Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Shareholder Meeting (October 2005)
46 slides from Australian Foundation Investment's shareholder meeting presentation, Oct 3, 2005
Slide 1: Chairman's Presentation - 2005 Shareholder Information Meetings
Australian Foundation INVESTMENT COMPANY 3 October 2005 Australian Stock Exchange Limited Company Announcements Office Exchange Centre 20 Bridge Street Sydney NSW 2000 Australian Foundation Investment Company Limited 2005 Shareholder Information Meetings Chairman’s Presentation Australian Foundation
Slide 2: Annual General Meeting
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Slide 4: All Ordinaries Year Performance
All Ordinaries 20 Year Performance | June 04 to June 05 4000 - increase of 19.8% ~~
Slide 5: Financial Highlights
Financial Highlights 2004 2005 Change Profit After Tax $124.2m | $158.8m | +27.8% Earnings Per Share 14.3c 17.5¢ +22.3% Total dividends per share 14.25c |16.0c +12.3% Net Asset Backing (cum dividend) | $3.48 $4.16 +19.5% Total Return (net asset backing+ | 18.6% 24.3% +5.7% dividends) S&P/ASX 200 Acc
Slide 6: Profit Analysis — 2005 Full Year vs. 2004 Full Year
Profit Analysis — 2005 Full Year vs. 2004 Full Year $ million 160 + 140 - $124.2m 2004 Full Year Profit $158.8m Major Factors + $24.2m in dividends 2005 Full Year Profit + $8.8m in special dividends/distributions + $7.1m in trading - $4.7m in interest received
Slide 7: Full Year Earnings Per Share vs Dividends Per Share
Full Year Earnings Per Share vs Dividends Per Share Cents per share 18 16 14 12 10 o NN HRD & N \) S iS i Eamings pershare & Dividends per share Special dividends per share Hi!
Slide 8: AFIC Earnings and Dividends
AFIC Earnings and Dividends 2004 2005 Change Full Year | Full Year Earnings Per Share 14.3 17.5 22.3% Underlying Dividend 13.25 16.0 20.8% Per Share Special Dividend 1.0 - n/a Per Share Total Dividend Per 14.25 16.0 12.3% Share
Slide 9: AFIC Share Price Relative to Net Asset Backing
AFIC Share Price Relative to Net Asset Backing 20% 5 Premium 15% 10% 5% 0% -5% -10% Discount -15% 5 -20% - Aug-95 Aug-97 Aug-99 Aug-01 Aug-03 Aug-05 AFIC Net Asset Backing per share at 31 August 2005 was $4.22 Share price of $4.10 is at 2.8% discount to this Net Asset Backing Us ZN MMT
Slide 10: Movements in the Top 20
Movements Movements In St George Bank Westfield Transurban Woodside Petroleum a sound) ||| || track re eral in the Top 20 $m Rank 66.6 14 65.1 15 63.1 16 62.9 17
Slide 11: Movements in the Top 20 (Out)
Movements in the Top 20 Previous Movements Out Rank News Corporation 11 AMP 18 Milton 19 Brambles 20 a sound ||||)!||/ | cl track record! | ne
Slide 12: Major Acquisitions (above $15m)
Major Acquisitions (above $15m) Investment Portfolio Acquisitions Commonwealth Bank BHP Billiton Telstra Transurban (Hills Motorway takeover) St George Bank Westpac Rio Tinto Smillion 37.8 37.4 30.0 27.5 24.6 24.4 19.8
Slide 13: Major Disposals (above $10m)
Major Disposals (above $10m) Investment Portfolio Hills Motorway Group Southcorp Smorgan Steel 8% Reset CPS OPSM Group NAB Income Securities $million 28.2 (takeover) 20.7 (takeover) 11.9 (buy back) 10.3 (takeover) 10.1 (disposal)
Slide 14: New Stocks in the Investment Portfolio
New Stocks in the Investment Portfolio ABC Learning ConnectEast Group Oil Search Healthscope Bradken Peet & Company Ramsay Healthcare Hastings Diversified Utility
Slide 15: Holdings in Other LICs — June 2005
Holdings in Other LICs — 30 June 2005 Value ($000) Yield (Est) AMCIL 173 4.3% Djerriwarrh 18,527 5.8% Djerriwarrh Conv. Notes 9,628 6.3% Diversified United Invtmts 25,063 3.5% Mirrabooka 10,291 3.8% Milton 46,805 3.8% Templeton Global Growth 5,826 3.0% Total 116,313 Total as % of Portfolio 3.1% Abov
Slide 16: Outlook
Outlook * Australia well positioned to benefit from the encouraging outlook for the global economy # High levels of cash and continued flow into superannuation creates strong flow of funds into equities # Equity valuations in Australia appear higher than many other global markets « What are the risk
Slide 17: Outlook
Outlook = In this environment AFIC will continue to look selectively at companies which represent specific long term value: > More difficult to find given the market is trading at record highs — acknowledge strong momentum >» Fully invested at 30 September 2005 > Trading portfolio currently at 2.9%
Slide 18: Share Acquisition Plan
Share Acquisition Plan > Issue Price of $3.96 per share > Minimum Subscription 100 shares, value of $396 > Maximum Subscription 1,262 shares, value of $4,997.52 > Closes 5.00pm Friday 21 October 2005 > Shares issued under the SAP are entitled to the Interim Dividend
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Slide 20: Questions for the Auditor
Questions for the Auditor Why are Djerriwarrh, AMCIL and Mirrabooka not shown as Related Parties in AFIC’s Financial Statements? AFIC : Has no Control Does not exercise Significant Influence Therefore : Not Related Parties Not Accounted for as Associated Entities
Slide 21: AFIC's Administration Fees Received
AFIC’s Administration Fees Received ($000) Admin Fee (incl. REB’s Reimbursed Total GST) Director’s Expenses Fee Djerriwarrh : 502 (552) 50 18 570 AMCIL : 159 (174) 29 6 194 Mirrabooka : 184 (202) 40 4 228 Total 845 119 28 992 Directors Fees appear in the Financial Statements of Djerriwarrh, AMCIL an
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Slide 23: Resolution (a)
Resolution 2 (a) Election of Catherine M Walter AM Number of shares % FOR 73,820,112 55.4 AGAINST 5,951,054 4.5 DISCRETIONARY* 53,476,335 40.1 * The number of the Chairman’s discretionary proxy votes are 46,852,008 (35.2%). Note: These figures relate to the proxies lodged 48 hours prior to the meeti
Slide 24: Resolution (b)
MA Resolution 2 (b) Election of Mr John Paterson Number of shares % FOR 75,904,338 57.1 AGAINST 2,696,275 2.0 DISCRETIONARY* 54,395,584 40.9 100% * The number of the Chairman’s discretionary proxy votes are 47,715,333 (35.9%). Note: These figures relate to the proxies lodged 48 hours prior to the me
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Slide 26: Resolution: Insertion of Partial Takeover Rule
Resolution 3 Insertion of Partial Takeover Rule Number of shares % FOR 76,874,623 58.1 AGAINST 2,388,427 1.8 DISCRETIONARY* 53,024,714 40:1 100% * The number of the Chairman’s discretionary proxy votes are 46,278,171 (35.0%). Note : These figures relate to the proxies lodged 48 hours prior to the me
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Slide 28: Total Potential Remuneration
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Slide 29: Resolution: Adopt the Remuneration Report
Resolution 4 Adopt the Remuneration report Number of shares % FOR 60,676,311 48.3 AGAINST 10,050,961 8.0 DISCRETIONARY* 54,823,566 43.7 100% * The number of the Chairman’s discretionary proxy votes are 47,839,708 (38.1%). Note : These figures relate to the proxies lodged 48 hours prior to the meetin
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Slide 31: Resolution: Managing Director's Remuneration
Resolution 5 Managing Director’s Remuneration Number of shares %o FOR 55,750,842 43.5 AGAINST 18,714,499 14.6 DISCRETIONARY* 53,801,450 41.9 100% * The number of the Chairman’s discretionary proxy votes are 46,888,711 (36.6%). Note: These figures relate to the proxies lodged 48 hours prior to the me
Slide 32: Base Remuneration Amount
amount BASE Actual 5A% Full Year 04/05 BASE 53% Proposed Full Year 05/06 a5
Slide 33: Managing Director - Fixed Annual Remuneration
Managing Director - Fixed Annual Remuneration From 1 October 2004 $000 Base Salary 344 Provision of car + FBT 38 AFI super 12 DJW, AMH, MIR super 11 ELTIP share dividends 11 416 Wh I
Slide 34: Managing Director - Fixed Annual Remuneration
Managing Director - Fixed Annual Remuneration From 1 October 2005 $000 Base Salary 358 Provision of car + FBT 39 AFI super 12 DJW, AMH, MIR super 11 ELTIP share dividends 16 Be Wh I
Slide 35: Managing Director — Short Term Incentive
Managing Director — Short Term Incentive Compensation 2003/4 $’000 Amount provided for during the year 240 Amount actually awarded 200 2004/5 Amount provided for during the year, as disclosed at previous year’s AGM 250 Amount proposed to be awarded 233
Slide 36: Executive Long Term Incentive Plan - Performance Criteria
Executive Long Term Incentive Plan - Performance Criteria Total Shareholder Return (TSR) with reference to defined performance targets set against the ASX 200 accumulation index performance (ASX200Al): AFIC TSR performance Percent of award vesting Below ASX200AI Return 0% Above ASX200AI Return by <1
Slide 37: Executive Long Term Incentive Plan - Performance Criteria
Executive Long Term Incentive Plan - Performance Criteria Total Portfolio Return (TPR) with reference to relative performance against other retail fund managers as indicated by the Mercer Investment Consulting Survey of Australian Retail Fund Managers. AFIC TPR performance _ Percent of award vesting
Slide 38: Comparison with the Mercer IDPS Australian Shares Universe
Comparison with the Mercer IDPS Australian Shares Universe Performance before tax and after fees for periods ended June 2005 Rates of Retum(%) 35) 2 2I Cs oe PO I Os es ee eee, [ vevnneeeed _ e = -— 1 1 Year (%) 3 Years (% pa) 5 Years (% pa) 7 Years (% pa) 10 Years (% pa) ASX-200 26.4 14.7 94 iid 12
Slide 39: Main Differences between Remuneration Report and Financial Statements
Main Differences between Remuneration Report and Financial Statements Remuneration Report Shows : * Short Term Incentive actually paid for a year, when determined (ie 2003/4) * Items not expensed by AFIC (eg ELTIP dividends) but considered when setting remuneration
Slide 40: Main Differences between Remuneration Report and Financial Statements
Main Differences between Remuneration Report and Financial Statements Financial Statements Show : * Individuals (notes 19 & 20) - amounts expensed during the year, including accrued STIP. * In aggregate (note 3) — as above but including reversal of over-accruals for previous year’s STIP.
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Slide 42: Top Ordinary Securities — June 2005
Top 20 Ordinary Securities — 30 June 2005 Shares CBA Westpac BHP Billiton NAB Wesfarmers a sound © INN | Ih 2005 2004 Rank $m Rank $m 1 299.6 1 227.3 2 255.1 2 206.8 3 228.9 5 131.4 4 213.3 3 204.1 5 196.3 4 144.2
Slide 43: Top Ordinary Securities — June 2005
Top 20 Ordinary Securities — 30 June 2005 Shares 2005 Rank $m Telstra 6 151.4 ANZ Bank 7 107.7 Toll Holdings 8 104.5 Rinker 9 87.4 Coles Myer 10 75.8 2004 Rank $m 6 117.5 7 99.9 8 85.8 15 50.3 10 71.3
Slide 44: Top Ordinary Securities — June 2005
Top 20 Ordinary Securities — 30 June 2005 Shares 2005 Rank $m Woolworths 11 75.1 Alumina 12 73.1 Rio Tinto 13 72.2 St George Bank 14 66.6 Westfield 15 65.1 2004 Rank $m 14 56.6 13 56.7 18 43.8 23 34.0 12 57.2
Slide 45: Top Ordinary Securities — June 2005
Top 20 Ordinary Securities — 30 June 2005 Shares 2005 2004 Rank $m Rank $m Transurban 16 63.1 35 22.4 Woodside 17 62.9 22 35.8 Amcor 18 62.5 9 71.5 WA News 19 61.6 16 49.4 AGL 20 60.6 17 46.2 a sound © INN | Ih
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Australian Foundation Investment Company — Shareholder Meeting (October 2005) on 6ix