Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Shareholder Meeting (October 2016)
32 slides from Australian Foundation Investment's shareholder meeting presentation, Oct 12, 2016
Slide 1: 2016 Annual General Meeting Presentation
12 October 2016 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 2016 Annual General Meeting Presentation Dear Sir / Madam Please fi
Slide 2: Annual General Meeting October 2016
For personal use only ANNUAL GENERAL MEETING OCTOBER 2016
Slide 3: Disclaimer
DISCLAIMER Australian Foundation Investment Company Limited and its subsidiary AICS (AFSL 303209), their For personal use only 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: Introduction
For personal use only INTRODUCTION ANNUAL GENERAL MEETING OCTOBER 2016
Slide 5: How We Invest – What We Look For in Companies
HOW WE INVEST – WHAT WE LOOK FOR IN COMPANIES Quality First For personal use only Growth Value Portfolio that is actively managed for the long term ANNUAL GENERAL MEETING OCTOBER 2016
Slide 6: Investment Objectives
INVESTMENT OBJECTIVES For personal use only To grow dividends over the medium to long term. To give investors attractive total returns over the medium to long term. ANNUAL GENERAL MEETING OCTOBER 2016 5
Slide 7: Dividends – Compound Growth Per Annum
DIVIDENDS – COMPOUND GROWTH PER ANNUM For personal use only ANNUAL GENERAL MEETING OCTOBER 2016 6
Slide 8: Results & Shareholder Returns
For personal use only RESULTS & SHAREHOLDER RETURNS ANNUAL GENERAL MEETING OCTOBER 2015
Slide 9: Full Year Financial Summary – June
For personal use only FULL YEAR FINANCIAL SUMMARY – 30 JUNE 2016 ANNUAL GENERAL MEETING OCTOBER 2016
Slide 10: Share Price Is at Slight Premium to Net Asset Backing
SHARE PRICE IS AT SLIGHT PREMIUM TO NET ASSET BACKING BUT DOWN FROM LAST YEAR For personal use only ANNUAL GENERAL MEETING OCTOBER 2016
Slide 11: Recent Share Price Return Has Reflected Lower Premium
RECENT SHARE PRICE RETURN HAS REFLECTED LOWER PREMIUM – PERFORMANCE PER ANNUM TO 30 SEPTEMBER 2016 For personal use only ANNUAL GENERAL MEETING OCTOBER 2016
Slide 12: The Market & The Portfolio
For personal use only THE MARKET & THE PORTFOLIO ANNUAL GENERAL MEETING OCTOBER 2016
Slide 13: Low Growth and Low Interest Rates Have Produced Unusual Market Conditions
LOW GROWTH AND LOW INTEREST RATES HAVE PRODUCED UNUSUAL MARKET CONDITIONS For personal use only Source: FactSet ANNUAL GENERAL MEETING OCTOBER 2016
Slide 14: Small and Mid Cap Companies Have Substantially Outperformed Larger Companies
SMALL AND MID CAP COMPANIES HAVE SUBSTANTIALLY OUTPERFOMED LARGER COMPANIES RECENTLY For personal use only Source: FactSet ANNUAL GENERAL MEETING OCTOBER 2016
Slide 15: One Year Return of AFIC and Major Sectors of the Market
ONE YEAR RETURN OF AFIC AND MAJOR SECTORS OF THE MARKET – INCLUDES DIVIDENDS For personal use only Source: FactSet The top 20 companies in the index are challenged for growth – we have been changing the profile of the portfolio to reflect this ANNUAL GENERAL MEETING OCTOBER 2016
Slide 16: Portfolio Performance – Per Annum Return to September
PORTFOLIO PERFORMANCE – PER ANNUM RETURN TO 30 SEPTEMBER 2016 For personal use only AFIC is after tax and expenses. Ignores benefits of franking and LIC tax credits. ANNUAL GENERAL MEETING OCTOBER 2016
Slide 17: Portfolio Performance Including Benefit of Franking Credits
PORTFOLIO PERFORMANCE INCLUDING BENEFIT OF FRANKING CREDITS* – PER ANNUM RETURN TO 30 SEPTEMBER 2016 For personal use only After tax and expenses. Ignores benefits of LIC tax credits. *Assumes an investor can take full advantage of the franking credits ANNUAL GENERAL MEETING OCTOBER 2016
Slide 18: Not a Significant Investor in Property Trusts, Gold and Gambling – 3 Years
AFIC IS NOT A SIGNIFICANT INVESTOR IN PROPERTY TRUSTS GOLD AND GAMBLING SECTORS – THIS CAN SOMETIMES AFFECT PERFORMANCE – 3 YEARS For personal use only ANNUAL GENERAL MEETING OCTOBER 2016
Slide 19: Not a Significant Investor in Property Trusts, Gold and Gambling – 10 Years
AFIC IS NOT A SIGNIFICANT INVESTOR IN PROPERTY TRUSTS GOLD AND GAMBLING SECTORS – THIS CAN SOMETIMES AFFECT PERFORMANCE – 10 YEARS For personal use only ANNUAL GENERAL MEETING OCTOBER 2016
Slide 20: What Have We Been Doing?
WHAT HAVE WE BEEN DOING? • Marginally reduced exposure to: For personal use only - banks; - energy; - supermarkets; and - selected interest rate sensitive holdings. • Further adding stocks with better growth outlook. • Used market volatility to generate income from buy and write portfolio. ANNUAL GE
Slide 21: Portfolio at September 2016 – Top Holdings
PORTFOLIO AT 30 SEPTEMBER 2016 – TOP 10 HOLDINGS REPRESENT 46.5% OF THE PORTFOLIO For personal use only ANNUAL GENERAL MEETING OCTOBER 2016
Slide 22: Portfolio at September 2016 – Next Holdings
PORTFOLIO AT 30 SEPTEMBER 2016 – NEXT 10 REPRESENT 17.7% OF THE PORTFOLIO For personal use only ANNUAL GENERAL MEETING OCTOBER 2016
Slide 23: AFIC's Portfolio vs the ASX Index – Major Variations
AFIC’S PORTFOLIO VS THE ASX 200 INDEX – MAJOR VARIATIONS For personal use only ANNUAL GENERAL MEETING OCTOBER 2016
Slide 24: Major Additions to the Portfolio Over the Last Years
MAJOR ADDITIONS TO THE PORTFOLIO OVER THE LAST 3 YEARS For personal use only ANNUAL GENERAL MEETING OCTOBER 2016
Slide 25: Major Additions to the Portfolio (continued)
MAJOR ADDITIONS TO THE PORTFOLIO OVER THE LAST 3 YEARS (continued) For personal use only The addition of these companies have further diversified the portfolio. Only $170 million was invested in these companies 3 years ago – many are new to the portfolio. Currently represent over $1bn in value
Slide 26: Small and Mid Cap Stocks Have Gone to 22% from 17%
SMALL AND MID CAP STOCKS HAVE GONE TO 22% FROM 17% LAST YEAR For personal use only 30 September 2016 ANNUAL GENERAL MEETING OCTOBER 2016
Slide 27: Comments on the Recent Reporting Season
COMMENTS ON THE RECENT REPORTING SEASON For personal use only • No more bad news than normal but few positive surprises. • Revenue growth remains subdued. • Large number of ‘one-off’ impairments/write offs. • Dividends reduced, particularly in commodity companies. • However outside of banks the mark
Slide 28: Looking Ahead
For personal use only LOOKING AHEAD ANNUAL GENERAL MEETING OCTOBER 2016
Slide 29: Low Interest Rates Have Driven Valuations Higher
LOW INTEREST RATES HAVE DRIVEN VALUATIONS HIGHER For personal use only Source: FactSet ANNUAL GENERAL MEETING OCTOBER 2016
Slide 30: What the Long Term Market Trend Looks Like
WHAT THE LONG TERM MARKET TREND LOOKS LIKE For personal use only ANNUAL GENERAL MEETING OCTOBER 2016
Slide 31: Where Does This Leave Us?
WHERE DOES THIS LEAVE US? For personal use only ANNUAL GENERAL MEETING OCTOBER 2016
Slide 32: Australian Foundation Investment Company
AUSTRALIAN FOUNDATION INVESTMENT COMPANY For personal use only
Australian Foundation Investment Company — Shareholder Meeting (October 2016) on 6ix