Investor presentation

Transcription

1 Argo Investments Limited Investing in Australia since 1946 Investor presentation May 2014 ABN:

2 Disclaimer Argo Investments Limited has prepared this presentation in good faith. However, Argo does not warrant or represent that the information is free from errors or omissions or is suitable for your intended use and no warranty (explicit or implied) is made as to the accuracy, completeness or reliability of any statements. Subject to any terms implied by law and which cannot be excluded, Argo accepts no responsibility for any loss, damage, cost or expense (whether direct or indirect) incurred by any one as a result of any error, omission or misrepresentation in any information presented. The information presented is intended as general information only and is not a securities recommendation or statement of opinion that is intended to influence any person in making an investment decision in relation to a particular financial product or class of financial products. If you are considering making an investment decision, you should seek independent professional financial advice which would take into account your personal needs and individual financial circumstances.

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4 Low cost model with no entry or exit fees Long-term investment strategy harvests dividends for shareholders Closed end investment fund Highly diversified portfolio in a single investment Transparent NTA backing Liquidity

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6 IT Industry & Company Analysis Quality Team Review Stock Selection Valuation Sector Allocation Portfolio Construction & Weighting Quality, Valuation, Income & Franking Superior Shareholder Returns Capital & Income Growth Portfolio Outperformance Marketing

7 Industry and company analysis qualitative attributes Quality Franchise Includes competition, capital intensity, exogenous factors & bargaining power Quality Board / Management Includes operational execution, capital deployment & ESG issues Quality Financial Strength Includes balance sheet, earnings transparency, earnings predictability & dividend sustainability/growth Qualitative Company Score

8 Portfolio construction Company Quality Score Valuation - Consistency across sectors Portfolio Risk Management - Sector exposure - Tracking error - Marginal contribution to risk

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10 Summary of financial results for the half year ended 31 December, 2013 Half-year to Half-year to Change Profit* $101.9 million $86.3 million +18.1% Earnings per share 15.8 cents 13.7 cents +15.3% Interim dividend per share 13.5 cents 13.0 cents +3.8% Net asset backing per share $7.31 $ % * Included $6.9m of non-cash, one-off income items (Brambles/Recall Holdings and Amcor/Orora demerger dividends and a special dividend due to the in-specie distribution of Sydney Airport securities by Macquarie Group).

11 Share price relative to NTA to 31 March, % 15.0% 10.0% Premium or Discount % For personal use only 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% Jun-95 Dec-96 Jun-98 Dec-99 Jun-01 Dec-02 Jun-04 Dec-05 Jun-07 Dec-08 Jun-10 Dec-11 Jun-13

12 Total Portfolio Return to 31 March, 2014: % per annum 16% 14% 13.9% 13.0% 13.7% 13.2% 12% 10% 8% 9.2% 8.1% 9.0% 9.2% 9.6% 8.7% 6% 4% 2% 3.3% 2.8% 0% 1 Year 3 Years 5 Years 7 Years 10 Years 15 Years Argo S&P/ASX 300 Acc. Index Source: JBWere

13 Portfolio allocation as at 31 March, 2014 Consumer Staples 9% Consumer Discretionary 6% LIC Holdings 7% Cash 3% Utilities 3% Telecommunication Services 4% Energy 6% Property Trusts 3% Financial-ex-Property & Banks 8% Materials 15% Banks 22% Health Care 5% Industrials 7% Information Technology 2%

14 Proportion of total assets and contribution to income as at 31 March, 2014 top 20 equity investments 12% 10% % of total assets 8% % of income 6% 4% 2% 0% WBC* ANZ BHP WES CBA TLS NAB MLT RIO WOW MQG* AUI ORG CSL RHC WPL* STO AMP CPU SYD * Income from WBC, MQG and WPL included special dividends

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16 Dividend history - cents per share Special dividends 20.0 Ordinary dividends

17 Dividend history - grossed up for franking credits Cents per share For personal use only Franking impact (cps) Special dividends (cps) Ordinary dividends (cps)

18 Income received dividend movements to 31 March, 2014: % change on previous year 120% 100% 80% 60% 40% 20% 0% AMP WOW AUI ORG CPU CBA MLT STO TLS RHC NAB BHP CSL SYD WBC* WES ANZ RIO MQG* WPL* -20% -40% * Income from WBC, MQG and WPL included special dividends

19 Value of $10,000 invested in Argo shares v cash deposits 15 years to 30 June, 2013 $45,000 $40,000 Argo: $40,648 $35,000 $30,000 $25,000 $20,000 Cash: $18,390 $15,000 $10,000 Source: Macquarie Group Cash Deposit * CPI Argo TSR ** * Based on a 6 month bank deposit with balance >$10,000 compounded & calculated monthly ** Total Shareholder Return (TSR) assumes all dividends & sale of rights are reinvested in Argo shares

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21 Estimated 12 month forward dividend yields as at 31 March, 2014 Source: Datastream, IBES, Deutsche Bank

22 Payout ratio of companies in the S&P/ASX 200 Index Source: Datastream, IBES, Deutsche Bank

23 Earnings revision downgrade cycle abating Forecast EPS growth for year shown (%) Profile of eps growth forecasts (LHS) Australian market EPSg profile FY1 Earnings revisions (x) FY04 FY03 FY05 Profile of FY1 earnings revisions (RHS) FY06 FY07 FY08 FY10 FY09 FY11 FY12 FY14E FY15E FY13-20 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Monthly <1= Net downgrades >1= Net upgrades Source: Macquarie Group

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