NAOS Ex-50 Opportunities Co. Ltd. · ASX:NAC
NAOS Ex-50 Opportunities — Q2 FY23 Earnings Presentation
53 slides from NAOS Ex-50 Opportunities's earnings presentation, Feb 7, 2023
Slide 1: Q2 FY23 Investor Update and Q&A
Tuesday 7 February 2023 | 10:30 am (AEDT) Audio Dial In: +61 3 8488 8990 Audio Access Code: 228-836-619 Q2 FY23 Investor Update and Q&A
Slide 2: Important Information
Important Information This material has been prepared by NAOS Asset Management Limited (ABN 23 107 624 126, AFSL 273529) (NAOS) for general information purposes only and must not be construed as investment advice. It does not constitute an offer to purchase any security or financial product or servi
Slide 3: NAOS Asset Management
NAOS Asset Management NAOS Asset Management is a specialist fund manager providing concentrated exposure to quality private and public emerging companies. NAOS established its first Listed Investment NAOS was originally founded in 2004 and Company (LIC) in 2013 with 400 shareholders, today has 10 st
Slide 4: NAOS Directors and Team
NAOS Directors and Team OUR DIRECTORS OUR TEAM 3
Slide 5: Our Investment Beliefs and Differentiation
Our Investment Beliefs and Differentiation 4
Slide 6: Reasons Not to Invest with NAOS
Reasons Not to Invest with NAOS Our LICs are not for everyone. Some reasons why you may not choose to invest with NAOS include: Concentrated portfolios (0-15 investments & shareholdings often >20%) Long-term investment philosophy (5+ years) Focus on emerging companies ($20 million - $500 milli
Slide 7: NAOS Investment Portfolio Financial Year Returns
NAOS Investment Portfolio Financial Year Returns* 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 NAOS Emerging Opportunities Company Limited (ASX: NCC) NAOS Ex-50 Opportunities Company Limited (ASX: NAC) NAOS Small Cap Opportunities Company Limited (
Slide 8: NAOS LIC Franked Dividend History and Profit Reserves
NAOS LIC Franked Dividend History and Profit Reserves Each LIC has consistently paid dividends and holds healthy profit reserves 90.06 90 80 70 65.00 57.93 CENTS PER SHARE 60 48.4 50 41.5 40.55 40 35.36 30 24.75 19.1 20 10 0 NCC (Feb 2013) NAC (Nov 2014) NSC (Dec 2017) Total Dividends Paid (Since In
Slide 9: Investment Portfolio Performance Summary
Investment Portfolio Performance Summary 3 YEAR Q2 FY23 3 YEAR INCEPTION BENCHMARK Q2 FY23 BENCHMARK Investment Portfolio PERFORMANCE BENCHMARK PERFORMANCE PERFORMANCE PERFORMANCE INCEPTION PERFORMANCE (p.a.) (p.a.) PERFORMANCE (p.a.) (p.a.) NCC Investment Portfolio +0.22% +7.54% +2.51% +1.38% +9.57
Slide 10: What Qualitative Information Sources Does NAOS Use?
What Qualitative Information Sources Does NAOS Use? The NAOS Investment Team undertakes fundamental analysis on potential and current investments. Some examples of our key focus areas include: 9
Slide 11: NAOS LICs Director Alignment
NAOS LICs Director Alignment Directors' shareholdings have significantly increased since the inception of each LIC Inception Directors Shareholding 31 December 2022 Directors Shareholding 9,000,000 8,538,578 8,000,000 7,000,000 6,000,000 5,171,775 NUMBER OF SHARES 5,000,000 4,000,000 3,000,000 2,510
Slide 12: The Case for Concentrated Investing
The Case for Concentrated Investing Holding too many stocks in a portfolio can lead to poor risk adjusted performance Source: NAOS Asset Management 11
Slide 13: What Has Changed Over the Past 12 Months?
What Has Changed Over the Past 12 Months? Measurement 31 December 2021 31 December 2022 RBA Cash Rate 0.10% 3.10% Australian 10-Year Bond Yield 1.58% 4.05% Australian CPI (YoY) 3.50% 7.30% AUD/USD $0.73 $0.68 ASX 200 Forward P/E (12-month) 18.05 14.42 ASX Small Ordinaries Accum. Index 11,004 8,982 S
Slide 14: Q2 FY23 Summary
Q2 FY23 Summary CY23 expectations are low. In our view this is due to the lag effect of CY22 interest rate rises, which certain sectors of the market have been factoring in, as shown by the -20% fall in the ASX Small Ordinaries Index. Significant dispersion in stock performance through CY22. Pre
Slide 15: Q2 FY23 Summary Relative Return
Q2 FY23 Summary 1 Year Total Return - Australian Equity Indicies 120.0 110.0 Large caps & small resources… 100.0 Relative Return 90.0 …outperformed all other small cap indexes 80.0 70.0 60.0 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 S&P ASX Small Ordi
Slide 16: Australia's Labour Market
Q2 FY23 Summary Australia's Labour Market 65% 25.0% 64% 63% 20.0% Employment-to-Population Ratio (%) 62% Underutilisation rate / Underemployment rate (%) 61% 15.0% 60% 59% 10.0% 58% 57% 5.0% 56% 55% 0.0% Employment-to-Population Ratio (LHS) Underemployment Rate (RHS) Underutilisation rate (RHS) Sour
Slide 17: Are Things As Bad As They Seem?
Are Things As Bad As They Seem? Unlike many previous economic slowdowns this has been engineered by the Reserve Bank of Australia (RBA). Interest rates are now at their highest level for a decade, so there is meaningful scope to reduce rates in the short to medium term if easing is required. C
Slide 18: Australian Annual Net Overseas Migration
Q2 FY23 Summary Australian Annual Net Overseas Migration 1,400,000 1,153,117 1,200,000 981,662 1,000,000 Annual Net Overseas Migration 800,000 569,732 600,000 400,000 200,000 - 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 -200,000 -400,000 Source: Aus. Bureau
Slide 19: Drewry World Container Index
Q2 FY23 Summary Drewy World Container Index ($US/40ft container) $12,000 $10,130 Drewry World Container Index Price ($) $10,000 $8,000 $6,000 $4,000 $2,135 $2,000 $1,486 $0 Date Drewry World Container Index Price Source: Bloomberg, NAOS EXPLAINER: The Drewy World Container Index assessed by Drewry r
Slide 20: Is Market Timing as Important as Many are Led to Believe?
Is Market Timing as Important as Many are Led to Believe? In our view not only is it impossible to predict market troughs and peaks but it also adds little value over the long term. To illustrate this, the basic analysis below shows the return if an individual had theoretically invested in the S
Slide 21: Arno Becker and Richard Bartley
Arno Becker CFO and Interim Chief Executive Officer Richard Bartley Executive GM 20
Slide 22: 21
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Slide 23: Our Business
Our Business BSA is a publicly-listed company on the Australian Securities Exchange (ASX: BSA). It is BSA’s vision to be our clients’ indispensable partner for the design, delivery and management of innovative asset solutions. BSA’s services are structured under two strategic business units: Advance
Slide 24: Core Capabilities
Core Capabilities Communications & Utility Fixed-Line Wireless Customer Access Infrastructure (CUI) Network Technologies (Fibre, Microwave, Cellular, Small Cell, Connections & Assurance, Copper, HFC), Civil Works, Cabling, Critical Networks, SAED, EME Satellite, Lead-in, In-Building Power Supply, Ac
Slide 25: FY23 – Group Update
FY23 – Group Update Continuing Operations | Stabilise & Focus Highlights: • On 23 November 22 BSA entered into an agreement with C UI CBRE for the sale of the APS Maintain business for $20m before costs and adjustments - completed on 3 February • Fixed line 23 ahead of schedule; • Wireless • Smart E
Slide 26: FY23H1 – Financial Update
FY23H1 – Financial Update Material improvement on PCP Financial Performance $’m Q2 FY2023 Q2 FY2022 Var H1 FY2023 H1 FY2022 Var Revenue CUI 62.7 63.8 (1.1) 123.0 122.5 0.5 Continuing Revenue 62.7 63.8 (1.1) 123.0 122.5 0.5 Gross Margin % 25% 18% 7% 23% 18% 5% EBITDA CUI 5.7 2.2 3.5 8.8 3.4 5.4 Corpo
Slide 27: FY23 – Strategic Direction
FY23 – Strategic Direction Simplified approach with emphasis on stability, profitability and growth Stabilise Focus Transform Target internal efficiencies and Prioritise cash backed results Protect and partner with clients system optimisation Focus on Telecommunications Setup for accelerat
Slide 28: CUI Highlights
a bsa CUI Highlights
Slide 29: CUI Overview
CUI Overview BSA’s Communication and Utility Infrastructure (CUI) division represents one of Australia’s Leading and National leading providers of diversified services to the telecommunications sector 1 Telco Services Platform ~3,800 jobs ~250 direct with Strong Brand Diverse range of capabiliti
Slide 30: CUI Platform
CUI Platform Four core platform categories Smart Energy Residential NBN Wireless Solutions & Enterprise A unique long-term Over 5 years of Acquisition of Catalyst Group heritage services contract; experience One in 2020 to establish having designed and supporting Vector capability in Group;
Slide 31: CUI Growth Plan
CUI Growth Plan Clear opportunities expected to underpin continued growth over the medium and longer term Maximise Opportunity with Innovation through Investment in Wireless Expansion Existing Clients Technology Maximise returns from significant Leverage initial wins in wireless Leverage custo
Slide 32: Smart Energy Solutions Addressable Market and Growth
Smart Energy Solutions Addressable Market and Growth APAC Smart Meter Market set to grow at 6.2%, Australia set to grow at least x2 this rate • Only 4m of 13.6m meters are smart representing a 30% penetration rate • Vector NZ recently sold 50% of business to QIC at NZ$2.5bn valuation • Pacific Priva
Slide 33: nbn Unify Contract
Case Study nbn Unify Contract Overview of Contract • Largest provider service Activations & Assurance VIC, NSW • 700 Technicians on project • Supervision across all key areas • BSA also support remediation/civils work and various projects Professional services • Program management for national and l
Slide 34: Wireless Experience
Case Study Wireless Experience Optus • National Deployment - Over 500 Greenfield RAN and In Building Coverage Sites • Upgraded Over 250 RAN Sites and Transmission • Renewed or Amended Over 200 Lease / Licence Agreements • Acquired 20 nbn POI locations for Optus Wholesale (HFC Project) Vivid Wireless
Slide 35: NAOS Investee Companies - Key Events Q2 FY23
NAOS Investee Companies - Key Events Q2 FY23 HOLDING INDUSTRY Q2 UPDATE AGM trading update sees strong FY22 conditions continuing into early FY23. Appointment of exec. GM John Lorente as CEO (effective 1st March) replacing Jim Bindon, providing consistency within operations and company culture.
Slide 36: NAOS Investee Companies - Key Events Q2 FY23
NAOS Investee Companies - Key Events Q2 FY23 HOLDING INDUSTRY Q2 UPDATE Awarded $44m tank construction, civil and electrical engineering project for Western Sydney Airport phase 1. Buoyant sector conditions continue with SND winning projects under State Govt. (NSW Bridge Replacement) & Federal G
Slide 37: MOVE Logistics Group
MOVE Logistics Group EXPLAINER: In December 2022, Craig Evans was appointed CEO of MOVE Logistics Group effective 1st February 2023. Craig has an outstanding track record in the Logistics sector, having previously spent 35 years at Mainfreight (NZX: MFT), including the last six years as Mainfreight’
Slide 38: NCC Overview as at December 2022
NCC Overview as at 31 December 2022 $0.87 $0.90 $0.755 9.93% 12 $134.6m Pre-Tax NTA Post-Tax NTA Share Price Franked Number of Weighted Average Dividend Yield Holdings Market Capitalisation of the Investments FRANKED DIVIDEND HISTORY Fully Franked Dividends Paid 50% Franked Dividends Paid 8.0 7.50 7
Slide 39: NAC Overview as at December 2022
NAC Overview as at 31 December 2022 $0.86 $0.92 $0.87 6.55% 12 $308.9m Pre-Tax NTA Post-Tax NTA Share Price Fully Franked Number of Weighted Average Dividend Yield Holdings Market Capitalisation of the Investments FULLY FRANKED DIVIDEND HISTORY Fully Franked Dividends Paid Cumulative Dividends Paid
Slide 40: NSC Overview as at December 2022
NSC Overview as at 31 December 2022 $0.78 $0.80 $0.69 7.25% 10 $206.1m Pre-Tax NTA Post-Tax NTA Share Price Fully Franked Number of Weighted Average Dividend Yield Holdings Market Capitalisation of the Investments FULLY FRANKED DIVIDEND HISTORY Fully Franked Dividends Paid Cumulative Dividends Paid
Slide 41: Capital Management Initiatives
Capital Management Initiatives Performance • Maintain a focus on long term performance without deviating from the NAOS investment philosophy. • Continue to focus on a growing stream of dividends, franked to the maximum extent possible, whilst maintaining an Dividends adequate reserve balance. • Cont
Slide 42: Overview & Outlook Q3 FY23
Overview & Outlook Q3 FY23 Expectations of slowing economic activity as impact of rate hikes take hold. The impact of ~23% of home loans cycling onto higher variable rates throughout 2023 is a major unknown. Positive factors that may prove valuable in insulating against a meaningful recession:
Slide 43: Outlook Q3 FY23
Outlook Q3 FY23 • Updates from most portfolio companies expected in the February reporting season. We have used the uncertainty to rotate out of investments that we believe offer inferior return profiles going forward and have added a number of new investments such as Smartgroup (ASX: SIQ), Info
Slide 44: NAOS Asset Management 1% Pledge
NAOS Asset Management 1% Pledge 43
Slide 45: Q&A
Q&A Thank you for your continued support. “Games are won by players who focus on the playing field - not by those whose eyes are glued to the scoreboard.” Warren Buffett 44
Slide 46: Appendix
Appendix
Slide 47: NAOS Strong Long-term Risk-adjusted Returns
NAOS Strong Long-term Risk-adjusted Returns * NCC Investment Portfolio Risk and Performance Metrics NAC Investment Portfolio Risk and Performance Metrics 15% 15% 9.67% 9.57% 10% 10% 6.45% 4.79% 5% 5% 3.08% 3.57% 2.65% 2.40% 0% 0% -1.42% -1.53% -3.17% -3.65% -5% -5% Performance Since Monthly Average
Slide 48: NAOS Strong Long-term Risk-adjusted Returns
NAOS Strong Long-term Risk-adjusted Returns * NSC Investment Portfolio Risk and Performance Metrics 10% 5% 3.91% 3.51% 2.40% 2.16% 0% -2.05% -4.02% -5% Performance Since Monthly Average Monthly Average Inception p.a. Performance when the Performance when the Market is up Market is Down NSC Investmen
Slide 49: Historical Shareholder Numbers
Historical Shareholder Numbers 8000 6000 4000 2000 0 NCC Shareholders NAC Shareholders NSC Shareholders 48
Slide 50: NAOS ESG Framework
NAOS ESG Framework Asan investment manager, NAOS ‘excludes investing in epecific controversa soon Ol 02 caveune eee ay OUR COMMITMENT TO N RESPONSIBLE INVESTMENT A NEGATIVE SCREENS: ° NAOS systematically. Ss ‘recognises and acoepts its duty to act responsibly and in the best interests of shareholder
Slide 51: Key Business & Industry Traits for Maximising Long-term Performance
Key Business & Industry Traits for Maximising Long-term Performance and Reducing the Risk of Permanent Capital Loss Events Industry Tailwinds Supporting A growing revenue base provides companies with a number of competitive advantages such as the ability to scale Long-Term Revenue Growth their fixed
Slide 52: Why Invest via a Listed Investment Company?
Why Invest via a Listed Investment Company? We strongly believe LICs are a highly effective structure to give investors the highest quality exposure to specific asset classes, which in the case of NAOS is emerging businesses. A Listed Investment Company structure: Allows the investment manager to
Slide 53: Investor Awareness and Communication
Investor Awareness and Communication FOLLOW NAOS 52
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