MIRRABOOKA INVESTMENTS LIMITED — Call Transcript 2008

Feb 18, 2008

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19 February 2008

The Manager Company Announcements Office Australian Securities Exchange Limited Exchange Centre Level 4 20 Bridge Street Sydney NSW 2000

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Electronic Announcement

Mirrabooka Investments Limited Shareholder briefing

Dear Sir/ Madam,

Please find attached an edited record of the shareholder teleconference held yesterday concerning the Company’s rights issue together with the presentation.

Yours faithfully, Sue Crook Company Secretary

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Company: Mirrabooka

Title: Briefing Date: 15 February 2008

Time: 4pm Conference ID number: 176889NS Moderator / Speaker: Terry Campbell

[START OF EDITED RECORD]

Operator: Thank you all very much for holding and welcome to the Mirrabooka Investments Limited briefing.

At this time your lines are in a listen only mode. However, you will have an opportunity to ask questions and I’ll provide instructions at that time.

I’d now like to hand the call to Terry Campbell, Chairman of Mirrabooka Investments Ltd. Thank you and please goes ahead.

Mr Campbell: Thank you, welcome to our briefing everyone. The purpose of the briefing is to provide an update on Mirrabooka and the current market conditions so that shareholders can have the best information possible in deciding whether or not to take up their rights in the current new issue at a price of $1.95 per share. We’ve timed this so that the briefing is well ahead of the applications closing date, which is this Friday on February 22[nd] ,2008 .

At the time of speaking, the market for Mirrabooka is $1.95 bid, $1.99 seller and last sale $1.98 per share.

The net tangible asset banking per share as at last Friday, February 15[th] , was $2.15 per share, and fully diluted for the current new issue, the net tangible asset backing was $2.13. So on this basis the new issue price for the $1.95 per share represents a discount of 8.4% against Friday’s net tangible asset backing.

Just a few general comments as Chairman. The outlook remains uncertain, but these uncertainties are now being reflected in the market and it’s the belief of Directors the months ahead will provide an opportunity to buy good stocks at prices that will prove attractive for medium and long-term investors such as Mirrabooka.

I’d like to repeat the statement made in the original announcement that directors will be taking up their entitlement in the issue.

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What we’re about to do is get the Managing Director, Ross Barker, and the Chief Investment Officer, Mark Freeman, will discuss a presentation that’s been lodged with the ASX and I believe posted on our website.

Mr Barker:

Yes.

Mr Campbell: When the presentation is complete, we will then take questions, so over to you, Ross and Mark.

Mr Barker: Thank you, Terry. My name is Ross Barker; I’m the Manager Director of Mirrabooka Investments Ltd. I propose to make a few comments about the market, and in those comments I’ll also be asking Mark Freeman, our Chief Investment Officer, to also make some comments.

I think to start with I want to really restate that our investment focus is a medium to long-term one. We are looking for companies that have solid businesses with good profit streams and with good dividend flows that we can invest your capital in over the medium to long-term. So we’re not an investment manager that’s trying to constantly chop and change its investments.

Having said that, in the mid and small caps section of the market, it is subject to more change than the main companies in the market, and so you do have to be nimble if things do change, and so we are prepared to sell things out of the portfolio if we form that view, but our fundamental approach is to invest for the medium to long-term.

In terms of this particular issue, over recent years these two sections of the market, the mid caps and the small ordinary, have performed incredibly well over the last four years rising in excess of 20% per annum. However, we have noticed, and as everyone else has, that the markets have had significant setbacks. They reached peaks in very early November, probably around the 1 November, and for example in the mid cap part of the market that section of the market is back 16% from its peak from 6903 to 5808 to the end of last week. Similarly in the small ordinaries section of the market, that’s down just under 20% from its peak in early November, 4176 down to 3347.

So we think that is quite an interesting development in the market. I think we were a bit surprised it happened quite so quickly, but having happened we think there are now starting to be some quite interesting opportunities in the market.

A few other comments about that. We should also note that there’s been quite a divergence in the performance of the resource companies in those two sectors. They’ve outperformed the industrials which has had a little bit of an impact on our particular portfolios. We tend to be more focussed in the industrial sector rather than resources. We haven’t been totally out of resources, but it hasn’t been as large a part of our portfolio as it is in the index.

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Coming back to valuations, it was surprising earlier this year to see the small companies trading at price earnings ratios well above some of the large caps in the market. That trend is starting to change. We had the small companies on price earnings ratios of over 18 times early this year and with the changes in the market that’s back down to 16, which is quite a big drop in market terms, and we keep watch on that as an indicator as to whether things are of value.

Now I think at this point I’ll pass the microphone temporarily to Mark to comment on some of the implications of that sort of improvement in valuations.

Mr Freeman: Thanks Ross. I guess what we thought we’d do is perhaps highlight an example of some of the opportunities we’re now seeing in the market, and we think we might see more of these opportunities going forward.

One example is a company called Bradken which has been a large part of the portfolio for some time. It’s a company that’s exposed to the resources and rail industry, and they make a lot of what we call consumable products. Their profit is really driven by volume growth in the resource market, particularly around iron ore. As more product is mined out of the ground the demand on our products is going to increase.

But this company, I guess, had a little bit of a hiccup throughout this financial year where they had a couple of issues that meant their profit forecast was pulled back. We saw the stock peak back in December at a price around $14.80. It was trading on very high PE multiples at that point. It was around 23 times, and the yield was quite low at 2.5%, so the stock was very highly rated in the market and it was quite a full valuation.

Since they pulled back their profit guidance, the stock’s fallen from $14.80 down to $6.40/$6.30 where it’s trading at the moment. That’s a huge fall for a stock that’s still, in spite of a pull back in that profit forecast, is still going to achieve earnings growth of around 10% per annum. I think the company’s still confident that they can do at least that into the next financial year or the next two or three years in fact, but at these prices it’s trading on PEs around 12 times and it has a yield over 5% fully franked.

So we’ve been adding Bradken to the portfolio at around these prices. I think this is a great example of how nervous the market is where if a company even slightly disappoints on their profit, the share prices can get hit very hard. To be offered these sort of prices on a good quality company like Bradken, these are the sort of opportunities that we would like to add to the portfolio. To have some cash and be able to sit there and be patient and selectively look for opportunities would put us in a very strong position.

Mr Barker:

Thank you, Mark.

The other comment to make is that in our portfolio quite a lot of good investments have been held for a significant amount of time. We’re not very keen to be selling the portfolio to invest in these new opportunities.

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That’s why we’re seeking to tap the market to get new cash because if we sell quite a number of the stocks that we’ve got in our portfolio, we would have large tax bills if we sold them and you’d only be able to reinvest the after tax amount back into the market. So we think that the circumstances in the market allied with that consideration means that it’s a good time to be seeking further funds from our investors.

Moving on to the comments Mr Campbell was making about net asset backing, we have released to the market today our estimate of that at the end of trading last Friday, which he also mentioned was $2.15 and then $2.13 adjusted for the issue. As for the after tax number our estimate is $1.91. Now those numbers are essentially the same as the ones that were released on 31 January 2008 because the market hasn’t really moved a great deal in price terms since that date. These numbers are on our website and also released to the stock exchange.

Moving then to the top 20 investments, we released this with the half year report that went out to shareholders recently, and that top 20 since the end of December hasn’t changed a great deal in the month and a half. Most of the names are still the same. Our biggest two investments are Incitec Pivot and Nufarm which, in fact, have been doing very well in the midst of the market gyrations.

There have been three new companies in our top 20: James Hardie, which we’ve been adding to; Toll Holdings and OneSteel, and they’re into the top 20, and out of the 20 top are McMillan Shakespeare, Equity Trustees and Asciano. Most of those changes really reflect the share price changes rather than significant additions of or sales from our portfolio.

The top 20 represents just over half of our investments and we have approximately 80 companies in the portfolio.

That’s really all I wanted to say unless, Mark, you have any more comments that you’d like to add.

Mr Freeman: There are a few companies we’re looking at, at the moment, that have had the same types of falls that we’ve seen in Bradken. I mean I could mention a couple of examples of some other stocks that we’re looking at. We may not necessarily be buying, but it’s really to give an example of the fall, I guess.

JB Hi-Fi has fallen from around $16 per share where it peaked, down to $10.30. I think that’s a good business and they actually had quite a good result, but it just shows you the extent to which the markets are nervous.

United Group’s another one that peaked, I think last year at around $21; it’s now back to $12. And even stocks like - Ross mentioned James Hardie, but Boral’s another one we looked at. I think it’s a well run company, but its exposure to the US is keeping the share price down and at some point when that market turns, it’s going to be an interesting opportunity as well. Even WA Newspapers has fallen a long way from its high.

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So these are good quality, sound businesses, but the share price falls from their peaks have been very, very large and these are sort of opportunities we’re going to be looking at. Mr Barker: Thank you, Mark. Now I think at this point I’ll hand back to Terry. Mr Campbell: We’ll take questions now. Operator: Thank you. Ladies and gentlemen, if you would like to ask a question, dial star 1 on your telephone keypad now. That’s star followed by 1 if you would like to ask a question. Question: I have a few questions on the question of our cash reserves. I also question what happens if only limited funds are raised from this issue, and has Mirrabooka already made purchases reliant on the funds raised from the issue. Our dividend, did it come from profit or profits plus capital gains, and I worry about FlexiGroup, Asciano and shares like that. Do we have any concerns in our portfolio? The money raised, are we going to move into the resources section? Thanks very much. Mr Barker: Yes, I’d like to respond to those questions. In terms of cash, we currently have $5.3million. We do have $10million of capacity to draw-down from the banks if we wish to, so we have cash reserves there. The funds that are raised from the issue have not yet been invested in the market. Our view is to see how much we get from the issue and then to embark on a program of investing that across the next six months or so as we see opportunities arrive, even longer if we don’t see good opportunities. In terms of dividends, Mirrabooka has always paid out a dividends substantially from the dividends we received from the companies, but also some of that dividend has been sourced from capital gains. That’s, in fact, been the case since the company started, so we don’t restrict ourselves to only the dividends that we receive from the companies we invest in. Mr Freeman: I think he mentioned FlexiGroup. I think we’ve got 100,000 shares representing $100/200,000 so it’s a very small holding for us and no, that wouldn’t be top of my list. Mr Barker: We don’t have any exposure to Centro, we don’t have any exposure to Alco Finance, we don’t have any exposure to MFS. Mr Freeman: We haven’t had a lot in resources. I think we’ve felt that most of the resource stocks in the mid to small cap space are more single commoditytype stocks. With stocks like Fortescues, Lihir and Oxiana we haven’t played in that space. I’m not sure the time is right now to be wading into those particular stocks. I think some of them will be interesting to see how they go on a longer term basis to see how their resources stack up, but I think at this point in the cycle, I wouldn’t be anticipating sort of ploughing into that area of the market unless, of course, there was some sort of major pullback.

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Question:	Yes, just a question about leverage, whether the company has any
	substantial debt situation, and if it does, what are the circumstances?
Mr Barker:	We have no debt at the moment.
Mr Freeman:	We’ve got net cash.
Question:	You mentioned the net tangible asset has been $2.15 or $2.13 diluted.
	Although that’s a very, very important consideration, I think the share price
	actually is a more important consideration and when you look at 22 January
	2008 I think Mirrabooka was trading at 1.81, at the end of January it was
	trading at $1.91. Now we’re now up to $1.95, the rights issue share is
	offered at $1.95. We don’t know really which way the market’s going to go,
	but I mean simply are we getting value at $1.95 per new issue when the
	price is $1.95 on the market and has been as slow as 1.81 about six weeks
	ago?
Mr Campbell:	It’s Terry Campbell speaking. I’ll answer that from a personal perspective.
	I think I’m the third largest shareholder or my own shareholding plus
	holdings associated with me. I’ll be taking up all of my entitlement. My
	attitude is that if you can buy into a portfolio of stocks at a time when the
	market is depressed at a discount of 8.5%, historically that’s been an
	attractive investment opportunity, particularly when you’re giving money to
	the investment team that can look across the whole market. I imagine
	shareholders are pretty much in the same position as myself. I’m relatively
	close to the market, but it’s such a diverse market you can’t follow
	everything, or follow such a wide range of stocks, so my own view is that
	the history says to me, as they say, if you can invest in $2.13 of assets for
	$1.95 at a time when the market is low, that is an attractive investment
	opportunity.
	Now who knows what the market will do. My own personal view is that if
	the market overall wasn’t at its low point last month, my view is that this
	low point will probably prove to be pretty close to the low.

I believe I’ve been in the market for 50 years now. I’ve learnt that you just don’t pick the top and you don’t pick the bottom, but if you start to feel that you’re somewhere within sort of 10% of the high and 10% of the low, you’re left about as good as you can expect to get.

The fact that the stock was down in the $1.80s several weeks ago, well I guess it was an even more attractive opportunity, but I think what we’re trying to do here is just to give shareholders the background and the latest information to help them decide whether they should take up their rights or whether they feel that they’ll let them lapse.

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• Question: Thank you. I’m in Brisbane and I was just wondering I think the whole business again tonight, and if I decide to take up my shareholding rights, then I will mail the application tomorrow, but I’m just wondering whether it would get to Melbourne in time by Friday. I was wondering, because of this conference, which is generously provided for us, because of that would you be prepared to accept, say, an application which arrived in the mail next Monday?

• Mr Barker: I’m sure if you posted it today it would get to us by Friday, but it’s a general policy that there’s a couple of days grace.

• Question: Well I certainly would not like to trade on that, but by the same token I would not be able to mail it until tomorrow and it’s quite on the cards. I’ve had problems with Australia Post up here recently, not that I’m bagging them completely, but if it did arrive in Melbourne, I’d say on Monday, would you be prepared to accept it?

• Mr Barker: Yes.

• Question: You would. Okay, well thank you very much for your time and the trouble and for organising this conference. That’s all.

• Mr Barker: If you have any concerns, anyone with concerns about that can contact our company secretary who will follow those up.

• Question: Just a query, first of all you’re talking $1.95, the shares will trade after these come on the market, but slightly less, because the half dividend will be getting paid on these as distinct from the ordinary shares. When you come to the end of year dividend, assuming it’s another 7c.

• Yes, when you have a listed investment company capital gain, will the people who buy these get the total listed investment company capital gain, or is that going to be halved as well?

• Mr Barker: Our commitment in the offer document is to pay half the dividend on these shares compared to the other shares, so whatever’s in the other will be halved exactly.

• Question: So you get half the LIC as well? Mr Barker: Yes. But that’s only for the next dividend. After that, they all rank alike. Question: Thank you. I was wondering whether you’d like to comment on the likelihood of a change in the final dividend compared to last year, especially as a change might be in the negative direction. The other question is, is the dividend reinvestment plan to be reinstated?

• Mr Barker: On the first question, I’d get into trouble if I committed the board to a final dividend, but I think obviously the board will have to make that decision when they see the results for the year, so I certainly don’t feel I’m in a position to make any commitment about final dividends.

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	The other question on the DRP, the reason we suspended it this time was we
	didn’t think it was sensible to have both the DRP operating at the same time
	we’re having an issue at the discount, so we decided to suspend it. I would
	imagine the board will reinstate it for the next dividend.
Mr Campbell:	As Chairman I’ll make a comment. I think it’s fair to say that the Board did
	not go into this issue expecting to cut the final dividend. The economic
	outlook in Australia remains quite sound and Australia is still growing at a
	rate that’s attractive globally.
	A number of our companies, well we don’t have a large interest in the
	resource stocks, which would benefit from what’s happening in China and
	Asia, we do invest in service those industries and they should continue to do
	well.
	Also too we’ve had significant reserves which we have been prepared to use
	in the past.
	So without committing it to anything, I hope you find those comments
	helpful.
Question:	Mirrabooka has some sister companies such as AFIC and others, and they
	are often interested in the same shares, Bradken being an example. How do
	you deal with the conflict of interest if, say, a suitable parcel of Bradken
	shares came up for sale?
Mr Barker:	I think it’s an important question because these companies are run
	autonomously in the sense that each of the boards and investment
	committees make their own decisions. In fact, as far as Mirrabooka is
	concerned, it’s tended to be operated a little bit at arm’s length from the
	other companies. We’ve had a fellow called Rob Evans from GSJB Were
	helping us, and we’ve got another analyst, Kieren Kennedy, and they tend to
	come up with suggestions and recommendations about the portfolio,
	whereas the other three companies tend to be more operated with Mark
	Freeman, myself – well, Mark does have a role in Mirrabooka, obviously, I
	beg your pardon, but as far as the other companies are concerned, it was
	Bruce Teele, myself, Mark and Alan Dunn. So if you’re looking at a
	particular stock that looks attractive, then each company would make up a
	decision for how much they wanted to invest at a particular price, and the
	orders would be placed and then they would be allocated proportionately to
	those orders.
Question:	My question is why was the dividend reinvestment plan suspended at a time
	you were wishing to raise more capital through a rights issue? There seems
	to be an inconsistency there.
Mr Barker:	The DRP has tended to operate at a nil or a small discount whereas this at
	the time we decided on the issue it was going to be at a very big discount.
	We felt it was a little hard on the people in the DRP to be issued shares close
	to the then current share price when we were about to issue shares at a big
	discount through the renounceable issue. So we felt to keep faith with the

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	people in the DRP it was better to suspend it this time around and let them
	take up their new shares of the new issue price, which was going to be
	considerably lower.
Mr Campbell:	I think the comment I’d make, it’s obviously something that’s reviewed
	every six months. The comment that I would make is that for the same
	reason we were keen to have an issue, apart from the market timing and the
	market opportunity, we think it’s important for this company to become
	bigger, and one of the ways of a quiet and steady way of doing that from
	time to time is DRP programs. It’s something that we’re quite attracted to,
	but it’s not necessarily at the same time as having a new issue.
Question:	Thank you. What, if any, fees are paid by Mirrabooka to JB Were outside
	of brokerage?
Mr Barker:	There has been a fee to Goldman Sachs JBWere since inception. It was
	originally 0.5%. About a year ago we revised that fee and it was reduced to
	0.275% as a result of the investment team moving across from Were’s to the
	investment companies. So that’s the current fee, 0.275%.
Mr Campbell:	I’ve got two hats on in this. I’m also the chairman of Mirrabooka, I’m the
	chairman of Goldman Sachs JB Were, and I was effectively associated with
	the formation of this company. Goldman Sachs JB Were has provided very
	substantial support to this company in its establishment phase. I think
	you’ve seen the reduction in the fee that Ross referred. There are
	circumstances whether the fee can be further reduced, but that is not
	something that I would be involved in, so obviously I have a conflict there
	so Ross will deal directly with the people at Goldman Sachs JB Were.
	But interestingly enough one of the things that has worked quite well for
	Mirrabooka is that because Goldman Sachs JB Were has received this fee,
	the investment team have tended to give Goldman Sachs JB Were a
	relevantly low share of the brokerage and have shared the brokerage out
	over a very wide panel of brokers and this has resulted in excellent market
	intelligence and a very good flow of ideas as people that specialise in this
	section of the market have realised that there are good brokerage returns to
	be had by providing us with investment ideas.
Question:	Does Mirrabooka make available stocks for short sellers?
Mr Campbell:	Definitely not.
Question:	Gentlemen, usually with rights issues there is a shortfall. Have you
	considered the way some LICs do to offer shareholders the right to apply for
	a few extra shares at the issue price to take up this shortfall or to help to get
	rid of the shortfall at times like this when there may be some uncertainty
	about people taking it up, you know, it may be an advantage to ensure that
	the funds are raised?
Mr Barker:	It’s an important question. We had a lot of discussion about this.

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The route we took for this particular issue was not to issue a formal prospectus because recently the law was changed so that companies could have a renounceable rights issue without a prospectus. Now when we looked into this, we thought if we allow shareholders to take up extra rights, the law wouldn’t permit that without a prospectus which was going to cost a huge amount of extra money and also a lot of time in going through the motions of due diligence and the legal requirements and the accounting requirements for a prospectus. So we felt that we wanted to get on with this and not being tied by having to have a formal prospectus.

The other consideration I think is that we didn’t really want there to an overhang at the end of the issue that might keep the share price under pressure for some time if there was a shortfall, so we also decided that we weren’t going to place any shortfall.

So if people want to apply for shares, they have the opportunity, but at the close of the issue, there will be no placement of any shortfall and there’s no opportunity for others to take additional shares up because we couldn’t get that process in place without doing a formal prospectus.

• Question: Good afternoon gentlemen. I wonder if you could just let us know what, if any, will be your change in strategy if there is a significant shortfall in the uptake of the rights issue. Will you increase borrowing or what?

• Mr Barker: Well, I think at this stage we feel in a very comfortable position because we have, in fact, got $5.3million to invest. We’re hopeful that there’ll be a satisfactory and good response to the issue, and at that point we’ll, I think, adjust our investment approach to suit the amount of cash that we raise. I don’t think the board’s of a mind to go out and borrow particularly to invest at this point. We will keep the matter under review in terms of our DRP and possibly a share purchase plan if we think that’s appropriate, but I think we’ll just wait and see what sort of outcome we get from the issue and make a decision then, but we certainly wouldn’t want to be going into a lot of debt.

• Mr Campbell: I asked the same question myself a week or so back on one of the very weak days. I noticed that the investment team had picked out a couple of stocks that had been quite sharply marked back and I said ‘You guys aren’t spending the proceeds already, are you?’, because we need to see what’s coming in, and they convinced me that they had no intention of doing that. So I think while we have been doing a little bit of buying, I think that’s typical of what we’ll be doing. It will be rather than any sort of major dives into the market, it will be trying to bottom fish to a certain extent over a period of time.

• Question: Thank you. I mean you were caught terribly badly with the share price about $2.25 on the day you issued the rights announcement - every board’s nightmare.

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• Mr Barker: Well the market had a big fall, I think, about a week after we announced the issue. I think the big fall was on 21 January. Well, we obviously didn’t know that when the issue was announced. I think everybody was surprised at how severe that particular day was, although it did recover that over the next couple of days, so I think as we mentioned earlier, our sense is that we’re somewhere near a bottom, but there’s no guarantees.

• Mr Campbell: It’s interesting, I think there is some similarities to the situation of Australian Foundation Investment Company back in October 1987 when there was the share crash because AFIC was right in a middle of an issue then, and for those that were brave enough to take up their shares, it proved to be a very good investment, but it was a nervous time.

• Question: Yes, I was just looking at the effective price compared with - you know, it’s line ball with buying in the market when you allow for the difference on the dividend, isn’t it?

• Mr Barker: It is at the moment, but I think the thing is, though, if shareholders went into the market to try and buy reasonable quantities of shares, you wouldn’t be able to get them.

• Question: Yes, that’s right. Mr Campbell: This is one of the reasons for having this meeting because if the market came off a little bit, at this level people might see if they’d like to buy a few shares in the market and as well or instead of taking up all of their entitlement.

• Question: Sure, thank you. Question: When would you anticipate being able to advise the market or the ASX on the result of the issue?

• Mr Barker: Well Computershare will need to process the applications, and as I said before, there’ll be a period of grace to allow for things that are in the mail, so – have we got a date? The end of the following week, I suspect.

• Question: How are you? I’d just like to tell you this. I bought shares at with $1.90 in Mirrabooka and I thought I wouldn’t take up my rights because of that dividend difference, but after hearing you gentlemen today, I intend to take up my rights and I like the companies where the directors put their own money in there because they tend to look after it a bit better. Overall I thought the responses to do with the dividend reinvestment why you stopped it is very sound, and I can see the idea that why spend a lot of money on a prospectus when you don’t have to, so overall I think you have done a very good job and you should be all congratulated. That’s all I’ve got to say, thank you very much.

• Mr Campbell: Thank you very much.

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Question:	Good afternoon everybody. I was just wondering if you could explain the
	rationale between why Mirrabooka has made a rights issue and Australian
	Foundation being a sister company has decided to go with the SAP?
Mr Barker:	Well, with the amount of money that you want to raise, Mirrabooka’s got
	about 4,300 shareholders, and if you did a 5,000 share acquisition plan
	there, you’d probably be raising about $20 million. Our purpose here was to
	raise $30 million. That was our intention, so to do that you couldn’t do it
	through a share acquisition plan.
	Now time will tell whether that decision was the appropriate way, but that’s
	what we decided to do. Given the fact that you don’t have to pay for a
	prospectus, it’s not all that hard to do a rights issue these days.
	As far as AFIC’s concerned, I think they made their decision based on the
	amount of cash they wished to raise and they’ve got 85,000 shareholders
	not 4,300 so they made the decision relative to their situation.
Mr Campbell:	I think also, we were very interested in the response of shareholders at the
	annual meeting where there was a common thread through a lot of the
	questions and comments where people said, shareholders said ‘Well, why
	don’t you consider a new issue?’, and at that time we were – well, the
	Chairman in particular was very cautious about the market, and the sort of
	things I was cautious about are becoming more apparent, not necessarily the
	answers, but people are aware of just how serious the credit crunch is and it
	starts to get reflected in the market. We thought well look, let’s have a new
	issue, grow the company and take advantage of the prices that could be
	available over the next few months.
	Just on the timing, I think one of the things that’s important to realise is that
	you’ve got to see what the Federal Reserve are doing in the US. The Fed is
	pumping money into the US system to, if it’s in recession, to try and move it
	out of recession. Let’s assume that if it is in recession, the economic work
	that I’ve read from North America suggests that the liquidity that’s now
	being pumped into the system should mean that by the end of the year there
	should be some sort of upturn within the US economy. Well, if that was so,
	and you can never predict these things exactly, the stock market tends to
	anticipate these things so that you’d expect the global markets would be
	moving up ahead of any sort of upturn in the economy in the US.
	So, while the economic conditions might be difficult for some time, we have
	less time than that to get our money invested in the market at what could be
	in these favourable circumstances.
Question:	I came into this conference a little bit late, so maybe this has been covered,
	but I think I would just like to make the comment that the timing of this in
	one sense may have been unfortunate in the market has gone down and the
	rights issue is around about the marketplace, but it’s probably a better result
	than if the market had gone the other way and then gone down, because I
	will take up my rights issue having listened to this, but I think it’s to the

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	advantage of the shareholders to support the rights issue because this is the
	time when you’ll be or hopefully be able to get better value.
Question:	I wonder if we go back to that brokerage of 0.0275%. Does that include any
	charge for advice or is that just purely the brokerage?
Mr Barker:	That’s a fee that we pay to GSJBW for them do research and to provide
	dealing and research. As Terry was saying before we don’t pay a lot of
	brokerage to Weres, we tend to use a lot of other brokers, but the fee has
	been traditionally to reimburse Were’s for the fact they provided to the
	company people who were researching the stocks and attending meetings
	with the companies and it’s a fairly important issue for this company. We
	always like to meet the executives of the companies we invest in, so it’s
	actually very time consuming to make sure that we’re constantly in contact
	with those companies, and that’s been part of it as well.
Question:	So it is 0.0275% for advice, and if you then buy shares through Weres, what
	sort of charges, brokerage do they charge you?
Mr Freeman:	I’m not sure that we’ve disclosed the actual brokerage rate we’re paying.
	What I can say is we actually deal with all the brokers in the market. We
	pay all the brokers the same brokerage rate. So Weres and all the other
	brokers, the brokerage charged is exactly the same across all of them.
Question:	So I guess being fairly big investors you can negotiate fairly assertively.
Mr Freeman:	Yes, you can do that. There’s always a balance between obviously wanting
	to get a good price on brokerage, but you also, you need to provide a bit of
	brokerage to the broker in order to get good service, which is getting the
	analyst to come in to talk to us, getting a good involvement in IPOs or
	placement for the companies they’re doing, so there’s a balance between the
	two.
Question:	Understood and accepted. Life is a weighing of probabilities and I know
	nobody can predict what’s going to happen on the market, but what do
	people like to try their arm at the chances of, say a 30% fall or 15% fall
	staying steady over three months, six months and going up 15% over that
	time? .
Mr Barker:	Look, I couldn’t answer that question. I just don’t know.
Mr Campbell:	My response is without quantifying it is that the big issues are now - it’s
	pretty well-known the losses, the estimates of the losses on the subprime and
	the derivative securities and that sort of thing. We don’t know exactly
	where some of the losses are falling, but they’re known. The impact on
	banks in Australia and financial institutions around the world are starting to
	be known. The impact of the potential credit rating of the bond insurers,
	it’s still being worked out, but I think from what I read on the weekend,
	that’s starting to come to some sort of climax. So for the market to have the
	sort of fall from this level that you were talking about, there’d have to be
	some very significant unidentified issues which by their very nature we

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can’t fix, but all I can say is there’s still a sense of confidence that these uncertainties are now being reflected in the market and for people like us, they do provide buying opportunities. Question: Thank you. So you expect it to be - nobody knows, but it could go up and down a little bit, but you’re not expecting to it be too gross. Is that a reasonable summary? Mr Campbell: My view is, and this is a personal view, that if the low point last month, if that wasn’t the low point, my own feeling is that it will turn out to be reasonably close to the low point.

• The difference this time around, I think, will be the length of time it will take for the market to recover. I think while we know some of these problems, the solutions are going to take some time to organise and arrange and that will mean that the markets recovery will be a bit more prolonged than normal.

• Question: Good afternoon, gentlemen. I just wanted to find out with the rights issue, the shares under the rights issue get half a dividend. Seeing the money’s kept for nearly six months, why isn’t it the full dividend when some other LICs have a full dividend from their rights issues?

• Mr Barker: Well, we decided to do this as part of the terms of the issue. We took into account the fact that the money wouldn’t be in until effectively the end of February, we wouldn’t have it to invest.

• We could have decided the other way, but the directors felt this was fairer for the people who were existing shareholders and perhaps didn’t take up their rights, but it was a decision we took as part of the process of working out what was fair.

Mr Campbell: The other thing too, the final dividend is larger than the interim denied, so that in doing this, what it is meant to reflect, and it’s not exactly precise, but it was meant to reflect the fact that this money would only be invested in the company for four months of the financial year. Mr Barker: A third of the year. Mr Campbell: So I must admit I felt that the split up is pretty fair. Question: Gentlemen, I’m sorry to come back to the costs factor again, but I guess you’re going to claim it’s a question of company size, but it’s a bit disappointing to view that we have an MER of 0.7% of a per cent when we look at ARGO it’s something like 0.12% and AFIC from memory of about 0.21%. Operator: No, AFIC’s just .013%. Question: 0.13%, okay, I’m corrected. That further illustrates my comparison. Mr Barker: Well not really because Mirrabooka’ market capitalisation is about $230m, whereas AFIC is $5.1 billion and ARGO is $4.3 billion.

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Question:	Okay, so like I assumed, you’re going to claim it’s a question of variation of
	scale?
Mr Barker:	Not totally. I go beyond that because there’s a couple of special things
	about Mirrabooka and it goes to the fact that this is a – you’ve got to have
	people close to the companies, and we’ve got 70 or 80 companies that are
	not well followed by the broking community. We want to be close to them.
	It takes a lot more time to do Mirrabooka than it does the other companies,
	so I don’t think that is a bad fee at all. In fact, I think it’s an excellent fee
	given the amount of time it takes to keep close to these companies. We
	think this is actually providing a good service to the shareholders because
	we’re able to get close to the companies in a way they can’t, but it is very
	hands-on and I think that’s important.
Question:	Just one more quick one, gentlemen, and thank you for a very good
	presentation today and your very open comments about - on any questions
	that were raised. My question is do you have an active on market buy back
	program in place at the moment or not?
Mr Barker:	We don’t at the moment. It is something we keep under review, though. I
	think our fundamental setting is that we want to grow the company not
	reduce it, so we’d be very sparing about using something like that. If we
	thought the shares were trading at a huge discount to their NTA, we might
	reinstitute it, but our fundamental approach is that we want to grow the
	company, not reduce it. But there is a place for those things in certain
	situations, but that isn’t our current thinking.
Question:	No, I understand that. Thank you.
Mr Campbell:	Well thank you very much, everyone. We’ve been going for almost the full
	hour. I’ve found it very enjoyable to speak to you all and answer your
	questions. It’s been an experiment for us and I hope you will have all found
	it worthwhile. The rest of the team has been very interested to hear your
	views and questions, so thanks very much everyone.

[END]

Shareholder Briefing 18 February 2008

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Disclaimer

Mirrabooka Investments Limited, its directors, officers and agents (together the Disclosers ) have prepared the information contained in these materials in good faith. However, no warranty (express or implied) is made as to the accuracy, completeness or reliability of any statements, estimates or opinions or other information contained in these materials (any of which may change without notice) and to the maximum extent permitted by law, the Disclosers disclaim all liability and responsibility (including, without limitation, any liability arising from fault or negligence on the part of any or all of the Disclosers) for any direct or indirect loss or damage which may be suffered by any recipient through relying on anything contained in or omitted from these materials. Any reader is strongly advised to make their own enquiries and seek independent professional advice regarding information contained in these materials.

These materials have been prepared solely for the purpose of information and do not constitute, nor are they intended to constitute, advice nor an offer or invitation to any person to subscribe for, buy or sell any shares or any other securities.

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Movements in the S&P/ASX MID CAP 50 price index – down 15.9% from its peak

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Movements in the S&P/ASX Small Ordinaries price index – down 19.8% from its peak

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Valuations are starting to look more reasonable

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Particularly in selected stocks

An example is Bradken Limited

At peak December 2007: Share price $14.80 Price earnings ratio 23.4x Dividend yield 2.5%

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15 February 2008: Share price $6.49 Price earnings ratio 12.3x Dividend yield 5.0%

Note price earnings ratios and dividend yield based on 1 year forward estimates from GSJBW

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Movements in net asset backing

	Before Tax¹	After Tax¹
	Diluted² Undiluted
15 February 2008 (estimated)	$2.13 $2.15	$1.91
31 January 2008 (ex dividend)	$2.13 $2.16	$1.91
31 December 2007 (cum dividend)	$2.39 $2.46	$2.13

¹The before and after tax numbers relate to the provision for deferred tax on the unrealised gains in the Company’s investment portfolio. The Company is a long term investor and does not intend disposing of its total long term investment portfolio. Under current Accounting Standards, the Company is required to provide for tax on any gains that may arise on such a theoretical disposal, after the utilisation of any brought forward losses.

²Note the diluted before tax NTA figures assume the rights issue is fully subscribed

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Top 20 Investments - 15 February 2008

		$ million
1	*** Incitec Pivot**	22.8
2	Nufarm	13.7
3	Healthscope	7.6
4	ASG Group	6.9
5	ConnectEast Group	6.8
6	Tassal Group	6.2
7	*** Origin Energy**	6.0
8	*** Queensland Gas Company**	6.0
9	APN News & Media	5.9
**10 **	Campbell Brothers	5.8
*	Indicates that options were outstanding against part of the holding

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Top 20 Investments - 15 February	2008 con’t	2008 con’t
	$ million
11 Australian Infrastructure Fund	5.4
12 Peet	5.3
13 * Computershare	5.1
14 Cabcharge Australia	5.0
15 Bradken	4.9
16 * Oil Search	4.9
17 Programmed Maintenance Services	4.4
18 James Hardie Industries NV	4.2
19 * Toll Holdings	4.1
20 OneSteel	4.1
	134.8
Top 20 represents 53.5% of total portfolio (excluding cash and bank bills)
* Indicates that options were outstanding against part of the holding

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Questions

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