Aurora UK Alpha plc · LSE:ARR
Aurora UK Alpha — Aurora Investment Trust — Shareholder Meeting (July 2016)
71 slides from Aurora UK Alpha's shareholder meeting presentation, Jul 13, 2016
Slide 1: Aurora Investment Trust plc AGM July 13th 2016
Aurora Investment Trust plc AGM July 13th 2016 Phoenix Asset Management Partners Limited
Slide 2: Phoenix – The Team
Phoenix — The Team Gary Channon (1998) Founder, Chief Investment Officer
Slide 3: Phoenix – The Team
Phoenix — The Team Gary Channon (1998) Founder, Chief Investment Officer Charlotte Maby (2000) Deputy Portfolio Manager, MD
Slide 4: Phoenix – The Old Lags
Phoenix — The Old Lags Gary Channon (1998) Founder, Chief Investment Officer Charlotte Maby (2000) Deputy Portfolio Manager, MD Tristan Chapple (2001) Research Analyst, Director mm 6 Steve Tatters \ (2004) Business Development, Director
Slide 5: Phoenix – Research (+ Steve)
Phoenix — Research (+ Steve) Gary Channon (1998) Founder, Chief Investment Officer James Wilson Charlotte Maby Tristan Chapple (2013) opotioh easel Research Manager, MD Analyst, Director INGEN Diana Tan (2014) Research Analyst Freddie Martin (2016) Research Analyst Steve Tatters s] (2004) Business D
Slide 6: Phoenix – The Entire Team
Phoenix — The Entire Team a) Gary Channon (1998) Founder, Roger Canham Chief (2009) Investment : Officer Chairman Charlotte Maby are James Wilson My Steve Tatters (2000) Deputy Rosearch (2013) He) (2004) Business Portfolio Analyst, Research Development, Manager, MD Dian Analyst Director Diana Tan Fr
Slide 7: Phoenix – A Barnes based business
Phoenix – A Barnes based business
Slide 8: Phoenix & Aurora Timeline
Phoenix & Aurora Timeline — First considered an Investment Trust in 2013.
Slide 9: Aurora Timeline
Aurora Timeline — First considered an Investment Trust in 2013 — Approached the Aurora Board in September 2015
Slide 10: Aurora Timeline
Aurora Timeline — First considered an Investment Trust in 2013 — Approached the Aurora Board in September 2015 — Investment Manager since January 2016 10
Slide 11: Aurora Timeline
Aurora Timeline aS — First considered an Investment Trust in 2013 — Approached the Aurora Board in September 2015 — Formal appointment as Investment Manager in January 2016 — Trust was £15m in January 2016 11
Slide 12: Aurora Timeline
Aurora Timeline aS — First considered an Investment Trust in 2013 — Approached the Aurora Board in September 2015 — Formal appointment as Investment Manager in January 2016 — Trust was £15m in January 2016 — Raised £14m of new money 12
Slide 13: Aurora Timeline
Aurora Timeline aS — First considered an Investment Trust in 2013 — Approached the Aurora Board in September 2015 — Formal appointment as Investment Manager in January 2016 — Trust was £15m in January 2016 — Raised £14m of new money — Net Assets currently £80m 13
Slide 14: Aurora NAV vs Share Price Since January 2016
Aurora NAV vs Share Price Since January 2016
Slide 15: Performance Attribution
Performance Attribution aS 2016 (30 June) Investment Return -4.7% 1.0% 0.5% l 0.0% U | | é cS 0.5% Ss 1.0% 1.5% 2.0% 2.5% -3.0% 3.5% 15
Slide 16: Portfolio Comparison – January 29th vs July 8th
Portfolio Comparison – January 29th vs July 8th
Slide 17: Aurora: Unique Fee Structure
Aurora: Unique Fee Structure
Slide 18: What To Expect
What To Expect Ss — A bumpy ride: a concentrated portfolio of out of favour stocks can be volatile — Occasional big drawdowns: times of crisis are often our best windows of opportunity — Big bounce backs — if we get our research right we have nothing to fear from volatility — Excellent long term ret
Slide 19: Appendices
y) Ale ww v Appendices
Slide 20: What Makes A Great Investment?
What Makes A Great Investment?
Slide 21: Managers We Back
Managers We Back — They must be honest — Aligned — financially and emotionally — Competent not necessarily outstanding — Have a track record of the above — Use fair or conservative accounting 21
Slide 22: What We Pay
Ze> What We Pay ed — Inadownside scenario, at a minimum, we want our money back — Inanormal scenario, we look for 15% per annum return — We model cash — We give no benefit to leverage — We won't buy stocks with a risk of ruin — We calculate an intrinsic value for the stock and our maximum entry pric
Slide 23: Key Differentiating Factor
Key Differentiating Factor The depth and detail of our research and the ongoing monitoring of businesses we own
Slide 24: Our Research Process
Our Research Process Ss — We operate in areas where we have acquired a lot of historical background knowledge — Thorough and detailed — Library, internet, fieldwork — We study competitors and look for winners — Business...Management....Price (AAA) — DREAM — We need to be able to monitor independentl
Slide 25: Research Process
Research Process • • • • • • • • • • • • •
Slide 26: How We Build Our Portfolio
How We Build Our Portfolio Ss — AA candidate becomes AAA because of price move — Risk screen checklist before allocation of an initial weight limit — Concentrated (12 — 20 stocks) but not correlated — Constrain by cost price weight, 15% max — Weighted according to downside, upside, confidence and li
Slide 27: Risk Philosophy
Risk Philosophy — Phoenix definition: Potential for Permanent Capital Loss — We have alow risk approach — we seek to avoid permanent capital loss — We do not view volatility as risk: we base our analysis and decisions on real world values, accept that stock prices will fluctuate in the short term ba
Slide 28: Phoenix UK Fund - Performance
Phoenix UK Fund - Performance
Slide 29: Winners & Losers – Phoenix UK Fund
Winners & Losers – Phoenix UK Fund
Slide 30: By Size of Company
By Size of Company mSmall & Mid Big 30
Slide 31: Win:Loss in Big Cap / Small & Mid Cap Stocks
Win:Loss in Big Cap / Small & Mid Cap Stocks
Slide 32: FTSE 100 During Phoenix's Life
FTSE 100 During Phoenix’s Life
Slide 33: By Market Condition When Purchased
By Market Condition When Purchased
Slide 34: Win:Loss in Bull / Bear Market Purchases
Win:Loss in Bull / Bear Market Purchases
Slide 35: Cyclical vs. Non-Cyclical
Cyclical vs. Non-Cyclical m Cyclical @ Non-Cyclical 35
Slide 36: Performance in Non-Cyclicals / Cyclicals
Performance in Non-Cyclicals / Cyclicals
Slide 37: Different Types of Cyclicality
Different Types of Cyclicality 180 160 140 120 100 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10 Non-Cyclical Cyclical A
Slide 38: Different Types of Cyclicality
Different Types of Cyclicality 180 160 140 120 100 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10 Non-Cyclical Cyclical A Cyclical B
Slide 39: Phoenix UK Fund (Gross) vs. FTSE All-Share
Phoenix UK Fund (Gross) vs. FTSE All-Share PUK (Gross) FTSE-All Share Index* 11.5%
Slide 40: Fundamental Portfolio Characteristics
Fundamental Portfolio Characteristics
Slide 41: Phoenix UK Fund NAV versus Intrinsic Value Estimate since Inception
Phoenix UK Fund NAV versus Intrinsic Value Estimate since Inception (£/share)
Slide 42: Research Process - Overview
Research Process - Overview Ss — The Fund Manager and Analysts use a variety of sources to generate ideas including wide reading and thinking, discussion and many other methods of research including fieldwork and meeting companies — _ Research is all primary and as much as we can involves interactin
Slide 43: Portfolio Management Process: Ongoing Weight Decisions
Portfolio Management Process: Ongoing Weight Decisions
Slide 44: Appendix III: Running Winners…Lessons From The Past
Appendix III : Running Winners…Lessons From The Past
Slide 45: Appendix IV: Anatomy of a Typical Phoenix Investment
Appendix IV: Anatomy of a Typical Phoenix Investment
Slide 46: Anatomy of a Typical Phoenix Investment
Anatomy of a Typical Phoenix Investment
Slide 47: Anatomy of a Typical Phoenix Investment
Anatomy of a Typical Phoenix Investment
Slide 48: Anatomy of a Typical Phoenix Investment
Anatomy of a Typical Phoenix Investment
Slide 49: Anatomy of a Typical Phoenix Investment
Anatomy of a Typical Phoenix Investment
Slide 50: Anatomy of a Typical Phoenix Investment
Anatomy of a Typical Phoenix Investment
Slide 51: Anatomy of a Typical Phoenix Investment
Anatomy of a Typical Phoenix Investment
Slide 52: Anatomy of a Typical Phoenix Investment
Anatomy of a Typical Phoenix Investment
Slide 53: Anatomy of a Typical Phoenix Investment
Anatomy of a Typical Phoenix Investment
Slide 54: Current Portfolio by Phase Position – June 2016
Current Portfolio by Phase Position – 30 June 2016
Slide 55: Appendix II: London Value Investor Conference April 2012
Appendix II: London Value Investor Conference April 2012
Slide 56: EBIT (2007 – 2012)
EBIT (2007 — 2012) 2007 2008 2009 2010 2011 2012 56
Slide 57: Net Profit (2007 – 2012)
Net Profit (2007 — 2012) 2007 2008 2009 2010 2011 2012 59
Slide 58: EBIT Using Current Cost Accounting
EBIT Using Current Cost Accounting
Slide 59: EBIT: Historic versus Current Cost
EBIT: Historic versus Current Cost
Slide 60: Profit per Plot – Current Cost Accounting
Profit per Plot – Current Cost Accounting
Slide 61: The UK Housebuilding Business Model
The UK Housebuilding Business Model Returns Capital £k £k Sale price 200 Work-In-Progress 90 Land 47 23.5% Landbank 165 Build & Sell 110 55.0% Trade Creditors 90 Costs 157 165 Site Profit 43 21.5% Overhead 9 4.6% EBIT 34 16.9% Profit After Tax 26 Return on Capital 16%
Slide 62: English House Prices vs. Land Price (Peak=100)
English House Prices vs. Land Price (Peak=100)
Slide 63: How Has The Pub Industry Performed
How Has The Pub Industry Performed
Slide 64: Where Do People Want To Drink Their Alcohol?
Where Do People Want To Drink Their Alcohol?
Slide 65: How Have J.D. Wetherspoon Performed?
How Have J.D. Wetherspoon Performed?
Slide 66: Cash Return On Capital Is The True Measure Of Success
Cash Return On Capital Is The True Measure Of Success
Slide 67: Sports Direct
Sports Direct 3,000 2,500 2,000 1,500 1,000 50 io) io) Sales £m 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 67
Slide 68: Sports Direct ROCC (2005 – 2015)
Sports Direct ROCC (2005 – 2015) 900 70% Core Capital £m ROCC £m ROCC% 800 60% 700 50% 600 500 40% 400 30% 300 20% 200 10% 100 0 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Slide 69: Consistent margins through the cycle
Consistent margins through the cycle
Slide 70: SPD consistently beats its competitors
SPD consistently beats its competitors •
Slide 71: Regulatory notice
Regulatory notice ee> Aurora Investment Trust Plc (“the Trust”) is a UK investment trust listed on the London Stock Exchange. Past performance is no guarantee of future performance. The value of investments and any income from them may go down as well as up and investors may not get back the amount
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