NAOS Emerging Opportunities Company Limited (NCC) Earnings Call Transcript & Summary

Good morning. My name is Sebastian. I'm the Chief Investment Officer of NAOS Asset Management. And this morning, I'll be speaking to well all in the webinar up there on an update on quarter 4 FY '23 investor update and obviously, the Q&A session where we have at the end. As is always the case with these webinars and other, the disclaimer here. Everything we mentioned here is obviously general in nature. None of the stocks or companies that we referred to. You shouldn't be treated as is got take your own financial advice and do your own homework. With that, I would like to make our acknowledgment of country and acknowledge the traditional owners of the country throughout Australia and recognize the continuing connection to land, waters and communities. We pay our respects to Aboriginal and Torres Strait Islander cultures, and to elders past and present. For those of you who don't know us, I know most of the people in these calls or webinars tend to know us pretty well. We're a boutique fund manager, been around since 2004, believe or not, with a focus predominantly on emerging companies, both public and now private, who run 3 with investment companies and 1 from investment fund. We generally take very long-term investment decisions in industrial type businesses, better word than industrial. We have roughly 7,000 shareholders, $300 million of fund with a team of 9 and we're extremely aligned with all of our shareholders as directors and staff to be one of the largest shareholders in the LICs. The team here -- I'll probably just pass on to the next slide, actually, enough months. And our investment belief and why we think we're a little bit different to our peers. We're at some price is extremely different. Obviously, we focus on businesses where there's a very strong level of investor and management alignment. Now most of our investee companies tend to be the found the lead type businesses. We've had many of our investee companies who've been invested we've been for 5-plus years. We're privileged to have John Lorente, who's the CEO of Big River on this call. He's been an investor now in Big River for 7 to 8 years. We own roughly 35% of that business. We do have a Board read on their Board of Directors. So we do believe that the quality over quantity. I'd like to combat our capital over many, many years. We don't feel like we have to exit the stock just for the sake of it. We believe often the best decision to make is the decision to do nothing at all. We focus on cash-generative businesses. Have a very strong, obviously, focused on ESG group, prefer the word positive impacts. We like to see our businesses make a positive impact for all stakeholders. And as I mentioned, regard that Big River example, we are quite hands on. We're not an activist, but we like to work with our businesses and really be a trusted partner for them to ensure their success over the long term. Thanks. Quite a few people like us, what we tend to do with our time. We only have roughly 14 to 15 investments across the $300-odd million of FUM. And as you can see here in the grand bubble, this is really what we do on a day-to-day basis from an investment standpoint. There's a lot of internal engagement. We'll speak to our investee companies, an example probably once a week once a fortnight probably, try to liaise with a number of the Board of Directors, both independent and nonindependent. But most importantly, speak to a lot of stuff. We finally get a lot more useful information from the people below that executive level, and the team here spends a lot of time on finding those information. We do a lot of external engagement with former employees, both listed and in the unlisted space. Obviously, you can see that supply of customers, industry contacts. And then to the right, you can see more hands on top research. So net saving the products, reading company announcement annual report. And then finally, on the right, doing a lot more industry work, so looking at transcripts of other listed businesses, industry reports, journals, surveys, ratings and things like that. So it's quite an array of research that we do. We don't rely on broker research, all of our research is done internally, or the deliver on qualitative research as opposed to quantitative research. And then finally, just the reasons not to invest with NAOS. People tell me this time and time again. But I do make it very clear that we do run a very concentrated fund. We have 0, generally around 15 investments. Some of our shareholdings are often over 20%. As many of you would know, we don't trade a lot. We do focus on the smaller businesses in the stock market. We are completely benchmark unaware. So I believe even today, we don't own 1 investment within the small index. We don't invest in early-stage businesses, which for some people, they do like to have that exposure to early-stage businesses. We are a relatively small fund. So we don't run a $1 billion, but we believe that allows us to get a meaningful exposure to smaller businesses. We do have quite a strong focus on positive impact. And as many of you would know, we can trade at discounts and premiums depending on where we are in the cycle. So Q4, from my perspective, you probably feel like a little bit of a whirlwind for Q4 and really FY '23 in general, considering where we came from. So I think you have on performance somewhere you can see that there's quite a big discrepancy in the performance of our funds, namely NAC had a stellar Q4, really driven by 2 outstanding investments that produced, in the case of Gentrack, which Rob will talk about later, had a stellar update and the other one being MaxiPARTS, who acquired a business in Q4 as well. What that meant from NCC and NSC was a pretty benign quarter, slightly underperformed the benchmark. And that's what we've been talking about, I think, is an investment team and especially at the Board level. There was quite a lot of good information that came out of Q4, but what we're seeing across the entire portfolio really of the invested companies is a complete lack of demand for emerging companies or small caps, which is leading to a big day rate and valuation supply to businesses in general. So as an example, I'll put John on the spot and will be very unfortunately, in if you base on the ever consensus earnings today for '23. I think the multiple is sub-10x on a pay and whereby 1 year or 2 ago, it will be in the mid-teens. But derives not a line. We've got a number of our core investments now trading, unfortunately, on single-digit peers, but I'm a big believer that doesn't last forever as we're essentially now back into a bull market, it feels like investors feel like the big end of town becomes fully valued, that will triple down and investors will look for other deploy that capital in place that they believe represents better data economic big believer of that places at emerging companies forecast. Just we had a number of questions just on that topic. If you do wish to ask a question, you can type the question in the chat box on the right-hand corner. If that's not working for you for whatever reasons, feel free to e-mail up directly at [email protected]. I think I've gone back to roughly 20 people already. So I will endeavor to e-mail you directly today, if I can. But I have had a number of questions on dividends in general for the 3 LICs. The 3 points I want to make here are our full year results will be released on the August 22, which I believe is a Tuesday, all 3 LICs. So for everyone who's trying to work out what our dividend will be, it will be announced then on the 22nd. As I have said to numerous people, the whatever outlaws are we supposed to or what we strive to be is to provide a consistent stream of stable or growing dividends over the long term. So hopefully, we can continue to do that. And as the slide here, you can see that from a dividend point of view, not only have we paid a very large amount of dividends over the journey, most of which have been fully franked over that journey, but we also sit on a relatively healthy reserve level for all 3 LICs. So more about just, I suppose, a qualitative summary to Q4. As you can see here, you can see the returns to the index, which I mentioned, a relatively strong year. Not so much for the small companies. It's definitely sort of larger ones because you can see large company significantly outperforming the smaller counterparts by almost 50%. And from our perspective, the other thing that really caught us off guidance unbelievably technologies rolled their way back to life. And it felt like as soon as more and more people caught on to ChatGPT and artificial intelligence. That was the click the catalogs that technology stocks needed. And to put that in perspective, they put on 25% for FY '23 and are not insignificant 13% for Q4 FY '23, and that hasn't really shown any signs of abating up until last night believe it or not. As more and more people really most like people have given up on being underweight technology stocks, especially in the U.S. and feel like the [indiscernible] and momentum is very much in favor. What we found as a team speaking to a lot of unlisted players in the marketplace was that they felt definitely in May and definitely in June, but the interest rates finally send to hit consumers. As you can see there, we've had 10 interest rate rises in FY '23 out of 11 meetings, which is frankly a hurdle. And that really started to catch on back to consumers, which led to a number of downgrades from retail stocks. So it is may be budging universal still holding or producing some relatively significant downgrade. And from retailers that many are perceived to be quite resilient in the case of Universal Store Holdings very much targeted to that millennial. But even in their case, they weren't immune from, I suppose, what we're seeing in the marketplace more generally as consumers tighten their back pocket and really probably come under a little bit of stress, a little bit might be under doing it after the interest rates have increased so significantly in such a short period of time. The second last point I put in that I know a lot of people refer to unemployment, unemployment remaining stubbornly low, and therefore, RBA has a significant amount of firepower continue to move interest rates higher in the short term anyway. But interestingly, what we're seeing with a lot of our investee companies, not all of them, but a lot of them, it is becoming easier to hire we're very big believer that obviously unemployment statistics are very much a lagging indicator for the RBAs we use.. And what we're seeing on the ground is, yes, I think deployment is still tight, but nowhere near as tight as what it was 4 months or even 18 months ago. And I think that probably bodes very well for the Australian economy and the outlook trade, which hopefully are down a tap and may well find their way down 12 to 24 months. And that final point, which has affected us significantly is, as I said at the start of the presentation, very little demand for small caps in general. What we've seen is investors are very much focused on liquidity. They want to be able to get in and out quickly. And that's why we've seen the larger companies outperform significantly relative to the counterpart. And I think if you look at small cap industrials, in general, you would find that they have underperformed more so in the small as it's very much being assisted by small cap resources, more cap tax stocks. So just a few visual representations to get some of our points across. And as I said, it felt like in May, something really click, especially for consumer discretionary stock and it wasn't a good thing. And you can see that the share price of the total returns on a relative basis for a number of very well-known consumer discretionary stocks in the case of Universal store holdings, that share price in March 31 to the end of June. So just 3 months is actually down by about 40%. They weren't alone. It wasn't inconsiderable for our contributors, especially business to be down by anywhere between 40% and 20% on the 3-month period. And it will be interesting to see a lot of the commentary about is out of that businesses have been priced like the wells ending, especially in the consumer discretionary space. But people have very little idea of what the macro economic outlook holds for some of these businesses has been open for this claims we don't invest in consumer discretionary stocks generally. So we're by no means an expert in this space. As I also mentioned before, it was -- I suppose the unexpected source of returns for FY '23. And I think if we sat down at the team and really felt that FY '23 was going to be the return of the stock pickers market, so to speak, there was a good article on the AFR on this higher rates means risk-free returns, the elevated cap will become scarce. And therefore, the source of returns will be very different than what it has been for the last 5, 6, 7 years. And what we found was that was not the case. Some of the most specialities in our view, sectors, industries were the ones that produce the highest return. So the Bitcoin index in the U.S. was up by over 60%. You take treasuries out of it and deliver an investment grade. As I mentioned, the NASDAQ up over 25%. Stocks in general, the S&P 500, close to 18%. But again, driven by the likes of Microsoft base for Google, Tesla. And then when you look at the ASX Index breaker with the IT or information technology sector really shot the life that and it was really a daylight between the tech sector and everything else, which should be very interesting. I don't believe many fund managers would have said that would be the case. You said rates were up 10x for FY '23, what would be the best returning sectors and asset class. Panned out very differently to many people expected. This is a good chart that Rob actually found. And I know we mentioned the year about artificial intelligence here. I'm sure many of you have heard the business, [ NVIDIA ], a huge business after that's where we're really grabbing that artificial intelligence tailwind. You can see here, you can actually find some of the Google data and what people are searching for. And you can see that since sort of January 23, artificial intelligence is now the most search to on Google. So the outpacing recession, goal, as you can see that. So really shows you how this term, and I suppose the future direction of artificial intelligence, it's really taking the world by storm and people are extremely interested in how they can put it to use from a personal standpoint, but also from a digital standpoint, people will change jobs, how we operate well into the future. So I think people are very much in on say how it's going to play out and what's the best exposure for them to have as an investment. Just before I hand over to John, we have sort of summarize FY '23 and how further change in Q4, interesting that the tone of interest rate expectations has very much changed in our view. So no longer is how high will they go? I think it's very much turned to how long will they remain at these levels. We're very much known that however it cost will be in probably late calendar year '24. And I think that's very important because you've seen is that psychological changes come in, you've seen equity markets at rally. Equity markets tend to look 6 to 12 months ahead. And as you can see, they're very much pricing in a very different outcome to what I suppose many economists and current interest rate projections same. As you can see there, we'll try to get some statistics on what people do expect to interest rates. And you can see that in the U.S., 2/3 have gone 6 debt interest rate to be between 3.75% and 4.5% by the end of the calendar year '25. But also in Avios, something that is quite interesting is a number of longer-term thematics in our view of gaining even more momentum near interest rate accretive to where they are. That's why we're keen to get John Lorente on the call here. We're a big believer and it's in the press almost every day now. And housing supply is a huge issue to this country. And the only way we're going to get out of it is by building more billings, whether it's apartments or attached homes or townhouses, hence why John probably no one better place to speak about this topic than John. And we want to have an excellent exposure to that, and we feel like we do. Novated leasing in the form that -- for any of you who have acquired an electronic vehicle, chances are you probably used Novated lease to do that. But to give you an idea that McMillan, which are a large Novated lease player, almost half of all Novated leases about wrote in June was regulatory vehicle. And what we understand is that momentum is not changing, more and more people looking to buy an electric vehicle more and more people looking to find electric vehicle and funding at true Novated lease. And as many people now state place like Norway. 100% new cars sold in Norway, more recently were electric vehicles. And then that final point there, also, I guess a lot of topic is renewable energy. And obviously more Australia is moving towards renewable energy. But as I'll touch on towards the end of the presentation, it's not so much of the consumers to point from an infrastructure standpoint, the billion and tens of billions or hundreds of billions of dollars that need to be spent to transform the grid and develop renewable energy generation, in our view, is really a once in a generation thematic that we want to have very significant exposure to. So yes, in the short term, more cap investing has probably been bumpier than we expected. But over the longer term, we've probably never been more excited about some of the opportunities for our core investments, and we expect them to grow significantly over the next 3 to 5 years. Okay. Just in regards to a few more charts and some of the format that we're seeing clearly, housing in this country is at a premium. We'll see right rents go through the roof. And you can see that obviously playing on consumer sentiment. And more recently, that really hasn't shown any signs of abating. So as I said previously, housing supply does need to increase sooner rather than later. But on an overall trend level, interestingly that the trend is very much our print and yet it's probably taken longer for inflation to fall, but it is continuing to fall at a slightly lower rate. But we very much feel, based on what we're hearing from a lot of our invested companies and sources, especially private sources, inflation very much seems to be under control over the medium to long term. And probably a fantastic segue to pass on to John Lorente. As I said, we've been an investor in Big River Group. John was appointed CEO. I actually don't have the update on the take say, 8 months. But we've known John for probably 5 to 6 years now, as we've been a General Manager of Big River before he becomes a CEO. As I said, a really great opportunity for everyone to hear from someone like John who is at the coal base in regards to construction, what you're seeing from a demand perspective. And John, I really appreciate you taking the time and the effort. I know full year results aren't that far away, and I'm sure you flex that. So thanks again for taking the opportunity in time to present to our shareholders.

Great. Thank you, Seb. And good morning, all, and thanks, Kevin and the NAOS team for the opportunity to speak. Just maybe as Seb said, I might just start off with a couple of disclaimers. As Seb mentioned, we've got our results coming up on the 24th of August. So we are in a lockout period. I won't be talking about results, obviously. The information I've got in here, we either provided before it's generally available in the market. And I really want to ask, to add some color to it in terms of what we're seeing. And if you want to hear about our results, obviously, 24th of August, please come and join us. And the second, you may have seen an ASX article is on titled not an economist, a lot of directors at the moment are using that disclaimer, and it's code for I don't know what's going on in the market. And really what it means to me is that the markets really gone through an uncertain time and economists at the moment, what's going on probably doesn't fit into models in the past. And many people are as clear as to what's going on. So I'll give what we're seeing and then hopefully, you guys can put the pieces together. This slide here. So the first slide is from our FY '22 results. And it really just shows the diversity of our business around geography, construction markets and supply chain. The focus here is really about the differences at the moment across each of these areas. So never before have we had the stimulus we've had 2 or 3 years ago, the shortage of labor that we've had, the disruptive supply chains, the interest rates, as Seb mentioned. And for me, as the matter what's going on is in supply chains, they call it the move forward effect as things change across the supply chain. So just maybe just going through a couple of those markets. Obviously, in each of the geographical markets, they're all performing very differently. Queensland's probably got a good headway in the next few years and is very strong. Western Australia is very strong. South Australia has been very strong. Interestingly, the other states in New Zealand have been soft, but the regional areas have also been strong as people have moved from the cities to regional areas. And we're seeing this across our branches. And really, Sydney and Melbourne that we're seeing the biggest impact in terms of a downturn moving forward. The cash, I think I'll talk more about it. But look, there's still a strong pipeline in detached. I think it's a big percentage of our business. But obviously, the approvals and the start to now come away. Multi-res is starting up with high density. The big identity stuff is taking its time at that medium-density space is pretty strong. And commercial is very strong but delayed, and it's been delayed because of all the infrastructure work, all the civil work going on in every state, there's either an airport or a road or a freeway or a metro being built. And that's taking up a lot of the labor, and the commercial work has been delayed over time. And OEM, we call out what we sold to other manufacturers, people building RVs and truck bodies and rail trains, et cetera. And that's been relatively strong. But obviously, that generally goes down with the consumer market. And the other bit on the supply chain, it's been an interesting couple of years where over COVID, I would say, manufacturing is dead and over COVID, bigger manufacturer was a great place to be in Australia and end up around the world. And then being a wholesaler, we did pretty well. But build has really struggled over the last few years. They had a lot of work, and I'll talk more to that. And then we get to consumers. And now as the market is changing, the strength of each of those positions is changing as well. And I think at some point in the near future, we'll end up at an equilibrium point once issues of the last few years go beyond this. We'll go to the next slide, please. So this is market data from both the HIA, ABS and ACIF. Just on the one on the left-hand side, just on the house and you would have all seen this. And I just -- I suppose one thing I want to point out is around the 2020, December 2020 stimulus package. So that's really when all the approvals took off. And if you had to look at an approvals graph, it just shows this huge spike in December 2020. Then it was about the starts. And the government, if you remember back, extended the starts to be able to eligible to receive that incentive until September '22, so late last year, after September 30, '22. And from then, we've probably seen quite a few buildings go under with the amount of starts have going, and you're probably seeing a little bit of decline since those dates. What's really interesting is that gap between the starts or the approvals of starts and the completions. And if anything, that's probably even though it's been quite troublesome for builders what it's actually meant is that it's extended the pipeline and our view is that it's still extended. There's still a lot of work to be delivered albeit at some point. Obviously, we're not going to have enough starts. And if you have a look at that graph, it's about now that the staff and the completion or the amount of work being done and the completions are actually crossing over. So there's still a bit of pipeline there, but obviously, there's question marks about the future. The one on the right-hand side, top right-hand side is about the multi-res, shows the multi-res and where are they at a cyclical low. And what we're seeing at the moment, there's been lots of talk about the build to rent and that growing, and we see that really positively. But that is going to take a couple of years to come through. And at the moment, there's a funding gap in terms of developers being able to fund these big projects, the big multi-res projects. And then consumers, you may not know a lot of developers will look at selling 50% to 70% of the apartments before they start construction. And again, with funding issues and question marks and uncertainty for consumers, some of those jobs aren't starting or they're being delayed. So that medium-density space, which is really about townhouses and duplexes. We're seeing really strong market in that space as an area where people can build relatively quickly and have certainty in what's going on. The bottom left-hand side, one is about commercial. And commercial the last few years has also been delayed, as I mentioned before, with a lot of workers within that civil and infrastructure space. And just a few examples, the Sydney fish markets in Sydney have taken a long time to get out of the ground or out of the water in that case. The John Hunter Hospital has been delayed. And unfortunately, they had debt here a few weeks back. So sites being closed as well so. So some extra delays, there's quite a few data centers, air trucker next DC are looking at those data centers. So I think there's a lot of work in the medium term, but have also been delayed. The Westmead Hospital, the Randwick Hospitals, they're all happening now that have been delayed. So there's a lot of potential within that commercial space, and that's something we've been looking at. But again, it's about labor. It's about labor and being able to get enough people on the jobs to deliver them. And then last one at the bottom right-hand side graph from the ACA, a lot of you would have seen this. and it just shows some of the top 20 projects and where they're heading. So if you can go to any capital city almost regional areas as well, and you're seeing either an airport being built or metros or new roads and a lot of workers in that space, taking that up. Our view is that that's peak, but it will continue for the next few years. And again, this question marks over a couple of governments state complements looking as to whether they continue some of the projects. So they had slated for the future. Well, we'll go to the next slide. These slides here also from the ABS and HIA. Seb mentioned about our migration. So the government flagged that they're looking at 650,000 immigrants over the next 2 years. And if you look at the bottom left-hand graph, we had very, very low vacancies across all capital cities. So that is what is rising in raising those rents at the moment. And interestingly, I don't want to get into the politics, but there's discussion about whether there's capsid rent. My view is that, that just means that the less people will invest in housing. And if less people invest in housing, then we're going to have a bigger housing issue. The big issue that needs to happen at the moment is release of land and labor and getting enough labor and funding, which I'll talk to in a second. But that's what the builders are telling us that they can get the land, they get the labor on board and they can work out the funding, then they'll be able to deliver more housing to meet the shortfall. So my view and getting to, I suppose, at the end of the presentation before we get to the end of the presentation is that the current pipeline of work will continue for a while, but obviously, there's patchiness across each of the market segments and also the market. But then we're going to end up in a position in the not-too-distant future where we've got a way shortage or undersupply of housing in the market. Just on the builders and a few months back, I spent a bit of time going to see all the major builders, all our major builders across the country. And I can say that they're all doing it tough and maybe a little bit different from what some of the things going on in -- or being reported within the media. There's been a lot said about fixed price contracts, that's caused growth, obviously. And the reason why they had fixed price contracts is because the banks won't lend people money on contracts for housing unless there's certainty, and that's probably fair enough. But obviously, over COVID that a lot of these contracts were signed in 2020 and 2021. A lot has changed since then, and you have heard a lot about metric on and others looking to try and cancel contracts that does make sense. But the bigger issue is that some of the builders are talking to us about our trade availability at historical lows and having to pay extras and pay over and above to maintain workers on site. So that's one, the lending, which I talked about. But then the extension of a project. And one of the builders said to me that it was taking in 22 weeks to build a house and that had grown to 40 weeks now that cash flow impact being that these builders work on progress payments on top of the rising costs and on top of the fact that there are less starts happening or less new approvals. And a lot of these builders use the deposit. So if it's a $500,000 house I'll get a $50,000 deposit at the start. They use those deposits is cash flow to maintain the entire thing working. So what we found late last year is quite a few builders going under as we heard, but we also have found quite a few builders looking to reduce the number of jobs they're doing at any one time to ensure that they don't get into cash flow problems. So my view is that if we -- the builders have still got a bit of a tough time ahead of them because labor will be difficult to get and delivering these jobs will take time. And obviously, at the moment, until something changes, the new approvals will take time to come through. So we go to the last slide. So a bit about the outlook. So our view is that regionally, the performance will differ across geographies. Queensland is going very strongly. There is a lot of competition. A lot of trades have moved up to Queensland to do work. And Big River, we're luckily well positioned in that state. Interestingly, New Zealand looks to possibly to come out of the West of it, unless what we're seeing, and they're probably ahead of us in terms of some of the dips. So the dip hasn't been long. But obviously, there's been some pain in that country. Western Australia is very, very strong. And as I mentioned, South Australia seems to be outperforming every month. I look at South Australia and usually, it's a market that goes up and down. It spends more time down than up, but it's been really strong and performing well. Sydney and Melbourne are where the question marks are. And for me, particularly in Melbourne, being that there's uncertainty from the government in terms of what they're doing. And the second part to it is that short, medium to long term is where I think the economists don't really know. Everyone is talking about the fact that the medium to long term, there's an upside in this market. The question is, what is short term and how long is short-term in terms of the market changing. For our business, having a bunch of commercial work and that multi-reservoir helps, but it will be difficult for housing markets over the next 12 months, or they're about until this turns around. So multi-res, I did mention will take some time to come out of the ground, the big multi-res stuff at that work within the medium-density space, is where a lot of the housing will come from in the coming year. Lastly, on population growth, looking vacancy rates, our industry is all about confidence. Our consumers need confidence to buy developers need confidence to invest and builders need confidence to sign up contracts. And for me, it's about the government and the banks. And I did put on the -- look, the fundamentals all point to sustained growth. But the government uncertainty is a question mark. And if I was to go talk to the government today, I'd probably say, look, that's where you need to give some certainty to the market. It's about the labor. It's about making sure we get enough skilled labor in this country and it will help to have more migrants come in. It's about land and land availability, just talking ability yesterday, it tells me that it's still taking too long to get land approved. And it's about that financing. Tim Reardon from the HIA did say in a meeting recently that our default rates have been the lowest in history for the APRA rules that came back a while back, which really means that those banks probably aren't loaning enough to get the market going. And the last point there, look, in uncertainty, cash is king, as I say, right. And for us, it's about being flexible and nimble and the builders that are flexible and nimble, and we're looking at the talking builders and they're going from detached housing to the medium-density space, we're doing some commercial work and making sure that they're flexible in what they're doing. People got to imagine their costs and then also investing wisely into the future because there are opportunities and there will be opportunities in the short to -- sorry, in the medium to long term. And that's all for me. Thanks, Seb.

Thanks, John. Appreciate your time this morning. It's always good to hear it from the horse's mouth what's something in the industry, not necessarily just in the papers. So I appreciate you taking the time out of your day to speak to our listeners. And good morning to everyone, all the regular listeners and a special shout-out to the ASA members that have joined us today as well. I will just quickly touch through some of the key highlights from the portfolio during the quarter. What's typically a reasonably quiet quarter was actually a lot going on during the quarter. So firstly, with MaxiPARTS, our aftermarket commercial vehicle replacement part distributor that has been very busy in the quarter. They have made an acquisition of a complementary small business called Forch. So when we think about the MaxiPARTS business generally, if you have a truck that's broken down and you need a replacement part for, someone has to actually put that part on the truck. And that typically happens in an automotive workshop or somewhere where there's still mechanics that can do that type of work. Those same workshop and mechanic customers have needs for other products, including consumables, specialty chemicals and electronics. That is what Forch specialize in out of WA. They're a small business, and we think there could be significant revenue synergies over time for MaxiPARTS now that company has come into the wider group. MaxiPARTS has 20-odd stores across the country and the customer, essentially every customer of MaxiPARTS would require products and consumables that forced cells. So we think that is a large medium to longer-term opportunity for MXI. Furthermore, there was a small bit of board renewal there with since the demerger of MaxiPARTS out of the parent company, MaxiTRANS, a couple of years ago. There's been a lot of change there and a pleasing to see you chair appointed. And finally, just in terms of, I suppose, industry comparable, we talked about this a little bit in the past with regards to supply networks, which is a fantastically run business for a long time in this space, the closest comparable to MaxiPARTS. Their results, preliminary results, which relates to guidance and then subsequently beat that guidance was for material revenue growth of around 30% and very strong profit margins in the double digits. We think now that MaxiPARTS has been liberated from that parent company over time, their margin profile, now that it is run as a standalone business with the opportunities in the marketplace, we think the industry dynamics should see continue to see MaxiPARTS go well over the medium term based on listed peers. Secondly, coming to Saunders. What feels like a long time ago now was the termination of the Northern Territory project with the U.S. government called Project Caymas whilst never like to see a termination of a project, silver lining here was the way it was terminated with a clause there called termination for convenience. We think that bodes well in terms of the way that sound structures their contracts and most of the contract was completed and so we think whilst clearly, not an ideal scenario. Saunders has, subsequent to that date, being able to fill their, I suppose, their order book flows through to existing projects that have been won since that time have been quite significant. So we look at the life of the major project they won during the quarter with BP. We're particularly excited about this one, which is out of the W.A., the BP shutdown refinery there. This is a world-first renewable project that Saunders is undertaking refurbishment of 25 tanks that will now be available to use in storage of biofuels and more sustainable fuels for BP. Furthermore, they've won more projects since July with ample for another storage taken also the quantum out of -- out of South Australia. So we certainly think that Saunders has a lot of opportunity in front of them with the government program of work, and we think that sets them up well for FY '24 and beyond. Thirdly, here coming to Urbanise, which is our software provider for the strata and the FM space. They achieved a major milestone is something we've been focused on for a while is going live with Colliers Australia for the facilities management software rollout. We think the product has gone through a significant stress test with Colliers -- and we think that a lot of other customers around the world would have been watching to see how that rollout has gone and then hopefully, that bodes well for the sales pipeline and the opportunities for Urbanise to continue to sell that product into other Tier 1 customers over a period of time going forward. I did undertake capital raising, some of which was the balance sheet strength, which we participated in. It's never an ideal scenario to participate in such raises, but we think part of the money as well that they raised was use for customer growth initiatives when it comes to further R&D to improve the product, which is an exciting opportunity going forward. And thirdly, there, we're pleased to see the appointment of what we believe is a highly experienced skilled Non-Executive Director, who has a lot of experience in the software space, which we think this company desperately needed. We certainly believe that this is a good step in the right direction, but the revenue growth that's been delivered to date, we think more needs to be done over time in terms of getting the opportunity to maximize that in terms of revenue results going forward, and we'll continue to partner and work with the company in anywhere we can. On to the next slide, place. Obviously, Gentrack has been a very successful business for us over the FY '23 period. It was a turnaround, as many of you know, when we first invested. And clearly, that played out probably quicker than you can never anticipate it would in the, I just continue with the results released in May with again exceeding their revenue and earnings guidance for the FY '23 period with a subsequent $10 million upgrade to that revenue guidance. What we think going forward as well, have put out the guidance to market around our target, I should say, around FY '25 and beyond. Those are yet to be adjusted as we look only in the short term. The opportunity was with FY '23, they have outperformed. We continue to think this business is forming a pretty good results-driven approach of outperforming what they provide to market with the opportunity there when the renewable energy transition with a lot of their customers and potential customers being Tier 1 utilities as a big opportunity for them to continue to grow going forward globally. Coming to move Logistics, which is our New Zealand trucking and transport business, probably one that we're most excited to catch up with at the full year results. Now that CEO, Craig Evans, would have been in the job for approximately 6 months by that point, a form of main high-level executive as many have known that we've spoken about in the past. We're excited to see what his strategy is going forward. But despite that, it is still a turnaround business that the industrial space, which probably does take longer than a software turnaround, clearly, but in saying that they are able to secure and renew a significant contract with a big New Zealand customer that they have over there. Subsequently, they saw -- we saw the capital stack simplified through the $8.2 million conversion of the convertible notes that were on issue. They were under a previous management team, and it's good to have a light in the sand, and that is now in the past for us going forward and of the company as well. And finally then, I'll just touch on Dropsuite, which is one we, I suppose, first kind of spoke about quite significantly in the last quarter that we put out to market, the quarterly results for Dropsuite. The cybersecurity company that continues to, I suppose, meet and exceed the revenue growth opportunities when you look at the market growth, but significantly as well from our perspective, they are cash flow positive software company, and that expense all that research and development costs, which we think shows conservatism from the management team, and we're very happy with that approach. They've continued to generate revenue growth throughout the quarter and subsequently into July with annual recurring revenue now approximately $30 million. They've ticked over 1 million end users on their product, which is a backup and archiving solution used by -- put in place by IT providers to end business customers. And it's great to see that, that 1 million customers now use this product, and we think we can continue to grow based on the opportunity and totally the cybersecurity, we all need that now. And we think the opportunity in the tailwind there is very, very significant over time, not just for Dropsuite, but the entire setup. What has happened in late though, we've seen in the last little while, Microsoft have gotten into this space to some degree, what Dropsuite do differently from many others as they are truly independent in their product offering, whereby back up and an archiving solution is provided external from whatever workflow solution, you have your information in the first place. And we think this is incredibly crucial. And based on the industry feedback that we've received and deep dive we've done in terms of sticking to customers, suppliers, competitors and many others, we very much feel that Dropsuite has a place in the market going forward despite others in the marketplace. And now if I can just go to the next slide, just quickly on the dividend profile. So as mentioned a little bit earlier, we clearly have a policy here or an approach where we want to pay out dividends, consistent dividends over time framed to the maximum extent possible. And as we can see here, we'll be declaring a final dividend for NCC in a couple of weeks' time. Coming to NAC again, same thing for the final quarterly dividend for Q4 will be announced later in August. I also just want to point out here that since we've installed the buyback in place in NAC, we've bought back approximately 25% of the company since mid-2019. So we're big believers in the companies that we invest in. And if there's opportunities to buy the discount, we're very happy to do that. We think it's a good use of capital. And finally, now on NSC again, same approach in terms of the buyback. We've been reasonably aggressive with that buyback, approximately 20% has been bought back since mid-2019 as well. And the final dividend will be declared and along with the results of the other 2 on the 22nd of August. So that is everything for me. With that, I will hand it back to Sebastian. Thanks.

Thanks, Rob. As always, I'll try to finish with a little bit of an overview and outlook for Q1 '24. As many of you know, Q1 is always very the most important quarter for us for the financial year with a full year reporting season and obviously closely followed by half year reporting. And thankfully, in the past, there are a few reporting seasons generally where we put on our most performance, as many of our investments finally tick the head about [indiscernible] been up to a few months have been extremely quiet. For -- in our perspective, clearly, people will be looking at FY '23 results. But unfortunately, and as has been the case with a number of [indiscernible] recently, most people will probably be interested to see how current trading is going, especially for the more cyclical businesses in the market. So unfortunately, not many people will be looking to revision here. They'll be looking about July, August, and then they'll see September. These businesses are feeling a lot. I'm trying to pick floor here that I think we're not apprehensive about but we're the most topical of that within the portfolio. The first of those is more logistics. The reason being that Craig Evans was appointed CEO, just prior to the first half results. We have obviously did a presentation at the half year results, but Craig or anyone else has presented at the half year or since. So we see, obviously, spoken to Craig, and I'm sure he's done an exceptional job of getting to see under the desk, understanding the culture, the shortcoming the service offering to their client [indiscernible], so it will be very interesting to see what they come out with him and his team about how they're looking to improve the offering and really become a challenger brand for the like of main freight and others. And it was interesting to see that I just appointed a full-time head of HR, who work -- also worked 20 years at Manfred with many of those years next to Craig Evans in running that New Zealand division. The second one obviously being sorters, the termination that came this project leaves a few unknowns in our view, most likely around the order book and the progress of expanding into adjacent industries. To Mark's credit, has done an exceptional job of filling their order books and the one, as Rob said, they were a large contract for renewable fuels, depot with BP, they also won a very large contract last week, I believe, in [indiscernible], which is actually the second largest project that they never want in dollars terms. So Mark's doing a fantastic job of winning new work and keeping or feeding the beast. We recently put our own director on a few weeks ago. So I really want to get a really great understanding of what the Saunders, not only it is today or what it can be in the future. It has come a long way. And we believe the opportunity significant to Saunder, and as always, things, especially as more companies execution. So John and his time in Big River, I think he's probably sick of it by now. But I'm sure it would pivot questions about what that short term sort of revenue profile looks like as we said on the call, prior medium- to long-term outlook looks exceptionally strong, where we believe that the bigger obviously, a diversified models that were not mutilated compared to other just focus on one particular industry in that construction industry. So we think they will be more insulated to a downturn. But -- and the other thing I think in the Board is ferries obviously being priced for the downturn is going to be significant with no foreseeable uptick in the next sort of 24 months at least. And then finally, Urbanise, which Rob touched on after the recent placement. Obviously, they've made the first quarter appointment from new Board appointment. Darc, who we obviously know well, is on the Board of Gentrack and also [indiscernible] Corporation. We'll be looking for the board change over the next 3 or 4 months so that this business [indiscernible] teams can really fulfill the potential that we think this business has. And it really all comes down now to conversion of the pipeline. The quarterly update, something you may see that the average our -- in the pipeline for a customer is roughly $250,000 to $300,000, which is a significant increase on what they have once a day. So clearly, it's resonating. The contracts are not dropping, yes. But we'll be very interested to see what people and what Urbanise has to say in the full year results in regards to that. Pipeline and hopefully some conversion with larger clients such as life and colleges. Next slide, please. Yes. As we said all the time, and I think I try to focus on this myself, as well as the team, our share process will do what they do in the short term quarter-to-quarter and even year-to-year. But I think as long as we're exposed to some fantastic structural tailwinds, the odds would be in our favor to compound capital at a rate that is acceptable for us and for our shareholders. I've put down year 3 unique tailwinds that I think I just want to be clear that a lot of our business was had exposure to it. So renewable energy, which I touched on before, clearly, Gentrack provides billing platforms to utilities who are really meeting themselves to the renewable energy future. The other one is COG. People think of COG is just a finance broker, which it is. But you got to remember that the people building the wind farms of tomorrow, Rob was telling me before, I think it's 2,000 megawatts of wind needs to be installed in Australia by 2050 to meet our net zero targets, which megawatts worth about $2 million. It's the SME in Australia will be building these projects. And they will require funding to get the equipment they need to adequately build these projects and coal, which now finances or aggregates, I think it's close to 20 -- close to $8 billion or $9 billion of net asset financed through their network is the largest player. So we think there are a big beneficiary. Infrastructure spending. We've spoken at with John with Big River, COGS again, has excellent exposure to that and then finally through the Construction and Maintenance division. We've also recently increased the scope and scale of that automation business, which took a lot of the smarts behind a lot of these large infrastructure projects. And then finally, technological efficiency is not going away. If anything, it's coming on stronger. The UBN should be a big beneficiary of that. And most of their clients are under a lot of pressure to provide more efficient outcomes for our customers. And the only way they can really do that is in software and technology. So if UBN can really show that they've got the leading piece of software and tech and they're willing to invest in that, they should continue to win work at a rate that is not 5% per annum, at a rate is closer to 20% per annum. And then obviously, Gentrack, then moving into new markets, the other set up an office in Southeast Asia. They've got clients in Singapore. We saw the quite ambitious to move into further into Europe as well to really show that their platform is best of breed. Really only hope to now be 1 key competitor. So there's no reason that they can't continue to take significant revenue share over the medium term. And then just to finish off before I get it's the question. I've got a couple of the team. To put these slides and really just to highlight how big some of these tailwinds are talking to BSA the other day. If you just think about NBN is probably a once-in-a-generation event when you think about how many people move to NBN, every household essentially. EVs, electric vehicles, again, is probably going to be the same event. Everyone will need an electronic vehicle charger in the house as they want the generation event. The more at the present larger scale is the fact that the whole country moving to renewable energy is a once in a generation event. And when you look on the left-hand side there, a significant increase in scale that we did in regards to storage capacity, solar and have the -- the electricity usage of the grid will nearly double over to 2050. You were talking about many, many billions of dollars. It's not in [indiscernible] happen. A lot of this is in regional areas. So the amount of spend an opportunity for SME and emerging business is very significant. Next slide. And then again, to put that show you how far along the journey we are only about over 12% of all energy with consumers that are renewable nature. So you can see there is a long way to go, and this obviously doesn't take into account any growth in electricity consumption out to 2050. So really only just started that journey. And I think people very much underestimate how it's really going to change the economy and change the future for many of these businesses.

So with that, I'll move to questions. John is still here, I believe, to take questions as well. So if you do have any further questions, feel free to type in the chat box or when you consider email inquiry now. No, I'll try and breathe through them or get at every single one, would you like to answer every single question. The first one comes from Andrew. Basically, in regards to NCC, which Andrew purchased in 2018 and exercised the options for 2019. Is the total conviction policy working from an investment standpoint? Good question, Andrew. So firstly, to me, my largest investment outside of NAC actually NCC shares. It's something that we think about internally are I would say the conviction policy or investment structure definitely works. I think what we invest in probably needs a little bit of tweaking, and that's what we've done over probably taken 24 months. And in regards to probably reducing our exposure to very, very small businesses in that fund. We're trying to get our businesses at least to a size of $100 million and then also to try and be a little bit pound on. So in businesses where we have a very large stake. So minimize our exposure to large businesses and be a bit hands-on either through an independent director or a director. So announced is something probably 5 boards. So the other thing I think that's very much that fund is just -- and I mentioned this earlier in the presentation. It's just valuation I think if you look at the 3 biggest, the 3 biggest investments in NCC, they're all trading or we think they're trading on 4 under 10x. And that's just a function of the lack of demand to emerging companies. But that can change very quickly. And as we know [indiscernible] is small companies can increase by 10% to 20% in industrial, so they can also increase 40% to 50% just on valuation, we rated very, very quickly in demand contact. Next question comes from Peter. In relation to Gentrack and we now call parcels on first week of April. The timing of sales of surprise and given your previous positive new on this company. Good question, Peter, as you can probably tell, we own, I think once you almost 20% Gentrack, and we sold that down to 10. I think obviously, in hindsight, it wasn't the right decision to do that. A lot of those funds went into 2 new investments. The first one was MaxiPARTS, which has proven be a good investment to date and in probably the year. And the other part of that investment went is [indiscernible] logistics. We're trying to broaden the portfolio into investments that have reasonable scale and there's no potential. So yes, looking back in the rearview mirror, it wasn't looking the most ideal outcome, albeit MaxiPARTS has been a good investment. But I would say Gentrack, in the case of NIC, as an example with a very, very large holding so most of the tune of stick on the most recent. I think it was more than 30% of the tune. Awaiting that long term, it is not sustainable, so hence when we had to reduce that position. A question from Patrick. Can you detail -- can you provide a detailed list of the investments held by the lead? Unfortunately, Patrick, we don't provide a list of our investments and with weightings. But what we have put in, in our last quarterly report was a list of what we call our core investments. So we don't split it out by funds. But what I see to do is go back to the most recent quarter report, which was released last week, I think. It will have core investments, what they do and what our ownership is I think it's 10 to 12 investments. So we'll give you a large chunk of the portfolio. And another question from David Kosh. Will the slides be available for download? So yes, David, the slides are on the ASX. I think they're already there. Otherwise, Angela and the team do e-mail and rounds later at the end of today along with a full recording of the presentation. If you do have a question, obviously, don't hesitate to contact me or any member of the team. And I think with that, there are no more questions. So John, you got off lightly. Lucky you. I'm sure a lot of hard questions that we saw to your result on the 24th. But thanks again, John, and thanks again to everyone else for participating [indiscernible] into what has been a pretty challenging year for us. But we remain -- I think especially, I think remain very optimistic about how '24 and hopefully, '25 will pan out [indiscernible] far ahead. So thanks again to your support. If you do have any questions, don't hesitate to reach out to us, and we look forward providing you with a detailed update, which will be a yearly roadshow later in the year in September and October. So thanks again.