Mirrabooka Investments Ltd · ASX:MIR
Mirrabooka Investments — Shareholder Meeting (October 2004)
32 slides from Mirrabooka Investments's shareholder meeting presentation, Oct 15, 2004
Slide 1: Mirrabooka Investments 2004 Annual General Meeting Chairman's Address
15 October 2004 The General Manager Australian Stock Exchange Limited Company Announcements Office Exchange Centre 20 Bridge Street Sydney NSW 2000 Mirrabooka Investments Limited 2004 Annual General Meeting Chairman’s Address Mirrabooka Investments Limited Chairman, Mr Terry Campbell, will deliver a
Slide 2: Annual General Meeting 15 October 2004 Welcome
Annual General Meeting 15 October 2004 Welcome In ves tin g in s ma ll a nd mediu m s ize compa nies
Slide 3: Mirrabooka Investments
Mirrabooka Investments An investor in small and medium size companies in Australia & New Zealand Seeking to provide our shareholders with: § Medium to long term investment gains § Attractive dividend returns
Slide 4: Big dividend increases and higher interest income led to improved profit
Big dividend increases and higher interest income led to improved profit $0.31m $ Million $0.10m $0.65m $4.19m $-0.37m $-0.17m $0.73m Increased income $2.95m because of higher dividend payment rates Increase in dividends received because of the larger portfolio 2003 Profit Dividends Dividends Tradin
Slide 5: Earnings Per Share v Dividends Per Share
Earnings Per Share v Dividends Per Share 7 6 5 Cents per share 4 3 2 1 0 00 01 02 03 04 20 20 20 20 20 Financial year Earnings per share Realised investments per share Dividends per share
Slide 6: Small and mid caps outperform again
Small and mid caps outperform again 145 140 135 130 125 120 115 110 105 100 Jul03 Sep03 Nov03 Jan04 Mar04 May04 Jul04 Sep04 ASX Mid 50's Acc. Index ASX Small Ordinaries Acc Index ASX200 Acc Index
Slide 7: Portfolio Management Performance - % Per Year
Portfolio Management Performance - % Per Year 30% 25% 20% 15% 10% 5% 0% 1 year return 2 year return 3 year return 4 year return 5 year return since inception Mirrabooka Net Asset per share growth plus dividends CPI S&P/ASX Mid Cap 50 and Small Ordinaries Accumulation Indices
Slide 8: Performance since inception
Performance since inception Base of 1,000 in April 1999 1,900 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1,000 900 Apr-99 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Mirrabooka net asset backing plus dividends Combined S&P ASX Small Ordinaries and Mid Cap 50 Indices
Slide 9: Net Asset Backing Return up 25%, Share Price Return up 12%
Mirrabooka’s Net Asset Backing Return up 25%, Share Price Return up 12% 30% 25% 20% 15% 10% 5% 0% 1 year return 2 year return 3 year return Share Price Accumulation Series CPI Combined S&P/ASX M id Cap 50 and Small Ordinaries Accumulation Indices
Slide 10: Discount to Net Asset Backing 11% - annoying but useful buffer
Discount to Net Asset Backing 11% - annoying but useful buffer against any small cap pull back 15% 12% 9% P re m iu m 6% 3% 0% -3 % -6 % -9 % D is c o u n t -1 2 % -1 5 % J u n -0 1 D e c -0 1 J u n -0 2 D e c -0 2 J u n -0 3 D e c -0 3 J u n -0 4 Net Asset Backing per share at 30 September 2004 was
Slide 11: Listed Investment Company Sector has moved from premium to discount
Listed Investment Company Sector has moved from premium to discount Price/NTA % Premium 20% 15% 10% 5% 0% -5% -10% -15% -20% Discount Jan 88 Apr 89 Jul 90 Oct 91 Jan 93 Apr 94 Jul 95 Oct 96 Jan 98 Apr 99 Jul 00 Oct 01 Jan 03 Apr 04 GSJBW Quantitative Research Market Cap Weighted P/NTA
Slide 12: Why has this happened?
Why has this happened? § Significant number of new listed investment companies: Ø approximately $1 billion of capital raised Ø a number of the new LIC’s focus on small company sector § Increased supply of Mirrabooka shares following the rights issue and share acquisition plan § Listed Investment Com
Slide 13: Largest Acquisitions
Largest 5 Acquisitions - (1/7/03-30/9/04) $m Macquarie Airports 3.3 Transurban Group 2.6 Baxter Group 2.4 Centennial Coal 2.4 AuSelect 2.0
Slide 14: Macquarie Airports and Transurban Group
Macquarie Airports § Holds investments in Sydney (56%), Rome (34%), Bristol (31%) and Birmingham (15%) airports § Prospective 2005 yield of 6.4% Transurban Group § Toll road and tolling system operator § Operates Melbourne Citylink toll road and holds a 40% interest in Sydney’s Westlink toll project
Slide 15: Baxter Group and Centennial Coal
Baxter Group § Waste management business located in Clayton which dominates landfill in S.E. Melbourne § Has an important recycling JV with Visy Paper Centennial Coal § Fuels nearly 40% of NSW’s coal fired electricity § Growth potential via two large mine developments for local and export (23% in 20
Slide 16: AuSelect
AuSelect § Resource Investment Company § Provides exposure to small/medium gold and base metal Companies in Australia, Africa and South East Asia
Slide 17: Portfolio additions in the 2004 Financial Year
Portfolio additions in the 2004 Financial Year § AuSelect § Incitec Pivot § Beach Petroleum § Macquarie Airports § BOOM Logistics § McMillan Shakespeare § Colorpak § Pharmaxis § Corporate Express § Primelife Corporation § Excel Coal § SAI Global § GasNet Australia Group § Sonic Healthcare § Genephar
Slide 18: Purchases Since June 2004 (Over $500,000)
Purchases Since 30 June 2004 (Over $500,000) New Stocks: § Argus Solutions - iris (eye) recognition technology § Diversified Utility & Energy Trusts - gas and electricity assets investor § Peet & Company - land estate development § Symex Holdings - manufacturer of soap (eg Velvet, Lux Flakes, Pental
Slide 19: Company Profit Share – Is this as good as it gets?
Company Profit Share – Is this as good as it gets? Ratio Ratio 0.21 0.58 0.20 0.57 0.19 0.56 0.18 0.55 0.17 0.54 0.16 0.53 0.15 0.14 0.52 0.13 0.51 0.12 0.5 Mar-86 Mar-88 Mar-90 Mar-92 Mar-94 Mar-96 Mar-98 Mar-00 Mar-02 Mar-04 Profit Share of Factor Income (RHS) Wages Share of Factor Income (LHS) So
Slide 20: Small Industrials Sector valuations look high
The Small Industrials Sector has moved to point where valuations look high PER Premium/Discount % 15 Small Companies trading at a Premium vs Major Industrials 10 5 GSJBW Quantitative Research 0 -5 Average -10 -15 -20 -25 Small Companies trading at a Discount vs Major Industrials -30 Nov-93 Nov-94 No
Slide 21: ION is an example of a small/mid cap stock falling out of favour
ION is an example of what can happen when a small/mid cap stock falls out of favour $ Capital raising 2.6 2.4 2.2 2 Profit downgrade 1.8 1.6 1.4 1.2 1 Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- 02 02 03 03 03 03 04 04 04
Slide 22: Largest Disposals
Largest 5 Disposals - (1/7/03 to 30/9/04) $m Hills Industries 3.7 G.U.D Holdings 3.6 AV Jennings 2.5 Housewares International 2.3 Ten Network 2.1
Slide 23: Sales Since June 2004: Disposed of
Sales Since 30 June 2004 (Over $500,000) Disposed of: § AV Jennings § Beach Petroleum § Hills Industries § ION § Primelife § Sunland Group
Slide 24: Sales Since June 2004: Reduced holding in
Sales Since 30 June 2004 (Over $500,000) Reduced holding in: § APN News & Media 7.25% conv. notes § Computershare § DCA Group § Excel Coal § Foodland § James Hardie § Pacifica Group
Slide 25: Mirrabooka has moved to a higher cash position
With the small/mid cap sector enjoying further strong rises Mirrabooka has moved to a higher $m cash position Index value (base 1000 30/6/02) Rights issue 18 1500 16 1400 14 1300 12 10 1200 8 1100 6 1000 4 900 2 0 800 Jun02 Sep02 Dec02 Mar03 Jun03 Sep03 Dec03 Mar04 Jun04 Sep04 Cash Position Combined
Slide 26: Top Investments - September 2004 (1-5)
Top 20 Investments - 30 September 2004 Rank $m Healthscope 1 8.0 Nufarm 2 7.7 Hills Motorway Group 3 6.8 Patrick Corporation (a) 4 6.1 Baxter Group 5 6.0 (a) Includes $4.5 million of PRK 6% converting preference shares
Slide 27: Top Investments - September 2004 (6-10)
Top 20 Investments - 30 September 2004 Rank $m APN News & Media 7.25% conv. note 6 5.8 Centennial Coal 7 5.6 Macquarie Airports 8 4.9 Programmed Maintenance 9 4.1 Macquarie Infra. Group 10 3.9
Slide 28: Top Investments - September 2004 (11-15)
Top 20 Investments - 30 September 2004 Rank $m Alinta 11 3.8 Iluka Resources 12 3.7 Gunns 13 3.6 DCA Group 14 3.4 Origin Energy 15 3.3
Slide 29: Top Investments - September 2004 (16-20)
Top 20 Investments - 30 September 2004 Rank $m Transurban Group 16 3.3 Funtastic 17 3.0 Boom Logistics 18 2.9 Foodland Associated 19 2.7 Integrated Group 20 2.6 91.3 (Top 20 investments represents 59.3% of total portfolio of $153.9)
Slide 30: Mirrabooka uses a wide range of brokers
Mirrabooka uses a wide range of brokers Brokerage split for 2004 Goldman Sachs JBWere $20,000* Other brokers included: $154,000 Austock Brokers ABN Amro Equities Australia JP Morgan Securities ABN Amro Morgans Linwar Securities Bell Potter Securities Lodge Partners Burdett Buckeridge Young Macquarie
Slide 31: Outlook
Outlook § Positive reporting season momentum: Ø strong profit growth and dividend increases Ø continuing cash inflows Ø higher share prices § More favourable float environment: Ø some of interest § High prices and valuations (P/E’s) Ø small caps at premium to large caps Ø risk in small caps rising Ø
Slide 32: Investing in small and medium size companies
In ves tin g in s ma ll a nd mediu m s ize compa nies
Mirrabooka Investments — Shareholder Meeting (October 2004) on 6ix