Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Shareholder Meeting (May 2009)
28 slides from Australian Foundation Investment's shareholder meeting presentation, May 11, 2009
Slide 1: ASX lodgement cover letter
For personal use only 11 May 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 Meeting Presentation - Adelaide Dea
Slide 2: Shareholder Meeting Adelaide Presentation May 2009
For personal use only Australian Foundation Investment Company Shareholder Meeting Adelaide May 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: All Ordinaries Price Index - Daily
All Ordinaries Price Index - Daily For personal use only 6200 5800 5400 1 January 09 to 30 April 09 increase of 2.3% 5000 4600 1 July 08 to 31 December 08 4200 decrease of 31.4% 3800 3400 3000 8 8 9 08 8 8 8 8 08 09 08 8 8 8 09 9 -0 -0 -0 -0 -0 -0 l-0 -0 -0 -0 -0 n- n- n- b- b- ug pr pr ov ec ep ay
Slide 5: Is Australia as bad as the US?
Is Australia as bad as the US? For personal use only 105 (S&P/ASX 200 v. S&P 500 Jan 08 to April 09) 100 95 90 USA 85 80 75 70 Australia 65 60 55 50 45 - 08 -08 r-08 r-0 8 - 08 -0 8 l-08 - 08 -08 -08 -08 -08 - 09 -0 9 r-09 r- 0 9 n g t v c Ja Fe b M a Ap ay Ju n Ju Au Se p O c No De Ja n Fe b M a Ap
Slide 6: Economic Growth (year on year)
Economic Growth For personal use only (year on year) Australia USA China Quarter 4 2008 -0.3% -0.8% +6.8% Quarter 1 2009 -0.7% -2.6% +6.1% Quarter 2 2009 (est.) -0.6% -4.0% +7.0% Quarter 3 2009 (est.) -0.4% -3.7% +8.5% Quarter 4 2009 (est.) +0.9% -1.8% +10.8% If China estimates prove to be accurate
Slide 7: Fiscal Stimulus
Fiscal Stimulus For personal use only % of GDP 0 5 10 15 China United States Italy Germany Australia Japan Canada France India Russia United Kingdom Brazil Source: GSJBW Research Estimates, Economist
Slide 8: All Ordinaries Price Index – A Long Term View
All Ordinaries Price Index – A Long Term View For personal use only
Slide 9: AFIC's Investment Structure – April 2009
AFIC’s Investment Structure – For personal use only 30 April 2009 Long Term Investment portfolio: A$3.6 billion Approximately 80 securities Focus on S&P/ASX 200 Trading portfolio: Up to 10% of total portfolio – deliberately reduced, A$18.3 million or 0.5% Short term positions Options writing strateg
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 in the Investment Portfolio
Major Major Acquisitions Acquisitions in in the the Investment Investment Portfolio Portfolio For personal use only (above Since $1m) 131January December 2007 to 30 April 2009 $million Notes AXA Asia Pacific 4.3 Placement + DRP Peet 3.1 Placement QBE Insurance Group 2.3 DRP Brambles 1.3 DRP Woodside
Slide 12: Major Sales in the Investment Portfolio
Major Sales in the Investment Portfolio For personal use only (above $1m) 1 January to 30 April 2009 $million News Corp Non-Voting 8.1 News Corporation 4.6 Rio Tinto 4.5 Wesfarmers 3.6 Suncorp-Metway 3.3 Santos FUELS 2.7 St George CPS II 2.5 James Hardie Industries 1.4
Slide 13: Annualised Returns to April 2009
Annualised Returns to 30 April 2009 For personal use only 15% 10% 9.8% 8.8% 7.3% 6.7% 7.8% 6.5% 5% 0.4% 0% -5% -3.7% -6.4% -10% 1 year return 3 year return 5 year return 10 year return -15% -20% -19.0% -25% -23.8% -30% -28.8% -35% Net Asset per share growth plus dividends Share Price growth plus div
Slide 14: 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% Apr-99 Apr-01 Apr-03 Apr-05 Apr-07 Apr-09 * Pre CGT
Slide 15: Top Ordinary Securities – April 2009
Top 25 Ordinary Securities – 30 April 2009 For personal use only $million * 1 BHP Billiton 474.0 2 Westpac Banking Corporation 339.8 3 Commonwealth Bank of Australia 297.5 4 National Australia Bank 174.0 5 Wesfarmers (a) 171.3 6 Woolworths 165.8 7 Telstra Corporation 162.6 8 Rio Tinto 151.0 9 Woodsi
Slide 16: Top Ordinary Securities – April 2009 con't.
Top 25 Ordinary Securities – 30 April 2009 con’t. For personal use only $million 11 QBE Insurance Group 81.2 12 Origin Energy 79.1 * 13 Santos 76.5 14 Computershare 74.5 15 AGL Energy 64.8 * 16 Oil Search 61.2 * 17 AMP 53.6 18 Amcor 48.2 19 Toll Holdings 47.2 20 Brambles 45.5 * Indicates that option
Slide 17: Top Ordinary Securities – April 2009 con't.
Top 25 Ordinary Securities – 30 April 2009 For personal use only con’t. $million 21 Westfield Group 42.8 22 Transurban Group 42.6 23 Orica 42.2 24 Milton Corporation 40.9 25 West Australian Newspapers Holdings 40.0 Total 2,953.6 As % of Total Portfolio Value 81.8% (excludes Cash & Bank Bills)
Slide 18: 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 19: 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 20: 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 ConnectEast Energy Developments PaperlinX Publishing & Broadcasting Spotless Transpacific Industries Virgin Blue (from Toll holdings) * Over the period s
Slide 21: Potential Impact of Impairment on AFIC's Accounts
Potential Impact of Impairment on AFIC’s Accounts For personal use only Auditors 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 impact
Slide 22: 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 23: 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 24: 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 25: Outlook
Outlook For personal use only Global economic conditions are very difficult Proper functioning financial markets provide the key to any prolonged upswing – signs US credit markets are improving Impact of A$ currency depreciation generally positive Government actions to moderate decline rather than p
Slide 26: Outlook con't.
Outlook con’t. For personal use only Most recent company results were mixed with dividends generally under pressure The market offers excellent long term value but it may be some time before the markets enter a long term upward trend We are focusing on dividend yield so we can provide shareholders w
Slide 27: Promoting AFIC in this Environment
Promoting AFIC in this Environment For personal use only
Slide 28: Australian Foundation Investment Company Shareholder Meeting Adelaide
For personal use only Australian Foundation Investment Company Shareholder Meeting Adelaide
Australian Foundation Investment Company — Shareholder Meeting (May 2009) on 6ix