Dear fellow shareholders,

On behalf of the Board, welcome to the Annual Report of NAOS Emerging Opportunities Company Limited (Company) for the financial year ended 30 June 2025. We thank all shareholders for your continued support and warmly welcome those who joined us during the year.

The past 12 months have been defined by a shifting economic environment, with the RBA cutting interest rates in late 2024 and early 2025 to bolster economic activity, offset by volatile commodity prices, lagging inflationary pressures and a volatile macro backdrop. What did remain constant was the continued demand for large and liquid listed businesses, which saw the continued outperformance of the largest listed businesses in Australia.

Despite this backdrop, NCC delivered a +5.59% investment return for FY25, albeit underperforming the S&P/ASX Small Ordinaries Accumulation Index return of +12.26%.

The Company reported an after-tax profit of $283,550, a significant turnaround from the $17.66 million loss reported in FY24. The Board has declared a final dividend of 2.0 cents per share (fully franked), bringing the total FY25 dividend to 4.0 cents per share, fully franked.

This dividend marks the 13th consecutive year NCC has paid a dividend and represents a 15.69% yield, based on the 30 June 2025 closing share price of $0.255. Since its inception, NCC has declared 82.25 cents per share in dividends, or $1.11 on a grossed-up basis, with the majority fully franked.

NCC Dividend History

Through FY25, the pre-tax Net Tangible Asset backing (NTA) per share of the Company decreased from $0.43 to $0.40 over the financial year, as shown in the following chart.

NCC Pre-Tax NTA Performance

The Board has continued to implement a dynamic and flexible capital management strategy throughout FY25 to ensure long-term value is maximised for all the Company’s shareholders. This capital management strategy, implemented, includes the use of:

• No Dilutionary Share Issues – When shares are trading at a discount to NTA, the Company acquires DRP shares on-market, eliminating dilution and preserving NTA integrity.
• Dividends – The Company continues to focus on delivering a sustainable stream of dividends, franked to the maximum extent possible, while maintaining an adequate profit reserve balance and funds available to reinvest into investment opportunities that could add significant long-term value for shareholders.
• On-Market Buyback NCCGA Convertible Notes – In July 2025, the Company announced an on-market buyback of up to 10% of the NCCGA Convertible Notes on issue. If executed at a discount to face value, this would represent an accretive outcome for NCC shareholders.

Despite shifts in sentiment favouring larger listed businesses, the Company’s consistent investment strategy ensures the potential for significant long-term outperformance. Alignment between the Board, shareholders and Investment Manager continues to deepen, with Directors and NAOS staff now holding 4.58 million NCC shares.

On behalf of the Board, thank you once again for your ongoing trust and support.

Sarah Williams
‍Independent Chair

21 August 2025

Dear fellow shareholders,

For the financial year ending 30 June 2025 (FY25), the NCC Investment Portfolio increased by +5.59% compared to the Benchmark S&P/ASX Small Ordinaries Accumulation Index (XSOAI), which increased by +12.26%. While it is pleasing to generate a positive absolute return, the portfolio’s relative underperformance stemmed primarily from a strong surge of ~8% in the benchmark in April and May.

As noted in my FY24 Investment Manager’s Report, the primary reason for NCC’s modest absolute performance in FY25 (which was below our expectations), was the ongoing headwinds impacting near-term earnings of key holdings, notably Saunders International (ASX: SND) and Big River Industries (ASX: BRI), two of the portfolio’s largest investments. Despite these challenges, the structural tailwinds supporting their medium- to long-term growth remain robust and, in our view, have strengthened. In the case of BRI, with over 60% of its revenue exposed to residential construction, the well-documented housing shortage in Australia, driven by government red tape, skilled labour shortages, and limited land availability, has led to the lowest dwelling construction in a decade (see chart below). Actions by all levels of government to address these barriers, combined with ongoing interest rate reductions, are driving improved supply dynamics, positioning BRI and similar holdings for significant upside potential.

Dwelling Approval & Commencements in Australia

For Saunders International, the structural thematics of increased Australian defence spending, particularly on facility upgrades, remain robust. In FY25, few, if any, major new defence contracts were awarded in this area, likely due to the federal election and an ongoing review of defence spending priorities. Globally, rising military activity is prompting nations, including Australia, to increase defence budgets as a percentage of GDP. This trend underscores the need for significant investment in new and upgraded facilities to support advanced aircraft, drones, submarines, and other capabilities. As a result, SND is well-positioned to capitalise on this growing demand over the medium to long term.

Share Price Performance - BRI & SND vs S&P/ASX Small Ordinaries

On a positive note, core investments such as COG Financial Services (ASX: COG) and BTC Health (ASX: BTC) made significant strides from a business perspective, which also led to sizeable shareholder outcomes, as detailed later in this letter.

Regarding our private investments, we recently exited MitchCap in June 2025. Despite MitchCap’s impressive growth, strong operating profit, and low bad debts, its increasing capital demands (both debt and equity) delayed the anticipated net interest margin (NIM) benefits from lower funding costs. We determined that accepting a takeover offer was the preferred risk-adjusted decision for NAOS, allowing MitchCap to align with a majority shareholder better positioned to support its funding needs, particularly given the low valuations of listed non-bank financiers and the potential for a delayed exit. Conversely, Ordermentum continued its robust growth, and the improving business quality and network effects are strengthening its competitive moat. In FY25, we increased our valuation of Ordermentum following a third-party capital raise to fund the expansion of new products and services.

For several years, I have noted that high interest rates, significant inflows into passive investing, and the rise of alternative strategies, such as private credit, have driven many investors away from emerging companies as an attractive investment class. This has resulted in reduced liquidity, lower valuations, and fewer investable businesses due to market consolidation, with numerous listed emerging companies acquired by strategic investors.

Over the past six months, however, we have seen early signs of investors returning to the emerging companies segment. It appears to us that declining interest rates and supply-demand challenges in alternative strategies, such as private credit, are shifting the risk-return dynamics. As the economic outlook improves, it has placed many emerging companies in stronger positions to produce more consistent earnings growth over the medium term. We believe these combined forces could spark a valuation inflexion point for emerging companies, with those generating stable, growing cash flows likely to command premium valuations over the next 2-3 years.

Relevance, Momentum and Index Inclusion

Reflecting on my FY24 Investment Manager’s Report, I dedicated significant discussion to the distinctive market dynamics that emerged, where valuations were often overshadowed by the influence of passive capital flows and index inclusion. A prime example was the share price of Commonwealth Bank of Australia Ltd (ASX: CBA), which soared to a record valuation despite maintaining a flat earnings per share (EPS) profile for several years.

Fast forward to the end of FY25, and this market dynamic, if anything, has only strengthened, and generally equity investors of all types are being forced to ‘play the game’ and therefore focus on companies that form part of the index or are a good chance of index inclusion in the short term.

Turning to CBA, its share price, excluding dividends, has increased by +46% in FY25, following a 37% increase in FY24, marking the seventh consecutive year of share price growth. For further context, the chart below compares the grossed-up yield of CBA shares to Australian Government 10-year bond yields over a 10-year period. As the chart illustrates, despite CBA’s flat profit growth outlook, its shares are arguably being priced similarly to a government bond. This suggests investors perceive CBA’s risk profile as being closely correlated with the Australian government’s balance sheet.

Commonwealth Bank vs Australian 10 Year Bond - Yield

CBA has several qualitative attributes that continue to drive its rising valuation. In our view, these include:

• Relevance – CBA is now the 9th largest listed bank by market capitalisation. This makes CBA relevant not only to Australian investors but also to some of the largest investors around the world. As CBA’s relevance grows, the pool of passive buyers expands against a relatively fixed supply of CBA shares, fuelling demand.
• Momentum – As CBA continues to become a larger part of numerous indices, alongside its growing relevance, a self-reinforcing cycle emerges. Investors who are underweight in CBA, and thus lagging in relative performance, may feel compelled to purchase shares to align their portfolios with index exposure, further amplifying price momentum.
• Index Inclusion – With a market capitalisation exceeding A$300 billion, CBA is not only the largest company on the ASX but also a significant constituent in numerous global indices, including those tracking Asian financials and developed market banks. As CBA’s size grows, it attracts greater attention from prominent global indices, reinforcing its appeal to investors.

From a NAOS standpoint, we will continue to focus on what we can control. Our investment philosophy centres on investing in emerging companies that deliver high returns on invested capital and are led by experienced, aligned management teams. These companies operate in industries poised for sustained revenue growth, where they hold clear competitive advantages, and their business models are transparent to investors. Notably, 100% of NCC’s portfolio is outside the ASX indices, ensuring our investments diverge significantly from the benchmark, the S&P/ASX Small Ordinaries Accumulation Index.

Below, I have expanded on several core investments within the NCC investment portfolio, outlining why we believe these companies have the potential to generate significant long-term value for shareholders, irrespective of their share price movements in FY25.

Hancock and Gore Ltd (ASX: HNG) – First Year of Schoolblazer Ownership and Trutex Acquisition

Hancock and Gore Ltd (ASX: HNG) is one of the newer additions to the NCC Investment Portfolio, with our thesis centred on its growing presence in the school uniform market in Australia and the UK. In October 2024, HNG acquired Schoolblazer, a UK-based e-commerce school uniform provider serving independent schools. Schoolblazer streamlines uniform management—from inventory to parent access and quality assurance—through a fully digital platform, eliminating the need for physical storefronts and enabling online measurements. This innovative model reduces costs and enhances convenience compared to traditional offerings, delivering high-quality garments. In FY24, Schoolblazer generated over £4 million in EBITDA through organic growth in the UK.

HNG’s acquisition of Schoolblazer aims to replicate this disruptive, digital-first model in Australia, where the school uniform market mirrors the UK’s landscape a decade ago. As shown in the chart below, Australia’s ~1.5 million private school students represent a larger addressable market than the UK’s ~600,000, despite the UK having a 50% larger population. Independent data suggests an average annual uniform spend of approximately $300 per student (varying by primary or secondary level), implying a $450 million market opportunity in Australia.

Throughout FY25, HNG has been focused on building out the platform for Schoolblazer in Australia. This involved building a local operational team, integrating all school operations onto a unified ERP system tailored for the Australian market, and boosting brand awareness through industry events and engagement with key decision-makers at private schools. The 12 months of groundwork culminated in HNG securing Schoolblazer’s first Australian private school client for the 2026 school year, a notable institution with approximately 1,000 students, potentially generating ~$3 million annually in contract value, depending on uniform requirements. Historically, Schoolblazer’s UK growth has been driven by word-of-mouth momentum, and we anticipate a similar trajectory in Australia.

Finally, HNG announced a conditional agreement to acquire Trutex, a UK-based school uniform provider established in 1865, serving public schools and retailers in the UK and select international markets. Unlike Schoolblazer, we don’t believe that Trutex will provide HNG with the same organic growth opportunity in future years. We do, however, believe its value lies in its robust sourcing relationships and global reach, which could streamline HNG’s complex supply chain. Improved sourcing is expected to enhance gross margins and ensure consistent, high-quality products. Should Schoolblazer gain significant traction in Australia, HNG could leverage Trutex’s customer base to expand into new geographies, further strengthening its market position.

Saunders International Ltd (ASX: SND) – FY25 Earnings Downgrade(s) and Resignation of CEO

Saunders International Ltd (ASX: SND), a long-standing core holding in the NCC portfolio, has pursued a strategic growth path over the past five years. During this period, SND expanded its workforce from ~50 to ~500 employees, grew revenue from ~$50 million to over $200 million, and enhanced its capability to execute larger, more complex projects.

SND’s strategy focuses on securing high-value contracts as a self-performing contractor, leveraging in-house expertise for clients such as the Department of Defence, tier-1 resource companies, and utilities like Sydney Water. Notable successes include projects exceeding $40 million at Western Sydney Airport and RAAF Base Tindal. However, in FY25, despite a growing work pipeline in defence, water, and resources, project timing became uncertain due to factors including a federal election, shifting budget priorities, and volatile commodity prices. These challenges led to earnings downgrades at the HY25 result and again in May 2025, alongside the resignation of SND’s CEO.

SND faces the common challenge of emerging companies: balancing long-term growth investments against short-term performance. Long-term investments in systems, people, premises and geographic reach have solidified SND’s ability to self-perform. All these investments have increased fixed costs, and therefore, the ability to correlate this with revenue growth is an art rather than a science.

As a major shareholder, we support the management and board’s commitment to building a diversified, resilient business with a robust revenue and earnings base. Over the past five years, SND’s consistent year-on-year EPS growth has been exceptional for a contracting business, scaling from a $50 million to a $200 million revenue company. With aspirations to exceed $350 million in 2-3 years, investment phases will be required along the way.

With tenders under evaluation exceeding $1.5 billion, SND is well-positioned to secure a significant share of contracts from direct client relationships and strategic partners, fostering long-term opportunities across multiple sectors. As shown in the chart below, comparable firms like Monadelphous Group Ltd (ASX: MND), GenusPlus Group Ltd (ASX: GNP), and Lycopodium Ltd (ASX: LYL) demonstrate that reaching a scale inflexion point and building a competitive moat can deliver substantial shareholder value, given the capital-light nature of contracting businesses.

Share Price Performance - 5 Years - MND, LYL & GNP

Finally, in July 2025, Saunders announced the acquisition of Aqua Metro, a significant strategic move. We will provide commentary on this acquisition in the Q1 FY26 Quarterly Investment Report, but we believe this is an excellent acquisition for SND. It aligns with the thematic of addressing ageing water infrastructure, adds scale with Aqua Metro’s annual revenue exceeding $100 million, and benefits from strong vendor alignment, with over 35% of the consideration paid in SND shares.

COG Financial Services (ASX: COG) – Board Overhaul and Strategic Reset

In last year’s letter, I outlined the critical changes we felt were necessary for COG to restore shareholder value and establish a sustainable path to growing earnings per share (EPS). Through early FY25, COG persisted with its prior strategy, resulting in a share price decline from $1.10 to a low of $0.86 in March 2025.

COG Financial - Share Price & Key Events

This trajectory shifted dramatically following a significant board overhaul: three directors, including the Chair, resigned, one transitioned to a non-executive role, and two new non-executive directors were appointed, with one assuming the Chair position. To support this transition, NAOS and other major shareholders sold a significant portion of their holdings, which enhanced liquidity in COG shares and enabled new directors and institutional investors to acquire meaningful stakes. We believe owning a smaller share of a revitalised, high-potential business is preferable to a larger stake in an underperforming company with limited prospects for improvement.

The most notable outcome of all the changes mentioned above was the appointment of Tony Robertson as Chair and John Dwyer as a Non-Executive Director. These appointments are significant for several reasons:

• Proven Insurance Broking Expertise – Tony Robertson and John Dwyer co-founded PSC Insurance (ASX: PSI), a listed insurance broking business that debuted in late 2014 at $1.50 per share and was acquired in mid-2024 by the UK-based Ardonagh Group for $6.20 per share, valuing the company at $2.26 billion. Over the ~9-year listing, a $1 investment in PSI grew to ~$7 (including dividends), delivering a ~25% IRR. Importantly, in our opinion, an insurance broking business shares many of the attributes of a finance broking business and, to a lesser extent, a novated leasing business. PSC’s success in driving organic growth, executing accretive acquisitions, and maintaining aligned management offers a proven playbook for COG’s transformation.

PSC Insurance - Share Price

• Track Record in Leading ASX-Listed Companies – Robertson and Dwyer have an exemplary track record of running a listed business and maintaining a strong business valuation. Many management teams find it challenging to lead a public company, often due to difficulties in managing expectations, communicating a clear strategy, and consistently focusing on key financial metrics, such as EPS growth, to demonstrate strategic execution. COG has historically lacked this discipline, resulting in an incoherent strategy and insufficient focus on EPS growth and return on invested capital (ROIC). Their expertise addresses this critical gap.
• Significant Alignment with COG Ordinary Shareholders – Once appointed, both Robertson and Dwyer were quick to acquire ordinary shares in COG. At the time of writing, John Dwyer owns ~4.5m shares with a further ~2.5m options exercisable at $1.30, and Tony Robinson owns ~2.5m ordinary shares with the same number of options. For us, this highlights their commitment to restoring COG’s value and driving consistent earnings growth over the medium term.

With the new board in place, COG has swiftly advanced its simplification strategy. The sale of minority stakes in Earlypay Ltd (ASX: EPY) and Centrepoint Alliance Ltd (ASX: CAF) has generated ~$25 million in cash proceeds. The remaining step in this simplification effort, in our view, is addressing the Westlawn Group, COG’s asset management business. We believe this business contributes less than $2 million to group profitability but adds significant complexity to the balance sheet and cash flow statement due to Westlawn’s debenture program. If this business were to be sold, it would enable current and prospective shareholders to clearly see the capital-light nature and strong free cash flow generated by COG’s core operations.

Ultimately, for COG to achieve long-term success, it must deliver consistent organic earnings growth, even if that growth rate is ~5-10% p.a. While the full strategy is yet to be disclosed, we anticipate that Robertson and Dwyer’s insurance broking expertise will drive improvements in COG’s underdeveloped insurance broking division. Given the thousands of finance broking transactions that occur through a COG-owned or aligned broker, the potential for cross-selling insurance products is substantial.

At the very least, we believe COG now has a credible opportunity to unlock its full potential as Australia’s largest finance, broking & aggregation business. While its ultimate scale and valuation remain uncertain, comparable businesses with steady organic growth and strategic acquisitions have historically commanded premium earnings multiples. Accordingly, COG’s future valuation could be significant, provided it executes effectively under its revitalised leadership.

Outlook for FY26

At our October 2024 national roadshows, we emphasised the goal of delivering a 10-20% return for the NCC portfolio in FY25, supported by the low valuations of our core holdings and modest earnings growth projections.

Although we are disappointed that we missed this target, despite a robust ~10% performance in 1H FY25, the Investment Team is confident that the strengthened qualitative and quantitative attributes of our core holdings will drive substantial share price appreciation as their intrinsic value is realised.

In my experience, often the last thing to change for many businesses is the share price. Emerging companies usually need one or more catalysts to spark a valuation surge, and below, I highlight key FY26 catalysts for select holdings, each poised to drive substantial market re-ratings.

Big River Industries (ASX: BRI)

• Strengthened Executive Leadership – Over the past two years, BRI has significantly expanded and revitalised its executive team to support its ambition of achieving ~$1 billion in annual revenue. Key roles, such as Head of Supply Chain (which have been filled for over 12 months), are driving strategies with the potential to enhance long-term profitability, particularly at the gross margin level. As market conditions normalise, these initiatives are expected to deliver more apparent financial benefits, currently offset by a challenging market environment.
• Property Consolidation – BRI’s acquisitions of complementary private businesses over the past five years have left it with multiple sites across Australia, some facing rising rental costs amid a dynamic construction materials market. BRI has initiated a consolidation strategy to ensure each site is fit for purpose, with sufficient scale to boost profit margins over time. Stabilising lease-related expenses, such as depreciation and interest, should amplify profit growth as gross margins and revenue recover.
• Improved Market Conditions – BRI’s end markets, with ~65% tied to residential construction, have generally been at cyclical lows for the past 12-18 months. However, structural tailwinds supporting long-term growth, such as Australia’s housing shortage, remain robust and have strengthened. More importantly, we have started to see progress in addressing constraints such as interest rate reductions, reduced planning red tape and tradesman availability. As these reforms take effect, increased activity in residential, commercial, and infrastructure projects (e.g., the 2032 Olympics capital expenditure, as shown in the chart below) could drive ~10-20% annual growth, significantly boosting BRI’s profitability.

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Hancock & Gore (ASX: HNG)

• Clarity on Schoolblazer Australia’s First Client – As noted earlier, Schoolblazer Australia secured its first private school client for the 2026 school year. While details on the school’s identity and size remain undisclosed, we expect greater clarity as 2026 approaches. This milestone is critical, as we believe other schools are awaiting a successful first-mover transition to validate Schoolblazer’s seamless digital platform, potentially driving adoptions in 2027 and beyond.
• Integration of Trutex Acquisition and Synergies – With most of the emphasis on the expansion of Schoolblazer Australia, less focus has been placed on the recent acquisition of Trutex. While Schoolblazer Australia drives HNG’s organic revenue growth, the pending Trutex acquisition offers complementary benefits. As a UK-based uniform provider, Trutex brings established sourcing relationships that could optimise HNG’s supply chain. For HNG, with approximately $200 million in group revenue, a 1-2% increase in EBIT margin could substantially enhance profitability, thereby strengthening the group’s financial performance.
• Simplifying Group Financials – HNG’s listed investment company (LIC) structure and unconsolidated Global Uniform Solutions (GUS) financials can seem complex. We are confident HNG’s leadership is implementing strategies—through enhanced reporting or restructuring—to clarify operations and unlock substantial shareholder value over time.

Urbanise.com (ASX: UBN)

• Payments Portal Launch – UBN and NAB are prioritising an industry-leading payments portal, emphasising usability and functionality. Scheduled for launch in mid-FY26, the portal’s success will hinge on customer feedback, a critical factor in the UBN-NAB partnership’s long-term impact.
• Initial Product Uptake – Success for UBN going forward will depend on how many of Australia’s ~2.3 million strata lots transition to its integrated software and NAB banking platform. Following the launch, the speed and scale of adoption will be key to capturing a significant share of this market.
• Capital Management Initiatives – Based on the potential revenue opportunities available for UBN in their ANZ strata operations, we anticipate that the company will focus on high-return, low-risk opportunities. This could involve capital management initiatives to prioritise the strata business.
• NAB’s Option Exercise – As part of the original agreement, NAB can acquire an additional 4.99% of UBN at $1.255 per share within 12 months of the payments portal launch, increasing its stake to 19.99%. This option could signal confidence in the partnership’s progress.

COG Financial Services (ASX: COG)

• New Board and Strategic Overhaul – Following the March 2025 board renewal, new Chair Tony Robertson and Director John Dwyer, former PSC Insurance founders, have yet to fully implement their vision for COG. Their expertise suggests a simple and repeatable strategy with an emphasis on driving consistent organic growth, which we expect to take shape in FY26.
• Business Simplification – As previously stated, COG’s CY23-24 share price decline stemmed from poor capital allocation and operational complexity. We have already seen steps to unwind this complexity via sales of COG’s minority investments in Earlypay (ASX: EPY) and Centrepoint Alliance (ASX: CAF). Divesting Westlawn Finance, which adds over $100 million in assets and liabilities via its debenture program, would further simplify COG’s balance sheet and clarify its cash flow profile.
• Insurance Broking Opportunity – COG facilitates ~$10 billion in annual finance for assets and equipment. Insurance broking has always been considered a growth lever for COG, given the complementary nature of offering insurance alongside finance for the purchase of business-critical equipment. COG’s insurance broking strategy has historically underperformed, falling short of expected growth. With the expertise of the new directors, we anticipate a renewed focus on revitalising this division. Given COG’s scale in finance broking, facilitating thousands of significant transactions annually, enhancements to the insurance broking operations could drive substantial organic growth for years to come.

While the catalysts outlined above may appear nuanced, we believe their realisation in FY26 could deliver substantial shareholder value, particularly if accompanied by valuation re-ratings and sustained earnings growth.

This reinforces our conviction that the intrinsic value of our investments significantly exceeds their current share prices, despite the modest performance in FY25. We remain optimistic that, building on FY25, the Investment Portfolio can achieve significantly strong cumulative returns by FY26, driven by the strength of our core holdings.

I look forward to updating you over the next 12 months on the progress of these investee companies concerning these catalysts, and we remain confident that many should materialise as anticipated. The NAOS team and I remain steadfastly committed to delivering sustainable, positive returns for all NCC shareholders through a concentrated portfolio of Australian and New Zealand emerging companies.

I would also like to acknowledge our long-standing NCC shareholders for their unwavering support, particularly during periods of performance volatility. As a sign of my confidence in NCC’s long-term value creation, I have continued to acquire shares and will do so as long as this potential remains.

Kind regards,

Sebastian Evans
‍Managing Director and Chief Investment Officer

NAOS Asset Management Limited