Annual Report 2023

ACN 107 617 381


Key Dates
Year at a Glance
Board of Directors
Chair's Message
Letter from the Chair
Investment Manager’s Review
NSC Core Investments
Investing with NAOS Asset Management
Our Values
Our Investment Beliefs
Our Investment Process
NAOS Qualitative Information Sources
Our ESG Process
Our Investee Companies and Their ESG Journey
Our Team
Shareholder Communications
NAOS Giving Back
Corporate Governance Statement
Download the Annual Report

Acknowledgement of Country

We acknowledge the Traditional Owners of Country throughout Australia and recognise their continuing connection to lands, waters and communities. We pay our respect to Aboriginal and Torres Strait Islander cultures; and to Elders past and present.



Tuesday 14 November 2023

NAOS Small Cap Opportunities Company Limited advises that its Annual General Meeting (AGM) will be held at 12.00 pm (AEDT) on Tuesday 14 November 2023 at The Fullerton Hotel, No. 1 Martin Place, Sydney NSW 2000.

Further details relating to the AGM will be advised in the Notice of Meeting to be sent to all shareholders and released to the ASX immediately after dispatch.

In accordance with the ASX Listing Rules, valid nominations for the position of Director are required to be lodged at the registered office of the Company no later than 5.00 pm (AEST) on 19 September 2023.


Ex-Dividend Date: 
Wednesday 6 September 2023
Record Date: 
Thursday 7 September 2023
Last Date for DRP Election: 
Friday 8 September 2023
Payment Date:
Wednesday 27 September 2023


The NAOS Investor Roadshow will be coming to a city near you this October. Join us as the investment team discusses its investment philosophy and process and provides an outlook on the market. We will also highlight a selection of stocks that are held within our Listed Investment Companies (LICs).

We invite you to come along with a guest, meet us in person, and understand more about NAOS Asset Management (NAOS) and our LICs. Register today to secure your seat.

Thursday 12 October
10.30 am–12.00 pm

Mayfair Hotel
45 King William Street
Adelaide SA 5000

Tuesday 24 October
10.30 am–12.00 pm

Hyatt Hotel Canberra
120 Commonwealth Avenue
Canberra ACT 2600

Tuesday 17 October
10.30 am–12.00 pm

The Westin Melbourne
205 Collins Street
Melbourne VIC 3000

Tuesday 24 October
11.00 am–12.30 pm

InterContinental Perth
City Centre
815 Hay Street
Perth WA 6000

Thursday 19 October
10.30 am–12.00 pm

Customs House
399 Queen Street
Brisbane QLD 4000

Thursday 26 October
10.30 am–12.00 pm

Australian Museum
1 William Street
Sydney NSW 2010

Monday 23 October
10.30 am–12.00 pm

Rydges Newcastle
Wharf Road and
Merewether Street
Newcastle NSW 2300

Visit naos.com.au/events for more information.

NAOS Small Cap Opportunities
Company Limited

NAOS Small Cap Opportunities Company Limited (ASX: NSC) seeks to provide long-term concentrated exposure to Australian emerging companies while providing a sustainable, growing stream of dividends franked to the maximum extent possible, and long-term investment performance above the Benchmark Index, being the S&P/ASX Small Ordinaries Accumulation Index (XSOAI).

Key Highlights

5.0 cps

Fully Franked FY23 Dividend


Fully Franked FY23 Dividend Yield

$2.6 million

FY23 Net Profit After Tax

+6.35% p.a.

3-Year Investment Portfolio Outperformance to Benchmark


Pre-tax Net Tangible Assets per Share


Post-tax Net Tangible Assets per Share


Fully Franked FY23 Dividend (cents per share)

5.0 cents

Fully Franked Dividend Yield


Share Price


Shares on Issue


Option Price (ASX: NSCOA)


Options on Issue


Directors’ Shareholding (number of shares)


Profits Reserve (cents per share)

17.1 cents


NSC Investment
Portfolio Performance*
S&P/ASX Small Ordinaries Accumulation Index
Performance Relative
to Benchmark
1 Year
2 Years (p.a.)
3 Years (p.a.)
5 Years (p.a.)
Inception (p.a.)
Inception (Total Return)

*Investment Portfolio Performance is post all operating expenses before fees, interest, taxes and capital-raising costs. Returns compounded for periods greater than 12 months. Performance has not been grossed up for franking credits received by shareholders. Inception performance (p.a. and Total Return) is from 1 December 2017.



Independent Chair
View Biography


View Biography

SARAH Williams

Independent Director
View Biography


Independent Director
View Biography


View Biography

CHAIR'S Message

David Rickards OAM

Independent Chair

Letter from the Chair

Dear fellow shareholders, 

On behalf of the Board, welcome to the Annual Report of NAOS Small Cap Opportunities Company Limited for the financial year ended 30 June 2023. I would like to thank all shareholders for your continued support and welcome all new shareholders.

FY23 saw another year with a bifurcation in returns within differing segments of the financial markets. The smaller end of the equities market recovered from a brutal FY22, with the S&P/ASX Small Ordinaries Accumulation Index (XSOAI) advancing +8.45% in FY23; however, it lagged the larger end of the Australian equities market. The S&P/ASX 200 Accumulation Index (XJOAI) lifted +14.78% for the financial year, and perhaps even more surprisingly, the Nasdaq Composite Index rose +25.02% in FY23. This was against a backdrop of continued central bank interest rate increases, with the majority of market commentary at the beginning of FY23 anticipating a rough period for high-valuation technology stocks within the Nasdaq Index, given the ‘risk-free rate’ was increasing substantially. Against this backdrop, the NSC Investment Portfolio increased +2.62% for the financial year.

Throughout this period, the Company remained focused on its investment philosophy, which is to provide concentrated exposure to quality emerging companies with aligned management teams that are operating with industry tailwinds.

For the financial year ending 30 June 2023, the Company recorded an after-tax profit of $2.61 million (FY22: after-tax loss of $19.8 million). I am pleased to announce the Board has declared a fully franked final quarterly dividend of 1.25 cents per share, bringing the full-year FY23 dividend to 5.0 cents per share, and maintaining the dividend level of the previous year. This represents a 7.35% net yield, based on the 30 June 2023 closing share price of $0.68. The Company has now declared a total of 28.50 cents per share of dividends since its inception in December 2017, all of which have been fully franked.

NSC Fully Franked Dividend History

The Board continues to be mindful of providing shareholders with a sustainable, growing stream of dividends, franked to the maximum extent possible, while also maintaining sufficient profit reserves to enable the Company to pay dividends in periods when it is more difficult to generate significant performance. The profit reserve balance of the Company at year end was $23.54 million, or 17.1 cents per share.

Over the course of the financial year, the pre-tax Net Tangible Asset (NTA) backing per share of the Company decreased from $0.84 to $0.80. The positive Investment Portfolio performance increased NTA per share by 2.77 cents per share, whilst 4.80 cents per share of fully franked dividends were paid to shareholders during the year. Management fees and interest expense on borrowings decreased the NTA by 1.25 cents per share and 1.12 cents per share respectively. The buyback of shares at a discount to NTA was a positive contributor, adding 0.53 cents per share to the NTA.

NSC Pre-Tax NTA Performance

The FY23 Total Shareholder Return (TSR), which measures the change in share price along with dividends paid to shareholders during the period, was –0.33%. This measure does not include the benefit of franking credits received by shareholders through franked dividends. The NSC share price closed the financial year at $0.68, which represented a discount to pre-tax NTA of 15.0%.

The Board continues to be committed to closing this discount, through several initiatives:

  • On-market Share Buyback: The Company continued its active share buyback program in FY23, acquiring and cancelling 5.8 million shares in FY23, which has been accretive for all shareholders. The Directors believe a share buyback program is a vital part of capital management strategy to maximise value for all shareholders over the long term. When shares are trading below NTA, it allows shares to be acquired not only at a discount to the current NTA of the Company, but also at what may prove to be a further discount to the potential future value of the investee companies.
  • No Dilutionary Share Issues: The Company will not issue shares below the post-tax NTA per share of the Company, as the Board does not believe this to be in the best interests of shareholders. As an example, for those shareholders who participated in the Dividend Reinvestment Plan (DRP), it is important to note the Company did not issue shares at a discount to NTA, but instead acquired shares on market to ensure this capital management activity was completed without any dilution for existing shareholders.
  • Differentiated and Consistent Investment Strategy: The Company will be true-to-label to its investment strategy and there will be no significant deviation from this strategy over the long term, ensuring that all shareholders understand what the Company is aiming to provide. The Board believes the strategy is unique and highly differentiated to most other investment strategies, with little scope for it to be replicated.
  • Alignment: The Directors have increased their ownership of NSC shares since inception and will endeavour to continue to do so, ensuring strong alignment with all shareholders. As at the end of the financial year, Directors own a total of 2.55 million NSC shares.
  • Dividends: The Company will continue to focus on delivering a sustainable, growing stream of dividends, franked to the maximum extent possible while maintaining an adequate profit reserve balance.
  • Shareholder Communications: The Company places a high priority on providing shareholders with timely, regular updates on the Company’s performance and investment philosophy, and the performance of the underlying businesses held in the Investment Portfolio. These updates are delivered in the form of monthly NTA and portfolio updates, a new Quarterly Investment Report, quarterly Investor Update Webinars, and regular investment insights and news, as well as an Annual Investor Roadshow.

While the current macro environment may continue to prove challenging for small-cap companies as we move through FY24, the Board believes the NAOS investment philosophy will continue to generate strong performance for shareholders over the longer term.

On behalf of the Board of Directors, I would like to thank the staff of the Investment Manager for their efforts over the course of the financial year.

David Rickards OAM
Independent Chair

22 August 2023


Managing Director
and Chief Investment Officer,
NAOS Asset Management Limited

Investment Manager's Review

Dear fellow shareholders, 

For the financial year ending 30 June 2023 (FY23), the NSC Investment Portfolio returned +2.62%, compared to the benchmark S&P/ASX Small Ordinaries Accumulation Index (XSOAI), which increased by +8.45%, in another challenging year for emerging equities. This brings Investment Portfolio performance since inception to +3.18% p.a. over the past 5 years and 7 months.

Was it Really Transitory?

It felt like the term most frequently used (and often misused) during the last 12 months was ‘transitory’. However, as investors persisted through FY23, the use of the word gradually declined to the point where it seemed to have almost vanished from everyone’s vocabulary. FY23 taught us an important lesson: certain macro movements and events, such as inflation, interest rate rises, labour shortages and even wars, have proven to be anything but transitory. None of the aforementioned factors have shown any signs of reversing soon. The graph below illustrates that valuation compression has not subsided, and the recent stabilisation of price-to-earnings (P/E) valuations for industrial businesses within the S&P/ASX 200 can be attributed more to the slowing or declining earnings of these businesses rather than stock prices moving higher.

S&P/ASX 200 – Valuation (Price to Earnings)

Source: FactSet

The actions of the Reserve Bank of Australia (RBA) in raising interest rates to combat persistently high inflation has resulted in lower risk, or risk-free investments, providing increasingly acceptable returns for investors, particularly when compared to numerous equity investments. When this tightening cycle commenced in FY22 there was a noticeable shift among investors, who began reassessing their overall exposure to equities due to the availability of alternative, risk-free returns, and equity markets consequently experienced declines, especially in sectors with inflated or irrational valuations.

Over the last 12 months, interest rate rises and inflationary pressures have continued to generate the most headlines, and their impact has extended into the wider economy, with the effects keenly felt by the consumer, businesses and asset prices. Labour shortages also continue to be a significant challenge in the post-COVID environment, with many businesses desperate to hire staff, as shown in the graph below.

Job Vacancies – Australia

Source: FactSet

These various factors have led to a significant increase in uncertainty around the earnings trajectories of many listed businesses, particularly retail and consumer discretionary stocks. Towards the end of FY23, several companies provided trading updates confirming that the current macro environment was now adversely impacting their operations in a significant manner. Such examples included retailers Universal Store Holdings (ASX: UNI), Michael Hill International (ASX: MHJ), City Chic Collective (ASX: CCX), Dusk Group (ASX: DSK) and Baby Bunting (ASX: BBN).

Arguably, the investing environment we face today was last experienced more than a decade ago. During that period, interest rates offered a reasonable return, businesses with negative cash flows were not valued on revenue multiples, and economic cycles occurred. Admittedly, economic cycles can bring with them short-term pain for investors and businesses alike, but they can also bring extraordinary opportunities. The two following graphs highlight how depressed the opportunity set currently is within emerging companies. The first chart compares the price performance of small-cap industrial businesses relative to their larger peers over the past three years, highlighting that small-cap industrials have underperformed their larger peers by ~40% on a peak-to-trough analysis, or by 15% over the three-year period.

When we review the data over a longer period (in this case since, June 2001) the underperformance is significantly more pronounced, with the discount of emerging industrial businesses to their larger counterparts at its widest level, even when factoring in the global financial crisis (GFC) and tech wreck period in the early 2000s. Price movements can often be indiscriminate, but one thing the share price movements of emerging businesses taught us during both the GFC and the COVID-19 pandemic, was that investing in quality, proven, and well-funded businesses during such times has yielded fantastic returns. Another important lesson learned is that picking share price lows is a futile exercise, especially when investing in large dollar amounts, and while there may be short-term pain in some cases, we firmly believe the long-term gains will be significantly outsized for many emerging businesses.

S&P/ASX Small Industrials Relative to S&P/ASX 200 Industrials – 2020 to 2023

Source: FactSet

S&P/ASX Small Industrials Relative to S&P/ASX 200 Industrials – 22-Year History

Source: FactSet

Events of Significance

In my experience of over 16 years in investing, one thing that has become abundantly clear is that share price movements are typically the culmination of a series of prior events related to the business and accompanied by a considerable amount of hard work. With this in mind, I highlight below several events that transpired in FY23, which, in our view, have the potential to generate outsized shareholder returns in the coming years.

MOVE Logistics CEO Appointment

In early CY23, Craig Evans was appointed CEO of MOVE Logistics (ASX/NZX: MOV), filling a role that had been vacant since July 2021. We strongly believe Craig’s appointment will play a pivotal role in MOVE’s potential success as a highly profitable and efficient business. Craig Evans had an impressive 34-year tenure at Mainfreight (NZX: MFT), starting in 1987 as a branch manager and eventually being appointed New Zealand country manager in 2015. When Craig announced his retirement from MFT, this excerpt from the MFT Team Newsletter praised his contribution with the following statement:

“Craig Evans, a legend of our business, has announced his intention to finish in the New Year, after 34 years of service with Mainfreight. Craig has played a key role for us across many and various leadership roles, of late leading our New Zealand team. During this time, the business has developed tremendously and is achieving record levels of growth and profitability. Our network intensity and customer reach has increased, with many new facilities built under his guidance.”

Over his six-year tenure as country manager, this division of MFT grew from a revenue base of $563 million with EBITDA of $78 million, to a revenue base of $1.13 billion with a PBT of $137 million (which we estimate implies an EBITDA of ~$165 million). While we acknowledge no individual alone can determine the fate of a business, we believe Craig is exceptionally qualified to lead the MOVE business.

Craig’s appointment builds on the complete overhaul of the MOVE executive team which consists of more than 10 executives with prior experience with the likes of Mainfreight, Toll Holdings and Linfox.

Given that Craig joined MOVE in the second half of the financial year, tangible progress in terms of strategy and financial results for FY23 is yet to be seen by investors. However, we have confidence that Craig and his team will develop a strategic plan that maximises MOVE’s potential for all stakeholders. The details of this plan are expected to be made public early in FY24, providing the market with insight into the growth opportunities and potential improvements in both profit margins and revenue profile for the business.

COG Financial Services Novated Leasing Expansion

In March 2023, COG Financial Services Limited (ASX: COG) completed its acquisition of Paywise, a Western Australia-based salary packaging and novated lease provider. As part of this transaction, COG also entered into an agreement with workers compensation provider EML Group, to acquire 18% of the combined COG novated leasing and salary packaging business.

Following the acquisition of Paywise, the novated leasing segment of COG will now account for over 20% of the group’s earnings, while the remaining earnings will be derived from finance broking and aggregation, insurance broking, and funds management. This acquisition provides the novated leasing division of COG with the necessary scale, technology, and personnel to compete in an industry that has become highly concentrated and dominated by players like Smartgroup (ASX: SIQ) and McMillan Shakespeare (ASX: MMS). Given the concentrated nature of the industry, we believe there is ample room for further competition. Additionally, with EML Group now a minority owner of the group and a customer base consisting of government departments, corporations and unions, who could all potentially benefit from a novated leasing product, it opens up numerous additional opportunities for COG to pursue.

Another key strategic aspect of this acquisition for COG is our belief that Australia is on the verge of a period of high churn as businesses and consumers transition to electric vehicles (EVs), as shown in the graph below. This is due to the significant technological advancements we have seen in EVs, together with recently announced government subsidies for people who acquire an EV (below a specific amount) through novated leasing. The graph below outlines the small but increasing percentage of EVs as a proportion of total vehicle sales. Furthermore, in a recent (May 23) SIQ presentation, the company stated that in Q1 CY23, ~24% of all quotes were for an EV, compared with ~2% for the corresponding quarter in CY22.

Electric Vehicles as Percentage of Total Vehicle Sales

Source: Statista

While we do not envisage novated leasing ever accounting for more than 50% of COG’s earnings profile, it adds valuable diversification to the business. Similar to the other divisions within COG, it operates with relatively low capital requirements, has highly repetitive processes, and is exposed to favourable industry trends.

MaxiPARTS' Acquisition of Forch Australia

Despite being a standalone business for just two years post the divestment of its trailer business in 2021, MaxiPARTS (ASX: MXI) has hit the ground running on the acquisition front. It started with the acquisition of Truckzone in FY22, and was followed by the recent acquisition of Forch Australia, a distributor of workshop consumables, in March 2023.

While the estimated EBITDA of $2.5 million from the Forch acquisition may not be a transformative deal on its own, it is worth noting that over 80% of the current EBITDA is generated in a single state, Western Australia. As such, we believe there is the potential for significant EBITDA growth as the business expands into other states such as New South Wales and Victoria. We believe there is only a single meaningful competitor to Forch: the Germany-based Würth Group. Based on the public information we could source, this business recorded >$175 million of revenue in CY22, highlighting the opportunity that MXI has with this recent acquisition.

Although MXI may not appear to be a business that has significant earnings growth potential given it is not operating in a high-growth industry, we continue to believe that in a few years’ time, the company has the potential to organically generate EBITDA of ~$35 million, a significant increase on the ~$14 million it generated in FY22. We also expect MXI to have numerous capital management options, as the business should be in a significant net cash position in the next 12–18 months.

FY23 Notable Investment Portfolio Contributors and Detractors


Big River Industries (ASX: BRI)

BRI has been a fixture in the NSC Investment Portfolio since its inception almost six years ago. At the time of our investment, BRI was a business with revenue of $120 million and less than $9 million of EBITDA, operating across nine sites. Based on FY23 market expectations, revenue is expected to exceed $450 million and EBITDA >$50 million, supported by a disciplined acquisition strategy and organic growth. BRI has expanded its presence to 26 sites throughout Australia and New Zealand. FY23 has seen BRI benefit from a number of factors, including price inflation caused by scarcity of supply, and increased demand driven by government stimulus, which assisted the business in achieving record margins in the first half of the financial year.

From an industry point of view, newspaper headlines have done a good job in painting a negative picture for mortgagors and house builders across the country given the RBA’s record pace of interest rate rises. However, as the Housing Industry Association (HIA) graph below shows, there is a structural shortage of housing in Australia. This shortage is forecast to remain for the next decade, thus providing a significant tailwind for both BRI and the broader construction industry.

Estimated Supply & Demand Balance – Total Dwellings Australia

Source: HIA

In our view, the returns provided to shareholders thus far have been driven purely by earnings growth and increased dividend payments, rather than a re-rate in the company’s valuation multiple. BRI currently trades at a price-to-earnings (P/E) multiple of less than nine times, which we consider to be a modest valuation for a business of BRI’s current scale and the growth potential that exists within a fragmented market. Over the longer term we believe BRI has the potential to be a a $1 billion-revenue business with EBITDA of >$100 million, and as this transformation occurs (and liquidity improves), we anticipate the valuation multiple to re-rate accordingly, similar to what occurred in an adjacent industry with a comparable business, Reece (ASX: REH).


As mentioned in the above section, MXI’s management has not wasted any time as a standalone business and is laser- focused on maximising the growth potential of the business over the next 3–5 years. In FY23, MXI shares re-rated in a moderate manner, driven by a strong HY result followed by the acquisition of Forch Australia.

From an industry point of view, Australia has one of the oldest truck fleets globally, with the average age of a heavy truck at 16.3 years compared to the European Union (14.2 years), United States (14.5 years) and United Kingdom (7.6 years). While supply chain issues are still affecting the manufacturing and delivery of new trucks to Australia, trucks are being used for longer rather than being retired, and are also being used more, with the number of kilometres increasing steadily since 1985.

An Increasingly Ageing Truck Fleet is Hauling More Freight

Source: Bureau of Infrastructure and Transport Research Economics

Similar to Big River Industries, we believe MXI will demand a significant valuation re-rate as the business demonstrates its ability to scale in a highly profitable manner. Unlike BRI, MXI fortunately has a clear comparable from a valuation perspective, in the form of direct competitor, Supply Network Limited (ASX: SNL). SNL is a business of similar size but with a long history of delivering outsized returns to shareholders in a capital-efficient manner. Currently, SNL trades on a P/E multiple of approximately 22 times, which we consider reasonable for a business of SNL’s calibre, but it is a valuation multiple that we believe, based on consensus, estimates to be over 50% above that of MXI’s.


Eureka Group Holdings (ASX: EGH)

In the case of EGH, the warning signs were apparent in FY22, and things worsened in FY23 as margins were eroded when interest costs were not adequately hedged, and the business then completed an equity raising to deleverage the balance sheet and embark on greenfield expansions. As we stated in a number of our previous investor communications, we lost confidence in management’s ability to consistently grow earnings in an accretive manner, and we would argue a lack of transparency and an unsatisfactory capital management strategy has resulted in a poor earnings per share (EPS) profile over the past few years. In our view, a significant opportunity cost existed and as such, we exited our investment and reinvested the funds into other investment opportunities we believed could compound our capital at a higher rate.

MOVE Logistics Group (ASX/NZX: MOV)

While our hopes for MOVE remain high, it is evident the old adage is true: turnarounds always take twice as long and are twice as expensive to implement successfully. These challenges have been compounded by issues in the New Zealand economy, including a severe labour shortage post-COVID, natural disasters, and supply chain disruptions affecting new truck delivery times. Given these headwinds, the revamped management team at MOVE was always going to struggle to deliver improved financial results in the short term.

However, we maintain our belief that MOVE has the potential to become a highly profitable business with significantly greater scale than it currently possesses. The market dynamics appear favourable for MOVE, as one player dominates 50% of the market, while the remaining share is divided among MOVE and three to four players with private equity ownership. With the benefit of hindsight, we made our investment too early; however, this has allowed us to secure a >15% ownership stake in a business that attracts relatively few institutional investors.

FY24 Outlook

As we move into FY24, the prevailing sense of uncertainty has led to very little conviction amongst the investment community as well as many business leaders. In our experience, uncertainty generally leads to lower valuations, especially for emerging businesses. However, when taking a step back and applying a small dose of objectivity and rationalisation, it becomes evident for a number of areas within the economy that while the wheels may indeed slow, they will continue to turn. Over time, it is not unreasonable to expect that these sectors will regain momentum and, consequently, valuations will also increase.

I use this analogy as we want all our investments to be exposed to industries that will grow over time, as we have found this not only greatly reduces the risk of entering into a poor investment, but also increases the probability of the investment generating outsized positive returns over the long term. We believe many, if not all, of our core investments have exposure to industries with significant tailwinds that include:

  • shortage of residential housing and apartments (Big River Industries);
  • ageing and more complex trucking fleet(s) (MaxiPARTS);
  • completing the infrastructure project backlog (COG Financial Services and Big River Industries);
  • supply chain pressures and risk-mitigation strategies (MOVE Logistics);
  • transition to renewable energy generation (Gentrack Group).

One other thematic we also believe will come to the forefront over the next 12–18 months will be the advantage that public businesses will have relative to their private counterparts, given the challenging macroeconomic conditions that are likely to persist. Numerous industries are dominated by private businesses that have founders from the baby-boomer generation. Many of these founders will be approaching decisions regarding succession or potential expansion opportunities. Both pathways can be fraught with financial risk and a level of uncertainty, which can lead a founder to seek the sale of an entire business so as to provide certainty to all parties involved. COG, BRI, MXI, and Saunders International (ASX: SND) have already made strategic acquisitions in this regard, and we expect them to continue pursuing such opportunities. Furthermore, we believe that MOVE will also seize on similar opportunities if they make financial and strategic sense.

FY24 may well prove to be another turbulent year for emerging equities, but we remain steadfast in our commitment to providing our shareholders with exposure to businesses that are led by capable and aligned management teams, are not overly reliant on capital, maintain strong balance sheets for financial flexibility, and have significant exposure to industries with long-term growth potential. We firmly believe the long-term future of all of our investee companies to be bright, and although the next 12 months may see further share price volatility, we fully expect these businesses to emerge from FY24 in improved strategic and financial positions.

The entire team is acutely aware of the trust you have placed in us to manage your capital and we greatly appreciate your ongoing support.

Kind regards,

Sebastian Evans
Managing Director and Chief Investment Officer
NAOS Asset Management Limited 

NSC Core Investments



MaxiPARTS (MXI) is a supplier of commercial truck and trailer aftermarket parts to the road transportation industry. In operation for over 30 years, MXI is one of the largest operators in Australia, with a unified support and distribution network providing over 50,000 different parts across 27 sites nationwide.



COG Financial Services (COG) is Australia’s leading aggregator of finance brokers and equipment leasing services to small and medium-sized enterprises (SMEs). COG’s operations are spread across three complementary business divisions: Finance Broking & Aggregation (FB&A), Lending & Funds Management, and Novated Leasing, all of which service the financial needs of the SMEs nationwide. At 1HFY23, COG had an ~21% market share of the Australian Asset Finance Broking market, with the COG network financing $6.7 billion in assets for SMEs in FY22. COG has been highly acquisitive in recent years, acquiring finance brokers, insurance brokers, as well as fund management and novated leasing businesses.



Big River Industries Limited (BRI) is a leading manufacturer and distributor of value-added timber and building material products in Australia and New Zealand. BRI has gained scale in recent years through the acquisition of bolt-on businesses to diversify its product offering and expand its geographical network, which now sits at 26 sites. BRI operates in the commercial sector with customers using BRI products in real-estate developments (detached and multi-residential), commercial construction projects, civil construction, among others. BRI has over 9,000 active trading accounts, serviced by ~640 staff members. BRI achieved $409 million in revenue in FY22.



MOVE Logistics is one of the largest freight and logistics providers in New Zealand. It has a large network of 41 branches across the two main islands of New Zealand, with capability to serve more than 3,500 customers. Originally listed on the New Zealand Exchange, the business dual listed on the ASX in July 2022.



BSA is a technical services business, with a national network of over 350 skilled employees. The core business of BSA manages close to 4,000 jobs daily across many industries, including energy, EVs and, most notably, across multiple technologies within the telecommunications industry. BSA’s client base includes National Broadband Network (NBN), Vector, Intellihub and Foxtel.


NAOS Asset Management is a specialist fund manager providing concentrated exposure to quality public and private emerging companies.

NAOS takes a concentrated and long-term approach to investing and aims to work collaboratively with businesses rather than be a passive shareholder. NAOS seeks to invest in businesses with established moats and significant exposure to structural industry tailwinds, which are run by proven, aligned and transparent management teams who have a clear understanding of how to compound capital.

We look to build large investments in businesses and from time to time will seek board representation or look to appoint highly regarded independent directors. Importantly, NAOS, its Directors and staff are significant shareholders in the NAOS LICs, ensuring strong alignment with all shareholders.

NAOS is B Corp Certified. As a B Corp in the financial services industry, we are counted among businesses that are leading a global movement for an inclusive, equitable, and a regenerative economy.

NAOS launched its first LIC in 2013 with 400 shareholders. Today, NAOS manages approximately $300 million across three LIC vehicles and one private investment fund, for more than 7,000 shareholders.


Encourage independent thinking

Rather than follow the crowd, we prefer to pave the way with innovation and provide a better outcome for our stakeholders. We have a disciplined investment process and do not get caught up in the hype and noise of the market.

Do one thing and do it really, really well

At NAOS, we focus on providing concentrated exposure to public and private emerging companies – and we strive to be the best at this.

Tell it like it is

At NAOS, we are honest and transparent. We continue to exist due to the earned trust of our shareholders.

Have the right people in the right environment

Each NAOS employee has been specifically chosen for their unique ability, proven experience and willingness to learn. At NAOS, we have created an inclusive work culture and one that supports all our employees.

Be invested and aligned

As NAOS Directors and employees, we have a significant interest in NAOS’ investment strategies. This means we are invested alongside our shareholders, creating a strong alignment of interests.

Have a long-term perspective

We believe in investing in businesses where the earnings today are not a fair reflection of what the same business may earn over the longer term. Prior to investing in a business, we ask ourselves: Do we want to own this business forever?

Act responsibly

We are responsible for investing our fellow shareholders’ funds and we do not take this responsibility lightly. At NAOS we seek to always act responsibly and diligently in all matters – from our investment choices through to our shareholder communications.

Be an owner

NAOS employees strive to make NAOS a success by taking ownership of their tasks and responsibilities. In addition, NAOS Asset Management Limited is majority owned by employees and Directors.

Give back

As a company, we have committed to pledge 1% of our revenue, time and knowledge to movements and missions that matter. We want to make a difference and aim to contribute to economic, social and environmental change.

Our Investment Beliefs


We believe in investing in businesses where the earnings today are not a fair reflection of what the same business will earn over the longer term. Ultimately, this earnings growth can be driven by many factors, including revenue growth, margin growth, cost cutting, acquisitions and even share buybacks. The result is earnings growth over a long-term investment horizon, even if the business was perceived to be a value-type business at the time of the initial investment.


Excessive diversification, or holding too many investments, may be detrimental to overall portfolio performance. We believe it is better to approach each investment decision with conviction. In our view, to balance risk and performance most favourably, the ideal number of quality companies in each portfolio would generally be zero to 20.


As investors who are willing to maintain perspective by taking a patient and disciplined approach, we believe we will be rewarded over the long term. If our investment thesis holds true, we persist. Many of our core investments have been held for three or more years, where management execution has been consistent and the value proposition is still apparent.


We believe in backing people who are proven and aligned with their shareholders. One of the most fundamental factors consistent across the majority of company success stories in our investment universe is a high-quality, proven management team with ‘skin in the game’. NAOS Directors and employees are significant holders of shares on issue across our strategies, so the interests of our shareholders are well aligned with our own.


This means we are not forced holders of stocks with large index weightings that we are not convinced are attractive investment propositions. We actively manage each investment to ensure the best outcome for our shareholders and only invest in companies that we believe will provide excellent, sustainable, long-term returns.


With the big four banks making up a large proportion of total domestic equity holdings for the self-managed superannuation funds (SMSF) investor group, many Australian investors are at risk of being overexposed to one sector and may be missing out on opportunities to invest in quality companies in industries such as media, advertising, agriculture or building materials. Australian listed industrial companies outside the ASX 200 are our core focus and we believe the LICs we manage provide pure access to these companies, which may be lesser known by the broader investment community.


We believe in taking advantage of inefficient markets. The perceived risk associated with low liquidity (or difficulty buying or selling large positions) combined with investor short-termism, presents an opportunity to act based purely on the long-term value proposition where the majority may lose patience and move on. Illiquidity is often caused by aligned founders or management having significant holdings in a company. The NAOS LICs benefit from a closed-end structure, which means they do not suffer ‘redemption risk’ and we can focus on finding quality, undervalued businesses regardless of their liquidity profile.


As an investment manager, NAOS recognises and accepts its duty to act responsibly and in the best interests of shareholders. We believe that a high standard of business conduct and a responsible approach to environmental, social and governance (ESG) factors is associated with a sustainable business model over the longer term. This benefits not only shareholders, but also the broader economy. NAOS is a signatory to the United Nations-supported Principles for Responsible Investment (PRI) and is guided by these principles in incorporating ESG into its investment practices. NAOS is also B Corp certified.


At NAOS we seek to work collaboratively with businesses and their respective management teams. We are often the largest shareholder in the businesses we invest in, and from time to time we will seek board representation either via an independent or a non-independent representative. This approach allows us to supportively engage with the boards and/or management teams of our portfolio holdings and maximise the potential for our invested capital to compound at a satisfactory rate over the long term.

Examples of constructive engagement where the NAOS investment team looks to add value include:

  • growth capital if/when required;
  • messaging and communications;
  • capital management decisions;
  • company strategy;
  • board composition.

Our Investment Process


The NAOS investment team undertakes fundamental analysis on potential and current investments.
Some examples of key focus areas include:



MaxiPARTS completed the NAOS ESG questionnaire during FY23.

MaxiPARTS Limited

>1 year

NAOS first invested

$126 million

MaxiPARTS’ market capitalisation as at 30 June 2023
MaxiPARTS (MXI) is a supplier of commercial truck and trailer aftermarket parts to the road transportation industry. In operation for over 30 years, MXI is one of the largest operators in Australia, with a unified support and distribution network providing over 50,000 different parts across 27 sites nationwide.


  • MaxiPARTS has worked with key suppliers to reduce packaging waste or has moved towards environmentally friendly options.
  • The company has reduced the use of plastic bags by 30,000 for one product alone, with plans to reduce more plastic packaging for other products.
  • The company has become a member of the Australian Packaging Covenant Organisation (APCO) to assist in coordinating reduction efforts.
  • The company has an external, independent reporting service for staff, suppliers and other persons to report modern slavery issues.


  • The company aims to improve its environmental footprint by targeting a reduction in power usage and an increase in recycling materials.
  • Long term, the company is investigating the use of alternative energy vehicles (EV or hydrogen), which could be used on a larger scale. There is currently a trial of EV delivery vehicles underway.
  • MaxiPARTS continues to retrofit energy-efficient lighting at various sites. Many site installations have now been completed.
  • Solar generation equipment has been installed in certain retail sites, with a view to extending this program to more locations.


  • An annual pulse survey for employees is conducted, with a total of 73% of staff participating in the survey last year, and the company achieving an overall engagement score of 78%.
  • An Employee Assistance Program (EAP) is available to all employees and their families.
  • A Supplier Code of Conduct requires suppliers to adhere to labour rights and environmental management commitments.
  • A diversity and inclusion training program was conducted in FY23 for all managers.


  • The Board approved an ESG Activity Plan to improve environmental activities and report on its impact.
  • Independent directors make up 80% of the Board.
  • Female Board participation in FY23 was 40%.

Areas for improvement:

  • Provide environmental metrics where possible. Measurement will assist with developing ESG strategies.
  • The creation of an environmental section on the website or in the annual report to publicly highlight initiatives and progress.
  • Set objectives and put targets in place to improve energy efficiency.
  • Use renewable energy at retail sites and distribution centres.
  • Develop a policy on waste management.
  • Continue to develop and improve training programs, and assess and plan staff training needs.
  • Continue to pursue gender diversity targets not met in the existing Corporate Governance Statement.
  • Develop a policy on fair remuneration and consider incentives for non-management staff.
“The Company believes that perspectives resulting from a diverse workforce promote innovation and business success, increasing productivity and competitiveness.”

Excerpt from MaxiPARTS’ Workplace Diversity & Equal Opportunity Policy

Our Team

Sebastian Evans

Chief Investment Officer and Managing Director

Sebastian is a Director of NAOS Emerging Opportunities Company Limited (ASX: NCC), NAOS Small Cap Opportunities Company Limited (ASX: NSC), NAOS Ex-50 Opportunities Company Limited (ASX: NAC), and has held the positions of Chief Investment Officer (CIO) and Managing Director of NAOS Asset Management Limited, the Investment Manager, since 2010. Sebastian is the CIO across all investment strategies.

Sebastian holds a Master of Applied Finance (MAppFin) majoring in investment management as well as a Bachelor of Commerce majoring in finance and international business, a Graduate Diploma in Management from the Australian Graduate School of Management (AGSM) and a Diploma in Financial Services.

Sebastian Evans

Chief Investment Officer and Managing Director
View Biography

Robert Miller

Portfolio Manager

Robert joined NAOS in September 2009 as an investment analyst. Robert has been a portfolio manager since November 2014 and is currently Portfolio Manager across all NAOS LICs: NAOS Emerging Opportunities Company Limited (ASX: NCC), NAOS Small Cap Opportunities Company Limited (ASX: NSC), and NAOS Ex-50 Opportunities Company Limited (ASX: NAC), and the NAOS Private Opportunities Fund. Robert is also a non-executive director of Ordermentum Pty Ltd.

Robert holds a Bachelor of Business from the University of Technology, Sydney, and a Master of Applied Finance (MAppFin) from the Financial Services Institute of Australasia/Kaplan.

Robert Miller

Portfolio Manager
View Biography

Brendan York

Portfolio Manager

Brendan joined NAOS in July 2021 as a portfolio manager. Brendan is also a non-executive director of Big River Industries Limited (ASX: BRI), BSA Limited (ASX: BSA), Saunders International Limited (ASX: SND), Wingara AG Limited (ASX: WNR), BTC health Limited (ASX: BTC) and MitchCap Pty Ltd.

Brendan has over 19 years’ finance, accounting and M&A experience. Most recently, Brendan had a 15-year career with ASX-listed marketing services business Enero Group Limited, initially in finance roles and ultimately as CFO and Company Secretary for a nine-year period. Prior to that, Brendan spent four years at KPMG.

Brendan is a chartered accountant and holds a Bachelor of Business Administration and a Bachelor of Commerce from Macquarie University.

Brendan York

Portfolio Manager
View Biography

Jared Tilley

Senior Investment Analyst

Jared joined NAOS in April 2021 as Senior Investment Analyst. Jared has over 16 years’ financial services experience. Most recently Jared was an investment analyst at Contact Asset Management and prior to that he spent nine years at Colonial First State.

Jared holds a Bachelor of Commerce majoring in accounting and finance from the University of Notre Dame, Sydney, and is a CFA Charterholder.

Jared Tilley

Senior Investment Analyst
View Biography

Nelson de Mestre

Associate Analyst

Nelson joined NAOS as an associate analyst in July 2020. He has a Bachelor of Commerce from the University of Sydney.

Nelson de Mestre

Associate Analyst
View Biography

Julie Coventry

ESG Officer

Julie joined NAOS in November 2012 as Compliance Officer and in January 2021, commenced the role of ESG Officer.

Prior to joining NAOS, Julie worked within compliance and performance teams at BZW Investment Management, Commonwealth Bank, Colonial First State, and QBE.

Julie holds a Bachelor of Business majoring in finance and economics from the University of Technology, Sydney, and she also holds a Graduate Diploma in Applied Finance and Investment from the Securities Institute of Australia.

Julie Coventry

ESG Officer
View Biography

Richard Preedy

Chief Financial and Operating Officer

Richard joined NAOS in October 2015 as Chief Financial and Operating Officer. Richard has over 16 years’ financial services experience in the UK and Australia, beginning his career in London with Deloitte & Touche before relocating to Sydney in 2013.

Richard holds a Bachelor of Arts (Hons) in Business Management from the University of Sheffield, is a qualified chartered accountant and is a member of the Governance Institute of Australia.

Richard Preedy

Chief Financial and Operating Officer
View Biography

Rajiv Sharma

Head of Legal & Compliance

Rajiv is Head of Legal and Compliance at NAOS and holds a Bachelor of Laws (First Class Honours), a Bachelor of Business (accounting major) and a Graduate Diploma in Legal Practice from the University of Technology, Sydney.

Rajiv has over 13 years’ experience, having most recently held senior legal roles at Custom Fleet, part of Element Fleet Management (TSX: EFN), and also at Magellan Financial Group (ASX: MFG). He has also previously worked at law firms Johnson Winter & Slattery, and Clayton Utz.

Rajiv is a member of the Law Society of New South Wales, an Associate of the Governance Institute of Australia, and is admitted to the Supreme Court of New South Wales and the High Court of Australia.

Rajiv Sharma

Head of Legal & Compliance
View Biography

Angela Zammit

Marketing & Communications Manager

Angela joined NAOS in May 2020 in the capacity of Marketing and Communications Manager.

Prior to joining NAOS, Angela held marketing roles for companies in both Australia and the UK, including SAI Global, American Express, Citibank, and Arete Marketing.

Angela holds a Bachelor of Communications majoring in advertising and marketing from the University of Canberra.

Angela Zammit

Marketing & Communications Manager
View Biography

Shareholder Communications

NAOS Asset Management is committed to keeping all shareholders up to date. We endeavour to produce timely updates and relevant communications throughout the financial year. We also welcome shareholder feedback, so please email any feedback or suggestions to enquiries@naos.com.au

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NAOS Giving Back

To be caretakers of the next generation we must actively support positive change. Supporting our commitment to ESG issues, NAOS Asset Management (the management company) donates 1% of recurring revenue to the community and the environment.

NAOS is proud to be supporting:

Corporate Governance Statement

The Board of NAOS Small Cap Opportunities Company Limited is committed to achieving and demonstrating the highest standards of corporate governance. As such, the Company has adopted what it believes to be appropriate corporate governance policies and practices having regard to its size and the nature of its activities.

The Board has adopted the ASX Corporate Governance Principles and Recommendations, which are complemented by the Company’s core principles of honesty and integrity. The corporate governance policies and practices adopted by the Board are outlined in the Corporate Governance section of the Company’s website