NAOS SMALL CAP OPPORTUNITIES COMPANY LTD Ladies, Gentlemen and Fellow Shareholders
Welcome to the 12th Annual General Meeting of Contango MicroCap Limited.
Thank you for your attendance and for your continuing support during what has been a challenging year for both the global and local share markets.
My name is Mark Kerr, I am the Chairman of the Board of Directors and I will be chairing the meeting today.
I would like to introduce the other members of the Board: Ian Ferres (Non-executive Director), David Stevens (Founder) and Glenn Fowles (Executive Director).
I also note that Nick Bull representing Pitcher Partners, the Company's auditors, is in the audience today.
Following any questions on the accounts and the business of the meeting, the meeting will formally close, at which time Bill Laister, Portfolio Manager with Contango Asset Management Limited (CAML) will provide a presentation about the Company's investment portfolio.
Unfortunately, 2015 was a volatile year for CTN's performance. For the full year ended 30 June 2015, CTN delivered an after tax loss of $0.7m. To put the market volatility into some perspective, as at 31 May 2015 - 11 months into the year - the Company had posted a $10.8m profit, only to see this fully eroded by the large fall in markets during the month of June.
Dividends attributed to FY15 were 7.7 cents per share. This was down on the previous 8.6 cents attributed to FY14, but still well ahead of the Company's 6% of NTA policy and an attractive yield of 7.5% for the year.
Since declaring its first dividend in December 2004, CTN has now paid a total of 87.3 cents per share in dividends to shareholders amounting to a total payout of over $101m.
We currently have a dividend reserve balance of over $18m which should be sufficient to pay our next 3 full year dividends based on our current dividend policy.
FY15 concluded the first full year of 100% ownership of its investment manager - Contango Asset Management Limited (CAML).
CAML's profit of $871,000 was a positive contribution to the group result for FY15 and CAML currently manages client monies of $827m including the $160m CTN portfolio and the newly listed CIE of $70m. This is an increase from the $691m at 30 June 2014.
CAML has 12 wholesale clients including the 2 listed LIC's - CTN and CIE.
The board wishes to build on this and we remain committed to the company's growth strategy. A key pillar of this strategy was the appointment of a new CIO, and as I am sure most of you are aware, George Boubouras was appointed as CIO in January of this year. I am pleased to say that George has hit the ground running and the prospects for growth are positive with strategic planning and business development being undertaken.
In December 2014, the company issued $26.5m of 5.5% convertible notes with a 5 year maturity. The current gearing level of the company is a very modest 15.6%
This issue was made on the basis that the expected earning yield of the funds would exceed the interest payable.
This issue was undertaken by Evans and Partners.
Consistent with our growth strategy, the proceeds of the Convertible Note issue were used to seed an income based listed investment company - Contango Income Generator Limited.
This company - ASX code CIE, is trading around its listing price of $1
The Joint Lead Managers to the issue were Evans & Partners, Taylor Collison, Wilson HTM and Morgans, with the Co-manager being Bell Direct.
This investment in CIE serves the Company well on two fronts.
Delivery of an investment yielding in excess of the interest rate payable on the convertible notes
Growing CAML's FuM and therefore its contribution to profits
CIE currently has 1,200 shareholders.
CTN continues its shareholder communications and promotional activities across the market. FY15 was another year where CTN grew its shareholder base by over 20% and at 31 October 2015 CTN recorded a record number of nearly 6,000 shareholders.
We have also started engaging shareholders on a semi-annual basis with investor briefings being conducted by CAML. Some of you may have been present at the Melbourne briefing held here on 10th November. These will continue to be held in March and November each year.
We now move onto the main business of the meeting.
The first item of business is to open to the floor for questions about the financial statements for FY15. Please note that Nick Bull, Partner of the Company's auditor from Pitcher Partners is present, should you wish to address any questions to him. Are there any questions?
The next item of business is the vote on the Company's Remuneration Report. On the screen in front of you is the proxy voting for this vote. Also note that votes associated with the key management personnel are excluded from participation in this vote.
The details of the Resolution and Proxy Votes are now on the screen in front of you. I now put the vote to a show of hands.
All those in favour? Against? [The resolution was passed by a show of hands]
The next item is the election of David Stevens as non-Executive director. Up until 31 October 2015, David was managing director of the Company [and an employee of CAML]. David has decided to retire from both CAML and as MD of CTN and now seeks your support to remain on the Board as a non-executive director.
Before putting the vote, I'd like to point out that David founded the Contango Group and he personally managed the CTN portfolio for the first six and a half years following its launch achieving a market leading 26.1% compound annual return. He also designed and managed the Ex 30 income fund - with similarly excellent return outcomes. This fund is the Institutional forerunner to the recently listed LIC - Contango Income Generator Limited (CIE).
The details of this Resolution and Proxy Votes are now on the screen in front of you.
I now put the vote for David's election as a non-executive Director to a show of hands. All those in favour? Against? [The resolution was passed by a show of hands]
The final item of business is the re-election of Ian Ferres as a non-Executive director.
Under the retirement by rotation requirements of the Company's constitution, Mr Ferres is required to retire from the Board at the conclusion of this meeting unless re-elected.
The details of this Resolution and Proxy Votes are now on the screen in front of you.
I now put the vote for Ian's re-election as a non-executive Director to a show of hands. All those in favour? Against? [The resolution was passed by a show of hands]
As a final comment, I would like to stress that the Board is cognisant of shareholders desire for regular and consistent dividend payments and this remains a priority for the Company.
With the formal business of the meeting complete I now close the meeting and advise that my address and today's presentation will be lodged with ASX and on the Company's website shortly.
I now ask David Stevens to say a few words about his involvement with the Company since its establishment over 11 years ago and then Bill Laister will provide a review of Contango's MicroCap portfolio and delve deeper into the portfolio merits and some of the stock positions held. Bill will take any questions at the end of his presentation.
Thank-you ladies and gentlemen for joining us today.
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