The 2020 calendar year is coming to a close and it will be impossible to write about the year without mentioning COVID-19 and the impact that it has had across the globe. Internationally the virus continues to spread and cause concern for health authorities while in Australia the measures taken appear to have controlled infection. This has allowed boarders to open and for the majority of Australians life has returned to a version of normal.
At the height of the pandemic in Australia, businesses needed to adapt to survive – gin distilleries became hand sanitiser producers, event staging manufacturers built flat-pack office desks and nearly every service organisation implemented a work from home program. Five years’ worth of technology adoption occurred in weeks as businesses worked out new ways of connecting staff and customers. We created a channel for #DadJokes on Slack and attended board meetings with our pets. However, something was missing: the face-to-face interaction, mentoring and interaction that occurs within the office environment. For business leaders these items became the next challenge for those who needed to engage with their teams and provide purpose and a sense of community when normal social interactions were not possible. Luckily for many people there was also time to slow down, to spend time in the family unit and to reflect on what really matters.
At Flagship Investments Limited, 2020 has been business as usual in many ways. Our Managers’ investment team have focused on the disciplined application of their investment process. A process that is based on the belief that the economics of a business drives long-term investment returns, this means that despite turmoil at a macro level it is the business itself that was assessed for viability and ongoing investment (see our commentary written in March 2020).
In accordance with the investment process the market fluctuations during the year provided opportunistic buying and positive valuations in realising investment gains. As a result, in the period from the end of December 2019 to the end of November 2020 our Net Tangible Assets increased by 15.2%, or 19.0% when factoring in dividends of 8.5 cents per share that were paid through the period, compared to the ASX All Ordinaries which declined by 0.9% over the same period.
Given the current global environment, we are exceptionally proud of the performance over the last twelve months and even more proud that this continues to build on our out-performance since inception where the portfolio has delivered 13.3% compared to the ASX All Ordinaries which increased by 4.2%. This long-term performance which translates to share price growth as well as dividends is the reward to our loyal Shareholders who continue to support the Company and we endeavour to continue this reward through a reliable dividend and capital appreciation into 2021 and beyond.
2020 has been an unprecedented year, we sincerely hope 2021 provides a more stable environment for communities at home and abroad. Happy holidays and best wishes to all, Merry Christmas.