Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Investor Presentation (March 2011)
26 slides from Australian Foundation Investment's investor presentation, Mar 21, 2011
Slide 1: Shareholder Information Meetings cover letter
21 March 2011 For personal use only The Manager Company Announcements Office Australian Securities Exchange Exchange Centre Level 4 20 Bridge Street Sydney NSW 2000 Electronic Lodgement Australian Foundation Investment Company Limited Shareholder Information Meetings Dear Sir / Madam Please find att
Slide 2: Shareholder Meetings March/April 2011
For personal use only Shareholder Meetings March/April 2011
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: All Ordinaries Price Index – A Long Term View
All Ordinaries Price Index – A Long Term View For personal use only Semi Log Scale has been used
Slide 5: Summary of Results
Summary of Results For personal use only HY10 HY09 Key factors: $m $m • Large increase in dividends Income 128.6 107.3 and distributions Operating Expenses (6.1) (5.7) • Positive contribution from Finance Costs (2.0) (2.1) Trading Portfolio although down on last year Income Tax (5.1) (5.4) • Net cap
Slide 6: Earnings Per Share vs. Dividends Per Share
Earnings Per Share vs. Dividends Per Share For personal use only 24.00 22.00 20.00 18.00 12.3 16.00 9.7 9.4 Cents per share 9.9 13.0 13.0 13.0 13.0 14.00 8.6 12.00 10.5 10.00 8.00 6.00 11.4 11.5 11.4 11.1 9.5 9.6 4.00 8.0 8.0 8.0 8.0 8.0 6.5 2.00 0.00 2006 2007 2008 2009 2010 2011 Financial year Ear
Slide 7: The Market Over the Year – All Ordinaries Price Index
The Market Over the Year – All Ordinaries Price Index For personal use only 5200 5000 4800 Value 4600 4400 4200 4000 0 0 10 0 11 11 10 0 -1 -1 -1 -1 v- n- b- p- ug l ct ec Ju No Ja Fe Se O A D Date
Slide 8: Sector Performance Reflected “two speed” Economy
Sector Performance Reflected “two speed” Economy For personal use only 30% 25% 20% 15% 10% 5% 0% -5% 0 -11 0 1 0 0 0 l-10 0 t -1 n- 1 b- 1 p- 1 c- 1 g-1 v- 1 Ja n Ju Oc De Au No Fe Ju Se % ASX300 Industrials % ASX300 Resources
Slide 9: Key Investment Themes Over the Period
Key Investment Themes Over the Period For personal use only AFIC remained close to fully invested during the period Took advantage of share placements and discounted dividend reinvestment plans Added to holdings in the nursery, including some new companies Increased use of the Trading Portfolio with
Slide 10: Largest Acquisitions in the Investment Portfolio
Largest 5 Acquisitions in the Investment portfolio (Six Months to 31 December 2010) For personal use only $m ANZ Banking Group 19.7 Victoria Petroleum*#(now called Senex Energy) 11.8 QBE Insurance 8.3 CFS Retail Property Trust# 8.1 National Australia Bank 7.1 * New stock to the portfolio # Includes
Slide 11: Largest Disposals in the Investment Portfolio
Largest Disposals in the Investment Portfolio (Six Months to 31 December 2010) For personal use only $m Healthscope # 9.4 Nufarm # 8.7 # Complete Disposal
Slide 12: Largest Acquisitions post December 2010
Largest Acquisitions post 31 December 2010 For personal use only WA Newspaper CULS Asciano Engenco* ANZ Banking Group * New stock to the portfolio
Slide 13: Largest Disposals post December 2010
Largest Disposals post 31 December 2010 For personal use only WA Newspapers
Slide 14: Top Holdings – February 2011
Top 25 Holdings – 28 February 2011 For personal use only % of portfolio (excl. $m cash) 1 * BHP Billiton 657.9 13.0% 2 * Commonwealth Bank of Australia 451.3 8.9% 3 * Westpac Banking Corporation 432.5 8.5% 4 Rio Tinto 303.5 6.0% 5 Wesfarmers (a) 251.2 5.0% 6 * National Australia Bank 245.1 4.8% 7 *
Slide 15: BHP Billiton Buy Back
BHP Billiton Buy Back For personal use only 50 3500 AUD USD $ $ million 45 3000 40 35 2500 30 2000 25 1500 20 15 1000 10 500 5 0 0 -04 -04 -05 -05 -06 06 -07 -07 -08 -08 -09 -09 -10 -10 - Jul Jul Jul Jul Jul Jul Jul Jan Jan Jan Jan Jan Jan Jan BHP Monthly Buyback (rhs) BHP Monthly Avg Share Price So
Slide 16: Top Holdings – February 2011 con’t.
Top 25 Holdings – 28 February 2011 con’t. For personal use only % of portfolio (excl. $m cash) 11 * Santos 104.0 2.1% 12 * Oil Search 97.8 1.9% 13 * QBE Insurance Group 93.8 1.8% 14 * Origin Energy 87.6 1.7% 15 Amcor 87.4 1.7% 16 Incitec Pivot 79.4 1.6% 17 Transurban Group 79.3 1.6% 18 Computershare
Slide 17: Top Holdings – February 2011 con’t.
Top 25 Holdings – 28 February 2011 con’t. For personal use only % of portfolio (excl. $m cash) 21 * AGL Energy 63.7 1.3% 22 West Australian Newspapers Holdings (b) 60.7 1.2% 23 * Brambles 60.6 1.2% 24 * AMP 58.9 1.2% 25 * Coca-Cola Amatil 55.3 1.1% Total 4,105.6 As % of Total Portfolio Value 80.9% (
Slide 18: AFIC Annualised Returns – Year Ended February 2011
AFIC Annualised Returns – Year Ended 28 February 2011 For personal use only 12% 11.1% 10% 9.9% 8.7% 8.2% 8% 7.4% 6% 5.5% 4.0% 4.0% 4% 2.2% 2% 0.3% 0.7% 0% -0.3% -2% 1 year return 3 year return 5 year return 10 year return Net Asset per share growth plus dividends Share Price growth plus dividends S&
Slide 19: AFIC Annualised Portfolio Returns, Including Franking Credits
AFIC Annualised Portfolio Returns, Including the Benefits of Distributed Franking Credits For personal use only – Year Ended 28 February 2011 14% 12% 11.8% 10.0% 10% 9.3% 9.7% 8% 7.4% 6% 5.5% 4.3% 4% 2% 1.3% 0% 1 year return 3 year return 5 year return 10 year return Net Asset per share growth plus
Slide 20: AFIC Share Price and Share Price Relative to Net Asset Backing
AFIC Share Price and Share Price Relative to the Net Asset Backing * For personal use only 20% Premium/Discount Share Price 600 (cents) 15% 550 10% 500 450 5% 400 0% 350 -5% 300 -10% 250 * Before provision for capital gains tax -15% 200 Feb-01 Feb-03 Feb-05 Feb-07 Feb-09 Feb-11
Slide 21: Reporting Season – Key Themes
Reporting Season – Key Themes For personal use only Two speed economy is very evident from results: Strong demand for commodities Subdued consumer activity Australian manufacturing facing strong import competition Labour shortages emerging which is impacting costs Industrial relations becoming an is
Slide 22: Reporting Season – Key Themes con’t.
Reporting Season – Key Themes con’t. For personal use only Government policy is creating some uncertainty – industrial relations, carbon pricing Increased sovereign risk is creating negative foreign investor reaction However, most companies now have balance sheets that are in good shape which has le
Slide 23: Long term performance of the market will depend on growth and productivity
Long term performance of the market will depend on strong economic growth and For personal use only improved productivity %pa 5-yr rolling %pa 5-yr rolling 3.5 35.0 30.0 3.0 25.0 2.5 20.0 2.0 15.0 1.5 10.0 5.0 1.0 0.0 0.5 Aus Labour Productivity (LHS) -5.0 All Ords (RHS) 0.0 -10.0 1980 1983 1986 198
Slide 24: Outlook
Outlook For personal use only Two speed economy well entrenched with demand for resources/energy from Asia still strong and the household sector in Australia acting cautiously Uncertainties exist: Sovereign risk arising from policy changes has become an issue for business and investors Geopolitical
Slide 25: Outlook - continued
Outlook - continued For personal use only Improving US economy is positive but developed economies still face major structural issues – high debt levels and potential for inflation with rising input costs Recent results produced increasing dividends as company earnings improved AFIC is fully investe
Slide 26: Australian Foundation Investment Company
AUSTRALIAN FOUNDATION INVESTMENT COMPANY
Australian Foundation Investment Company — Investor Presentation (March 2011) on 6ix