Half Yearly Report and Accounts as at 31 December 2017

Appendix 4D Statement
for the Half-Year ending
31 December 2017
Contents
• Results for Announcement
to the Market
•
Media Release
•Appendix 4D Accounts
• Independent Auditors’
Review Report
This half-year report is presented under
listing rule 4.2A and should be read in
conjunction with the Company’s 2017
Annual Report.
Australian Foundation Investment
Company Limited ABN 56 004 147 120

RESULTS FOR ANNOUNCEMENT TO THE MARKET
The reporting period is the half-year ended 31 December 2017 with the previous corresponding
period being the half-year ended 31 December 2016. The results have been reviewed by the
Company’s auditors.
Results for announcement to the market
•Revenue from operating activities was $154.0 million, up $ 18.5 million or 13.6% from the
previous corresponding period. This excludes capital gains on investments.
•Profit after tax attributable to members was $136.4 million (up 15.6% on the previous
corresponding period’s $118.0 million).
•The interim dividend is 10 cents per share, fully franked, the same as last year. It will be
paid on 23 February 2018 to ordinary shareholders on the register on 9 February 2018 and
the shares are expected to commence trading on an ex-dividend basis on 8 February 2018.
There is no conduit foreign income component of the dividend.
•A Dividend Reinvestment Plan (DRP) and Dividend Substitution Share Plan (DSSP) are
available, the price for which will be set at a nil discount
to the Volume Weighted Average
Price of the Company’s shares traded on the ASX and Chi-X automated trading systems
over the five trading days from when the shares trade ex-dividend. The last date for the
receipt of an election notice for participation in the DRP & DSSP is 5.00 pm (Melbourne
time) on 12 February 2018.
•The final dividend for the 2017 financial year was 14 cents per share (fully franked), and it
was paid to shareholders on 30 August 2017.
•Net tangible assets per share before any provision for deferred tax on the unrealised gains
on the long-term investment portfolio as at 31 December 2017 were $ 6.15, up from $5.83 at
the end of the previous corresponding period (both before allowing for interim dividends).
2

Global Growth Fuels Market

Half Year Report to 31 December 2017


Key Themes –


 AFIC invests in a diversified portfolio of Australian equities, seeking to provide
shareholders attractive income and capital growth over the medium to long term at a
low cost.
 Global equity markets have risen over the period with many major economies
showing improved growth. Volatility is very low.
 Resource and energy stocks have lifted in response to economic growth, however
some sectors within the Australian index have been less buoyant. M any large
companies face increased competition and the prospect of disruption to their
business.
 It is difficult to find stand out value in the Australian equity market at present.
Companies with good growth prospects continue to be very expensive.
 AFIC will continue to look for quality companies that can provide good long term
growth, including dividends, but will only do so where long term value is on offer.


Result Summary –

 Half Year Profit of $136.7 million, up 15.6% from $118.3 million in the corresponding
period last year:
- Investment income increased $18.5 million primarily due to a lift in dividends
across a range of companies, particularly resource companies including
participation in the Rio Tinto off market buy back
 Interim Dividend maintained at 10 cents per share fully franked.
 Management expense ratio of 0.11% (annualised).
 Six month portfolio return was 6.9%; including franking it was 7.9%.
 Twelve month portfolio return was 9.9%; including franking it was 11.8%.







3

Portfolio Performance


The emergence of a synchronised expansion in growth across many major economies has seen
equity markets, including Australia, reach post GFC highs. The renewed confidence about global
growth has led to rising commodity prices, with the Australian resources index up 26% over the six
month period. During the same period the industrial and banking sectors were up only 5% and 3%
respectively as many large companies encountered increased competition and the banks face an
outlook of lower growth and intense scrutiny.
AFIC’s portfolio was up 6.9% for the 6 months to 31 December 2017 compared with S&P/ASX
200 Accumulation Index which increased 8.4%. In the resources sector AFIC primarily invests in
companies with long life assets and low cost production such as BHP and Rio Tinto. The portfolio
was not exposed to the significant rise in the more cyclical small and mid-sized resource
companies which increased by 41.5% and 21.1% respectively over the period.
The best performing companies in the AFIC portfolio outside the large resource companies were
Wesfarmers, Westpac Banking Corporation, Treasury Wine Estates and Transurban.
The long term performance of the portfolio, which is more in line with the Company’s investment
timeframes, was 8.8% per annum for the 5 years to 31 December 2017 versus the Index return of
10.2% per annum. Including the full benefit of franking, these returns are 10.7% per annum for
AFIC and 11.9% per annum for the Index. AFIC’s performance numbers are after expenses and
tax paid.

Portfolio Adjustments

Given the generally strong market conditions AFIC looked to selectively add to existing holdings,
often during periods of temporary weakness. Major purchases included Macquarie Group, Westfield
Corporation (which is now subject to a takeover offer), CSL, Origin Energy, Boral, CYBG
(Clydesdale Bank) and Scentre Group. The only new holding added during the period was Adelaide
Brighton Group. AFIC also participated in the Transurban rights issue which was completed toward
the end of the period.

Major sales included a reduction in the holdings of Incitec Pivot, Coca-Cola Amatil, QBE Insurance
and Japara Healthcare. There was also the complete sale of Australian Agricultural Company from
the portfolio. AFIC also participated in the Rio Tinto off-market buy back given the high level of fully
franked income that was available.


Going Forward


It is difficult to find stand out value in the current market. Companies that are displaying prospects
for strong growth are being sought by investors and are fully valued.

Another remarkable feature of 2017 was the very low level of volatility. Further increases in
interest rates in the US or a slowdown in China may provide some scope for adjustments in
markets, including a move to more normal levels of volatility. Our view is that many investors are
in a similar position to AFIC, waiting for better prices. In this context, any pullback may be modest
unless there is a major correction arising from an unexpected coordinated tightening in global
interest rates by central banks or an unforeseen geopolitical event. AFIC will continue to look for
quality companies that can provide good long term growth, including dividends, but will only do so
where sensible long term value is on offer.

Please direct any enquiries to:
Mark Freeman Geoff Driver
Managing Director General Manager
(03) 9225 2122 (03) 9225 2102

22 January 2018
4

MAJOR TRANSACTIONS IN THE INVESTMENT PORTFOLIO

Acquisitions (above $10 million)
Cost
($’000)

Macquarie Group 32,128
Westfield Corporation 17,483
Transurban Group (participation in 3 for 37 Rights Issue at $11.40 per share) 16,948
CSL 16,152
Origin Energy 13,849
Boral 12,924
CYBG 12,808
Scentre Group 10,798
Adelaide Brighton 10,092

Disposals (above $10 million)
Proceeds
($’000)

Incitec Pivot 27,848
Coca-Cola Amatil 23,623
QBE Insurance 17,317
Australian Agricultural Company
#
14,220
Rio Tinto (participation in off-market buy back) 12,409
Japara Healthcare 10,454

#
complete disposal from the portfolio


New Companies Added to the Investment Portfolio

Adelaide Brighton





5

TOP 25 INVESTMENTS AS AT 31 DECEMBER 2017

Includes investments held in both the Investment and Trading Portfolios

Total Value
% of
$ millionPortfolio
1
Commonwealth Bank of Australia634.78.9%
2
Westpac Banking Corporation487.36.8%
3 *
BHP419.15.9%
4
Wesfarmers298.64.2%
5 *
National Australia Bank294.74.1%
6 *
CSL262.63.7%
7
Rio Tinto262.13.7%
8
Transurban Group246.43.4%
9
Australia and New Zealand Banking Group243.93.4%
10
Telstra Corporation190.42.7%
11
Amcor189.72.7%
12*
Woolworths143.12.0%
13
Brambles135.41.9%
14
Oil Search128.41.8%
15
Woodside Petroleum108.61.5%
16*
Treasury Wine Estates107.11.5%
17
AGL Energy104.91.5%
18
AMP104.31.5%
19*
Macquarie Group102.71.4%
20
Ramsay Health Care99.21.4%
21
Qube Holdings90.61.3%
22*
James Hardie Industries81.21.1%
23
Computershare76.01.1%
24*
Westfield Corporation75.21.1%
25*
Origin Energy71.51.0%
4,957.6
As % of Total Portfolio Value 69.4%
(excludes Cash)
* Indicates that options were outstanding against part of the holding
Valued at closing prices at 29 December 2017




6

PORTFOLIO PERFORMANCE TO 31 DECEMBER 2017




PERFORMANCE MEASURES TO 31 DECEMBER 2017 6 MONTHS 1 YEAR 5 YEARS
%PA
10 YEARS
%PA
NET ASSET BACKING RETURN INCLUDING DIVIDENDS REINVESTED
6.9% 9.9% 8.8% 4.7%
S&P/ASX 200 ACCUMULATION INDEX
8.4% 11.8% 10.2% 4.1%


NET ASSET BACKING GROSS RETURN INCLUDING DIVIDENDS
REINVESTED
*
7.9% 11.8% 10.7% 6.6%
S&P/ASX 200 GROSS ACCUMULATION INDEX*
9.2% 13.4% 11.9% 5.7%

*Incorporates the benefit of franking credits for those who can fully utilise them.


Note: AFIC net asset per share growth plus dividend series is calculated after management fees, income tax and capital gains
tax on realised sales of investments. It should also be noted that Index returns for the market do not include the impact of
management expenses and tax on their performance.

7

A
USTRALIAN
FOUNDATION
INVESTMENT
C
OMPANY
LIMITED
ABN 56 004 147 120








HALF-YEAR REPORT
31 DECEMBER 2017




8

COMPANY PARTICULARS
Australian Foundation Investment Company Limited (“AFIC”)
ABN 56 004 147 120
AFIC is a Listed Investment Company. As such it is an investor in equities and similar securities on the
stock market primarily in Australia.
Directors:
Terrence A. Campbell AO, Chairman
Ross E. Barker
Jacqueline C. Hey
Graeme R. Liebelt
John Paterson
David A. Peever
Catherine M. Walter AM
Peter J. Williams
R. Mark Freeman, Managing Director
Company Secretaries:
Matthew J. Rowe
Andrew J.B. Porter
Auditor:
PricewaterhouseCoopers, Chartered Accountants
Country of
incorporation:
Australia
Registered office:
Level 21
101 Collins Street
Melbourne, Victoria 3000
Contact Details:
Mail Address:
Telephone :
Facsimile:
Email:
Internet address:
Level 21, 101 Collins St., Melbourne, Victoria 3000
(03) 9650 9911
(03) 9650 9100
invest@afi.com.au
www.afi.com.au
For enquiries regarding net asset backing (as advised each month to the
Australian Securities Exchange):

Telephone: 1800 780 784 (toll free)
Share Registrar:
Computershare Investor Services Limited

Mail Address:


AFIC Shareholder
enquiry lines :

Facsimile:
Internet:
GPO Box 2975, Melbourne, Victoria 3001
Yarra Falls, 452 Johnston Street, Abbotsford, Victoria
3067
1300 662 270 (Aus)
0800 333 501 (NZ)
+613 9415 4373 (from overseas)
(03) 9473 2500
www.investorcentre.com/contact


For all enquiries relating to shareholdings, dividends and related matters, please
contact the share registrar.
Securities Exchange
Codes:

AFI Ordinary shares (ASX and NZX)


9

DIRECTORS' REPORT

The Directors present their report in relation to the half-year to 31 December 2017 on the
consolidated entity (“the Group”) consisting of Australian Foundation Investment Company Limited
(“the Company” and “AFIC”) and its subsidiary, Australian Investment Company Services Limited
(“AICS”).

Directors
The following persons were Directors of the Company during the half-year and up to the date of
this report:

T.A. Campbell AO (appointed September 1984)
R.E. Barker (appointed September 2001)
J.C. Hey (appointed July 2013)
G.R. Liebelt (appointed June 2012)
J. Paterson (appointed June 2005)
D.A. Peever (appointed November 2013)
C.M. Walter AM (appointed August 2002)
P.J. Williams (appointed February 2010)
R.M. Freeman (appointed January 2018)

Review of the Group's operations and results
Overview
The Company maintains a diversified portfolio of equity and similar securities, predominantly in
entities listed on the Australian Securities Exchange. There has been no change in the nature of
the Company’s activities during the period. Its primary objectives are to pay dividends which, over
time, will grow at a faster rate than inflation, and to generate attractive total returns in terms of
growth in net asset backing plus dividends.

Profit Performance and Dividend
Profit for the half-year was $136.7 million, up 15.6% from the previous corresponding period.
The net profit per share for the six months to 31 December 2017 was 11.6 cents per share with an
interim dividend declared of 10 cents per share fully-franked, the same as last year.
The portfolio return for the 6 months (measured by change in net asset backing per share plus
dividends reinvested) was 6.9% compared to the return of the S&P/ASX 200 Accumulation Index
for the same period which was 8.4%. AFIC’s portfolio return is calculated after management fees,
income tax and capital gains tax on realised sales of investments and does not reflect the value of
franking credits or LIC credits attached to the dividends. Index returns for the market do not
include the impact of management expenses and tax on their performance.
During the half-year 5.9 million shares were issued under the DRP and the DSSP resulting in an
additional $32.2 million of capital (after costs).
Auditors’ independence declaration
A copy of the auditors’ independence declaration as required under section 307C of the
Corporations Act 2001 is set out on page 12.
10

11

12

CONSOLIDATED INCOME STATEMENT FOR THE HALF-YEAR ENDED 31
DECEMBER 2017
Note Half-year
2017
Half-year
2016
$’000 $’000

Dividends and distributions 150,792 132,043
Revenue from deposits and bank bills 810 928
Other revenue 2,380 2,523

Total revenue
153,982

135,494

Net gains/(losses) on trading portfolio and non-equity
investments
(6,553)

(363)

Income from operating activities 3 147,429 135,131

Finance & related costs (425) (6,597)
Administration expenses (6,240) (6,502)
Profit before income tax expense

140,764 122,032
Income tax expense (4,023) (3,745)
Profit for the half-year 136,741 118,287


Profit is attributable to :
Equity holders (members) of Australian Foundation
Investment Company Ltd
136,402 118,023
Minority Interest 339 264
136,741 118,287

Cents

Cents
Basic earnings per share 8

11.56 10.40
Diluted earnings per share 8 11.56 10.45





This Income S tatement should be read in conjunction with the accompanying notes.

13

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE
HALF-YEAR ENDED 31 DECEMBER 2017

Half-Year to 31 December 2017
Half-Year to 31 December 2016


Revenue Capital Total
Revenue Capital Total

$’000 $’000 $’000
$’000 $’000 $’000


Profit for the half-year 136,741 - 136,741 118,287 - 118,287


Other Comprehensive Income


Items that will not be recycled through the Income Statement
Gains for the period on equity securities in
the investment portfolio
- 317,183
317,183
-
418,915
418,915
Deferred tax on above - (95,707)
(95,707)
- (130,335)
(130,335)
Total other comprehensive income
1
- 221,476 221,476

- 288,580 288,580



Total comprehensive income
2
136,741 221,476 358,217

118,287 288,580 406,867



1
Net capital income not accounted for through the Income Statement


2
This is the company’s Net Return for the half-year, which includes the Net Profit plus the net realised and
unrealised gains or losses on the Company’s investment portfolio.




Half-Year to 31 December 2017
Half-Year to 31 December 2016

Revenue Capital Total
Revenue Capital Total

$’000 $’000 $’000
$’000 $’000 $’000
Total Comprehensive Income is
attributable to:




Equity holders of Australian Foundation
Investment Company Ltd
136,402 221,476
357,878
118,023 288,580
406,603
Minority Interest 339 -
339
264 -
264

136,741 221,476 358,217

118,287 288,580 406,867



This Statement of Comprehensive Income should be read in conjunction with the accompanying

notes.


14

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2017
31 Dec 30 June
2017 2017
Note $’000 $’000
Current assets
Cash 102,356 105,125
Receivables 9,486 52,011
Tax refund 5,388 -
Total current assets 117,230 157,136

Non-current assets
Investment portfolio 7,156,793 6,790,368
Deferred tax assets 9,735 349
Total non-current assets 7,166,528 6,790,717

Total assets 7,283,758 6,947,853

Current liabilities
Payables 1,068 6,953
Tax payable - 1,980
Trading portfolio 4 10,926 546
Provisions 3,158 4,448
Total current liabilities 15,152 13,927

Non-current liabilities
Provisions 1,083 1,332
Deferred tax liabilities - investment portfolio 5 1,073,578 967,091
Total non-current liabilities 1,074,661 968,423

Total liabilities 1,089,813 982,350

Net Assets 6,193,945 5,965,503

Shareholders' equity
Share Capital 6 2,788,436 2,756,256
Revaluation Reserve 2,342,829 2,123,209
Realised Capital Gains Reserve 432,768 430,912
General Reserve 23,637 23,637
Retained Profits 605,517 631,070
Parent Entity Interest 6,193,187 5,965,084
Minority Interest 758 419
Total equity 6,193,945 5,965,503



This Balance Sheet should be read in conjunction with the accompanying notes.
15

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2017

Attributable to members of Australian Foundation Investment Company
Ltd

Half-Year to 31 December 2017


Note


Share
Capital
$’000


Revaluation
Reserve
$’000

Realised
Capital
Gains
$’000


General
Reserve
$’000


Retained
Profits
$’000

Total
Parent
Entity
$’000


Minority
Interest
$’000



Total
$’000
Total equity at the beginning of the half-
year
2,756,256 2,123,209 430,912 23,637 631,070 5,965,084 419 5,965,503
Dividends paid
7
- - - - (161,955)
(161,955)
-
(161,955)
Shares issued - Dividend Reinvestment Plan
6
32,249 - - - -
32,249
-
32,249
Other Share Capital Adjustments
6
(69) - - - -
(69)
-
(69)
Total transactions with shareholders 32,180 - - - (161,955) (129,775) - (129,775)

Profit for the half-year

- - - - 136,402
136,402
339
136,741






Net gains for the period on equity securities in
the investment portfolio

- 221,476 - - -
221,476
-
221,476
Other Comprehensive Income for the half-
year
- 221,476 - - - 221,476 - 221,476
Transfer to Realised Capital Gains Reserve
of net cumulative gains on investments sold

- (1,856) 1,856 - -
-
-
-






Total equity at the end of the half-year 2,788,436 2,342,829 432,768 23,637 605,517 6,193,187 758 6,193,945

This Statement of Changes in Equity should be read in conjunction with the accompanying notes.



16

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DEC. 2017 (CONT)


Attributable to members of Australian Foundation Investment
Company Ltd
Half-Year to 31 December 2016


Note


Share
Capital
$’000


Revaluation
Reserve
$’000

Realised
Capital
Gains
$’000


General
Reserve
$’000


Retained
Profits
$’000

Total
Parent
Entity
$’000


Minority
Interest
$’000



Total
$’000
Total equity at the beginning of the half-
year
2,521,441 1,767,628 457,593 23,637 637,094 5,407,393 1,148 5,408,541
Dividends paid
7
- - (16,698) - (139,154)
(155,852)
-
(155,852)
Shares issued - Dividend Reinvestment Plan

32,493 - - - -
32,493
-
32,493
- Convertible Note Conversion

5,133 - - - -
5,133
-
5,133
- Share Purchase Plan

(61) - - - -
(61)
-
(61)
Other Share Capital Adjustments
37,565 - (16,698) - (139,154) (118,287) - (118,287)
Total transactions with shareholders



Profit for the half-year

- - - - 118,023
118,023
264
118,287






Other Comprehensive Income for the half-year






Net gains for the period on equity securities in
the investment portfolio

- 288,580 - - -
288,580
-
288,580
Other Comprehensive Income for the half-
year
- 288,580 - - - 288,580 - 288,580
Transfer to Realised Capital Gains Reserve
of net cumulative losses on investments sold

- 208 (208) - -
-
-
-






Total equity at the end of the half-year 2,559,006 2,056,416 440,687 23,637 615,963 5,695,709 1,412 5,697,121
This Statement of Changes in Equity should be read in conjunction with the accompanying notes


17

CONSOLIDATED CASH FLOW STATEMENT FOR THE HALF-YEAR
ENDED 31 DECEMBER 2017
Half-year Half-year
2017 2016
$’000 $’000
INFLOWS/ INFLOWS/
(OUTFLOWS) (OUTFLOWS)
Cash flows from operating activities
Sales from trading portfolio 52,731 20,119
Purchases for trading portfolio (6,253) (13,810)
Interest received 800 924
Dividends and distributions received 141,036 163,702
188,314 170,935

Other receipts 2,380 2,521
Administration expenses (7,692) (7,982)
Finance costs paid (425) (6,349)
Taxes paid (9,410) (9,797)
Net cash inflow/(outflow) from operating activities 173,167 149,328

Cash flows from investing activities
Sales from investment portfolio 181,877 103,555
Purchases for investment portfolio (228,247) (207,522)
Taxes paid on capital gains - (7,635)
Net cash inflow/(outflow) from investing activities (46,370) (111,602)

Cash flows from financing activities
Share issue costs (69) (61)
Dividends paid (129,497) (123,171)
Net cash inflow/(outflow) from financing activities (129,566) (123,232)

Net increase/(decrease) in cash held (2,769) (85,506)
Cash at the beginning of the half-year 105,125 155,903
Cash at the end of the half-year 102,356 70,397











This Cash Flow Statement should be read in conjunction with the accompanying notes.

18

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED
31 DECEMBER 2017
1. Basis of preparation of half-year financial report
This general purpose half-year financial report has been prepared in accordance with Accounting
Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.
This interim financial report does not include all the notes of the type normally included in an
annual financial report. This report should be read in conjunction with the 2017 Annual Report
and public announcements made by the Group during the half-year, in accordance with the
continuous disclosure requirements of the Corporations Act 2001.
The accounting policies adopted are consistent with those of the previous financial year and
corresponding interim reporting period.
In the interests of transparency in its reporting, the Group uses the phrase “market value” in place
of the AASB terminology “fair value for actively traded securities.”

2. Financial reporting by segments
The Group consists of a Listed Investment Company and a subsidiary which provides
administration services to it and to other Listed Investment Companies in Australia. It has no
reportable business or geographic segments.
(a) Segment information provided to the Board
The internal reporting provided to the Board for the Group’s assets, liabilities and performance is
prepared on a consistent basis with the measurement and recognition principles of Australian
Accounting Standards, except that net assets are reviewed both before and after the effects of
capital gains tax on investments (as reported in the Group’s Net Tangible Asset announcements
to the ASX).
The relevant amounts as at 31 December 2017 and 31 December 2016 were as follows:
2017
$


2016
$
Net tangible asset backing per share
Before Tax 6.15 5.83
After Tax 5.24 5.01

(b) Other segment information
Segment Revenue
Revenues from external parties are derived from the receipt of dividend, distribution and interest
income, and income arising on the trading portfolio.
The Company is domiciled in Australia and the Group’s dividend and distribution income is
predominantly from entities which maintain a listing in Australia. The Group has a diversified
portfolio of investments, with only the Group’s investment in Commonwealth Bank : 12.5% and
Westpac Bank : 10.0% comprising more than 10% of the Group’s income (including trading
portfolio) for the half-year ending 31 December 2017 (2016 : Commonwealth Bank : 13.0%,
Westpac Bank 10.8%).
19

3. Income from operating activities
Half-year
2017
$'000

Half-year
2016
$'000
Income from operating activities is comprised of the following:

Dividends & distributions
• securities held in investment portfolio
150,683 131,934
• securities held in trading portfolio
109 109
150,792 132,043
Interest income
• securities held in investment portfolio
- -
• deposits and income from bank bills
810 928
810 928
Net gains/(losses) and write downs
• net gains from trading portfolio sales
49 655
• unrealised gains/(losses) in trading portfolio
(6,602) (1,018)
• gains/(losses) on non-equity investments
- -
(6,553) (363)

Administration fees received from other Listed Investment
Companies
2,180 2,256
Expenses recovered from other Listed Investment
Companies
147 133
Other expenses recovered 53 51
Other income - 83
147,429 135,131



4. Current liabilities – trading portfolio

The Company enters into option contracts in the trading portfolio for the purpose of enhancing
returns, offsetting risk or providing opportunities to acquire or sell securities at advantageous
prices.
As at balance date there were call options outstanding which, if they were all exercised, would
require the Company to deliver securities to the value of $193.5 million (30 June 2017: $82.4
million).
As at balance date the Company had outstanding put options which at the option of the purchaser
may have required the Company to buy $41.1 million worth of securities prior to the respective
expiry dates if they were all exercised (30 June 2017 :$18.4 million ).





20

5. Deferred tax liabilities – investment portfolio
In accordance with AASB 112 Income Taxes, deferred tax liabilities have been recognised for
Capital Gains Tax on the unrealised gain in the investment portfolio at current tax rates (30%)
totalling $1,073.6 million (30 June 2017 : $967.1 million). As the Directors do not intend to
dispose of the portfolio, this tax liability may not be crystallised at this amount.
6. Shareholders’ equity – share capital
Movements in Share Capital of the Company during the half-year were as follows:
Date Details Notes Number
of shares
’000
Issue
price
$
Paid-up
Capital
$’000
01/07/2017 Opening Balance
1,176,079 2,756,256
30/08/2017 Dividend Reinvestment Plan i 5,448 5.92 32,249
30/08/2017 Dividend Substitution Share Plan ii 455 5.92 n/a
Various Other Share Capital adjustments - (69)
31/12/2017 Balance 1,181,982 2,788,436

i The Company has a Dividend Reinvestment Plan under which some shareholders elected to
have all or part of their dividend payment reinvested in new ordinary shares. Pricing of the
new DRP shares was based on the average selling price of shares traded on the Australian
Securities Exchange & Chi-X automated trading systems in the five days from the day the
shares begin trading on an ex-dividend basis.
ii The Company has a Dividend Substitution Share Plan under which some shareholders
elected to forego all or part of their dividend payment and receive shares instead. Pricing of
the new DSSP shares was done on the same basis as the DRP.
iii The Company introduced an on-market Buy-Back Programme in December 2000. This plan
remains active. No shares were bought back during the period.

7. Dividends
Half-year
2017
$’000
Half-year
2016
$’000

Dividends (fully franked) paid during the period 161,955 155,852
(excluding DSSP shares) (14 cents per
share)
(14 cents per
share)
Dividends not recognised at period end
Since the end of the half-year the Directors have declared an
interim dividend of 10 cents per share fully franked. The
aggregate amount of the proposed interim dividend expected to
be paid on 23 February 2018, but not recognised as a liability at
the end of the half-year is 118,198






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8. Earnings per Share
Half-year
2017

Half-year
2016

Number Number
Weighted average number of ordinary shares used as the
denominator
1,180,025,058 1,135,136,382

$’000 $’000
Profit after tax for the half-year attributable to members of the
Company 136,402 118,023

Cents Cents
Basic earnings per share 11.56 10.40

Diluted*
Number Number

Weighted average number of ordinary shares attributable to
members of the Company
1,180,025,058 1,135,136,382
Weighted maximum number of potential shares as a result of
possible conversion
0 36,779,110
1,180,025,058 1,171,915,492

$’000 $’000
Profit after tax for the half-year attributable to members of the
Company
136,402 118,023
Interest & fees on convertible notes (after tax) 0 4,396
Adjusted profit after tax attributable to members of the Company 136,402 122,419

Cents Cents
Diluted earnings per share 11.56 10.45

*The calculation of diluted earnings per share for the half-year ended 31 December 2016 adjusts
the profit or the net operating result attributable to ordinary equity holders and the weighted
average number of shares on issue for the effect of the convertible notes on issue at 31 December
2016.
9. Events subsequent to balance date
Since 31 December 2017 to the date of this report there has been no event specific to the
Company of which the Directors are aware which has had a material effect on the Group or its
financial position.
10. Contingencies
At balance date Directors are not aware of any material contingent liabilities or contingent assets
other than those already disclosed elsewhere in the financial report.
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