Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Shareholder Meeting (October 2020)
29 slides from Australian Foundation Investment's shareholder meeting presentation, Oct 14, 2020
Slide 1: 2020 Annual General Meeting Chairman's Address and Presentation
14 October 2020 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 2020 Annual General Meeting Chairman’s Address and Presentation Dea
Slide 2: AFIC AGM Chairman's Address - Introductory Remarks
AFIC AGM Chairman’s Address - Introductory Remarks If I had been told on the first of July 2019 that the Australian Equity market would produce a total return of negative 6.6% for the year it would not have surprised me. Market valuations were getting high , growth was slowing and some predicted a m
Slide 3: Chairman's Address - International Equities Portfolio
the portfolio better industry diversification and we believe stronger growth potential. The recent positive performance numbers appear to confirm the benefits of this strategy. Shareholders will be aware that over recent years many of our core holdings have expanded their businesses internationally.
Slide 4: Annual General Meeting Presentation
For personal use only Annual General Meeting Presentation
Slide 5: Presentation Agenda
For personal use only Presentation Agenda • Objectives and Investment Process (Mark Freeman) • Result Summary (Andrew Porter) • Markets and the Portfolio (David Grace) • Outlook (Mark Freeman) Annual General Meeting 2020 5
Slide 6: 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 7: Objectives
For personal use only Objectives Annual General Meeting 2020 7
Slide 8: AFIC offers a diversified portfolio of quality stocks – what we look for
For personal use only AFIC offers a diversified portfolio of quality stocks – what we look for Sustainable competitive advantage – unique Businesses that can grow over the long assets producing strong returns on capital term, producing growing dividends Strong management team and board Nursery stock
Slide 9: ESG is integrated into our investment framework
For personal use only ESG is integrated into our investment framework • Invest in companies that have strong governance and risk management processes that include environmental and social risks. • We are seeking remunerations plans and outcomes that align with AFIC’s interests as long term sharehold
Slide 10: Result Summary
For personal use only Result Summary Annual General Meeting 2020 10
Slide 11: Result Summary
For personal use only Result Summary * Assumes a shareholder can take full advantage of the franking credits. Annual General Meeting 2020 11
Slide 12: Profit per share – changes from full year result in 2019 to 2020
For personal use only Profit per share – changes from full year result in 2019 to 2020 • Westpac no interim dividend • NAB decreased interim dividend • ANZ no interim dividend • Sydney Airport no interim distribution • Transurban reduced distribution • Alumina reduced dividend • James Hardie no fina
Slide 13: AFIC's share price was trading at a 7% premium to the NTA
For personal use only AFIC’s share price was trading at a 7% premium to the NTA at 30 September 2020 Annual General Meeting 2020 13
Slide 14: Markets and the Portfolio
For personal use only Markets and the Portfolio Annual General Meeting 2020 14
Slide 15: Market and key sector performance – Year to September 2020
For personal use only Market and key sector performance – Year to 30 September 2020 Includes dividends, but not franking Annual General Meeting 2020 15
Slide 16: Fiscal Stimulus response is unprecedented in the post war period
For personal use only Fiscal Stimulus response is unprecedented in the post war period Fiscal Easing* in Response to Coronacrisis *Discretionary policy actions taken since the outbreak that lead to higher government expenditures or lower tax receipts ** GS expected easing Source: Goldman Sachs Globa
Slide 17: Dividend Trends
For personal use only Dividend Trends ASX Percent of cut or suspended dividend (stocks covered by 62% of companies paid a June half dividend, but over half of these Macquarie Research) companies payments were reduced Reported Half Year Dividends (% of Companies) Source: Macquarie Research, September
Slide 18: Relative portfolio performance, including franking – per annum returns
For personal use only Relative portfolio performance, including franking* – per annum returns to 30 September 2020 Note AFIC portfolio returns have a slightly lower level of volatility (Beta) than the Index Annual General Meeting 2020 18
Slide 19: Recent changes to the portfolio reflected a move to businesses with well positioned assets
For personal use only Recent changes to the portfolio reflected a move to businesses with well positioned assets Purchases Sales Cochlear/Sydney Airport included participation in placements Annual General Meeting 2020 19
Slide 20: Top Overweight Positions in AFIC
For personal use only Top 15 Overweight Positions in AFIC Very unique toll road assets which benefit from population growth and have set inflation linked pricing. Further opportunities to add new growth projects which support long term cash flow growth. Emerging leader in logistics solutions globall
Slide 21: Top Overweight Positions in AFIC continued
For personal use only Top 15 Overweight Positions in AFIC continued Leading manufacturer of respiratory and humidification medical products, with a near monopoly position in humidified high flow oxygen therapy. High quality management who have been in the business for many years. Very strong market
Slide 22: Top Overweight Positions in AFIC continued
For personal use only Top 15 Overweight Positions in AFIC continued Attractive monopolistic assets which generate attractive returns. Opportunities to invest to generate further growth. Strong management team. High quality portfolio of difficult to replicate hospital assets, with growth driven by an
Slide 23: Top holdings as at September 2020
For personal use only Top 30 holdings as at 30 September 2020 Total Portfolio 61 Holdings Rank Company % of Portfolio 1 CSL 8.7% 2 Commonwealth Bank of Australia 7.1% 3 BHP Group* 7.0% 4 Wesfarmers 4.6% 5 Transurban Group 4.6% 6 Westpac Banking Corporation 3.7% 7 Macquarie Group 3.7% 8 Woolworths Gr
Slide 24: Top holdings as at September 2020 continued
For personal use only Top 30 holdings as at 30 September 2020 continued Total Portfolio 61 Holdings Rank Company % of Portfolio 11 Amcor 2.5% 12 James Hardie Industries 2.2% 13 Telstra Corporation 2.1% 14 Sydney Airport 2.1% 15 Australia and New Zealand Banking Group 2.1% 16 Mainfreight 2.0% 17 Soni
Slide 25: Top holdings as at September 2020 continued
For personal use only Top 30 holdings as at 30 September 2020 continued Total Portfolio 61 Holdings Rank Company % of Portfolio 21 Goodman Group 1.7% 22 Fisher & Paykel Healthcare 1.5% 23 Carsales.com 1.5% 24 Reece 1.5% 25 ARB Corporation 1.4% 26 NextDC 1.4% 27 Resmed 1.3% 28 ASX 1.3% 29 Qube Holdin
Slide 26: Outlook
For personal use only Outlook Annual General Meeting 2020 26
Slide 27: Outlook
For personal use only Outlook • The onset of COVID-19 means low interest rates and significant government stimulus for the foreseeable future. • Full impact of economic conditions on company earnings and dividends still to play out. • Difficult to reconcile expansion of market valuations, although i
Slide 28: Questions
For personal use only Questions Annual General Meeting 2020 28
Slide 29: For personal use only
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