1 Welcome to the 2018 Annual General Meeting
2 Disclaimer This presentation has been prepared by Argo Service Company Pty Ltd (ASCO) (ACN 603 367 479) (Australian Financial Services Licence 470477), on behalf of Argo Investments Limited (ACN 007 519 520). ASCO’s Financial Services Guide is available on request or at www.argoinvestments.com.au. This presentation contains unsolicited general information only, which does not take into account the particular objectives, financial situation or needs of any individual investor. It is not intended to be passed on or relied upon as a recommendation by any person. Before making any decision about the information provided, an investor should consult their independent adviser and consider the appropriateness of the information, having regard to their objectives, financial situation and needs. Past performance may not be indicative of future performance and no guarantee of future returns is implied or given. While all reasonable care has been taken when preparing this presentation, no responsibility is accepted for any loss, damage, cost or expense resulting directly or indirectly from any error, omission or misrepresentation in the information presented.
3 Financial results for the year ended 30 June 2018 2018 2017 change Profit $218.9 million $211.5 million +3.5% Earnings per share 31.3 cents 30.7 cents +2.0% 31.5 cents 31.0 cents +1.6% Total dividends per share for the full year Net tangible asset backing (NTA) per share, $8.16 $7.71 +5.8% after costs and tax Number of shareholders 84,120 81,445 +2,675 Management expense ratio (MER) 0.15% 0.16%
4 Continued dividend growth 15 year return based on $10,000 invested + franking credits $37,848 + dividends paid ARG share price $29,477 $16,312 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
5 LIC capital gain tax deduction
6 LIC capital gain tax deduction
7 LIC capital gain tax deduction 5 6
8 Total return % per annum to 30 September 2018 14.0% 12.1% 11.0% 9.8% 8.2% 7.7% 7.3% 6.9% 6.9% 6.1% 5.9% 5.7% 1 Year 3 Years 5 Years 10 Years Share Price NTA S&P/ASX 200 acc.
9 Opposition to the removal of refundable franking credits
10 Survey results 10+ Half shareholders 50% invested based on 25% advised by friends Dividends main reason for 10 or more years own research or family for investing
11 Survey results communication 96% Followed by capital 40% do not understand 90% happy with Recommend growth LIC tax refund
12 Directorate This Photo by Unknown Author is licensed under CC BY-NC
13 Market outlook This Photo by Unknown Author is licensed under CC BY-NC
14 Argo shareholder benefits Low cost, Experienced Long term, proven investment internally managed investment team approach Fully franked, sustainable Strong balance sheet, Administrative simplicity dividends no debt
15 “Argo’s objective is to maximise long-term returns to shareholders through a balance of capital and dividend growth. It does this by investing in a diversified Australian equities portfolio which is actively managed in a low cost structure in a tax-aware manner. ”
16 Global market performance October 2018 source: J.P. Morgan estimates, Bloomberg
17 Top 20 decliners since reporting season high PE group Average falls of high PE group source: J.P. Morgan estimates, Bloomberg
18 Industry performance current price v 1 year range source: J.P. Morgan estimates, Bloomberg
19 Winners v losers % 140 135 130 125 120 115 110 105 100 95 90 Sep Dec Mar Jun Sep ASX200 Metals & Mining Energy Banks source: Morgan Stanley
20 Macquarie Group v the benchmark & the four major banks index source: Factset
21 Major investment purchases during the year to 30 June 2018
22 Ramsay Health Care (ASX:RHC) EPS & DPS forecast 350 $90.00 $80.00 300 $70.00 250 $60.00 cents per share 200 $50.00 $40.00 150 $30.00 100 $20.00 50 $10.00 - $- FY13 FY14 FY15 FY16 FY17 FY18 FY19E FY20E FY21E EPS DPS Share Price - RHS source: Argo estimates
23 Major investment sales during the year to 30 June 2018
24 21st Century Fox (NAS:FOX) a long history
25 21st Century Fox (FOX.NAS) fully exiting our position source: Factset
26 Larger purchases since year end to 30 September 2018
27 Top 20 equity investments as at 30 September 2018 $M $M Westpac Banking Corporation 328.4 Australian United Investment Co. 122.5 Macquarie Group 309.8 APA Group 108.6 ANZ Banking Group 275.2 Sydney Airport 99.6 BHP Billiton 274.6 Computershare 97.8 Wesfarmers 251.2 Milton Corporation 96.2 Commonwealth Bank of Australia 228.8 Ramsay Health Care 94.2 CSL 223.9 Woolworths 93.6 Rio Tinto 174.9 Transurban Group* 91.1 National Australia Bank 168.4 Origin Energy 91.1 Telstra Corporation 146.8 Aristocrat Leisure* 82.1 * Denotes new additions to top 20 holdings
28 Portfolio sector allocation as at 30 September 2018 4.9% 6.7% Listed Investment Companies 3.8% 7.1% 3.4% Cash Utilities 6.4% 5.7% Telecommunication Services & I.T. Property 3.5% Materials Industrials Health Care 17.3% 14.5% Other Financials Banks Energy Consumer Staples 6.7% 11.5% Consumer Discretionary 8.5%
29 Outlook Australian company NPAT growing circa 7% source: Company data, Deutsche Bank forecasts
30 Market outlook Market outlook Fallout from Royal Commission Potential slowing of credit growth Cautious of further escalation of trade tensions US Federal Reserve to continue to lift rates
31
32 Executive team Managing Director Jason Beddow Managing Director Investment team Management team Brydie Lloyd- Andy Forster Tim Binks Andrew Hill Roberts Senior Investment Officer Investment Analyst Chief Operating Officer Chief Financial Officer Colin Jo Meredith Paul Frost Whitehead Hemsley Chipperfield Investment Analyst Investment Analyst Communications Manager Legal Officer Andrew Stephen Moller Mortimer Investment Analyst Operations Officer
33 Get in touch invest@argoinvestments.com.au (08) 8210 9500 www.argoinvestments.com.au
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