8th Annual Meeting of Shareholders€¦ · (people, strategy, balance sheet) Outlook • New...
Transcript of 8th Annual Meeting of Shareholders€¦ · (people, strategy, balance sheet) Outlook • New...
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ANNUAL MEETING
OF SHAREHOLDERS
Kingfish Limited
27 July 2018
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Agenda
• Preliminary matters
• Chair’s Overview
• Manager’s Review
• Q&A
• Annual Meeting Resolutions
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Board of Directors
Kingfish Team
Alistair Ryan Carmel Fisher Andy Coupe Carol Campbell
Sam DickieSnr Portfolio Manager
Zoie ReganSnr Investment Analyst
Matt PeekInvestment Analyst
Jody KayeCorporate Manager
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Chair’s Overview
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Kingfish’s Investment Objectives
Achieve a high real rate of return, comprising both income
and capital growth within acceptable risk parameters
Access to a diversified portfolio of New Zealand quality,
growth stocks through a single tax-efficient vehicle
Absolute Returns
Diversified Portfolio
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2018 Overview
Net profit Dividend NAV per share Share price
$36.3m(2017: $22.4m)
11.28cps(2017: 11.16cps)
$1.45(2017: $1.40)
$1.31(2017: $1.29)
Total
shareholder
return*
Dividend return Adjusted NAV
return*
Share price
discount to
NAV^
+12.0%(2017: 8.1%)
+8.7%(2017: +8.5%)
+14.7%(2017: 10.6%)
+9.7%(2017: 7.0%)
*These metrics are Non-GAAP measures calculated in accordance with the methodology described in the Kingfish Non-GAAP Financial Information Policy which is available on the Kingfish website. ^Share price discount/(premium) to NAV (including warrant price on a pro-rated basis).
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Use of Shareholder Funds
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Quarter 1, 2019
1 April – 30 June 2018
Total shareholder return*
+8.4%Adjusted NAV return*
+7.2%NAV per share
$1.52Share price
$1.39Net profit
$21.1m
*These metrics are Non-GAAP measures calculated in accordance with the methodology described in the Kingfish Non-GAAP Financial Information Policy which is available on the Kingfish website.
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Warrants
• 5 May 2017: Successful “KFLWD” warrant issue
with $35.2m invested in the Kingfish portfolio
• 2 July 2018: New warrant issue “KFLWE”
announced
• 18 July 2018: Eligible shareholders issued 1
warrant for every 4 shares held on the record
date with Final Exercise Price to be announced
in June 2019
• 12 July 2019: “KFLWE” Exercise Date
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Manager’s ReviewSam Dickie
Senior Portfolio Manager
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Agenda
1. The Kingfish story
2. Why own NZ shares?
3. Review of markets in FY18
4. Portfolio insights
5. Outlook
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The Kingfish story
1. New Zealand has been a great place to invest
2. Kingfish gives you access to quality, growing companies with offshore revenues
3. Active management has allowed Kingfish to successfully operate in different macro backdrops over the long term
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Why invest in New Zealand shares?
The New Zealand market has outperformed other major markets
-
+50%
+100%
+150%
+200%
New Zealand
(S&P/NZX50G)
US
(S&P 500)
UK
(FTSE 100)
Global
(MSCI World)
Japan
(Nikkei 225)
Australia
(ASX 200)
Emerging
(MSCI EM)
Total gross index return over the last 10 years
Note: Total gross index return with returns in the currency of the index (S&P/NZX50G in NZD, S&P 500 in USD, FTSE 100 in GBP,
Nikkei in JPY, ASX 200 in AUD, MSCI World and MSCI EM in USD); Source: FactSet (10 years to 5 July 2018)
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Mar 17 Jun 17 Sep 17 Dec 17 Mar 18
How did the NZ market fare in FY2018?
October 2017
Q1 2018
Note: S&P/NZX50G index
Source: FactSet
February 2018
June 2017
March 2018
April – July 2017
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Performance has been strong
Note: Adjusted NAV return as defined in Kingfish Non-GAAP Financial Information Policy
(http://kingfish.co.nz/assets/Uploads/Kingfish-Non-GAAP-Financial-Information-Policy.pdf)
+14.7%
+7.2%
-
+5%
+10%
+15%
Fiscal year to
31 March 2018
Quarter to
30 June 2018
Adjusted NAV Return
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Portfolio company performance
Note: * a2 Milk from first acquisition date; portfolio holdings as at 31 March 2018
13 / 16positive
-20%
-10%
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10%
20%
30%
40%
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Portfolio company total shareholder returns (year to 31 March 2018*)
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Attractive earnings growth outlook remains key
Note: Consensus earnings per share growth from current unreported fiscal year to the year after next
Source: FactSet as at 25 July 2018
0%
50%
100%
a2 Milk Vista Ryman F&P
Healthcare
Summerset Restaurant
Brands
Mainfreight
Consensus 2-year forward earnings per share growth (selected holdings)
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What went especially well?
• During the year we increased
the F&P Healthcare weighting
in the Kingfish portfolio
• What happened?
Impact of litigation
significantly overblown
Double-digit and
accelerating growth in
hospital business
• Increased position size in
November 2017 and March
2018
• What happened?
Quality operator,
successfully following in
Ryman’s footsteps
Sector leading growth,
priced attractively
Solid management and
leading disclosure
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What went against us?
• What has changed recently?
Closed the US network
Reversed course on Emma & Roe
Tough Australian retail environment
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Key Theme 1:
Active management means many things
• Kingfish investment process focuses on researching businesses using the STEEPP framework
• Enhancing long term returns can be as much about what you don’t own - Kingfish has never owned any shares in CBL
• During FY18 and into FY19 we have upgraded the quality of the Kingfish portfolio (5 exits, 3 entries)
Note: FY18 refers to fiscal year ended 31 March 2018 (FY19: fiscal year ended 31 March 2019)
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Key Theme 2:
Active management means the ability to tilt
our exposure towards offshore growth
New
Zealand
50%
Australia
& Asia
26%
North
America
14%
Europe
8%
Other
2%
Portfolio revenue by geography*• NZ GDP growth has outperformed for a number of years
• Approximately 50% of the Kingfish portfolio’s revenue is from offshore
• Exemplified by Fisher & Paykel Healthcare
– 94% offshore revenue
– Hospital division and high flow oxygen is a key growth driver
Source: * Fisher Funds estimates
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Key Theme 3:
Active management means opportunities can
be found in unlikely places
• Kingfish recently took a position in
Fletcher Building (in April 2018)
• Several strong core businesses,
problem divisions addressed
• Multiple key changes in the business
(people, strategy, balance sheet)
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Outlook
• New Zealand is insulated from
some global risks but is not totally
immune
• While macro is important, there is
no substitute for wearing out the
shoe leather
• Kingfish’s active management
style allows it to adjust its
approach to different macro
backdrops
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What does Kingfish offer?
• Focus on high quality growth
businesses
• Continually scour the market for
the best investments
• Our goal is to maintain a
Kingfish portfolio of high quality
growth companies that will
outperform over an economic
cycle
Note: Adjusted NAV return as defined in Kingfish Non-GAAP Financial Information
(http://kingfish.co.nz/assets/Uploads/Kingfish-Non-GAAP-Financial-Information-Policy.pdf)
-
$1.00
$2.00
$3.00
$4.00
$5.00
Ma
r 04
Ma
r 05
Ma
r 06
Ma
r 07
Ma
r 08
Ma
r 09
Ma
r 10
Ma
r 11
Ma
r 12
Ma
r 13
Ma
r 14
Ma
r 15
Ma
r 16
Ma
r 17
Ma
r 18
Adjusted NAV return
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General Questions from
Shareholders(not relating to resolutions)
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Annual Meeting
2018 resolutions
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2018 Annual Meeting Resolutions
• Introduce and propose
• Discussion, questions
• Enter your vote on voting paper and
lodge your voting paper at end of
resolutions
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Matters of Business
• Annual Report
• Resolutions:
–Re-elect Carol Campbell
–Directors’ remuneration
–Auditor remuneration
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Proxy Count
Proxy votes to date: 14.8 million
Resolution For Against Discretionary Total Abstain
Re-elect Carol Campbell
13,034,987 86,576 1,629,672 14,751,235 40,735
Directors’ remuneration
4,864,573 2,868,425 1,693,763 9,426,761 5,365,209
Auditor remuneration
12,916,216 152,870 1,544,533 14,613,619 178,351
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Resolution 1
Re-election of Carol Campbell
To re-elect Carol Campbell as a
director of the company
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Resolution 2
Directors’ Remuneration
To authorise that the maximum
aggregate remuneration able to be
paid to all directors (in their capacity
as directors) of the company be
increased by $32,500 per annum from
$125,000 to $157,500 (plus GST if any)
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Resolution 3
Auditor’s Remuneration
To authorise the board of directors to
fix the remuneration of the auditor for
the ensuing year.
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Conclusion
• Complete and sign voting paper
• Voting papers in the voting boxes
• If you need a voting paper please
see Computershare
• Results to NZX
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Thank you