Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Investor Presentation (April 2018)
32 slides from Australian Foundation Investment's investor presentation, Apr 23, 2018
Slide 1: Information Meetings – Presentation cover letter
23 April 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 Tasmania - April 2018
For personal use only Shareholder Meetings Tasmania - April 2018
Slide 3: Disclaimer
Disclaimer Australian Foundation Investment Company Limited and its subsidiary AICS (AFSL 303209), their For personal use only 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 - Tasmania April 2018
Slide 5: Labor Party have announced the ending of refundability of franking credits
Labor Party have announced the ending of refundability of franking credits For personal use only • 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
Labor Party have announced the ending of refundability of franking credits For personal use only • We feel that this is an unfair attack on a specific sections of the investing public i.e. SMSF’s and low-income earners who hold investments outside of retail and industry super-funds. • Many sharehold
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
AFIC is a Long Term Investor in a Diversified Portfolio of Quality Companies For personal use only Shareholder Meetings - Tasmania April 2018
Slide 9: With the Objective of Delivering for Shareholders
With the Objective of Delivering for Shareholders For personal use only • Growing fully franked dividends over time. • Attractive total returns over the medium to long term. Shareholder Meetings - Tasmania April 2018
Slide 10: Portfolio Performance Combined with Very Low Costs Have Provided Long Term Outperformance
Portfolio Performance Combined with Very Low Costs Have Provided Long Term Outperformance of the Australian Market AFIC For personal use only S&P/ASX 200 Accumulation Index Shareholder Meetings - Tasmania April 2018
Slide 11: Half Year Financial Summary – December 2017
Half Year Financial Summary – 31 December 2017 For personal use only Shareholder Meetings - Tasmania April 2018
Slide 12: Major Components of Income for the Half Year to December 2017
Major Components of Income for the Half Year to 31 December 2017 For personal use only 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 4% Premium to Net Asset Backing
Share Price is Trading at a 4% Premium to Net Asset Backing at end March Versus 3% Discount This Time Last Year For personal use only Shareholder Meetings - Tasmania April 2018
Slide 14: Long Term Share Price Return is in Line with the Portfolio Performance
Long Term Share Price Return is in Line with the Portfolio Performance – Per Annum Returns to 31 March 2018 For personal use only Shareholder Meetings - Tasmania April 2018
Slide 15: The Market and the Portfolio
For personal use only The Market and the Portfolio Shareholder Meetings - Tasmania April 2018
Slide 16: Key themes in the market
Key themes in the market For personal use only • 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 - Ta
Slide 17: The market has been generally strong despite the recent pullbacks
The market has been generally strong despite the recent pullbacks, although we are starting to see increased volatility For personal use only I n Recent market d e reaction to rising US x long term bond rates Shareholder Meetings - Tasmania April 2018
Slide 18: Mid and Small Sized Companies Have Been Very Strong Led by Resources
Mid and Small Sized Companies Have Been Very Strong Led by Resources For personal use only ASX Small Cap ASX Mid Cap ASX 200 Shareholder Meetings - Tasmania April 2018
Slide 19: Resources Have Dominated Returns Over the Year to March 2018
Resources Have Dominated Returns Over the Year to 31 March 2018. AFIC is Underweight Small and Mid Sized Resource Companies. For personal use only Shareholder Meetings - Tasmania April 2018
Slide 20: The Year Performance of the Portfolio to March 2018 Presents a Very Different Picture
The 10 Year Performance of the Portfolio to 31 March 2018 Presents a Very Different Picture For personal use only Resources Shareholder Meetings - Tasmania April 2018
Slide 21: Top 10 holdings 31 March 2018
Market moves as well as purchases/sales have changed the profile of the Portfolio – top 10 holdings 31 March 2018 Major changes – For personal use only Rank Company % of Portfolio % Mar 2017 1 Commonwealth Bank of Australia 8.4% 9.8% 2 Westpac Banking Corporation 6.5% 7.8% 3 BHP* 5.9% 4.8% 4 CSL* 4.
Slide 22: Next 10 holdings 31 March 2018
Market moves as well as purchases/sales have changed the profile of the Portfolio – next 10 holdings 31 March 2018 Major changes – For personal use only Rank Company % of Portfolio % Mar 2017 11 Telstra Corporation 2.4% 3.5% 12 Woolworths Group* 2.0% 13 Brambles 2.0% 14 Macquarie Group* 1.8% Outside
Slide 23: Large companies represent a major percentage of the portfolio, with mid and small companies
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 For personal use only Per cent of Portfolio by Value Number of Companies Shareholder Meetings - Tasma
Slide 24: Over time we have been adding smaller companies
Over time we have been adding smaller companies that have produced dividend and/or capital growth For personal use only Mid Cap 50 Small Ordinaries Shareholder Meetings - Tasmania April 2018
Slide 25: Companies we have made larger investments in this financial year
Companies we have made larger investments in this financial year Company What we like For personal use only 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
New companies added to the portfolio For personal use only Shareholder Meetings - Tasmania April 2018
Slide 27: Longer term trends are important considerations for the Portfolio
Longer term trends are important considerations for the Portfolio For personal use only • 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 - Tasmania April 2018
Slide 29: US Long Term Bond Rates influence the Australian Market
The trajectory of US Long Term Bond Rates have a history of influencing the Australian Market For personal use only S&P ASX 200 Index – price US 10 year bond rates Source: FactSet Shareholder Meetings - Tasmania April 2018
Slide 30: Other factors at play…
Other factors at play… For personal use only Shareholder Meetings - Tasmania April 2018
Slide 31: In Summary
In Summary For personal use only • Profit growth should offset higher interest rates in the US and Australia. • Politics creating a mood of unease. • We are not bullish. We are not bearish. • Our focus is the “market for stocks” not the “stock market”. Shareholder Meetings - Tasmania April 2018
Slide 32: Australian Foundation
AUSTRALIAN FOUNDATION
Australian Foundation Investment Company — Investor Presentation (April 2018) on 6ix