Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Investor Presentation (December 2017)
32 slides from Australian Foundation Investment's investor presentation, Dec 4, 2017
Slide 1: NZ Information Meetings – Presentation
4 December 2017 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 NZ Information Meetings – Presentation Dear Sir / Madam Please find
Slide 2: NZ Shareholder Meetings December 2017
For personal use only NZ Shareholder Meetings December 2017
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 NZ Shareholder Meetings November 2017
Slide 5: How AFIC Invests – What we look for in Companies
For personal use only How AFIC Invests – What we look for in Companies Quality in this context is an outcome of our assessment Quality First of the board and management, outlook for the industry as well as some key financial metrics. Ability of companies to grow earnings over time, which Growth ulti
Slide 6: Investment Objectives
For personal use only Investment Objectives A long term investor seeking: To grow dividends over the medium to long term. To give investors attractive total returns over the medium to long term. NZ Shareholder Meetings November 2017
Slide 7: Dividends – Compound Growth Per Annum in $A to June
For personal use only Dividends – Compound Growth Per Annum in $A to 30 June 2017 NZ Shareholder Meetings November 2017
Slide 8: Long Term Portfolio (NTA) Growth in $A Against the Index
For personal use only Long Term Portfolio (NTA) Growth in $A Against the Index – 10 Years to 31 October 2017 NZ Shareholder Meetings November 2017
Slide 9: Results and Shareholder Returns
For personal use only Results and Shareholder Returns NZ Shareholder Meetings November 2017
Slide 10: Full Year Financial Summary – June
For personal use only Full Year Financial Summary – 30 June 2017 NZ Shareholder Meetings November 2017
Slide 11: Recent Share Price Return Reflects Move to Small Discount
For personal use only Recent Share Price Return has reflected the move to small discount from premium last year – Performance Per Annum to 31 October 2017 in $NZ NZ Shareholder Meetings November 2017
Slide 12: Share Price at a small discount to Net Asset Backing end October
For personal use only Share Price at a small discount to Net Asset Backing end October 2017 NZ Shareholder Meetings November 2017
Slide 13: The Market and the Portfolio
For personal use only The Market and the Portfolio NZ Shareholder Meetings November 2017
Slide 14: Resources have Outperformed Banks and Industrials
For personal use only Resources have Outperformed Banks and Industrials NZ Shareholder Meetings November 2017
Slide 15: Mid Cap Resources Have Been Very Strong – Other Sectors Have Been Weak
For personal use only Mid Cap Resources Have Been Very Strong – Other Sectors Have Been Weak Source: FactSet NZ Shareholder Meetings November 2017
Slide 16: Portfolio Performance in $NZ – Per Annum Return to October 2017
For personal use only Portfolio Performance in $NZ – Per Annum Return to 31 October 2017 After tax and expenses. NZ Shareholder Meetings November 2017
Slide 17: Banks Face a More Challenging Earnings Environment
For personal use only Banks Face a More Challenging Earnings Environment • Revenue growth more challenging given household gearing and political pressures. • Cost reduction efforts based on technology increasingly in focus. • Normalisation of bad debt charges will be a headwind. • Forecast yield for
Slide 18: As do the Telecommunications Sector and Supermarkets
For personal use only As do the Telecommunications Sector and Supermarkets Telecommunications Sector • Margin pressure from NBN implementation • Increasing competition with 4th mobile operator • Introduction of 5G mobile technology Supermarkets • Improving performance from Woolworths • Aldi continue
Slide 19: Although the Outlook for Resources Sector is Improving
For personal use only Although the Outlook for Resources Sector is Improving Resources Sector • Global growth is improving • Earnings and dividends are recovering • Balance sheets are now strong • Management now focused on delivering value to shareholders NZ Shareholder Meetings November 2017
Slide 20: Portfolio at October 2017 – Top Holdings
For personal use only Portfolio at 31 October 2017 – Top 10 Holdings Represent 47.5% of the Portfolio NZ Shareholder Meetings November 2017
Slide 21: Portfolio at October 2017 – Next Holdings
For personal use only Portfolio at 31 October 2017 – Next 10 Represent 16.9% of the Portfolio NZ Shareholder Meetings November 2017
Slide 22: Some Recent Adjustments to the Portfolio
For personal use only Some Recent Adjustments to the Portfolio Added Reduced complete sale NZ Shareholder Meetings November 2017
Slide 23: AFIC’s Portfolio vs the ASX Index – Major Variations
For personal use only AFIC’s Portfolio vs the ASX 200 Index – Major Variations NZ Shareholder Meetings November 2017
Slide 24: Long Term Themes Being Considered
For personal use only Long Term Themes Being Considered NZ Shareholder Meetings November 2017
Slide 25: Disruption Very Likely for Some Industries
For personal use only Disruption Very Likely for Some Industries NZ Shareholder Meetings November 2017
Slide 26: Implications for Portfolio Management
For personal use only Implications for Portfolio Management • Change in business is occurring more rapidly. • We need to research our companies to consider whether they have a sustainable competitive advantage, how will they be disrupted and to what extent. • We are looking to keep abreast of these
Slide 27: Looking Ahead
For personal use only Looking Ahead NZ Shareholder Meetings November 2017
Slide 28: Global Growth has become less volatile and improving
For personal use only Global Growth has become less volatile and improving – G20 Real GDP over 20 Years GDP growth (%) Source: FactSet NZ Shareholder Meetings November 2017
Slide 29: Although with High Debt Levels (Private Non-Financial Debt)
For personal use only Although with High Debt Levels (Private Non-Financial Debt) – 20 Year Picture % of GDP % of GDP Source: BIS NZ Shareholder Meetings November 2017
Slide 30: In an Environment of Low Global Interest Rates
For personal use only In an Environment of Low Global Interest Rates – is this likely to continue? Benchmark Bond % 10 year US 60 year picture NZ Shareholder Meetings November 2017
Slide 31: In Summary
For personal use only In Summary • The Australian equity market is likely to face somewhat difficult conditions as many large companies continue to face growth headwinds. • However, we believe the portfolio is well placed following recent adjustments. • We will continue to use buy and write strategi
Slide 32: Australian Foundation Investment Company
AUSTRALIAN FOUNDATION INVESTMENT COMPANY
Australian Foundation Investment Company — Investor Presentation (December 2017) on 6ix