NAOS Ex-50 Opportunities Company Limited (NAC) Earnings Call Transcript & Summary

Good morning, and welcome to the NAOS Asset Management Limited Investor Conference Call. I would like to introduce your host for your conference call today, Sebastian Evans. Thanks. Sebastian, please go ahead.

Right. Thanks, Ally. And good morning, everyone. Welcome to the quarter 2 FY '20 investor conference call from NAOS Asset Management and the subsequent 3 LICs. Just an admin question, if my speaker or microphone does get funny, just please let me know somehow. I'm sure someone down here has got my mobile or e-mail address, and I'll try and fix that straight away. You would have seen the materials were lodged with -- are lodged on the ASX this morning. I believe they've all been e-mailed out as well. So I'll be running through this presentation with Ben Rundle who's sitting next to me. And to kick it off, I'll start on Slide 3. Obviously, this information is a little bit repetitive, but as there's quite a few people on the call, I will just touch on it to provide a little bit of background about NAOS. So for those of you that don't know NAOS, it started with its first listed investment company in 2013 with 400 shareholders and about $17 million in FUM. Today, we manage roughly $300 million on behalf of about 7,500 shareholders. Clearly, we're aligned with all of our shareholders. All of my personal funds, that's out of my home, are invested in the 3 LICs, along with other directors, employees who have a very significant stake as well. And it's also worth noting that we have a very strong ESG process, and we recently signed up filings to the United Nations Principles of Responsible Investments. And as you would see on the next slide, we're very cognizant of our portfolio and the ESG process that we apply for all of our investments. On Slide 4, this really looks at our investment beliefs. As most of you would know, we invest for the long term. Most of our investments are held within the fund for many, many years. Some have been with us for 7 years. We're very high -- we're a highly concentrated investor. We believe in the quality of the business and the quality of our information as opposed to the quantity of investments. Because we're a closed-end fund, we don't need to invest in the investments just because they're illiquid. We can take a view based on the business and not the liquidity of its shares. We don't follow the index. We mainly invest in industrials, so no mining, no early-stage technology, no consumer finance. And as I've said, we've got a strong ESG screen, and our alignment is very strong for our own LICs. So we look for the same thing across all of our investments. So a lot of our investments tend to be founder-led businesses where they have a lot of equity alignment with just ordinary shareholders. On Slide 5, this just gives you an illustrative chart, I suppose, of our performance since inception. As you can see, we've been going since FY '13, and obviously, as the different colored column starts, that represents new funds. Pleasingly, after a poor FY '19, FY '20 has started very well for all of our funds. As you can see, the NCC is up 17.5% to December, NAC is up over 20% and NSC is up over 19%. For me, I think it's just really a reflection of our investment strategy obviously paying off. If you look at our long-term track record, it's very strong. It's in excess, in NCC's case, of more than double the index return. But obviously, we will go through periods where we may underperform significantly. But if we believe we're in the right investments, over time, these investments should rerate accordingly, and our performance should adjust hopefully very strongly to the upside as we've seen in FY '20. And pleasingly, that performance has continued. Slide 6 just touch on the risk-adjusted metrics. Obviously, we get investors telling us all the time that our portfolios would be what they would consider to be high risk. But as you can see here, you can see when you look at risk and return, we've shown that our performance relative to our risk is much stronger than the index over the longer term. So our downside deviation is less than the index, yet our returns are significantly higher. So I think it's a little bit of a fallacy that just because you run a concentrated portfolio means you have a much higher risk or you're taking a much higher risk exposure to the index. On Slide 7, I've really just started with some market commentary. And I think very topical, in the office this morning, we were talking about Tesla shares. If anyone is a Tesla shareholder, clearly, you've done very well over the past month. You would have gone from almost $200 12 months ago to over $960, I think, this morning. And to me, it gives you a really -- just a really clear picture of where we are in this environment, what we're trying to deal with. So the ASX 200, for those of you that don't know, was up 23.5% for calendar year '19. But the interesting point is that earnings growth was just 1%. So when you look at what's driven returns at an index level, it's really been valuation. So you can see the P/E of the market, excluding resources, has increased from 13.8x to almost 22x. So what people are willing to pay for a business has gone through the roof. And therefore, the index has gone through the roof, with the majority of the earnings -- of the gain that you've made after that coming purely from dividends. And what you've seen and what we continue to see is that investors across Australia and across the globe are really grappling with how to invest and how to allocate assets when cash rates are at record lows. We continue to see a flood into commercial property, shares, ETFs, anything that drives some sort of income. And now people are looking for more, I would say, speculative investments that have a significant amount of potential capital growth but also a significant amount of potential capital risk in my view. And you can see by that chart, the market was -- had, in our view, minimal volatility, albeit, again, still significant. When you look at the micro level of both -- the domestic economy, a few things have clearly changed from where we were 6 months ago. One of the big things that has changed is the credit contraction in housing loans has definitely eased over the past 6 months. These charts from the RBA chart pack that was released in late January shows you that, interestingly, owner-occupier loans are definitely down, so it's starting to get easy to get an owner-occupied loan. Yet interestingly, if you're an investor, investor loans is still at record lows since 2003. So the property market again is driven by people looking for new homes to live in or upgrade to. And what that means is, in our view, it gives people confidence. People want to renovate. They feel good about, obviously, their house price and where they are in life. And potentially, they feel better about spending money on discretionary items. Everyone was expecting -- 2 or 3 months ago, everyone would have expected the RBA to cut rate yesterday. Obviously, they didn't. And a big reason for that is unemployment has been very strong. The unemployment rate is now 5.07%. But if you talk to anyone, obviously running this business, it is very hard to find good people, but at the same time, people aren't getting the wage increases that they're used to or have been used to over the past decade or so and that really drives a lower confidence level. People don't have the confidence doing that. And they're offsetting that, the house price piece, with the fact that they're not getting more money in the banks through a wage increase over a 12-month period. And just on the last point, the federal budget, it is a little bit more topical lately. But it is interesting to note that, yes, with the budget coming up in May, a lot of what is driving the New South Wales economy and the Victorian economy has been stimulus driven by the states and the federal government. We believe the budget remains in reasonable shape, especially when you look at the iron ore price and what we've used to forecast the budget originally 12 months ago. But at the same time, offsetting that is much lower taxes through consumption and potentially in things like property prices and things like that. But in our view, a good chart to highlight this is -- if anyone's seen through the Cimic results that came out last night, we always look at the chart that shows you the amount of work that you've scheduled to come to fruition over the next 5 or so years. And if you look at transport, the amount of money being spent on transport infrastructure over the next 5 years, that chart continues to rise. And I remember doing my presentation 3 years ago expecting it to taper off and fall, but the chart just continues and continues to rise, especially now with things like, in Sydney, you've got the new Harbour Tunnel that's scheduled to be built. Inland Rail is probably the biggest project of them all. We continue to have more metro projects in Sydney. There is a lot of money being spent in infrastructure in New South Wales, and now pleasingly, things like Cross River Rail in Brisbane and obviously the new tunnels which are causing people a few headaches in Melbourne. Most people will know we're going into reporting season for both the half year for all of our investments across most of our funds. And interestingly, in January -- interestingly, to be honest, January and December were very busy for us with a lot of businesses making either acquisitions or releasing earnings guidance for the year earlier. And what -- I think what we've really realized is that, yes, a lot of companies remain on, I suppose, valuation highs, whether it's technology stocks, if anyone's looked at the technology stocks of late, things like Altium, Afterpay, Appen, they're all back to their record highs. Yet interestingly, we've seen a few downgrades from businesses that used to be very well owned and, I suppose marked down. Some really good examples of that: nib, the health insurance business finally succumbing to pressure in the health insurance market, which -- obviously, less and less people are getting health insurance, and their ability to push back on cost has finally -- it looks like it's running out of steam. That stock's down almost 20% since they downgraded not long ago, less than a few weeks ago. The other standouts were Kogan, a business we've been involved for a long time. Interestingly, they've been able to grow revenue at a very fast pace. But what they've shown us is that revenue is growing, but it's not as profitable as it once was. So their gross margins are being crimped, so now there's questions around the sustainability of that business model and how profitable it can be. And if you were in that business, going into that update, you've lost almost -- well, you lost over 1/3 of your capital. And the other one that probably fits within that basket as well is Nearmap, a business that was a market darling for a long time. Unfortunately, we were short, and we closed it out too early just to minimize our capital loss on the way up. But really, a 1-product company, in our view, that probably doesn't have a significant competitive advantage to some of its peers. So this is all relative to valuation. This is a business, I think at one stage, had close to $1 billion valuation. And they have come out and said that, albeit they expected their growth rates to be significant, they've come out and said that later in the year, they lost a couple of customers, their ability to sell the product effectively into new markets has been slower than what they expected and the amount of cash this is taking up has been significant, and it looks like they may get to a slight cash crunch over the next 6 months if things don't go according to plan. So it doesn't leave them with a lot of sight on their own balance sheet. And then you've seen the shares fall 30%. So as I'm saying in my month-end commentary that comes out later or next week is, it really doesn't matter what business you're in, whether it's retail, contracting businesses. It's interesting to note that the 2 businesses here that have had the biggest fall are actually were the market darlings and are supposed to be in vogue, [ staying programmed in that ]. It really comes down to earnings and what you're paying relative to those earnings multiples and the quality of those earnings streams. The businesses' reporting season for us generally is the most important part for our -- all of our LICs because we don't tend to hear from some of our businesses for a long time. I'll try to give you a rough idea of some of the more important ones we are looking for. Clearly, BSA is a big one. For those of you that don't know, the Service Stream result is out later tonight, I believe, and we'll be looking at that very closely, just looking to see how they're going with NBN volumes, how the maintenance is going with NBN. I sent around an e-mail last night to my team, in my suburb, where I am, NBN is down. And they gave me a log of all the work that's being completed. So I can tell you, if you're looking at how many technicians are sent out and at what time and for how long, there will continue to be a lot of maintenance spend on NBN to get it up to scratch even post its build-out phase. Over the Wire, after a poorly received '19 results, they'll be looking to put any concerns to bed and really show the market that they can continue to grow organically, and that their product and their service offering continues to resonate. And then a new position for us, but a position that we've been in time and time again, Smartgroup Corporation. So the difference is essentially half, I suppose, since it's hired a new Managing Director, but a Managing Director who's been in the business for many years as a CFO. Really need to put a lot of -- I suppose answer a lot of questions around organic growth rates, the balance sheet, which should be net cash, and how they can drive earnings going forward in arguably what's a tougher environment for them but, in our view, at 10x of the net cash balance sheet it priced for in, I would say, almost complete disappointment. So touching on the funds. I'm going to do NCC, then I'll let Ben do the other 2 funds. NCC went through a very, I suppose, busy period for quarter 2. So as you would all know -- or hopefully you all know, CML Group's been a core division for 6 years probably. That's an invoice financing and factoring business. They received a merger proposal, a takeover proposal from one of their other divisions being COG, or Consolidated Operations Group. Obviously, we were supportive of that deal until Scottish Pacific, which is a big private equity-owned business, lodged a $0.60 share cash bid which, at this stage, is indicative and subject to due diligence. What's happened since then is COG had taken a 20% share in CGR. I will say that NCC had sold out a majority of its position, so we have a very, very, very small position left in that business. And we really don't know how this proposed takeover will end over the coming months. But from an NCC point of view, it's been a very strong contributed performance over the long term of the fund and, just as importantly, over the last quarter. And now it's been removed from the fund. Saunders, which has probably been one of our worst-performing businesses for the last couple of years, announced at the AGM that they expect an improved result which, many would argue, is not hard to do considering the previous result was so poor. But a few industry things that we started to pick up on later in the year were that one of Saunders' major competitors called CB&I run by a U.S.-run business called McDermott, McDermott made a very large acquisition 2 years ago to defend a takeover. And unfortunately for them, they've run into a lot of contracting issues. And subsequently, McDermott entered Chapter 11 bankruptcy very early in January. What this meant to the industry is that it removes one of the 3 competitors for the time being. And for -- the other competitor, being EVZ, I would suggest people to go and have a look at their recent financial guidance, which came out yesterday, which was forecasting a loss for the half year. And we would argue they have a very stretched balance sheet. So from an industry perspective, the industry should really be the best it's ever been for Saunders, hopefully, over the next 12 to 24 months. And going into January, people would have noticed that Saunders, after 2 years of hiatus of winning any major work, have recently won a $15 million contract with Sydney Water for a new reservoir that's being built in Sydney, out at Liverpool. And then they won another contract in excess of $30 million to replace and maintain 16 tanks at a Rio Tinto facility. And then finally, they've put out guidance as well, which shows them returning to profitability of margins of 5% which, we would argue, it should have -- should have plenty of scope to increase considering the revenue base is quite small. So pleasingly, we've seen the stock rerate from $0.25 closer to $0.50 in the past few weeks. And then finally, our smallest position by size or company size, BTC Health, not known really by anyone but really put out some guidance later in the year saying that they expect revenue growth of 15% with a steady gross margin. So still a subscale business but operating in an industry that we think has some excellent tailwinds. And if they can continue to add new hospitals and new products to their bow, then it should continue to see good organic growth, hopefully improved gross margins. And the market is huge when you're looking at medical devices and that distribution into hospitals in Australia and New Zealand. It's a very big market. It will only continue to grow, especially as hospitals and health insurers look for more efficient and lower cost and more effective ways to treat patients, so they don't have to stay in a hospital any longer than they have to. Just touching on the portfolio, just more really statistic. So the NTA is $1.12. The share price, which was a $1 at 31st of December, was $1.035 with roughly a 5% cash weighting. The performance for quarter 2 was roughly 0.4%. The average market cap of the stocks in the fund is $90 million. That's weighted by the size of each position. And the historical dividend yield is 7% fully franked, so you can gross that up. But pleasingly, our profit reserves remain healthy at roughly $0.25 per share. So as you see, we're paying a bit over $0.07 a share. That gives us at least 3 years of dividend reserves prior to our January performance. So with that, I'll pass it on to Ben to touch on NSC and NAC.

Thanks, Sebastian. Good morning, everyone. So starting with NSC, some of the key portfolio events for the quarter. MNF Group, which is the largest holding in the fund, completed a $50 million institutional placement at $5 per share. The reason for the raising was to pay down all their debt and give them the optionality to fund international growth initiatives and potentially acquisitions going forward. So Rene, who's been running that business for a long time, particularly prides himself on running a conservative business. The capital raise probably came out of the blue for some, however, we feel that it strengthens the company and gives him that optionality to act quickly on a growth initiative despite what the prevailing market conditions look like at the time. Importantly, for MNF, the tailwinds remain significant. One example is, recently, a company called Spoke Phone, who is a customer of MNF and uses their network, they're a mobile-based voice company, and they recently announced a successful tender for a large commercial insurance provider. So the growth of that business is just one example of the type of businesses powering the growth of the overall MNF Group. So as it stands, the business trades at about 17x FY '21 earnings with a very strong balance sheet and a very capable management team. If you look at that, particularly in light of where the rest of the market trades, and then also in particular, the rest of their technology sector, we still view that as very cheap. And as I mentioned, it has the optionality to grow by the strong balance sheet. The second event was in Enero Group. The CEO, Matt Melhuish, announced his intention to resign by the end of March 2020. Matt has done a fantastic job of restructuring the entire Enero Group and streamlining the business to what it is today. And so even though it's a significant loss for Enero, we believe the risk is mitigated somewhat as all of the large agencies operate as independent silos and have their own management teams. There's also on top of that, a significant depth in the overall EGG management team. We've met all of the key CEOs of the individual businesses. We think they're very capable and very high performance. We do think that despite the loss of Matthew and the efforts that he has put into an era of his time running the company, we don't think that there's significant risk to the business from losing him going forward. The tailwinds for EGG, we believe, remain significant, particularly for Hotwire and Orchard. They both operate in the technology and health care space. And it's an industry whereby success begets success. And that's what we're seeing in Enero at the moment where the more they're winning, the more people want to work for them and the more win they -- more work they end up winning on top of that. So the company at the moment has about 11x earnings, has a very strong balance sheet. We still feel it's a little bit undiscovered by the rest of the market, and we continue to be happy holders of the stock. And it's been a fantastic performer for NSC since inception. And then third position there, Eureka Group, which is quite a new position to the portfolio, they operate and build senior living villages. They announced their first acquisition in over 2 years, acquiring a 124-unit facility in Bundaberg. Enero -- sorry, Eureka is a group that we came across. It has a little bit of a checkered track record insofar as the previous management team used allocated capital and, I guess, lost their way a little bit. However, that's been significantly cleaned up over the last 12 to 18 months. And that's given Eureka the ability to internally fund further acquisitions, which they have done so with this Bundaberg acquisition, by selling some of their noncore assets. And it also gives them the ability to reduce debt through cash flow, resulting in a potential EBITDA uplift of over 15%. So we were able to buy that business at the low book value, and we do think that the book value, as stays in the account, is very conservative and is potentially at risk of being revised upwards at some stage. Turning to Slide 13, just some of the statistics around the portfolio. So the pretax NTA of NSC at the moment is $0.85. The share price, a little lower at $0.75. We are relatively fully invested with only a 4.5% cash weighting at the moment. We have an ongoing buyback program, which has bought just under 8 million shares back to date, which has been significantly accretive to the NTA for all shareholders. The dividend yield is 5.3% at the moment, and we have about $0.165 worth of profit reserves. So in Q1, we announced a $0.01 quarterly dividend. NSC pays its dividends quarterly. So you can see $0.165 gives us over 3 years' worth of dividend capability. Turning to Slide 14, the NAC portfolio, so some of the key events there. Objective Corporation, which is a business that we own and have been quite public about, they announced in the middle of January that they were expecting an operating profit that's expected to increase by close to 24%, and importantly, recurring revenue, as part of that profit, is around 75% of the total. So one of the things that attracts us to the Objective Corp. business at the moment is the fact that the company has been through a significant transition of moving from a term license model to a Software as a Service business. And what that does is significantly increase the recurring revenue nature of the business and, for us, significantly improves the quality of the overall business. They expense 100% of their research and development spend, so the accounting is very, very clean. And at the AGM, they provided more commentary around potential acquisitions, which could be funded out of the $34 million net cash balance sheet they have at the moment. So it's a business that we really like. The company has a very long track record of operation. The management are highly aligned, they don't pay themselves a fortune like some other small companies do, and they're very high quality. The return on capital metrics are very good. The cash flow is very strong. And as I mentioned, the accounting is very clean, too. So a business that we're happy holders of for the time being. The second event was in a company we own called Moelis Australia. They announced the acquisition of a 50% stake in South Australia's largest shopping center, Marion Westfield (sic) [ Westfield Marion ], for $670 million. That is part of an institutional mandate with a company called SPH REIT, which is a large real estate investment trust listed in Singapore. And so we look at that as a significant endorsement of the Moelis management team in their ability to not only attract the mandates from offshore but also deploy it in what we think is a very smart acquisition. The second acquisition they made during the period was the completion of a special-purpose vehicle to acquire the freehold and operating rights to the Beach Hotel in Byron Bay. That's a significantly strategic asset which we think there is further development upside, and we think it's a smart acquisition by the company. And so the assets under management for Moelis will be close to $5 billion, and we also think that the corporate and advisory business is performing very strongly at the moment. So again, it's a company that we really like at the moment. We think that the management team is first rate. They are very well aligned and, significantly, I guess, don't pay themselves a huge amount of money. They take their pay via dividends paid through the stock, which aligns themselves further with shareholders. And then finally, Smartgroup Corporation. So Sebastian mentioned it briefly before. It's a company that we have known for a long time. The share price has fallen from about $12.50 to a low of $6.80 or has been a touch lower than that over the past 3 months. There's been a few negative announcements which has caused that. The first was the resignation of Deven Billimoria, the highly regarded Managing Director of the company who's been there for about 17 years; the exit of a large founding shareholder; and together with about a 10% earnings downgrade due to changes with their insurance provider. So 3 probably quite significant negative announcements from the company. However, we feel at the moment the share price has overreacted to those events. And at the moment, the company is trading at about 11x earnings. It has a very strong balance sheet, a very impressive level of cash flow. And we do think that the incoming CEO, who has previously been the CFO of the business, Tim Looi, knows the business very well and is very confident and capable of taking the business forward. Turning to Slide 16 (sic) [ Slide 15 ], just some of the metrics. The pretax NTA of the portfolio at the moment is $1.18, so that's at the end of December versus the share price, which I think is about $1 at the moment. We have 9 holdings and 1 short holding. That short position has now been removed. Probably worth noting as well that the short position wasn't us taking a view on the company falling, it was just a hedging position which we used to neutralize another holding which we had an escrow period on. We currently have $0.165 (sic) [ $0.163 ] worth of profit reserves. So you can see that provides us with close to 3 years of dividends going forward. And today, we've bought back about over 3 million shares in the company as well to try and reduce that discount. So with that, I'll hand back to Sebastian who'll finish off with capital initiatives.

Right. Thanks, Ben. Just finishing off with this slide, just some more holistic views about capital management and the funds themselves. And I think this is important for all shareholders. So just the things we try to focus on as a business and for our shareholders, clearly, the most important variable that we focus on and try to improve that every day is performance. We want to invest in businesses that compound shareholders' capital year in, year out over the longer term, and we want to minimize any potential permanent capital loss, and that's what we continue to do without deviating from our philosophy. Clearly, we want to grow our dividends to shareholders, which we have done so in NCC and NAC, and we obviously look forward, hopefully, to doing in NSC. We've done that for over 7 years now, and we clearly have a very healthy reserve balance. We want to be aligned with all of our shareholders. We benefit just as much as you hopefully when the LICs perform well and obviously hurt just as much when the LICs don't outperform as expected. Communication is a very important piece. We want all of our shareholders to understand what we're doing and why; and why mistakes occur and what our thought process was behind that; and obviously, when investments perform very well, why they have done so and why we made those investments in the first place. And then in regards to this fund specifically, I think it's important to note that, clearly, we did an option, a small option issue in NCC. Over 10% of those options have been exercised already. Pleasingly, after the January NTA report is released, those NCC options will be very much well in the money. And with a bit of luck, that should be able to get NCC to $100 million, which we've said we'll soft-close because, for us, that's a special fund, that's our first fund, and it operates and invests in very small businesses. So we want to make that -- leave it at a size that's marketable but, at the same time, to give it enough flexibility to continue to invest in that space effectively. In regards to NSC, it was a busy period. We've been very active on the buyback. Pleasingly, we've bought a lot of those, 7.7 million shares, well below NTA. And then pleasingly, we were able to repay those listed convertible notes, which we inherited, and we've replaced them with a lower cost nondilutionary unlisted note offering. So we did a $27 million note offering. They have a 5-year term. They don't convert to equity, and they have an interest rate of sub-5%. So it gives us certainty over the funding of the LIC and really removes any distraction going forward. And hopefully, over the next 5 years, the fund returns generated will be substantial and, therefore, will give us the funds needed to repay those notes if that is the best use of shareholders' capital. And then finally, NAC. Clearly, it's had a very strong start to the -- well, calendar year '19 was very strong. It was the second best year on record with a 28% return, probably the one that's not as well-known as the other 2 LICs, but probably has been the best performer with NCC. And as we've said, it's probably the most illiquid of the 2, but we've been able to buy back 7% of the shares on issue, which has been very accretive to shareholders, considering we probably bought most of those shares back at $0.80, and the NTA today is probably closer to $1.20. So it has been very accretive. And the fund size actually hasn't shrunk at all. If anything, it's probably increased slightly given the performance. Just one final point. You'll see that we've released our investor road show dates. The one thing that is different this time is we've added 2 new cities due to demand from some investors. So we will be presenting in Toowoomba this time on Wednesday, the 1st of April, in the morning. And we'll also be presenting in Hobart on the 6th of April. So I believe it's up on our website. You can RSVP, and there'll be a more formal announcement on the ASX later -- I think actually tomorrow. So with that, Ally, I'll see if there's any questions on the line.

[Operator Instructions] We have our first question, and this is from [ Stephen Toms ].

There's a few here that hopefully are all going to be relatively simple. First off, with regards to NSC, do you mind sort of explaining the Contango merger or buyout or whatever happened there, sort of the sequence of events and why you decided to take on Contango?

Right. Yes. So right, this is years ago now, but I'm happy to sort of give you a rough idea. So yes, from our point of view, we were approached with an opportunity to obviously acquire, or hopefully try to acquire, the management rights of that LIC. As you would know, or hopefully know, we only run 2 LICs at the time, now we run 3 LICs. We don't run any managed fund money. So from our point of view, we're very passionate about what we do, and we believe we do it well. So we thought it was a good opportunity for NAOS, hopefully, to try and restore value for I'll call them NSC shareholders now, because that's what it is, and hopefully develop what we believe is, hopefully, one of the best small cap LICs in the market because there aren't too many of them. So that's really the longer-term opportunity for us and try and restore shareholder value. So that's the reason why we did it.

Okay. Following on, when do you guys announce key dates as in the...

Like dividends and things like that?

Dividend dates and performance information and all that sort of stuff.

Yes. So in regards to key dates, so you will get a -- well, like for example, our half year accounts, they will be out probably in a couple of weeks. So within that, you'll get key dates on when all the dividend payments are due. In regards to month-end reports, we don't actually give any date. But if you go and look at our previous announcements, they're very consistent, you'd probably say they're on the, give or take, the 6th or 7th business day of each month. And then obviously, the road shows are very -- everything's pretty consistent. So the road show is always generally the same time of the year, the quarterly conference call is always the same time of the year.

Yes. Okay. You mentioned NSC. So obviously, I'm a shareholder in NSC, and I came into you guys from Contango.

Sure.

Right? So that's my history there. You mentioned the dividend reserve for NSC of about 3 years. So can we assume from that that that means NSC is going to be receiving approximately $0.05 a share per year or more specifically, $0.0125 per share per quarter?

Yes. So look, I can't give you guidance. Obviously, it's a Board decision. I think when we -- the way we calculate it is, I think, we paid a $0.01 dividend last quarter, which you can annualize, that's $0.04 annualized. So you put that into the dividend reserves, it gives you a bit over 3 years, almost 3.5 years. What I would say is, and I am a director, clearly, we had a very poor year, which I wasn't happy with. We've had a very strong financial -- or first half financial year. We're up 22%, I think, or something like that. If we can continue -- we're going to reporting season, which is a very important period for us. To be honest, we feel very good about how we're positioned going into February. If we can have a strong February, I would say, in my point of view, there's no point having a 4- or 5-year dividend reserve because that's probably too much. So my view is, you want to see that dividend increase over time, this is the way I'll put it. And then NAOS, if you look at everywhere on NAOS and all of that marketing material, it's a deliberate stream, a growing stream of fully franked dividends.

Okay. Okay. No, I think 3 years is enough. So any more than that is good. Maybe just a couple of others here. Again, you talked about the NSC buyback of 7.7 million and how positive that was for customer wealth with NTAs, et cetera. What percent of market cap or what percent of share volume is that 7.7 million?

You're putting me on the spot. I can't -- let me refer to the chart to give me a rough idea.

Like is it 1%? Like would we...

No. I think off the top of my head, there's 176 million shares on issue, give or take. And I don't know if that's pre or post buyback. Roughly 176 million, and we bought back 8 million. So 8 million of the 176 million might be, what, 5%? Is that right? 4.5%. There you go. 4.5%, yes. But if you look as a percentage of average daily volume, it's a lot more. Like it'd be -- like if I -- it would take me a long time to do that work, but I would say the -- a minimum 1/4 of all the volume maybe.

Yes. Okay. Okay. And then lastly, there's been a recent share price readjustment, let's say, for NSC. As in from the...

Yes. People have been calling me about this.

Say it again?

People have been calling me about this.

Yes. Okay. Like from say the mid-70s to say the mid-60s, I mean maybe that's...

Yes.

So that's -- so let's, for argument's sake, just call it a 10% fall. Your understanding or reasoning behind that or...

Yes. Look, if there was a reason behind this and it was material, we would have put it out. As I've said to everyone else, there is no reason. There's no material reason. I would let everyone -- obviously, the NTA report will be out on Monday, I think. Hopefully, that will give people some comfort. I think people have a very good idea of what's in the fund anyway. So if you go and look at their core holdings, you'll see they're all pretty healthy. What I would say, which is -- and we pay a lot of attention to this. One of the mistakes we made with NSC is, clearly, we inherited a lot of shareholders. And over time, a lot of those people have exited, so don't know NAOS. And you've definitely seen in the last week or so one sort of, I would say, broking group, if that makes sense, stockbroker with a few clients, has definitely headed for the door for no particular reason that I know of. And obviously, we've spoken to them, and that's their decision. But in my view, that hopefully provides the opportunity because definitely nothing untoward with the NTA or the fund itself.

Okay. So does this mean that this is an opportunity for you to, say, double down and really, really get stuck into buybacks then?

Look, well, within reason. Yes. Obviously, I need to be careful, but we'd do within reason. Yes.

Yes. Okay. Because it would seem to be 10% better off than it was a week ago for you guys to do buybacks.

Yes, you would think so. Yes. I mean I can't remember how many we did yesterday, [ I've called it out ] this morning. But I'm sure we did a few.

[Operator Instructions] Okay, Sebastian, we have no further questions in the queue at this stage.

Well, they might have disappeared after that long question-and-answer session. If anyone -- as always, I do get plenty of e-mails and calls, so if you do have any other questions that you don't want to obviously ask over the phone or at some ideal time, don't hesitate to contact me or any member of the investment team. As I've said, the NTA report will be out on Monday. Reporting season will be a very critical time for us. And then as you've seen, we'll be doing our road shows later in March. So please RSVP if you'd like to join or if you have any suggestions, and we look forward to seeing everyone in a month or so. So thanks again for your support, and thanks again for joining the call. We'll see you all soon.