THORNEY OPPORTUNITIES LTD — AGM Information 2018

Nov 20, 2018

THORNEY OPPORTUNITIES LTD ACN 080 167 264

ASX Announcement: 21 November 2018

ASX Code: TOP

2018 ANNUAL GENERAL MEETING CHAIRMAN’s ADDRESS

In accordance with ASX Listing Rule 3.13.3., please find attached a copy of the Chairman’s Address.

Please note that the Chairman’s address and presentations from the TOP guest presenters will be recorded and made available at http://thorneyopportunities.com.au/agm/ by close of business on Monday 26 November 2018.

Please direct enquiries to: Craig Smith Company Secretary Email: craig.smith@thorney.com.au Telephone: + 61 3 9921 7116 Website: http://thorneyopportunities.com.au/

Level 39, 55 Collins Street, Melbourne Vic 3000 Telephone + 61 3 9921 7116 Facsimile + 61 3 9921 7100

Chairman’s address

I’m delighted to be standing before you today to share my insights on the successes of Thorney Opportunities Ltd (TOP) portfolio over the past year.

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For the 12 months the 30 June 2018, the net tangible asset (NTA) backing, including the benefit
of dividends, rose by around 7.5%. However, since inception until 31 October 2018, TOP has
increased its NTA by around 50%. In my mind, this illustrates best, both our investment
philosophy and success as investors. Great wealth is not necessarily created in a discrete twelve
month period, it is created through sustained returns over the mid to long term. An acute
understanding of this fact was one of the very reasons I launched TOP a few years ago and
indeed expressed at the time.
TOP PERFORMANCE SINCE INCEPTION
All
TOP NTA (after fees and costs) v Ords
All Ords and Small Ords Accumulation Indices Accum.
Index
65%
55% Small
Ords
45%
Accum.
35%
Index
25%
15% NTA
(after
5%
fees &
-5% costs)
Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18
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This consistent performance enabled an increase in the total franked dividends paid in 2018 to 1.5 cents per share, an increase of 20% compared to 2017.

We have four presentations from the TOP investment portfolio today, being Money3 Corporation Limited, Austin Engineering Limited, Murray River Organics Group Limited and Southern Cross Electrical Engineering Limited, however, ahead of those presentations, I want to make reference to a few of the other companies in the portfolio.

Firstly to Fairfax Media Limited, a company which has been in the news extensively of late.

Earlier this week, the Fairfax shareholders voted in favour of the proposed merger with Nine Entertainment. TOP voted against the merger as we believe that Nine is not paying a premium to acquire the Fairfax Media assets. This became especially apparent in recent weeks after a significant fall in the share price of Fairfax Media.

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Thorney Opportunities Ltd 2017 Annual General Meeting

Chairman’s address continued

While I have a high regard for Nine Entertainment’s leadership team, and believe they will likely acquire a valuable portfolio of assets at a good price, I would have preferred the Fairfax board and management themselves to undertake the process of liberating cash from Fairfax’s nonstrategic assets, so ensuring maximum value return for Fairfax shareholders.

If the recently announced plan by former Domain chief Antony Catalano to challenge the merger can result in a better deal for all Fairfax shareholders then I would be supportive of it.

It appears the premise for Mr Catalano’s challenge is that the sum of the parts valuation of the Fairfax assets is in the range of $0.85 to $1.00. Mr Catalano himself is a proven value creator and this valuation range is supported not only by Mr Catalano’s own analysis, but by the independent expert’s valuation, published research by equity analysts, a previous indicative bid by private equity as well as being my own view.

Whatever the final outcome, TOP shareholders have done well from our investment in Fairfax and I am proud to have been active in calling for the company to improve shareholder returns over the past few years.

TOP Assets Under Management

31 October 2018

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2% 6%
2% 8% 19%
3%
3%
4% 16%
4% 6%
15%
7%
5%
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Service Stream Ltd Money3 Corporation Ltd AMA Group Ltd Austin Engineering Ltd TPI Enterprises Ltd OneVue Holdings Pty Ltd Aveo Group Southern Cross Elect. Eng. Ltd Fairfax Media Ltd Decmil Group Limited MMA Offshore Ltd Cooper Energy Ltd Other investments Cash + other assets

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Thorney Opportunities Ltd 2017 Annual General Meeting

Chairman’s address continued

Secondly, in the past twelve to eighteen months, we have increased our exposure to the mining services sector. A couple of these positions we have followed for a while, whilst others are new additions to the TOP portfolio. One of these new positions is Southern Cross Electrical Engineering Limited, and we will hear from their Chief Executive Officer, Graeme Dunn, shortly. Another company which I have mentioned before, Austin Engineering Limited, continues to grow its earnings and be a beneficiary from the increase occurring in resource industry maintenance capex. I won’t say too much as the Austin’s Chairman is here today to present to you. However, I will say that last week I nominated this company as my number one investment recommendation for the next one to two years at the Sohn Hearts & Minds Conference which took place in Melbourne last Friday.

In this age of rapid technology change, it could be said that some of the companies in the TOP portfolio are old fashioned. Not only do they have revenue, they also make money at the EBITDA and NPAT lines, and they are valued by the market, in contrast to many technology stocks, on traditional financial metrics. Some, in fact, even pay dividends.

At TOP we continue to love these companies and be excited by their potential. When we see what we believe to be an undervalued situation we are happy to TOP up, so to speak.

I would like to thank the shareholders of TOP for their continued support, the Board for their guidance and hard work over the past year and the investment team at Thorney.

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Alex Waislitz Chairman Thorney Opportunities Ltd 21 November 2018

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Thorney Opportunities Ltd 2017 Annual General Meeting