Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Investor Presentation (October 2010)
26 slides from Australian Foundation Investment's investor presentation, Oct 11, 2010
Slide 1: Shareholder Information Meetings cover letter
11 October 2010 For personal use only The Manager Company Announcements Office Australian Securities Exchange Exchange Centre Level 4 20 Bridge Street Sydney NSW 2000 Electronic Lodgement Australian Foundation Investment Company Limited Shareholder Information Meetings Dear Sir or Madam Please find
Slide 2: Shareholder Meetings October 2010
For personal use only Shareholder Meetings October 2010
Slide 3: 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 4: All Ordinaries Price Index – A Long Term View
All Ordinaries Price Index – A Long Term View For personal use only
Slide 5: Summary of Results
Summary of Results For personal use only FY10 FY09 Key factors: $m $m • Decline in dividends and Income 202.9 218.1 distributions Operating Expenses (11.1) (11.3) • Revenue from deposits Income Tax (8.2) (3.5) down as cash invested Net Operating Profit 179.5 199.6 • Improved performance of Trading P
Slide 6: Earnings Per Share vs. Dividends Per Share
Earnings Per Share vs. Dividends Per Share For personal use only 24.00 22.00 20.00 18.00 Cents per share 16.00 14.00 12.00 23.7 10.00 21.0 21.0 21.2 21.0 20.5 21.0 19.4 18.2 8.00 17.0 6.00 4.00 2.00 0.00 2006 2007 2008 2009 2010 Financial year Earnings per share Dividends per share Note: Earnings pe
Slide 7: The Market Over the Year – All Ordinaries
For personal use only Value Ju l-0 3600 3800 4000 4200 4400 4600 4800 5000 5200 9 A ug -0 9 Se p- 09 O Price Index ct -0 9 N ov -0 9 D ec -0 9 Ja n- 10 Fe b- 10 M ar -1 0 2009/10 financial year A pr -1 0 M ay -1 0 Ju n- 10 Ju l-1 0 A ug -1 0 The Market Over the Year – All Ordinaries Se p- 10
Slide 8: Key Investment Themes Over the Year
Key Investment Themes Over the Year For personal use only Generally adopted a cautious approach in light of the global environment - looked for income yield Opportunities did however arise through: share placements market weakness in good companies offering long term value Utilised $83 million of ca
Slide 9: Largest Acquisitions (Last Financial Year)
Largest 5 Acquisitions (Last Financial Year) For personal use only $m Transurban Group 21.2 Hastings Diversified Utilities Fund 15.6 Oil Search 12.3 Amcor 11.0 Perpetual 10.1
Slide 10: Largest Disposals (Last Financial Year)
Largest Disposals (Last Financial Year) For personal use only $m Santos FUELS (a) 13.2 Nufarm 7.9 (a) Redeemed by the Company
Slide 11: Top Holdings – September 2010
Top 25 Holdings – 30 September 2010 For personal use only % of portfolio (excl. $m cash) * 1 BHP Billiton 555.4 11.9% * 2 Commonwealth Bank of Australia 434.8 9.4% 3 Westpac Banking Corporation 423.8 9.1% 4 Rio Tinto 274.4 5.9% 5 Wesfarmers (a) 249.1 5.4% * 6 National Australia Bank 222.7 4.8% * 7 A
Slide 12: BHP Billiton is AFIC's Largest Holding
BHP Billiton is AFIC’s Largest Holding For personal use only Strong/experienced Management and Board Generates strong cash flows and has a strong balance sheet Operates at low end of the cost curve for its projects – able to withstand significant price variations Attractive and diversified organic g
Slide 13: The Banking Sector
The Banking Sector For personal use only Each of the major 4 banks have slightly different strategies Attractively structured competitive industry Australia has passed through the worst of the economic cycle which means bank provision levels should decline further – improved risk processes since GFC
Slide 14: Telstra
Telstra For personal use only In principle agreement reached with Federal Government about NBN but details and implications for shareholders still unclear Long lead time for implementation of NBN could create business uncertainty for Telstra for some time Minority Federal Government means political
Slide 15: Top Holdings – September 2010 con't.
Top 25 Holdings – 30 September 2010 con’t. For personal use only % of portfolio (excl. $m cash) * 11 QBE Insurance Group 89.2 1.9% * 12 Santos 87.8 1.9% * 13 Oil Search 86.3 1.9% * 14 Origin Energy 83.1 1.8% 15 Amcor 82.2 1.8% 16 Computershare 79.5 1.7% * 17 Transurban Group 77.8 1.7% 18 AGL Energy
Slide 16: Top Holdings – September 2010 con't.
Top 25 Holdings – 30 September 2010 con’t. For personal use only % of portfolio (excl. $m cash) 21 Australian Infrastructure Fund 62.4 1.3% 22 West Australian Newspapers Holdings 59.8 1.3% * 23 AM P 55.0 1.2% * 24 Westfield Group 54.9 1.2% * 25 Brambles 54.3 1.2% Total 3,840.1 As % of Total Portfoli
Slide 17: AFIC Annualised Returns – Year Ended September 2010
AFIC Annualised Returns – Year Ended 30 September 2010 For personal use only 15% 11.7% 10.1% 10% 7.3% 7.7% 5.6% 5% 4.2% 2.5% 0.6% 0% -1.5% -2.8% -5% -4.0% -7.2% -10% 1 year return 3 year return 5 year return 10 year return Net Asset per share growth plus dividends Share Price growth plus dividends S
Slide 18: AFIC Annualised Portfolio Returns, Including Franking Credits
AFIC Annualised Portfolio Returns, Including the Benefits of Distributed Franking Credits For personal use only – Year Ended 30 September 2010 14% 12.0% 12% 10% 9.1% 8% 7.4% 5.5% 6% 4.4% 4% 2% 1.9% 0% -2% -2.2% -4% -6% -5.9% -8% 1 year return 3 year return 5 year return 10 year return Net Asset per
Slide 19: 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% * Before provision for capital gains tax Discount -20% Aug-00 Aug-02 Aug-04 Aug-06 Aug-08 Aug-10
Slide 20: Reporting Season – Key Themes
Reporting Season – Key Themes For personal use only Investment team attended presentations by 155 companies: Current domestic conditions remain patchy with little in the way of outlook comments from companies Activity levels in Europe and the US remain subdued China/Asia growth has been important fo
Slide 21: Reporting Season – Key Themes con't.
Reporting Season – Key Themes con’t. For personal use only Labour shortages are beginning to re-emerge in WA, raising concerns over wage pressure and project delays Poor housing affordability has become a more prominent structural issue for many in the property market and building and construction i
Slide 22: Outlook
Outlook For personal use only Demand for resources/energy from Asia still driving the Australian economy - some sectors are however underperforming Structure of the Federal Government likely to cause some political uncertainty in the market in the short term Equity market valuations in Australia loo
Slide 23: Projected Net Government Debt as a Percent of GDP
For personal use only A us 0.0 20.0 40.0 60.0 80.0 100.0 120.0 tr C alia a D nad en a m a Source: OECD Fr rk G an er ce m a G ny of GDP in 2011 re e Ir ce el an d Ita Ja ly P pa U or n ni tu te ga d S l K pa U i ni ng in te do d m S E tat u e To ro s ta are lO a E C D Projected Net Government Debt a
Slide 24: ASX 200 Industrial Prospective PER – Rolling 12 Months Forward
For personal use only Au 8 10 12 14 16 18 20 22 g-8 9 Ju n -9 0 Ap r-9 1 Fe b-9 2 De c-9 2 Oc t -9 3 Au g-9 4 Ju n -9 5 Ap r-9 6 Fe b-9 7 De c-9 7 Oc t -9 8 12 Months Forward Au g-9 9 Ju n -0 0 Ap r-0 1 Fe b-0 2 De c-0 2 Oc t -0 3 Au g-0 4 Ju n -0 5 Ap r-0 6 Fe b-0 7 De c-0 7 Oc t -0 8 Au g-0 9 Ju n
Slide 25: ASX 300 Resources Prospective PER – Rolling 12 Months Forward
For personal use only Au 6 8 10 12 14 16 18 20 22 24 26 28 g-9 0 Ju n-9 1 Ap r-9 2 Fe b-9 3 De c-9 3 Oc t -9 4 -1 Std Dev Au g-9 5 Ju n-9 6 Ap r-9 7 Fe b-9 8 De c-9 8 Oc t -9 9 Au g-0 0 Ju n-0 1 Ap r-0 2 Fe b-0 3 +1 Std Dev Rolling 12 Months Forward De c-0 3 Oc t -0 4 Au g-0 5 Ju n-0 6 Ap Average: 1
Slide 26: Australian Foundation Investment Company
AUSTRALIAN FOUNDATION INVESTMENT COMPANY
Australian Foundation Investment Company — Investor Presentation (October 2010) on 6ix