Good afternoon and welcome to Mirrabooka Investments half-year financial results briefing. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. All questions will be taken via the webcast. If you'd like to ask a question at a time, please enter your question in the Ask a Question box at the bottom of the webcast window. I'd now like to hand the presentation over to Mark Freeman, Managing Director of Mirrabooka Investments. Please go ahead.
Good afternoon, everyone. I'm Mark Freeman, the CEO and Managing Director of Mirrabooka Investments Limited, and welcome to this half-year result briefing. I'd like to begin by acknowledging the traditional owners and custodians from all the lands we are gathered on today and pay my respects to the elders, past, present, and emerging. Joining me on today's webinar, I have Kieran Kennedy, the portfolio manager, and Stuart Low, the assistant portfolio manager; Andrew Porter, our CFO; Matthew Rowe, our company secretary; Geoff Driver, our general manager of business development; and Suzanne Harding, our business development manager. Before we start the presentation, just a bit of housekeeping on this webinar. This briefing is based on the material available on my company's website. If you are using your computer to access the presentation via the webcast, the slides will change automatically.
Finally, please note, following the presentation, there'll be time for questions and answers. You can ask a question via the webcast using the tab at the bottom of the screen. So just moving to the presentations, as per usual, there's a disclaimer just to say we're here to talk about the company. We're not giving any advice as such. And with that, I'll pass over to Kieran and Stuart to run through the presentation.
Oh, yes.
What are we going to, Andrew? Sorry.
That's okay. Thanks, Mark. Good afternoon, everybody. It's Kieran Kennedy here, the portfolio manager. We always like to set the scene with these presentations and reinforce what our investment approach is and what we're looking to do when investing in this area of the market. For those that know us well, they'll know that it's the same investment team that looks at the four investment companies here, which includes Australian Foundation Investment Company AMCIL, Djerriwarrh, and Mirrabooka. The reason we mention that is because the philosophy of investing for the long term applies across all of those listed investment companies, and we do apply that in this small and mid-cap end of the market as well.
When you're doing that, you're really looking at your own businesses for the long term through different economic cycles and businesses you think can prosper with different conditions that they face through those different cycles. The important thing in that is to have real quality about the business, something that's defendable against competitors, and something that you believe can see them beat their competition, which is bound to intensify as they're doing well through different parts of the cycle. It's also important to have financial strength. When you see negative times in the cycle, when conditions go against companies, it's super important that they have the resilience and the financial capacity to see that through to the other side. We pay a lot of attention to the balance sheets of the portfolio holdings in Mirrabooka.
Even more so, I think, at this end of the market in mid and smalls, you rely a lot on management, trust in management, having management that have a clear strategy, have alignment, their interests align with you. You can really get a really good result from people who have their life's work invested in their business, that pride they have in us, and the way they drive that forward tends to deliver really good results if you find those right people with the other characteristics we're looking for in those businesses. That's what we look for in the stocks. In terms of managing the portfolio, we obviously like to have some diversification. We don't like to have too many eggs in single baskets in this end of the market because there are a wider range of outcomes that you can be dealing with.
We're also more alert to valuation in the mid- and small-cap part of the market. It is more prone to extremes in both directions. So that means that there is more activity in Mirrabooka at the small- and mid-cap end of the market because if you ride stocks when they're going too high and don't trim them, you can expose yourself to undue risk in the portfolio, and you really want to make sure you've done that so that when other parts of the cycle arise, you're in a position to buy those holdings again and add value to the returns that the company is generating in their own right. So with that, we'll move on to the next slide.
This looks at our share price premium and discount to NTA, which we think in all listed investment companies, this is a particularly relevant piece of information that shareholders should arm themselves with. What this is effectively reflecting is the value of all the holdings in the portfolio divided by the number of shares gives you a true market value at any point in time of what the portfolio is worth or what the market is determining it's worth at that time. But then we have our own share price, which is determined by the buyers and sellers in Mirrabooka that are looking to access that portfolio. You can get a difference in the two.
We think over the long run, they should generally trade in line with each other, but they do dislocate, and it's typically around market sentiment and often can follow, actually, the returns that the Mirrabooka portfolio has been generating. So when the portfolio is doing well and market's doing well, at times you can have buying coming into that and people looking to access it, and it can go the other way. So just looking at this chart and looking at the longer-term history for Mirrabooka, we've been pleased that we've typically had good support from investors and have typically, on average, traded it at a modest premium to asset backing, which is a desirable place to be. We don't want that to be too much of a premium.
But there are times where that can track to a discount, and we have seen in recent months that situation arise again, which is interesting. And I think we can cover that again later as we go through some of the portfolio performance metrics. There might be some factors that are driving that at the moment. And with that, I'll hand over to Andrew to cover the financial results.
Thank you, Kieran. And good afternoon, ladies and gentlemen. As you would have seen from the results that were released, the profit for the half-year actually up from AUD 4.6 million for this half to AUD 8.9 million. So that is AUD 0.04 per share up from AUD 0.024 this time last year. All aspects of the P&L were up in terms of the income. The dividends were up by AUD 1.6 million. We had a special takeover done from Infomedia.
We got more shares in Region this time, which is quite a high-yielding investment. ALS, due to timing issues, paid us an extra dividend in this half than they did in the previous half. So those are some of the increased dividends. The interest was up AUD 1 million on the half. So there was what has been and there is again today an increase in interest rates. But the large part of that was the cash that we had from the capital raising that we did at the end of the last financial year. Trading up AUD 1.5 million, and that was mainly to do with positions in Flight Centre and TUI's that we had.
Options were up AUD 1.4 million, and that was some options we'd written over our holdings at Netwealth and Temple & Webster in particular this half that expired out of the money, and we were able to book that as income, which is generally what we're trying to do with options. So the interim dividend remained the same at AUD 0.045. That's entirely from capital gains. So that means there is an LIC discount available on that when it comes to filling in your tax return. So those of you who have heard me before on this subject will remember that I always say, "Do check with your accountant when it comes to doing your tax return on that," because quite often they miss out on it. The management expense ratio, 0.49%, that's AUD 0.49 for every AUD 100 that you have invested.
The expenses, essentially, for the half were flat on the previous year. So the lower MER is really down to the increase in the portfolio size as a result of the rights issue. And just a reminder, of course, it is the movement in the portfolio value that's for Mirrabooka the real determinant of that MER. The portfolio at AUD 739 million, so up from AUD 668 million at the same time last year. And again, that includes the raising that we did from the rights issue. Happy to take any questions, of course, at the end on any aspect of that. But in the meantime, Kieran, I'll hand back to you.
Thank you, Andrew. So moving on to some discussion on the portfolio performance. We always pride ourselves in these presentations in being particularly transparent and just calling things as we see them.
We did a similar thing at the AGM in October. We stood up and talked to shareholders about how our one-year performance was trailing the benchmark indices quite significantly. At the time, we talked about that was the fifth time in Mirrabooka's now 26-year history that Mirrabooka had been more than 10% behind its benchmark on a one-year view. That really reflects the fact that we're long-term investors, and we're not really looking to optimize one-year returns, but we think it's important to talk about divergences like that. What we're saying here is what has happened since, well, actually, those headwinds have intensified quite significantly. If we look at the calendar year, 2025, in its entirety, we actually underperformed benchmark by more than 20%, which is unprecedented in Mirrabooka's history. There's some interesting observations to make as to why.
So I guess the first, which we cover on this slide, really talks more about our style and what we don't own. So as mentioned earlier, when we're looking for quality companies, we're typically trying to buy businesses we can own through the cycle, sort of no matter what comes their way, and we think they can navigate those conditions because of their competitive advantage in their industry. That's what we're really looking for. It's much harder to find that in a resources stock. Their fortunes are dictated to them by the commodity price that they sell, and they have no influence over that. And those commodity prices tend to be particularly cyclical. That doesn't mean we don't own any commodity businesses.
If we think a business has a particular competitive advantage with a really low-cost position or a strategic asset globally, we can and have done well owning those in the past. But as it stands today, we are very underexposed in this end of the market. And the metrics we produced on this slide for those following it really highlight how much of a challenge that's been in short-term performance terms. So the Mid-Cap Resources, as an index, incredibly, in a year, was up over 100%. The small resources up over 70%, whereas the industrial equivalents of those in the mid and small were sort of in the mid to high single-digit return range. And that's sort of more our heartland. So that's a very big headwind.
That resources component in the benchmark is now around a quarter of the money in resource stocks, which is at a high after a run like that as well. I guess the factors behind that, I mean, people that are following markets will understand gold has been particularly strong. We understand the reasons for that. There's a lot of uncertainty coming out of lots of things in the U.S. The U.S. dollar is an important asset globally because it is a reserve currency. It sets risk-free rates. There's lots of dependence on that. And when that gets called into question through the behaviours in the U.S., different institutions in the U.S., it can lead to people thinking about other sources of value. And I think that's been the driver of gold. We understand all that. But again, we're not trying to predict commodity prices.
We're trying to invest in a style that we think's worked over our 25-year-plus history. We just haven't found the assets to really own through the cycle in that. Following on from gold, we've seen copper, uranium, silver. There's not much of that in our index, but that's been particularly strong. Then the really interesting one was lithium, which had been in our index for a long period of time, had done very well. A couple of those stocks got actually promoted to the 50 Leaders, had a particularly poor outcome, and then returned back to the mid-caps and had another run. That just shows you the quirk of some of these index inclusions and things that are happening, but really not in areas that we're invested in.
So in response to this, I mean, importantly, we want to make sure that we're not putting our head in the sand, and we always got to keep questioning what we're doing and making sure we're investing most effectively for our shareholders for the long term. So we always ask lots of questions. When the performance is challenging on a short-term view, we ask more questions. But we also want to make sure that we don't become reactive and change what we do because of near-term cyclical conditions. Because the worst thing you can do is be late and reactive to something and following others. That will give you the worst outcomes in investing. You really want to be true to what you are and understand where cycles are and where the best place to allocate your capital to.
So really, that's just saying us double down on what we do, stick to the style we think works, and really reinforce our investment style. And we'll come back to that if there's any questions that investors have at the end. So moving on to the actual numbers that we always produce in these briefings, and this really does highlight it. So for the one year, the benchmark up 22.5% versus our return, still positive, but only 1.2%. So really, we've had a flat year. It feels like there's been a big party going on in this end of the market, and we haven't been invited. But in the long term, on a 10-year view, interestingly, in our 25-plus-year history, recent months have been the first time we've actually dipped under in terms of underperforming over 10 years. And that is interesting.
We think it does indicate just where we are in the cycle and how pronounced that one-year underperformance has been. But importantly, the most important context we think to provide here is on a 25+-year view, the return to shareholders has been 12% per annum, which when you compound that for a long period of time, they're excellent outcomes, and they're very tax-effective with low costs. So we think the proposition Mirrabooka provides remains excellent. It's just making sure we're explaining the difference to what's been going on in the market as we sit here today. Moving on, we thought we'd just give a little bit more color on resources. We think it's important, again, to describe this. We'll move on to what we're doing shortly because that's far more important. But I guess we want to make a few observations.
We're not going to sit here today and make predictions about how these commodity prices run too high and are about to fall over. We don't know. We didn't know they were going to go up as much as they have. That's not our place to do that. We don't think anyone really knows, to be honest. The best place to make observations is when you look at history. As we look at Mirrabooka's history, from the chart on the left, we see the Small Resources Accumulation Index. It's obviously run up very high recently. If you look at history, it has done this before. As I said earlier, this is the fifth time we've had underperformance in Mirrabooka that's been pronounced like this. Each time, it's been in one of these resources cycles. It's hard to see on the chart.
I think the best measure of risk in financial markets is how much capital you can lose from peak to trough, the drawdown you can experience. And that small resources drawdown from 2011 to 2015 was an 82% drawdown, so 82% of capital lost in an index, not in a single stock. So that is just a reminder that cycles are great when they go up, but be wary when you're in cyclical things because through the cycle, you can have some volatility. And interestingly, if you look at the right-hand side and look at the mid-cap resources, I mean, the only conclusion you can draw from that chart is it's been a great place to be invested in the Australian market. What we'd say is it's very transitory. The stocks that have gone through that index change a lot. There's been iron ore. There's been fertilizer booms.
There's been mineral sands. There's been lithium. And now there's been gold. Effectively, the mid-cap resources index has been a very good trader of stocks. It's been very good at owning them and then selling them before they get to the peak of that cycle. And that's just a quirk of the way it's worked. But it doesn't change what we're trying to do with Mirrabooka. We're looking for those winners we think we can back in for the long term. So moving on to the other factor, I mean, it is important to point out that our underperformance is not all just down to what we don't own. It is down to what we do own as well.
This is actually far more interesting and important to us to really sort of drill down on what is in the portfolio and just to make sure we're asking the right questions to say, "Are these still the stocks that we want to own for the long term, and has something changed with some businesses that haven't been performing recently?" That's a question we're always asking. So we really picked 7 stocks on this slide that in total make up 22% of the portfolio, so larger weightings that were sources of underperformance in the 2025 year. So we've listed the 1-year return in those stocks. There's a few that are fairly dramatic. Gentrack, for instance, down 36%, but that was up after a very particularly strong run in the years prior.
In total, they were all down around 20% in a year where the benchmark was up 20%. So as a drag, that's been around a 40% difference in the performance of these stocks versus the benchmark that we compare ourselves to. So just drill down on a few of these. Macquarie Technology and ARB, they're our two largest holdings. They remain our two largest holdings. And they didn't perform in 2025 in share price terms. And it's important to say that. We think there can be differences in how a business is actually tracking versus how its share price is going. And I think Macquarie's a good example of that. There's a lull there. People are very keenly waiting for their big data center expansion to be underway and to be selling and to be earning revenue. It takes time to build those.
As that's happened, the earnings have gone sideways effectively for a few years. So this is a stock that we originally bought at about AUD 15. When it reached AUD 80 and AUD 90 two or three years ago, we sold a considerable amount. We thought that was sort of taking the risk out of the position, and that was probably going to be a holding we'd just keep from there. And then we saw a big sell-off over the last few years, and it dropped back under AUD 60. So we've been back buying it again. We understand the business really well, and we think there's really good long-term value in this one. So yes, it underperformed in share price terms last year, but in terms of our ownership in the business, our enthusiasm and conviction is unchecked on this one.
ARB, an interesting one, they came out just in recent weeks to talk about another downgrade that they have suffered in terms of their earnings. We don't think it's there was volatility from quarter to quarter, but we don't think it's asking particularly strong structural questions about the business. It's just the earnings volatility you can get in a company like this. But we're really encouraged by what they've been able to do in the U.S. They've opened up that market, and we think it's still early days there, but that opens up a whole new platform for growth for this business. So again, not something that's going to move the share price in the next quarter or two, but something that really gives us confidence for our investment. We'll probably leave most of the others for questions in the interest of time.
But the point I'd make is that these are really good businesses. They remain that. The reason we put them in, our conviction remains strong in each of them. And we can understand why they've had a lull in the year that they have, but our belief remains strong. The one I would touch on is Equity Trustees, just preempting. I think we will get a question on this. It's had a lot of press recently. That is one where there is more of a structural question that's been brought upon that position because of the industry conditions they now facing, their role as a trustee in some failed superannuation products. They've seen ASIC take action against them. There's been settlements by other players in the industry. We're working through the legalities of it. They're defending the case at this point. We have de-risked this position slightly.
We didn't do it at the bottom when the stock had really sold off when these issues came to light. We let the stock recover somewhat and have taken about 15% out of that holding just to de-risk the position. But we think these matters need to be resolved, and there'll be financial consequences of it. But we're mindful that we just want to make sure we're looking at the total business and its market position and the difficulty of replicating that and not giving up a really good asset because of some difficult headlines. So that's something we'll continue to navigate. But again, happy to take questions on that at the end if there are any. And the final slide from me for the moment before I hand over to Stuart is really just to reiterate the themes.
Why are we confident that nothing has changed in the portfolio and that our long-term track record is still a relevant indicator that we think should give confidence to shareholders? There's a few reasons. Again, we've seen these cycles before. We stuck true to what we did in the past. Typically, cycles are cycles. When you have a tough period in the short term because conditions are against you, it can often be followed by relative outperformance. The important thing is to stick to what you do and not try and change your stripes and follow what others are doing because that means you'll never get that benefit on the other side. Importantly also, this is something we always look at in terms of where we are transacting the portfolio, are we adding value with what we're doing?
Over the last three years, we've done around AUD 400 million of buying, AUD 400 million of selling. The outcome of those transactions post doing them has been around a AUD 50 million increase in the value of the portfolio. That gives us encouragement that we did recognise when a number of our positions were particularly overvalued. We de-risked those positions at that point in time, and that's given us capacity to buy them back as they've fallen since those heady times in recent years. The most important thing that Stuart and I look at every day, literally 365 days a year, is the portfolio in good shape? Do we think these businesses are a better reflection of this end of the market than what you're getting in any index? Are these better companies? Have these got better prospects?
Do they tick the boxes that we're looking for to give us that confidence that this is a good place to invest your money? There'll always be some things going wrong in a 60-70 stock portfolio at this end of the market, and we do monitor those. But broadly speaking, for the vast majority of where the money is, we have unchecked confidence in the future long-term prospects for these companies. And then with that, I'll hand over to Stuart to just cover off on some of the top 20 holdings.
Thanks very much, Kieran. Good afternoon. I'll just move to slide 15 for those following along. This is a list of our top 20 holdings. It's a slide we always like to include. I guess touching on Kieran's points before, we do think it illustrates what we talk about in being a long-term investor. As you can see, significant periods of ownership for our major stocks. I guess why is that important? We think that we don't want to interrupt the compounding of these businesses. We want to give them time to earn and grow and don't get in the way of that by trading too soon or incurring unnecessary trading costs or tax implications. So we do think we're long-term. With these companies, we've talked about it in the past, we tend to take starting positions.
As we get more confidence and trust in management, we add to them over a period of time. We don't buy large positions straight away. We like the companies to grow into the position and us to grow trust in them as well before adding. In terms of some companies that might be relatively newer in the top 20, Channel Infrastructure, that's one we've purchased more recently in the last couple of years. We've talked about in previous presentations. It's the major import fuel terminal for New Zealand, provides nearly all the fuel to Auckland Airport, and has some really key strategic land and optionality. That company has sort of grown in this position in the portfolio both from our buying and also a little bit more acknowledgement from the market. It is a New Zealand-listed business.
It is now duly listed on the ASX and now starting to get treated a little bit more like our infrastructure businesses over here. So that's had some quite strong price appreciation. Another one that might be relatively new to people is Cuscal. That was an IPO we participated in last year. They provide payments infrastructure to smaller regional banks and the mutual sector. A solid business that's been around for many years, performed really well, and made a highly accretive acquisition of a competitor, Indue, a couple of months ago, which has really caused a significant reaction in the share price and has appreciated quite strongly. Some of the businesses that people might be wondering that have dropped off the top 20, the investment platforms Hub24, Netwealth have been major players in our top 20 for a number of years.
We've reduced those through strength in the share price and just the view that the valuations were getting a little bit high for us. They're still large positions, but just sitting outside the top 20. Cobram Estate Olives, the olive oil producer, we've talked about that quite extensively in more recent times. That has had a really strong price appreciation. And more recently, they made a highly accretive acquisition. Once again, we just took the opportunity to reduce that a little bit. Just sits outside the top 20. And we do have a little bit more valuation sensitivity for an agricultural business like Cobram, which can get knocked around depending upon what's happening with crops and commodity prices, etc. Others that are just outside that people will know from other presentations, realestate.com, Fisher & Paykel, Pinnacle, Objective, all really good companies, high quality.
They've just been reduced through either taking a little bit off the top from strong valuations probably 5 or 6 months ago, and then more recently, we've probably had a little bit of rotation out of these companies into the resources sector, which has seen them underperform a little bit. Still large holdings, but just sitting outside our top 20. Once again, happy to take questions on any of these stocks in Q&A time and also any of the stocks in the portfolio. I'll now move to the next slide, new stocks in the portfolio. By their very nature, these new positions aren't in our top 20, so they're not our highest conviction. I know there always are a lot of interest to people in knowing what we're buying, and we understand that.
But I do stress that we take starting positions, and some of them may not work, and we will add to some over time. But in terms of, I'll go through them individually just to give a little bit of color for people on the call. The travel stocks, Webjet and Flight Centre, we've owned both of these businesses before. We rate management really highly in both cases. Graham Turner of Flight Centre, obviously the founder, John Guscic at Webjet has been there for a number of years. Both companies have really strong balance sheets, net cash. And we just got an opportunity throughout the middle of the year. They were sold off quite heavily.
We had a lot of issues around travel being reduced in the Middle East due to tensions there, really heightened geopolitical risks, a lot of issues around the tariffs, and that also impacted Corporate Travel spend as well. So we looked at both of those businesses, long-term, solid businesses, good track records, and they were trading at pretty undemanding multiples in the sort of 11x-13x PE. So we took the opportunity to take small positions in both. Pleasingly, they've both had really good recent trading updates. So we've done well from those. But I will premise that these are still businesses that act as intermediaries. So when we look through on that, we'll get a lot of questions and AI in question time. And we do have to consider what is the role of agents and intermediaries over the long term.
So that's something that we're thinking about. But both of those businesses have performed well. Baby Bunting, this is probably one that people are familiar with. Once again, we've owned this business before. But under the new CEO, Mark Teperson, we've gone back in an initiated position. We always really like their market position. A lot of people have sort of called Baby Bunting a category killer in that baby goods space. And it really is a good proposition. But I'm not sure how many people have been into a store more recently. And I will admit they did look a little bit tired, some of their stores. It had been the same format, the same ranging, the same appearance for a number of years. And under Mark, who has a very strong digital retail background, very data-centric person, they've sort of reimagined the format of some of these stores.
So they've opened three new format stores in more recent times, really bright, well laid out, a lot of digital displays. They've got a lot of data about what are the best-performing SKUs. And we've seen, even though it's early days, sort of 20% increases to like-for-like sales in their stores. And they really are having a walk through them, they do encourage a lot more lingering time, which is translating into better sales. So with approximately 70-80 stores in the portfolio, we think there's a long multi-year store refurb opportunity. So hence, we're taking a position. EROAD, that's probably one that's not familiar to too many people. It's a New Zealand-based business which does telematics. What that actually means is that they provide GPS tracking, compliance, driver monitoring for large truck fleets and commercial vehicles.
I guess the reason this business has been New Zealand-based, for those that sort of don't know and don't expect people to, New Zealand doesn't have a diesel excise tax, but they have what's known as a road user charge. So EROAD, over the years, has built a sort of dominant position with their hardware and their software for monitoring road user charges. Essentially, they've got a, I think, probably an 80% market share in that space. So the reason we took a position, we think their existing business looks interesting. But the New Zealand government more recently have flagged that all vehicles, including passenger vehicles, will potentially migrate to road user charges rather than having fuel excise taxes. So we think they're really well positioned to participate in any upside depending upon how New Zealand transitions that over time. So I'd sort of characterise this one.
It's a very small position in the portfolio, but we're holding it for option value. We have seen, even in Australia, Jim Chalmers has talked about, given they're not collecting tax from EVs, how do they go about fixing that? They have flagged potential road user charges over here too. This business has had its ups and downs. It sort of made a poor acquisition a couple of years ago and did more recently have an earnings downgrade. We've kept the position small, but we do think it has some interesting optionality longer term. Wrkr, another one that I assume won't be overly familiar to people on the call, provides software in the payment space, primarily focused on employees distributing superannuation payments to employers. This is enabling workers to be paid efficiently in an area with pretty high regulation and licensing requirements.
This really comes into focus this year. Payday Super coming in, I think, in July. And as a background, previously, Super Payments have lagged normal payments to employers. They may have only been paid on a quarterly basis in some instances, but these will now be paid pretty much in sync with a normal pay run. So that will increase a lot more transactions in this space. There's going to have to be a lot more compliance and messaging. So we think they're really well positioned. They have a white-label partnership with MUFG, which lists Australian Super and Australian Retail Trust as clients. So really significant amount of Super members there. So I think that's a really impressive network of clients. And they are operating in a really quite a niche space, but a very important space.
So we think that one looks interesting despite being quite a small company and only kind of AUD 350 million market cap. So I think, hopefully, that's of interest to people to know what we've been doing recently with the portfolio. But I'll just hand back to Kieran now.
Thanks, Stuart. So just onto some outlook comments. And really, this is just looking to reiterate the key messages that we've already expressed. While we're very conscious of the particularly challenging cyclical conditions we're currently facing relative to our benchmark, we remain confident in the key holdings that have been weighing on performance recently and their long-term outlooks. And we also remain of the view, we don't know when, we won't be able to pick how and to what level, but commodity prices and resource stocks will remain cyclical. And it's pretty easy to observe how buoyant that cycle has been recently. We also continue to take confidence from the transactions and making sure that we're executing on our investment approach. That does feel a little bit under the hood versus the overall performance of the portfolio relative to benchmark at the moment.
But it's a key measure of the health of our execution on our strategy. The other point I'd make is about cycles just more generally. It is interesting. I mean, there's always silver linings in a cycle, as challenging as it's been for the portfolio recently. What we've noticed just in recent months has been we've been encouraged by being able to get back on the front foot and buy long-term growth companies again. It's felt for the last 3, 4, 5 years that we've been defending some of the valuations in the portfolio and making sure we're rotating some capital out of positions that have done really well because they were looking a bit full and putting it into still high-quality companies, but things that had more resilience and more protection, sort of asset plays rather than growth companies.
But I guess with what the market conditions are throwing us now, it's seeing us being able to go back to some of the businesses that we think we're most confident will be much larger in five years and beyond and buy those into the portfolio again. So we do think this is a period we'll look back on in the future and say, "This was a good period for us to execute on our strategy and add value looking back years from now." The other point is we've got great latency with our cash. We've still got plenty of cash left from the raising and a very, very healthy franking credits balance because of that environment we've been in. And I guess, finally, I'll just make a point going back to that discount to NTA and just observing cycles.
I mean, it strikes me that if we had done particularly strong outperformance versus the benchmark, they're the times you typically trade at a premium. And that can be a risky time to be looking at an LIC. But it's interesting that a portfolio that we think's a really good quality portfolio of stocks underperforming its benchmark is now at a discount. So I just think that's an interesting cyclical observation as well. And with that, we'll close the presentation and hand to Geoff for questions.
Thanks, Kieran and Stuart. So the first question's actually addressing market cycles. The market appears to be rotating away from technology companies towards mining, as you mentioned. Is Mirrabooka now going to follow the trend? I think you've probably answered it, but.
I think we have. But I think it's just important to say it again that good luck to those people that sort of saw gold about to break out and bought it. And that's a different style of investing, well played to them. But I guess when those cycles get extreme and you're facing the pressure of underperforming it, it's so easy to capitulate and then say, "Well, I don't really want to be that underexposed. Let's just have some." But effectively, you're probably buying that position off someone who bought it much better, much earlier, and is de-risking their position. And I think that's just not the way to deliver long-term outperformance, which is a challenging thing to do versus benchmarks.
You've got to be really aware of what your approach is as an investor, why you think it can have an advantage over others, and stick to it, particularly when it feels hardest. That's the most important thing we think for the long term.
A couple of questions on corporate travel. So both related in a way. How much of the Corporate Travel Management investment is sold down? CTM claim that Australian businesses function a bit power-close. Normal is that? And is it realistic for an Australian small business to have an offshoot in the U.K., which has probably been answered itself? And the last bit, how much have we actually lost on corporate travel?
Yeah. Look, I think we'll cover that a bit more broadly. I think it's important. I think there'll be some questions about corporate travel. And we'll give a fuller answer to that, which is really the starting point for me and the question. I'll get to those questions. But the key question is, with your long-term quality investment approach, how did this get into the portfolio and what have you learned from it? And then we'll get into the losses and the way forward. So what's particularly disappointing about it is we talked about the key tenets in our investment approach, and one being reliance on people. And in this case, we feel particularly let down. We don't know enough of the detail of what's actually happened. I don't think anyone does yet to be able to direct that disappointment specifically at people.
But clearly, there's been people in this business that have done wrong by their customers in a very material way. And when you do wrong by your customers that materially, you're doing wrong by all your stakeholders. So that causes us to reflect. We won't share publicly what those reflections are on the particular instances of this investment. We don't think that's right or fair. But it does make us stop and think about what enthused us about this? What did we believe about their competitive advantage? How does that look in the cold light of day when you've sort of seen these sorts of things? But importantly, we also feel like we've been the victim of fraud here. And there's not that much you can do about that. But we do need to learn from, in a broader sense, from how this investment got into the portfolio.
In terms of money lost, it was around 1% of the portfolio when it went into trading halt in the middle of last year. So that's the maximum loss. The way forward, as I said, we just don't know enough to know how to value it. But we need to, as a public company, people are buying our shares. We've got an asset backing that we want to reflect what we think the value is. So we've had to take a view. And what we've done is effectively written the position down to the extent of our tax loss. So if it was worthless and we sold it, we would recover some money in terms of offsetting other gains. And that's what we've done at this point in time. So we're at about a 70% write-down is what that means.
But we'll see what comes out in the coming months as to how this actually resolves itself.
That probably does say something about smaller companies expanding overseas, Kieran, I guess.
Yeah. Look, it does. Yeah. Whether this is particularly about overseas and not enough oversight about what people were doing there, it's hard to say. We have had other small companies expand overseas and done very well out of it. Yeah. Look, you can't get them all right. But we've got to make sure we reflect on, particularly when people let you down, were there any indicators that we should have been reflecting on as it relates to these people?
I've got a couple of questions on the impact of AI, particularly on companies such as REA and Carsales. How is the investment team thinking about the disruption that AI can have on traditional or these sort of business models? The second part of the question is, given the valuations in Australia are still relatively full for these companies, but comparatively overseas, there are other companies which are trading closer to or on lower valuations. Has the Mirrabooka team ever thought about looking at overseas for those opportunities?
Yeah. Look, it's a great question. It's particularly relevant at the moment. Both of those are great questions. In terms of AI disruption, I think there's probably two broad ways we're looking at this at the moment. One is how AI could change the way consumers interact with companies. And then the other is, I guess, the solutions that businesses are providing for other solutions. Can AI come along and change that game and make that different? And so we have a number of technology companies in the portfolio. They're good long-term investments, have been, we think will continue to be. And obviously, this is the area that'll get exposed most particularly if technology changes in the way that AI could. So we ask ourselves that question a lot on all of our companies.
And we think if you've just got a basic sort of application that's doing a function and sort of organizing something for a business, but you're not deeply embedded in that business, you're going to be vulnerable because the way technology is developed, brought to companies, is going to change a lot. And so you've really got to think about what is the true moat around the business with technology enabling the delivery of something. So you've got to think, how embedded is it? How much of a habit is it for the consumer? How could it be disrupted? And they're the sorts of questions we're asking. So for the classifieds, REA and car sales, they're so dominant for their existing customers that we think the most likely risk will come from consumer behavior changes.
If young consumers interact with technology in a totally different way and Google's not the way you search for things and you're asking questions of Agentic AI or some sort of AI, then that could change the game. And so we think it's incumbent on these businesses with the really strong market positions they have to just be really hyper-aware of that. And it's a question we'll be asking in the upcoming reporting season along with every other investor. What I would say is it's become very much the trend in the market to call this into question. Markets move very quickly when that becomes a theme. I think really why these stocks have fallen is because they were pretty fully valued and they were priced for not much doubt at all. And this AI can introduce some doubt. So that's a way to bring share prices down.
It'll be many, many years before we know the real answer as to whether this risk emerges. And I guess that goes to the other point around valuation, which is to say we think we kind of agree. We think these businesses were overvalued. They're getting back to fair value, which for great businesses means they're back in an area where we could buy some. We have started to buy some, but we're not piling in because we're aware that these valuations are still fair rather than cheap at this point in time. And then finally, on international, it's not something we're looking to do tomorrow. Stuart and I travel quite a lot in our role. A lot of our positions are global. When we do that, we see other international companies. We've often remarked how interesting it is the multiples are often better in overseas markets.
But it's something we want to address over the medium term and consider that it's something that's on our strategic agenda, but not something we're looking to do in the immediate term.
Thanks, Kieran. Question about why we still hold ResMed and Car Group in the portfolio given they're now ASX 50 index companies.
Yeah. So look, it goes back to, I guess, the way we constructed Mirrabooka originally, which is to say we don't want to have rules and mandate restrictions. We don't really think that we're being put into people's asset allocation in a way that's narrow and needs to be very disciplined, focused on something to meet their criteria. We think we're looking to get good long-term returns for our shareholders, including us, because we're all invested in it. So in saying that, we're never going to have a massive part of the portfolio remaining in 50 Leaders companies. But what we do is when companies are promoted from the mid-cap index into the 50 Leaders because they've been really successful, that's the way you get there. It just causes us to reassess what's left in our conviction in this, what's in the investment case from here.
Take a little bit of a higher bar to holding onto them. But if they're still doing everything we want and we still think there's return to be had and they're not sort of maxed out, then we're happy to run with them. Because in the case of a ResMed, you're looking at a business with a net cash balance sheet, PE in the low 20s, doing earnings growth of mid-teens. I'd love to have way more of those in the portfolio, not less. So it's a pretty easy decision to keep holding onto that.
Question about the current PE and forecast PE in the Mid-Cap 50s. I think on my calculation, the current PE is about 15, sorry, 18, I should say. The average has been about 19.6. So where do you see that particular index in terms of valuation at this stage?
Yeah. Look, it's a very curious index, the Mid-Cap 50s, because you've got to drill down and look at the components of it. As we sort of touched on earlier, you've had mid-cap resources up 100% in the last 12 months. A lot of those companies probably wouldn't even be on a very high PE because the gold price is so high that the PEs look really reasonable. But does that make them cheap? Probably not for a cyclical stock. And then you've got some sort of secular growth companies in there which are on high PE. So that blends out to that sort of number. But I think to have sensible analysis, you really need to look at it industry by industry rather than as an overall number.
Question here about where shares in Mirrabooka is trading at a discount. Would you think about doing a buyback of shares this year under the DRP to do?
No. Look, it's obviously something that the board considers. And it's a board matter. But some context around that, the discount's not wide enough that we think we'd get compelling sort of arbitrage in valuation or that it's our responsibility to sort of step up and act for anyone. We think it's better to let the market resolve these things typically. And it can provide opportunities on both sides. And that's what we typically try and do. And I guess the other point we'd raise is that we did raise capital last year, interestingly, at a pretty similar share price to where we are now. There was quite strong demand for that then. But we think to then turn around and return that capital effectively through a buyback, there's not enough in it in terms of the discount 28% at the moment.
Thanks, Kieran. A question about Cleanaway. We talk about investing in quality businesses. Cleanaway is in the top 20. Question is, is it sort of a quality company? Has mid-single digit ROE, high debt, and very low earnings growth and has had very low earnings growth over a number of years?
Yeah. That's a really astute question. Our view on this has been we look at the assets and the market position and see quality. But it's anticipating improvements in what's been described in the question. And sometimes you can get those situations. If you buy a really good asset, you get some sort of change in the industry or management, the returns and the financials can start to look better afterwards. And if you identify those, they can be great investments. Since we bought Cleanaway, it's been more lackluster, to be frank. We think the management are doing the best they can. But at this stage, the strategic value of the assets is not being reflected in the financials. And yeah. So I guess we're just looking for a bit more out of that investment in terms of those improvements.
Given how we think about gaining exposure to resources through the services companies operating in those areas, the question is that I believe there's a number of quality small companies that operate in this space. Will we use those as a proxy to actually get exposure to those commodities and geographies?
Yeah. Look, it's interesting. I go back to that time in 2011 to 2015. I remember the sort of drawdown in resources that I described earlier of 80% for the small resources companies. And I guess my recollection of that time is the services companies that might not have been as dramatic, but they follow the customers in terms of their fortunes and the share prices. So I'm wary of that. Do they have competitive advantage? Do they have resilience through cycles? You've got to be a little bit careful, particularly for just contractors. I think that's the area we'd be most worried about through the cycle. It's fair to say, though, we've got businesses like ALS, which is one of our top positions in the portfolio. Half of that business is testing commodities for commodity companies. But it has, we think, very high competitive advantage.
It's one of the few companies in the world that can have that network of assets to provide that service to their customers. So we'll wear cyclicality in a business like that because we think there's an upward slope in their profits over time, i.e., it grows through the cycle. They have resilience because of their competitive advantage. We don't have rules that we don't like resources at all. We just struggle to find the sort of competitive advantage and resilience that we like in that area of the market.
A question about Australian Ethical Investment Limited. Do we have a view on Australian Ethical Investment Limited conditions from APRA and the potential outcomes of the review? You might give a bit of background to it.
Yeah. No. Thanks, Geoff. Just a bit of background. So Australian Ethical, one of the positions in our fund, is also the trustee for their super fund. APRA has announced they've imposed additional conditions on their license. We're spoken to the company. They weren't the only fund approached. And it's sort of there's no coincidence that these issues have occurred around post First Guardian and Shield, obviously around Netwealth and acquiring and what's happened there. So APRA, I think, are just tightening what they're doing. We're spoken to the company. They believe they're in compliance with the regulations. APRA are just imposing additional requirements. And in terms of oversight and reporting, APRA can't take money off Australian Ethical or any of those sort of penalties. And the company has spoken to the market, reassured them they're charging what are fair prices, market prices, to the super fund.
Their performance has been outstanding, sort of top quartile as a super fund. So they're not failing any of the superannuation tests. So I think it's probably impacted the valuation and the sentiment towards the stock as opposed to something long-term. But I guess post what's happened with Equity Trustees, Shield, Guardian, there is some heightened regulations coming to the sector that we need to be constantly aware of.
Thanks, Stuart. I'll throw this one to you, Mark. Is there a potential for a merger between Mirrabooka and AMCIL?
Oh. Well, look, each of the investment companies are independent. They've each got their board of directors. It's up to them to sort of review strategy. But I mean, we obviously observe what's going on in the sector. We follow it very closely. And you had the joining of all the Soul Patts group. And now you've had AUI takeover proposal of DUI. And so we work through all those strategic issues. And I guess you'd expect us to be doing that and to be considering the marketplace and what's going on. But then ultimately, it's up to the boards of each LIC to determine the strategy.
Thanks, Mark. Question here about sort of naming the companies you've exited and not repurchased over the last five years. I guess really the point of the question is, has there been any common themes in those companies you've exited in the portfolio?
Yeah. Look, hopefully, it came through with what we were describing earlier. There's two sort of reasons really why we look to sell anything in our portfolio and two broad reasons. One is to manage risk around valuation. When things run to extremes, we think that's important. But actually, the first protocol and the more important selling is when something's not working and it doesn't meet the thesis because it's either deteriorated or you've worked out you were wrong. And so the reason I make that distinction is the first category will typically trim but run with a holding and hope that we're right and we can buy them back and we can add value but keep the position in the portfolio because they're good businesses. And that's what we want to do in the portfolio.
The second category, where we've either been proven wrong or things have changed and it's deteriorated, they're the ones we need to exit. So that's the common theme. It's interesting how you come to that decision, how open-minded you need to be. And I'll give one example of that, which I think's a good one. For those that follow us closely, they would have seen that a stock that we'd once done particularly well out of was Treasury Wine. And going back 12 months ago, we'd seen the share price decline. We were meeting with management. We saw the ability to sort of regrow that business, thought it looked pretty interesting, started a position.
Within a matter of months, one of our analysts went over to China and was asking around, doing his work on Treasury Wine, and really was struck by just how oversupplied that market felt and how much inventory there was in the chain. And so we'd only bought the position a couple of months earlier. But we had to come to a conclusion that said, "Well, that thesis was wrong. These circumstances are changing. And the last thing you want to own is a wine business with too much inventory." So we quickly reversed that and moved that position out. And so we only owned it again probably for about 4 months. We lost a bit of money, which always looks a bit odd when you've only owned it for a short period of time.
But in selling it, we preserved a lot of capital versus where it would be today. So hopefully, that gives a bit of color about what we do sell versus what we trim.
AUB is back in the top 20 at the end of January. Despite the share price decline, does it mean you have taken a favorable view of the recent prestigious acquisition?
No. The easy answer to this is it means that we've taken up our entitlement as part of that acquisition, which is enough to have bumped it back into the top 20. In terms of a favorable view of the acquisition itself, we're still forming that view. So we don't have a view either way. But the other point to note on that is if a good company makes an acquisition and it's not betting the company or transformational, often you'll just put the money in because it's a good company, not necessarily because you're voting on that acquisition. But you want to increase that exposure to that business. So that can be the case as well.
The final question here we've got because we're just on the hour now. I know some numbers are dropping off. Did you sell Reece into the buyback?
No. We didn't. We actually, interestingly, saw it as the opposite indicator, which was to say that the company has a lot of insider ownership in that business. They are long-term people. They were pretty motivated to buy back stock. We were already thinking there was a bit of value there. That was just enough of a catalyst for us to say, "Well, they're obviously saying long-term value as well." So we did build that position up through that time. It's performed fairly well since.
All right. Thanks, Kieran. I'll hand back to you now, Mark, to close the meeting. Thanks.
Okay. So thank you, everyone. We've answered all the questions that have come through. So we appreciate everyone joining in. It's a great opportunity to hear directly from Kieran and Stuart what's happening in the portfolio through this results. We are doing investor roadshows throughout March in all the major cities. So if you're looking for more updates or contact, you can check the website for the dates on those. So with that, again, thank you for your attendance. And we'll speak to you soon. Bye.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.