Good afternoon, ladies and gentlemen. Welcome to the 28th Annual General Meeting of Mirrabooka Investments Limited. My name is Greg Richards, Chairman of your company. The Company Secretary has confirmed that a quorum is present. I will now open the meeting. 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 the elders, past and present. I will now introduce those on stage with me. We have our Chief Executive Officer and Managing Director, Alison Gibson.
Good afternoon.
On my left, and my fellow Non-Executive Directors, Jacinth Fairley on my right.
Good afternoon.
Annette Kimmitt and Tony Walls. Unfortunately, Paul Dwyer is an apology due to some unavoidable complications with his travel arrangements over the past few days. He has had quite a few cancellations, which is most unfortunate. We have also our Company Secretary, Matthew Rowe.
Good afternoon.
Our Chief Financial Officer, Andrew Porter, and our Head of Business Development and Investor Relations, Claire Aitchison.
Good afternoon.
Welcome, Claire. In due course, we will be hearing from Portfolio Manager, Kieran Kennedy. Good afternoon. Assistant Portfolio Manager, Stuart Low.
Afternoon.
We are also joined by other members of the investment team in the front row of the audience. I also take this opportunity to introduce Kate Logan, partner of the company's auditors, PricewaterhouseCoopers, who is available to answer questions today on the audit and the preparation and content of the auditor's report at the end of the presentation. Today's presentation has been released to the ASX and also made available on the company's website. I remind shareholders using the online platform that whilst questions can be submitted at any time, I will not address them until the relevant time in the meeting. To ask a question, click on the Ask a Question button on your screen. If you have not entered your shareholder number or proxy number, you will be required to provide these details before you can proceed.
Once your shareholder or proxy number has been verified, you can choose to ask your question in writing or verbally. If you require further guidance, please click on the Virtual Meeting Online Guide link on your screen. Please also note that your questions may be moderated, or if we receive multiple questions on one topic, amalgamated together. I now declare voting open on all items of business. I will give you a warning before I move to close voting. To cast your vote, click on the Get a Voting Card button on your screen. Where prompted, please provide your shareholder or proxy number and follow the prompts. Once verified, a voting card will be issued, and you will be able to lodge your votes. Click Submit Vote at the bottom of the voting card to lodge your votes.
If you have multiple holdings, you will need to obtain a voting card for each holding. Shareholders, authorized representatives, and appointed proxies in attendance here in Melbourne would have been issued a yellow card to vote on each resolution. If you are eligible to vote and you have not received a yellow card or have any related questions, please see a representative of the share registry, MUFG Corporate Markets, in the foyer outside. Before we move to the business of the meeting, I would like to provide some additional comments. Mark Freeman retired as Chief Executive Officer and Managing Director at the end of the 2026 financial year, having worked with the company in different roles since its inception. The board would like to acknowledge Mark for his leadership, and we wish Mark all the best for his future endeavors.
Alison Gibson was appointed Chief Executive Officer and Managing Director of the company with effect from July 13, 2026. Prior to taking on the role of CEO, Alison, as an experienced investment professional, established and managed the Australian equities team at HESTA, one of the larger industry super funds. Alison is well known to the company, having previously worked with the group for 10 years until 2021. Alison has been using her first few months to connect with shareholders, their advisors, and the team. The board and I are excited to work with Alison to continue to deliver good long-term outcomes for shareholders. On a relative basis, the 2026 financial year proved to be one of the more challenging periods in Mirrabooka's history. The divergence between resources and industrials has been at some of the highest levels seen in Mirrabooka's history.
The combined S&P/ASX Small Ordinaries and Mid-Cap 50 Accumulation Index returned 7.8%, including franking, for the 12 months to June 30, 2026. The market was driven by mining and mining services companies, with the mid and small resources indices returning 68.5% and 30.7%, respectively, over this period. This is compared to the mid and small industrial indices' returns of -3.9% and -0.9%, respectively. Mirrabooka's portfolio return for the year was -10.8%, including franking. This reflected our lack of exposure to resource companies, together with a valuation de-rating across several of our higher growth holdings, particularly technology-related businesses, as heavy investment in artificial intelligence by large offshore technology companies increased perceived disruption risk. Whilst this shorter term underperformance is disappointing, it has not changed our conviction in the quality of the businesses we hold or in our medium to long-term approach to investing.
Importantly, full-year profit increased to AUD 13 million, up from AUD 7.9 million last year. The board has maintained the final dividend at AUD 0.065 per share and declared a special dividend of AUD 0.03 per share, both fully franked, bringing total dividends for the year to AUD 0.14 per share, up from AUD 0.11 last year. Mirrabooka's management expense ratio also improved, falling to 0.52%, which we believe remains very competitive. Since listing in 2001, Mirrabooka has delivered a portfolio return, including the benefit of franking, of 11.6% per annum, ahead of both the combined benchmark at 8.5% per annum and the S&P/ASX 200 Accumulation Index of 9.8% per annum. It is this long-term track record and our ongoing investment discipline that gives the board confidence in the portfolio as we look ahead.
On your behalf, the team remains committed to uncovering compelling listed Australian and New Zealand companies outside of large caps, providing investors diversification from the high levels of concentration at the larger end of the market. Now, moving on to the business of the meeting. I will take the notice of meeting as read. With regards to the minutes of the 27th annual general meeting held in 2025, they have been signed as a correct record and are available to shareholders for inspection today. The first agenda item is the consideration of the financial statements and reports for the year ended June 30, 2026. We will do this via a presentation, after which I will ask shareholders to comment or to raise any questions either about the presentation or of the auditors if they have any questions about the audit. I will now hand over to Alison for the presentation.
Thank you, Greg, and good afternoon, everybody. It is an absolute pleasure to be here serving you, our shareholders, as CEO and Managing Director of Mirrabooka. Thank you for coming this afternoon in person, and thank you for those joining us online. I will now turn to our presentation, and the usual disclaimer, which just says that we are not here to talk about your individual circumstances or give you individual financial advice. Here to talk about the company. The first slide is really our agenda for today. I will say a few words and then hand over to Andrew Porter, our CFO, to talk about the financial results. Then Kieran Kennedy, our Portfolio Manager, will give an update on the portfolio, and then he and our Deputy Portfolio Manager, Stuart Low, will provide an update on the market and the outlook.
As Greg noted earlier, I have returned to the group recently, having worked in the business for 10 years until 2021, and in the last five years, been working with HESTA to establish their internal Australian equities team and run that portfolio. I am really excited to be back with the team at Mirrabooka, and I have worked with them for many years, and I am really grateful to be back serving you, our shareholders, in this role.
I have been with the business now nearly three months and been asked a couple of key questions in that time, and I wanted to spend a little time talking to those today. Those being, why did I rejoin the business, and what am I looking to improve? Firstly, on why did I rejoin the group? A few of you in the room have heard this before, so bear with me a little bit.
It is important. Firstly, that purpose. I do believe in why Mirrabooka was created in the first place, really to serve shareholders and to provide them with a low-cost option for a managed portfolio of quality companies at the small and mid-cap end of the market. We are essentially not for profit, working directly for shareholders, with no external fees, and that is something that is really important to me personally. In terms of the people I have already mentioned, it is great to be back working with the team. I do remember a story where I was a young analyst working for JBWere, researching the infrastructure sector, and I was asked to come and present to the board of the LICs. I went up and presented on Transurban and a number of the other infrastructure companies and talked about their prospects for growth in earnings and dividends.
At the end, Mr. Bruce Teele asked me, or said to me, "That is great. Thanks so much, Alison, for that information, but tell me about the people. Who is on the board? Who are the management? What is their track record for looking after shareholders?" That is really important, and it is something that has really stayed with me my whole investing journey. It is something that our team do really well. Talking to the management teams, it is a privileged position that we have. We are able to talk to those management teams and interrogate them and determine whether they are indeed good allocators of capital. I think it is also really important in terms of the people that we work with each day. Are they people of high integrity? Do they have a shared sense of purpose that brings them to work each day?
That is one of the key reasons I am coming back to the group. I have rejoined because we have an incredibly experienced board of directors, and it is a privilege to work with them, and also a capable team, and dedicated, working for you, our shareholders. I think finally, just the ability to make a difference. We work, as I said, directly for shareholders, and that is really important to us. We have the ability to provide shareholders with that actively managed portfolio at a low cost, the opportunity to provide them with a portfolio of high-quality companies, and the best quality companies we believe in the small and mid-cap end. I do believe in active management, not just buying the index, and that wealth is created quietly over decades through the power of compounding. An investment in Mirrabooka provides investors with just that.
Mirrabooka has an investment process focusing on quality companies that has delivered outperformance over the long term, as you can see on this chart, some very nice long-term performance. I wanted to talk about a few areas of focus today. Recent performance, that has been more challenging. Greg has mentioned that. We have seen industrials out of favor as interest rates have risen from the lows in COVID. Resources has been talked about. They have had an incredibly strong period of performance, and that is an area of the market that the team have typically struggled to find many sustainable long-term investment opportunities. There is a cycle to things, and sometimes these things can be really attractive, but through the cycle it is difficult to identify quality opportunities in this smaller end of the market. I think the other thing to say is there have been some structural market changes.
We have seen the rise of passive and systematic investing, which has seen that single stock volatility increase. We have seen big moves in share prices on the back of short-term factors, and big swings between sectors. The resources sector we have mentioned already. That has created some real challenges for active managers in the industry. But I do see that as an opportunity for investors like Mirrabooka, who can look at through that volatility in the short term and take a long-term view, and there is many in the market that cannot do that. I have been in markets now for a little while, over 25 years, and have seen many cycles, and I am confident that part of the current performance is due to just that, the cycle, which will reverse at some point.
Our focus on quality companies that generate strong cash flows and returns, and are run by good people, that will not change. But I do see an opportunity to refine the investment process to deliver stronger returns. The other area of opportunity I see for improvement is in communicating the value proposition of Mirrabooka to a broader audience. Mirrabooka is trading at a discount to NTA, or its Net Tangible Assets. I believe we do have a unique offering in the market, which is attractive to investors at all stages in life. It is important we communicate this clearly. Investors currently have the opportunity to buy an actively managed portfolio of quality, growing small and mid-cap companies at around AUD 0.90 in the dollar. I have great confidence in the Mirrabooka team, led by Kieran and Stuart, having previously worked closely with them.
They bring many years of experience in investing in the small and mid-cap part of the market, and remain extremely dedicated to serving shareholders and delivering improved returns. As I said, I am really excited to be working with them again, having spent the 10 years working with them. With that, I want to say thank you for trusting us to manage your company, and I look forward to taking your questions a little later on. I am just going to hand over to Andrew Porter, our CFO, to talk through the FY 2026 financial results.
Thank you, Alison, and for those of you who heard this morning, I thought we would shake it up a bit by me speaking from this stand rather than over there, just to make sure everybody is paying attention. Good afternoon, ladies and gentlemen. As in previous years, I will run through the key financial metrics for Mirrabooka, as reflected in the financial report, before we get back to the interesting stuff about the portfolio. Much of this, those of you who listened to the results summary webcast will have heard before. Although I will try and be quick, I will of course be around for any questions after the end of the presentation. As the chairman has noted, profit was up for the year to AUD 13 million, equivalent to AUD 0.058 per share.
That AUD 0.058 per share is consistent with the levels that we had in 2023 and 2024, which were themselves at a higher than usual level. This was caused not only by an increase in dividends, particularly from ALS, which changed the timing of their dividends, so we got three during this year under review rather than one last year, and a special dividend from ARB. We also had an increased contribution from writing call options over stocks that we owned, with an outsized contribution from options written over Lynas Rare Earths as it shot up in value. From the trading portfolio, largely from our holdings in Tuas and Flight Centre, which were sold during the year to take advantage of those gains. The interest that we received was considerably higher, as we were patient with the cash that we had from the rights issue.
We had a fair proportion of that in deposit accounts. Again, as Greg has noted, we have announced a special dividend of AUD 0.03 this year, bringing the total dividends for the year to AUD 0.14, which represented a yield of 7.1% on the portfolio at the end of the year, at the end of June 26, including franking. We think that this is one of the attractions of Mirrabooka. Getting a fully franked dividend of this size from a portfolio of small to mid-caps is rare, and I will come back to that in a moment. After paying those dividends, we still had sufficient franking credits to maintain, or to cover, I should say, AUD 0.27 worth of dividend, and I will also come back to that shortly.
Portfolio, down in the bottom left-hand corner, was down to AUD 635 million at the end of the year, and Kieran and Stuart will go through the main drivers of that. The management expense ratio or MER, which Greg also mentioned, is a proxy for the costs of running the company, and is calculated as the costs for the year over the average portfolio for the year. Even though the costs were flat and the portfolio down at the end of the year, due to the rights issue, the average portfolio this year was higher than last year. So the MER dropped 0.52% or AUD 0.52 for every AUD 100 invested. I am happy to go through that in more detail if anybody wants to see the sums after this.
We think that for this sector of the market and the work involved, the costs are very competitive, but are always monitored by the board and management. Realized gains per share were down on last year, but combined with the increased earnings, the board were comfortable to declare a special dividend this year. The next slide shows the history of dividend payments, including special dividends, which Mirrabooka has been paying out since 2013, but not, I should note, every year or even of a consistent amount. I think most Mirrabooka shareholders appreciate that special dividends can and will vary from year to year.
Mirrabooka will pay a special dividend depending on the level of earnings, the level of realized gains, and what is considered a prudent reserve of franking credits to continue to pay the ordinary dividend in times when we are not receiving or generating as many franking credits as usual. As noted this year, after paying out the dividends in August, we will have roughly AUD 0.27 worth of coverage, which is the dotted line on the chart. It is important to note that Mirrabooka's ordinary earnings, even in a good year, only approximate to 50% of the ordinary dividend. The rest needs to be funded from realized gains. So we do need to be more cautious with regard to the reserves of franking that we have than many other LICs in order to maintain that ordinary dividend for times when gains are hard to come by.
The last slide that I will cover highlights the importance of franked dividends to Mirrabooka shareholders. As we have noted, regular franked dividends, certainly at the level that Mirrabooka pays, are rare in this area of investing. The share price will be volatile, but by itself, it does not reflect the full value of what a Mirrabooka shareholder can expect. In this chart, we show what the cumulative value of franked dividends that we have paid for the last 25 years, plus the franking on top of that, has been for shareholders. Essentially, if you ignore those franked dividends, you are ignoring well over AUD 4 of additional value that a shareholder has gained since the shares were trading at just over AUD 1 back in June 2001.
I should note that these figures do not actually include the benefit of the LIC gains that are paid as part of that dividend. For many years now, a substantial part of Mirrabooka's dividend has consisted of dividends paid out of capital gains, which have further tax advantages for shareholders. These tax advantages are not included in this chart, but are certainly worth bearing in mind, and I know many of you are very familiar with them. As we have said, those franked dividends are very important part of the equation for a shareholder to consider. As I noted, happy to take questions about this or anything else at the end of the presentation, but in the meantime, I will hand over to Kieran.
Thanks, Andrew, and good afternoon, everyone. Thank you for your interest and attendance today. As Alison and Greg mentioned in their opening remarks, we have experienced challenging portfolio performance since the start of the 2026 financial year, with performance falling well short of our mid and small-cap benchmark. This has inevitably impacted our longer-term numbers following a strong long-term track record of outperformance over five years and beyond. Today, I want to put that recent performance into perspective. I will provide clarity on the factors that have driven this result while sharing some context on the broader market cycle that has shaped the environment for mid and small-cap investors over the past five years.
Most importantly, I will finish by looking forward, where we are today in the market cycle, what we are seeing across the portfolio, and why we believe the current environment provides a supportive foundation for our future medium to long-term returns. Starting with the 12-month portfolio performance. This chart shows the Mirrabooka portfolio return in blue versus our benchmark in lighter blue. We have further broken down our benchmark return into its two components, resources or mining stocks in gray, and industrials, which is everything that is not a mining resources stock, in orange. It is clear that investing in mid and small-cap resources stocks, and specifically those tied to strong rallies in gold, lithium, and copper prices, has been particularly profitable over the past year. We have not meaningfully benefited from investing in this area of the market.
Rare earths miner Lynas Corporation, a holding that we profitably sold upon its graduation to becoming a large cap stock during the year, has been our only recent mining investment. I will touch on our approach to considering mining stocks for the portfolio on the next slide. The other observation on this slide is that we have underperformed against the non-mining industrial stocks by approximately 3% over the 12 months to August.
I will also return to the factors behind this shortly. I will now zoom out to provide some context on the obvious question: Why do we miss out on such strong recent mining stock returns? The lines in the chart represent a series of one-year returns, including franking for every month-end period since Mirrabooka's IPO in 2001. The same color scheme applies as earlier, Mirrabooka in blue, mid and small industrials in orange, and mining resources stocks in gray.
A couple of observations. One, Mirrabooka's returns have clearly been much more aligned to the industrials non-mining part of our benchmark since their inception. Two, for those investing in the resources gray line, returns have clearly been more volatile, with significant performance peaks like we are seeing now, but also more pronounced periods of negative returns. The period from 2011- 2016 is important to consider in this light. For nearly all of this five-year period, one-year returns from mid and small cap mining stocks were negative, and most commonly down by more than 20% against the prior year. This reflects a painful bear market where significant capital losses followed earlier significant capital losses, an experience that hasn't similarly been felt by Mirrabooka or the industrials part of the benchmark in our history. Now turning to the same analysis, but looking at 10-year returns, again including franking.
First, it's obvious that the longer timeframe provides much more consistent returns as a full market cycle is experienced over 10 years, while one-year numbers are limited to a specific stage in the cycle and can therefore be much more volatile. It's also clear that Mirrabooka and the industrials part of the benchmark has delivered more consistent returns than in resources stocks over this timeframe. Mirrabooka's return since inception has been approximately 11.5% per annum. On a 10-year view, the chart demonstrates that our returns have most often tracked between 10% and 15% per annum, though they have fallen slightly under this range in recent months. Our consistent underweight position in resources stocks has more often than not been beneficial for us. The exceptions have been in the early years of Mirrabooka and the experience of recent years as strong resources cycles drove their returns well above our range.
Our approach to investing in mid and small cap resources has consistently been to be selective. Capital intensity, finite mine lives, a lack of influence over highly variable commodity selling prices, and lower competitive advantage has tended to weigh against them in our stock selection process. It is worth remembering in mid and small cap resources, that degree of competitive advantage is not as strong as you would see in companies like BHP and Rio in the larger part of the market. It's also worth noting that this process has delivered strong long-term returns for us with relatively low portfolio turnover. This is not to say that we haven't invested in resources companies. As mentioned, Lynas Corporation recently, and a company like mineral sands producer Iluka was a particularly lucrative investment for us going back a number of years ago.
What set those businesses apart was their leadership in their industries, which for us enabled them to have a degree of competitive advantage that did see them stack up in our process. We continue to consider whether we are being too selective in our quality assessment of resources stocks, but even following any possible refinement in this, we are likely to remain well below benchmark weighting in our mining stock allocation for the reasons mentioned earlier, particularly the high point in the cycle like we see today with commodity prices being very high and their weighting in the index being particularly high compared to history. As mentioned earlier, we have also underperformed against the industrials component of our benchmark over the last 12 months. This slide highlights material portfolio positions that did not deliver on our earnings expectations over that 12-month period.
A magnified impact of the market downgrading earnings and reducing valuation multiples concurrently occurred for each of these holdings. Temple & Webster saw a significant sales slowdown as the consumer environment worsened and attracting new customers through online channels became more expensive for them. ARB suffered from a subdued consumer environment as well, while challenged availability in key vehicles and a shift in vehicle preferences created additional headwinds. Objective saw a surprise loss of a material contract with a very long-standing customer, albeit one that continues to use their software without contracting Objective for ongoing support. Gentrack and Macquarie Technology have seen delays in expected new customer signings. It is not unusual for us to experience variable trading conditions across portfolio holdings, which is a key reason why we diversify with more than 50 stocks in the portfolio.
It is fair to say that this was a year of more setbacks in some of our larger holdings than we usually see. We reflect on these experiences deeply and take learnings from them where appropriate. It is, however, important to note that each of the stocks listed on this slide have been profitable for Mirrabooka Investments since they were first acquired for the portfolio, despite the challenges they faced in the past year. While recent market conditions have weighed heavily on our longer-term returns, we remain confident in the quality of the underlying businesses that we own and their long-term earnings potential. For example, as the analysis here demonstrates, these four long-standing holdings, CAR Group, Breville, Netwealth, and ResMed, have continued to deliver strong earnings growth despite a significant de-rating in their valuations.
These stocks make up around 10% of our portfolio, made up around 10% of our portfolio five years ago, and are around 10% of the portfolio again today, noting that we have had transaction in each over the five-year period. As this chart shows, the earnings delivery in these businesses has been excellent, consistent with the strong long-term track record of each, with average earnings per share growth across the four companies of 15% per annum between the 2022 and 2026 financial year. As a recap, market conditions were particularly buoyant in 2021, with elevated valuations for high-quality, high-growth companies in a near zero interest rate environment fueled by post-COVID stimulus. Significant valuation de-rating has since occurred, particularly in higher growth businesses.
For these four businesses, this has created a significant gap between the excellent earnings growth that their management teams have delivered and the share price performance that we have experienced, which averaged only 2% per annum for the four stocks over the five-year period. In the long run, our experience tells us that earnings growth and business quality are the most significant share price drivers, and the longer the timeframe considered, the greater their impact on total returns. While the valuation impacts of the last five years have been painful, we are confident that further progress in quality businesses such as these, alongside many others in the portfolio, will more directly lead to share price performance consistent with their earnings growth going forward. To illustrate this changing market backdrop, the last five years of price earnings valuation in the small industrials index is shown on this slide.
In the 10 years between 2011 and 2021, the valuation that the market was applying to this index broadly doubled, an environment that saw our holdings particularly well rewarded for their earnings growth, with the portfolio delivering exceptionally strong returns of over 17% per annum for 10 years. The portfolio returns that we were producing leading up to and including 2021 were the strongest in Mirrabooka's history, and they were strongly outperforming our benchmark. This elevated starting base is the key reason our five-year return has since been disappointing. It is also worth noting our portfolio returns encapsulating the whole 15-year period have been consistently strong, delivering 11.3% per annum, including franking, so pretty much in line with our since inception returns. Before moving on, it is also important that we reflect on our portfolio management execution through this changing environment of the last five years.
We have been aware of and articulated these valuation risks and increased the trimming of portfolio positions to manage this risk. This has supported our realized gains and franked dividends, including specials over the past five years. We have also rotated some capital to manage this risk, buying high-quality companies with lower growth expectations, seeking better value. We will return to some of this when we touch on our top 20 positions shortly. A key learning for us is that the valuation circumstances of 2021 were so extreme, there is really only one way interest rates can go when they are near zero, that greater rotation of capital towards lower growth and asset-backed businesses was warranted. In this light, it is also worth discussing important structural market changes that we are observing.
The ongoing increase in capital allocated to passive or highly benchmark-aware investment mandates is magnifying performance volatility across stocks and sectors, as Ali touched on earlier. This requires us to be backed more on relative value assessments across sectors while not deviating from our long-term quality-focused investment approach. I will now pass to Stuart to discuss our recent transactions and how they reflect our current thinking on relative value across different sectors of the market.
Thank you, Kieran, and good afternoon all. My name is Stuart Low. I am the assistant portfolio manager of the Mirrabooka portfolio. I am going to talk to you about some recent portfolio activity, and an update. Moving to, for those online, to slide 24, recent buying and where we are seeing emerging opportunities. The first box that we have drawn there is resilient market leaders. These are large, robust businesses that have had a wobble in recent years, and their corresponding share price falls have now brought them back into our investable universe. Essentially, they have come out of the large caps and back into the small mid caps. We think their issues are temporary in nature, and we are using this share price weakness as a buying opportunity. The first one I will start with is Ramsay, which is further along in its turnaround.
This is a business we purchased about 18 months ago in the low AUD 30. It had struggled post-COVID, with a lot of cost issues. Profit margins were down. We had some management turnaround. We are encouraged by that management turnaround, which is when we reentered the stock. They are clearly refocusing the business on their core, getting back to basics, and subsequently, we are seeing margins begin to improve, and the business is refocusing on their core Australian hospital business, divesting their French operations more recently.
We now see the stock back over AUD 50, much more appropriately valued. We do appreciate that is a really good business and has worked well for us. The ASX. This one, I would say, is probably halfway through their turnaround. They have had a number of issues, quite public issues around cost overruns, some earnings downgrades, predominantly relating to their CHESS replacement system.
Once again, we saw management turnover and change, and we were encouraged. We met with the new CEO recently by their, I guess, increased humility, and focus on dealing with their issues and in particular with the regulator. Once again, though, we would say despite their earnings issues, this is an outstanding market position and a near monopoly asset. Cochlear, this is the most recent addition and purchase to the portfolio. Once again, a business that was quite large, some would say sort of a market darling. It executed really well for a number of years. Absolute market leader in its space. They had a very surprising, and surprisingly large, earnings downgrade earlier in the year. I think at the time it fell 40% on the day, which was quite extraordinary at the time. Once again, we still think it is a robust business.
It is the market leader in implantable hearing devices, but it has had some specific problems relating to their recent Nexa product launch and some issues coming out of Western Europe. We have built an initial position. I guess what we are saying with these businesses, we do like it when we see great businesses in a turnaround, but they do take time. We have seen this with Ramsay, we have seen this with ASX.
It can take a couple of years. So we would characterize this as a starting position. It is an outstanding business, but it is not going to be a smooth turnaround, and it will not turn around quickly. We do think we have the capability to have quite a large holding in this business over time. The second box is what we have deemed interest rate sensitive stocks. These are businesses that tend to move negatively when interest rates are going up.
Although, once again, we think these are temporary issues, these are what we deem to be high quality businesses, and we are using that share price weakness as a reason to enter the stocks or top up in some cases. Charter Hall, as a real estate investment management business, obviously potentially impacted by lower property prices and deal activity in the space, but it has been an outstanding business for a number of years. Probably a gap in our portfolio not owning that one. So with the recent share price weakness, we have begun starting an initial position, once again, with the ability to add more if we do continue to get some share price weakness. JB Hi-Fi, an outstanding business, really well run. We have owned it in the past. We did exit at higher prices.
Once again, when we see interest rates rising in the economy, understandably, we are getting some retail weakness. That sector is tough at the moment in terms of consumer discretionary spend, but we have identified JB Hi-Fi as one of the high-quality operators in the retail space. We have re-entered that, and once again, we will take our time and build up a position, but it is a large, robust business which we could own a lot more of over time. Lastly, SEEK in that box. This is a business that we own and are continuing to top up in it. It has been impacted around, obviously, fears around slowing economic activity, what that will mean for recruitment, and does have some interest rate sensitivity to its valuation. They do continue to be the market leader though.
They are driving innovation, reducing costs, and we think at current share prices, there is also very little value attached to their holding in the SEEK Growth Fund. So topping up there as well. In terms of the bottom boxes, we are identifying these as emerging opportunities. We see that if we continue to get some weakness in the economy, potentially financial markets, a slowdown in GDP, we will be looking for opportunities to top up in companies where we already have a position, but we really like the outlook.
I guess this is not an exhaustive list, but some of the companies we are thinking about over the next 12 months would be the investment platforms like Netwealth and Hub24, some of the investment managers like Pinnacle and Australian Ethical Investment, transport businesses like Freightways out of New Zealand, dual listed here, and some really high quality retailers like the A.P.
Eagers Group and Lovisa, as well as, we have got a little box there, small cap growth stocks, interesting businesses like PWR Holdings and IPD Group. So that is not an exhaustive list of the things we are looking at, but we do think we are looking forward to getting some opportunities to add to those names over the next 12 months. Moving to the next slide, just to comment on probably what a lot of people have seen, a lot more recent takeover activity in this space of the market. This tends to be a recurring theme in the Mirrabooka portfolio. We do seem to attract a takeover or two most years. Last year, we had PSC Insurance and Infomedia both taken over, and this year we currently have three stocks under takeover, Cleanaway, Equity Trustees, and Tourism Holdings, which accounting for nearly 5% of the portfolio.
All three of these companies have received bids from private equity. I think as Kieran alluded to earlier in the presentation, it is becoming increasingly apparent that when a company stumbles, there are fewer long-term owners prepared to look through it. We are seeing share prices overshooting on the downside, and this same force of volatility, it is creating more volatility in our portfolio, is presenting opportunities for long-term private patient capital to come in and acquire some of these businesses.
This thematic should, in theory, suit our portfolio. It is why we tend to get a couple of takeovers each year. But it does look to us like we might be losing good small industrial businesses out of the market. It is shrinking our investable universe because we are just not seeing the offsetting factor by really high-quality IPOs coming to market. I'll now turn back to Kieran for a discussion on the top 20 holdings.
Thank you, Stu. This top 20 investment slide is included to both inform you on where your money is invested, as these positions represent a bit over half of your portfolio, but also to demonstrate our long-term investment approach, as represented by the continuous period of ownership that you see with the orange bars. As mentioned earlier, more recent additions, Cuscal, Channel Infrastructure, Region Group, Ramsay, and the ASX represent stocks that were bought with lower growth expectations, but better value than has been on offer against the demanding valuations in many higher growth companies. Cuscal and Channel Infrastructure are two worth pointing out. They've been particularly pleasing, as their earnings growth has exceeded our expectations, and they've driven particularly strong share price returns for us.
The threat of disruption from AI innovation is another topic that has weighed on valuations of a number of growth technology stocks, including CAR Group, REA, and SEEK within our top 20. AI continues to evolve at an incredible pace. As an investment team, we are open-minded and learning, both in terms of how to utilize AI's potential to assist with our research process, but also to consider the potential impact that it could have in disrupting businesses within the portfolio. At this stage, we continue to believe that the dual-sided markets that exist in the CAR, REA, and SEEK businesses, and the value of their unique data sees them well-placed to interface with the evolving AI tools that will help consumers search for their next car, house, or job.
Our discussions with management teams in these businesses also give us comfort that they are open-minded, prepared to adapt to a changing market, and are themselves utilizing AI to bring efficiencies to developing new products in their business. The other reason that we like to show the top 20 is that it provides a good prompt for questions on our holdings at the conclusion of this presentation, which we always welcome. On our final slide, a quick discussion on how the Mirrabooka share price has traded against our asset backing. We're aware that the shareholder experience over the past five years has been further impacted by the share price moving from a premium to asset backing to now trading at a discount, which has been painful for shareholders. This is another element of the market cycle at play.
The market rating of Mirrabooka as an investment often follows portfolio performance, with periods of strength creating excess enthusiasm, as occurred in 2021, and periods of weakness resulting in a discount, as we are seeing today. As discussed in today's presentation around the market cycle, the starting point is always an important determinant for long-term future returns. Our top 20 slide demonstrated our process of holding companies that we determine have the best long-term prospects. We're confident in the quality of these holdings and the broader portfolio.
The valuations being applied to these high-quality growth businesses across the Mirrabooka portfolio are now more attractive than they have been for a number of years, and our shares are now trading at a discount to net asset backing. Taken together, these factors give us a much more attractive starting point today than the one we faced five years ago when valuations were at the peak of the cycle. We believe this provides a strong foundation for future long-term returns from here. Thanks again for your time. I'll now hand back to the Chair, Greg.
Thank you, Kieran, and thank you to Alison, Andrew, and Stuart. I would now like to invite questions from shareholders. For those in the room, we have microphones available, and if shareholders could please state their name when addressing the meeting and ask all questions through the Chair, that would be appreciated. If you have any questions on this item, please submit them now via the online platform or raise your hand if you're in the room. Oh, we have a question down here.
Well, I'd like to thank you for your presentation. Alison has painted a fairly rosy or bright future for Mirrabooka. I've been an investor, a substantial investor, I might say, for a very long time, and I spent 30 years on the board and on the investment committee of two industry super funds. So, I've had some background. I query the future, the rosy future or the bright future for Mirrabooka in circumstances where the performance, the five-year performance has been exceptionally poor. Now, if you look up CommSec, you'll see the Mirrabooka share price - 40%. You get a very similar picture if you look up Google Finance, whereas the ASX 200 has performed at about 20%. So you've got a very substantial underperformance, which is, as a major shareholder, I'm very concerned about it.
The next thing is that you've on any one day, you'll see five times the number of units for sale as compared to the buyer units, which suggests that the financial planners who really look after retirees aren't really interested in Mirrabooka, which is a major problem. The platforms, the major platforms like Hub24 and Netwealth similarly, don't seem to be interested, which is a concern. I'll say this, that Mirrabooka hasn't got this alone. You've got major investment people like Peter Cooper winding up funds which have underperformed. I'll note also that in the U.K., underperforming funds have the practice to put to shareholders their future as to whether they ought to actually put the vote as to whether they ought to be wound up.
The options for Mirrabooka seem to be to continue and try to improve the performance. Convert to an exchange traded fund like many have, or put the wind up to the vote, because I don't think we could just continue looking at the portfolio and the weightings and this sort of thing every year I come along and that happens. The real question is, what is the future for a company like Mirrabooka?
As I say, they don't have that alone, there's many other LICs in the same position, and there's been a considerable structural change with a huge amount of money flowing to ETFs, and you can see that from, as I said, the number of seller shares to buyer shares on any one particular day. Look, I like these meetings. I ask this question constructively, as a major shareholder and with goodwill. Hopefully, we have a future, but I'm very concerned given the five-year underperformance.
Thank you.
Thank you.
Did we get your name? I am sorry.
I am Philip Kennan.
Philip.
Philip Kennan KC.
Thank you, Philip. Appreciate the question. It is good to have these observations. We certainly haven't given up, but I would like to pass to Alison or Kieran to talk in that light.
Yeah. Thank you, Philip, for the questions and observations. I think we've tried to talk to that a little today, and certainly Kieran has talked through the details on performance, which we all acknowledge hasn't been acceptable for shareholders. I think Kieran and Stuart talked a bit about the focus and the challenges within the market and resources being one. The cycle, as I said, comes and goes a little there. It wasn't that long ago that the numbers were well in excess of the benchmark for Mirrabooka, consistently delivering out-performance over the long term at a reasonable cost for an actively managed portfolio. I would say yes, we're in this period that has been disappointing, but I have great confidence in the team and their ability to improve performance going forward.
It will be a little dependent on the sectoral rotations and those sorts of things. But I have great confidence in them. I think one of the things that I mentioned in my remarks was around our communication. I think we would all acknowledge that ETFs have done a very good job marketing to particularly the younger generation. I think that's a missed opportunity. I think it's something that we are focusing on, communicating our value more broadly, and we need to do more there. Because I think at the moment you have a really attractive opportunity to buy a portfolio of quality assets that we believe in, for a discounted value. I think there's more we can do to communicate that. I think your point on you enjoy these meetings. Thank you. We appreciate you coming along and asking questions.
With ETFs, you don't get that opportunity to do that. You don't get the opportunity to talk to the portfolio managers and understand why they're making those decisions for shareholders. I think that transparency is something that is of value. Yeah, I take on board what you're saying. I don't think that it's over for LICs. I think we need to do a better job marketing to prospective shareholders because I think there's a real opportunity for them to buy a quality portfolio of assets at a discount at the moment.
Thank you. Claire, do we have any questions online?
Greg, just one.
Sorry.
Go. Yeah. Thanks, Mr. Chairman. My name's Stephen van Emmerik. I'm the ASA, Australian Shareholders Association rep. Thanks for everyone that's given their proxies, and great to see a good crowd here. I guess the first question is really about the portfolio, about risk. Looking at the top 20 holdings, I think there's only about 54% of the portfolio, and obviously there's a heap of other holdings. A lot of them seem to be subject to the same type of risk, whether that be fundamental or sentiment. I'm just wondering how you look at risk, because obviously when you have bad years, no one's happy. If things are a bit more even, people tend to be more happy over the longer term.
Yeah. Thanks for the question, Steve. I'll take that one. It's a good question. I think when you have difficult periods like we've just had for the last year, you've got to take the opportunity from that to have the best learnings so you can really think through your process and think about whether it is fit for purpose in a changing environment as has been discussed. I'd characterize it historically as saying, if we believe by having a broad range of industries in the portfolio of good people with good balance sheets and the sort of characteristics we're looking for, that's served Mirrabooka really well historically, and that's driven our strong long-term performance, of outperformance since inception.
I think one of the lenses Alison's bringing back to the business, which I think is really welcome, is to think about risk also through obviously the relative risk. We've obviously been aware of that, but just to sharpen our focus a little bit more in that area in saying, rather than solely running your own race and saying, "This is the type of investing we want to do," thinking about the macro environment we're in, some sectors where we're underweight, and thinking about if scenarios play out in those sectors and those sectors have strong runs, how will that impact our relative returns?
Because I think with the changing market environment we're in, the proliferation of ETFs, having these cycles where the relative performance is so far from benchmark does run the risk of challenging people in the market, particularly advisors, that they see more uncertainty in the outlook and the returns they expect. So we're looking at that more than we were, and we're sharpening our focus on that. But at our core, we believe our competitive advantage is the ability to take a medium to long-term view. As Stuart mentioned, we think there's less participants in the market that can actually do that because of the pressures that everyone's feeling. We want to make sure that we maintain that in our process, because if we think without that, we would struggle to replicate the sorts of returns we've had since we started Mirrabooka.
Yep. Just a follow-up question really on that. I think you don't have any resources stock in the portfolio at the moment. I'm not suggesting you go back in time and change things, but when you look at the index you compare yourself to, you're comparing yourself to an index that does include resources. So why don't you go out there and more say, "Well, we're an industrials investor, and this is the index that's relevant to us." Because really, you're comparing yourself against an index that isn't appropriate if you're including resources in there and you don't hold any resources.
Another good observation. Yeah, so that benchmark was put in place when Mirrabooka started in 1999. I think back then, we were just using that as a yardstick for the long term to say, if you are going to invest in this area of the market, this is what we expect to beat, but there will be variation in the short term. We are not taking performance fees against it, so it is a bit different to some in the market. But I think your observation is right, and in our communications, we think we need to introduce a bit more of the industrials as well to explain to people what they are buying so they understand the two of them. I think that is something you can expect to see from us going forward. But we also think it is a bad look.
You do not want to turn around and change your benchmark because you are underperforming a benchmark. We want to have both there, be very transparent, but make sure the people that are buying Mirrabooka understand that their fortunes are going to tie more to industrials than the resources area of the market. Then the final thing I would mention is, on resource stocks, we do have a few in the portfolio we have been buying more recently, a smaller end of the market, a couple of gold stocks that we put in the portfolio, but we are still well underweight the benchmark.
Yeah, good answer. Thank you.
Claire.
Chairman, I have got a shareholder here who is asking, "Please pay dividends quarterly like other LICs.
Yep. Thank you. We appreciate that some of the other LICs, in particularly our stable, like Djerriwarrh and AFIC recently, have moved to quarterly dividends. I will pass across to Andrew, but I think as he has mentioned previously in discussions on the dividend, that realized capital gains are quite an important part.
That is quite right. It is such an important part of Mirrabooka's dividend that we think at the moment that it is better to go with the interim and the full year. Never say never, but that is certainly the way we are looking at it at the moment.
Thanks, Andrew.
Chairman, on page 10 of the annual review, this shareholder reads that the lack of resources positioning was a major contributor to the year's underperformance, as we have just discussed. Further, it is stated that Mirrabooka does not invest in resources due to volatility and limited durable competitive advantages. Please review Mirrabooka's potential positioning, for example, in copper, which has been positive for the last couple of years. Mirrabooka could consider ETFs or other specialist LICs as methods to gain exposure with reduced volatility.
We have touched on this to an extent, but Kieran, do you have anything further?
Yeah, look, I can add a couple of other insights to this. Obviously, it's something we're considering and we consider all the time. I think what I'd say is we're thinking more about how the higher quality tends to be mid-cap resources companies fit with our process. So, looking for businesses where we think they have really strong financial position, they have good management, and importantly, they have growth. So you're not just buying to express a view on a commodity price, but you're thinking about the business in its fundamental sense and how it can grow and improve its fortunes over time, and accept that the way they earn revenue will be through a volatile commodity price.
When we think about it like that, we don't think that consideration needs to go out and buy different funds and bring in expertise and have geological insights that means we can really outperform from the smaller end and really get in behind the resource. This is really thinking about where there's some robust mid-cap gold producers that fit with our process, and that's really where we're thinking about the refinement rather than going deep down into the small part of the market.
Thanks, Kieran.
Chairman, this is a question along a similar vein. This shareholder's asked, "Please advise how Mirrabooka performed compared to a relevant industry's non-resources benchmark.
Yeah, we have touched on that, but Kieran, maybe just go over it again.
Yeah. Just a reminder, the 12 months to the 31st of August, we were about 3% below benchmark if you take all the resources stocks out. Slightly under. But as we had on the chart earlier, the long-term track record is to track much more closely with the industrials part of the market, and measured over long-term time frames, including now, we've always been ahead of that part of the benchmark.
Okay, thank you.
Okay, we've got a couple of questions from Stephen Mayne.
Earlier today, we heard our staff have a history with Goldman Sachs or JBWere, our two sponsoring organizations. In terms of putting together strong teams of investment professionals, have we ever lost staff to Geoff Wilson's WAM Group or recruited staff from the WAM stable of LICs? WAM is the most aggressive player in LIC land, regularly launching hostile takeovers of smaller LICs. Why haven't we ever done the same to them, especially given they leak huge fees to its external manager and trade at a big discount to NTA?
Yeah. I think I'll just pass that to Alison.
Pass that to me. Thank you. I would say, just firstly on the JBWere and Goldman Sachs sponsoring, they're not sponsoring organizations as such. I think it's only me, currently, as an ex-employee of JBWere, in terms of in the management and team. In terms of staff, just for complete transparency, no, we haven't lost any staff to them, and no, we haven't poached any staff to WAM, or the Wilson Group. I did mention earlier that a lot of fund managers are incentivized to get bigger, and so acquire other funds to generate more fees for themselves, and that's an important distinction. I also mentioned that we work directly for shareholders with no fees. We are very different, and I think that is a really important point to make, and thank you to the shareholder that raised the question.
We are particularly focused, as I mentioned, on improving performance and also communicating our message and the value of our portfolio to a broader audience. There are two key areas of focus at the moment, and we think that will serve our shareholders best. I will leave the other groups in the market to do their thing. But we will stay focused on our shareholders and what's best for them.
Thank you, Alison.
Chairman, as this is the final of the four AFIC stable LICs, I would just like to say thank you for running best practice hybrid AGMs spaced across two days. This is in stark contrast to the WAM Group stable, which is running nine public company LIC AGMs on the one day. However, at least WAM Group LICs disclose how many shareholders voted for and against in the poll results, something I have been asking the AFIC stable to do for years. How many shareholders lodged proxy votes ahead of today's AGM, and why won't you disclose how they voted?
Matthew?
I can confirm that 269 proxies were voted, of which 69 were open. So, there you go. We obviously adhere to the Corporations Act when we release our proxy voting.
Can't hear you.
Oh, sorry. We have received 269 proxies, of which 69 were open, and we adhere to the Corporations Act when requirements come to releasing our results at the end of the day, which contain all that information.
Thank you.
Chairman, has anyone ever done a study at the AFIC stable to assess whether we are more likely to invest in a company if one of their directors or a former CEO happens to sit on one of the boards? Is there a positive correlation? Also, do we have a bias in favor of Melbourne and Sydney-based companies? We have always been underweight Perth-based companies, especially miners. How often do the investment team travel to Perth and visit companies, and how often do we visit a company which we have never owned? Are they even prepared to meet with us?
Who is that from?
That is from Stephen Mayne.
Okay. I think the first part of the question is have we done a study? The answer is no, and it is not really relevant. If there is a conflict of interest, we deal with it appropriately at the board level, where anyone with a conflict will be excused from the discussion. With respect to the other questions.
Oh, look, I am happy to share that we have a wider range of brokers that we speak to than just about anyone in the market. We are always looking for new opportunities. Yes, we travel to Perth. Yes, we are meeting companies that we do not own all the time. So I do not think there is an issue there at all.
You would spend a lot of time on investments that we do not make is what you are saying.
Absolutely.
Yeah.
Yep.
Okay.
Yep.
Okay, thank you.
Thank you. Chairman, the five-year underperformance questions portfolio adjustment processes addressing falling stock prices and market sentiment valuation changes. Has Mirrabooka reviewed selling and risk control processes?
Alison?
Yeah, I think Kieran talked about it earlier, and certainly when you go through a period of underperformance, and I know the team has been working incredibly hard to reflect and think about what's happened and what they might do differently, and I think that's really important and naturally something that most investment professionals do. But I've absolutely seen that in the time that I've been back with the group. And I think he's mentioned some of the adjustments to his thinking and the team's thinking in the way that they're looking at things, the risk management, talked about that, some enhancements to the process that was already in place. But yes, it's absolutely an opportunity to reflect, and you'd expect us to be doing that, and I certainly have seen that. But I think we've talked through that.
Thanks, Alison.
Chairman, how is Mirrabooka investing in industrials with an AI benefiting focus? For example, indirect or direct AI-related tech or data center investments on the horizon?
Without giving too much away, Kieran?
Well, it's interesting. It's been quite patchy where the benefits from AI have come through in the market. Obviously, the CapEx cycle we're seeing in the U.S. is propelling a lot of the commodity prices, most particularly copper. It won't be for our universe, but Firmus is going to be one of the largest IPOs in Australian corporate history, which is just going to leapfrog straight over the mid and small caps, which is interesting. One of our frustrations is all the while our biggest investment's been in a data center business, Macquarie Technology. They've been a really successful investment for us for a long period of time. They've just opened their expansion in Macquarie Park in Sydney, just this last month gone by, and we're still waiting for them to sign a contract to secure that first underpinning tenant for that data center.
Now, there's no issue behind that because the demand is incredibly strong. But we've just got a business where the founders still own plenty of the business, still run the business, and they're prepared to realize value at their pace, and they understand you can only sell data center space once. So they're looking to extract the best deal. I guess when we've been through some challenging periods with our performance, it'd be nice to have had that in market. But that gives you some characterization of some of the businesses in the portfolio and how the returns come when they come. When you've got long-term focused people, you tend to have to be quite patient at times to wait for that to come through.
Thanks, Kieran.
That is all the online questions.
Great. Thank you, Claire. We will now move to the-
Greg. Greg.
Whoa. I'm sorry.
That's okay.
Thank you, Mr. Chairman. Andrew Walpole. I always think it's bad to change track when things are going badly if you've got a good policy. I was looking on page 17 of the long form, which shows the shareholdings of directors and officers of executive of the company, and I was wondering if when you look at the net change, whether that would represent a larger net change now compared with five years ago?
I couldn't answer that off the top of my head.
No.
Do we need to take that on notice, Matthew?
Yeah, we'll be able to.
If you're happy with that?
Thank you.
Okay.
Good afternoon. Thanks for the presentations. My name is Dallas Howard. I have a question about a comment that came up in the discussion about, there's maybe a declining pool of companies that can invest in the space, through takeovers and so on. Has there ever been the thought to maybe look at gaining exposure to markets outside Australia? I understand you don't want to go and invest in a whole team to do that, I understand that, but I've seen one or two other LICs based in Melbourne where they might, say, go and get some outside exposure through an ETF. Is that something that's being considered? Could be considered?
Thank you. It's a good question, and it is considered. AFIC, for example, does have a certain amount of international shares, and Mirrabooka itself does invest in quite a few New Zealand companies. I'll pass across to the team.
We do have two members of the team who look at international shares and for AFIC, and so it's not something that Mirrabooka does at the moment, but we do have that within the stable. I don't know if, Kieran, you've had a look at this.
We have thought about it. We travel overseas to visit some of our Australian investments, and when you're doing those trips, you do tend to see some companies that aren't listed in Australia as part of your fact-finding mission. There are times, particularly over the last five years actually, where you look at some of the valuations on the ASX versus overseas markets, and it does make you think about times in the cycle where Australian stocks can get quite expensive, which we've just seen play out. What I'd say, though, is I feel like we've got a fair bit on our plate at the moment to really get the performance of Mirrabooka back where we want it to be.
I don't think that's something we'd want to be doing until we get back to a position of strength, then we'd really want to think through it at that point. I guess the key question would be, rather than buying an ETF for exposure, it'd be more how can we leverage our insights and our research capability to add returns for shareholders, would be the lens we'd look at it through.
Thank you.
I think we're done with questions on the floor.
Yeah.
Okay. We now move to the formal resolutions of the meeting. Your directors' recommendations are set out in the notice of the meeting. I can confirm that where undirected proxies have been given to me as chairman, I will vote them in line with the board's recommendations on each agenda item. Voting today will be conducted by way of a poll on all items of business. Representatives of MUFG, the registry, will oversee the conduct of the poll. Firstly, if there is any person present in the room who believes they are entitled to vote but is not yet registered to vote, would you please seek assistance from our share registry, MUFG. For those in the room, on the reverse of your yellow admission card is your voting paper and instructions. I will now go through the procedures for filling in the voting papers.
In respect of any open votes a proxyholder may be entitled to cast, you need to mark a box beside each resolution to indicate how you wish to cast your open votes. Shareholders also need to mark a box beside each resolution to indicate how you wish to cast your votes. When you are finished filling in your voting paper, please lodge it in the ballot boxes that will be available at the end of the meeting. The second agenda item is a resolution to adopt the remuneration report. This is required by the Corporations Act to be considered by shareholders annually and is an advisory resolution only.
The remuneration report can be found in the company's 2026 annual report. This 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. I will now show the proxies received in respect of this resolution, which are now shown on the screen. If you have any questions on this item, please submit them now via the online platform or raise your hand if you are in the room. Do we have any questions from the floor on this item? Claire, do we have any questions?
None online.
Okay. Thank you. The third agenda item is the resolution of my own re-election, and so I have asked Annette Kimmitt to chair the meeting for this item of business.
Thanks, Greg. The third agenda item is the resolution to re-elect Greg Richards. Greg was re-elected to the board as a Director at our 2024 AGM. However, to facilitate the process of Director rotation and re-election, he is standing for re-election by shareholders today. In accordance with Rule 46 of the company's constitution, he retires from the board of Directors, and being eligible, offers himself for re-election. Greg, would you care to say a few words before I put the motion?
Okay. Thank you, Annette. I've been on the board of Mirrabooka since January 2021, and Chair of your company since October 2022. It's been an honor and a privilege to work on behalf of all the shareholders for the company over this period. I enjoy the role and appreciate its importance to all our shareholders. I believe I've been able to make a positive contribution to the running of the board over this time, and that I'm in a position to continue doing so. I look forward to it and thank you for your support. Thanks, Annette.
Thanks, Greg. I'll now show the proxies received for this resolution, which are now shown on the screen. There were no questions asked prior to the meeting concerning this resolution, but if you have any questions on this item, please submit them now via the online platform or raise your hand if you're in the room. Question here.
Yes. Stephen van Emmerik, Australian Shareholders Association. Just a question about Director shareholdings, really. I know that different companies, they have their own rules about spending X percent of their fees on shares, et cetera, which is fair enough, and I'm not suggesting anything is wrong in that respect. Really, the question comes out of discussion with other shareholders before this meeting. To shareholders, the way they look at it is, do you have a significant proportion of your wealth really invested in the company? Because that's how they view it. They're not getting any fees.
They're putting their hard-earned in. If you're actually on the board, why wouldn't you put your hard in? If you're worth AUD 10 million and you got AUD 100,000 worth of shares, well, really, that's nothing. Yeah, I guess my question is, if directors don't have a substantial proportion of their wealth in the company, and they're not, as far as I can see, buying any shares in the company, even when it's at a discount, how would you expect retail shareholders to do that?
Sorry?
Do you want to respond to that?
I can, yeah. But it's not related to my election, but
He kind of tried to ask that question in a more polite way, but it didn't really Yeah.
Well, I missed that bit. What I am really interested in as a chair is to have directors that are going to contribute in a positive manner to the performance of the company. That is the main thing. We do not have a specific requirement to hold a certain amount of shares, or a minimum, but you note that all the directors do hold shares in the company, and that is left to them as to how they basically determine that amount. Your point is taken, and I think most of the directors are adding to their holding as time goes on, particularly through dividend reinvestment.
Thank you. Any other questions? Claire, do we have any questions via the online?
No questions online.
Okay. I will now hand back to Greg.
Thank you, Annette. Ladies and gentlemen, that concludes our discussion on the items of business. In a couple of minutes, I will close the meeting. For those participating online, please ensure that you have cast your vote on all resolutions and clicked on Submit Votes at the bottom of your voting card. You will have five minutes from the close of the meeting to finalize and submit your voting card. For those in the room, may I now ask that you complete your voting card. Staff from the share registry will collect your voting card at the end of the meeting.
I would like to thank shareholders for your continued support and for the interest you have shown in the affairs of the company by your attendance in person or virtually today. Shareholders are reminded that the team will be holding shareholder meetings, I think it is around Australia, in March 2027. The results of these votes today will be released on the ASX later today. I will now declare the meeting closed. I thank you for your attendance, and for those here, please feel welcome to join us for refreshments.