Preliminary Final Report

Australian Foundation Investment Company Limited


1

Australian Foundation Investment Company Limited
Results for Announcement to the Market
The reporting period is the year ended 30 June 2024, with the prior corresponding period being the year
ended 30 June 2023.
This report is based on financial statements that are in the process of being audited.
Results for Announcement to the Market
> Net Profit was $296.4 million, down 4.4% from the
prior year.
> Net Profit attributable to members (excluding
minority interests) was $296.2 million,
down 4.4% from the prior year.
> Revenue from operating activities was
$334.4 million, down 2.8% from the prior year.
> The Management Expense Ratio (“MER”)
calculated as the net expenses of managing the
Company as a percentage of the average value of
its investments including cash over the year, was
0.15% for the year (2023: 0.14%).
> Net tangible assets as at 30 June 2024, before
allowing for the final dividend and before the
provision for deferred tax on unrealised gains in the
investment portfolio were $7.88 per share (2023:
$7.19).
> A fully-franked final dividend of 14.5 cents per
share, an increase of 0.5 cents per share on last
year’s final dividend, will be paid on 30 August
2024 to shareholders on the register on 15 August
2024. The shares are expected to trade ex-
dividend on 14 August 2024. There is no conduit
foreign income component of the dividend.
> NZ 4.0 cents of the final dividend carries a New
Zealand imputation credit.




> The Board has elected to source 4.5 cents per
share of the final dividend from capital gains, on
which the Group has paid or will pay tax. The
amount of this pre-tax attributable gain, equals 6.43
cents per share. This enables some shareholders
to claim a tax deduction in their tax return. Further
details will be on the dividend statements.
> The interim dividend of 11.5 cents per share (up
from 11 cents in the previous corresponding
period) was paid to shareholders on 26 February
2024.
> The total dividend for the financial year is therefore
26 cents per share, fully franked, up from 25 cents
per share fully franked last year.
> A Dividend Reinvestment Plan (DRP) and Dividend
Substitution Share Plan (DSSP) are available, the
price will be set at a nil discount to the Volume
Weighted Average Price of the Company’s shares
traded on the ASX and Cboe automated trading
systems over the five trading days after the shares
trade ex-dividend. Notices of participation in the
DRP and DSSP need to be received by the share
registry by 5pm (AEST) on 16 August 2024. All
shares issued under the DRP and DSSP will rank
equally with existing shares.
> The Company will be providing a briefing on these
results via a webcast for shareholders on Monday
29 July 2024 at 3.30pm (AEST). Details are on the
website afi.com.au.
> The 2024 AGM will be held at 10 am on Thursday
3 October. Further details on how to participate will
be sent to shareholders.

2

Australian Foundation Investment Company Limited
AFIC Increases Final Dividend, Portfolio Outperforms in
Strong Markets.
Full Year Report to 30 June 2024
AFIC’s investment focus is on a diversified portfolio of Australian equities, seeking to
provide attractive dividend and capital growth to shareholders over the medium to long
term. This is achieved at a low cost, with lower volatility than the market, and with low
portfolio turnover which produces tax-effective outcomes for shareholders. AFIC’s
management expense ratio is 0.15% with no additional fees.
The Full Year Profit was $296.4 million, down from $310.2 million in the previous corresponding period. The
decrease in the profit from last year was the outcome of lower dividends (as expected) received from BHP,
Rio Tinto and Woodside Energy Group. The extent of this decline was somewhat offset by adjustments
made to the portfolio throughout the year and improved income from a number of companies in the portfolio
including the four major banks.
Earnings per share for the financial year were 23.75 cents per share. The final dividend was increased to 14.5
cents per share fully franked, bringing total fully franked dividends applicable for the year to 26.0 cents per
share, an increase of 4.0% from the previous financial year’s total fully franked dividend of 25.0 cents per share.
Activity in the portfolio was focused primarily on recycling capital into existing holdings by trimming some
positions where companies were trading at extreme valuations during the year and selling positions where
companies in our assessment are facing significant structural industry challenges and competition.
The portfolio returned 15.1% for the financial year in comparison to the S&P/ASX 200 Accumulation Index
return of 13.5% when the benefit of franking is included for both returns. This relative outperformance was
driven by key holdings in the portfolio with the strongest contributors being CAR Group, Goodman Group,
Wesfarmers, Reece, Netwealth and ARB Corporation. The ongoing underweight exposure to the mid cap
resources sector which was down 25.7% over the financial year also supported this outperformance.
Note AFIC on occasion incurs realised capital gains tax on the sale of shares. Not all the franking generated
from these realised capital gains is paid out as dividends and is therefore not included in these performance
figures.

Portfolio return (including the full benefit of franking) – per annum to 30 June 2024

AFIC’s performance figures are after costs.
Past performance is not indicative of future performance.
3

Australian Foundation Investment Company Limited
Market Commentary and Portfolio
Performance
The ASX 200 Accumulation Index (not including the
benefit of franking) rose 12.1% in the financial year to
30 June 2024. Sector returns were widely dispersed,
and the best performing sectors were Banks, up
34.9%, Information Technology up 28.4% and A-
REITs up 24.7%. Industrials were up 17.8% over this
period significantly outperforming the Resources
sector which was down 3.2%. Resilient domestic
economic conditions provided a more positive
backdrop for banks than initially expected. The
Information Technology sector has shown similar
strength to the NASDAQ Composite Index over recent
months amid growing interest in the future
applications of artificial intelligence. The weakness in
the Resources sector reflected subdued demand for
commodities from China on the back of declining new
residential construction.

The portfolio returned 15.1% in comparison to the
S&P/ASX 200 Accumulation Index return of 13.5%
when the benefit of franking is included for both
returns. Strong performance came from our holdings
in CAR Group, Goodman Group, Wesfarmers, Reece,
Netwealth and ARB Corporation, which all materially
outperformed the market. Having limited exposure to
lithium companies contributed meaningfully to
outperformance. We have long been cautious on the
supply response to the rapidly rising lithium price in
2022. The lithium market is now in surplus which has
resulted in equity prices for lithium companies falling
sharply.
A number of high-quality companies in the portfolio
trailed the return of the overall market. These included
Transurban Group, Mainfreight, Sonic Healthcare and
the ASX. We still consider the long term prospects for
these companies to remain strong.
Portfolio Adjustments
The majority of purchases during the year were
focused on increasing positions in existing holdings at
what we felt were appropriate levels. This included
Woodside Energy, Telstra Group, BHP, CSL and
ResMed.
In managing the portfolio, we endeavour to hold a
diversified portfolio of quality companies with an
appropriate mix of income and growth attributes to
achieve our long term investment objectives.



We continue to be attracted to quality “owner driver
businesses” where management and board members
have significant shareholdings. These companies are
attractive as there is a strong alignment between
management and shareholder interests. These
owner-driver companies are typically smaller but
deliver strong long term returns. In this regard we
initiated positions in Mineral Resources and
Macquarie Technology Group during the financial
year.
Mineral Resources is a diversified resources company
with operations in lithium, mining services, iron ore
and energy. Mineral Resources seeks to maintain
low-cost mining operations while the mining services
division is market leading with a strong growth
pipeline backed by internal projects. It was founded by
the current Managing Director, who is also a large
shareholder. Macquarie Technology Group is a data
centre, and cloud and telecommunications business
focussing on enterprise, corporate and the Australian
Federal Government. Data centres and cloud end-
markets now represent around 80% of operating
earnings. The company was founded 30 years ago by
large shareholders, the Tudehope brothers, who
continue to manage the company.
Delivering income is also an important part of
constructing the portfolio. In this context we added
Ampol and Region Group during the financial year at
prices that provide attractive dividend yields.
Ampol is Australia’s leading integrated energy
company engaged in refining, supply and marketing of
petroleum and convenience retailing. The company
owns strategic infrastructure assets while investing to
grow convenience retail away from fuel.
Region Group owns a portfolio of high-quality grocery
anchored neighbourhood and sub-regional shopping
centres. The predominant tenant offering is focused
on every day needs of non-discretionary retail spend.
We exited IRESS Limited and Ansell over the
12-month period. We are observing structural
industry challenges for these companies and an
environment where competitive intensity has
materially increased. We consider growth prospects
to be increasingly challenged as a result.


4

Australian Foundation Investment Company Limited



International Portfolio
We have continued to successfully manage the global
portfolio (within the AFIC portfolio) over the period.
This portfolio was first initiated in May 2021. Given we
have been trialling this portfolio for over 3 years we
are considering the most appropriate next steps for
this initiative, including the options for establishing a
separate low-cost global investment company in the
future. AFIC has invested a total of $103.7million of
shareholder capital in the global portfolio, which is
valued at $147.5 million as at 30 June, 2024. At
current value, the global portfolio represents about
1.5% of the overall AFIC portfolio.
We are encouraged by the performance of this
portfolio which has exceeded its benchmark index
(the MSCI World Index ex Australia) over one year
and since its inception.




Source: Northern Trust.
During the last 12 months we continued to build our
position in Nvidia while topping up our exposure to
Freeport McMoran, Netflix, Meta and Nextera Energy.
These purchases were completed at attractive levels,
well-below the current prices. We took advantage of
share price weakness to add to our existing position in
Fortinet. In addition, we established one new position,
Halma plc. These investments were funded through
the complete sale of Roche Holdings and a reduced
holding in Starbucks, along with trimming some of our
recent outperformers such as Ferguson, L’Oréal,
Mastercard and Visa.
Outlook
Economic conditions remain unpredictable with a
broad range of potential outcomes.
There are signs emerging that consumer confidence
is softening with persistent inflation and higher interest
rates. In this context while economic growth in
Australia currently remains sound, it could
conceivably soften in the more immediate term.


Corporate earnings have so far proved resilient.
Following a strong run in the equity market since
November 2023, the market’s tolerance for earnings
disappointment is not anticipated to be high, with
current market valuations trading above long term
averages and at extreme levels for a number of
companies.
Finally geopolitical factors remain relevant with the
occurrence of ongoing conflict and with elections in
key developed markets. While geopolitical factors
have not yet negatively impacted equity markets, they
may still have a role to play in investor sentiment over
the remainder of the calendar year.
While conscious of the prevailing environment our
research effort remains focussed on the fundamentals
of the companies. We believe the portfolio remains
invested in quality companies forecast to deliver an
appropriate mix of income and growth even in
challenging conditions, positioning us well to deliver
on our long-term investment objectives.
Please direct any enquiries to:
Mark Freeman Geoff Driver
Managing Director General Manager
(03) 9225 2101 (03) 9225 2102

29 July 2024
Gross returns in Australian dollars to 30 June 2024
1 year Since Inception
% pa
% pa
AFIC Global Portfolio 23.0% 14.1%
Benchmark
19.9%
12.7%
Differential
3.1%
1.4%
5

Australian Foundation Investment Company Limited
Major Transactions in the Investment Portfolio
Acquisitions
Cost
($m)
Woodside Energy 71.2
Telstra Group 55.4
Mineral Resources 52.1
Ampol 41.2
BHP 35.0

Disposals
Proceeds
($m)
James Hardie Industries (partially because of the exercise of call options) 58.1
National Australia Bank (partially because of the exercise of call options) 55.4
Wesfarmers 39.0
IRESS* 33.8
Ansell* 32.3
* Complete disposal from the portfolio.

New Companies Added to the Portfolio
Mineral Resources
Ampol
Region Group
Macquarie Technology Group


6

Australian Foundation Investment Company Limited
Top 25 Investments at 30 June 2024
Includes investments held in both the investment and trading portfolios.
Value at Closing Prices at 28 June 2024

Total Value
$ Million
% of the
Portfolio
1
Commonwealth Bank of Australia 980.6 10.1%
2
BHP 787.5 8.1%
3
CSL 756.9 7.8%
4
Macquarie Group 458.4 4.7%
5
National Australia Bank 446.9 4.6%
6
Wesfarmers 442.1 4.6%
7
Westpac Banking Corporation 395.9 4.1%
8
Goodman Group 352.9 3.6%
9
Transurban Group 337.7 3.5%
10
Woodside Energy Group 230.3 2.4%
11
ANZ Group Holdings 228.7 2.4%
12
Telstra Group 227.4 2.3%
13
Woolworths Group 225.3 2.3%
14
Rio Tinto 221.6 2.3%
15
James Hardie Industries 216.5 2.2%
16
CAR Group* 200.4 2.1%
17
Coles Group 165.6 1.7%
18
ResMed 155.0 1.6%
19
Reece 149.5 1.5%
20
Mainfreight 148.9 1.5%
21
Amcor 143.2 1.5%
22
ARB Corporation 137.0 1.4%
23
Xero 113.9 1.2%
24
REA Group 113.5 1.2%
25
Cochlear 111.0 1.1%
Total 7,746.6
As percentage of total portfolio value (excludes cash)

79.8%
* Indicates that options were outstanding against part of the holding.


7

Australian Foundation Investment Company Limited
Portfolio Performance to 30 June 2024
Performance Measures to 30 June 2024 1 Year
3 Years
% pa
5 Years
% pa
10 Years
% pa
Portfolio Return – Net Asset Backing Return
Including Dividends Reinvested

13.5%

5.4%

7.7%

7.2%
S&P/ASX 200 Accumulation Index 12.1% 6.4% 7.3% 8.1%

Portfolio Return – Net Asset Backing Gross
Return Including Dividends Reinvested*

15.1%

6.9%

9.3%

9.0%
S&P/ASX 200 Gross Accumulation Index* 13.5% 7.9% 8.7% 9.6%
* 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 expenses,
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.
Past performance is not indicative of future performance.

8

Australian
Foundation
Investment
Company Limited
(AFIC)
Consolidated Annual Financial
Statements



30 June 2024

9

FINANCIAL STATEMENTS
Consolidated Income Statement for the Year Ended 30 June 2024
2024 2023
Note $’000 $’000
Dividends and distributions
A3 321,836 334,740
Interest income from deposits A3 6,963 3,714
Other revenue A3
5,555
5,
553
Total revenue
334,
354
344,007
N
et gains on trading portfolio A3
4,901
6,000
Income from operating activities
339,255 350,007
Finance costs (1,405) (1,265)
Administration expenses B1 (18,915)
(17,987)
Profit before income tax expense 318,935 330,755
Income tax expense B2, E2 (22,522) (20,544)
Profit for the year
296,
413
310,211
Profit is attributable to :
Equity holders of Australian Foundation Investment Company
296,174 309,763
Minority interest
239 448
296,413 310,211
Cents Cents
Basic earnings per share A5 23.75 25.06
This Income Statement should be read in conjunction with the accompanying notes.
10

Consolidated Statement of Comprehensive Income for the Year Ended 30 June 2024


Year to 30 June 2024 Year to 30 June 2023

Revenue
1
Capital
1
Total Revenue
1
Capital
1
Total

$’000 $’000 $’000 $’000 $’000 $’000


Profit for the year 296,413 - 296,413 310,211 - 310,211


Other
Comprehensive
Income


Items that will not be recycled through
the Income Statement

Gains/(losses) for
the period
- 923,692
923,692 - 697,758 697,758
Tax on above - (279,803) (279,803) - (210,319) (210,319)


Total Other
Comprehensive
Income

- 643,889 643,889 - 487,439 487,439


Total
Comprehensive
Income

296,413 643,889 940,302 310,211 487,439 797,650

1
‘Capital’ includes realised or unrealised gains or losses (and the tax on those) on securities in the investment
portfolio. Income in the form of distributions and dividends is recorded as ‘Revenue’. All other items, including
expenses, are included in Profit for the year, which is categorised under ‘Revenue’.


Total Comprehensive Income is attributable to :
Year to 30 June 2024 Year to 30 June 2023

Revenue Capital Total Revenue Capital Total
$’000 $’000 $’000
$’000 $’000 $’000
Equity holders of Australian
Foundation Investment
Company
296,174 643,889 940,063 309,763 487,439 797,202
Minority Interests 239 - 239 448 - 448

296,413 643,889 940,302 310,211 487,439 797,650



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


11

Consolidated Balance Sheet as at 30 June 2024

2024 2023


Note $’000 $’000

Current assets

Cash D1 166,499 165,385

Receivables 42,425 44,709

Trading portfolio 5,387 3,837

Total current assets 214,311 213,931



Non-current assets

Investment portfolio A2 9,703,558 8,749,226

Total non-current assets 9,703,558 8,749,226

Total assets 9,917,869 8,963,157




Current liabilities

Payables 1,256 1,268

Borrowings – bank debt 10,000 10,000

Tax payable 34,105 32,156

Provisions 6,014 6,057

Total current liabilities 51,375 49,481

Non-current liabilities

Provisions 154 90

Deferred tax liabilities - other 1,237 830

Deferred tax liabilities – investment portfolio B2 1,603,716 1,355,200

Total non-current liabilities 1,605,107 1,356,120

Total liabilities 1,656,482 1,405,601




Net Assets 8,261,387 7,557,556


Shareholders' equity


Share capital A1, D6 3,204,950 3,136,282

Revaluation reserve A1, D3 3,449,280 2,926,191

Realised capital gains reserve A1, D4 546,953 509,741

General reserve A1 23,637 23,637

Retained profits A1, D5 1,034,794 960,171

Parent entity interest 8,259,614 7,556,022

Minority interest 1,773 1,534

Total equity 8,261,387 7,557,556


This Balance Sheet should be read in conjunction with the accompanying notes.
12

Consolidated Statement of Changes in Equity for the Year Ended 30 June 2024



Note
Share
Capital
Revaluation
Reserve
Realised
Capital
Gains
General
Reserve
Retained
Profits
Total
Parent
Entity

Minority
Interest Total
Year Ended 30 June 2024
$’000 $’000 $’000 $’000
$’000 $’000 $’000 $’000
Total equity at the beginning of the year 3,136,282 2,926,191 509,741 23,637 960,171 7,556,022 1,534 7,557,556
Dividends paid to shareholders A4 - - (83,588) - (221,551) (305,139) - (305,139)
- Dividend Reinvestment Plan D6 68,840 - - - - 68,840 - 68,840
Other share capital adjustments (172) - - - - (172) - (172)
Total transactions with shareholders 68,668 - (83,588) - (221,551) (236,471) - (236,471)


Profit for the year - - - - 296,174 296,174 239 296,413
Other Comprehensive Income (net of tax)
Net gains for the period - 643,889 - - - 643,889 - 643,889
Other Comprehensive Income for the year

- 643,889 - - - 643,889 - 643,889
Transfer to Realised Capital Gains of cumulative
gains on investments sold

- (120,800) 120,800 - - - - -
Total equity at the end of the year 3,204,950 3,449,280 546,953 23,637 1,034,794 8,259,614 1,773 8,261,387

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

13

Consolidated Statement of Changes in Equity for the Year Ended 30 June 2024 (continued)



Note
Share
Capital
Revaluation
Reserve
Realised
Capital
Gains
General
Reserve
Retained
Profits
Total
Parent
Entity

Minority
Interest Total
Year Ended 30 June 2023
$’000 $’000 $’000 $’000
$’000 $’000 $’000 $’000
Total equity at the beginning of the year 3,070,163 2,556,466 510,503 23,637 828,634 6,989,403 1,086 6,990,489
Dividends paid to shareholders A4 - - (118,476) - (178,226) (296,702) - (296,702)
- Dividend Reinvestment Plan D6 66,268 - - - - 66,268 - 66,268
Other share capital adjustments (149) - - - - (149) - (149)
Total transactions with shareholders 66,119 - (118,476) - (178,226) (230,583) - (230,583)

Profit for the year
- - - -
309,763 309,763 448 310,211
Other Comprehensive Income (net of tax)
Net gains for the period - 487,439 - - - 487,439 - 487,439
Other Comprehensive Income for the year

- 487,439 - - - 487,439 - 487,439
Transfer to Realised Capital Gains of cumulative
gains on investments sold

- (117,714) 117,714 - - - - -
Total equity at the end of the year 3,136,282 2,926,191 509,741 23,637 960,171 7,556,022 1,534 7,557,556


This Statement of Changes in Equity should be read in conjunction with the accompanying notes
14

Consolidated Cash Flow Statement for the Year Ended 30 June 2024


2024 2023

$’000 $’000

Inflows/ Inflows/

Note (Outflows) (Outflow)
Cash flows from operating activities
Sales from trading portfolio 13,346 20,042
Purchases for trading portfolio (9,995) (5,178)
Interest received 6,963 3,714
Dividends and distributions received 319,169 320,485

329,483 339,063


Other revenue 5,758 5,877
Administration expenses (19,316) (18,909)
Finance costs paid (1,405) (1,265)
Taxes paid (25,172) (7,083)
Net cash inflow/(outflow) from operating activities E1 289,348 317,683


Cash flows from investing activities
Sales from investment portfolio 489,873 491,219
Purchases for investment portfolio (517,291) (490,993)
Taxes paid on sales from investment portfolio (24,571) (66,560)
Net cash inflow/(outflow) from investing activities (51,989) (66,334)


Cash flows from financing activities
Share issue transaction costs (172) (149)
Dividends paid (236,073) (230,434)
Net cash inflow/(outflow) from financing activities (236,245) (230,583)


Net increase/(decrease) in cash held 1,114 20,766
Cash at the beginning of the year 165,385 144,619
Cash at the end of the year D1 166,499 165,385

For the purpose of the cash flow statement, ‘cash’ includes cash and deposits held at call.

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

15

Notes to the consolidated financial statements
A. Understanding AFIC’s financial performance
A1. How AFIC manages its capital
AFIC’s objective is to provide shareholders with stable to growing dividends over time and attractive total returns
over the medium to long term.
AFIC recognises that its capital will fluctuate with market conditions. In order to manage those fluctuations, the
Board may adjust the amount of dividends paid, issue new shares, buy back the Company’s shares or sell
assets.
AFIC’s capital consists of its shareholders’ equity plus any net borrowings. A summary of the balances in equity
is provided below:

2024
$’000
2023
$’000

Share capital 3,204,950 3,136,282

Revaluation reserve 3,449,280 2,926,191

Realised capital gains reserve 546,953 509,741

General reserve 23,637 23,637

Retained profits 1,034,794 960,171


8,259,614 7,556,022


Refer to notes D3-D6 for a reconciliation of movement from period to period for each equity account (except the
General Reserve, which is historical, relates to past profits which can be distributed and has had no movement).
A2. Investments held and how they are measured
AFIC has two portfolios of securities: the investment portfolio and the trading portfolio.
The investment portfolio holds securities which the company intends to retain on a long-term basis, and includes
a small sub-component over which options may be written and an additional small sub-component of
international (i.e. non-Australian/New Zealand listed stocks). The trading portfolio consist of securities that are
held for short-term trading only, including call option contracts written over securities that are held in the specific
sub-component of the investment portfolio and on occasion put options and is relatively small in size. The Board
has therefore focused the information in this section on the investment portfolio. Details of all holdings (except for
the specific option holdings) as at the end of the reporting period can be found at the end of the Annual Report.
The balance and composition of the investment portfolio (all at market value) was:
2024
$’000
2023
$’000



Equity instruments (excluding below) 8,539,661 7,834,313

Equity instruments (over which options may be written) 1,019,386 799,527

Equity instruments (listed on non-Australian/NZ Exchanges) 144,511 115,386

9,703,558 8,749,226





16

How investments are shown in the financial statements
The accounting standards set out the following hierarchy for fair value measurement:
Level 1: Quoted prices in active markets for identical assets or liabilities
Level 2: Inputs other than quoted prices, which can be observed either directly (as prices) or indirectly (derived
from prices)
Level 3: Inputs for the asset or liabilities that are not based on observable market data
All financial instruments held by AFIC are classified as Level 1 (other than the options sold by the Company
which are Level 2). Their fair values are initially measured at the costs of acquisition and then remeasured based
on quoted market prices at the end of the reporting period.
Net tangible asset backing per share
The Board regularly reviews the net asset backing per share both before and after provision for deferred tax on
the unrealised gains in AFIC’s long-term investment portfolio. Deferred tax is calculated as set out in note B2.
The relevant amounts as at 30 June 2024 and 30 June 2023 were as follows:










30 June
2024

30 June
2023
Net tangible asset backing per share $ $
Before tax 7.88 7.19
After tax 6.60 6.09
Equity investments
The shares in the investment portfolio are designated under the accounting standards as financial assets
measured at fair value through ‘other comprehensive income’ (“OCI”), because they are equity instruments held
for long-term capital growth and dividend income, rather than to make a profit from their sale. This means that
changes in the value of these shares during the reporting period are included in OCI in the Consolidated
statement of comprehensive income. The cumulative change in value of the shares over time is then recorded in
the Revaluation Reserve. On disposal, the amounts recorded in the revaluation reserve are transferred to the
realisation reserve.
Securities sold and how they are measured
Where securities are sold from the investment portfolio, any difference between the sale price and the cost is
transferred from the revaluation reserve to the realisation reserve and the amounts noted in the consolidated
statement of changes in equity. This means the Company is able to identify the realised gains out of which it can
pay a ‘Listed Investment Company’ (LIC) gain as part of the dividend, which conveys certain taxation benefits to
many of AFIC’s shareholders.
During the period $486.6 million (2023: $538.7 million) of equity securities were sold. The cumulative gain on the
sale of securities was $120.8 million for the period after tax (2023: $117.7 million). This has been transferred from
the revaluation reserve to the realisation reserve (see Consolidated statement of changes in equity
). These sales
were accounted for at the date of trade.







17

A3. Operating income
The total income received from AFIC’s investments in 2024 is set out below.
Dividends and Distributions
2024
$’000
2023
$’000
Income from securities held in investment portfolio at 30 June
316,100 328,188
Income from investment securities sold during the year
5,736 6,552
Income from securities held in trading portfolio at 30 June
- -
Income from trading securities sold during the year
- -
321,836 334,740

Interest income

Revenue from deposits and cash management trusts 6,963 3 3,714
Other revenue
Administration fees 5,525 5,553
Other income 30 -
5,555 5,553
Dividend income
Distributions from listed securities are recognised as income when those securities are quoted in the market on
an ex-distribution basis. Capital returns on ordinary shares are treated as an adjustment to the carrying value of
the shares.
Trading income
Net gains on the trading portfolio are set out below.

2024


2023

Net gains

$’000

$’000
Net realised gains/(losses) from trading portfolio – shares/securities
(77) 48
- options 4,119 4,542
Unrealised gains/(losses) from trading portfolio - shares/securities
937 1,010
- options (78) 400
4,901 6,000
$170.1 million of shares are lodged with the ASX Clear Pty Ltd as collateral for sold option positions written by
the Group (2023: $145.3 million). These shares are lodged with ASX Clear under the terms of ASX Clear Pty Ltd
which require participants in the Exchange Traded Option market to lodge collateral, and are recorded as part of
the Group’s Investment Portfolio
. If all call options were exercised, this would lead to the sale of $34.5 million
worth of securities at an agreed price – the ‘exposure’ (2023: $155.8 million).

18

A4. Dividends paid
The dividends paid and payable for the year ended 30 June 2024 are shown below:

2024
$’000
2023
$’000
(a) Dividends paid during the year

Final dividend for the year ended 30 June 2023 of 14 cents fully franked at
30% paid 1 September 2023 ( 2023: 14 cents fully franked at 30% paid on
30 August 2022).
167,176 165,866
Interim dividend for the year ended 30 June 2024 of 11.5 cents per share
fully franked at 30% paid 26 February 2024 (2023: 11 cents fully franked at
30% paid 24 February 2023)
137,963 130,836

305,139 296,702
Dividends paid or payable in cash
236,299 230,434
Dividends reinvested in shares
68,840 66,268

305,139 296,702
Dividends forgone via DSSP
11,856 11,400
(b) Franking credits

Opening balance of fr anking account at 1 July
248,712 197,933
Franking credits on dividends received
101,489 109,312
Tax paid during the year
49,428 73,512
Franking credits paid on ordinary dividends paid
(130,774) (127,158)
Franking credits deducted on DSSP shares issued
(5,084) (4,887)
Closing Balance of Franking Account
263,771 248,712
Adjustments for tax payable in respect of the current year’s profits and the
receipt of dividends recognised as receivables
42,488 41,364
Adjusted Closing Balance
306,259 290,076
Impact on the franking account of dividends declared but not recognised as
a liability at the end of the financial year:
(77,776) (74,421)
Net available 228,483 215,655
These franking account balances would allow AFIC to frank additional
dividend payments up to an amount of:
533,127 503,195
AFIC’s ability to continue to pay franked dividends is dependent upon the receipt of franked dividends from
the trading and investment portfolios and on AFIC paying tax.













19

(c) New Zealand imputation account
2024
$’000
2023
$’000
(Figures in A$ at year-end exchange rate : 2024 : $NZ$1.097:$A1; 2023 : $NZ1.085:$A1)
Opening balance
10,325 18,898
Imputation credits on dividends received
8,619 6,970
Imputation credits on dividends paid
- (15,429)
Closing balance
18,944 10,439
A NZ imputation credit on NZ 4.0 cents of the dividend will be attached to the final dividend to be paid on 30
August 2024. There was no NZ imputation credit attached to the proposed final dividend for the year ended 30
June 2023.
(d ) Dividends declared after balance date
Since the end of the year Directors have declared a final dividend of 14.5 cents per share fully franked at 30%.
The aggregate amount of the final dividend for the year to 30 June 2024 to be paid on 30 August 2024, but not
recognised as a liability at the end of the financial year is: 1 81,478

(e ) Listed Investment Company capital gain account



2024
$’000
2023
$’000
Balance of the Listed Investment Company (LIC) capital gain
account at 1 July:


92,813
158,619
Capital gains (incl LIC gains received from dividends) 55,425 52,670
LIC gains paid as part of dividend (83,588) (118,476)
Balance at 30 June 64,650 92,813
This equates to an attributable gain of: 92,357 132,590

Distributed LIC capital gains may entitle certain shareholders to a deduction in their tax return, as set out in the
dividend statement. LIC capital gains available for distribution are dependent on the disposal of investment
portfolio holdings that qualify for LIC capital gains, or the receipt of LIC distributions from LIC securities held in
the portfolios. $80.5 million attributable gain is attached to the final dividend to be paid on 30 August 2024.
A5. Earnings per share
The table below shows the earnings per share based on the
profit for the year:
2024 2023

Basic Earnings per share Number Number

Weighted average number of ordinary shares used as the
denominator
1,247,196,831 1,236,299,822




$’000 $’000
Profit for the year 296,174 309,763



Cents Cents
Basic earnings per share







23.75 25.06
20

B. Costs, Tax and Risk
B1. Management Costs
The total management expenses for the period are as follows:

2024
$’000
2023
$’000


Rental expense relating to non-cancellable leases (702) (648)
Employee benefit expenses (12,390) (11,093)
Depreciation charge - -
Other administration expenses
(5,823) (6,246)

(18,915) (17,987)
Employee benefit expenses
A major component of employee benefit expenses is Directors’ and Executives’ remuneration. This has been
summarised below:

Short-term


Post-employment


Total

$ $ $

2024
Non-executive
Directors 724,321 70,890 795,211
Executives 4,028,579 110,000 4,138,579
Total 4,752,900 180,890 4,933,790
2023
Non-executive
Directors 801,828 49,042 850,870
Executives 3,595,245 110,000 3,705,245
Total 4,397,073 159,042 4,556,115

Detailed remuneration disclosures are provided in the Remuneration Report.

The Group (i.e. AFIC and its subsidiary, Australian Investment Company Services Ltd (”AICS”) – see note F8)
does not make loans to Directors or Executives.





21

B2. Tax
AFIC’s tax position, and how it accounts for tax, is explained here. Detailed reconciliations of tax accounting to
the financial statements can be found in note E2.
The income tax expense for the period is the tax payable on this financial year’s taxable income, adjusted for any
changes in deferred tax assets and liabilities attributable to temporary differences and for any unused tax losses.
Deferred tax assets and liabilities (except for those related to the unrealised gains or losses in the investment
portfolio) are offset, as all current and deferred taxes relate to the Australian Taxation Office and can legally be
settled on a net basis.
A provision has been made for taxes on any unrealised gains or losses on securities valued at fair value through
the Income Statement – i.e. the trading portfolio, puttable instruments and convertible notes that are classified as
debt.
A provision also has to be made for any taxes that could arise on sale of securities in the investment portfolio,
even though there is no intention to dispose of them. Where AFIC disposes of such securities, tax is calculated
according to the particular parcels allocated to the sale for tax purposes, offset against any capital losses carried
forward.
Tax expense
The income tax expense for the period is shown below:
(a) Reconciliation of income tax expense to prima facie tax payable


2024
$’000
2023
$’000
Profit before income tax expense 318,935 330,755
Tax at the Australian tax rate of 30% (2023: 30%) 95,681 99,226
Tax offset for franked dividends received (71,058) (76,518)
Sundry items whose tax treatment differs from accounting treatment 619 (665)

25,242 22,043
Over provision in prior years (2,720) (1,499)


Total tax expense 22,522 20,544

Deferred tax liabilities – investment portfolio
The accounting standards require us to recognise a deferred tax liability for the potential capital gains tax on the
unrealised gain in the investment portfolio. This amount is shown in the Balance Sheet. However, the Board
does not intend to sell the investment portfolio, so this tax liability is unlikely to arise at this amount. Any sale of
securities would also be affected by any changes in capital gains tax legislation or tax rate applicable to such
gains when they are sold.

2024
$’000
2023
$’000
Deferred tax liabilities on unrealised gains in the investment portfolio 1,603,716 1,355,200
Opening balance at 1 July 1,355,200 1,169,452
Tax on realised gains (31,287) (24,571)
Charged to OCI for ordinary securities on gains or losses for the period 279,803 210,319
1,603,716 1,355,200
22

B3. Risk
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices.
As a Listed Investment Company that invests in tradeable securities, AFIC can never be free of market risk as it
invests its capital in securities which are not risk free – the market price of these securities will fluctuate.
A general fall in market prices of 5% and 10%, if spread equally over all assets in the investment portfolio, would
have led to a reduction in AFIC’s comprehensive income of $339.6 million and $679.2 million respectively, at a
tax rate of 30% (2023: $306.2 million & $612.4 million).
AFIC seeks to reduce market risk at the investment portfolio level by ensuring that it is not, in the opinion of the
Investment Committee, overly exposed to one company or one particular sector of the market. The relative
weightings of the individual securities and the relevant market sectors are reviewed by the Investment Committee
and risk can be managed by reducing exposure where necessary. AFIC does not have a minimum or maximum
amount of the portfolio that can be invested in a single company or sector.

AFIC’s total investment exposure by sector is as below:

2024 2023

% %
Energy 3.77 3.41
Materials 14.28 15.46
Industrials 10.75 12.58
Consumer Discretionary 7.95 7.41
Consumer Staples 4.08 5.42
Banks 20.81 18.42
Other Financials 9.23 9.00
Real Estate 5.01 3.44
Telecommunications 6.51 6.25
Health Care 13.17 14.00
Info Technology 2.72 2.73
Utilities 0.03 0.03
Cash 1.69 1.85

Securities representing over 5% of the investment portfolio at 30 June
were
Commonwealth Bank 10.1 8.9
BHP 8.1 9.1
CSL 7.8 7.7

AFIC is also not directly exposed to material currency risk as most of its investments are quoted in Australian
dollars. The international portfolio is a minor (1.5%) part of the total portfolio (2023 : 1.3%).

The writing of call options provides some protection against a fall in market prices as it generates income to
partially compensate for a fall in capital values. Options are only written against securities that are held in the
trading or the specific sub-section of the investment portfolio.




23

Interest Rate Risk

The Group is not currently materially exposed to interest rate risk as all its cash investments and borrowings are
short term for a fixed interest rate.

Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing
to discharge an obligation. AFIC is exposed to credit risk from cash, receivables, securities in the trading portfolio
and securities in the investment portfolio respectively. None of these assets are overdue. The risk in relation to
each of these items is set out below.
Cash
All cash investments not held in a transactional account (including with a custodian) are invested in short-term
deposits with Australia’s major commercial banks. In the unlikely event of a bank default, there is a risk of losing
the cash deposits and any accrued unpaid interest.
Receivables
Outstanding settlements are on the terms operating in the securities industry, which usually require settlement
within two days of the date of a transaction. Receivables are non-interest bearing and unsecured. In the event of
a payment default, there is a risk of losing any difference between the price of the securities sold and the price of
the recovered securities from the discontinued sale. Receivables also include dividends from securities that have
passed the record date for the distribution but have not paid as at balance date.
Trading and investment portfolios
Converting and convertible notes or other interest-bearing securities that are not equity securities carry credit risk
to the extent of their carrying value. This risk will be realised in the event of a shortfall on winding-up of the
issuing companies. As at 30 June 2024, no such investments are held (2023 : Nil). AFIC engages a custodian,
Northern Trust, to hold the shares that are in the sub-component of the investment portfolio that contains
international shares. AFIC receives a GS007 report on Internal Controls for Custody, Investment Administration,
Registry Monitoring and Related Information Technology Services from Northern Trust every 6 months.
Liquidity risk
Liquidity risk is the risk that an entity will not be able to meet its financial liabilities.
AFIC monitors its cash-flow requirements daily. The Investment Committee also monitors the level of contingent
payments on a regular basis by reference to known sales and purchases of securities, dividends and distributions
to be paid or received, put options that may require AFIC to purchase securities, and facilities that need to be
repaid. AFIC ensures that it has either cash or access to short-term borrowing facilities sufficient to meet these
contingent payments.
AFIC’s inward cash flows depend upon the dividends received. Should these drop by a material amount, AFIC
would amend its outward cash-flows accordingly. AFIC’s major cash outflows are the purchase of securities and
dividends paid to shareholders, and both of these can be adjusted by the Board and management. Furthermore,
the assets of AFIC are largely in the form of readily tradeable securities which can be sold on-market if
necessary.
The table below analyses AFIC’s financial liabilities into relevant maturity groupings. The amounts disclosed in
the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying
amounts as the impact of discounting is not significant.





24

30 June 2024
Less than
6 months
6- 12
months
Greater
than 1
year
Total
contractual
cash flows
Carrying
Amount

$’000 $’000 $’000 $’000 $’000
Non-derivatives
Payables
1,256
- - 1,256 1,256
Borrowings
10,000
- - 10,000 10,000

11,256 - - 11,256 11,256
Derivatives
Options in trading portfolio* - - - - -
- - - - -

30 June 2023 Less than 6
months
6- 12
months
Greater
than 1
year
Total
contractual
cash flows
Carrying
Amount

$’000 $’000 $’000 $’000 $’000
Non-derivatives
Payables 1,268 - - 1,268 1,268
Borrowings 10,000 - - 10,000 10,000
11,268 - - 11,268 11,268
Derivatives
Options in trading portfolio* - - - - -

- - - - -
* In the case of call options, there are no contractual cash flows as if the option is exercised the contract will be
settled in the securities over which the option is written. The contractual cash flows for put options written are the
cash sums the Company will pay to acquire securities over which the options have been written, and it is
assumed for the purpose of the above disclosure that all options will be exercised (i.e. maximum cash outflow).
There were no put options outstanding at 30
th
June 2024 or 30
th
June 2023.

C. Unrecognised items

C1. Contingencies
Directors are not aware of any material contingent liabilities or contingent assets other than those already
disclosed elsewhere in the financial report.

25

Further information that shareholder may find useful is included here. It is grouped into three sections:

D Balance sheet reconciliations
E Income statement reconciliations
F Further information

D. Balance sheet reconciliations
These Notes provide further information about the basis of calculation of line items in the financial statements.
D1. Current assets – cash

2024
$’000
2023
$’000

Cash at bank 166,262 755

Cash with custodian 237 4,359

Cash Management Trusts - 160,271


166,499 165,385

Cash holdings yielded an average floating interest rate of 4.30% (2023: 2.97%). All cash investments are held
in a transactional account, with a custodian or in an ‘at call’ deposit account with the Commonwealth Bank of
Australia and Macquarie Bank.
D2. Credit Facilities


2024
$’000

2023
$’000

Commonwealth Bank of Australia – cash advance facility 110,000 110,000

Amount drawn down at 30 June 0 0

Undrawn facilities at 30 June 110,000 110,000



National Australia Bank- cash advance facility 20,000 20,000

Amount drawn down at 30 June 10,000 10,000

Undrawn facilities at 30 June 10,000 10,000



Total short-term loan facilities 130,000 130,000

Total drawn down at 30 June 10,000 10,000

Total undrawn facilities at 30 June 120,000 120,000


The above borrowings, with the exception of the NAB facility, are unsecured. Repayment of facilities is done
either through the use of cash received from distributions or the sale of securities, or by rolling existing facilities
into new ones. Facilities are usually drawn down for no more than three months and hence are classified as
current liabilities when drawn.
The debt facility with National Australia Bank is structured in the form of a securities lending arrangement. The
terms of the agreement require that securities be pledged as collateral for the drawn secured borrowings under
that facility and that such securities currently satisfy a minimum value of $11 million (110% of the total drawn
facility). These securities are held by the National Australia Bank but included as part of the Company’s
investment portfolio. As at 30 June 2024 the market value of the securities pledged as collateral was $15.1
million (2023 : $14.6 million).
26

D3. Revaluation reserve

2024
$’000
2023
$’000

Opening balance at 1 July 2,926,191 2,556,466

Gains/(losses) on investment portfolio

- Equity Instruments 923,692 697,758

Provision for tax on above (279,803) (210,319)

Cumulative taxable realised (gains)/losses (net of tax) (120,800) (117,714)

3,449,280 2,926,191



This reserve is used to record increments and decrements on the revaluation of the investment portfolio
as described in accounting policy note A2.


D4. Realised capital gains reserve




Opening balance at 1 July 509,741 510,503

Dividends paid (83,588) (118,476)
Cumulative taxable realised gains/(losses) (net of tax) 120,800 117,714
546,953 509,741

This reserve records gains or losses after applicable taxation arising from disposal of securities in the
investment portfolio as described in A2.

D5. Retained profits




Opening balance at 1 July 960,171

828,634

Dividends paid (221,551) (178,226)

Profit for the year 296,174 309,763

1,034,794 960,171

This reserve relates to past profits.










27

D6. Share capital


Movements in Share Capital

Date Details Notes Number
of shares

Issue
price
Paid-up
Capital

’000 $ $’000
1/07/2022 Balance 1,229,906
3,070,163
30/08/2022 Dividend Reinvestment Plan i 4,883 7.56 36,914
30/08/2022
Dividend Substitution Share
Plan
ii 836
7.56 n/a
24/02/2023 Dividend Reinvestment Plan i 4,027
7.29 29,354
24/02/2023
Dividend Substitution Share
Plan
ii 697
7.29 n/a
Various Costs of issue -
- (149)
30/06/2023 Balance 1,240,349
3,136,282
1/09/2023 Dividend Reinvestment Plan i 5,280 7.03 37,121
1/09/2023
Dividend Substitution Share
Plan
ii 920 7.03 n/a
26/02/2024 Dividend Reinvestment Plan i 4,292
7.39 31,719
26/02/2024
Dividend Substitution Share
Plan
ii 729
7.39 n/a
Various Costs of issue -
- (172)
30/06/2024 Balance 1,251,570
3,204,950
i. Shareholders elect to have all or part of their dividend payment reinvested in new ordinary shares under
the Dividend Reinvestment Plan (DRP). The price of the new DRP shares is based on the average selling
price of shares traded on the Australian Securities Exchange & Cboe in the five days after the shares
begin trading on an ex-dividend basis.
ii. The Group has a Dividend Substitution Share Plan (DSSP) whereby shareholders may elect to forgo a
dividend and receive shares instead. Pricing for the DSSP shares is done as per the DRP shares.
iii. The Group has an on-market share buy-back programme. During the financial year, no shares were
bought back (2023: Nil).
All shares have been fully paid, rank pari passu and have no par value.












28

E. Income statement reconciliations
E1. Reconciliation of net cash flows from operating activities to profit

2024
$’000
2023
$’000
Profit for the year 296,413
310,211
Net decrease/(increase) in trading portfolio (1,550) 1,142
Dividends received as securities under DRP investments -
(16)
Decrease/(increase) in current receivables 2,284
(8,111)
- Less increase/(decrease) in receivables for investment portfolio (3,223)
3,223
Increase/(decrease) in deferred tax liabilities 248,923
186,075
- Less (increase)/decrease in deferred tax liability on investment portfolio (248,516)
(185,748)
Increase/(decrease) in current payables (12)
(27,420)
- Less (increase)/decrease in dividends payable (226)
2
- Less (increase)/decrease in payables for investment portfolio -
27,610
Increase/(decrease) in provision for tax payable 1,949
(30,411)
Capital gains tax charge taken through equity (31,287)
(24,571)
Prior year taxes paid relating to capital gains 24,571
66,560
Increase/(decrease) in other provisions/non-cash items 22
(863)
Net cash flows from operating activities 289,348
317,683

E2. Tax reconciliations

Tax expense composition

Charge for tax payable relating to the current year 24,835 21,716
Over provision in prior years (2,720) (1,499)
Increase/(decrease) in deferred tax liabilities 407 327

22,522 20,544

Amounts recognised directly through Other Comprehensive Income

Net movement in deferred tax liabilities relating to capital gains tax
on the movement in gains/losses in the investment portfolio
279,803 210,319

279,803 210,319







29

Deferred tax assets & liabilities
The deferred tax balances are attributable to:
2024
$’000
2023
$’000

(a) Tax on unrealised gains or losses in the trading portfolio (362) (423)

(b)
Provisions and expenses charged to the accounting profit
which are not yet tax deductible
1,856 1,929

(c)
Interest and dividend income receivable which is not
assessable for tax until receipt
(2,731) (2,336)


(1,237) (830)


Movements:

Opening balance at 1 July (830) (503)

Credited/(charged) to Income statement (407) (327)


(1,237) (830)

Deferred tax assets and liabilities arise when provisions and expenses have been charged but are not yet tax
deductible. These assets are realised when the relevant items become tax deductible, as long as enough
taxable income has been generated to claim the assets against, and as long as there are no changes to the tax
legislation that affect AFIC’s ability to claim the deduction.

30

F. Further information
This section covers information that is not directly related to specific line items in the financial statements,
including information about related party transactions, share-based payments, assets pledged as security and
other statutory information.
F1. Related parties
All transactions with deemed related parties were made on normal commercial terms and conditions and
approved by independent Directors.
(a) Arrangements with non-executive directors
Non-Executive Director C Drummond and former Non-Executive Directors J Paterson and C Walter have
rented office space and, for J Paterson, a parking space from the Group at commercial rates during the year.
Sub-lease rental income (included in revenue) received or receivable by the Group, excluding GST, during the
year was $ 16,760 (2023: $45,369)
(b) AICS transactions with minority interests
The below transactions were with Djerriwarrh Investments Ltd as a minority interest holder in the Company’s subsidiary.

2024
$’000
2023
$’000
Administration expenses charged for the year 2,566 2,442
At the end of June, the Company’s investment in Djerriwarrh Investments Limited, which is measured at fair value
through OCI as part of the investment portfolio, was valued at $22.1 million (2023 : $21.3 million) and it received
dividend income during the year of $1.1 million (2023 : $1.1 million).
(c) AICS transactions with other Listed Investment Companies
AICS had the following transactions with other Listed Investment Companies to which it provides services :

Administration expenses charged for the year to Mirrabooka Investments Ltd 2,139 2,058
Administration expenses charged for the year to AMCIL Ltd 1,011
1,216
At the end of June, the Company’s investment in Mirrabooka Investments Limited, which is measured at fair
value through OCI as part of the investment portfolio, was valued at $27.7 million (2023 : $23.9
million) and it
received dividend income during the year of $1.3 million (2023 ; $1.0 million). The Company did not have an
investment in AMCIL Ltd during the year.











31

F2. Remuneration of auditors
For the year the auditor earned or will earn the following remuneration including GST:

2024
$

2023
$
PricewaterhouseCoopers
Audit Services
Audit or review of financial reports 178,115 176,496
Audit r
elated Services
AFSL compliance audit and review 9,507 9,098
Permitted No
n-Audit Services
Review of realised CGT balances 67,760 63,702
Preparation and lodgement of tax returns 37,479 35,864


Total remuneration 292,861 285,160

F3. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting used by the chief operating
decision-maker. The Board, through its committees, has been identified as the chief operating decision-maker,
as it is responsible for allocating resources and assessing performance of the operating segments.
Description of segments
The Board makes the strategic resource allocations for AFIC. AFIC has therefore determined the operating
segments based on the reports reviewed by the Board, which are used to make strategic decisions.
The Board is responsible for AFIC’s entire portfolio of investments and considers the business to have a single
operating segment (noting that the investment portfolio contains sub-components for ease of administration).
The Board’s asset allocation decisions are based on a single, integrated investment strategy, and AFIC’s
performance is evaluated on an overall basis.
Segment information provided to the Board
The internal reporting provided to the Board for AFIC’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
AFIC’s Net Tangible Asset announcements to the ASX).
Other segment information
Revenues from external parties are derived from the receipt of dividend, distribution and interest income, and
income arising on the trading portfolio and realised income from the options portfolio.
AFIC is domiciled in Australia and most of AFIC’s income is derived from Australian entities or entities that
maintain a listing in Australia. AFIC has a diversified portfolio of investments, with only 2 investments
comprising more than 10% of AFIC’s income – BHP 12.4% and CBA 10.6% (2023 1 investment : BHP (17.3%).
F4. Summary of other accounting policies
This general purpose financial report has been prepared in accordance with Australian Accounting Standards,
Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. This
financial report has been authorised for issue on 29 July 2024 in accordance with a resolution of the Board and
is presented in the Australian currency. The Directors of the Company have the power to amend and reissue
the financial report.
32

AFIC has attempted to improve the transparency of its reporting by adopting ‘plain English’ where possible. Key
‘plain English’ phrases and their equivalent AASB terminology are as follows:
Phrase AASB Terminology
Market Value Fair Value for Actively Traded Securities
Cash Cash & Cash Equivalents
Share Capital Contributed Equity
Options

Hybrids
Derivatives written over equity instruments that are
valued at fair value through Profit or Loss
Equity instruments that have some of the
characteristics of debt


AFIC complies with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (“IASB”). AFIC is a ‘for profit’ entity.
AFIC has not applied any Australian Accounting Standards or AASB Interpretations that have been issued as at
balance date but are not yet operative for the year ended 30 June 2024 (“the inoperative standards”). The
impact of the inoperative standards has been assessed and the impact has been identified as not being
material. AFIC only intends to adopt other inoperative standards at the date at which their adoption becomes
mandatory.

Basis of accounting
The financial statements are prepared using the valuation methods described in A2. All other items have been
treated in accordance with the historical cost convention.
Fair value of financial assets and liabilities
The fair value of cash and non-interest bearing monetary financial assets and liabilities of AFIC approximates
their carrying value.
Convertible Notes
On the issue of convertible notes, the Group estimates the fair value of the liability component of the convertible
notes, being the obligation to make future payments of principal and interest to holders, using a market interest
rate for a non-convertible note of similar terms and conditions. The residual amount is included in equity as
other equity securities with no recognition of any change in the value of the option in subsequent periods. The
liability component is then included in borrowings. Expenses incurred in connection with the issue of the notes
are deducted from the total face value and the expense is then incurred over the life of the notes.
The total liability is subsequently carried on an amortised cost basis with interest on the notes recognised as
finance costs on an effective yield basis until the liability is extinguished on conversion or maturity of the notes.
The Group had no convertible notes on issue for the years ended 30 June 2024 or 30 June 2023.
Employee benefits
(i) Wages, salaries and annual leave
Liabilities for wages and salaries, including annual leave, expected to be settled within 12 months of balance
date are recognised as current provisions in respect of employees’ services up to balance date and are
measured at the amounts expected to be paid when the liabilities are settled.
(ii) Long service leave
In calculating the value of long service leave, consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using
corporate bond rate information provided by Milliman via the G100.
(iii) Cash incentives
Cash incentives are provided under the Incentive Plan and are dependent upon the performance of the Group.
A provision is made for the cost of unsettled cash incentives at balance date.
33

(iv) Share incentives
Share incentives are provided under the Incentive Plan and the Employee Share Acquisition Scheme.
For the Employee Share Acquisition Scheme and the Incentive Plan, the incentives are based on the
performance of the individual, the Group and investment companies to which the group provides administration
services, for the financial year and, in the case of performance of the Group and other investment companies,
longer term performance of up to 10 years. For the Employee Share Acquisition Scheme and a portion of the
Executive Incentive Plan, the recipient agrees to purchase (or have purchased for them) shares on-market, but
receives a cash amount. A provision for the amount payable the Incentive Plan is recognised on the Balance
Sheet.
Administration fees
The Group currently provides administrative services to other Listed Investment Companies. The associated
fees are recognised on an accruals basis as income throughout the year. Any amounts outstanding at balance
date are recognised as receivable, subject to the assessment of recoverability by the Directors.
Operating leases
The Group currently has an operating lease in respect of its premises. Payments made under operating leases
are charged to the Income Statement on a straight-line basis over the period of the lease.

Rounding of amounts
AFIC is a company of the kind referred to in the ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191, relating to the ‘rounding off’ of amounts in the financial report. Amounts in the financial
report have been rounded off in accordance with that Instrument, to the nearest thousand dollars, or in certain
cases, to the nearest dollar.

F5. Performance Bond
The Group’s subsidiary, AICS, has under the terms of its Australian Financial Services License in place a
performance bond to the sum of $20,000 underwritten by the Commonwealth Bank of Australia in favour of the
Australian Securities and Investments Commission (“ASIC”), payable on demand to ASIC.

F6. Share Incentive Arrangements
Share Incentive arrangements
The Group has a number of share incentive arrangements. T hese are accounted for in accordance with note
F4. Where shares are issued to employees of AICS, AICS compensates AFIC for the fair value of the shares.

(a) Incentive Plan
The executives’ remuneration arrangements incorporate an ‘at risk’ component as set out in the remuneration
report. Part of this ‘at risk’ component is paid in shares in the Group.
Each financial year, the Remuneration Committee sets the target (cash) amount of remuneration that could be
paid should all performance targets and measures be achieved. If all are achieved, 100% of the remuneration
will be awarded. If stretch levels of performance are achieved above target, then higher amounts may be paid.
On the other hand there is no set minimum that will be paid regardless of performance.
The performance measures are a combination of the performance of the Group, the investment companies to
which the Group provides administration services, and personal objectives.
All of the incentive remuneration awarded is paid in cash, with 25% of the pre-tax amount being used by the
executive to purchase shares in AFIC and/or the other LICs. All remuneration under the plan, is paid in the
financial year following the year of assessment.
The executive agrees to the shares being subject to being held for four years (holding term), during which they
cannot be sold. Dividends are paid to executives on these shares prior to the expiry of the holding term.
Should an executive leave the Group before the holding term expires, the restriction will be lifted.
34

10,291 AFIC shares for the Incentive Plan (2023: 37,897 shares) were purchased by executives in the year (in
relation to the prior year) with a fair value (being the acquisition price) of $72,717 ( 2023: $276,813). Executives
are allowed to buy shares in any of the LICs that AICS administers in order to meet this requirement.
(b) Employee Share Acquisition Scheme (ESAS)
Under the current Employee Share Acquisition Scheme, each employee who is not a participant in the
executive or investment team incentive plans is awarded $5,000 per annum. After PAYG is deducted, $2,500
is used to buy shares in the Company, which needs to be held for three years. After three years, or the
departure of the employee from employment with the Group, the shares come out of the holding lock.
In addition, each employee is eligible for an additional award of up to $5,000. 50% of the amount awarded is
used to buy shares in one of the other LICs that AICS provides services to. The amount that is awarded is
dependent on the metrics used for the vesting of the Investment Team’s Short Term Incentive (excluding
personal measures). During the year, 58% of the possible maximum was awarded, and 50% of this was used
to buy shares in AMCIL Limited, as part of the Group’s policy of rotating these purchases amongst the LICs
other than AFIC to which AICS provides services.
(c) Expenses arising from share based payment transactions
Total expenses arising from share based payment transactions recognised during the period as part of the
employee benefit expense were as follows (ESAS only) :

2024
$’000
2023
$’000
Share-based payment expense 47 55

(d) Liability
The total liability arising from share based payment transactions is included in the current liabilities for
‘provisions’.

F7. Principles of consolidation
AFIC’s consolidated financial statements consist of the financial statements of AFIC, the parent, and its
subsidiary, Australian Investment Company Services Ltd (“AICS”). 25% of AICS is owned by Djerriwarrh
Investments Ltd, another investment company for which AICS performs operational and investment
administration services, and for which it is paid monthly.
No subsidiaries were acquired or disposed of during the year. Intercompany transactions and balances
between AFIC and AICS are eliminated on consolidation.
The financial information for the parent entity, disclosed in note F10 below, has been prepared on the same
basis as the consolidated financial statements. All notes are for the consolidated group unless specifically
noted otherwise.

F8. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries:
Name of entity Country of
Incorporation
Class of
shares
Equity holding
2024 2023

Australian Investment Company Services
Ltd

Australia

Ordinary

75%

75%
The investment in AICS is accounted for at cost in the individual financial statements of AFIC.


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F9. Lease Commitments
The Group has entered into a non-cancellable operating lease for the use of its premises for 6 years with effect
from 1 July 2022. Current commitments relating to leases at balance date, for the current lease (incl. GST), is:

2024
$’000
2023
$’000
Due within one year 561 534
Later than one year but less than five 1,855 2,416
Greater than five years - -
2,416 2,950


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F10. Parent Entity Financial Information

Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:

2024 2023
$'000 $'000
Balance sheet

Current assets 202,583 203,360
Total assets 9,906,291 8,952,645

Current liabilities 46,579 43,607
Total liabilities 1,651,840 1,401,070

Shareholders’ equity

Issued capital 3,205,100 3,136,432

Reserves
Revaluation reserve 3,449,280 2,926,191
Realised capital gains reserve 546,953 509,741
General reserve 23,637 23,637
Retained earnings 1,029,481 955,574
5,049,351 4,415,143

Total shareholders’ equity 8,254,451 7,551,575

Profit or loss for the year 295,457 308,418

Total comprehensive income 939,346 795,857

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