Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Investor Presentation (November 2014)
31 slides from Australian Foundation Investment's investor presentation, Nov 28, 2014
Slide 1: NZ Information Meeting - Presentation
28 November 2014 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 Meeting - Presentation Dear Sir / Madam Please find
Slide 2: NZ Shareholder Meeting November 2014
For personal use only NZ SHAREHOLDER MEETING NOVEMBER 2014
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: For personal use only
For personal use only • Diversified Australian Equities - Long Term Investor • 97 stocks, A$6.6billion portfolio, dividend yield 3.8%, MER of 0.17% • Approximately 8,500 NZ Shareholders • ASX/NZX code: AFI As at 31 October 2014
Slide 5: 1. The Market
For personal use only 1. THE MARKET
Slide 6: Including dividends the Australian market has surpassed pre GFC levels
INCLUDING DIVIDENDS THE AUSTRALIAN MARKET HAS SURPASSED PRE GFC LEVELS For personal use only
Slide 7: Low interest rates helping to drive market valuations (price earnings ratio)
LOW INTEREST RATES HELPING TO DRIVE MARKET VALUATIONS (PRICE EARNINGS RATIO) For personal use only Source: FactSet.
Slide 8: All Ordinaries Price Index long term performance
ALL ORDINARIES PRICE INDEX LONG TERM PERFORMANCE For personal use only Note: A semi log scale has been used to better show a comparison of the relative size of the percentage changes over the period.
Slide 9: 2. Results & Shareholder Returns
For personal use only 2. RESULTS & SHAREHOLDER RETURNS
Slide 10: Financial Summary for 2014 (A$)
FINANCIAL SUMMARY FOR 2014 (A$) For personal use only
Slide 11: Dividends
DIVIDENDS For personal use only “Board’s current intention is to lift the upcoming interim dividend by 1 cent per share to adjust the disparity between the interim and final dividends.”
Slide 12: Share price performance – per annum return to October 4 (in $NZ)
SHARE PRICE PERFORMANCE – PER ANNUM RETURN TO 31 OCTOBER 2014 (IN $NZ) For personal use only
Slide 13: Share price trading at a slight premium
SHARE PRICE TRADING AT A SLIGHT PREMIUM For personal use only
Slide 14: 3. Portfolio Highlights
For personal use only 3. PORTFOLIO HIGHLIGHTS
Slide 15: Portfolio performance – per annum return to October 2014 (in $NZ)
PORTFOLIO PERFORMANCE – PER ANNUM RETURN TO 31 OCTOBER 2014 (IN $NZ) For personal use only After tax and expenses. Ignores benefits of franking and LIC tax credits.
Slide 16: Top contributors and detractors to portfolio return in FY 13/14
TOP CONTRIBUTORS AND DETRACTORS TO PORTFOLIO RETURN IN FY 2013/14 BY VALUE (INCLUDING DIVIDENDS) For personal use only ✓ Commonwealth Bank ✓ Westpac ✓ BHP Billiton ✓ ANZ Banking Group ✓ National Australia Bank ✗ Coca-Cola Amatil ✗ QBE Insurance
Slide 17: Portfolio at October 2014 – top holdings represent 56.1% of the portfolio
PORTFOLIO AT 31 OCTOBER 2014 – TOP 10 HOLDINGS REPRESENT 56.1% OF THE PORTFOLIO For personal use only * Indicates that options were outstanding against part the holding.
Slide 18: Portfolio at October 2014 – next represent 17.5% of the portfolio
PORTFOLIO AT 31 OCTOBER 2014 – NEXT 10 REPRESENT 17.5% OF THE PORTFOLIO For personal use only
Slide 19: Portfolio at October 2014 – by sector
PORTFOLIO AT 31 OCTOBER 2014 – BY SECTOR For personal use only
Slide 20: BHP and Rio are well positioned even in falling iron ore prices
BHP AND RIO ARE WELL POSITIONED EVEN IN AN ENVIRONMENT OF FALLING IRON ORE PRICES Iron ore: break even costs For personal use only $US/tonne Source: UBS.
Slide 21: Energy an important part of the portfolio – moving from capital investment to cash flows
ENERGY AN IMPORTANT PART OF THE PORTFOLIO – MOVING FROM CAPITAL INVESTMENT TO CASH FLOWS For personal use only
Slide 22: Healthcare has been an increasing focus
HEALTHCARE HAS BEEN AN INCREASING FOCUS For personal use only
Slide 23: AFIC – Increasing the nursery
AFIC – INCREASING THE NURSERY For personal use only
Slide 24: Major additions from July 2014
MAJOR ADDITIONS FROM 1 JULY 2014 For personal use only • AGL Energy (1 for 5 capital raising) • Asciano • CSL • QBE Insurance (Placement)
Slide 25: Continued allocation of funds to buy and write strategies
CONTINUED ALLOCATION OF FUNDS TO BUY AND WRITE STRATEGIES WITHIN THE INVESTMENT PORTFOLIO TO ENHANCE INCOME For personal use only • Produced A$9.8 million of income and A$2.6 million of realised capital gains in 2013/2014 • Portfolio size A$120million - main holdings: - Twenty First Century Fox - CS
Slide 26: 4. Looking Ahead
For personal use only 4. LOOKING AHEAD
Slide 27: Reporting season feedback from companies
REPORTING SEASON FEEDBACK FROM COMPANIES For personal use only • Overall earnings and dividends better than first expected • Cost efficiency generally driving earnings improvement • Top line revenue growth remains challenging • Company balance sheets are strong • Business conditions are mixed
Slide 28: Expected earnings per share growth by sector – % change
EXPECTED EARNINGS PER SHARE GROWTH BY SECTOR – % CHANGE For personal use only Pro-rated to June FY14A FY15E Banks 8.3 5.4 Property Trusts 5.8 4.1 Resources 29.2 2.3 Industrials (excludes Res, LPT’s, Banks) 2.7 10.8 All Companies 10.0 6.6 Source: Macquarie Equities August 2014.
Slide 29: Issues for the market
ISSUES FOR THE MARKET • Short term interest rates likely to stay relatively low for some For personal use only time given weak growth outlook in Australia • Reporting season has been encouraging for dividends • Opportunities to invest – privatisations, IPO’s • Global growth other than the US looks w
Slide 30: Share Purchase Plan
SHARE PURCHASE PLAN • Issue price of A$5.88 For personal use only • 20.9% of shareholders participated • Raised $185 million • Shares were issued 6 October
Slide 31: Australian Foundation Investment Company
AUSTRALIAN FOUNDATION INVESTMENT COMPANY
Australian Foundation Investment Company — Investor Presentation (November 2014) on 6ix