Kingfish Limited Annual Meeting of Shareholders 31 July 2015
Preliminary Matters • 2014 Meeting Minutes • 2015 Annual Report • Voting by way of poll • Voting papers
Agenda • Chairman’s Overview • Manager’s Review • Questions relating to the management and operations of the business • Annual Meeting Resolutions – Re-election of Carmel Fisher – Auditor’s Remuneration – Increase Director Fees by $5k
Please note • The information given during this presentation is class advice and is not to be taken as ‘personalised financial advice’ • A disclosure statement is available on request
Introduction Board of Directors – Alistair Ryan (Chairman) – Carmel Fisher – Carol Campbell – Andy Coupe Senior Portfolio Manager – Murray Brown Senior Investment Analyst – Zoie Regan Corporate Manager – Glenn Ashwell
Proxy Count Resolution For Against Discretionary Total Abstain Re-elect 8,550,820 36,500 498,043 9,085,363 10,000 Carmel Fisher Fix auditor’s 8,559,039 - 526,479 9,085,518 9,845 remuneration Increase directors’ fees 7,837,187 561,365 604,854 9,003,406 91,957 by $5k Proxy votes to date: 9.1 million
Presentation of Annual Result Chairman’s Overview
Investment Objectives • A high real rate of return – income and capital growth – within acceptable risk parameters • Access to a diversified portfolio – New Zealand growth stocks – Single tax-efficient vehicle
Overview of the Year • Net profit $11.9m (2014: $26.5m)
Use of Shareholders’ Funds Year ended 31 March 2015 ($m) 180 170 12 13 5 160 150 166 162 140 130 120 Opening Net Dividends Dividends Closing NAV Profits Paid Reinvested NAV
Overview of the Year • Net profit $11.9m (2014: $26.5m) • Total Shareholder Return* +16.1% (2014: +18.9%) *Assumes all dividends are reinvested, but excludes imputation credits.
Total Shareholder Return 1 Year to 31 March 2015 30% 25% 20% 2.6% 0.7% 15% 8.4% 10% 18.7% 16.1% 5% 7.0% 0% Share Dividends DRP TSR Warrants TSR + Price (1 for 4) Warrants Change *Assumes all dividends are reinvested, but excludes imputation credits.
Overview of the Year • Net profit $11.9m (2014: $26.5m) • Total Shareholder Return* +16.1% (2014: +18.9%) • Warrants +2.6% *Assumes all dividends are reinvested, but excludes imputation credits.
Warrants • New warrants issued November 2014 • 1 warrant for every 4 shares held • Final exercise price announced in October, expected to be ~$1.18 • Exercise form available October • Exercise date 6 November • Listed: KFLWC
Overview of the Year • Net profit $11.9m (2014: $26.5m) • Total Shareholder Return* +16.1% (2014: +18.9%) • Warrants +2.6% • 10.74 cents per share paid in dividends (2014: 10.30cps) *Assumes all dividends are reinvested, but excludes imputation credits.
Overview of the Year • Net profit $11.9m (2014: $26.5m) • Total Shareholder Return* +16.1% (2014: +18.9%) • Warrants +2.6% • 10.74 cents per share paid in dividends (2014: 10.30cps) • Adjusted NAV* +6.7% (2014: +18.1%) *Assumes all dividends are reinvested, but excludes imputation credits.
Adjusted Net Asset Value (NAV) For year to Five Years 31 March 2015 (accumulated) +6.7% +78.2% Adjusted NAV* +13.5% +78.5% S&P/NZX50G Index *Assumes all dividends are reinvested, but excludes imputation credits.
Index Reporting • Wider Investment Mandate • Five of the top 10 NZX companies • S&P/NZX50G v S&P/NZX Midcap
Three Month Update 1 April – 30 June 2015 to 30 June 2015 (0.5%) Adjusted NAV* +2.0% Total Shareholder Return* S&P/NZX50G Index (1.8%) *Assumes all dividends are reinvested, but excludes imputation credits.
Manager’s Review Part 1 Carmel Fisher
Is our approach still the right one? • 2015 was a year of underperformance • The market and our investment style have evolved Do we need to evolve further?
Investment techniques change with time 1940s 1970s 1980s Value investing – Quality of business “Boy, if I had listened mostly quantitative and its prospects as only to Ben, I would “Margin of Safety” important as price have been a lot poorer”
Evolution of investment style The Fisher Funds STEEPP Analysis model
Evolution of investment style The Fisher Funds STEEPP Analysis model Stock A Stock B 5 4 4 2 4 2 3 3 3 3 2 4 21/30 18/30
Evolution of investment style Yes, but… How strong is strong? And for how long? Does a track record of 10 years ago matter? Is revenue growth a good substitute? In a low-growth world, is this achievable? Just how important is management, really? Price relative to history? Peers? Market?
Fisher Funds 2015 • STEEPP remains valid • Strength = Quality = Wide Moat • Earnings history is mandatory • Price/Valuation no more important than other five factors • Think in ‘what - if?’ terms not single point forecasts • Invest with a medium term horizon
Is our approach still the right one? “You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.” Ben Graham
The Final Word “Get a little better over time so you’re virtually certain to make investments that are virtually certain to be good over time. Discipline, hard work and patience are the key ” Charlie Munger
Manager’s Review Part 2 Murray Brown
2015 Highlights / Lowlights Highlights Lowlights Sixth straight year of positive Market favoured stocks that returns score low in our STEEPP process Strong contributions from key Underperformed the broader portfolio holdings market Refreshed the portfolio with Kathmandu disappointed further quality companies
Performance FY2015 20% 15% 13.5% 10% 6.7% Return 5% 0% Kingfish Adjusted NAV S&P/NZX50G Index Value Gap -5% -6.8% -10% Rally in low growth, yield stocks hurt relative performance For the 12 months ending 31 March 2015 Kingfish Adjusted NAV assumes all dividends are reinvested, but excludes imputation credits.
S&P/NZX50G Index Contribution FY2015 20% 20% 15% 15% 13.5% 6.0% 13.5% Return Return 10% 10% 6.7% 7.5% 5% 5% 0% 0% Kingfish S&P/NZX50G Gentailers & Other S&P/NZX50G Adjusted NAV Index Property Index Index driven by low scoring STEEPP companies in 2015
Since Inception NAV Performance 160% Kingfish Adjusted NAV S&P/NZX50G Index 140% 120% 100% 80% 60% 40% 20% 0% -20% Kingfish Adjusted NAV assumes all dividends are reinvested, but excludes imputation credits.
Performance – YTD 5% 4% Return 2.9% 3% 2.3% 2% 1% 0.6% 0% Kingfish Adjusted NAV S&P/NZX50G Index Value Added Better relative performance YTD Reflects year to date performance to the 29 July 2015 Kingfish Adjusted NAV assumes all dividends are reinvested, but excludes imputation credits.
Contribution % -4 -3 -2 -1 0 1 2 3 4 5 6 Key Contributors FY2015 F&P Healthcare Infratil Freightways Mainfreight Opus Ryman Kathmandu
What Worked in FY2015 TSR 59% 55% 35% 30%
What Didn’t Work in FY2015 TSR -9% -9% -25% -61%
Portfolio Changes FY2015 Metro Performance +2.0% Auckland Airport +1.8% Additions Meridian Energy +1.4% Restaurant Brands +0.6% Kathmandu -5.8% Exits F&P Healthcare +2.6% Key Port of Tauranga +2.2% Rebalances Ryman Healthcare -3.5% Portfolio Refresh in 4Q
Outlook • Short-term challenges • Little room for earnings disappointment • Economy slowing • Longer-term view remains positive • Low interest rate environment • Quality, growth companies will continue to perform
General Questions from Shareholders (not relating to resolutions)
2015 Annual Meeting Resolutions • Introduce and propose • Discussion, questions • Enter your vote on voting paper and lodge your voting paper at end of resolutions
Matters of Business • Annual Report • Resolutions: – Re-elect Carmel Fisher – Auditor remuneration – Increase director fees by $5k
Resolution 1 Re-election of Director Carmel Fisher To re-elect Carmel Fisher as a Director of Kingfish Limited
Resolution 2 Auditor’s Remuneration That the directors be authorised to fix the remuneration of PricewaterhouseCoopers as auditors for the ensuing year (2015/2016)
Resolution 3 Increase in Directors’ Fees To authorise an increase in directors’ fees by $5,000 per annum from $100,000 to $105,000.
Conclusion • Complete and sign voting paper • Voting papers in the voting boxes • If you need a voting paper please see Computershare • Results to NZX
Thank you
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