2022 Annual General Meeting Presentation

4 October 2022


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
2022 Annual General Meeting Presentation


Dear Sir / Madam

The following presentation will be delivered to shareholders at the Company’s Annual
General Meeting to be held today.


Yours faithfully


Matthew Rowe
Company Secretary


Authorised for release by the Company Secretary

Annual General Meeting
2022

AFIC Annual General Meeting 2022
Board Members
John Paterson
Chairman and Independent
Non-Executive Director
Craig Drummond
Independent Non-Executive
Director
Mark Freeman
Managing Director
Julie Fahey
Independent Non-Executive
Director
David A Peever
Independent Non-Executive
Director
Rebecca Dee-Bradbury
Independent Non-Executive
Director
Graeme R Liebelt
Independent Non-Executive
Director
Catherine M Walter AM
Independent Non-Executive
Director
Peter J Williams
Independent Non-Executive
Director
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AFIC Annual General Meeting 2022
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AFIC Annual General Meeting 2022
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Annual General Meeting – Presentation2022

AFIC Annual General Meeting 2022
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 faith. However, no warranty
(express or implied) is made as to the accuracy, completeness or reliability of any statements, estimates
or opinions or other information contained in these materials (any of which may change without notice)
and to the maximum extent permitted by law, the Disclosers disclaim all liability and responsibility
(including, without limitation, any liability arising from fault or negligence on the part of any or all of the
Disclosers) for any direct or indirect loss or damage which may be suffered by any recipient through
relying on anything contained in or omitted from these materials.
This information has been prepared and provided by AICS. To the extent that it includes any financial
product advice, the advice is of a general nature only and does not take into account any individual’s
objectives, financial situation or particular needs. Before making an investment decision an individual
should assess whether it meets their own needs and consult a financial advisor.
Disclaimer
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AFIC Annual General Meeting 2022
Investment ObjectivesMark Freeman
Financial ResultsAndrew Porter
Markets and the PortfolioDavid Grace and Nga Lucas
OutlookMark Freeman
Agenda
2
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AFIC Annual General Meeting 2022
Investment Objectives and Investment Team

AFIC Annual General Meeting 2022
Investment Objectives
The Company aims to provide
shareholders with attractive investment
returns through access to a growing
stream of fully franked dividends
and growth in capital invested.
The Company’s primary investment goals are:
• to pay dividends which, over time, grow
faster than the rate of inflation; and
• to provide attractive total returns over
the medium to long term.
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AFIC Annual General Meeting 2022
Investment Team
David Grace
Portfolio Manager
Kieran Kennedy
Portfolio Manager
Brett McNeill
Portfolio Manager
Rosie Malcolm
Portfolio Manager
Andrew Sutherland
Portfolio Manager
Nga Lucas
Investment Analyst
Olga Kosciuczyk
Investment Analyst
Stuart Low
Investment Analyst
Jeremy Moore
Dealer
Gilbert Battistella
Graduate Investment
Analyst
Nicky Sun
Graduate Investment
Analyst
Jaye Guy
Investment Analyst
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Full Year Results 2022
Financial Results

AFIC Annual General Meeting 2022
Results to 30 June 2022
* Assumes a shareholder can take full advantage of the franking credits.
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AFIC Annual General Meeting 2022
Relationship between full year dividends per share and earnings per share
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AFIC Annual General Meeting 2022
Share Price Relative to NTA
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AFIC Annual General Meeting 2022
Markets and the Portfolio

AFIC Annual General Meeting 2022
Long term investor in companies, not traders of share prices
Identify quality companies with sound growth prospects that we can buy at a reasonable price
This supports our belief in the power of compounding returns from great businesses
Our research process is built on observing the key characteristics of a company that our experience
indicates will produce strong investment returns
Our investment process – focus on long term quality
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AFIC Annual General Meeting 2022
ESG considerations are integrated into our Investment Framework
Approach to Environmental, Social and
Governance (ESG) factors
•Long term sustainability of a company’s
business model is a key focus in our
assessment of quality.
•Assessment of ESG risk factors is an important
part of our investment process.
•We regularly review companies to ensure
ongoing alignment with our investment
framework.
Engagement with companies
•We conduct our own evaluation of the merits
of any shareholder resolution and also take
input from proxy advisors.
•We vote on all company resolutions as part of
our regular engagement with companies.
•We actively engage with companies when we
have concerns those resolutions are not
aligned with shareholders’ interests.
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AFIC Annual General Meeting 2022
Performance
Returns to 31 August 2022 – per annum*
Sector Performance - annual return to 31 August 2022
Source: FactSet
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AFIC Annual General Meeting 2022
Portfolio Set to Perform in a variety of Economic Settings
AFIC
Stalwarts
Growth Companies
IncomeCyclicals
16%
22%
29%
33%
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AFIC Annual General Meeting 2022
Market Conditions
•Equity markets lacking direction as investors weigh up global economic challenges
Inflation and rising interest rates
Slowing outlook for consumer spending
Softening economic growth in China
Escalating war in Ukraine
The ongoing Coronavirus pandemic
•Investor sentiment very short term. Share price movements being driven by the news
of the day.
•We remain committed that holding a diversified portfolio of quality companies over the
long-term remains appropriate.
•Market volatility in an uncertain environment presents buying opportunities in quality
companies at attractive prices.
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AFIC Annual General Meeting 2022
Valuation in a Long Term Context
Price to Sales – S&P/ASX 200 Index
Average
1.9
Price to Book – S&P/ASX 200 Index
Source: FactSet
Average
1.9
Atclosing 26 September 2022 - S&P/ASX Index at 6469
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AFIC Annual General Meeting 2022
Market Sell Offs Create Excellent Long-term Buying Opportunities
Inflation shock/
rising rates
-13%
ASX All Ordinaries – Price Index
Source: FactSet
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AFIC Annual General Meeting 2022
Active Portfolio Management – Recent Transactions
* Takeover
*
*
New Purchases
Sales
Additions to
Existing Holdings
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AFIC Annual General Meeting 2022
Mainfreight continued expansion in the US
•Logistics company specialising in Less Than
Truckload segment with an extensive global
network.
•Founded in NZ in1978 by current Chairman
Bruce Plested.
•Owner driver business, experienced and
focused management team.
•Significantopportunity to win market share
in the US as they continue to expand and
densify their network.
•Long track record of growth and shareholder
returns. Strong balance sheet.
Source: Mainfreight
Source: Mainfreight
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AFIC Annual General Meeting 2022
Carsalesacquisition of Trader Interactive USA
Source: Carsales
25
•Dominant market position in used car classifieds in
Australia.
•Recent acquisition of the remaining 51% of Trader
Interactive in the US (non-automotive classifieds)
significantly expands International presence.
•Ability to leverage CarsalesIP to accelerate market
penetration and growth in the US
•Management team has strong track record of
delivering strong returns and growth.
Source: Carsales

AFIC Annual General Meeting 2022
James Hardie continuing to capture market share
Source: Macquarie / US Census Bureau Characteristics of Housing Supply
Fibre cement gaining market share
•Fibre cement has grown from 9% wall share in
2005 to 22% today. All other competing materials
have lost market share over this period. We expect
this trend to continue.
•Marketleadership in fibre cement cladding for US
homes
•New product development focussed on architectural
trend of modern look homes. Early days but
performing well.
•High return oncapital and strong balance sheet.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20052006200720082009201020112012201320142015201620172018201920202021
Fibre CementVinylWoodStuccoBrickOther
Source: James Hardie
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AFIC Annual General Meeting 2022
ResMed – excellent long-term opportunity
•Market leader in the treatment of Obstructive Sleep
Apnoea (OSA).
•Founded in Sydney in 1989 by current Chairman,
Peter Farrell. His son Mick is the current CEO
•Today, the business has over 8,000 employees and
operates in over 140 countries
•Invests more than 7% of sales in Research and
Development
•Long and successful track record of creating
shareholder value with returns well above cost of
capital
Source: ResMed
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AFIC Annual General Meeting 2022
Outlook

AFIC Annual General Meeting 2022
Outlook
• Uncertain operating environment with persistent inflation and rising interest rates.
• The valuation of the market has significantly retraced this year with some risk of
further downside.
• The portfolio is well positioned to perform in a wide range of operating environments.
• Volatile markets often provide the best buying opportunitiesfor investors focused
on a company's long-term prospects.
• The portfolio is invested in well managed, quality companies owning strategic assets
with strong balance sheets.
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AFIC Annual General Meeting 2022
International Portfolio
• Consistent with the existing AFIC portfolio, the International portfolio invests in quality companies with:
Strong management teams
Solid balance sheets
Competitive advantages that we view as sustainable
Often underpinned by long term secular growth trends
• Provides shareholders with exposure to world class companies – potentially a precursor to a separate LIC
• Adds global perspective to the Investment Team
• Currently holds positions in 39 companies ~$100m or 1.2% of AFIC portfolio
• Encouraging results to date with performance since inception ahead of the benchmark*
* 7
th
May 2021 – 30
th
September 2022, before costs
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