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TRANSCRIPT
Welcome to the 2016 Annual General Meeting
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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.
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Welcome to the 2016 Annual General Meeting
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Cash rate v Argo dividend five year history
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source: FactSet
13.0 13.0 13.0 13.0
13.5 13.5
14.5
14.0
15.5
15.0
15.5
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
06-11 12-11 06-12 12-12 06-13 12-13 06-14 12-14 06-15 12-15 06-16
Argo Dividend cps Cash Rate % (LHS)
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Summary of financial results
2015 2016 change
Profit $228.1 million $216.3 million -5.2%
Earnings per share 34.3 cents 32.0 cents -6.7%
Total dividends per share for the full year 29.5 cents 30.5 cents +3.4%
Net tangible asset backing (NTA) per share $7.52 $7.11 -5.5%
Management expense ratio (MER) 0.15% 0.17% +0.02
Number of shareholders 78,008 80,477 +2,469
for the year ended 30 June 2016
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26.0 26.5 28.0 29.5 30.5
2012 2013 2014 2015 2016
cen
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Argo continues to deliver
Profit Dividends per share NTA per share
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167.3 175.0 195.9
228.1 216.3
2012 2013 2014 2015 2016
$ m
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5.50
6.52
7.35 7.52 7.11
2012 2013 2014 2015 2016
do
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Total Portfolio Return to 30 September 2016: % per annum
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10.7%
5.4%
11.1%
5.1%
8.7%
-0.7%
5.5%
12.7%
4.6%
8.9%
13.2%
6.0%
11.2%
5.1%
8.5%
1 Year 3 Years 5 Years 10 Years 15 Years
NTA Share Price S&P/ASX 200 acc.
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Share price relative to NTA to 30 September 2016
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-15%
-10%
-5%
0%
5%
10%
15%
20%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
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Small cap outperformance
S&P/ASX Small Ordinaries
S&P/ASX 200
S&P/ASX 20
Argo share price
source: FactSet
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www.argoinvestments.com.au
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Outlook
Unconventional monetary policy Interest rates near zero
Growth rates have remained anaemic Continued deflationary worries
Australian economy has performed relatively well
US economy gathering momentum Normalising monetary policy challenges
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www.argoinvestments.com.au
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S&P/ASX 200 subsectors 15
total return during the year to 30 September 2016
-10%
0%
10%
20%
30%
40%
50%
source: FactSet
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Outperformance of smaller companies
S&P/ASX 20
S&P/ASX Small Industrials
S&P/ASX Small Resources
S&P/ASX 200
source: FactSet
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Major investment purchases during the year to 30 June 2016
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Major investment sales during the year to 30 June 2016
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Investment purchases since year end to 30 September 2016
Total purchases of approximately $53m, with larger purchases including:
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Top 20 equity investments as at 30 September 2016
$M $M
Westpac Banking Corporation 328.1 Australian United Investment Co. 117.1
ANZ Banking Group 269.7 CSL 112.6
Wesfarmers 239.9 Ramsay Health Care 111.4
Commonwealth Bank of Australia 232.0 Sydney Airport 100.8
Telstra Corporation 222.8 Woolworths 96.2
Macquarie Group 201.4 APA Group 87.6
BHP Billiton 188.6 Amcor 74.5
National Australia Bank 168.8 AGL Energy 69.5
Rio Tinto 129.6 Brambles 65.9
Milton Corporation 117.3 Transurban Group 65.8
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6.0% 2.2%
4.7%
6.8%
4.0%
12.5%
6.3%
7.7% 10.3%
20.2%
3.8%
8.2%
7.3% Listed Investment Companies
Cash
Utilities
Telecommunication Services & I.T.
Property Trusts
Materials
Industrials
Health Care
Financials ex-Property & Banks
Banks
Energy
Consumer Staples
Consumer Discretionary
Portfolio sector allocation as at 30 September 2016
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S&P/ASX 200 total dividends 22
0
10
20
30
40
50
60
70
80
Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16 Jun 17e Jun 18e
$b
n
Financials
Industrials
Mining &Energy
e = estimate source: Credit Suisse
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S&P/ASX 20 dividend growth last three financial years (FY)
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-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
FY14 FY15 FY16
source: FactSet
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Highest dividend growers within Argo’s portfolio
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-20%
-10%
0%
10%
20%
30%
40%
50%
60%
FY14 FY15 FY16
source: FactSet
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Expected dividend growers based on our forecast
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40%
29%
18% 16%
14% 13% 13% 11% 11% 10%
ISU VOC SYD ALL REH SKI PPC RHC PGH MVF
1 Yr Expected Dividend Growth
source: FactSet
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www.argoinvestments.com.au
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Demographic trends in Australia number of people aged 100+
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source: Commonwealth of Australia - 2015 Intergenerational Report
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Healthcare spending per person in today’s dollars
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source: Commonwealth of Australia - 2015 Intergenerational Report
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Aged care key service providers
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source: Regis Healthcare presentation (Oct 2016)
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Aged care projected growth in places
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source: Estia Prospectus
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Outlook
US interest rates
Brexit
Geopolitics
Technology change
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Executive team
Jason Beddow Managing Director
Brydie Lloyd-Roberts
Investment Analyst
Colin Whitehead
Investment Analyst
Daniel Cuthbertson
Investment Analyst
Paul Frost
Investment Analyst
Stephen Mortimer
Operations Officer
Jo Chipperfield
Legal Officer
Andy Forster
Senior Investment Officer
Tim Binks
Chief Operating Officer
Andrew Hill
Chief Financial Officer
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