14 Jan

Shareholders Quarterly Report - December 2021

OBJECTIVE Long - term capital growth and income FLAGSHIP INVESTMENTS LIMITED OVERVIEW T he Flagship Investments Limited (ASX: FSI ) Net Tangible Asset Value (NTA), as at 3 1 Dec ember 2021 ( before estimated tax on unrealised gains) was 2 77.3 cents per share, representing a 1. 2 % de crease since Sept ember 202 1 . This under - performance of the portfolio is due to our high PE growth stocks coming under pressure in an environment of rising inflation and increased interest rates. UNDERLYING PORTFOLIO PERFORMANCE 3 months 1 year 3 years p.a. 5 years p.a. 10 years p.a. Since Inception ( 1 May 1998) p.a. Portfolio ^ - 1.7 % 1 6 . 5 % 2 5 . 4 % 18. 2 % 1 7. 8 % 13. 3 % Bloomberg Bank Bill Index 0.0 % 0.0 % 0. 6 % 1. 1 % 1 . 9 % 4.0 % ASX All Ordinaries 2. 0 % 13.6 % 10.9 % 6. 4 % 6. 6 % 4. 5 % ASX All Ord Accumulation Index 2. 5 % 1 7 . 7 % 1 4 . 8 % 10. 4 % 1 1. 0 % 8.8 % ^ Source: EC Pohl & Co Pty Ltd Gross performance before impact of fees, taxes and charges. Past performance no predictor of future returns INVESTMENT ACTIVITY During the quarter we added GQG Partners (ASX: GQG ), Judo Cap Holdings (ASX: JDO ) and Nanosonics Limited (ASX: NAN ) to the portfolio. We sold ARB Corporation (ASX:ARB), Magellan Financial Group Ltd (ASX:MFG) and Pendal Group Ltd (ASX:PDL) . MARKET COMMENT AND OUTLOOK By year end, global equities were stronger as investors focused on economic resilience and corporate earnings, despite the ongoing volatility caused by Covid - 19 . The rising Covid case numbers seemed to become less of a concern for investors as the new variants seem to result in less severe symptoms . Across the world, service - based sectors appear to be losing their positive momentum, while manufacturing sentiment has continued to remain resilient despite supply constraints and rising input prices . The strength in corporate earnings outlooks, combined with easing supply chain pressures have seen investor s remain positive as we head into the new year where monetary policy normalisation and inflation issues are becoming of central importance. In the US, b y quarter - end, equities posted robust gains as the economy remained stable with unemployment falling to 4.2% and corporate earnings remain ing robust . Bond markets have priced for monetary policy normalisation, with short - dated bond yields rising more than their longer - dated counterparts indicating concerns regarding resilience to interest rate rises and sus tained inflation . The S&P500 posted +10.6% while the Nasdaq posted +8.3%, by quarter - end. In Europe, strong corporate profits and economic resilience resulted in equities post ing some gains over the quarter despite Omicron concerns . While some countries in the Eurozone reintroduced restrictions, these had little effect on the markets . In the UK, equities performed well, following a similar path to that in other developed markets which recouped mid - quarter losses as investors received encouraging news reg arding Omicron . The FTSE posted +4.2%, the CAC +9.7%, the DAX was +4.1% and the Euro Stoxx was +6.2% . In Australia, investors have been acutely focused on the policy settings by the Reserve Bank of Australia (RBA) with growth related sectors underperformi ng . The RBA made no changes to monetary policy during the quarter but did indicate a possible re - evaluation in February . The RBA noted improvements in the economy, with unemployment falling to 4.6% while housing prices appear to be moderating . The ASX A ll Ordinaries posted +2.0% for the quarter, ASX 200 +1.5%, the MidCap 50 +5.5% and the Small Ordinaries was +1.6%, respectively . The AUD appreciated during the quarter, posting +0.6% against the US Dollar (72.7 US cents), +0.1% against the Pound (53.7 pen ce), and +2.4% against the Euro (63.9 cents). PORTFOLIO CHARACTERISTICS (as at 3 1 Dec ember 202 1 ) N T A ( before tax on un realise d gains) – total $ 7 1 , 519 , 3 1 8 NTA ( before tax on un realise d gains) – per share 2 77 . 3 cents Concentration of the Top 20 Holdings 8 1 . 4 % Stocks in the underlying portfolio 2 8 SHAREHOLDERS’ QUARTERLY REPORT DEC EMBER 2 0 2 1 STRATEGY High - conviction portfolio of quality Australian listed equities from a research driven, bottom - up investment philosophy DIVIDEND INFORMATION (Cents per share, fully franked) 4.75 cps paid on 20 August 2021 4.25 cps paid on 05 March 2021 4.25 cps paid on 17 September 2020 4 . 2 5 cps paid on 06 March 2020 COUNTR Y WHERE LISTED Australian Securities Exchange : December 2000 STOCK EXCHANGE CODE ASX: FSI RATINGS • Independent Investment Research – Recommended 1 DIRECTORS Dominic M McGann Non - Executive C hairm an Dr Emmanuel (Manny) C Poh l AM Managing Director Angela Obree Non - Executive COMPANY SECRETARY Scott Barrett COMPANY DETAILS Flagship Investments Limited ABN 99 080 135 913 Level 12, Corporate Centre One 2 Corporate Court B UNDALL QLD 4217 A USTRALIA 1800 FLAGSHIP 1800 352 474 Tel: +61 7 5644 440 5 Fax: +61 7 5574 1457 Email: contact@flagshipinvestments.com.au www.flagshipinvestments.com.au FLAGSHIP INVESTMENTS LIMITED DEC EMBER 20 2 1 FUND MANAGER EC Pohl & Co Pty Ltd ABN 68 154 399 916 Level 1 2 , Corporate Centre One 2 Corporate Court BUNDALL QLD 4217 AUSTRALIA PO BOX 7536 GCMC BUNDALL Q LD 9726 AUSTRALIA Tel: +61 7 5644 440 5 Fax: +61 7 5574 1457 Email : flagship@ecpohl.com www. ecpohl.com INVESTMENT PHILOSOPHY High quality growth companies outperform over the longer term Investments should outperform the risk - free rate The price one pays determines the ultimate long - term return INVESTMENT PROCESS FOLLOW OUR SOCIAL MEDIA www.flagshipinvestmentslimited .com.au /flagshipinvestment s limited /flagship - investments - limited - fsi/ SECTOR BREAKDOWN TOP 10 STOCK HOLDINGS Financials 28.9% Macquarie Group Ltd 6.7 % Health Care 15.0 % Rio Tinto Limited 6.5 % Information Technology 14.8 % HUB24 Ltd 5.7 % Consumer Discretionary 14.7 % GQG Partners 5.4 % Materials 10.5 % Commonwealth Bank 5.0 % Cash 8.0 % CSL Limited 4.8 % Telecommunication Services 6.2 % Cochlear Limited 4.7 % Colnsumer Staples 1.9 % Altium imited 4.4 % Energy 0.0 % Idp Education Ltd 3.9 % Industrials 0.0 % James Hardie Industries 3.9 % Utilities 0.0% ACTIVE SECTOR WEIGHTS to the ALL ORDINARIES PORTFOLIO CHANGES during the Quarter ADDITIONS GQG Partners GQG Judo Cap Holdings JDO Nanosonics Limited NAN REMOVALS ARB Corporation AR B Magellan Financial Group Ltd MFG Pendal Group Ltd PDL ACTIVELY PROMOTING THE COMPANY Flagship Investments Limited remains visible in the digital spectrum and through multiple mediums with industry participants including Investor Associations and its Shareholders. During the quarter the Company met with and presented to various B rok ers, Re searchers and Financial Advisers. For those attending the March 2022 Australian Investors Association National Conference in Gold Coast, the Company will be participating and exhibiting. In addition, the Investment Manager, Dr Manny Pohl AM will be prese nting a session. For further information including about other upcoming events , please contact the Company at +61 7 5644 4405 or toll - free 1800 352 474, or via email contact@flagshipinvestments.com.au including if you would like a representative to present to you, at an investor function or your office. VISIT THE WEBSITE – AND SUBSCRIBE TO OUR MONTHLY NEWSLETTER The Company website www.flagshipinvestments.com.au has information about Flagship Investments Limited and links to a rticles, v ideos, a nnouncements, r eports and more. A monthly email is sent to subscribers. Shareholders and interested parties can subscribe through the website or by emailing the Company asking to be added to the mailing list. Information about the Company on Social Media platforms can be found at the bottom left of this page . STRUCTURE AND TERMS Dividend Reinvestment Plan Dividend Reinvestment Plan (DRP) is a n optional way of reinvesting dividends to acquire additional shares . When new shares are issued under the DRP, they are free of brokerage, commission, stamp duty and other costs. Legal Domicile Australian Securities Exchange (ASX) Listed Investment Company (LIC) Fees Management fee of N IL . Performance fee of 15% of the annual outperformance over the Bloomberg Bank Bill Index . MER 2 0.0% Reporting and Correspondence Monthly Net Tangible Asset Value s on www.asx.com.au and Q uarterly R eports, H alf - Y early and A nnual R eports on www.flagshipinvestments.com.au Auditor Connect National Audi t Pty Ltd Registry Boardroom Pty Limited - 1300 737 760 OR enquiries@boardroomlimited.com.au Share price and N T A www.flagshipinvestments.com.au and www.asx.com.au 1 This opinion is provided by Independent Investment Research and must be read together with whole report including the disclaimer and relevant legal notices which can be found at www.independentresearch.com.au 2 Calculated in accordance with ASX defined terms as at 30 June 20 2 1 -20% -10% 0% 10% 20% I.T. Cons Discret Health Care Financials Telcos' Utilities Cons Staples Energy Industrials Real Estate Materials INITIAL SCREENING PROCESS • ROE • IPOs • Revenue Growth • Broker Ideas • Interest cover • Internal Ideas FUNDAMENTAL ANALYSIS • Understanding the Business Model • Sustainable Competitive Advantage • Organic Growth Opportunities • Assessing Management • Assessing the Operating Environment PORTFOLIO WEIGHTING • 3 Year Risk Adjusted Total Return • Market Risk Analysis HIGH CONVICTION PORTFOLIO OF COMPANIES This process is the basis for all our Australian equities investment decisions
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