Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — H1 2022 Earnings Presentation
27 slides from Australian Foundation Investment's earnings presentation, Jan 24, 2022
Slide 1: Interim Results Webcast Presentation ASX cover letter
24 January 2022 The Manager ASX Market Announcements For personal use only Australian Securities Exchange Exchange Centre Level 4 20 Bridge Street Sydney NSW 2000 Electronic Lodgement Australian Foundation Investment Company Limited Interim Results Webcast Presentation Please find attached the prese
Slide 2: Interim Results Presentation
Interim Results Presentation 24 January 2022 For personal use only
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 • Interim Result – Andrew Porter • Investment Process – Mark Freeman • Markets and the Portfolio – David Grace and Nga Lucas • Outlook – David Grace 3
Slide 5: Interim Result
4 For personal use only Interim Result
Slide 6: Interim Result Summary – months to December 2021
Interim Result Summary – 6 months to 31 December 2021 For personal use only * Assumes a shareholder can take full advantage of the franking credits. 5
Slide 7: AFIC's share price relative to the NTA - December 2021
AFIC’s share price relative to the NTA - 31 December 2021 For personal use only 6
Slide 8: Objectives and the Investment Process
For personal use only Objectives and the Investment Process 7
Slide 9: Objectives
Objectives For personal use only AFIC’s investment focus is on a diversified portfolio of Australian equities, seeking to provide attractive income and capital growth to shareholders over the medium to long term. This is achieved at a low cost, with lower volatility than the market, and with low por
Slide 10: Our investment process – how we assess quality
Our investment process – how we assess quality For personal use only Uniqueness of Assets Competitive landscape, leadership position, can the assets be replicated Barriers to entry, sustainability of competitive advantage, track record of new entrants, Long-term Sustainability threat of substitution
Slide 11: 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 12: ESG is integrated into our investment framework
ESG is integrated into our investment framework Approach to Environmental, Social and Governance (ESG) factors For personal use only o Assessment of ESG risk factors is an important part of our investment process as the sustainability of a business is a key input in our assessment of a company. o As
Slide 13: Markets and The Portfolio
For personal use only Markets and The Portfolio 12
Slide 14: Long term value in the context of recent market moves
Long term value in the context of recent market moves For personal use only Price to Book - Price to Sales - S&P/ASX 200 Index S&P/ASX 200 Index Source: FactSet Source: FactSet 13
Slide 15: Market and key sector performance - Year to December
Market and key sector performance* - Year to 31 December 2021 For personal use only *includes dividends but not franking 14
Slide 16: Portfolio performance metrics
Portfolio performance metrics Portfolio performance, including franking Over the 5-year period to 31 December 2021 AFIC has a higher - per annum returns to 31 December 2021 portfolio return with less volatility than the S&P/ASX 200 Index For personal use only (both exclude franking) Source: Mercer I
Slide 17: Transurban Limited
Transurban Limited • Transurban owns a high quality, diversified toll road portfolio • Good track record of capital allocation by management driving strong long term FCF growth For personal use only • Solid balance sheet, gearing high but before contribution from funded growth projects • Sydney and
Slide 18: CSL Limited
CSL Limited For personal use only • Leading global bio-tech company specialising in the treatment of rare diseases and influenza. • Has consistently delivered a high return on capital. The company has a long and successful track record of capital allocation driving shareholder returns. • Significant
Slide 19: Portfolio Update - Recent Transactions
Portfolio Update - Recent Transactions New Additions to For personal use only Sales Trimmed Purchases existing holdings (Nursery stock) 18
Slide 20: Top holdings – December 2021
Top 30 holdings – 31 December 2021 Total Portfolio 60 Holdings Rank Company % of Portfolio For personal use only 1 Commonwealth Bank of Australia 8.4% 2 CSL 7.1% 3 BHP 6.1% 4 Macquarie Group 4.8% 5 Wesfarmers 4.6% 6 Transurban Group 4.2% 7 Westpac Banking Corporation 3.5% 8 National Australia Bank 3
Slide 21: Top holdings – December 2021 continued
Top 30 holdings – 31 December 2021 continued Total Portfolio 60 Holdings Rank Company % of Portfolio For personal use only 11 Woolworths Group 2.6% 12 Australia and New Zealand Banking Group 2.5% 13 Telstra Corporation* 2.4% 14 Sydney Airport 2.3% 15 Goodman Group 2.2% 16 Reece 2.1% 17 Amcor 2.0% 18
Slide 22: Top holdings – December 2021 continued
Top 30 holdings – 31 December 2021 continued Total Portfolio 60 Holdings Rank Company % of Portfolio For personal use only 21 Coles Group 1.7% 22 ResMed 1.6% 23 Carsales.com 1.6% 24 Ramsay Health Care 1.4% 25 ASX 1.4% 26 Fisher & Paykel Healthcare 1.3% 27 Xero 1.2% 28 Seek 1.2% 29 IRESS 1.1% 30 NEXT
Slide 23: Closing Comments
For personal use only 22 Closing Comments
Slide 24: Outlook
Outlook Cost inflation and the likely end of the rate easing cycle is providing a For personal use only near term headwind for equity valuations. This is evident in some of our high quality companies that were trading at high valuations. However, quality companies remain best positioned to continue
Slide 25: International Portfolio – December 2021
International Portfolio – 31 December 2021 Additional investments and portfolio returns has seen investment rise to For personal use only $72 million (70bps of total portfolio). Portfolio holdings in 41 companies. Performance is encouraging. Applying the AFIC way of investing to International compan
Slide 26: Questions
For personal use only 25 Questions
Slide 27: For personal use only
For personal use only
Australian Foundation Investment Company — H1 2022 Earnings Presentation on 6ix