ECP EMERGING GROWTH LIMITED — Interim / Quarterly Report 2022

Oct 13, 2021

ECP EMERGING GROWTH LIMITED

SHAREHOLDERS’ QUARTERLY REPORT

SEPTEMBER 2021

PORTFOLIO PERFORMANCE

OBJECTIVE

Long-term capital growth and income

STRATEGY

High-conviction portfolio of quality Australian listed small to mid-cap companies constructed using a research driven, bottom-up investment philosophy

DIVIDEND INFORMATION

(Cents per share, fully franked)

2.75 cps on 15 September 2021 2.00 cps on 12 March 2021 2.25 cps on 18 September 2020 1.75 cps on 20 March 2020

	3 m	1 Y	3 Y	5 Y	INCEPTION
ECP Portfolio^	9.6%	36.4%	29.3%	23.0%	20.7%
ASX All Ordinaries Index	0.6%	27.0%	6.5%	6.7%	4.4%
^Source: ECP Asset Management.
Gross performance before impact of fees, taxes and charges. Past performance no predictor of future returns.

ECP Emerging Growth Limited’s Net Tangible Asset Value (NTA) as at 30 September 2021 (before estimated tax on unrealised gains) closed at 188.9 cents per share, this represents an increase of 6.4% on the prior quarter.

INVESTMENT ACTIVITY

During the quarter, we added Nitro Software (ASX: NTO) to our portfolio. Nitro is a founder-led challenger brand to Adobe, leveraging clear points of difference on product, service, and price. Nitro has a growing reputation in the enterprise market, which opens the door to an enormous growth opportunity. We removed Catapult Limited (ASX: CAT) as the company’s financial performance has not materialized in a way that has matched our expectations.

COUNTRY WHERE LISTED

Australian Securities Exchange: Inception 14 August 2014

STOCK EXCHANGE CODE

ASX: ECP

RATINGS

• Independent Investment Research – Recommended[1 ]

DIRECTORS

Murray d’Almeida Non-Executive Chairman

David Crombie AM Non-Executive

Jared Pohl Executive

COMPANY SECRETARY

Scott Barrett

COMPANY DETAILS

ECP Emerging Growth Limited ACN 167 689 821

Suite 305, Level 3 343 George Street Sydney NSW 2000 AUSTRALIA

Tel: 1800 352 474 Fax: +61 2 8651 6899 Email: info@ecpam.com

ecpam.com/emerging

MARKET COMMENTARY

This quarter’s performance differed between markets, with the US seeing record highs, while China was hit with sweeping regulatory action and concerns relating to their property market. Globally, many economies shifted from recovery to steady expansion, with positive corporate commentary, solid economic activity, and continued supportive fiscal policy. However, some slowdowns did occur due to the Covid-19 Delta variant. Governments appear to be shifting from damage control procedures toward the endgame of a post-Covid world, which is aimed at vaccination programs and removing social distancing practices – an approach led by the US and the UK, with early indications of an acceleration of growth and economic outperformance.

The US economy appears to be entering an expansionary phase, after a year of recovery from the pandemic. Consumer spending, housing and developments, and labour markets have been particularly strong, with early signs this growth is slowing to a steadier and more reasonable pace. The US Federal Reserve appeared to have a dovish stance to further tightening of policy and with a slowdown in asset purchases, rate projections are expected to hike at a faster rate. In the US, equities were muted over the quarter with strong corporate earnings driving performance in August, while inflationary and economic growth concerns placing pressure on markets by quarter-end. The S&P500 posted +0.2% while the Nasdaq posted -0.4%, by quarter-end.

In Australia, the housing market has proven to be remarkably resilient in spite of Covid restrictions limiting activity. Residential building approvals posted +6.8% in August, while price gains have been +18.3% over the year. Labour markets remained strong despite the severe restrictions in place across the country with unemployment steady at 4.5%. The ASX All Ordinaries posted +0.6% for the quarter, ASX 200 +0.3%, the MidCap 50 +3.0% and the Small Ordinaries was +2.6%, respectively. The AUD depreciated during the quarter, posting -3.6% against the US Dollar (72.3 US cents), -1.0% against the Pound (53.7 pence), and -1.3% against the Euro (62.4 cents).

PORTFOLIO CHARACTERISTICS (as at 30 September 2021)

PORTFOLIO CHARACTERISTICS(as at30 Septemb	er 2021)
NTA (Before tax on unrealised gains) – Total	$34,608,360
NTA (Before tax on unrealised gains) – Per Share	188.9 cents
Concentration of the Top 20 Holdings	85.57%
Number of Portfolio Positions	26

ECP EMERGING GROWTH LIMITED

SHAREHOLDERS’ QUARTERLY REPORT

SEPTEMBER 2021

PORTFOLIO BREAKDOWN

ECP ASSET MANAGEMENT ABN 68 158 827 582

Our Investment Philosophy is based on the belief the economics of a business drives long-term investment returns. This is expressed through our investment process.

• Valuing potential, not just performance

• Choosing high-quality growing businesses

• Ignoring temporary market turbulence

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SECTOR ALLOCATION	SECTOR ALLOCATION		TOP HOLDINGS
Consumer Discretionary	33.8%		Lovisa Holdings Ltd	7.3%
Information Technology	24.9%		PWR Holdings Limited	6.7%
Financials	17.9%		HUB24 Ltd	6.6%
Telecommunications	8.3%		IDP Education Limited	5.9%
Cash	8.2%		Megaport Limited	5.5%
Consumer Staples	3.7%		Magellan Financial Group Ltd	5.3%
Health Care	3.2%		Netwealth Group	5.3%
Industrials	0.0%		Carlales.com	4.9%

ACTIVE SECTOR WEIGHTS vs.ALL ORDINARIES		QUARTERLYPORTFOLIO CHANGES
-10%0%10%20%30%40%iscretI.T.elcos'taplestilitiesnergyh CareEstatestrialsncialsterials		ADDITIONS
		Nitro Software Ltd	NTO
		REMOVALS
		Catapult Group International Ltd	CAT
-30%-20%Cons DTCons SUEHealtRealInduFinaMa

ACTIVELY PROMOTING THE COMPANY

During the quarter, the Company’s Investment Manager was awarded the highest rating possible from a leading Australian research house for its Australian Growth Companies Fund. The rating reflects the level of confidence that the research house has in the ability of the Investment Manager to meet its investment objectives over the long-term. The rating is based on performance and risk analysis, as well as a qualitative assessment of the capability of the investment team and rigour of the investment process. The rating review was arranged in concert with the Investment Manager’s distribution partner, Copia Investment Partners. Further information is available by visiting the Investment Manager’s website.

ECP Emerging Growth Limited is committed to growing in size and promoting itself to investors, financial advisers, stockbrokers and investor associations across Australia. Please contact the Company for further information through info@ecpam.com or visit our website www.ecpam.com/emerging for links to Shareholder Reports and Announcements.

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STRUCTURE AND TERMS

DividendReinvestment Plan	Dividend Reinvestment Plan (DRP) is an optional way of reinvestingdividends to acquire additional shares. When new shares are issuedunder the DRP, they are free of brokerage, commission, stamp duty andother costs.
Legal Domicile	Australian Securities Exchange (ASX) Listed Investment Company(LIC)
Fees	Management Fee of 1.0% p.a.Performance Fee 20% of the annual outperformance over 8.0%.
MER2	1.11%
Reporting andCorrespondence	Monthly Net Tangible Asset Values www.asx.com.au and QuarterlyReports, Half-Yearly and Annual Reports on www.ecpam.com/emerging
Auditor	Connect National Audit PtyLtd
Registry	Boardroom Pty Limited -1300 737 760ORenquiries@boardroomlimited.com.au
Shareprice and NTA	www.asx.com.auand www.ecpam.com/emerging

• 1 These opinions are provided by independent researchers and must be read together with the whole report including the disclaimer and relevant legal notices which can be found at the respective websites.

2 Calculated in accordance with ASX defined terms as at 30 June 2021