Marlin Global ASM Presentation 18 October 2019

ANNUAL MEETING OF SHAREHOLDERS
MARLIN GLOBAL LIMITED
18 OCTOBER 2019

Agenda
•Preliminary matters
•Chair’s Overview
•Manager’s Review
•Q&A
•Annual Meeting Resolutions

Board of Directors
Marlin Team
Alistair Ryan
Carmel Fisher
Andy Coupe
Carol Campbell
Ashley Gardyne
Snr Portfolio
Manager
Chris Waters
Snr
Investment
Analyst
Wayne Burns
Corporate
Manager
Harry Smith
Snr Investment
Analyst

Chair’s Overview

Marlin’s Investment Objectives
Absolute Returns
Achieve a high real rate of return, comprising both income and
capital growth within acceptable risk parameters
Diversified Portfolio
Access to a diversified portfolio of international quality,
growth stocks in a single tax-efficient vehicle

Corporate Governance
•Investment Committee
•Audit and Risk Committee
•Performance Fee Reduction
•Fulcrum Fee 1.25% -0.75%

2019 Overview
Net profitDividendNAV per shareShare price
$8.4m
(2018: $23.8m)
7.87cps
(2018:7.59cps)
$0.96
(2018: $1.02)
$0.90
(2018: $0.86)
Total shareholder
return
Dividend return
Adjusted NAV
return
Share price
discount to NAV
+15.5%
(2018: 21.5%)
+9.2%
(2018: +9.6%)
+6.8%
(2018: 23.2%)
6.2%
(2018: 13.7%)

2019 Overview -Continued
For the year
ended
30 June
12 months
3 years
(annualised)
5 years
(annualised)
Adjusted NAV
return
(Net return to an investor
after fees and tax)
+6.8%
(2018: +23.2%)
+15.4%+10.6%
BenchmarkIndex
+2.1%
(2017: +17.1%)
+12.5%+12.5%
Portfolio Performance

Movements in Shareholders’ Funds
12 Months to 30 June 2019 ($m)

Quarter 1, 2020
30 June –30 September 2019
Total shareholder return
+5.5%
Net profit
$9.7m
NAV per share
$1.01
Adjusted NAV Return
+7.0%
Share price
$0.93
Benchmark Index
+3.1%
.

Marlin Warrants
•New Warrant Announced 17 October 2019
•1 Warrant for each 4 Shares
•Record Date -6 November 2019
•Warrant Allotment -7 November 2019
•NZX Trading from -8 November 2019
•Exercise Price $0.94 less dividends
•Exercise Date -6 November 2020

Manager’s Review
Ashley Gardyne
Senior Portfolio Manager

Agenda
1.Review of markets in 2019
2.Company performance
3.Portfolio activity and positioning
4.Outlook

1. Review of markets in 2019

Why Marlin
An eventful year in financial markets

Why Marlin
18% decline on growth and trade fears
Jun-18Sep-18Dec-18Mar-19Jun-19
×Federal Reserve rate hikes
×US-China trade war
×Slowing global growth
Low unemployment
Strong US consumer
Low interest rates &
hunt for yield
-18%
MSCI World
Index

Why Marlin
Jun-18Sep-18Dec-18Mar-19Jun-19
2019 rebound on supportive Fed policy
MSCI World
Index
×Federal Reserve rate hikes
×US-China trade war
×Slowing global growth
Pivot in Fed policy
Strong US consumer
Low interest rates &
hunt for yield
+4%

Market supported by lower interest rates
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
Jun-18Dec-18Jun-19
USAEUNZ
10 year government bond yield

Why Marlin
Creating excesses in parts of the market
Percentage of US IPOs with
negative earnings
Rising debt levels
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
19831988199319982003200820132018
1
2
3
4
5
6
20052008201120142017
BBBAAAAAA
($ trillion)

2. Performance

Why Marlin
Strong performance in a difficult market
Marlin Gross Portfolio Performance
vs Global Benchmark (%)
10%
2%
MarlinBenchmark

-60
-40
-20
--
20
40
60
Why Marlin
Stock performance by company
Total Shareholder Return (%)
Marlin portfolio companies
Marlin gross return

0
50
100
150
200
250
2016201720182019
Why Marlin
–Global leader in heart valves
Global leader in trans-catheter heart valves
Dominant position in rapidly growing market
Trans-catheter heart valves may ultimately
become the global standard of care
2016 price drop due to small revenue miss
Market was missing bigger picture:
•Very large potential market
•Applications beyond the aortic valve
•Business under-earning
•Aligned management
30% price drop
Edwards share price

3. Portfolio activity and positioning

Why Marlin
Selected portfolio changes -Additions
•#1 US dollar store chain
•Food and everyday household items
•20% discount to local grocery stores
•29 years of same store sales growth
•Fixed $1 price point
•Party supplies, cleaning products, stationery, toys
•Long runway for new store openings
•Potential for higher price points
•#1 US local govtsoftware provider
•High client retention
•Software upgrade cycle just starting
•Highly profitable & gaining share

Why Marlin
Selected portfolio changes -Exits
•Large ecommerce marketplace
•Invested when it owned PayPal
•Growth slowed since PayPal spinoff
•Increasing competitive pressures
•#2 global online travel agent
•Shift to online booking driving growth
•Google’s travel push threatens moat
•Travel market cyclicality also a concern
•Leader in ‘core analysis’ for oil industry
•High returns on capital and cash flow
•Challenged by US shale growth given profitability
driven by offshore projects

-Convenience and value provides
economic protection
•#1 US dollar store chain with 16,000 stores
•Food, cleaning products, household items
•20%+ discount to local grocers & drug stores
•Economically defensive, with 29 years of
consecutive same-store sales growth
Why Marlin
Same store sales growth
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
19992004200920142019

Portfolio snapshot post changes
# of companies
25
# ofcountries
6
EBITDA growth
+13%
Marlin portfolio –Sector split

4. Outlook

Why Marlin
Outlook: Lower for longer?
•Mixed economic picture
US economy strong
Upbeat consumer
×Manufacturing weak
×Europe struggling
×Trade war
•Growth is not dead
•But a world of lower growth, interest rates and returns
•Active portfolio management increasingly important

Why Marlin
Marlin is doing its job for you
•Proven investment process
•Access to world leading growth
companies
•Aim to outperform markets
over an economic cycle
•Important diversification role
for investor portfolios
Marlin Gross Portfolio Performance
vs Global Benchmark (%)
10%
19%
14%
11%
2%
13%
12%
7%
0%
5%
10%
15%
20%
25%
1 year3 years5 yearsSince
inception
Marlin Gross Performance
Global Benchmark

General Questions from
Shareholders
(not relating to resolutions)

Annual Meeting
2019 resolutions

2019 Annual Meeting Resolutions
•Introduce and propose
•Discussion, questions
•Enter your vote on voting paper and lodge
your voting paper at end of resolutions

Matters of Business
•Annual Report
•Resolutions:
–Re-elect Alistair Ryan
–Re-elect Carmel Fisher
–Auditor remuneration
–Constitution changes

Proxy Count
Proxy votes to date: 12.4 million
ResolutionForAgainst DiscretionaryTotalAbstain
Re-elect Alistair
Ryan
8,808,76356,0003,587,42612,452,1890
Re-elect Carmel
Fisher
5,970,47156,0003,539,3439,565,8142,886,375
Auditor
remuneration
8,640,29831,2503,744,77412,416,32235,867
Constitution
amendments
8,095,278113,2924,161,12712,369,69782,492

Resolution 1
Re-election of Alistair Ryan
To re-elect Alistair Ryan as a Director of
Marlin Global Limited

Resolution 2
Re-election of Carmel Fisher
To re-elect Carmel Fisher as a Director of
Marlin Global Limited

Resolution 3
Auditor Remuneration
That the Board of Directors be authorised to
fix the remuneration of the auditor for the
ensuing year

Resolution 4
Constitution changes
To revoke the existing constitution and adopt
a new Constitution of the Company in the
form described in the Explanatory Notes to
the Notice of Meeting, and tabled at the
Annual Meeting of Shareholders on
18 October 2019.

Conclusion
•Complete and sign voting paper
•Voting papers in the voting boxes
•If you need a voting paper please see
Computershare
•Results to NZX

THANK YOU
MARLIN GLOBAL LIMITED

---

Marlin Global Limited
Phone +64 9 484 0365
Fax +64 9 489 7139
Private Bag 93502
Takapuna, Auckland

18 October 2019
Marlin Limited Annual Meeting
Chair’s Address from Alistair Ryan
[Slide: Marlin Global Limited Annual Meeting of Shareholders]
Welcome to the 12th Marlin Global Limited Annual Meeting of Shareholders. I am Alistair Ryan,
Chair of Marlin.
We are duly convened as a notice of meeting has been circulated to shareholders and I can confirm
that a quorum is present so I declare the meeting open.
Please note that the exits are at the back and front of the room. Please ensure you turn off your cell
phones.
At the conclusion of the meeting there will be a light lunch. We look forward to meeting many of you
after the meeting.
[Slide: Agenda]
To briefly cover off preliminary matters:
 The minutes of the 2018 annual shareholders’ meeting held on 31 October 2018 are
available at the registration desk and are also on the Marlin website.
 The 2019 annual report has been circulated to shareholders – additional copies are available
at the registration desk.
Today I’ll give a brief update on the Marlin 2019 financial year, and then Marlin’s Senior Portfolio
Manager, Ashley Gardyne will review the Marlin portfolio.
After the Manager’s Review, we will have a Q&A session, and will then move to the formal business
of the meeting. There are four resolutions for you to consider and vote on today, which are set out
in the notice of meeting.
[Slide: Introductions]
Let me introduce the front table.
Firstly, the directors. To my right is Carmel Fisher, then Andy Coupe and Carol Campbell.
Next to Carol is Ashley Gardyne, Senior Portfolio Manager for Marlin.
Next to Ashley, is Wayne Burns Corporate Manager for Marlin.
Also here today are Senior Investment Analysts, Chris Waters and Harry Smith who are in the
audience, please stand up Chris and Harry.

We are also pleased to have representatives from our share registrar, Computershare, auditor,
PricewaterhouseCoopers, our tax agent, Deloitte and our legal advisors, Bell Gully in the audience
today.
[Slide: Chair’s Overview]
Shareholders, it is my pleasure to again present the Chair’s Overview at this meeting.
[Slide: Marlin’s Investment Objective]
Before we begin the review of the year ended 30 June 2019, it is useful to refresh ourselves as to the
key investment objectives of Marlin, namely:
 to achieve a high real rate of return, comprising both income and capital growth, within risk
parameters acceptable to the directors; and
 to provide access to a diversified portfolio of international quality growth stocks through a
single tax-efficient investment vehicle.
Both of these objectives were achieved for the 2019 financial year.
[Slide: Corporate Governance]
The Board is committed to strong governance principles and to overseeing the Manager’s portfolio
performance on behalf of shareholders. The Investment Committee generally meets twice a year,
on a six monthly basis, to hear from the Manager about what has gone well and what has
disappointed, and to engage in a comprehensive review session covering key performance metrics,
some of which we will go through on the following slides. The Audit and Risk Committee meets at
least twice a year to review not only the financial accounts, but also all internal control structures,
risk management systems and the external audit function. Thereby ensuring full financial and
regulatory compliance.
The Board generally meets formally six times per annum plus other meetings as required.
Further details with regards to the corporate governance can be found in the Marlin Annual Report.
As announced to the market on 20 August this year, the Board has negotiated a 33% reduction to
the performance fee earn rate (above the performance hurdle) from 15% to 10% together with the
introduction of a cap (1.25%) on the total performance fee amount. The payment of any
performance fee remains unchanged at 100% in cash, however there will no longer be an obligation
on the Manager to apply 25% of any performance fee to purchase of ordinary shares in the
Company. The changes took effect from 1 July 2019.
The Marlin board wishes to acknowledge the positive response from Fisher Funds Management
Limited to enter into fee discussions and for agreeing to these changes which will be of significant
benefit to Marlin shareholders in the circumstances where a performance fee has been earned by
the Manager.
There has been no change to the fulcrum fee, where the base management fee can be reduced on a
sliding scale below 1.25% to as low as 0.75% depending on the performance of the fund.
The combination of the fulcrum fee, (down to as low as 0.75% for lower performance) along with the
potential for the Manager to receive upside benefit for performance above the nominated threshold
level, is a good fee combination.

[Slide: 2019 Overview]
So how has 2019 treated shareholders?

• We are pleased with Marlin’s performance during what was a particularly volatile and
challenging period. The global share market correction that occurred in the December 2018
quarter meant that Marlin’s half year position was a NPAT loss of around $14m. It was
therefore very pleasing to see Marlin’s portfolio recover by approximately $23m over the
second half of the financial year to end the year with a NPAT of $8.4m. That was a significant
achievement against a challenging market backdrop and further demonstrated the
prevailing quality of the Marlin portfolio.

• Despite the strong recovery in the second half of the financial year we were unfortunately
not able to match the recorded NPAT from the previous financial year of $23.8m.

• The total shareholder return for the year was 15.5%.

• Marlin’s regular dividends continued to contribute to the total shareholder return with 7.87
cents per share paid in dividends during the 2019 financial year, which is equivalent to a
dividend return of +9.2% (2018: +9.6%).

• The NAV per share at year end was $0.96, slightly down on the previous year end NAV per
share of $1.02, which is of course after dividends were paid out.

• The adjusted NAV return was +6.8% for the period which represents the net return to an
investor after expenses, fees and tax, which was down from the 2018 result of +23.2%.

• Over the 2019 financial year, the share price to NAV discount narrowed from 13.7% (30 June
2018) to be 6.2% at 30 June 2019. However, for a reasonable part of the year the discount
was below 8%. Since year end, the share price to NAV discount has continued to be below
8%. Total shareholder return is the return to an investor who reinvests their dividends, and if
in the money, exercises their warrants at warrant maturity date for additional share. The
narrowing of the discount helps explain why the total shareholder return is higher than the
adjusted NAV return.

• The Board has a number of initiatives in place to help manage the share price to NAV
discount including the buyback programme. Over the 12 months to 30 June 2019,
approximately 1 million Marlin shares were purchased under the buyback programme when
the shares were trading at sufficiently deep discounts. Shares purchased under the buyback
programme are held as treasury stock and primarily utilised under the dividend
reinvestment plan. There haven’t been any buybacks in the first quarter of the new financial
year, because of the small size of the discount.

[Slide: 2019 Overview - Continued]
As I mentioned in the previous slide the adjusted NAV return was +6.8% for the period, which
represents the net return to an investor after expenses, fees and tax. This return was comfortably
ahead of the benchmark return of 2.1%.

As you can see from this slide both the three & five year annualised adjusted NAV returns compare
well with the equivalent period benchmark returns.
Ashley will discuss the international market dynamics and how the portfolio performed shortly in the
Manager’s Review.

[Slide: Use of Shareholder Funds]
The chart shows the Marlin NAV of $121m as at June 2018, increased $19m to $141m at the end of
the June 2019 reporting period.
The movements during the year as represented by the green and orange columns were:
• plus $8.4m net profit,

And movements due to our capital management initiatives:
• less $10m dividends paid,
• adding back $4m for dividends reinvested by shareholders,
• less $1m for buybacks, and
• plus $18m for the new shares issued when the warrants were exercised in April.

[Slide: Quarter 1, 2019]
The first quarter of Marlin’s 2020 financial year was relatively settled and markets had risen slightly.
This slide provides a snapshot of those first three months of the current financial year to 30
September 2019, where you can see that:
• Total shareholder return for the quarter was +5.5%.
• Unaudited net profit for the three months was $9.7m.
• NAV per share was $1.01, (bearing in mind that Marlin made a quarterly dividend
payment of 1.93 cents per share in late September (paid on 26 September).
• The share price to NAV discount remained narrow, and was 7% as at 30 September
2019.
• Marlin’s adjusted NAV return for those first three months was +7.0%, which represents
the net return to an investor after expenses, fees and tax, and
• The benchmark index for the same three months, which was 3.1%.
In closing, on behalf of the Board I’d like to thank you shareholders for your continued support of
Marlin. I will now hand over to Ashley Gardyne, Senior Portfolio Manager of Marlin.

[Slide: Marlin Warrants]
As we announced to the market on Thursday this week Marlin will issue a new Warrant to
shareholders in early November.
As with prior warrants, one warrant will be issued for every four shares held by shareholders on the
record date of 6 November 2019.
Details of the new warrant will be sent to shareholders later this month, however the actual
allotment of the warrants won’t occur until 7 November, which is when allotment notices will be
sent to warrant holders.
It is intended that the New Marlin Warrants will trade on the NZX from 8 November 2019.

The exercise price per warrant of $0.94 will be adjusted down by the dividends per share that are
declared on the Marlin shares between allotment of the warrants and the notification of the final
exercise price in late September next year.
The warrants will be exercisable in early November next year (2020)




Closing remarks
In closing, on behalf of the Board I’d like to thank you shareholders for your continued support of
Marlin. I will now hand over to Ashley Gardyne, Senior Portfolio Manager of Marlin.
ENDS