Ann: HY23 Results Media Release, page-42

Okay herewith how I saw these investments - all three:

SOL in and around 2011 worried me - they had had the bump from the NHC sale of the Saraji mine and special dividend. They could not sell NHC. TPG was starting to show signs that the growth was going to be hard given no mobile viability. Bridgeport wasn't of interest to me and their coal to gas pilot was a dog... My issue was where and how were they going to keep the profits flowing. That was when I started to drift my investment from SOL and put some of that into BKW but also moved a bit to PGF and PAF. I am probably nota natural LIC investor - I hate passive investments and the active stock pickers take too much of the slice. So I go in and out - wont pay NTA in active LIC's as 1% is around 25% of your return.

Fast forward - NHC doesn't get sold and starts looking like a slow bleed whilst coal prices drift lower. TPG and Vodafone look like a dog. Too much to spend to be a real competitor and really number 3 isn't where I want to invest. I started investing in MLT because ARG AFI and the like were at a premium to NTA but didn't really outperform enough to make MLT unattractive.

I was holding much lower percentages of SOL - Its only attraction was its commitment to dividends. Then they go and merge MLT with SOL - Personally it made me less worried at first as I thought they would have more stability in income. However I did not do the maths on what a MLT shareholder would expect as a dividend. After all the moves they are now getting to the dividends needed so that MLT shareholders would feel okay. They needed to pay around 72 cents from SOL.

It was very exciting - then the penny dropped - BKW was doing very well but the higher payout ratios of LIC's would be hard on SOL. They then started behaving strangely by selling off a lot of bank stocks and those that would fund their need for cash to pay dividends. Then the portfolio of MLT started dropping and to be honest I could and partially cannot understand what was in it for SOL shareholders.

Like all great companies you need a bit of good fortune. The Coal price turns NHC into a money tree. Then you realise these guys did a very bad deal in the NHC pref convertible debt that was listed in Hong Kong ( I think). That is costs Hundreds of millions.

So suddenly NHC was funding chunks of cash to SOL that was allowing it to diversify and at the same time they were selling the MLT portfolio and now had more cash.

So why do I like it: Yes I would lake a cash income producing diversified portfolio of $3billion. Pay the dividends straight through to keep your dividend around #% base and then add to that from cyclical businesses. But the payout ratio probably cannot exceed 50%. use the remaining 50% and the underlying cash generated to find the next generation of gems. My personal opinion is that wont be BKI or CLV or even AmpControl. We probably could do well in Agriculture in the short term but ultimately we will need to benefit from finance or technology. I don't see Australia as the place for industrial giants anymore. That said GMG and BKW are the exception.

I think SOL and MLT were lucky - If the MLT discount had continued G Wilson would have raided with WAM. His only problem was that he probably could not enforce a buyout because of loyal blocks. MLT was an LIC with a virtually permanent discount. Much like CIN.

I dont know how many investors understand that TPG was a very lucky investment as well and bought a virtually crashed cable to Gaum run by Bevan Slattery. He tells the story of almost giving up and then SOL and TPG put together their acquisition.

In say luck - the great Gary Player said the harder I train (Practice) the luckier I get.

They have components - the PCG link and its ability to deliver investor platforms. The Corporate finance arm. The Private equity is interesting but as yet has not shown how good they are.

Milner is correct never drop the dividend but to do that you have to keep payout ratio around 50%.You also cannot keep delivering results based upon revaluations you need to deliver hard cash to diversify.

So yes I am concerned but not that concerned.