The New Ireland Fund, Inc. April, 2005 Presented by Deirdre Kennedy Senior Equity Manager Bank of...

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The New Ireland Fund, Inc. April, 2005 Presented by Deirdre Kennedy Senior Equity Manager Bank of Ireland Asset Management Capital Link Forum
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Transcript of The New Ireland Fund, Inc. April, 2005 Presented by Deirdre Kennedy Senior Equity Manager Bank of...

The New Ireland Fund, Inc.

April, 2005

Presented by

Deirdre KennedySenior Equity Manager

Bank of Ireland Asset Management

Capital Link Forum

The Irish growth story continues…

0%

2%

4%

6%

8%

10%

12%

1991 1993 1995 1997 1999 2001 2003 2005F

GDP GNP

Source: Davy/Irish Central Bank

One of Europe’s fastest growing economies

...as Irish fundamentals drive premium growth

Supportive demographics

Flexible labor markets

Low corporate tax regime

Pro-business environment attractive to multinationals

Strong government finances

One of Europe’s major success stories

Ireland has a very young workforce...

0

500

1,000

1,500

Under 15 15-24 25-49 50-64 65+

2004

Source: NCB

‘000

Population by age cohort 2002

…with the youngest median age in the EU 15...

30

32

34

36

38

40

42

44

IT DE FI SE BE GR AT EU-15 DK ES NL FR GB PT LU IE

Source: Eurostat/Goodbody

…and the workforce is quite different from rest of Europe

2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4

1995 2000 2005 2010 2015 2020 2025

230

235

240

245

250

255

260

Ireland (lhs) EU15 (rhs)

Source: NCB

IRL (mn) EU (mn)

IRL/EU active population

The Irish economy has become more competitive

20

30

40

50

60

70

80

90

100

110

1990 1992 1994 1996 1998 2000 2002 2004

Source: Central Bank of Ireland/NCB

Improving

Irish relative unit wage costs

Adds up to high employment growth...

-1012345678

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Ireland EU

%

Source: NCB

The key to economic performance

…and supported by healthy government finances

0

20

40

60

80

100

120

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

%

Source: NCB

General government debt as % of GDP

The economy hit a soft patch for two years...

17,800

18,000

18,200

18,400

18,600

18,800

19,000

19,200

Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03

Ireland Real GNP

Source: Davy

...but recovery underway since the spring of 2003

18,000

18,500

19,000

19,500

20,000

20,500

21,000

Q101

Q201

Q301

Q401

Q102

Q202

Q302

Q402

Q103

Q203

Q303

Q403

Q104

Q204

Q304

Q404

Ireland Real GNP

Source: Davy

Economic success drives outperformance

70

80

90

100

110

120

130

140

150

Dec-98

Jun-99

Dec-99

Jun-00

Dec-00

Jun-01

Dec-01

Jun-02

Dec-02

Jun-03

Dec-03

Jun-04

Dec-04

Source: Davy

ISEQ relative to Eurofirst 300

Looking forward - risks to the growth story?

Rising Euro exchange rate Euro has already risen about 60% from its lows

An adjustment to the housing market Support from demographics and low interest rate environment

A reduction in the flow of direct investment The importance of grants versus a low corporate tax rate

But the positives remain

Favorable fiscal environment

Tax reductions and decent expenditure increases in the recent budget

Demographic, labor market and corporate tax attractions 25-45 age group growing at 2% to 3% a year for the next decade

High proportion of college education, English speaking, low level of unionization

12.5% tax rate committed in legislation

GNP growth forecast at 4.75% in 2005

Premium growth relative to the rest of Europe

New Ireland Fund – investment style

Concentrated portfolio with 22 stocks held

Quality bias with a value discipline

Balance Stocks directly exposed to the Irish economy Irish companies with global growth strategies

Ireland’s leading bank – great play on a strong economy

Source: Davy Stockbrokers

Allied Irish Banks Banking 16.9% of Fund

5 Yr CAGR 10 Yr CAGR

EPS Growth % 7.7 11.0Dividend Growth% 8.1 15.6Total Shareholder return% 11.2 20.9

Valuation

P/E 05 P/E 06 Yield

Allied Irish Banks 11.1 10.1 4.0 International Peer Group 11.2 10.2 4.1

Successful execution of a global growth strategy

CRH Building Materials 11.6% of Fund

5 Yr CAGR 10 Yr CAGR

Sales Growth % 11.2 18.1EPS Growth % 14.5 19.7Dividend Growth % 10.5 13.1Total Shareholder Return % 2.1 20.9

Valuation

P/E 05 P/E 06 Yield

CRH 11.7 10.7 1.9 European Peer Group 12.8 11.7 2.7

Source: Davy Stockbrokers

The winner in the sector

Ryanair Airline 4.4% of Fund

5 Yr CAGR 10 Yr CAGR

Valuation

P/E 05 P/E 06 Yield

Source: Davy Stockbrokers

Ryanair 15.8 13.3 -International Peer Group 20.6 16.7 -

Sales Growth % 29.4 N/AEPS Growth % 40.7 N/ATotal Shareholder Return % 14.7 N/A

New Ireland Fund - top 10 stocks

% of P/E Yield Fund 2004 2005F 2005F

1. Allied Irish Banks 16.9% 12.2x 11.1x 4.0% 2. CRH 11.6% 12.5x 11.7x 1.9% 3. Kerry Group 10.7% 15.1x 14.2x 0.9% 4. Kingspan Group 6.8% 20.0x 16.2x 1.3% 5. DCC 4.9% 13.1x 12.1x 2.2% 6. FBD 4.9% 8.4x 7.9x 2.2% 7. United Drug 4.4% 21.7x 19.6x 1.6% 8. Ryanair 4.4% 18.9x 15.8x - 9. Grafton 4.3% 16.9x 14.1x 1.6% 10. Jurys Doyle Hotel Group 4.2% 18.6x 16.1x 2.2%

Top 10 73.2% 14.8x 13.2x 2.1%

Source: BIAM, Davy

Demonstrating Shareholder Focus

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1 Yr Total Return 3 Yr Compound 5 Yr Compound 10 Yr Compound

New Ireland Fund ISEQ

$

Number 1 performer in its Western European Lipper peer group over 1, 3 and 5 years

New Ireland Fund NAV Performance

Source: PFPC, Total Return

0

5

10

15

20

25

30

Apr-90

Dec-90

Aug-91

Apr-92

Dec-92

Aug-93

Apr-94

Dec-94

Aug-95

Apr-96

Dec-96

Aug-97

Apr-98

Dec-98

Aug-99

Apr-00

Dec-00

Aug-01

Apr-02

Dec-02

Aug-03

Apr-04

Dec-04

$

The Fund repurchased 18% of shares outstanding over the past 5 years

Bank of Ireland Asset Management Limited is authorised by the Irish Financial Services Regulatory Authority (IFSRA) under the Investment Intermediaries Act, 1995. Past performance is not necessarily a guide to future performance. Mention of individual stocks should not be taken as a recommendation to trade in these stocks.