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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.