Update No. 217 – 29/05/15

I spent this week in Kuala Lumpur; it has been an enormously useful week. You won’t see the impact on results in the short term, but the efforts of this week will pay dividends to fellow EGP investors in the coming weeks and years.

I spent much of my time with Nigel and Max, some fellow fund managers from Harness Asset Management who spent a couple of days here this year also. Wednesday, we attended the AGM for UOADB, the 68% owned, Malaysian listed development arm of our main holding UOS. The UOADB meeting was a powerful lesson in the power of incentives. This year was the second year that the AGM for UOADB had been held in the Nexus Ballroom, a company owned function room at the Bangsar South mega-development. Last year, in order to encourage patronage for the new tenants at what was the recently opened retail centre in the floors below the Ballroom, the company handed out vouchers that could be used for discounts and deals with these tenants. The outcome of that was that nearly the entire retail shareholder base turned out this year in search of their free vouchers, and the company did not have sufficient vouchers to meet shareholder demand. I see a similar phenomenon at weddings when the bar is made ‘open’. Only a fraction of these shareholders actually stayed for the formalities of the meeting, the rest were off, happily using their vouchers at the shops below.

We attended the UOS AGM on Thursday. The last two AGM’s, I have been the only shareholder in attendance, there was a tripling of shareholder attendees this year, but the meeting was still much quieter than the UOADB affair. The clarity of the vision and execution of CS and Jim (Pak Lim) Kong and their team in building United Overseas Australia is testament to the value of putting your lot in with owners who have integrity, honesty and a track record of delivering. I am happy to have a meaningful portion of my assets (and yours fellow shareholder) entrusted to this exceptional group of people. If we allow them the time to deliver on their vision, the likeliest outcome is meaningful growth in our wealth.

We met with the managements of a couple of other small listed businesses; I will not go into detail here, as further work is required in respect of these companies.

I also met with your next member-auditor, who happens to be on assignment in Kuala Lumpur at present. Meeting him confirmed my view that the shareholders we have attracted are quite an exceptional group of people. He is here doing what someone who loves Capitalism as much as I do can only describe as ‘God’s work’, for he works in productivity improvement. It is this field that ensures every new generation of humans live better lives than the last. It is advancement in technology and productivity that have me as a believer that there is next to no problem that humankind won’t surmount.

We also pay our 3^rd annual dividend based on today’s closing price. In terms of asset values, this week was a good one, with our share price rising more than 1% to a new record high. However, our benchmark rose more sharply still, and we once again slightly trail it FY15 to date. You will receive your dividend statements over the weekend via e-mail, feel free to e-mail me back if you have any questions – Tony Hansen 29/05/2015

EGP Fund No. 1 Pty Ltd. Up by 11.21%, trailing the benchmark by 0.39% since July 1^st 2014. Since inception, EGP Fund No. 1 Pty Ltd is Up by 89.47%, leading the benchmark by 45.43% all-time (April 1^st 2011).

^{*1 after a 31 May 2013 dividend of 2.333 cents per share (cps) plus 1.000 cps Franking Credit, a 31 May 2014 Dividend of 7.000 cps plus 3.000 cps Franking Credit and a 31 May 2015 Dividend of 8.6667 cps plus 3.7143 cps Franking Credit}

^{*2 calculated based on dividends reinvested}