Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Shareholder Meeting (October 2021)
34 slides from Australian Foundation Investment's shareholder meeting presentation, Oct 5, 2021
Slide 1: 2021 Annual General Meeting Presentation
5 October 2021 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 2021 Annual General Meeting Presentation Dear Sir / Madam The follow
Slide 2: Annual General Meeting 2021
Annual General Meeting For personal use only 2021
Slide 3: Board Members
Board Members For personal use only John Paterson Mark Freeman Rebecca Dee-Bradbury Chairman and Independent Managing Director Independent Non-Executive Non-Executive Director Director Craig Drummond Julie Fahey Graeme R Liebelt Independent Non-Executive Independent Non-Executive Independent Non-Exe
Slide 4: Presentation
Annual General Meeting 2021 For personal use only Presentation
Slide 5: Disclaimer
Disclaimer For personal use only 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 6: Our Company
Our Company Invests in Australian and New Zealand companies – looking for quality for the long term. For personal use only Largest listed investment company on the ASX at $9.4bn at 31 August 2021 (also listed on NZX), 160k shareholders, full transparency from being listed, independent Board of Direc
Slide 7: Investment Team
Investment Team For personal use only David Grace Kieran Kennedy Brett McNeill Portfolio Manager Portfolio Manager Portfolio Manager Nga Lucas Rosie Malcolm Andrew Sutherland Investment Analyst Portfolio Manager Portfolio Manager Olga Kosciuczyk Stuart Low Jaye Guy Investment Analyst Investment Anal
Slide 8: Long term value in the context of recent market moves
Long term value in the context of recent market moves For personal use only Price to Book - Price to Sales - S&P/ASX 200 Index S&P/ASX 200 Index Source: FactSet Source: FactSet Annual General Meeting 2021 7
Slide 9: Result Summary
For personal use only Result Summary Annual General Meeting 2021
Slide 10: Result Summary
Result Summary For personal use only *Assumes an investor can take full advantage of the franking credits Annual General Meeting 2021 9
Slide 11: AFIC's share price relative to the NTA - August 2021
For personal use only AFIC’s share price relative to the NTA - 31 August 2021 Annual General Meeting 2021 10
Slide 12: Investment Objectives and Approach
For personal use only Investment Objectives and Approach Annual General Meeting 2021
Slide 13: Investment Objectives
Investment Objectives For personal use only The Company aims to provide The Company’s primary investment goals are: shareholders with attractive investment returns through access to a growing • to pay dividends which, over time, grow stream of fully franked dividends faster than the rate of inflatio
Slide 14: Our investment process – how we assess quality
Our investment process – how we assess quality For personal use only Uniqueness of Assets Competitive landscape, leadership position, can the assets be replicated Barriers to entry, sustainability of competitive advantage, track record of new entrants, Long-term Sustainability threat of substitution
Slide 15: Our investment process – focus on long term quality
Our investment process – focus on long term quality For personal use only Long term investor in companies, not traders of share prices Identify quality companies with sound growth prospects that we can buy at a reasonable price This supports our belief in the power of compounding returns from great
Slide 16: Long-term approach
Long-term approach AFIC invests in high quality companies and benefits from compounding returns. For personal use only ARB Total Shareholder Return (%) RMD Total Shareholder Return (%) First added to the portfolio: November 2010 First added to the portfolio: August 2013 Annual General Meeting 2021 1
Slide 17: ESG is integrated into our investment framework
ESG is integrated into our investment framework Approach to Environmental, Social and Governance (ESG) factors For personal use only o Assessment of ESG risk factors is an important part of our investment process as the sustainability of a business is a key input in our assessment of a company. o As
Slide 18: Markets and The Portfolio
For personal use only Markets and The Portfolio Annual General Meeting 2021
Slide 19: Market and key sector performance - Year to August 2021
Market and key sector performance* - Year to 31 August 2021 For personal use only * includes dividends but not franking Annual General Meeting 2021 18
Slide 20: Portfolio performance metrics
Portfolio performance metrics Portfolio performance, including franking* Over the 4-year period to 31 August 2021 AFIC has a higher - per annum returns to 31 August 2021 portfolio return with less volatility than the S&P/ASX 200 Index For personal use only (both exclude franking) Source: Mercer Inve
Slide 21: AFIC's Performance relative to the Index (FY20-FY21)
AFIC’s Performance relative to the Index (FY20-FY21) 8000 For personal use only AFIC's Outperformance 1H20 AFIC's Outperformance 2H20 AFIC's Outperformance 1H21 AFIC's Outperformance 2H21 7500 +1.69% +1.87% +1.43% +1.02% 7000 6500 S&P/ASX200 Index 6000 5500 5000 4500 4000 1H20 2H20 1H21 2H21 Source:
Slide 22: Portfolio Update - Recent Transactions
Portfolio Update - Recent Transactions New Additions to For personal use only Sales Trimmed Purchases existing holdings Annual General Meeting 2021 21
Slide 23: Core holdings with significant long-term opportunity
For personal use only Core holdings with significant long-term opportunity Annual General Meeting 2021
Slide 24: Xero
Xero • Strong market positions in Australia, New For personal use only Xero Revenue: FY17-FY21 Zealand and the UK with growing presence in $849m rest of world 800 $700m • Software-as-a-service (SAAS) revenue model and 700 leading SAAS economics delivers superior returns 600 $553m • Cloud accounting
Slide 25: Carsales
Carsales • Dominant market position in used car classifieds in Australia with 4.4m average monthly unique For personal use only audience (4.5x lead over nearest competitor). • Growing contribution from international businesses, now represents ~35% of group profit. • “Carsales Select” to facilitate a
Slide 26: ResMed
ResMed • Market leader in the treatment of Obstructive Sleep For personal use only Apnea (OSA). • Condition remains largely undiagnosed. Proven link between the incidence of obesity and requirement for OSA treatment. • Significant investment in Research and Development being 7% of sales. Sleep apnea
Slide 27: James Hardie
James Hardie For personal use only • Market leader in fibre cement siding with Wall Share Chart 100% Other more than 90% market share 90% Brick 80% • Fibre cement market share has doubled since 2005, all other materials have declined. 70% Stucco 60% • Favourably exposed to the shift to lightweight 5
Slide 28: Top holdings – August 2021
Top 30 holdings – 31 August 2021 Total Portfolio 64 Holdings Rank Company % of Portfolio For personal use only 1 Commonwealth Bank of Australia 8.4% 2 CSL 7.3% 3 BHP Group 6.5% 4 Wesfarmers 4.7% 5 Westpac Banking Corporation 4.3% 6 Macquarie Group 3.9% 7 Transurban Group 3.7% 8 National Australia Ba
Slide 29: Top holdings – August 2021 continued
Top 30 holdings – 31 August 2021 continued Total Portfolio 64 Holdings Rank Company % of Portfolio For personal use only 11 James Hardie Industries* 2.7% 12 Australia and New Zealand Banking Group 2.5% 13 Rio Tinto 2.2% 14 Telstra Corporation* 2.2% 15 Sydney Airport 2.2% 16 Amcor 2.2% 17 ARB Corpora
Slide 30: Top holdings – August 2021 continued
Top 30 holdings – 31 August 2021 continued Total Portfolio 64 Holdings Rank Company % of Portfolio For personal use only 21 Carsales.com 1.6% 22 Reece 1.6% 23 Coles Group 1.6% 24 Ramsay Health Care 1.4% 25 Xero 1.3% 26 ASX 1.3% 27 Fisher & Paykel Healthcare Corporation 1.3% 28 Seek 1.3% 29 IRESS 1.2
Slide 31: Closing Comments
For personal use only Closing Comments Annual General Meeting 2021
Slide 32: Outlook
Outlook We are mindful of: For personal use only • China growth slowing. • Inflationary environment and potential end of rate easing cycle. • Company dividends recovering. Outlook for earnings growth remains solid, companies with international earnings relatively better positioned to deliver. Holdin
Slide 33: International Portfolio
International Portfolio Invested a small amount ($47m/50bps) in International companies in May 2021. For personal use only Portfolio holdings in 39 companies. Performance so far has been encouraging. Applying the AFIC way of investing to International companies. Looking to build a consistent track r
Slide 34: For personal use only
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Australian Foundation Investment Company — Shareholder Meeting (October 2021) on 6ix