Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Investor Presentation (November 2012)
30 slides from Australian Foundation Investment's investor presentation, Nov 28, 2012
Slide 1: New Zealand Shareholder Information Meetings - Presentation
For personal use only 28 November 2012 The Manager ASX Market Announcements Australian Securities Exchange Exchange Centre Level 4 20 Bridge Street Sydney NSW 2000 Electronic Lodgement Australian Foundation Investment Company Limited New Zealand Shareholder Information Meetings - Presentation Dear S
Slide 2: NZ Shareholder Meetings November 2012
For personal use only NZ Shareholder Meetings November 2012
Slide 3: Disclaimer
Disclaimer For personal use only Australian Foundation Investment Company Limited and its subsidiary AICS (AFSL 303209), their related entities and each of their respective directors, officers and agents (together the Disclosers) have prepared the information contained in these materials in good fai
Slide 4: For personal use only
For personal use only • Diversified Australian Equities • Long Term Investor • A$4.8 billion portfolio, 75 stocks • Dividend yield 4.7% • ASX code:AFI, NZX code:AFI As at 30 June 2012 NZ Shareholder Meetings November 2012
Slide 5: Benefits of our Structure
Benefits of our Structure For personal use only Medium to long term investment focus Fund flows don’t drive buy/sell decisions Retain earnings to distribute over time MER’s lower than comparable managed funds History of outperformance i.e. not index funds NZ Shareholder Meetings November 2
Slide 6: Year in Summary
Year in Summary For personal use only June 2012 Reported Profit(A$m) 219.9 -5.8% Net Operating Result (A$m) 204.8 -10.3% Dividend Per Share (cents) 21.0 unchanged Total Portfolio (A$bn) 4.7 last year 4.9 MER (%) 0.19 + 0.02 Number of Holdings 73 down 5 NZ Shareholder Meetings November 2012
Slide 7: Earnings and dividends per share
Earnings and dividends per share – A$ cents For personal use only Dividend maintained. Objective remains to grow dividends over time NZ Shareholder Meetings November 2012
Slide 8: On average discount has narrowed over the year
On average discount has narrowed over the year For personal use only NZ Shareholder Meetings November 2012
Slide 9: Portfolio has outperformed over the short and long term
Portfolio has outperformed over the short and long term For personal use only AFIC NTA performance is after tax paid and expenses. NZ Shareholder Meetings November 2012
Slide 10: Performance in NZ$
Performance in NZ$ For personal use only AFIC NTA performance is after tax paid and expenses. NZ Shareholder Meetings November 2012
Slide 11: Our Investment Process
Our Investment Process For personal use only Long term investor in businesses Active management of the portfolio: Investment Committee – Directors and Investment Team Meet regularly with company management Holdings sold if long term outlook is adverse NZ Shareholder Meetings November 2012
Slide 12: What we look for in Companies
What we look for in Companies For personal use only Quality assets/business Strong management and board Prudent financial structure Attractive returns which fund dividends Companies that are run for shareholders NZ Shareholder Meetings November 2012
Slide 13: Semi log scale chart
For personal use only Note: Semi Log Scale has been used NZ Shareholder Meetings November 2012
Slide 14: Attractive Investment opportunities have been on offer for long term investors
Attractive Investment opportunities have been on offer for long term investors For personal use only NZ Shareholder Meetings November 2012
Slide 15: Key Investment Activity: deploying Convertible Note funds
Key Investment Activity has been to deploy funds from the $223m Convertible Note Issue in December 2011 For personal use only • Building exposure in selected sectors - Financials/market related: AMP, ASX, IRESS - Healthcare: CSL, Ramsay Healthcare, Ansell, Sonic Healthcare - Infrastructure: Hastings
Slide 16: Major Sales
Major Sales • Takeovers For personal use only - Fosters - Eastern Star Gas • Fairfax Media and APN in response to adverse long term structural change NZ Shareholder Meetings November 2012
Slide 17: Adverse structural change has affected other companies
Adverse structural change has affected other companies For personal use only • Once held in the AFIC portfolio: - Arrium (OneSteel) – sold 2011 - Hills Industries – sold 2010 - PaperLinX – sold 2009 • Not held in the AFIC portfolio: - BlueScope Steel - David Jones - Myer Holdings NZ Shareholder Meet
Slide 18: Top at October 2012 – Banks
Top 25 at 31 October 2012 – Banks For personal use only Major banks are an important source of dividends. Whilst growth is likely to be subdued we expect continuance of dividend flow. Rank Company A$ million % of portfolio 2 *Commonwealth Bank 493.8 9.8 3 *Westpac 468.4 9.3 5 *National Australia Ban
Slide 19: Top at October 2012 – Energy
Top 25 at 31 October 2012 – Energy For personal use only Energy exposure is an important part of the portfolio and we remain positive about ongoing demand particularly from quality resource/projects. Rank Company A$ million % of portfolio 10 *Oil Search 117.2 2.3 11 Woodside Petroleum 109.5 2.2 16 *
Slide 20: Top at October 2012 – Retail
Top 25 at 31 October 2012 – Retail For personal use only Retail exposure is through non discretionary retailers Rank Company A$ million % of portfolio 4 *Wesfarmers (a) 267.8 5.3 9 Woolworths 182.7 3.6 Total 450.5 8.9 (a) Includes $50.6m WESN partially protected securities * Indicates that options w
Slide 21: Top at October 2012 – Resources
Top 25 at 31 October 2012 – Resources For personal use only Resource exposure is primarily through the diversified low cost producers Rank Company A$ million % of portfolio 1 *BHP Billiton 495.9 9.8 8 Rio Tinto 205.3 4.1 Total 701.2 13.9 * Indicates that options were outstanding against part or all
Slide 22: Top at October 2012 – Infrastructure
Top 25 at 31 October 2012 – Infrastructure For personal use only Infrastructure holdings have been targeted at those with attractive long term assets with relatively simple structures Rank Company A$ million % of portfolio 12 Australian Infrastructure Fund 105.6 2.1 14 Transurban 97.4 1.9 18 Hasting
Slide 23: Top at October 2012 – Mining Services
Top 25 at 31 October 2012 – Mining Services For personal use only Exposure to companies which rely on volumes rather than commodity prices – Bradken dropped out the top 25 over the second half of the financial year Rank Company A$ million % of portfolio 22 *Orica 73.7 1.5 24 Incitec Pivot 67.0 1.3 T
Slide 24: Top at October 2012 – Non Bank Financial Services
Top 25 at 31 October 2012 – Non Bank Financial Services For personal use only Financial services and insurance Rank Company $ million % of portfolio 15 *AMP 95.9 1.9 17 *QBE Insurance 89.1 1.8 23 Computershare 70.9 1.4 Total 255.9 5.1 * Indicates that options were outstanding against part or all of
Slide 25: Top at October 2012 – Industrial
Top 25 at 31 October 2012 – Industrial For personal use only Telstra and industrial companies Rank Company A$ million % of portfolio 7 *Telstra 222.2 4.4 13 Amcor 99.7 2.0 20 *Brambles 77.7 1.5 25 Coca-Cola Amatil 61.9 1.2 Total 461.5 9.1 * Indicates that options were outstanding against part or all
Slide 26: Recent Reporting Season Feedback From Companies
Recent Reporting Season Feedback From Companies For personal use only • Continued cost pressures evident • Difficult industrial relations climate • High Australian dollar making conditions difficult for some companies • Many sectors experiencing subdued conditions • Political environment is unsettli
Slide 27: Outlook
Outlook For personal use only • Despite recent optimism global conditions remain uncertain with the path to reducing high debt levels unresolved • Resolution of the “fiscal cliff” in the US • A slowing China will have implications for Australian resources • Earnings growth in Australia likely to be
Slide 28: Valuation levels look reasonable
Valuation levels look reasonable For personal use only Source: Goldman Sachs NZ Shareholder Meetings November 2012
Slide 29: Other managed funds: Diversified Australian Equities
Diversified Australian Equities For personal use only Enhanced income using options 45 stocks - $800 million, yield 6.6% MER of 0.41%, ASX code:DJW Australian mid and small companies 75 stocks - $260 million, yield 5.6% MER of 0.79%, ASX code:MIR Australian equities – High conviction 40 stocks - $16
Slide 30: For personal use only
For personal use only NZ Shareholder Meetings November 2012
Australian Foundation Investment Company — Investor Presentation (November 2012) on 6ix