For personal use only

Transcription

1 Sandon Capital Investments Limited Shareholder Presentation May

2 Important information This presentation has been prepared for use in conjunction with a verbal presentation and should be read in that context. This presentation is prepared by Sandon Capital Investments Limited (SNC) for general information purposes only. The information contained in this presentation is for information purposes only and has been prepared for use in conjunction with a verbal presentation and should be read in that context. The presentation is not a recommendation, offer or invitation by any person or to any person to buy, sell or apply for securities or interests in any company. You should not construe the contents of this presentation as tax or investment advice. No financial product advice is provided in this presentation and nothing in it should be taken to construe a recommendation or statement of opinion that is intended to influence a person in making a financial product decision. Neither SNC, its manager, Sandon Capital Pty Ltd (Sandon Capital), nor any related or associated companies guarantees the performance of SNC, the return of investor s capital or any specific rate of return. Nothing in this presentation takes into account any person s investment objectives, financial situation or particular needs. You should seek advice before making any investment decision. If you do not have an adviser, we can put you in touch with someone who can help. The projected results and any forward-looking statements contained in this presentation are not historical facts. They are based on current expectations, speak only as of the date of this presentation, as the case may be, and are susceptible to a number of risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those expressed or implied by such projected results and statements. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of SNC and Sandon Capital. Although we believe that the assumptions underlying any projected results and forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this presentation will prove to be accurate. In light of the significant uncertainties inherent in such forward-looking statements included herein, the inclusion of such information should not be regarded as a representation to future results or that the objectives and plans expressed or implied by such forward-looking statements will be achieved. We will not undertake and specifically decline any obligation to disclose the results of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. In addition, it is our policy generally not to make any projections as to future results, and we do not endorse any projections regarding future performance that may be made by third parties. Any quoted performance is post fees and expenses but before tax and assumes distributions were reinvested. Dollars are AUD, unless otherwise stated. We are not responsible for the statements made by or attributed to others in this report. Past performance is no guarantee or does not provide any indication of future returns. 2

3 Agenda Welcome Portfolio & performance What we do Investment objectives General market observations About us 3

4 Portfolio & Performance It has been five months since Sandon Capital Investments Limited was listed $1.02 NTA (post-tax), Small Ords (scaled to $1.00) The portfolio is under construction : A few positions are taking shape with some promise Some investments will take longer than others to come to fruition The Company s investment strategy is focused on the medium- to longterm $1.00 $0.98 $0.96 Dec 13 Jan 14 Feb 14 Mar 14 Apr 14 SNC NTA (Post tax) Small Ords Accumulation Index Sources: SNC, Bloomberg We are in no rush to invest 4

5 Performance & Portfolio cont d Current portfolio status: 7% 44% 49% Cash at Bank Term Deposits Cash is a powerful tool to exploit opportunity Securities Most current purchases share some common characteristics: Buying at discounts to intrinsic value Substantial franking accounts, which may indicate scope for capital management 5

6 Performance & Portfolio cont d We do not disclose all our portfolio holdings 1 Communicating our activities: We are committed to keeping our shareholders informed We need to ensure any communication about portfolio holdings does not adversely affect our ability to build our positions We will talk about our investments when we feel we can, for example 1. Other than as required in the annual report 6

7 Portfolio Holding: Clarius Group Limited Clarius Group Limited (CND) is a recruitment firm. It operates a number of brands under its House of Specialist Brands strategy CND was attractive for a number of reasons: the market was attributing negative value to the company Estimate of wind up value was well above market All figures are in $m, except per share data 31-Dec-13 Total Current Assets 45.2 Total Liabilities 16.9 Excess 28.4 per share $0.32 Franking per share (as at 30 June 13) $0.17 Market price when SNC commenced buying $0.22 Current market price (at 20 May 14) $0.29 Operationally, we believe CND needs to adapt: Larger competitors have more diverse income streams Scale matters, requires a strong costs focus Risks: Cashflow Continued weak hiring conditions Brand value Comparable Companies (current market price & 1HFY14 figures) Clarius (ASX:CND) Average of selected listed peers Enterprise Value Revenues Gross Margin % 16.6% 22.4% Revenue Growth -18% -9% Operating Margin 2.0% 1.4% Price/Book Value (x) Mgmt. Remuneration as % of EV 10.8% 1% to 30% Sources: CND Annual Report to 30 June 2013, Half Yearly Report to 31 December

8 Portfolio Holding: Coventry Group Limited Coventry Group Limited (CYG) operates in the following segments: Fasteners Cabinet & furniture hardware Gaskets distribution & manufacture Fluids products & services IT services Asset sales from 2011 onwards Auto parts Properties Distribution CYG is a longstanding holding among portfolios managed by Sandon Capital. In our opinion: Attractions include (at 31 Dec 13) High cash levels ~$53m High levels of reported net tangible assets Franking account ~$11.5m Historically, has paid 22cps per annum in fully franked dividends Current situation is not sustainable* Risks Current situation is not sustainable* Acquisition risks abound current Board has been seeking acquisitions for several years * We see this as both an attraction and a risk 8

9 What we do We hunt for those opportunities with: High levels of tangible assets, marketable securities or cash Values that are somewhat independent of market and economic conditions 1 and Reasonable prospects for change We then seek to buy such opportunities as a discount to the Manager s assessed intrinsic value 1. Though such characteristics can never be certain, and market and economic turmoil can affect market price and even value. 9

10 Discount to Intrinsic value For personal use only What we do the activist toolkit Activism can take many forms: We will seek to apply methods and techniques appropriate for each circumstance The Manager seeks to invest in opportunities that: Can be bought at a discount to the Manager s assessed intrinsic value and Offer the potential to foster change that will unwind that discount Intrinsic value Intrinsic value Letters to the board Meet with Company/Board Dividend policy PR Campaign Strategic change Corps Act s249 Seek increasing control Passive ownership A C T I V I S M M&A Implement board changes 10

11 Investment objectives Sandon Capital Investments Limited (SNC) aims to: Provide an absolute positive return over the medium- to long-term Preserve shareholder capital Deliver regular and growing dividends, franked to the fullest extent possible 1 1. This is not intended to be a forecast. It is merely an indication of what SNC aims to achieve over the medium to long term (that is, 3 to 5 years). SNC may not be successful in meeting its objective. Any financial market turmoil or an inability by the Manager, Sandon Capital Pty Ltd, to find and make profitable investments will likely have an adverse impact on achieving this objective. Returns are not guaranteed. 11

12 General market observations A general market comment: The consequences of the significant macro factors at play globally are difficult to predict or quantify. - Quoted from Sandon Capital Monthly reports since 2009 Media headlines continue to be a source of chaos and confusion Profitable opportunities remain to be found in the detail by undertaking bottom-up research Market conditions will continue to provide investment opportunities for activist investors 12

13 About us Sandon Capital Investments Limited directors: Gabriel Radzyminski Chairman Matthew Kidman Non-executive director Paul Jensen Non-executive director Mark Licciardo Company secretary Sandon Capital Pty Ltd the Manager Gabriel Radzyminski MD & portfolio manager Pratham Ravi Investment analyst Judy Lam Snr. Financial accountant Amanda Goodsir Executive assistant Role of the Board is: governance manager oversight, and capital management (dividends, issue and repurchase of shares) Role of the Manager is to make the investment decisions on behalf of the Company 13

14 About us Contacting us: 14