy out there. And what we would say is we are seeing an increase in demand. I think there's no doubt about that. Things like we've spoken about forever, Brisbane Olympics, work for new housing programs, people would have seen the new housing initiative program in South Australia that's off the ground. There's a large article on the Herald yesterday, almost 10,000 apartments have been approved along Parameta Road in Sydney alone. There is some real momentum in that space. There's also momentum in anything related to defense and artificial intelligence, whether it's data centers or whatnot, just demand for electrical services. And now we've also towards the end, increase in resources prices have seen significant expansion of mines, even putting mines back online. A lot of Lithium mines were mothballed. We're starting to see some of them actually think about coming back online. All this creates a significant amount of demand around the country, probably for similar type of services. And what I put there is the first order effect is demand is real. We think revenue will rise for many businesses, including some of our own, thankfully. But the second and third order effect is probably a little bit more of an unknown and that comes from cost inflation. The productivity issues in this country, it's too expensive to do too few tasks, and we are near full employment. And then what does that mean for businesses? You go back to the mining heyday. Back in '07 and '06, revenue was fantastic. Margins were probably not as fantastic as many expected. So it's going to be very interesting to see how all the businesses associated with some of these thematics can manage profit margins, price increases, where will that go, store projects and even potential increasing rates in this country. I think A lot of the anecdotal feedback, and I've heard this now from 2 or 3 people in regards to building is, yes, the Brisbane Olympics is behind schedule. What we're already seeing is the demand is real in Queensland, and we're seeing a lot of skilled workers leaving Victoria for obvious reasons, but also leaving Sydney and New South Wales because they can get paid more in Queensland for probably a longer period of time have more certainty of work and ultimately, what that will mean is, from a Queensland perspective, that's more expensive to do the work, but for a lot of the housing associated related programs in New South Wales, there won't be the resources to get them done. So where does that leave us from a demand-supply perspective and a productivity perspective over the next 2 to 3 years. And I think you should be fairly concerned until we start to see some proper programs and strategies to address these issues. And finally, these are just 2 charts to show you, I suppose what I'm referring, and it goes back to that summary that we just don't have enough labor in this country in the right places, and therefore, it costs way too much to do too few tasks. And ultimately, that becomes a problem for you. The economy that can't necessarily be fixed through interest rate increases, and it does need to be a lot more focused and strategic initiative associated with fixing some of these issues. And then finally, some of the other, I suppose, points we're looking at just concentrating on and what we hear from a lot of businesses as well as I know a lot of people spoke about energy costs, that is real governance subsidies have rolled off. The demand associated with AI applications, data centers do eat a lot of electricity and the electricity supply needs to come from somewhere and from something else. And also rising network and distribution costs. We're going through a significant overhaul of the distribution network in this country for renewables, but also because the end user demand is increasing significantly, and that does cost a significant amount of money. So it will have to be passed on at some stage. Insurance costs, we went through this a few years ago, but obviously, recent weather events in Queensland and also Victoria, those will be passed on to consumers and businesses alike, even though the insurance premiums have been falling for the past few years. You probably expect that from a consumer perspective to start to increase. And then the last 2 are probably a little bit more interesting. Obviously, public sector employment, we all know about it, but has been rising well ahead from a cost perspective, well ahead of inflation, and that is obviously an issue. And more recently, the AUD USD. Something has probably taken a lot of people by surprise, probably including us. But with the Aussie dollar now above $0.70, does create a slightly different discussion. We're a bit importer outside of if you take iron ore out of the equation. We're a large importer of goods and services. So therefore, it makes it cheaper for us, so potentially deflationary. And also, hopefully, in our view, does protect a few businesses, especially a lot of businesses that import goods and services does give a bit of, I suppose, FA, hopefully, to protect profit margins over the next 12 to 18 months. And that just gives you a visual representation of just how quickly that Aussie dollar has moved over the past probably only 3 to 4 months. So with that, I'll just introduce Hancock and Gore before I try and hand it over without making a meal of it. But Hancock and Gore is a relatively new investment for our portfolio, led by Sandy Bird, the Executive Chairman. Phil Christopher is also here, who's the Investment Director I won't steal their thunder, so I think they'll do a much better job of explaining it than I will. But the team here over the next 10 to 15 minutes. We'll give a brief summary of the business and hopefully where they see things unfolding over the next 12 to 24 months. And if you do have any questions, please use the Q&A button. And we'll address them at the end of their short presentation. So over to you, guys.

Thank you Seb, and thank you for the opportunity to introduce Hancock and Gore, update to you all on the strategy and relevant erosions for our largest investment, which has become a small laser group. Next slide, thanks. So this is a little graphical where Hancock and go get into the picture and where Stillbase is our most dominant investment. And Hancock & Gore has a 100-plus year history of driving long-term investment value through partnering with businesses and owners. And like as is we're looking to find businesses that can meaningfully compound and grow earnings on an annual basis. Over the past 4 years, we have combined 4 leading global software businesses to become 100% owned schools group and have a business of real basal. [indiscernible] is a global solar platform operating in a large addressable market, led by Liana Founder, who is the Executive Chairman of Small blast Group and Tim James and a very experienced management team. With the acquisition completed in September of 2025 of Tritax U.K., we are now operating as a cohesive group with a clear objective to deliver $200 million in revenue and $25 million EBITDA by financial year '27 and build on that annually. At our Annual General Meeting next week, we are seeking to change your name to school blades and limited to reflect the importance and capability of Stores Group to drive long-term investment performance. It's an exciting point of our evolution, something we put a lot of time and tenor the last 4 years, we really do get involved with companies and look to help grow truly meaningful business. And for context, it's important to look at the scale of the market opportunity. We are operating a global store market currently valued approximately $25 billion. It remains highly fragmented and significantly lacks meaningful innovation. This is an entry point in the even broader $3 trillion global payer education market and professionalizing -- by professionalizing this niche, we're looking to establish a devent position with the resilient infrastructure of global education. I'll now hand over to Gill Christopher, our Investment Director, who will overview Martin Pemex and growth drivers to the business and why we believe solar in compound value from here. We sell benefits, better customer experience and disciplined focus on the core operating business, back to you Phil.

Thank next slide the -- so I'll start with some things that are driving solar markets globally. Firstly, with Australia. It's not sure that the generational mix is on the call, but we'll refer to young generations here as millennials and Gen Z, so Born 1981 onwards and -- the key message on this slide is that recently, millennials have become the majority of secondary store parents, and Gen Z will be following suit in coming years. So we think usually native generations, transform and other sectors, the share of expenditures increased. So especially retail, grocery, media, hospitality and aging have all changed to cater to that poll, who shops online 80% of the time and nearly 80% of retail traffic now is mobile. We've also seen those younger generations care cobbles in those generators shifting towards dual incomes and increasingly becoming dual time and Julian compared [indiscernible] in Australia have increased from 50% to about 75% in the last 20 years. So that's amplifying the need for convenience and time-saving in part an example of that is the explosion in the childcare industry and then also demand sustainability, durability and transparency from suppliers. Next slide sir. So stool based was models been built bottom up with those changing needs in mind and is rapidly move from a standing start in the U.K. to one the independent market over there, and that's happened in 15 years. So they've built a custom ERP to allow parents to logon typing their kids on, see what they need to buy. The sizing algorithm achieves 94% first-time fit. Every item is a name to down of a centralized DC and dispatching 48 hours. So that's driven the growth in the U.K. market. But the majority of the sales stores still require appearance to line up at a volunteer on shop on summer afternoon us probably and potentially have items out of stock. There's other online offerings here where -- well, from fiscal first retailers where you have to sift through dozens or hundreds of items don't offer nametag because they don't have a centralized DC and our sourcing and in-house design teams also provide highway garments, sportswear store best-class sustainability standards. That are required by increasingly by students. So the combination of that service and prior proposition rose 4.9% trust pilot store in the U.K., which shows a review website there. And you may [indiscernible] quite a hard thing to see where you've got 1,000 pounds at a school. It doesn't take a great percentage of underperformance to drive lifestyle review. So they maintain it over 15 years, to be an indicator of the parents to students see them. And that's resulted in the school business being Invis team nearly every tender that comes up from a private store in the U.K., we 80% of them about a 1% generate over 15 years, now reaching 250 independent tools in the U.K. And if you speak to our [indiscernible] partners, that's that the Australian market feels very much like the U.K. market 20 years ago, right for disruption, and that successfully commenced with our test launch that Cambara in New South Wales last week, and we winter 4 leading private stores with a growing pipeline. We think that Australian market can be an incremental market for our business on the size of the U.K. business, which is about $55 million a revenue in private stores. Next, so lovely private education is rapidly expanding in our key markets. Private enrollments run about 6% per annum in the last 5 years compared to 2% in the government sector. There's a lot of me here about stagnating total populations in certain countries. But within those countries, in those last populations, there are massive demographic segments shifting into income brackets with private estate through the preference. Interestingly, Paulson deal, media, there's a lot of product capital and infrastructure funds money laxing onto that demand major investments in product store groups. So last year March 2025 was the largest deal in the sector where a consortium EQT, Canada Pension Plan, Neuberger, Mubadala and Dubai Holdings, invested $4.5 billion into U.K. or loco Group, North Ambea. And so most of that time to sovereign wealth funds that set long-term social infrastructure drug in their egos and all of these groups on this page are U.K. care coordinated price or rooms that are exporting their heritage and education to international school margins. Next slide, please sir. So store [ Blaser ] is actually a part of that heritage below us. U.K. store grows. And whilst we service school segment, our real point of differences in the premium end of the margin and private store growth is the tailwind for our global addressable market. So we now have presence in 35 countries and particularly the growth markets to which these private store groups are expanding. And we have contracts with U.K. stores that are in mice of those products still groups, which has led to international store wins and is increasingly leading to global partnership discussions which we view as the next step change now is national drought profile. Next slide. Another change is rising popularity of women's sports and the professional commercialization is in full swing around the world with global revenues growing 240% in the last 3 years to around USD 2.5 billion revenue. You'd be aware this is a sale, we have a growing investment in viewership in Team Sports AFLW, RLW and Privet a couple of years ago, where one of the most watched event in Australian history with the materials run the women's World Cup. But participation in continuity in schools force is girls is as important a her still basis on hurdles and a major drop off at high stool ages. -- the changing bodies, confident to apparel, choice of care and manufactures in that and large sportswear brands have been slow to adapt to the very specific needs of this segment. Next slide, so half [indiscernible] 55 million revenue in the U.K. prior margin is actually from sportswear and sportswear brand, which has been specifically developed for school ag, steels and voice. So a combination of choice, functionality and sizing resonating with us units is being heard by tools and they realize the benefits for participation for boys and particularly revise. So our Imagineers range successfully launched Coal for Cabot kit in January, just last month, and we won 2 of the leading girls private stores here in Australia with strong sports programs off the back of that brand. And the span private or sportswear market is actually bigger than the U.K. and with the range of seasons and we actually greater activities. So we see a massive opportunity in the sportswear and the limits to become the dominant brand in that segment of the market. Thanks, Ed. Next Slide. So as Andy said, so forms a line goes $25 billion per annum industry, tagline. The barriers to entry are high. So aside from the standard model being schools contracting the supply for 5 years, if you compare fashion retail, where a brand we start selling a couple of items on the website and so into manage in Solar Tienor active immediately offer a full brand SKUs and in service value on what order, it can be payable to our relationship with the store. So the majority of suppliers in the industry as all remain multigenerational family on businesses. Good cash flow businesses and they're difficult to operate because not from the solar industry. The overall market is attractive and talked about a few -- but the simple across our investment basis as school plays up, our investment proposition is that we believe we have the best product and the best service in the market and we're told out through our customer management schools to pull back to that cost pilot store, which is a major validation of service and products. And it's hard to replicate ERP, which has been built in-house and refine over 15 years plus and our global supply chain, which as Schools U.K. founder, Tim Danks, who became one of the largest shareholders of MG when we matured our business a couple of years ago, lead the team of executives who have decades experience specifically in sale. It's much more price as industry relationships with PE relationships than it is a retail apparel industry. And that [indiscernible] invested in its success of executives and directors are around 20% of H&G. And with 3 businesses coming together in a matter a lot of focus on optimization and efficiency gains, which is the biggest priority for us at the moment, along with continued revenue growth, and they now have $100 million of cost of goods sold per annum that they can optimize across the supply chain and continue to win schools like Cambara in Australia create another, as I said, incremental business here in private schools to replicate the success that they've had in the -- so let me have the team and the tools to increase market share in a growing market under a contracted model to this matter of adjacencies. And so beyond that $200 million revenue and $25 million EBITDA target from 2027. The has a long runway across this to become a really meaningful, but of business. Seb anything to add? That's good. Happy to take any questions if there are any.

You've done such inefficient, Joel. We actually don't have any questions. So unfortunately, that leaves us maybe to ask a couple if you can go to mind. So yes, I mean maybe first one, just a perspective on maybe people don't understand how the sales process works. Could you touch on in regards to Canbella or any other Australian school opportunity, how that process works, okay, you get in front of them? Are they tenders? How long does it take?

Yes. Sure. So a lot of it is in the private store segment awareness. And so the sales team has been attending conferences, this relationships with Australian store principles that have come from U.K. schools and aware stool laser. It's building awareness and then every now and then schools. So stores typically have a 5-year contract or supplies about 20% of stores coming up on tender over year. and the school later proposition with our wares is becoming sort of well known enough to be gain entry into those standards. I mentioned in the U.K., they have subawareness that they're almost in into every tender win and set of it. We want to get to that same flower sales processes, there's a lot of education about the benefits of the Lumenis brands about the e-commerce proposition and how it's worked well in the U.K. And so we're finding that, that's really getting a senior standards and that we tons when they come up.

And to further that point, you made the comment that Tim and his team britistralia's years roughly behind where the U.K. was. -- based on feedback and what you're seeing in market, do you -- or do they expect the Australian market to move quicker than maybe what the U.K. market did 10 to 20 years ago?

Yes. I think that 15 years actually in the U.K., if you think about it as we started out with the very start of their business. So it's the getting one school. There's been about 18 miles optimizing experience with that school. It's not easy to win stores rapidly when you don't have enough ditans out there in the market and that awareness that I was talking about. So it's not a standing start here. And I think they expect to move quicker simply because they have better awareness and the time points to point to. And I think they would say that the competitive environment in Australia is not as advanced as the U.K. So absolutely, it's not -- we are expecting 0 to decease ambition and expectations to move much faster than that.

We actually do have 2 questions. sorry.

At the same time just whilst launching the school base in Australia is a bit of pioneering work in the first year, but in our pioneering work we still managed to secure 4 contracts as much as you get plus 5 stores up and the networks -- got it, then there is certainly so from all but at the same time is helping improve the scale of business, and that's where the real opportunity in gin business is that $100 million worth purchasing. And as your last slide in your presentation, talk to his Australian dollar is meaningful to our business as is U.K. to the U.S. staff. So all those things are in by margin improvements and with a purchasing is scale is significant.

And with these questions until one and I do say that'll be right up, Sandy's Ali, pretty more holistic. So -- there was a comment. Is there any guidance for this financial year, and that was from Red and this really ties into the next 1 from Greg that obviously, H&G recently suspended the dividend. When would you expect this to start again if at any time?

Yes, we're not using this as a sort of results gooeyness our AGM next week or charter than welcome. But we have wanted to preserve minimal dilution in the Rating register. And in terms of acquiring the TruTex U.K. business, we stretch ourselves. So the reason for sustaining the dividend was to told, but the beauty of that having an investment portfolio, which we're in the process of continued realization and about the sale period and significant cash generation is we hope to vastly get through those sort of stretch elements of our ancestor and return to dividends, but we're not making any statements out there at this point in time. But we have 2 pretty key levers to enable that to occur.

All right. Well, yes, I would say, from our perspective, it was an exceptional presentation very professional. So I do appreciate you making the time and effort. To do this, the web is also recorded. So if there are any questions from anyone listening to the recording, please send them to me, and I'll pass them on to the H&G team. But as Sandy mentioned, AGMs text week. I know some of the teams coming out. So best of luck with that. And I'm sure we'll be in touch soon. And thanks again, guys.

Thank you, and appreciate it.

So now I will pass on to my colleague, Bob Miller, who will give you a little bit of an update on some of the stocks. It was quite an eventful quarter, so there'll be plenty to go through, and then I'll finish off with a little bit of an outlook on how we see the calendar year.

Thank you, Seb, and good morning all. Yes, as I said, I'll just touch on the portfolio quickly here at the moment. And those are the key, you might see that we've actually changed the format slightly for this quarter. So instead of just running through what has occurred, we're giving a bit of a summary as well and what we're thinking about for the next catalyst for some of the portfolio companies mentioned here today. So firstly, with Big River, which has obviously been a core holding for a long period of time. And I'd say without the kind of top point there in terms of our views on this being a capital-light distributor of building materials, our investment thesis hasn't really changed since since day 1, but where we do sit in the cycle of the building cycle generally is it's probably fair to say it's come off the bottom, and there's plenty of opportunity for upside. -- generally speaking there. So when we think about Big River specifically, what's occurred during the quarter that was is they've spent a long time betting their business down during this downturn in the building cycle. -- have improved their supply relationships. They've done a lot on procurement, have definitely widened and improved the executive management team and just got their house very, very strong, in our opinion, and that's effectively led them to the point now where they're able to go out and acquire good businesses again in this business at a port called John's Building Supplies. We already have a couple of locations at presence in the WA market, and this was a natural quality business to kind of add value to what we've already got there in terms of our operations, and it was done through a rights issue in the business itself. John's building supplies is about 40% EPS accretive based on the numbers that the company has put out to market. So it's pleasing to see that come into the portfolio. It's -- they buy these things on -- typically on a 3-year cycle in terms of the average earnings that they look through. So you don't get the the exact volatility, which is a pleasing from our perspective and certainly the WA market is a strong market, and we expect that to continue over time. At the same time as doing the acquisition, they also provided a bit of a trading update, which reflected that it's never good to take just a month-on-month comparison for businesses like this, but certainly the trend I mentioned earlier. -- the company saw that October was an improvement on the previous quarter and also that November was stronger than October. So at the point when they put the announcement out. So from our perspective, the next catalyst, obviously, the first half results, which are happening this month, and we'll certainly get an update as well on how the integration is going with John's building suppliers at that point in time as well as anything to tell with the outlook for the second half of the calendar year, financial year, I should say. Coming to cylinders, again, a capital up business, which is a theme throughout the portfolio generally as we're looking for companies that don't have to spend a whole lot of capital expenditure on an annualized basis and certainly can benefit from having a high pass-through from revenue to earnings. They had a very -- again, that was a very eventful quarter that was for cylinders. Firstly, the CEO change became effective in the new CEO, Angelo that Angela took over the reins from Mark Benson there. Angela's been in the business for quite some period of time. So it wasn't exactly a a shock to the system. He's been COO for a number of years and knows the business inside and out. What's happened then subsequent to that is they probably have a bit of a change of tack in terms of the way they've started to speak to the market. They've put out firstly, an update for first half results being that they expect that effectively, the earnings are going to be flat mill earnings in terms of first half, but that provided a guidance for the second half already, which implies a second half earnings margin, which is materially higher than 0 for the first half. So on an annualized basis, it's about a 3% to 4% margin they're targeting. But if you look at the second half only, that implies a far higher margin given where they are today? And what that's been supported by is the fact that they've announced a number of contracts over a pretty short period of time since Angela has taken over the reins and we've heard from a lot of contractors in the space that things like defense and a lot of the key providers of work out there had certainly pushed a lot of things out to the right, and you're seeing that rhetoric throughout a number of contractors in the market. It seems to now be changing. And certainly, with respect to cylinder specifically, they've had a number of contracts that had 3 or 4 awarded in a short space of time, including in the defense space. where their subcontractor up at Aon in the northern territory. If you look at all they've won there, it's quite remarkable from whether the journey that Sonders have been on from best being a tank builder back in the day now that doing work for the defense force in terms of not only in tanks, but also in piping, electrical controls and civils. So the strategy is working, and we're seeing that not only in defense but in water, where the Aqua Metro acquisition from recently announced that they had won and been awarded into 2 key panels with Sydney Water as well as all the work they do on in Victoria. So in terms of the next catalyst, there's a lot of chatter in the market from a lot of the different contractors, again, around the spend that's happening in defense. And a lot of that work is starting to flow through. So we're hoping to see cylinders continue to have form in that space. And secondly, in terms of what's happening with the Sydney Water works with Aquamentro. As I mentioned, they're on 2 other panels there. and there's probably no better industrial tailwind out there than water infrastructure. So we'll see what plays out there, but the dollars being talked about of spend in Sydney Water is quite remarkable, many, many billions of dollars. And so on does have the opportunity to participate in some of that spend. On to the next slide, the next 2 companies. One we haven't mentioned for quite a while, is a small business called BTC Health. There's not many pure-play medical distribution business is left on the ASX and BTC is 1 of them where they've been doing a lot of hard yards fixing that business up over the last couple of years. and that work is definitely paying off now. And we saw within the quarter that was a placement to a well-credentialed South African investor who has got strong track record in the medical, I suppose, space generally. This placement was done at a premium to the share price and no dilution to existing investors. And furthermore, we saw a significant director participation within that placement as well. So certainly, both positive things from our perspective. In terms of what's next for BTC Health, there's certainly no doctor, and they do talk about a lot of very specific medical device equipment that they do distribute across the country. And there's a reasonably large opportunities certainly in the ECMO in the PE space that they discussed in their most recent update at the AGM, where they've also talked about looking to further scale the business. So the platform is there. They've got good products. They've got good relationships. Now it's about executing and hopefully growing on the base that they've got because they've got the infrastructure to be able to distribute more than what they do today and now they've got the balance sheet to support it as well. Coming to Comms Group, which is a reasonably new investment for us in the IT and telco space. Historically, we've done a reasonable amount in this sector generally. So it's certainly not a new sector to us. And the thing that does attract us to this space is the recurring nature of revenues. They are speaking from our own experience when you're under a contract with an IT service provider, you typically are with them for a very long period of time. And obviously, being a -- the phrase that's often used in the market in this space is one throat to choke in terms of having all of your IT with 1 service provider who knows what they're doing and they control all of your back office functions and you're happy to pay a recurring revenue. Recurring revenue fee for that on a monthly basis and certainly, Comms Group operate in that space in the B2B market. They had a very, very busy quarter. Once again, when we came in when they did the acquisition of a company called [ Tasman, ] which they bought out of -- effectively out of administration about 6 to 12 months ago. and raise money at the time to do so. That was our entry point into the business, and it's 1 we've been following for a while, and they've refinanced the debt that they had associated with that transaction. to a major Australian bank and done so at a pretty compelling improvement in terms of the rates that they all should see flow through to EPS in FY '26 and FY '27. Furthermore, it's not just about margin improvement, it's about top line growth as well in their Q1 FY '26 trading update, which was released around the time of the AGM shows that they're continuing to win new recurring revenue for across all parts of their business and the realization of strong synergies from the recently announced Tasman acquisition. Coming to the next quarter. So what they've put out to date is a general target in terms of what the company would look like steady state plus this Tasman acquisition integrated. So we expect that to be somewhat more honed as the year progresses in terms of actual guidance for FY '26, not just the target. And the business itself, it's got a very strong balance sheet, and it should just be -- it's a highly cash flow generative business that will be close to net cash positive over the coming months. And when you've got a company like this, it's spinning off a lot of free cash flow, and it's probably trading on a double-digit free cash flow yield. It's a reasonably compelling opportunity in terms of our view on where to allocate our capital cost for shareholders at the moment. Finally, the last 2. So 2 very different businesses here, Pharmx, which has been one that we've had in the portfolio, I should say, for a little while now, and it is probably not heard offline many people, but we have done a couple of write-ups within our quarterlies of late. It's very much a mission-critical element within the chemists and pharmaceutical whole ecosystem out there in terms of the gateway that they have. So it's effectively most dollars that are spent within pharmacies flow through a gateway that is controlled by Pharmx, which is quite remarkable given the size of this small company being. So when you've got the distribution already, what they are looking to do in their strategy is to expand that in terms of offering a marketplace to these same customers to enable them to improve their order flows across a lot of potential offerings and see -- have better stock availability and the ability to order and pay through what they do is something that can be a growth -- a major growth opportunity and a high-margin growth opportunity for Pharmx. And we're starting to see the -- the first part of that occur with the launch of the new marketplace and the launch of a new stock portal that occurred during the quarter that was. Next catalyst is obviously first half results, and we expect updates on the adoption rates of these new revenue opportunities and seeing how they are converting through the business. And finally, on one of the unlisted companies, which I'm sure plenty of people have heard of and it's been in the paper quite a lot, and we did a big write-up on it approximately 2 quarters ago when we first invested in Firmus, which is the Australian AI-based AI factory and certainly one that had a very eventful quarter, but it's all somewhat in the review mirror now with respect to what they've announced with the CDC partnership along with NVIDIA. So CDC is half owned by tax fans through a lot of the [indiscernible] and I think the future fund and also by ASX listed in vitro. So they're a major data center operator in the country and 1 of the best of breeds out there and also NVIDIA, which I'm sure everyone heard of, they've certainly done a big in terms of partnership across their projects, Southgate to roll out a very significant amount of data center capacity for AI across the country over the next 2 to 3 years associated with that for as completed another capital raising of approximately $500 million. So they've got the opportunity to grow and they've got a strong balance sheet. And what's next is the firmus is obviously the ModenPO, which has been continually talked about in the paper, including last night in the Australian but also apart from that is also who's going to start paying for these GPUs, which have got in place, and that comes down to revenue and offtake opportunities. So we're expecting more over time because there's a lot of opportunity there in that space as well. So want to keep an eye on in the future. And with that, I think that's all for now. So I'll pass back to Sebastian.

Thanks, Rob. As I mentioned, I'll just finish up quickly with a, I suppose, it's a little bit of an outlook on how we see the calendar year playing out, which I'm sure it won't play anything out like I mentioned in this presentation that we definitely had over shot. So looking forward into calendar year '26, I don't know some of this might sound simple, but it's awfully hard to implement. Delivering revenue growth for our investments in an illicit business, frankly, will have a significant impact on their end results in the end the overall valuation. And from our perspective, a lot of this will be driven by structural growth trends, especially in quite a choppy economic environment. Those businesses exposed to industries that are continue to build growth. I think as we saw in the second half of last year, we'll ultimately be rewarded. We saw quite a few mergers and acquisitions last year, probably we saw quite a few takeovers probably in that mid-cap end. We expect that to continue. So we expect that to continue. And b, we expect a lot of those listed businesses than merged or acquired, but remain listed, we'll probably show some of the benefits of those deals in this calendar year. And then finally, I think this is important because it does affect share prices is we look at a lot of our larger investments, a lot of the ones Rob just mentioned, they are very catalyst-rich in 2026. And by Catalyst Rich, we mean catalysts that can move the dial, not necessarily make or break in some cases. But if you look at something like an urbanize and getting that product to market, sooner rather than later, I would argue that's probably a do-or-die moment for that business. So I will touch on some of those key catalysts quickly and what we're looking for in 2026. I'm not going to go through all of this. The point was, I think this is important for our shareholders to understand, that a lot of our businesses are exposed to some significant industry tailwinds. Obviously, Rob mentioned Firmus. I'm not going to go through that in the AI build-outs, defense, the health focus society that we live in -- and the last one, the obviously, cottage industries that are highly fragmented. A lot of our investments, hopefully, should benefit this from these tailwinds or even multiple tailwinds one way or another. And we want to see that continue over the rest of the calendar year and hopefully, for a lot longer, it will allow them to grow consistently for many, many years to come. on mergers, acquisitions and potential takeovers. As we've said there, a lot of our core investments made some major acquisitions. H&G, who recently just spoke on this presentation, obviously, you did one of those COGS cylinders, Big River, a lot of businesses like XRF, as an example, did smaller acquisitions. But we expect some of those benefits, hopefully, material benefits to flow through into calendar year '26. So whether it's in the full year results or half year results or AGM updates later in the year, and we expect those to have a material impact on the valuation of these businesses. So on as being a prime example is with the Sydney Water panel appointments, what sort of work can they win and be exposed to over time? Importantly, though, a lot of the businesses we've invested in still have a lot of balance sheet capacity to continue to acquire strategic acquisitions at fair valuations. If you look at, I suppose, our top 4 or 5 investments. I've mentioned Maxi Pass moving to a net cash balance sheet, H&G probably doesn't have the same capacity, but has significant cash flow generation Big River even after the recent acquisition. They're all in a position where they have the flexibility from a financial perspective to acquire if it makes sense. And as listed businesses, we are big believers they should use that to their advantage if it does make sense for all stakeholders. And then finally, a lot of our businesses, although obviously, we haven't seen a takeover, we have seen corporate activity probably start to increase more recently. So [ Saunders ] has attracted the attention Vans Group a large South Australian contracting family-owned business down there. They now own 13% of sounders maybe a bit more. Big River has had a very new shareholder pop on the registered CTL Australia, which is actually just a shell company. But if you go digging deeper, it's part of the Candin Co business, they've got large building material interest mainly in steel distribution around the country. So they've acquired that 11% stake in the past only 3 months. which we don't know where that leads to, but it's not something you see every day. And then more recently, as many of you would know, numbered a 15% investment in urbanized in the middle of last year, they have an option to go to just under 20%. We don't know where this leads to. But what we would say is if you look at the acquirers of these businesses, what they've all got to comment is they have big balance sheets. They've got long-term time horizons. So they have the ability to be patient. And when you speak to some of them, they would say we have the ability to be patient and acquire large stakes in businesses that we think have unique propositions moats and can compound capital at an adequate rate for us, but we feel like the share market is not valuing them fairly, and we're going to use that to our advantage. I would definitely say that's a consistency across all 3 of those. And then finally, being catalyst-rich. As I said, I won't rattle all of these off, but there are some very significant catalysts for all of our less over this calendar year. It's going to be quite an interesting year to see where we finish up. But even though we had a strong calendar year '25 in most cases and definitely second half. We feel like momentum is on our side we have the catalyst to re-rate again is now comes down to execution. Some of those big ones, as we said, move logistics returning to profitability would be a big one. Maxi parts continue to grow earnings, moving back into a net cash position, the firmest IPO, urbanized getting their product out to market with NAV and actually getting some takeup from customers. Hancock and Gore moving from a illicit investment company to a consolidated entity. Getting an update on the major unlisted investment, degearing, all of these catalysts are significant and in our view, can drive some real share price depreciation. If you can get earnings growth and then get multiple growth -- you won't see share prices up 10%, 20%, you might see share prices up 50%, 60%, 100% in some cases. It really comes down to execution in some of these smaller businesses. And then once they do that, they do gain the attention of some much larger investors out there, and you see the share price rerating. So with that, I'm happy to take any questions if there are any questions out there. I know I've had a few questions lately. People just e-mail me directly, so that's fine as well. Some of you would see we continue to buy shares on market. I've continued to buy shares in most of the LICs. We feel like it's going to be an exciting 12 months ahead. So if there aren't any questions, feel free to e-mail me or any other member of the team directly. Otherwise, we look forward to most likely speaking with you at the end of next quarter. So in that case, thanks for your support, all the best for half year reporting season, and we'll no doubt speak with you again in a few months. So thanks again, and enjoy the rest of your week.