AGM 2021

Oct 5, 2021

Slides

Good afternoon, ladies and gentlemen. Welcome to the 23rd Annual General Meeting of Mirrabooker Investments Limited. As many of you know, I am the Terry Campbell, the Chairman of your company, and the company secretary has confirmed that a quorum is present online. Before I start, I might mention that we had a similar meeting this morning for Australian Foundation, the parent company in the group, and we did the investment presentation first. And then the formalities after the investment presentation, we lost half our audience when we moved to the formalities, so we're changing around. We're going to do the formalities first, then we'll have our presentation. I would like to begin by acknowledging the traditional owners and custodians from all the lands we are gathered on today and pay my respects to their elders, both past and present and future. Due to the ongoing pandemic, my fellow non executive directors, Ian Campbell, Jackie Feeley, Annette Kimmer, David Meiklejohn and Greg Richards are joining via video. I am joined here today in the studio by our Managing Director, Mark Freeman our company's secretary, Matthew Rowe our Chief Financial Officer, Andrew Porter our General Manager of Business Development and Investor Relations, Jeff Driver and the Portfolio Manager, Kieran Kennedy and Investment Analyst, Jay Guy. I also take this opportunity to introduce Nadia Carlin, partner of the company's auditors PricewaterhouseCoopers, who is attending via video and available to answer questions today on the audit and the preparation and content of the auditors report at the end of the presentation. Today's meeting is being held online via the Lumi platform and via teleconference. Today's presentation has been released to the ASX and made available on the website. Those of you who have just joined the meeting prior to the start would have seen a short video on how to vote and ask questions via the Lumi site. For those shareholders and proxy holders joining by telephone, you can indicate you would like to ask a question by pressing star 1 on your keypad and wait for your name to be announced. I remind shareholders that whilst questions can be submitted at any time, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated or if we receive multiple questions on one topic amalgamated together. Voting today will be conducted by way of a poll on all items of business. I now declare open the voting on all items of business, and I will give you a warning before I move to close the voting. I can confirm that where undisclosed proxies have been given to me as Chairman, I will vote them in line with the Board's recommendation on each agenda item. As with previous years, we will commence with the formal resolutions and then present on the activities of the company. If I may, I will take the notice of meeting as read. The first agenda item is the consideration of the financial statements and reports for the year ended June 30. As is our normal practice, this item will be covered after the statutory part of the meeting as the matter does not require a shareholder resolution and is part of the presentation. Our executives will touch on the matters that relate to our results, portfolio and performance. After which, I will ask shareholders to comment or raise any questions either about the presentation or of the auditors if they have any questions about the audit. Haven't had any yet in all the time we've been going. We now move to the formal resolutions of the meeting. As set out in the notice of meeting, your directors recommend that shareholders vote in favor of each resolution. The second agenda item is the resolution to adopt the remuneration report. This is required to be put to shareholders every year under the Corporations Act and is an advisory resolution. The remuneration report can be found in the company's 2021 annual report. The report is only concerned with non executive directors' fees as the company has no employees and utilizes Australian Investment Company Services Limited to provide day to day operations. If you have any questions on this item, please submit them now if you have not already done so. We will now deal with any questions. Jeff? I One question, Terry, which we could probably address here from Michael Gounsworthy. Can you please tell us how to reduce fees and increase dividends? Mark? Thanks, Terry. Well, obviously, the way our group of investment companies are really about cost recovery. We obviously have to pay staff and we pay rent, but as shareholders be aware, there's no external fee going to a fund manager. As such, the size of the company makes a big difference to the overall cost to shareholders. And we actually have seen the expense ratio for the business decline quite substantially over the last few years. And when you look at that expense ratio, which will come to in the formal presentation, and the fact that we don't have performance fees, we actually think the product is actually very well priced when you look through the market. Does that cover it, Jeff? We'll cover the dividends later on, I suspect, in terms of the The NER itself has very little impact, which has no impact on the dividend decisions of the Board. Yes. Okay. There's no other questions, Terry. Okay. Thanks, Chip. I will now show the proxies received in respect of this resolution, which are now shown on the screen. I remind shareholders and proxies who have yet to lodge their votes via the app to do so now as the voting is open. The 3rd resolution is to reelect Doctor. Jackie Fairley. Jackie was reelected by shareholders at the 2018 annual meeting and so is standing for reelection by shareholders today. In accordance with Rule 46 of the company's constitution, she retires from the Board of Directors and being eligible, offers herself for reelection. Jackie, would you care to say a few words? Thank you, Terry, and good afternoon, ladies and gentlemen. As I'm standing for reelection this year, Terry has asked me to say a few words about myself and my experience as it relates to Mirrabooka. I've had the pleasure of serving on the Board and Audit Committee since 2019. I'm not an investment professional, but rather I bring to the role more than 30 years of operational experience in pharmaceuticals and health care, mostly enlisted companies. This has included roles at CSL and F. H. F. F. F. F. F. Folding and Co, which was ultimately acquired by Pfizer and for more than 10 years as the CEO of ASX 300 Company Star Pharma. I've also served for around 15 years as a non executive director, most recently on the Board of the Melbourne Business School. I began my industry career at CSL back in 1989 before the ASX listing, which seems like an awfully long time ago. I worked at CSL for 5 years, gaining an MBA along the way and then moved to folding where I ran their global product development operation for the hospitals business, developing multiple products and launching them across 70 or so countries that we operated in. I've also worked for smaller companies and since 2006 have been the CEO of Star Pharma, a mid sized ASX company which develops pharmaceutical and healthcare products using a proprietary polymer technology. In that time at Star Pharma has developed multiple products, which have been partnered with global companies including AstraZeneca, Merck and Ansell and licensed in 160 countries. Through my executive roles, I've built a deep expertise in healthcare and animal health across a broad range of product categories, regulatory systems and international markets. I also have an extensive international network of industry and clinical contacts who I can call upon to assist in the assessment of health care and related investment opportunities. Additionally, my operational experience in both large and small companies can provide insights into operational considerations and issues faced by management teams and the boards of such companies. As well as my executive roles, I've also served on the Investment Committee of Mark Carnegie's Innovation Investment Fund since 2011 and as an advisor to government including on the Prime Minister's Science Council as well as to treasurers and industry ministers on a variety of topics including innovation, economic development and investment in pharmaceuticals and biotechnology. I hope that this brief overview will provide you with some helpful insights into my experience and potential contribution to the Board, and I welcome your support in my reelection today. Thank you. Thank you, Jackie. We'll now deal with any questions. Any questions, Jeff? No, there's no questions on the reelection of Jackie. Thank you, Jeff. No questions. I will now show the proxies received in respect of this resolution, which are now shown on the screen. I can't read them from here, but they look pretty favorable. Thank you. The 4th agenda item is the resolution to elect Annette Kimmott. Annette was appointed to the Board on the 1st January in 2021 and so is standing for election by shareholders today. In accordance with rules 45 of the company's constitution, she retires from the board and being eligible offers herself for reelection. Annette, would you care to say a few words? Thank you, Chairman. Good afternoon to you all and thank you for the opportunity to address you today. As the Chairman said, my name is Annette Kim and I'm incredibly honored for the opportunity to be considered for election to the Board of Mirrabooka Investments. I am a chartered accountant who would bring to the role more than 37 years professional and commercial experience with my executive career, including roles as CEO and at senior executive levels with Minter Ellison where I was a partner for almost 14 years and before with the International Accounting Standards Board where I was one of the founding developers of International Financial Reporting Standards or IFRS. So I have quite an extensive local and international track record in executive leadership and in financial reporting and risk management. Just to touch on my time at I was the managing partner of the Victorian Audit and Assurance Practice, then spent 5 years as the Melbourne Office Managing Partner and after that a further 5 years as a member of the firm's Asia Pacific and its global executive leadership teams. As a member of the firm's global leadership team, I had ultimate global responsibility across more than 150 countries for all of 's services and initiatives supporting high growth entrepreneurial businesses, IPOs, venture capital and family business. So my local and global experience and networks in the emerging and high growth business space are quite deep and I think will help me to make a really meaningful contribution to the Board of Mirrabooka. I also have quite a bit of Board experience including as the Chair of Audit and Risk Committees. And I think it is that Board experience combined with my executive experience that will really help me to make a strong contribution to the governance and strategic direction of Mirrabooka as a member of the Board. In terms of my Board experience, I'm currently a non executive director of the Truwala Group, which manages the family investments of the Schwartz family. I'm also on the Board of the Melbourne Business School, where I chair the Finance Risk and Audit Committee. I previously served as an Non Executive Director of Air Services Australia and was Chair of Air Services Audit and Risk Committee from 2012 to 2016. And I've served as a non executive director for a wide range of NGOs, including the Committee for Melbourne, the Victoria University Foundation and the Institute of Chartered Accountants in Australia and New Zealand, where I served as the Victorian Chair of the Institute in 2009. So as I said, I would bring to Mirrabooka a combination of financial reporting, executive and Board experience that will allow me to make, I hope, a meaningful contribution and significant contribution on behalf of shareholders. So thank you in advance for your support. Thanks, Annette. We'll now deal with any questions. Jeff? We have one pre submitted question, Terry, from RJR and REP nominees. Can you describe the reasons behind the appointment of Annette Kemet to the board and the contribution Annette makes to its deliberations. Thanks, Chip. Well, I would have thought that Annette's answered that pretty well herself already. Can I just sort of reiterate, sort of, I think, her incredible career as a chartered accountant and being made the managing partner in Melbourne at a remarkably young age for a major firm? Her experience with Ernst and Young globally, including a special role in increasing their exposure to small and mid cap companies. Jeff was discrete enough to not mention sort of the Mentor Allison role, which was brought up in the question. My view is that it has there were very special factors involved there that have absolutely nothing to do with the role that Annette plays at Mirrabooka. And we're very, very pleased to have her on the board, and I'm sure she will be reelected. Having said that, I have the benefit of knowing the proxies, which are about to be shown on the screen. Right, we will now move on to the 5th agenda item, to elect Mr. Greg Richards. Greg was appointed to the board on the 1st January and so is standing for election by shareholders today. In accordance with Rule 46 of the company's constitution, etcetera, he offers himself for reelection. Greg, would you care to say a few words? Thank you, Terry. Good afternoon, everyone. Thank you very much for this opportunity to speak. I've been serving on the Board of Mirrabooka since the start of this year and it's been a very positive and rewarding experience. With respect to my proposed election to the Board, I believe I can contribute in a meaningful way to the benefit of shareholders based on my experience and knowledge of the Australian financial markets. I've been involved in the markets and business for over 40 years as an analyst dealing in fixed income markets, advising in equity capital markets to being a non executive director of companies listed on the Australian Stock Exchange. I commenced my career at the Australian Commonwealth Treasury in 1980 and from there worked in financial markets for 25 years until 2,006. In particular, I was with J. B. Weir and Son and Goldman Sachs J. B. Weir for 19 years, where I was an equity partner for 17 years. More recently, I was a non executive director on the board of JB Hi Fi Limited for 13 years. At JB Hi Fi, I was a member and chair at different times of the audit and risk committee and the remuneration committee. I was also very fortunate to be chairman of the board of JB Hi Fi for 8 years up until my retirement on June 30 last year. During this time, I was also non executive chair of ASX listed Vitaco Holdings Limited, a manufacturer of vitamins and supplements for the domestic and overseas markets. Over the past 40 years, I've also been involved on a voluntary basis with several not for profit organizations with respect to the investment portfolios and business advisory committees. In particular, I'm currently Chair of the Advisory Board of Hamilton Wealth Partners, a high net worth wealth manager. It is a privilege to be involved with Mirrabooka and I very much look forward to further interaction with shareholders if elected to the Board. Thank you. Thank you, Greg. We'll now deal with any questions. There's no questions on this particular resolution. Terry? Thanks, Geoff. I will now show the proxies received in respect of this resolution, which are now shown on the screen. Moving on. The 6th agenda item is the consideration of the non executive director's fee cap. The next agenda item is the current fee cap of 600,000 per annum was approved by shareholders in 2018. The Board is requesting an increase in the cap of $150,000 to $750,000 per annum. This is not an item that the Board wishes to bring back to shareholders very often and wanted to retain the flexibility going forward to be able to appoint additional directors should any outstanding opportunities arise and to increase fees if deemed appropriate. I move that the maximum aggregate remuneration, which may be paid to non executive directors for their services for each financial year commencing on the 1st July 2021, be increased to $750,000 per annum for the purposes of Rule 47 of the company's constitution and ASX Listing Rule 10.17. Geoff, any questions? There doesn't appear to be any questions on this item, Terry. I'm pleased about that. We will now show the proxies received in respect of this resolution, which are now shown on the screen. The next item is the formal resolution to renew the proportional takeover approvals in the constitution. At our rehearsal last week, I asked the secretary if I could take it as read, But I was advised that this wasn't possible. So I apologize for the length of this particular piece of the meeting. Rule 7980 of this constitution allow a majority of the company's shareholders the opportunity to consider and either accept or reject a proposed proportional takeover offer for the company. The Corporations Act requires that shareholders renew these provisions every 3 years by special resolution, which requires the approval of 75% of votes cast. These provisions were last approved by shareholders at the 2018 annual meeting. They therefore need to be renewed today for further 3 years. I move that the constitution be amended by adopting rules 7980 as set out in the notice of meeting. There is no change in the existing wording in the company's constitution. Are there any questions on the matter? There's no questions, Terry. No questions. Thank you, Geoff. I will now show the proxies received in respect of this resolution, which are now shown on the screen. Now we return to the first agenda item, consideration of the financial statements and reports for the year ended June 30, 2019 2021. I will now pass you to our Managing Director, Mark Freeman, to start the presentation. Well, thanks, Terry, and good afternoon, everyone. Once again, disappointing that we can't do this AGM face to face with our investors. We really enjoy the opportunity to connect with our shareholders. Let's hope next year gives us that opportunity to do that and also to do our shareholder information meetings around the country. So just starting with our disclaimer, just to remind everyone that we're here to talk about the company, we're not here to give any advice. So just moving to the next slide, 16. Just to remind everyone the investment objectives of Mirrabooka. We're aiming to provide medium to long term investment gains through a holding of core investments in selected small and mid sized companies, and we always aim to provide an attractive fully franked dividend return to our shareholders. Moving on to the next Slide 17. We've had this slide consistently in our presentation over the years. What we're looking for in companies, the first thing we look at is the quality of the business. So we're looking for companies that have an attractive sustainable return on capital. They might be achieving it either now or there's a strong likelihood that they will achieve that. And we want investor companies that we don't see any impediment for growth to continue. Financial strength has always been an important consideration for us. We're always wary of companies that are carrying too much debt. So balance sheets, a strong balance sheet provides resilience and it also provides great reinvestment opportunities for a company. And we want the returns that companies generate to be supported by strong cash flows. Management is critical when investing in small and midsized companies. We want management to act like a substantial shareholder and often are and we often refer to these as owner driver companies. We're looking for management who are experienced, effective and passionate about what they do. In terms of managing the portfolio, we buy with a medium to longer term view. So we're generally a long term investor. But we want to buy stocks when we see fair value and we're wary of overpaying. Our holdings will often grow with increased conviction or when there's a price dip in the market. We will sell stocks when an investment case adversely changes. We'd monitor all our holdings for excessive valuations to manage the risk and we maintain a spread of holdings which enhances the consistency of the returns. Moving on to the next Slide 18. ESG is very topical in the world at this moment. ESG has been part of our investment process ever since I've been involved with running these companies, but we've just never really called it out as ESG. But ESG is an important part of what we do. The sustainability of your business model is one of the key things we assess when we're looking at the company and therefore ESG factors play into that. As a long term investor, we want to invest in companies that have strong governance and risk management processes and this includes consideration of environmental and social risks. And we regularly review companies to ensure ongoing alignment with our investment frameworks. Voting on resolutions is one of the key functions that a shareholder has and this ensures better long term returns and management of investment risk. We conduct our own evaluation of the merits of shareholder resolutions, but we do take input from a proxy advisor, but we make up our own minds. We vote on all company resolutions as part of our regular engagement with companies, and we do actively engage with the companies we invest in, particularly when we have concerns about resolutions that are not aligned with shareholders' interests. Just moving on to the next slide. Our Board of Directors have significant input into the operations of the company as they generally sit or attend the Investment Committee meetings that we hold. Our directors have significant experience, as we've heard as they presented on this, this morning, involving in business, industry and governance. I'm happy to take more questions from any of the directors at the end of the presentation, and we'll just move forward to the next slide where we also wanted to highlight the investment team. The investment team, you'll be hearing this morning or this afternoon, sorry, from Kieran and Jay, but the investment team is much bigger than that. And we've highlighted the overall team. And again, happy to take questions on any of those at the end of the presentation. But we do have some substantial experience within the group covering many years of investment experience. And with that, I will pass over to Andrew Port, our CFO, who will run through the results. Thank you, Mark. And good afternoon, ladies and gentlemen. So looking at the first figure on the top left hand corner of Slide 22, the profit for the year was steady, but it was moving parts. The dividends that we received were down, but only by 7%. This reflects the changing of circumstances in the second half of the financial year as companies such as event hospitality, corporate travel and seek that did not pay a dividend were counterbalanced by 1 such as ARB that either resumed normal dividend payments or made up for a previous underpayment. And James Hardie, for instance, actually paid a special dividend. Unsurprisingly, certainly for those of us with cash on deposit, interest payments from cash deposits were down, but the trading portfolio made a healthy contribution, particularly with the investment in 4 d Medical. This helped maintain the ordinary $0.10 dividend for the year whilst realized gains for the year of $29,000,000 enabled a special dividend of $0.02 to be paid, whilst still maintaining reserves to set against future periods where income and gains may not be as forthcoming, which is one of the benefits of an LIC as opposed to the trust structure that many ETFs use. They require everything to be paid out as it is earned, leaving nothing to help smooth distributions over, as I said, difficult years. The portfolio return we'll discuss later when the team looks at more up to date figures, and I'll come back to the share price return in a moment. The management expense ratio or MER is, as many of you know, and as we've discussed earlier, the cost of running the company. It is the total amount of costs divided by the portfolio. So that meant that for every $100 invested, it costs $0.50 to run MIR. There are no outperformance fees paid to an external management company, as we've mentioned, just the cost of running MirrorBooker, including listing fees, shareholder communications, etcetera, as well as salaries. So going back to the point we made earlier, at those levels, there is very little if no impact on the dividend payout and certainly no impact on the growth of dividend at these levels. We'll discuss the MER in more detail a bit later on. At the end of June, the portfolio as you can see there was $618,000,000 At the end of August, this had gone up to $675,000,000 It's strange to think that 10 years ago, the portfolio was $258,000,000 So the growth has been quite extraordinary. Moving forward to the next slide, Slide 23. As we had seen, the share price return was ahead of the portfolio return by some margin at the end of June. This meant that the premium at the end of June was up 3% and up from a 4% discount at the end of June 2020. At the end of August, the premium was 4%. That's it from me. Kieran, I'll hand over to you. Thank you, Andrew, and good afternoon, everyone. Today, I'll talk about some of the key differentiating attributes of Mirrabooka, as well as taking a long term perspective on our portfolio performance. My colleague, Jay and I will then share some insights on the current positions in the portfolio before closing with some outlook thoughts. So starting on Slide 25. This portfolio performance chart is one that we regularly discuss at these meetings. We have however made a change this time in that we reversed the order. You will now see the 10 year portfolio performance presented first on the left hand side as this better aligns with our investment approach. We are pleased with Mirrabooker's portfolio performance and how it compares to our benchmark across all time frames, but particularly this 10 year return. The 1 year return figures now on the right hand side clearly stand out due to their strength. I will share some perspectives on this on later slides. On Slide 26, we share some unique benefits of investing in Mirrabooka as we see them. First, there is the consistency of our long term returns. Then alignment of interests, which we think is a very important consideration in any investment. And finally, the tax effectiveness that comes from a long term low turnover investment approach. Slide 27 demonstrates our portfolio return consistency. 1st, to explain the information presented on the chart. With Mirabook performed and commencing investing in 1999, from 2,009 we have been able to record 10 year historical portfolio performance figures using our monthly reported net asset backing series. There are 149 observations on the chart representing a month end record of the 10 year portfolio return to the date on the horizontal x axis. The footnote is also important. It highlights that returns are presented on the basis that an investor has reinvested all dividends and the full benefit of all attached franking credits back into the portfolio at our net asset backing as they were received. While these assumptions clearly don't hold for all investors, this is the purest method of measuring the performance of the investments that we make on your behalf. It also allows for the most effective comparison to our benchmark and to other fund managers. So what does the chart tell us? To us, it's a consistent the message of consistent and attractive returns for those that have been long term investors. The lowest point in the chart is a still attractive 7.8% per annum return over the 10 years from the pre GFC market peak in 2007 to May 2017, while the highest point is interestingly that which we recorded for the 31 August 2021, a very strong 17.5% per annum over 10 years. Slide 28 repeats the same information, but breaks the returns down to the contribution of our benchmark in orange and our outperformance over the benchmark in blue. The key message in this chart is that over the long term, our quality focused investment approach, as outlined by Mark earlier, has consistently delivered. An interesting feature is the higher magnitude of outperformance when benchmark returns were lower. Our May 2017 low of 7.8% per annum discussed on the previous slide compares very favorably to the benchmark delivering 1.5% per annum over the same timeframe. We view this outcome as a logical feature of our investments in high quality companies. In tougher times, high quality businesses have an enhanced ability to stand out. More surprising to us is the acceleration of outperformance in the current period of higher returns. I will discuss this further on later slides. On Slide 29, we have sought to bring this portfolio return information some clarity with a couple of key observations. Firstly, if we take an average outcome of all 149 10 year returns charted on the prior slides, what has been the average investment experience produced by Miro Booker's portfolio over a 10 year period? The answer to this is 12.5 percent per annum, a return which sees an investment more than triple in value with reinvestment when held over 10 years. Our benchmark by comparison has averaged 7.4% per annum when measured over 10 years. This return season investment doubled over a 10 year period, which is in itself a good demonstration of the wealth creation possible from investing in the equity market over the long term. The second observation is that an investment in Miraboga's portfolio 10 years ago, fully investing dividends and franking would now be worth approximately $50,000 while an equivalent investment in our benchmark would have grown to $28,000 Moving on to alignment of interest considerations on Slide 30. A key benefit of a subset of LICs on the market which includes Mirrabooka is their internally managed corporate structure. This sees an absence of any portfolio management business which is looking to profit through the management of your investment. The importance of this is that funds management businesses benefit from increased profit margins as they scale up in size. Essentially, the cost of running a $100,000,000 investment fund aren't significantly different from running a $500,000,000 investment fund. In the Mirrorbooker structure, the chart on Slide 30 clearly demonstrates the benefit of this scale being enjoyed by all shareholders. The management expense ratio, which Andrew helped define earlier, has more than halved as we've significantly grown the portfolio over our 22 year history. Our latest management expense ratio calculation of $0.50 of cost for every $100 invested remains very competitive against others investing in emerging ASX listed companies. An important addition to this point is the absence of performance fees in Mirrabooka discussed on Slide 31. This sees full alignment between the interests of the staff and directors working for Mirrabooka with our shareholders. We all want to see funds remain invested in the stocks in our portfolio for the future compound return benefit of our shareholders rather than being extracted to the benefit of a funds management business. A key reason for this is the significant personal investments that Mirrabooka directors and staff hold in our company. The final key differentiator that I'll discuss is the tax effectiveness that comes with being a long term low turnover investor, which starts on Slide 32. As an LRC, we incur capital gains tax when we make an investment gain in selling an investment. This helps us to maintain a strong awareness of the returns drag that high portfolio turnover causes through increased crystallization of tax. While overvaluation is an important consideration when investing in emerging companies, we consider any selling or trimming of positions in the context of achieving a clearly better alternative return in another investment having considered these tax implications. The timeline on Slide 32 demonstrates our long term investing approach well. Our current top 20 investments are listed by the date at which we first acquired stock that we still own today. You will see several investments that have been held for well in excess of 10 years on this chart. On Slide 33, we chart the unrealized gains and losses across our investment portfolio, which totaled $338,000,000 as at 31st August. The point we are illustrating with this chart is that these gains remain invested in our portfolio rather than being whittled down by incurring significant tax as we switch investment ideas chasing maximum short term returns. Moving now to the current state of the portfolio from Slide 34. Starting on Slide 35, we felt it important to provide some analysis of the very strong portfolio performance both in absolute and relative terms produced by Mirrabooka in the 2021 financial year. As I earlier mentioned, it is more typical for Mirrabooka to achieve stronger outperformance in weak rather than in buoyant markets. As such, we have been surprised by the strength of our 1 year return in such a buoyant market. Bearing in mind a strong benchmark return of 34%, the charts on the slide categorize the return delivered by each investment in the portfolio over the year. On the left, the allocation to each return category is by the value of each investment, while on the right, it is by the number of holdings in each return category. The story presented on Slide 35 is that we saw consistency returns across the portfolio with only 7% of the portfolio declining in value over the year, a particularly strong benefit from 11 stocks representing 30% of the portfolio, which remarkably returned more than 90% in 1 year. Strong portfolio outperformance despite less than half of our 63 holdings outperforming the benchmark over the year. So what is the key takeaway from this? Our unusually strong portfolio performance in such a buoyant year in the market was mainly due to our larger portfolio holdings doing particularly well. For a change of pace, I'll now hand to Jay to further discuss details of the 2021 financial year portfolio performance. Thanks, Kieran. Engomotive, Transport, Financial Technology, Financials, Software, Industrials and Resources. 2, they've typically been in the portfolio for many years and were not bought in Mirrabooka with a view as to how they would perform in the 2021 year and 3, the reasons for such an exceptional year ranged from strongly rebounding profits post the initial onset of COVID and provides our long term thesis for the largest four of our exceptional recent performers. We felt this would highlight well our long term approach as well as addressing a question that we'd anticipate about considering trimming or selling these positions to lock in a gain. In the case of Mainfreight, one of our largest investments, recent results have demonstrated significant profit uplift and new freight customer wins in the U. S. And Europe. This is evidence that the customer obsessive culture that has been so successful in New Zealand and Australia is starting to gain traction in these very large markets. This supports an outlook for a very long runway of growth with a high return on capital. ARB is a similar story. COVID related travel restrictions have undoubtedly provided a boost to 4 wheel drive touring related demand in their well established Australian business. But of greater long term value significance to us, Ford in the U. S. Have sought out ARB to partner on accessorizing a range of Ford vehicles for the U. S. Market. This provides ARB with a very cost efficient distribution method to significantly step up their growth aspirations in the region. It also grows their brand recognition in the U. S, a foundation needed to deliver on their long term vision for a U. S. Network of branded ARB stores. Reece is also a well known Australian success story, tackling a large long term U. S. Growth opportunity. This is a case where we have reduced our shareholding in recent months. We observed the equity market pricing significant profit margin growth from the U. S. Expansion that we felt wasn't consistent with the company's strategy. We do remain comfortable holding the majority of our position though. We maintain high regard for the quality of the business and the Wilson family's patience in getting the foundations right for sustained success in the very large U. S. Market. Netwealth also had a very strong financial year 2021. This was pleasing earlier than expected recognition for one of our largest share purchases of financial year 2020. Our investment focus here remains relatively straightforward. After 20 years of exceptional profit growth, they still have less than 5% market share. They are winning significantly higher market share of new flows to their investment platform. They grow their business at a very high return on capital and they are managed by the very backable founding Heine family who run the business to maximize long term value. On Slide 3839, we provide an outline of our top 20 investments, which represent slightly over 60% of the portfolio. As demonstrated earlier, many of these names will be familiar to long term shareholders due to their long standing in our portfolio. But in the interest of time, I will move on with the comment that we are more than happy to take questions on aspects of any stocks of interest at the completion of our presentation. And with that, I'll hand back to Kieran. Thanks, Jay. On Slide 40, we outline our most significant investment portfolio activity of financial year 2021. CUBE was a long standing investment where our long term thesis played out as they monetize their strategic Moorebank logistics land holding. This saw us exit our position for a healthy gain. The document management software business objective continues to be a wonderful investment for us. We've enjoyed more than 8 fold share price appreciation on our initial stock purchases many years ago. We trimmed the position as a rapid increase in equity market recognition of the quality of the business was starting to create growth expectations that the company may be hard pressed to deliver upon. We do continue to hold a position however as we are reluctant to discount Tony Walls, one of the best value creating founders that we've encountered in our time investing on the ASX. And REE's was also trimmed for similar reasons as outlined earlier. The largest portfolio purchase included adding a new position in the recent IPO of PEXA. PEXA is a very high quality asset with a dominant market position in the digital settlement of residential land titles and mortgages in Australia. Australia has progressed with this important innovation to a faster timeline than in other similar offshore markets. COVID disruptions and ever increasing instances of fraud have been important factors highlighting the value of this innovation to participants in other markets. We see good long term prospects for PEXA unlocking such offshore opportunities starting with the UK, which is under the early stage of development now. Finneos is a software provider to the life insurance sector globally. Their opportunity is to take a global market leadership position on the necessary transition of this sector to modern cloud software. The continued commitment shown by Michael Kelly in maintaining majority ownership of the business increases our conviction in this investment further. NIB, the Australian health insurer is a business that we've monitored and admired for many years. When we observe the share market pricing a very pessimistic long term outlook for private health insurance participation, we happily added a position to the portfolio. Pleasingly, the share prices that we paid now look supportive of our thesis. On Slide 41, we briefly describe 3 smaller recent additions to our portfolio. We are aware that shareholders are often interested in the earlier stage businesses that we are identifying for their future leadership potential. BeamTree is developing an interesting presence in pathology and hospital software, bringing important insights on rates of patient complications and prescription and billing accuracy to customers in both the public and the private sector. Nanasonics has a market leading ultrasound decontamination device in market today. Signs are good that this product can continue its progress to being the global industry standard. Many years of investment in research and development is seeing Nanonics progress further products with a vision of a global leadership position in broader hospital infection control. And Lark is a Tasmanian Whiskey business with a 30 year heritage of producing industry acclaimed premium whiskey. They are seeing significant interest build in the Tasmanian Whiskey market and the recent appointment of a refreshed entrepreneurial management team is seeing many new sales opportunities being unlocked both within Australia and for export markets. So to close, moving on to Slide 43, I'll make some portfolio outlook comments before handing back to Terry for broader closing remarks. To start with some equity market observations as distinct from the futility of predictions, to us market valuations have looked stretched by historical standards for a number of years. This is a naturally expected result of a prolonged period of very low interest rates. While rates remain low and liquidity continues to be injected into global markets, all asset classes are likely to remain supported as investors continue to seek out the best available returns. In the longer run, elevated valuations seem much more likely to weigh on equity market returns from here. Economic cycles have a tendency to be more consistently mean reverting the longer the perspective you take. Bond markets and central bank intentions appear to be the best places to monitor for clues that the outlook is shifting. In terms of our portfolio, we are cognizant that the strength of recent returns has the potential to cap our short term portfolio performance from here. But in the long run, we remain just as confident that a portfolio of high quality equity investments with attractive growth prospects and high return on capital generation will compare favorably to most other alternatives. We are also confident in our investment process continuing to identify such opportunities. And with that, I'll say thanks for listening and hand you back to Terry. Jeff, do we have any questions? We have some couple of questions, Terry. One is from EMU Harbor Proprietary Limited. Mirabook has invested in Star Farmer, would appreciate an update on how that investment is going, particularly on progress in getting fire release marketed in Australia. Kieran? I can take that one. Thanks, Geoff. Yeah, so it's an interesting company, Star Farmer. So I guess going back to our original thesis and why we still have long term conviction, it's actually much more about the Dendroma technology they have, which is enables oncology drugs to have better delivery methodology in a number of different areas in oncology. Like a lot of things in biotechnology that takes a long time to come to fruition and it's been for the patient investor really to see the milestones of value emerge along the way. The company has been quite good at developing some other opportunities with this really interesting technology they have, one of which is the Viralease COVID treatment that they've brought into market recently. Our sense is that while those are interesting and provide some good upside on the short term, the main game really is about the oncology Dendroma technology and we're seeing some really good milestones and expect some good royalties to come through over the next few years. So the conviction there is quite good. Thanks, Kieran. The question I have was pre submitted by John Heard. Could you please explain your intentions regarding your investments in renewable energy and or renewable energy generation? Kieran? Thanks, Jeff. Look, so I guess going back to the investment process that we outlined earlier, our approach is really what we describe as bottom up in that we look for the company that has competitive advantage and start from that basis. And then from there, look to see whether the industry will enable them to win in the long term in basic terms. So it's really company first and then looking at the industry. As it seems from saying that there's going to be a lot of capital invested and a lot of opportunities emerging in a particular industry that's let's then find a play on that theme that might be a stock in that industry. We have seen a couple of interesting ideas emerge in renewable energy that we are monitoring, but at this stage we have yet to find one with the sufficient competitive advantage that we think warrants a position in our portfolio. Thank you, Kieran. Again, just a reminder, star 1 if you want to ask questions through the operator and obviously you ask questions through the Lumi app as well. At this point in time, Terry, I don't have any other submitted questions. Right. But why don't I just move on and then if we get some questions in the meantime we can come back to them. Ladies and gentlemen, in a couple of minutes I will close the voting system. So please ensure that you have cast your vote on all resolutions. But before we close the meeting, I would like to acknowledge the retirement of 2 directors who have been instrumental in the development of Mirrabooka over many years. Ross Barker retired on the 31st January, having been with the company since its inception in December 1998 and Managing Director from February 2001 to December 2017. He then transitioned to Non Executive Director in January 2018. Ross, when we were together at J. B. Weir, was one of the key figures in first establishing Mirrabooka back in 1998, and he has provided significant services to shareholders and his colleagues over many years. We again wish him the very best. David Meaglejohn, who is retiring as a non executive director following the conclusion of this meeting, was appointed a Director on the 1st March 2006 and is currently the Chairman of the Audit Committee and a member of the Investment Committee. David has also served shareholders exceptionally well, particularly in his role as Chairman of the Audit Committee. His guidance through audit procedures and the accounts has been excellent and shareholders can be assured that the financial position of Mirrabooka is very well placed. I know everyone on the team has appreciated his thorough and practical approach in this time in his time as a Director. All the very best for the future, David. Any questions coming in? No, not at this stage, Terry, so we'll keep going. Right. My second final comment is to thank all of our staff for such a good result achieved in a difficult work environment due to COVID. It reflects their professionalism and commitment to mirror Booker's shareholders' interests. Voting is now closed and the results of these votes will be released to the ASX later today. I feel like an auctioneer. No questions before we finish up. I'll just check one more time, Terry, and I'll have no on the phone and none on through the app either. So I'll get more questions. Perhaps we have a similar system next year, people might be more familiar with it. We'll get a few more questions. Thank you all for your continued support and for the interest you have shown in the affairs of the company by attending virtually. Before closing the meeting, I'd just like to make a couple of comments. First of all, I must admit I've quite enjoyed putting a suit on for the first time for a long time after working casually at home. And just a general observation. I've worked in the financial markets for over 60 years now. And I guess my role as Chairman and Founder of the company is to provide wisdom perhaps and the benefit of this experience. But I must admit this year has staggered me. I can't believe that after the biggest social, economic and health shock in over 100 years, We've made almost 50% on the portfolio, well, that's if you include franking. And all I know is it certainly won't happen again, well, certainly not in my lifetime. But what I do really believe just as strongly as when Ross and I started the company all those years ago is that I can't think of a better place to invest your money than in small and upcoming Australian companies. So thank you very much everyone. And I now close the meeting. I have actually, Terry, I have one more question. One more question. Go ahead. The question has come through. That's all right. So we had a question on the DSSP, Andrew, particular one around selling shares in 5 years, but I think it might be best just to describe how the cost base of the DSSP shares are actually calculated. Thank you, Jeff. Yes, DSSP is for those of us old enough to remember, it's effectively like a bonus share plan. Instead of getting a dividend, you get a share. So if you brought your original parcel of shares for $100 and you go into the DSSP and get 10 shares under that, the total cost of your 110 shares is still $100 You've got no cash. So when you sell those shares, you divide the 110 shares by the $100 I hope that's clear. If it isn't, then please, the email addresses on the website, etcetera. I'm very happy to go into more details, although I'm not I don't have a license to give personal taxation or financial advice, I should point out. As none of us do, Andrew. Thank you. All right, Terry. There are no further questions. Okay. Thanks, Andrew. Thanks, everybody. I now once again close the meeting.