Milton : Chairman & Managing Director's Address at 2019 AGM

Good afternoon ladies and gentlemen.

My name is Robert Millner and it is my pleasure to welcome you to Milton's 81st Annual General Meeting.

As it is now 3pm I declare the meeting open.

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First, I would like to introduce you to the directors and senior executives of Milton.

Starting from the far end, we have the non-executive directors Graeme Crampton, Kevin Eley, Ian Pollard and Justine Jarvinen.

In front of me we have Nishantha Seneviratne, the company's secretary and Brendan O'Dea, Milton's CEO and Managing Director.

In addition, the company's auditor, Melissa Alexander from Pitcher Partners Sydney is in attendance.

The notice of annual general meeting has been circulated to all shareholders. The holders of over 145 million shares or approximately 21.60 per cent of the company's ordinary shares have either lodged their proxy or voted on-line.

Following my report Brendan will provide an overview of the 2019 results and comment on the investment portfolio.

You will then have an opportunity to ask questions regarding the business of the meeting.

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Milton's uncomplicated business model is focused on delivering several important outcomes for shareholders.

Milton aims to deliver, over the long term, a growing stream of tax effective dividends and capital growth whilst maintaining a very low expense base.

Milton achieves these goals through investing in a portfolio of companies, trusts, real estate and cash.

This approach, whilst being continually refined to reflect a changing business environment, has remained fundamentally unchanged, and has delivered another strong set of results for shareholders.

In 2019, Milton reported record net profit after tax of $147.7 million, an increase of 13.6% on 2018.

Earnings per share grew by 12.1% to 22.19 cents per share.

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Milton is internally managed, and as such has no management or performance fees that reduce returns to shareholders. Milton's expense ratio at 0.14% is significantly lower than the vast majority of actively managed investments.

This year's strong result was driven by increased dividend income, most notably $14.1 million of special dividends received in the period, as various portfolio companies returned excess capital to shareholders.

Underlying profit after tax, which excludes special dividends, was $133.6 million, a solid but more modest increase of 3.7% over 2018.

Underlying earnings per share in 2019 was 20.1 cents per share, up 2.4% on the prior year.

In 2019, 60% of Milton's portfolio increased their ordinary dividends with the largest increases seen in the resource sector from BHP, RIO and Woodside Petroleum. Resource companies have enjoyed very favourable trading conditions with prices for many commodities at elevated levels.

Unfortunately dividend decreases were seen from Telstra, as the NBN impacts earnings, and NAB. NAB reduced its dividend to build its capital reserves and reduce its payout ratio from an elevated position.

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