Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Investor Presentation (March 2018)
31 slides from Australian Foundation Investment's investor presentation, Mar 14, 2018
Slide 1: Information Meetings – Presentation (ASX cover letter)
14 March 2018 For personal use only 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 Information Meetings – Presentation Dear Sir / Madam Please find atta
Slide 2: Shareholder Meetings March 2018
For personal use only Shareholder Meetings March 2018
Slide 3: Disclaimer
For personal use only Disclaimer 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: Introduction
For personal use only Introduction Shareholder Meetings March 2018
Slide 5: Labor Party have announced the ending of refundability of franking credits
For personal use only Labor Party have announced the ending of refundability of franking credits • The Labor Party has announced that if elected it will stop excess franking credits being refunded to shareholders. • This particularly impacts individuals and self-managed super funds – charities, not-
Slide 6: Labor Party have announced the ending of refundability of franking credits
For personal use only Labor Party have announced the ending of refundability of franking credits • We feel that this is an unfair attack on a specific section of the investing public and on low-income earners who hold investments outside super- funds that can offset extra franking-credits against co
Slide 7: Company Objectives and Recent Financial Performance
For personal use only Company Objectives and Recent Financial Performance Shareholder Meetings March 2018
Slide 8: AFIC is a Long Term Investor in a Diversified Portfolio of Quality Companies
For personal use only AFIC is a Long Term Investor in a Diversified Portfolio of Quality Companies Shareholder Meetings March 2018
Slide 9: With the Objective of Delivering for Shareholders
For personal use only With the Objective of Delivering for Shareholders • Growing fully franked dividends over time. • Attractive total returns over the medium to long term. Shareholder Meetings March 2018
Slide 10: Portfolio performance combined with very low costs have provided long term outperformance
For personal use only Portfolio performance combined with very low costs have provided long term outperformance of the Australian Market AFIC S&P/ASX 200 Accumulation Index Shareholder Meetings March 2018
Slide 11: Half Year Financial Summary – December 2017
For personal use only Half Year Financial Summary – 31 December 2017 Shareholder Meetings March 2018
Slide 12: Major Components of Income for the Half Year to December 2017
For personal use only Major Components of Income for the Half Year to 31 December 2017 Half-Year Half-Year 2017 2016 $’000 $’000 Dividends and Distributions 150,792 132,043 Net Losses on Trading Portfolio -6,553 -363 Dividends from many investee companies have increased. Unrealised losses from call
Slide 13: Share price is trading at a 1% premium to Net Asset Backing
For personal use only Share price is trading at a 1% premium to Net Asset Backing versus 2% this time last year Shareholder Meetings March 2018
Slide 14: Long term Share Price return is in line with the Portfolio Performance
For personal use only Long term Share Price return is in line with the Portfolio Performance – Per Annum Returns to 28 February 2018 Shareholder Meetings March 2018
Slide 15: The Market and the Portfolio
For personal use only The Market and the Portfolio Shareholder Meetings March 2018
Slide 16: Key themes in the market
For personal use only Key themes in the market • Synchronised global growth. • Rising long term interest rates. • Buoyant commodity prices. • Recent company reporting season in Australia – growth remains challenging for many large companies. • Value still difficult to find. Shareholder Meetings Marc
Slide 17: The market has been generally strong despite the recent pullbacks
For personal use only The market has been generally strong despite the recent pullbacks, although we are starting to see increased volatility I n Recent market d e reaction to rising US x long term bond rates Shareholder Meetings March 2018
Slide 18: Mid and small sized companies have been very strong led by resources
For personal use only Mid and small sized companies have been very strong led by resources ASX Mid Cap I ASX Small Cap n d e x ASX 200 Shareholder Meetings March 2018
Slide 19: Resources have dominated returns over the year to February 2018
For personal use only Resources have dominated returns over the year to 28 February 2018. AFIC is underweight small and mid sized resource companies. Shareholder Meetings March 2018
Slide 20: The year performance of the Portfolio to February 18 presents a very different picture
For personal use only The 10 year performance of the Portfolio to 28 February 2018 presents a very different picture Resources Shareholder Meetings March 2018
Slide 21: Top 10 holdings 28 February 2018
For personal use only Market moves as well as purchases/sales have changed the profile of the Portfolio – top 10 holdings 28 February 2018 Major changes – Rank Company % of Portfolio % Feb 2017 1 Commonwealth Bank of Australia 8.5% 9.6% 2 Westpac Banking Corporation 6.7% 7.8% 3 BHP* 6.1% 5.2% 4 CSL*
Slide 22: Next 10 holdings 28 February 2018
For personal use only Market moves as well as purchases/sales have changed the profile of the Portfolio – next 10 holdings 28 February 2018 Major changes – Rank Company % of Portfolio % Feb 2017 11 Amcor 2.4% 12 Woolworths Group* 2.1% 13 Brambles 1.8% 14 Oil Search 1.8% 15 Treasury Wine Estates* 1.7
Slide 23: Large companies a major percentage of portfolio, with mid and small companies
For personal use only Whilst large companies represent a major percentage of the portfolio, there are a number of companies in the portfolio in the mid and small sectors which typically have a stronger outlook for growth Per cent of Portfolio by Value Number of Companies Shareholder Meetings March 2
Slide 24: Over time we have been adding smaller companies
For personal use only Over time we have been adding smaller companies that have produced dividend and/or capital growth Mid Cap 50 Small Ordinaries Shareholder Meetings March 2018
Slide 25: Companies we have made larger investments in this financial year
For personal use only Companies we have made larger investments in this financial year Company What we like Business model has pivoted toward recurring revenue streams. Thematic exposure to global infrastructure demand – utilities, renewables. Leading global blood plasma business with strong track r
Slide 26: New companies added to the portfolio
For personal use only New companies added to the portfolio Shareholder Meetings March 2018
Slide 27: Longer term trends are important considerations for the Portfolio
For personal use only Longer term trends are important considerations for the Portfolio • Changing nature of business models including use of technology. • Digital disruption, management of data. • Ongoing exposure of the Australian economy to global businesses. • Changing demographics – transition
Slide 28: Looking Ahead
For personal use only Looking Ahead Shareholder Meetings March 2018
Slide 29: US Long Term Bond Rates have a history of influencing the Australian Market
For personal use only The trajectory of US Long Term Bond Rates have a history of influencing the Australian Market S&P ASX 200 Index – price US 10 year bond rates Source: FactSet Shareholder Meetings March 2018
Slide 30: Other factors at play…
For personal use only Other factors at play… Shareholder Meetings March 2018
Slide 31: Australian Foundation Investment Company
AUSTRALIAN FOUNDATION INVESTMENT COMPANY
Australian Foundation Investment Company — Investor Presentation (March 2018) on 6ix