Information Meetings – Presentation

17 March 2023


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
Information Meetings – Presentation


Dear Sir / Madam


Please find attached the presentation to be given at the Information Meetings being
held in March 2023.


Yours faithfully


Matthew Rowe
Company Secretary

ASX Release authorised by the Company Secretary.

Shareholder Meeting
March 2023

Shareholder Meeting – March 2023
Australian Foundation Investment Company Limited and its subsidiary AICS (AFSL 303209), its
related entities and each of its 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
2

Shareholder Meeting – March 2023
Overview and Investment ObjectivesMark Freeman
Markets and the PortfolioDavid Grace
Recent Portfolio ActivityNga Lucas
OutlookNga Lucas
Agenda
2
33

Shareholder Meeting – March 2023
Overview and Investment Objectives

Shareholder Meeting – March 2023
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.
5

Shareholder Meeting – March 2023
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 alsotake
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 concernsthose resolutions are not
aligned with shareholders’ interests.
6

Shareholder Meeting – March 2023
Share Price Relative to NTA
7

Shareholder Meeting – March 2023
Markets and the Portfolio

Shareholder Meeting – March 2023
Current Market Conditions
Inflation remains persistent with uncertainty around cash rate settings from Central Banks.
Operating environment for companies becoming more challenging.
Cost of living increases challenging the outlook for consumer spending.
Value is presenting in selective companies where we maintain confidence in the long term
opportunity.
9

Shareholder Meeting – March 2023
Valuation in a Long Term Context
Price to Sales – S&P/ASX 200 Index
Price to Book – S&P/ASX 200 Index
Average
1.9
Average
1.9
10

Shareholder Meeting – March 2023
Portfolio* and Sector Performance to 28 February 2023
12 Month Sector Performance
* Assumes the full benefit of franking credits. Per annum returns.
Past performance is not indicative of future performance.
Includes dividends but not franking.
11

Shareholder Meeting – March 2023
Reece: Long Term Investing
0
500
1,000
1,500
2,000
Reece Share Price vs ASX 200
20 Year CAGR
Reece: 13.7%
Index: 4.5%
Reece Share PriceS&P/ASX 200 Price
12

Shareholder Meeting – March 2023
Quality Companies Find a Way to Grow
Sales Growth Per Annum Since Our First Purchase
Holding
since
2015
Holding
since
2014
Holding
since
2010
Holding
since
2013
Holding
since
2013
Holding
since
2018
Holding
since
2016
Holding
since
2016
Holding
since
1999
Sales from FY02
3.2%
S&P/ASX 200
10 Year Sales CAGR
13
22.5%
14.2%
14.1%
13.2%
10.7%
10.3%
9.7%
9.6%
7.2%
6.8%
Holding
since
2016
To 31 December 2022

Shareholder Meeting – March 2023
Recent Portfolio Activity

Shareholder Meeting – March 2023
Active Portfolio Management – Recent Transactions
New PurchasesSalesAdditions to Existing Holdings
Complete Disposals
15

Shareholder Meeting – March 2023
Wesfarmers
Wesfarmers is a conglomerate that operates a number oflarge, well
known retail brands including Bunnings, Officeworks, Kmart and Target.
Bunnings is one of the best retailers in the world generating very
attractive shareholder returns.
Bunnings is a key driver of earnings growth at >60% of group
earnings, with a long growth runway.
Wesfarmers’ strategy is to continually establish new businesses
and invest in existing businesses to provide a ‘satisfactory’ return
to shareholders in the long term.
16

Shareholder Meeting – March 2023
Auckland Airport
Auckland Airport owns a highly unique and strategic
infrastructure asset.
Freehold nature and large undeveloped landbank offers opportunity
for long term growth.
Expect post COVID international passenger recovery to drive
earnings growth, currently at over 70% vs 2019.
Strong balance sheet and experienced management team.
17

Shareholder Meeting – March 2023
PEXA
A pioneer and leader in digital property settlements
in Australia.
Handles >80%ofproperty transfer transactionsand>90%
of refinancingtransactionsin Australia.
Has developeda deepnetworkofpractitionerfirms, financial
institutions, the RBA,landtitles offices and state revenueoffices.
PEXA is uniquely positioned to take its know-howto larger offshore
markets, starting in the United Kingdom.
18

Shareholder Meeting – March 2023
Outlook

Shareholder Meeting – March 2023
Outlook
The effects of inflation and high living costs are placing pressure on parts of the economy.
Market valuations are slightly above long termaverages with some downside risk.
We remain focused on companies well positioned to create long term shareholder value.
The portfolio is invested in well managed companies with proven track records of financial
discipline capturing value-accretive opportunities as they arise.
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Shareholder Meeting – March 2023
We remainconfident about the quality of AFIC’s largest holdings
21
RankCompany% of Portfolio
1
Commonwealth Bank of Australia9.0%
2
BHP Group 8.5%
3
CSL 8.1%
4
Macquarie Group 4.9%
5
Transurban Group 4.7%
6
Wesfarmers 4.1%
7
Westpac Banking Corporation3.9%
8
National Australia Bank* 3.8%
9
Woolworths Group 3.1%
10
Rio Tinto 2.5%
RankCompany% of Portfolio
11
Woodside Energy Group* 2.4%
12
Telstra Group 2.3%
13
Mainfreight 2.3%
14
ANZ Group Holdings 2.3%
15
Goodman Group2.2%
16
Coles Group 2.0%
17
Amcor2.0%
18
James Hardie Industries1.9%
19
Carsales.com* 1.7%
20
ResMed1.6%
As at 28 February 2023.
* Indicates that options were outstanding against part of the holding.