Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Shareholder Meeting (October 2023)
26 slides from Australian Foundation Investment's shareholder meeting presentation, Oct 3, 2023
Slide 1: 2023 Annual General Meeting Presentation
3 October 2023 The Manager ASX Market Announcements Australian Securities Exchange Exchange Centre Level 4 20 Bridge Street Sydney NSW 2000 Electronic Lodgement For personal use only Australian Foundation Investment Company Limited 2023 Annual General Meeting Presentation Dear Sir / Madam The follow
Slide 2: Annual General Meeting October 2023
Annual General Meeting For personal use only October 2023
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: Agenda
Agenda For personal use only Overview and Investment Objectives Mark Freeman Financial Results Andrew Porter Markets and the Portfolio David Grace Recent portfolio activity Nga Lucas Outlook David Grace Annual General Meeting / October 2023 2 3
Slide 5: Overview and Investment Objectives
For personal use only Overview and Investment Objectives Annual General Meeting / October 2023 4
Slide 6: Our Company
Our Company For personal use only Invests in Australian and New Zealand companies Largest listed investment company on the ASX, over 160k shareholders, independent Board of Directors Shareholders own the ‘management rights’ to the portfolio Management expense ratio of 0.14% with no performance fees
Slide 7: Investment Objectives
For personal use only Investment Objectives The Company aims to provide The Company’s primary investment goals are: shareholders with attractive investment • to pay dividends which, over time, grow returns through access to a growing faster than the rate of inflation; and stream of fully franked div
Slide 8: Financial Results
For personal use only Financial Results Annual General Meeting / October 2023 7
Slide 9: Results to June 2023
Results to 30 June 2023 For personal use only * Assumes a shareholder can take full advantage of the franking credits. # Includes a non-cash dividend of $74.9 million from the BHP Petroleum/Woodside merger in 2022. Annual General Meeting / October 2023 8
Slide 10: Share Price Relative to Net Asset Backing Per Share
Share Price Relative to Net Asset Backing Per Share For personal use only 31 August 2023 NTA: $7.20 Share price: $6.94 Annual General Meeting / October 2023 9
Slide 11: Consistent dividend even through volatile times
Consistent dividend even through volatile times For personal use only AFIC’s franking reserve balance ensures we can pay a consistent dividend even through volatile times. In 2019 AFIC also paid a special fully franked interim dividend of 8 cents per share Annual General Meeting / October 2023 10
Slide 12: Markets and the Portfolio
For personal use only Markets and the Portfolio Annual General Meeting / October 2023 11
Slide 13: Our Investment Process – Focus on Long Term Quality
Our Investment Process – Focus on Long Term Quality For personal use only Long term investor in companies, not traders of share prices Identify quality companies with sound growth prospects that we can buy at a reasonable price This supports our belief in the power of compounding returns from great
Slide 14: Portfolio and Sector Performance – to August 2023
Portfolio and Sector Performance – to 31 August 2023 For personal use only 1 Year Sector returns to 31 August - do not include franking. Annual General Meeting / October 2023 13
Slide 15: Market Conditions
Market Conditions For personal use only Positive Negative Solid economic growth, reducing the risk Inflation is moderating but still above Central of a recession. Bank targets. China policy initiatives to stabilise market Slowing consumer spending. conditions. Sharp rise in interest costs
Slide 16: Market Valuation in a Long Term Context
Market Valuation in a Long Term Context ASX 200 valuation slightly above 20-year average. For personal use only ASX 200 Total Return ASX 200 firms trade at an average forward PE of 15.4x, which is 7% above the 20-yr average 20x 900 800 18x 700 PE NTM 600 16x Indexed 500 14x 400 300 12x 200 10x 100 0
Slide 17: Wide Dispersion of Valuations
Wide Dispersion of Valuations Highly valued companies trading materially above their long-term average. For personal use only High PE firms trade at a 72% premium to the Low PE firms trade at a 56% discount to the market, which is 29% above the 20-yr average market, which is 10% below the 20-yr aver
Slide 18: Portfolio Set to Perform in a Variety of Economic Settings
Portfolio Set to Perform in a Variety of Economic Settings For personal use only Growth Companies Stalwarts 33% 24% AFIC Cyclicals 18% 25% Income Annual General Meeting / October 2023 17
Slide 19: Recent Portfolio Activity
For personal use only Recent Portfolio Activity Annual General Meeting / October 2023 18
Slide 20: Active Portfolio Management – Recent Transactions
Active Portfolio Management – Recent Transactions For personal use only Reduced Holdings New Purchases Additions to Existing Holdings Complete Disposals Annual General Meeting / October 2023 19
Slide 21: CSL
CSL EPS vs Share Price US$ For personal use only CSL is a specialist biotechnology company that develops and manufactures products to treat serious human medical conditions. Market leadership position in plasma fractionation operating more efficiently than competitors. Recent capital investment incr
Slide 22: Telstra
Telstra Mobile Service Revenue Market Share For personal use only Telstra is Australia’s leading Telecommunications company with dominant market share and extensive infrastructure assets. Mobile network superiority with 99% network coverage and 85% 5G coverage. More rational competitors given indust
Slide 23: Goodman Group
Goodman Group EPS vs Share Price For personal use only Goodman Group is a specialist developer, owner and manager of industrial properties operating in 14 countries. Market leader in providing high-quality essential infrastructure for the digital economy and data centres. Unique opportunity to inves
Slide 24: Outlook
For personal use only Outlook Annual General Meeting / October 2023 23
Slide 25: Outlook
Outlook For personal use only What’s Occupying Our Mind Solid economic growth with inflation remaining stubborn. Consumer spending starting to slow. Company earnings growth to stabilise following two years of strong growth. Strong migration to drive near record population growth. Economic
Slide 26: Australian Foundation Investment Company
AUSTRALIAN FOUNDATION INVESTMENT COMPANY
Australian Foundation Investment Company — Shareholder Meeting (October 2023) on 6ix