Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Investor Presentation (March 2009)
29 slides from Australian Foundation Investment's investor presentation, Mar 16, 2009
Slide 1: Cover letter to ASX: Shareholder Information Meetings
For personal use only 16 March 2009 The Manager Company Announcements Office Australian Securities Exchange Limited Exchange Centre Level 4 20 Bridge Street Sydney NSW 2000 Electronic Lodgement Australian Foundation Investment Company Limited Shareholder Information Meetings Dear Sir or Madam Please
Slide 2: Shareholder Meetings March/April 2009 Presentation
For personal use only Australian Foundation Investment Company Shareholder Meetings March/April 2009 Presentation
Slide 3: Disclaimer
Disclaimer For personal use only Australian Foundation Investment Company Limited, its related entities and each of its respective directors, officers and agents (together the Disclosers) have prepared the information contained in these materials in good faith. However, no warranty (express or impli
Slide 4: We cannot control the tide, all we can do is make sure the boat doesn't leak
For personal use only “We cannot control the tide, all we can do is make sure the boat doesn’t leak”
Slide 5: Comparative Price Index Returns Since July 2008
Comparative Price Index Returns For personal use only Since 1 July 2008 10% 0% -10% -20% Industrials -30% Financials -40% S&P/ASX 200 Resources -50% -60% 8 9 8 8 08 8 09 08 -0 0 0 l-0 -0 n- b- p- - - t ug ec ov Ju Oc Fe Se Ja D A N
Slide 6: All Ordinaries Price Index - Monthly
All Ordinaries Price Index - Monthly For personal use only 7000 6500 6000 5500 5000 Value 4500 4000 1 July 08 to 31 December 08 3500 decrease of 31.4% 3000 1 January 08 to 27 February 08 2500 decrease of 9.9% 02 03 04 05 06 07 08 2 3 4 5 6 7 8 -0 -0 -0 -0 -0 -0 -0 n- n- n- n- n- n- n- ec ec ec ec ec
Slide 7: All Ordinaries Price Index – A Long Term View
All Ordinaries Price Index – A Long Term View For personal use only
Slide 8: AFIC's Investment Structure – February 2009
AFIC’s Investment Structure – For personal use only 28 February 2009 Long Term Investment portfolio: A$3.2 billion Approximately 100 securities Focus on S&P/ASX 200 Trading portfolio: Up to 10% of total portfolio – deliberately reduced, A$20 million or 0.6% Short term positions Options writing strat
Slide 9: Financial Highlights - Half Year to December 2008
Financial Highlights - Half Year to 31 December 2008 For personal use only 2008 2007 Change Operating Profit After Tax $107.8m $110.7m -2.6% Reported Profit After Tax* $108.9m $ 326.1m Large Operating Profit Per Share 11.1c 11.5c -3.5% Interim dividends per share 8.0c 8.0c - * Includes realised gain
Slide 10: Portfolio Management in Difficult Market Conditions
Portfolio Management in Difficult Market Conditions For personal use only AFIC has a well positioned portfolio constructed on the basis of quality companies with: Valuable long term business franchises Good management Sound balance sheets Strong cash flows Cautious approach to investing - trimmed so
Slide 11: Major Acquisitions (above $5m) Investment Portfolio
Major Acquisitions (above $5m) Investment Portfolio For personal use only Six Months to 31 December 2008 $million Notes Westpac Banking Corp 84.9 Includes $54m SGB t/over National Australia Bank 23.2 Incitec Pivot 12.5 5 for 13 issue @ $2.50 QBE Insurance Group 11.8 Alumina 9.0 5 for 19 issue @ $3 W
Slide 12: Major Disposals (above $5m) Investment Portfolio
Major Disposals (above $5m) Investment Portfolio For personal use only Six Months to 31 December 2008 $million Notes St George Bank 54.4 Takeover by Westpac Queensland Gas Co 46.0 Sold into BG takeover Suncorp-Metway 26.0 ConnectEast Group 21.3 PaperlinX 8.2 BKW 6.565% Reset Pref 7.0 Redeemed by com
Slide 13: Major Acquisitions in the Investment Portfolio since 31 December
Major Major Acquisitions Acquisitions in in the the Investment Investment Portfolio Portfolio For personal use only Since (above $1m) 31 December 1 January 2007 to 28 February 2009 Nil
Slide 14: Major Sales in the Investment Portfolio
Major Sales in the Investment Portfolio For personal use only (above $1m) 1 January to 28 February 2009 $million Wesfarmers 3.6 Rio Tinto 3.5 Suncorp-Metway 3.3
Slide 15: Annualised Returns to February 2009
Annualised Returns to 28 February 2009 For personal use only 15% 10% 8.0% 7.1% 8.0% 4.9% 4.4% 6.1% 5% 0% -2.9% -5% -5.8% -10% -8.2% 1 year return 3 year return 5 year return 10 year return -15% -20% -25% -23.3% -30% -31.6% -35% -36.9% -40% Net Asset per share growth plus dividends Share Price growth
Slide 16: AFIC Share Price Relative to Net Asset Backing
AFIC Share Price Relative to Net Asset Backing For personal use only 20% Premium 15% 10% 5% 0% -5% -10% -15% Discount -20% Feb-99 Feb-01 Feb-03 Feb-05 Feb-07 Feb-09
Slide 17: Top Ordinary Securities – February 2009
Top 25 Ordinary Securities – 28 February 2009 For personal use only $million * 1 BHP Billiton 413.9 2 Westpac Banking Corporation 298.9 3 Commonwealth Bank of Australia 252.5 4 Telstra Corporation 173.3 5 Woolworths 162.2 6 National Australia Bank 150.8 7 Wesfarmers (a) 133.0 8 Rio Tinto 111.9 9 Woo
Slide 18: Top Ordinary Securities – February 2009 con't.
Top 25 Ordinary Securities – 28 February 2009 For personal use only con’t. $million * 11 Australia and New Zealand Banking Group 72.0 12 QBE Insurance Group 68.2 13 Origin Energy 66.0 * 14 Oil Search 59.9 15 Computershare 57.5 16 AGL Energy 56.6 * 17 AMP 49.9 18 Amcor 44.3 19 Toll Holdings 42.8 20 T
Slide 19: Top Ordinary Securities – February 2009 con't.
Top 25 Ordinary Securities – 28 February 2009 For personal use only con’t. $million 20 Transurban Group 42.7 21 Westfield Group 42.5 22 Incitec Pivot 39.1 23 Milton Corporation 38.0 24 Foster's Group 36.0 25 West Australian Newspapers Holdings 36.0 Total 2,604.9 As % of Total Portfolio Value 81.7% (
Slide 20: The Question of Impairment
The Question of Impairment For personal use only Equity markets have fallen precipitously since the market high in November 2007 Markets are not expected to recover substantially in the foreseeable future Some stocks currently trading well below original cost These events have raised questions about
Slide 21: AFIC's Approach to the Question of Impairment
AFIC’s Approach to the Question of Impairment For personal use only The Portfolio is reviewed weekly by the Investment Committee Investment focus on the long term value of the business franchise and strength of cash flows - we are not driven by short term cycles If we become concerned about the long
Slide 22: Concerns About Investment Translates to Sales
Concerns About Investment Translates to Sales* For personal use only Asciano Group ABC Learning Alinta (offered B&B paper) Centro Properties Group Connect East Energy Developments PaperlinX Publishing & Broadcasting Spotless Transpacific Industries Virgin Blue (from Toll holdings) * Over the period
Slide 23: Potential Impact of Impairment on AFIC's Accounts
Potential Impact of Impairment on AFIC’s Accounts For personal use only Auditors may require recognition of an impairment charge against some holdings at the full year (where current value is well below book cost) even where we believe the investment has good long term value This may potentially imp
Slide 24: Recent Speculation about the Imputation Regime
Recent Speculation about the Imputation Regime For personal use only Imputation system actively encourages the formation of capital by retail shareholders/superannuation funds – recent equity raisings in Australia strongly underpinned by retail investors Company dividends currently under pressure –
Slide 25: RIO Tinto and Chinalco Proposal
RIO Tinto and Chinalco Proposal For personal use only We are assessing the proposal from the perspective of being a long term investor Existing shareholders have not been given the opportunity to recapitalise the Company- preference given to one shareholder Significant influence has been given to Ch
Slide 26: RIO Tinto and Chinalco Proposal con't.
RIO Tinto and Chinalco Proposal con’t. For personal use only We are deeply concerned about Chinalco becoming involved with the running of the business: sovereign government/customer/competitor 2 seats on the parent board corporate governance issues integrated into decision making process and informa
Slide 27: Outlook
Outlook For personal use only Global economic conditions have worsened Proper functioning financial markets provide the key to any prolonged upswing Government actions to moderate decline rather than produce strong growth Recent company results were mixed with dividends generally under pressure AFIC
Slide 28: Promoting AFIC in this Environment
Promoting AFIC in this Environment For personal use only
Slide 29: Australian Foundation Investment Company Shareholder Meetings
For personal use only Australian Foundation Investment Company Shareholder Meetings March/April 2009
Australian Foundation Investment Company — Investor Presentation (March 2009) on 6ix