DMX Listed InvestmentCompany Limited

DMX Listed InvestmentCompany Limited

September 2014

Roger Collison, Executive Chairman+612 9955 3493roger.colison@dmxcorp.com.au

Disclaimer

In this presentation there are statements related to DMX AssetManagement’s future business and financial performance and future eventsor developments. These forward looking statements may be identified bywords such as “estimated”, “allow”, “assuming” or words of similar meaning.Such statements are based upon current expectations and assumptions ofDMX Asset Management’s management, and are, uncertain and may notcome to fruition from a variety of factors beyond the control of DMX AssetManagement. Actual results, performance or events may be materiallydifferent from any express or implied forward looking statement. Should oneor more of these risks or uncertainties materialise, or should underlyingassumptions prove incorrect, actual results, performance or achievements ofDMX Asset Management may vary materially from those described in therelevant forward looking statement as being expected, anticipated, intended,planned, believed, sought, estimated or projected.

In this presentation there are statements related to DMX AssetManagement’s future business and financial performance and future eventsor developments. These forward looking statements may be identified bywords such as “estimated”, “allow”, “assuming” or words of similar meaning.Such statements are based upon current expectations and assumptions ofDMX Asset Management’s management, and are, uncertain and may notcome to fruition from a variety of factors beyond the control of DMX AssetManagement. Actual results, performance or events may be materiallydifferent from any express or implied forward looking statement. Should oneor more of these risks or uncertainties materialise, or should underlyingassumptions prove incorrect, actual results, performance or achievements ofDMX Asset Management may vary materially from those described in therelevant forward looking statement as being expected, anticipated, intended,planned, believed, sought, estimated or projected.

DMX Corporation 2

DMX Listed Investment Company

Key Messages

Every dollar invested works for you:• IPO costs will be assumed by the manager, DMX Corporation.

Attaching options potentially allow further investments at a discount to NAV:• 3 options exercisable at 12, 24 and 36 months for $1.10, $1.20 and $1.30.

Impressive manager track record:• Roger Collison has received over 70 investment awards;• Investment track record

– Tyndall– Family Office– DMX Corporation

Value Investment style.

Liquidation if LIC at a significant discount after 5 years.

Key Messages

Every dollar invested works for you:• IPO costs will be assumed by the manager, DMX Corporation.

Attaching options potentially allow further investments at a discount to NAV:• 3 options exercisable at 12, 24 and 36 months for $1.10, $1.20 and $1.30.

Impressive manager track record:• Roger Collison has received over 70 investment awards;• Investment track record

– Tyndall– Family Office– DMX Corporation

Value Investment style.

Liquidation if LIC at a significant discount after 5 years.

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Every dollar invested works for you

Capital raising costs are born by the Manager, DMX Asset Management.Consequently every dollar invested works for you.

Costs born by DMX Asset Management

Amount Raised $15m $30m $100m

Accounting

Printing

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Printing

ASX 66,405 80,934 128,289

Legal 25,000 25,000 25,000

Lead Manager

Distribution

Cost per Share

Attaching Options

Attaching options potentially allow further investments at a discount to NAV1.

Initial Capitalof $1.00

Initial Capitalof $1.00

Costs of issue Valueavailable forinvestment

Value from2015 Option

Value from2016 option

Value from2017 option

Valueavailable forinvestment

Traditional Listed InvestmentCompany cost structure

DMX Listed Investment Company cost structure

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1 Net Asset Value

Initial Capitalof $1.00

Initial Capitalof $1.00

Costs of issue Valueavailable forinvestment

Value from2015 Option

Value from2016 option

Value from2017 option

Valueavailable forinvestment

Traditional Listed InvestmentCompany cost structure

DMX Listed Investment Company cost structure

Option structure

Each option gives the holder the right but not the obligation to purchaseanother share/option parcel at a specific price and at a specific date.

30/9/15 30/9/16 30/9/17

Exercise Price: $1.10 $1.20 $1.30

Get: • 1 share • 1 share • 1 share

• 1 2016 option • 1 2017 option

• 1 2017 option

Each option gives the holder the right but not the obligation to purchaseanother share/option parcel at a specific price and at a specific date.

30/9/15 30/9/16 30/9/17

Exercise Price: $1.10 $1.20 $1.30

Get: • 1 share • 1 share • 1 share

• 1 2016 option • 1 2017 option

• 1 2017 option

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Manager Track Record - Awards

An abridged summary of the awards won by Roger Collison as an Analyst are below: BRW Weekly “Best Analyst”, Building Materials in 1994, 1995, 1996, 1997.

BRW Weekly “Best Analyst”, Engineering in 1995 and 1996.

Institutional Investor Market Report, 3rd best Engineering Analyst in 1998 and 5th best in 1997.

Dunhill Management Services, best Australian Building Materials Analyst in 2000.

Institutional Investor, best European Building Materials team in 2000, runner up in 2002, 2003, 2nd in 2004,2005 and 2006.

Institutional Investor, best Metals and Mining team in 2001, 2002.

Institutional Investor, 2nd best Steel team in 2001.

Thomson Extel, 2nd best European Building Materials team in 2001,

Thomson Extel best European Construction and Building Materials analyst in 2002, 4th inn 2003, 3rd in 2005

Institutional Investor 3rd best European Building Materials analyst in 2002, best in 2003, 2004, 2005 and2006

Reuters 3rd best UK Building Materials analyst 2003

Extel 2nd best European Steel Team, 2002

UK Sunday Times 1st for construction and building materials and 9th best analyst in London

An abridged summary of the awards won by Roger Collison as an Analyst are below: BRW Weekly “Best Analyst”, Building Materials in 1994, 1995, 1996, 1997.

BRW Weekly “Best Analyst”, Engineering in 1995 and 1996.

Institutional Investor Market Report, 3rd best Engineering Analyst in 1998 and 5th best in 1997.

Dunhill Management Services, best Australian Building Materials Analyst in 2000.

Institutional Investor, best European Building Materials team in 2000, runner up in 2002, 2003, 2nd in 2004,2005 and 2006.

Institutional Investor, best Metals and Mining team in 2001, 2002.

Institutional Investor, 2nd best Steel team in 2001.

Thomson Extel, 2nd best European Building Materials team in 2001,

Thomson Extel best European Construction and Building Materials analyst in 2002, 4th inn 2003, 3rd in 2005

Institutional Investor 3rd best European Building Materials analyst in 2002, best in 2003, 2004, 2005 and2006

Reuters 3rd best UK Building Materials analyst 2003

Extel 2nd best European Steel Team, 2002

UK Sunday Times 1st for construction and building materials and 9th best analyst in London

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Manager Track Record - Performance

• Three different environments but consistent outperformance.

Tyndall: $1,200 m value fund

15 to 20 stock portfolio

Joint Portfolio Manager, 2008-10

1.6%pa outperformance

Family Office: Small fund, 0-15 stock portfolio, outperformance 16.4%

DMX Corporation: 7 special situations

45.3% versus market 17.6%, outperformance 27.7%

• Three different environments but consistent outperformance.

Tyndall: $1,200 m value fund

15 to 20 stock portfolio

Joint Portfolio Manager, 2008-10

1.6%pa outperformance

Family Office: Small fund, 0-15 stock portfolio, outperformance 16.4%

DMX Corporation: 7 special situations

45.3% versus market 17.6%, outperformance 27.7%

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Buy-back Commitment

To encourage the stock to trade at or near its NAV the company hascommitted to offer to buy back all of its shares if it is trading at a discount ofmore than 10% 5 years after the IPO date.

IPO 5 years

NAV Review/Buy Back

To encourage the stock to trade at or near its NAV the company hascommitted to offer to buy back all of its shares if it is trading at a discount ofmore than 10% 5 years after the IPO date.

IPO 5 years

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NAV Review/Buy Back

Value Investment Style

1. Knowledge and expertise will be more important thandiversification.

It is more important to know a small number of companies intimately than to know verylittle about a lot of companies. Risk will increase the more diversified you become.

2. Intrinsic value: cash flow, after allowance for the capitalexpenditure to keep the business going will be the keymeasure for valuation.

The intrinsic value of a business – the true underlying value – will depend on its ability toproduce cash in the future less the cash it consumes. The intrinsic value will vary overtime as cash-flow certainty and the discount rate change.

3. Risk: standard deviation of returns or likelihood of loss? Value investors reject the idea that risk is the standard deviation of historic returns. Riskshould be about the probabilistic assessment of something bad happening.

4. The share market can wildly mis-price companies relativeto their intrinsic value. With time however prices willtend to correct.

In the short term, the share market is effectively a popularity contest. Share price willmove up and down depending on the number of buyers or sellers. In the long term, theshare price will reflect the economic fundamentals of the business. Over short periods oftime (even extending to several years) there can be a wide gap between the intrinsicvalue and that available at the stock exchange.

In the short term, the share market is effectively a popularity contest. Share price willmove up and down depending on the number of buyers or sellers. In the long term, theshare price will reflect the economic fundamentals of the business. Over short periods oftime (even extending to several years) there can be a wide gap between the intrinsicvalue and that available at the stock exchange.

5. We think of investments in terms of part ownership of abusiness.

Shares are a fractional ownership of a business – they are a lot more than a stockcertificate, a CHESS statement, or a ‘blip’ on a screen.

6. “Mr Market” should be your friend. Bi-polar “Mr Market” provides you buy and sell prices every day – sometimes high andsometimes low. You should exploit his moods - buy when he is down and sell when he ishigh. DMX Asset Management will have a long term investment horizon so this theme isused as a guide in “bear” and “bull” markets.

7. Margin of safety. The idea is you want to have a sufficiently large gap between the intrinsic value and thecurrent share price to make the investment attractive and to allow for any inaccuracies inthe assessment of the intrinsic value.

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Value Investment Style

8. Governance. Alignment of rewards and treating shareholders as partners.

9. Investing or value investing. Investing should be about a considered appraisal of a business/investment case againstall known facts with the expectation that on average a superior return can be achieved.This contrasts with speculation which is short term and more akin to gambling.

10. Value versus growth. Value investing can be applied to both low and high growth businesses. The key is theintrinsic value compared to the current share price – the margin of safety.

11. The distinction between price, book value and intrinsicvalue.

Price is the current share price. The book value (sometimes called the equity value) isthe value of the assets minus liabilities as reported in the accounts expressed on a pershare basis. The intrinsic value is the true underlying worth of the business.

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12. Macroeconomic factors. These are very hard to forecast accurately and, given the value investing approach isover the long term, frequently of only limited relevance.

13. Gold and other assets that will never produce anything. Non income producing assets have no value in the value investing framework.

14. Family companies. Very often family companies have performed well because decisions are frequentlymade within a longer period and, as the business will be the major part of the wealth ofthe family, they will typically have a higher level of engagement than a salariedemployee will.

Sources of Competitive Advantage

We believe competitive advantage stems from five sources:

•Network effects. This occurs where the value of the product increases as more people have or use the product. Agood example of this would be the internet. If you and another person were the only people on the internet it wouldbe far less value to you than if many people use the internet. The more people that use the internet the morevaluable it is for other people to join and the more people that join the more valuable it is to join. It becomes avirtuous circle. Examples of this would include telecommunications, credit cards, and credit rating services.

•Cost advantages. This includes scale in distribution (such as railways or grocery retailing) and manufacturing (forinstance there is only one incandescent light globe manufacturer left in the world). It will also include companieswhose costs are structurally lower than competitors (for instance the Escondida mine jointly owned by BHP and RioTinto has the highest concentration of copper and lowest strip ratio of any sizeable copper mine in the world).

•Intangible assets. This will include factors such as brands, patents, licences and government concessions, andeven corporate culture.

•Switching costs. For instance it is difficult and time consuming to change the bank or telephone company you use.In the corporate environment it can be expensive and risky to relocate plant and equipment or transition from one ITsystem to another.

•Scale efficiencies. This would include natural monopolies (airports, or water or electrical utilities, for instance),niche markets, and rational oligopolies (such as the Australian banking market).

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We believe competitive advantage stems from five sources:

•Network effects. This occurs where the value of the product increases as more people have or use the product. Agood example of this would be the internet. If you and another person were the only people on the internet it wouldbe far less value to you than if many people use the internet. The more people that use the internet the morevaluable it is for other people to join and the more people that join the more valuable it is to join. It becomes avirtuous circle. Examples of this would include telecommunications, credit cards, and credit rating services.

•Cost advantages. This includes scale in distribution (such as railways or grocery retailing) and manufacturing (forinstance there is only one incandescent light globe manufacturer left in the world). It will also include companieswhose costs are structurally lower than competitors (for instance the Escondida mine jointly owned by BHP and RioTinto has the highest concentration of copper and lowest strip ratio of any sizeable copper mine in the world).

•Intangible assets. This will include factors such as brands, patents, licences and government concessions, andeven corporate culture.

•Switching costs. For instance it is difficult and time consuming to change the bank or telephone company you use.In the corporate environment it can be expensive and risky to relocate plant and equipment or transition from one ITsystem to another.

•Scale efficiencies. This would include natural monopolies (airports, or water or electrical utilities, for instance),niche markets, and rational oligopolies (such as the Australian banking market).

DMX Listed Investment Company

In summary:

Every dollar invested works for you.

Attaching options potentially allow further investments at a discount to NAV.

Impressive Manager track record.

Value Investment style.

Buy back if LIC at >10% discount in 5 years..

In summary:

Every dollar invested works for you.

Attaching options potentially allow further investments at a discount to NAV.

Impressive Manager track record.

Value Investment style.

Buy back if LIC at >10% discount in 5 years..

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DMX Listed InvestmentCompany Limited

DMX Listed InvestmentCompany Limited

September 2014

Roger Collison, Executive Chairman+612 9955 3493roger.colison@dmxcorp.com.au

Management Fees

Initial costs of establishment are borne by the manager, DMX AssetManagement.

Fee is 25% of outperformance over the 90 day BBSW:

• Focus is on absolute performance

• No “management fee”

• All fees (net of expenses) will be reinvested by the manager in fund

Initial costs of establishment are borne by the manager, DMX AssetManagement.

Fee is 25% of outperformance over the 90 day BBSW:

• Focus is on absolute performance

• No “management fee”

• All fees (net of expenses) will be reinvested by the manager in fund

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DMX Corporation

DMX is a public company involved in investments both directly and indirectlythrough its AFSL licence.

Direct Investments:– Nina’s Chocolates

– Cavendish House Fine Foods

– Shellfish Culture

– ASK Funding

DMX is 44% owned by its directors, including Roger Collison with 29%.

AFSL:– DMX LIC

– DMX Ethical

– Florin Investments

DMX is a public company involved in investments both directly and indirectlythrough its AFSL licence.

Direct Investments:– Nina’s Chocolates

– Cavendish House Fine Foods

– Shellfish Culture

– ASK Funding

DMX is 44% owned by its directors, including Roger Collison with 29%.

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AFSL:– DMX LIC

– DMX Ethical

– Florin Investments

DMX Listed Investment Company Limited

Alignment of interests between the Manager and Investors:

Manager takes responsibility for listing and other IPO fees.

Manager only benefits if the Fund outperforms its benchmark.

Manager invests all (net) fees back into the fund.

Fund continues after 5 years only if fund trades at greater than 90% of NAV.

Alignment of interests between the Manager and Investors:

Manager takes responsibility for listing and other IPO fees.

Manager only benefits if the Fund outperforms its benchmark.

Manager invests all (net) fees back into the fund.

Fund continues after 5 years only if fund trades at greater than 90% of NAV.

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