2026 Annual Reports

28 August 2026




The Manager
ASX Market Announcements
ASX Limited
Level 27,
39 Martin Place,
Sydney NSW 2000



Electronic Lodgement


Australian Foundation Investment Company Limited
Statutory Annual Report and Annual Shareholder Review


Dear Sir / Madam

Please find attached the 2026 Statutory Annual Report and Annual
Shareholder Review being sent to shareholders.


Yours faithfully


Matthew Rowe
Company Secretary


Authorised by the Company Secretary

Annual Report
2026
Income,
Capital Growth,
Low Cost

Contents
AUSTRALIAN FOUNDATION
INVESTMENT COMPANY
IS A LISTED INVESTMENT
COMPANY INVESTING
IN AUSTRALIAN AND
NEW ZEALAND EQUITIES.
DIRECTORS’ REPORT03
5 Year Summary03
About the Company04
Review of Operations and Activities06
Top 25 Investments13
Company Position14
FINANCIAL REPORT32
Financial Statements33
Consolidated Income Statement33
Consolidated Statement
of Comprehensive Income34
Consolidated Balance Sheet35
Consolidated Statement
of Changes in Equity36
Consolidated Cash Flow Statement38
Notes to the Consolidated
Financial Statements39
A. Understanding AFIC’s Financial
Performance39
B. Costs, Tax and Risk43
C. Unrecognised Items46
D. Balance Sheet Reconciliations47
E. Income Statement Reconciliations49
F. Further Information50
CONSOLIDATED ENTITY
DISCLOSURE STATEMENT56
DIRECTORS’ DECLARATION57
INDEPENDENT AUDIT REPORT58
SUSTAINABILITY REPORT63
Independent Auditor’s Review Report
on Specified Sustainability Disclosures73
OTHER INFORMATION78
Information About Shareholders78
Major Shareholders79
Sub-underwriting80
Substantial Shareholders80
Transactions in Securities81
Major Transactions in the Investment Portfolio82
Holdings of Securities83
Holdings of International Securities85
Issues of Securities86
Company Particulars88
Shareholder Information89
Board Members16
Senior Executives19
Remuneration Report20
Non-audit Services30
Auditor’s Independent Declaration31
Australian Foundation Investment Company Limited ABN 56 004 147 120

* Assumes a shareholder can take full advantage of the franking credits.
#
Includes 12.0 cent interim dividend and 2.5 cent special interim dividend.
2026
Year in Summary
Profit for the Year
$293.5m
$285.0m in 2025
Total Portfolio Return
0.9% Including franking*
S&P/ASX 200 Accumulation Index
including franking* 7.2%
Management Expense Ratio
0 .14%
0.16% in 2025
Total Shareholder Return
2.5%
Share price plus dividend, including franking*
Total Portfolio
$9.8b
Including cash at 30 June. $10.5 billion in 2025
Fully Franked Dividend Per Share
14.5¢ Final
31. 5¢
Total
#
2.5¢ Special
31.5 cents total in 2025
1
Annual Report 2026
Australian Foundation Investment Company Limited

2
Annual Report 2026
Australian Foundation Investment Company Limited

DIRECTORS’ REPORT
5 Year Summary
Notes:
(a) All dividends were fully franked. The LIC attributable gain per share attached to the dividend (including the special dividend) was 14.29 cents for 2026;
2025: 27.86 cents; 2024: 6.43 cents; 2023: 10.0 cents; 2022: 14.29 cents.
(b) Excludes cash.
(c) Net asset backing per share based on year-end data before the provision for the final dividend. The figures do not include a provision for capital
gains tax that would apply if all securities held as non-current investments had been sold at balance date as Directors do not intend to dispose
of the portfolio.
Net Profit After Tax
($ Million)
Net Profit Per Share
(Cents)
Investments at Market Value
($ Million)
(b)
Net Asset Backing Per Share
($)
(c)
Number of Shareholders
(30 June)
2026
Dividends Per Share
(Cents)
(a)
23.4
7.93
144,360
293.5
9,669
6.63
7.19
164,979
163,964
8,087
8,753
7.88
8.33
157
,923
152
,586
9,709
10,261
2026
360.6
310.2
29.4
25.1
24
25
23.7
22.7
26
5.0
296.4
285.0
Special
5.0
Special
2026
202620262026
202220232024202520222023202420252022202320242025
202220232024202520222023202420252022202320242025
26.526.5
3
Australian Foundation Investment Company Limited
Annual Report 2026

About the Company
How AFIC Invests – What We Look For in Companies
A portfolio that
is managed to
achieve long
term capital and
dividend growth
Quality First
Growth
Including dividends
Value
Australian Foundation
Investment Company (AFIC) is
a Listed Investment Company
investing in Australian and
New Zealand equities.
Investment Objectives
The Company’s primary investment goals are:
• to pay a stable to growing ordinary dividend over time; and
• to provide attractive total returns over the medium to long term.
INCOME,
CAPITAL GROWTH,
LOW COST
DIRECTORS’ REPORT
4
Australian Foundation Investment Company Limited
Annual Report 2026

Approach to Investing
Investment Philosophy
Our investment philosophy is built on
taking a medium to long term view on
companies in a diversified portfolio, with
an emphasis on identifying and investing
in quality companies that are likely to
sustainably grow their earnings and
dividends over this timeframe.
Quality in this context is an outcome of
our assessment of the following factors:
1. We prefer companies that have a
leadership position or are developing
one within the industry in which they
operate. This will often mean we are
investing in a unique set of assets with
competitive advantages that produces
attractive returns on invested capital.
2. As a long term, tax aware investor we
seek to be in companies that have a
long term sustainable business model,
with low risk of disruption. This helps
to ensure portfolio turnover remains
low. The analysis may consider
technological disruption, environmental
issues, including the impact of climate
change, and social risks as all of these
factors can have a material impact
on the assessment of a company’s
long term sustainability.
3. We consider how a company’s
business can be potentially impacted
by influences outside the control
of management such as change in
government regulation and/or policy.
4. We are attracted to companies with
outstanding management teams
and boards with strong governance
processes, whose interests are
closely aligned with shareholders,
and act in the best interest of all
their stakeholders, including their
employees, customers, suppliers
and wider communities. We consider
matters including safety, diversity,
social impacts, environmental impact
and modern slavery where material
or appropriate in the context of that
company. We regularly review and
meet with companies to ensure
ongoing alignment with our investment
frameworks. Our process may
include an assessment of the board
in terms of their past performance,
history of capital allocation, level of
accountability, mix of skills, relevant
experience and succession planning.
We also consider a company’s degree
of transparency and disclosure.
Voting on resolutions is one of the
key functions that a shareholder has
in ensuring better long term returns
and management of investment risk.
We take input from proxy advisers
but conduct our own evaluation of
the merits of any resolution. We vote
on all company resolutions as part
of our regular engagement with the
companies in the portfolio and our
voting record is on the company’s
website. We actively engage with
companies when we are concerned
about resolutions that are not aligned
with shareholders’ interests. We seek
to stay engaged with the companies
and satisfy ourselves that any issues
are taken seriously and worked
through constructively. Ideally we
seek to remain invested to influence
a satisfactory outcome for stakeholders.
5. We prefer companies with more
stable income flows. We are wary
of companies that have large,
inconsistent profit streams.
6. We like our companies to be financially
strong and the assessment of the
balance sheet and the degree to which
the company is self-funding is critical
in our analysis. Cash generation
is also an important consideration.
Analysis of the above factors helps to
inform us of the structure of the industry
and a company’s sustainable competitive
position as well as the quality of the
people running the business, strength
of the balance sheet and consistency
of earnings. Within this analysis some
key financial metrics are considered.
These include return on capital employed,
return on equity, the level of gearing
in the balance sheet, margins and free
cash flow generation.
Alongside the assessment of quality
is an analysis of the ability of companies
to grow earnings over time, which
ultimately should drive dividend growth.
Recognising value is also an important
aspect of sound long term investing.
Short term measures such as the price
earnings ratio, price to book or price
to sales may be of some value, but
aren’t necessarily strong predictors
of future performance. Our assessment
of value tries to capture the opportunity
a business has to prosper and thrive
over the medium to long term.
Reporting of social and environmental
issues is being influenced by the
development of climate-related
disclosures as required by Australian
Corporate Legislation. Their introduction
in Australia should enable investors over
time to better make informed decisions
on these issues based on company
disclosures arising from these standards.
Assessment of commitments and plans
by companies to reach net zero by 2050
may also be considered having regard to
several factors. These include the industry
in which they operate, progress against
their plans, their broader contribution to
social good in addressing the challenge
of reducing global carbon emissions,
and the impact on their value if they fail
to achieve their stated goals. In applying
external data for benchmarking*, the
current carbon intensity of AFIC’s portfolio
is less than the S&P/ASX 200 Index.
In building the investment portfolio
with the principles outlined, we believe
we can offer investors a well-diversified
portfolio of quality companies, structured
to deliver total returns ahead of the
Australian equity market over the long
term with less volatility and with more
consistent dividends.
From time to time some borrowings
may be used where potential investment
returns justify the use of debt.
AFIC is managed for the benefit
of its shareholders with fees based
on the recovery of costs rather than
as a fixed percentage of the portfolio.
There are no additional fees. As a result,
the benefit of scale over time results
in a very low expense ratio for investors.
For the 12 months to June 2026 this was
0.14, or 14 cents for each $100 invested.
* Data provided by ISS ESG.
Portfolio at 30 June 2026.
5
Australian Foundation Investment Company Limited
Annual Report 2026

Profit and Dividend
The full year profit was $293.5 million,
up from $285.0 million in the previous
corresponding period. The uplift in the
profit from last year was due to an increase
in dividends and distributions received
from the portfolio and an increase in
gains from the trading portfolio.
The management expense ratio remains
low at 0.14 per cent with no additional
fees. This is down from 0.16 per cent
last financial year.
Earnings per share for the financial year
were 23.42 cents per share.
The final dividend was maintained at
14.5 cents per share fully franked. A fully
franked special dividend of 2.5 cents per
share has also been declared. Total fully
franked dividends for the year, including
special dividends, is 31.5 cents per share,
in line with the previous financial year’s
total dividend including special dividends.
The Board has elected to pay 10 cents
of the final and special dividends from
capital gains, on which the Group has paid
or will pay tax. The amount of this pre-tax
attributable gain, known as an ‘LIC capital
gain, equals 14.29 cents per share. This
enables some shareholders to claim a
tax deduction in their tax return. Further
details are on the dividend statements.
A key objective of AFIC is to provide
stable to growing ordinary dividends over
time. The amount of any ordinary dividend
remains at the discretion of the Board and
depends on the level of earnings and the
amount of realised capital gains generated
for the year, as well as the balance of
franking credits.
The Board considers special dividends to
be the most appropriate way to distribute
the franking credit balance reserve that
has built up in recent years. Despite
the recent payment of these special
dividends, further generation of realised
capital gains during the year means the
franking credit balance remains strong.
Directors will continue to consider further
capital management initiatives for future
financial years taking into consideration
the balance of franking credits and the
generation of realised capital gains. We
anticipate providing an update regarding
any special dividends for financial year
2027 at the AGM in October 2026.
Outlined in Figure 1 is the long term
history of the dividends paid to
shareholders. Over the long term, the
Company has delivered on its objective
of paying stable to growing ordinary
dividends over time irrespective of any
special dividends that have been paid.
Net Asset Backing Per Share
Figure 2 highlights the change
in the net asset backing per share (NTA)
over the financial year. Dividends paid,
including special dividends, and the fall in
the value of the portfolio were the major
contributors to the decline, although
income received from the portfolio offset
most of the decline in the portfolio value.
Over the year approximately 35.4 million
shares were bought back at a cost of
approximately $242.8 million. The share
buy-backs were accretive to the value
of the NTA over the year.
Market and Portfolio
Performance
The S&P/ASX 200 Accumulation Index
(not including the benefit of franking) rose
6.1 per cent in the calendar year with a
large part of this return coming from the
Materials sector, up 52.1 per cent. Within
the Materials sector BHP and Rio Tinto
had very strong performances, with each
returning approximately 68 per cent. This
sector was also buoyed by positive rises
in gold, copper, rare earths and lithium
commodity prices. In this context,
mid-cap resources were up 68.5 per cent
for the period, with small-cap resources
up 30.7 per cent.
Energy was the second-best performing
sector, returning 14.5 per cent during
the period as energy stocks such as
Woodside and Santos benefited from
higher oil prices from the conflict in the
Middle East.
Sectors that underperformed were
Healthcare, down 36.2 per cent, driven
largely by CSL, Cochlear and ResMed,
and Information Technology, down
37.0 per cent as the fear of disruption on
the business models of software stocks
from artificial intelligence hit the share
prices of many companies in this sector.
$0.35
$0.30
$0.25
$0.20
$0.15
$0.10
$0.05
$0.0
20172016201520142013201220112010200920082007200620052004200320022001201820192020202120222023202420252026
Ordinary dividendSpecial dividends
Figure 1: Long Term History of Dividends Including Special Dividends
Review of Operations and Activities
DIRECTORS’ REPORT
6
Australian Foundation Investment Company Limited
Annual Report 2026

$7.50
$7.60
$7.70
$7.80
$7.90
$8.00
$8.10
$8.20
$8.30
$8.40
$8.33
$0.33
$0.28
$0.27
$7.93
$0.03
$0.04
$0.02
$0.06
$ per share
NTA at
30 June 2026
Taxes
paid
ExpensesIncome
received
Portfolio
movement
Share
buy-backs
Share
issues
(DRP/DSSP)
Dividends
paid
NTA at
30 June 2025
Negative movementPositive movement
Figure 2: Movement in Net Asset Backing Per Share to 30 June 2026
70%
60%
50%
40%
30%
20%
10%
0%
-10%
-20%
Jul 25
Aug 25
Sep 25
Oct 25
Nov 25
Dec 25
Jan 26
Feb 26
Mar 26
Apr 26
May 26
Jun 26
S&P/ASX 200
Banks
S&P/ASX 200
Resources
S&P/ASX 200
Industrials
S&P/ASX 200
Index
Figure 3: Key Sector Performance for the 12 Months to 30 June 2026
Australian Foundation Investment Company Limited
7
Annual Report 2026

This proved to be a challenging
environment, with the AFIC portfolio
including the benefit of franking returning
0.9 per cent over the 12 months,
compared to the S&P/ASX 200
Accumulation Index return of 7.2 per
cent including franking, with most
of the underperformance occurring
in the first half of the financial year
(Figure 4).
Over the financial year the portfolio
benefited from solid returns from our
holdings in Woolworths Group, Rio Tinto,
ALS, Macquarie Group and Coles Group.
We also benefited from our underweight
position in Commonwealth Bank of
Australia, which returned negative
8 per cent for the period.
The main contributors to the portfolio’s
underperformance relative to the
benchmark were our positions in CSL,
ARB Corporation, ResMed, CAR Group,
REA Group and Cochlear. Each of these
companies has been retained in the
portfolio as we consider their long term
prospects to be sound, noting that in
some cases the turnarounds required
to improve returns are likely to take
some time.
While near term conditions have been
challenging, we continue to believe the
investment approach of focusing on
high-quality companies can deliver
attractive long term returns, including
income for shareholders.
Figure 5 highlights the long term
performance of the portfolio relative
to the S&P/ASX 200 Index. Both
include the benefits of franking.
Positioning Adjustments
AFIC seeks to own a diversified portfolio
of quality companies with an appropriate
mix of income and growth attributes
to achieve our long term investment
objectives.
The portfolio is actively managed but
with a long term investment approach,
meaning that our annual portfolio turnover
will typically be low to moderate.
The majority of our buying activity for
the year involved adding to positions
in mid and large-cap companies that
we consider to be high quality and that
provide the portfolio with a good mix
of income and growth.
Sigma Healthcare was our largest
purchase for the year. Following the
merger with Chemist Warehouse, Sigma
Healthcare is now Australia’s leading retail
pharmacy franchisor, distributor and
wholesaler. The company has a strong
track record of execution with double-
digit revenue growth over the past two
decades. The company continues to have
a long growth runway, as it operates in
an attractive, strongly growing healthcare
and beauty retail category in which it is
winning market share. Sigma Healthcare
offers our portfolio an attractive level of
capital growth alongside modest, albeit
strongly growing, dividends.
During the period we also increased our
holdings in JB Hi-Fi, Woolworths Group,
Telstra Group, CAR Group and REA Group.
We also added a number of new positions
to the portfolio during the year.
DIRECTORS’ REPORT
Review of Operations and Activities continued
Figure 5: Long Term Portfolio Performance Relative to the S&P/ASX 200 Index
1,200
1,000
800
400
200
0
20012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023202420252026
AFIC NTA total return,
including franking
S&P/ASX 200 Accumulation Index,
including franking
Note: AFIC’s performance returns are after costs. AFIC on occasions incurs realised capital gains
tax on the sale of shares. Not all the of the franking generated from these realised capital gains
is paid out immediately as dividends and is therefore not included in these performance figures.
Past performance may not be indicative of future performance.
Figure 4: Portfolio Performance – Per Annum Returns to 30 June 2026
Net asset per share growth
plus dividends, including franking
S&P/ASX 200 Accumulation
Index, including franking
10-year return3-year return1-year return
0.9%
7.2%
2nd half
financial year
3.0%
1st half
financial year
-2.0%
4.2%
8.7%
11.9%
5-year return
6.4%
9.2%
9.6%
10.9%
2.9%
8
Australian Foundation Investment Company Limited
Annual Report 2026

Pro Medicus and TechnologyOne were
bought after their share prices fell sharply
in February 2026. Pro Medicus is the
market leader in medical software
imaging, operating in North America,
Australia and Europe. TechnologyOne
is a dominant software business that is
used by governments and universities
in Australia, New Zealand and the
United Kingdom. Both Pro Medicus and
TechnologyOne have delivered very strong
returns over the long term and have
high-quality management teams. We were
able to purchase both of these companies
at what we considered to be attractive
valuations given their quality and long
term growth potential.
In addition, we were able to take
advantage of a sell-off in several quality
small-cap growth companies during
the financial year as part of our goal
of building a more diversified portfolio
of small-cap investments. This saw us
add Life360, Temple & Webster, HUB24,
Objective Corporation and Pinnacle
Investment Management to the portfolio.
While we endeavour to hold companies
for the long term, selling companies
when we identify a significant deterioration
in future growth prospects remains
fundamental to meeting our long term
investment objectives. On this basis
we exited Sonic Healthcare, WiseTech
Global, Worley, IDP Education and
Telix Pharmaceuticals.
We continued to trim our positions
in Commonwealth Bank of Australia
and Wesfarmers. We consider both
companies to be high quality; however,
we saw their valuations as extreme,
especially when factored against our large
position sizes. For similar reasons we
trimmed our holdings in National Australia
Bank, Westpac Banking Corporation and
ALS. As a result of call option exercises
some of our holding in BHP was sold.
Overall, the value of stock sales
outweighed stock purchases. This was
primarily due to the attractive relative value
we saw in buying back AFIC shares during
the period given the material discount
in the share price compared to the net
tangible asset backing through the year.
Figure 6 outlines the positioning of the
AFIC portfolio relative to the market as
represented by the S&P/ASX 200 Index.
Figure 6: AFIC Investment by Sector Versus the S&P/ASX 200 Index
as at 30 June 2026 – Excludes International Holdings
0%
5%
10%
15%
20%
25%
30%
AFIC portfolio weightS&P/ASX 200 Index weight
19.4%18.5%11.6%9.8%8.6%7.3%0.0%7.1%3.4%5.9%0.9%2.5%5.1%
Banks
Materials
Healthcare
Industrials
Other
Financials
Consumer
Discretionary
Consumer
Staples
Communication
Services
Information
Technology
Energy
Real Estate
Cash
Utilities
9
Australian Foundation Investment Company Limited
Annual Report 2026

International Portfolio
During the year the decision was made
not to pursue the listing of a separate
international LIC at this stage. In this
context we have adjusted our portfolio
approach to focus on a smaller number
of holdings most aligned with AFIC’s
quality-focused investment philosophy
with attractive medium to long term
prospects. Over the course of the
financial year the number of holdings
has gone from 44 companies to 19
companies as at 30 June 2026.
The international portfolio continues
to provide AFIC with offshore research
insights to assist domestic investment
decisions and exposure to what AFIC
views as the most attractive international
companies. Most of our international
holdings have leadership positions in
growing industries not typically available
to investors on the ASX.
The international portfolio has continued
to generate value for shareholders, with
the portfolio standing at $148.7 million
on 30 June 2026 following the initial
investment of $103.5 million in May 2021.
At current value, the global portfolio
represents about 1.5 per cent of the
overall AFIC portfolio.
At 30 June 2026 our largest holdings were
Schneider Electric, Amazon, Visa, Eli Lilly,
Ferguson Enterprises, Waters and Netflix.
Share Price Return
Over the 12-month period the share
price has moved from a discount of
11.8 per cent to the net asset backing
of $8.33 per share at 30 June 2025, to a
slightly smaller discount of 11.1 per cent
to net asset backing of $7.93 per share
at 30 June 2026. Total share price return
including franking was 2.5 per cent over
the 12-month period.
As illustrated in Figure 7 the extent of this
discount is unusual in the context of the
historical trend. Factors such as the level
of interest rates, momentum in the market
and level of market dividends can have a
large impact on sentiment towards AFIC
shares. When interest rates are low
and market dividends are down AFIC
can trade at a premium, as was the
case during COVID-19. As these factors
reverse, what we have seen is the
share price move to a large discount.
The discount is not something that we
can control in the short term, but we are
very conscious of this issue. As a result,
the Group has uplifted its communication
with brokers and financial planners,
provides weekly disclosure of the net
asset backing per share and has begun
to buy back shares in an orderly fashion
as and when opportunities arise.
Figure 8 illustrates the long term
performance of the share price relative
to the net asset backing per share. Over
the long term the difference between the
share price return and the return of net
asset backing per share is not large
despite the history of the share price
trading at a premium or discount through
various market cycles. Ultimately over the
long term the share price has been driven
by the net asset backing per share.
DIRECTORS’ REPORT
Review of Operations and Activities continued
Figure 7: Long Term History of the Share Price Premium/Discount to Net Asset Backing
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Tech bubble
Property
crash/bank
crisis
Tech crash
RBA interest rate
cutting cycle
Pre GFC
Post GFC
Black Monday Aug 2011
/US credit rating
downgraded
RBA interest rate
cutting cycle
COVID-19
Rising interest
rates
19891990199119921993199419951996199719981999 2000200120022003200420052006200720082009200920102011201220132014201520162017201820192020202120222023202420252026
Figure 8: Long Term History of the Share Price and Net Asset Backing Per Share
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0
AFIC NTA per share
20012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023202420252026
AFIC share price
10
Australian Foundation Investment Company Limited
Annual Report 2026

Outlook
Another positive year of returns from
domestic and global share markets was
noteworthy given the shock to economies
caused by geopolitical events such as the
conflict in the Middle East and the general
upward pressure on interest rates from
heightened inflation.
In this context, the Australian economy
has proved resilient. However, the
Australian share market continues to look
moderately expensive, especially against
long term averages for the market’s price
to earnings ratio and dividend yield.
The broader share market is currently
forecast to deliver a dividend yield of
just 3.7 per cent (not including franking
credits), below the average dividend
yield of the last 10 years.
In terms of AFIC’s dividend income,
we believe that the portfolio has a good
balance across the key sectors such
as Resources, Banks and Consumer
Staples, which should generate a solid
level of fully franked dividend income.
We are confident that the transactions
made in the last 12 months have
enhanced the portfolio’s long term
income and growth prospects.
Despite the uncertainties about the
direction of economies and financial
markets, we continue to believe that
AFIC, with its diversified portfolio of
high-quality companies, is well positioned
to meet its investment objectives over
the long term.
Figure 9: Valuation of the Market – Price to Earnings of the S&P/ASX 200 Index
Average 15.1
8
10
12
14
16
18
20
22
Times
200620072008200920102011201220132014201520162017201820192020202120222023202420252026
Figure 10: Valuation of the Market – Forward Looking Dividend Yield of the
S&P/ASX 200 Index
Per cent
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
Average 4.5
20062007
200820092010201120122013201420152016201720182019
202020212022202320
24
20
25
2026
Source: FactSet
Source: FactSet
11
Australian Foundation Investment Company Limited
Annual Report 2026

Board Changes
Mark, the Chief Executive Officer and
Managing Director, retired at the end
of the 2026 financial year.
Mr Freeman was involved in the
management of AFIC for over 31 years.
For the past eight years Mark has been
the Chief Executive Officer and Managing
Director, and previously he spent 10 years
as the Chief Investment Officer. Mark has
had a long and distinguished career in
the industry. The Board would like to
acknowledge Mark for his leadership and
passion for our shareholders and thank
him for successfully navigating the LICs
through a period of significant change.
Listed Investment Companies
offer a unique structure for investors.
Mark has understood this and has been
a very strong advocate for AFIC and its
investment approach, which has delivered
long term benefits to shareholders at a
low cost. AFIC as a long term investor
often provides a different perspective to
many others in the industry, and Mark has
been central to conveying these views.
We wish Mark all the best for his future
and his retirement.
Alison Gibson has been appointed
as Mark’s successor, effective
13 July 2026. Alison was previously
a Portfolio Manager at HESTA. Alison
is well known to AFIC shareholders
having been a Portfolio Manager with
the Company from 2011 to 2021 when
she left to join HESTA. Alison is an
experienced investment professional
with over 25 years’ experience across
portfolio management, equity research
and investment strategy within institutional
and funds management organisations.
Alison has a strong background in
leading investment teams, setting clear
investment frameworks and delivering
long term outcomes for stakeholders.
DIRECTORS’ REPORT
Review of Operations and Activities continued
12
Australian Foundation Investment Company Limited
Annual Report 2026

Top 25 Investments
At 30 June 2026
DIRECTORS’ REPORT
Includes investments held in both the investment and trading portfolios.
Value at Closing Prices at 30 June 2026
Total Value
$ Million
% of the
Portfolio
1BHP* 1,132.011.7
2Commonwealth Bank of Australia807.38.3
3Macquarie Group* 528.25.5
4Wesfarmers 436.14.5
5Westpac Banking Corporation407.44.2
6National Australia Bank* 390.14.0
7Transurban Group 379.53.9
8Goodman Group*358.83.7
9Telstra Group* 357.83.7
10Woolworths Group* 327.83.4
11Rio Tinto 321.23.3
12CSL 311.93.2
13ANZ Group Holdings 262.12.7
14Coles Group* 240.32.5
15Woodside Energy Group* 232.82.4
16ResMed 193.22.0
17CAR Group 175.71.8
18Computershare* 162.81.7
19James Hardie Industries160.51.7
20JB Hi-Fi 126.61.3
21ALS 126.51.3
22Mainfreight 122.61.3
23Amcor120.31.2
24Fisher & Paykel Healthcare Corporation 115.41.2
25Brambles 113.81.2
Total7,910.8
As percentage of total portfolio value (excludes cash)81.8%
* Indicates that options were outstanding against part of the holding.
13
Australian Foundation Investment Company Limited
Annual Report 2026

DIRECTORS’ REPORT
Company Position
The following changes occurred to the
Company’s share capital during the year:
• Under the Company’s Dividend
Substitution Share Plan, 1,218,577 new
shares were issued at nil cost in August
2025, and 1,033,773 new shares were
issued at nil cost in February 2026.
• Under the Company’s Dividend
Reinvestment Plan, 6,929,932 new
shares were issued at a price of $7.35
in August 2025, and 5,400,941 new
shares were issued at a price of $6.90
in February 2026.
During the year the Company bought
back shares through its on-market
buy-back facility. A total of 35,435,326
shares for a total consideration of
$242.8 million were bought back
and cancelled.
The Company’s contributed equity, net
of share issue costs, fell $155.4 million
to $3.1 billion. At the close of the year
the Company had 1,233 million shares
on issue.
Dividends
Directors have declared a fully franked
final dividend of 14.5 cents per share and
a special dividend of 2.5 cents per share
(14.5 cents ordinary and 5.0 cents special
last year, both fully franked).
The dividends paid during the year ended
30 June 2026 were as follows:
$’000
Final dividend for the year
ended 30 June 2025 of
14.5 cents per share and a
special dividend for the year
ended 30 June 2025 of 5.0
cents per share, both fully
franked at 30 per cent, paid
28 August 2025235,582
Interim dividend for the year
ended 30 June 2026 of
12 cents per share and a
special dividend for the year
ended 30 June 2026 of
2.5 cents per share, both
fully franked at 30 per cent,
paid 26 February 2026174,549
410,131
Dividend Substitution Share
Plan (DSSP)
The Company has in place a Dividend
Substitution Share Plan.
This enables shareholders to elect to
receive shares in the Company instead
of dividends, forgoing any franking credit
and LIC gains that would otherwise be
attached to the dividend, but deferring
any tax due on the receipt of such shares
(for Australian tax payers) until such time
as the shareholding is sold. Shareholders
will need to seek their own taxation
advice in determining if this Plan is
suitable for them.
Further details are available on the
Company’s website or by request from
the Company’s Share Registrar.
Financial Condition
The Company’s primary source of
funds consists of its shareholders’ funds.
The Company also had agreements with
Commonwealth Bank of Australia and
Westpac Banking Corporation for loan
facilities totalling $150 million (see Note
D2). As at 30 June 2026, the facilities
were not drawn down. The Board takes
a prudent and conservative approach
to the use of borrowed funds. Currently,
when used, they are maintained within
a limit of 10 per cent of total assets.
Listed Investment Company
Capital Gains
Listed Investment Companies (LIC),
which make capital gains on the sale of
investments held for more than one year,
are able to attach to their dividends an
LIC capital gains amount, which some
shareholders are able to use to claim
a tax deduction. This is called an ‘LIC
capital gain attributable part’. The
purpose of this is to put shareholders
in Listed Investment Companies on a
similar footing with holders of managed
investment trusts with respect to capital
gains tax on the sale of underlying
investments.
Tax legislation sets out the definition of a
‘Listed Investment Company’, which AFIC
satisfies. Furthermore, from time to time
the Company sells securities out of the
investment portfolio held for more than
one year, which may result in capital gains
being made and tax being paid. The
Company is therefore on occasion
in a position to be able to make available
to shareholders a LIC capital gain
attributable part with our dividends.
In respect of this year’s final and special
dividends of 17 cents per share for the
year ended 30 June 2026, it carries with
it a 14.3 cents per share LIC capital gain
attributable part (2025: 27.9 cents). The
amount which shareholders may be able
to claim as a tax deduction depends on
their individual situation. Further details
are provided in the dividend statements.
Likely Developments
The Company intends to continue
investing on behalf of its shareholders as
it has been doing since 1928. The results
of these investment activities will depend
upon the performance of the companies
and securities in which we invest. Their
performance in turn depends on many
economic factors (macro, which includes
economic growth rates, inflation, interest
rates, exchange rates and taxation levels,
and micro, which includes industry
economics and competitive behaviour)
and their approach to, and management
of, material Environmental, Social and
Governance (ESG) risks.
We do not believe it is possible
or appropriate to make a prediction
on the future course of markets or
the performance of our investments.
Accordingly, we do not provide a forecast
of the likely results of our activities.
However, the Company’s focus is on
paying stable to growing dividends over
time and providing attractive total returns
over the medium to long term.
14
Australian Foundation Investment Company Limited
Annual Report 2026

Significant Changes
in the State of Affairs
Directors are not aware of any other
significant changes in the operations of
the Company, or the environment in which
it operates, that will adversely affect the
results in subsequent years.
Events Since Balance Date
The Directors are not aware of any matter
or circumstance not otherwise disclosed
in the financial statements or the
Directors’ Report which has arisen since
the end of the financial year that has
affected or may affect the operations,
or the results of those operations,
or the state of affairs of the Company
in subsequent financial years.
Environmental Regulations
The Company’s operations are such that
they are not directly materially affected
by environmental regulations.
However, as a Listed Company over a
certain size, the Company is required to
produce an audited Sustainability Report,
which can be found on pages 63 to 77.
As an overseas listed issuer on the
New Zealand Stock Exchange (NZX) that
does not have a large presence in New
Zealand, the Company is relying on the
exemption in clause 6 of the Financial
Markets Conduct (Climate-related
Disclosures for Foreign Listed Issuers)
Exemption Notice 2024 in respect of the
accounting period from 1 July 2025 to
30 June 2026. The effect of relying on
the exemption is that for the accounting
period ended 30 June 2026 the Company
is not required to comply with climate
reporting (including producing climate
statements), assurance and record-
keeping requirements imposed under
part 7A of the Financial Market Conduct
Act 2013.
This information is provided for the
purposes of clause 7(1)(c) of the Financial
Markets Conduct (Climate-related
Disclosures for Foreign Listed Issuers)
Exemption Notice 2024.
The Company’s Sustainability Report for
the financial year ended 30 June 2026
will be found in the Annual Report
on the Company’s website at:
afi.com.au/company-reports
Rounding of Amounts
The Company is of the kind referred to
in the ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument
2026/183, 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.
Corporate Governance
Statement
The Company’s Corporate Governance
Statement for the financial year
ended 30 June 2026 will be found
on the Company’s website at:
afi.com.au/corporate-governance
As an overseas listed issuer on the
New Zealand Stock Exchange (NZX), the
Company is generally deemed to comply
with the NZX Listing Rules provided that
the Company remains listed on the ASX,
complies with the ASX Listing Rules and
provides the NZX with all the information
and notices that it provides to the ASX.
15
Australian Foundation Investment Company Limited
Annual Report 2026

Board Members
DIRECTORS’ REPORT
Member of the Investment,
Remuneration and Nomination
Committees.
Ms Dee-Bradbury was
appointed to the Board in
May 2019. Ms Dee-Bradbury
is a Non-Executive Director
at BlueScope Steel Limited
(appointed April 2014),
and a member of Chief
Executive Women.
Ms Dee-Bradbury was
previously a Director of Energy
Australia Holdings, a Non-
Executive Director of Bapcor
Limited and Chief Executive
Officer/President of Developed
Markets (Asia Pacific and ANZ)
for Mondelez from 2010 to
2014. Before joining Mondelez
Ms Dee-Bradbury was Group
CEO of the global Barbeques
Galore group and has held
other senior executive roles
in organisations including
Maxxium, Burger King
Corporation and Lion
Nathan/Pepsi Cola Bottlers.
Member of the Investment
and Nomination Committees.
Managing Director of AICS.
Ms Gibson became Chief
Executive Officer and
Managing Director in July
2026. Ms Gibson was
previously a Portfolio Manager
for Internal Australian Equities
at HESTA. Before joining
HESTA, she spent a decade
at Australian Foundation
Investment Company and the
other three LICs (Djerriwarrh,
AMCIL and Mirrabooka) as a
Portfolio Manager. Prior to this
she was an Executive Director
at Goldman Sachs JBWere.
Ms Gibson is an experienced
investment professional with
over 25 years’ experience
across portfolio management,
equity research and investment
strategy within institutional
and funds management
organisations. She has a
strong background in leading
investment teams, setting clear
investment frameworks and
delivering long term outcomes
for stakeholders.
Rebecca Dee-Bradbury
–
Independent Non-Executive
Director
BBus, GAICD
Alison Gibson
–
Managing Director
CFA, B Bus (BusAdmin), Grad
Dip App Fin (FINSIA), GAICD
Chair of the Audit Committee
and Member of the Investment
and Nomination Committees.
Ms Fahey was appointed
to the Board in April 2021.
She has over 30 years of
experience in technology,
including in major organisations
such as Western Mining,
Exxon, Roy Morgan, General
Motors and SAP, covering
consulting, software vendor
and Chief Information Officer
roles. In addition to her
industry experience, she
spent 10 years at KPMG as
a partner with the firm, during
which time she held roles
as National Lead Partner
Telecommunications, Media
and Technology, and National
Managing Partner – Markets.
Ms Fahey was also a member
of the KPMG National
Executive Committee.
Ms Fahey is a Non-Executive
Director of Datacom. She
was formerly a Non-Executive
Director of IRESS Limited,
SEEK Limited, Vocus,
Partnerslife and Cenitex and
formerly a member of the
Australian Red Cross LifeBlood
board and Latrobe University
Council.
Julie Fahey
–
Independent Non-Executive
Director
BAS
Non-Executive Chairman
of the Company’s subsidiary,
Australian Investment Company
Services Limited (AICS).
Chairman of the Investment
and Nomination Committees.
Member of the Audit and
Remuneration Committee.
Mr Drummond was appointed
to the Board in July 2021. He
is Chairman of Transurban Co
Ltd, Chairman of The Ian Potter
Foundation and a Director of
Ramsay Health Care Ltd. He
was a Director of the Geelong
Football Club from 2011 to
2024 and President of the
Club from 2021 until the end
of 2024. Mr Drummond was
elected Chair of the AFL
Commission in 2026.
Mr Drummond served as Chief
Executive Officer of Medibank
from July 2016 to May 2021.
Prior to joining Medibank, he
was Group Executive Finance
and Strategy of National
Australia Bank (NAB), and Chief
Executive Officer and Country
Head of Bank of America Merrill
Lynch (Australia). He served
as a Member of the Financial
Regulator Assessment Authority
from 2021 to 2023.
Earlier in his career,
Mr Drummond worked in
equity research at JBWere,
and subsequently held roles
including Chief Operating
Officer, Chief Executive Officer
and Executive Chairman of
Goldman Sachs JBWere.
Craig Drummond
–
Chairman and Independent
Non-Executive Director
BCom (Melb), FCA, FAICD
16
Australian Foundation Investment Company Limited
Annual Report 2026

Chairman of the Remuneration
Committee and Member
of the Investment and
Nomination Committees.
Mr Liebelt was appointed to
the Board in June 2012. He
is Chairman of Amcor Limited.
He is a Fellow of the Australian
Academy of Technological
Sciences and Engineering and
a Life Fellow of the Australian
Institute of Company Directors.
He was formerly Director of
Australia and New Zealand
Banking Group Limited,
Chairman and Director of
DuluxGroup Limited, a Director
of Carey Baptist Grammar
School, Chairman and Director
of the Global Foundation,
Deputy Chairman of
Melbourne Business School
and Managing Director and
CEO of Orica Limited.
Member of the Audit and
Nomination Committees.
Ms Hudson was appointed
to the Board in January 2024.
She has more than 25 years
of experience in investment
markets, including roles as
an equities research analyst,
head of research and portfolio
manager.
Ms Hudson is currently a
portfolio manager for Yarra
Capital Management focused
on the small and mid-cap
universe and, in addition,
serves as Yarra Capital’s
Head of Australian Equities
Research. Prior to transitioning
to Yarra Capital Management,
she was a Managing Director
at Goldman Sachs Asset
Management, and has
previously worked as an
equities analyst and partner
at JBWere. Prior to this she
spent seven years at PwC,
where she was a senior
manager primarily focused
on mergers and acquisitions
advisory and transaction
support.
Ms Hudson is currently a
Director of Yarra Capital
Management and the
Hawthorn Football Club.
Member of the Nomination
Committee.
Mr Murray was appointed to
the Board in January 2024.
Mr Murray has over 30 years’
experience in the retail
industry, assurance and
advisory services and listed
public companies. He is
currently CFO of Sigma
Healthcare Limited and his
past executive experience
includes CEO of Total Tools
Holdings, CEO of Premier
Retail and Executive Director
of Premier Investments.
Prior to his role at Premier
Investments, he was the
Group Chief Executive Officer
from 2014 to 2021 and
Executive Director of JB Hi-Fi,
the major electronic and
white-goods retailer. He had
an 18-year career at JB Hi-Fi,
commencing in 2003, initially
as Chief Financial Officer,
taking the business through
the IPO process. Prior to that
he had roles for 10 years in
the Corporate Finance and
Assurance and Advisory
practices at Deloitte.
Mr Murray holds a Bachelor
of Commerce degree from
Melbourne University, a
Graduate Diploma in Applied
Finance and Investment and
is a qualified Chartered
Accountant.
Graeme R Liebelt
–
Independent Non-Executive
Director
BEc (Hons), FTSE FAICDLife
Katie Hudson
–
Independent Non-Executive
Director
BCom (Melb)
Richard Murray
–
Independent Non-Executive
Director
B.Comm, Grad.Dip. Applied
Finance and Investment, FCA
Member of the Audit,
Investment and Nomination
Committees. Non-Executive
Director of the Company’s
subsidiary, Australian
Investment Company Services
Limited (AICS).
Mr Peever was appointed to
the Board in November 2013.
He was Managing Director of
Rio Tinto Australia from 2009
to 2014. He is Chairman of
Brisbane Airport Group Pty
Ltd. He chaired the Minister
of Defence’s First Principles
Review of Defence and
following the acceptance
of the review by Government
was Chair of the Oversight
Board, which helped guide
implementation (with
Defence) of the Review’s
recommendations.
Mr Peever was a Non-
Executive Chairman of Naval
Group Australia, a former
member of the Foreign
Investment Review Board,
a former Chair of Cricket
Australia and a former Director
of the Stars Foundation, a not
for profit body which promotes
education of Indigenous
girls, and also a former Vice
Chairman of the Minerals
Council of Australia and was
a Director of the Business
Council of Australia.
David A Peever
–
Independent Non-Executive
Director
BEc MSC (Mineral Economics)
17
Australian Foundation Investment Company Limited
Annual Report 2026

Board Members continued
DIRECTORS’ REPORT
Meetings of Directors
The number of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended 30 June 2026
and the numbers of meetings attended by each Director were:
BoardInvestmentAuditRemunerationNomination
Eligible
to AttendAttended
Eligible
to AttendAttended
Eligible
to AttendAttended
Eligible
to AttendAttended
Eligible
to AttendAttended
CM Drummond 771212442222
RM Freeman 771212–4
#
–2
#
21
RP Dee-Bradbury 771212–4
#
2222
JA Fahey 77121244–2
#
21
KM Hudson 77–12
#
44––22
GR Liebelt 771212–4
#
2222
RL Murray 77–11
#
––––22
DA Peever 77121144–2
#
22
#
Attended meetings as non-members.
Insurance of Directors and Officers
During the financial year, the Company paid insurance premiums to insure the Directors and officers named in this report to the extent
allowable by law. The terms of the insurance contract preclude disclosure of further details.
Mr Freeman became Chief Executive Officer and Managing Director
in January 2018 having been Chief Investment Officer since joining the
Company in February 2007. Mr Freeman retired on the 30 June 2026.
Prior to this he was a Partner with Goldman Sachs JBWere, where he
spent 12 years advising the investment companies on their investment
and dealing activities. He has a deep knowledge and experience of
investment markets and the Company’s approaches, policies and
processes. He was also Managing Director of Djerriwarrh Investments
Limited, Mirrabooka Investments Limited and AMCIL Limited until
30 June 2026.
Mark Freeman
–
Managing Director (Retired)
BE, MBA, Grad Dip App Fin
(Sec Inst), AMP (INSEAD),
GAICD
18
Australian Foundation Investment Company Limited
Annual Report 2026

Mr Driver joined the Company
in January 2003. Previously,
he was with National Australia
Bank Ltd for 18 years in
various roles covering business
strategy, marketing, distribution,
investor relations and business
operations. Mr Driver was
formerly Chairman of Trust
for Nature (Victoria).
Mr Porter joined the Company
in January 2005. He is a
Chartered Accountant and
has had over 30 years’
experience in accounting and
financial management both
in the United Kingdom with
Andersen Consulting and
Credit Suisse First Boston,
and in Australia where he
was Regional Chief Operating
Officer for the Corporate and
Investment Banking Division
of CSFB. He is a Director of
the Auditing and Assurance
Standards Board (AUASB)
and a Director of the Anglican
Foundation. Mr Porter is a
former Chair of The Group
of 100 (G100), the peak body
for CFOs.
Mr Rowe joined the Company
in July 2016. He is a Chartered
Secretary with over 18 years
of experience in corporate
governance with a particular
focus in Listed Investment
Companies. He was previously
a corporate governance
adviser at a professional
services firm, which included
acting as Company Secretary
for three ASX listed
companies. Prior to that he
was the Company Secretarial
Manager for a funds
management company
based in the United Kingdom.
Geoffrey N Driver
–
General Manager
Business Development
and Investor Relations
B Ec, Grad Dip Finance
Andrew JB Porter OAM
–
Chief Financial Officer/
Company Secretary
MA (Hons) (St And),
FCA, MAICD
Matthew J Rowe
–
Company Secretary
BA (Hons), MSc Corp Gov,
FGIA, FCG
Senior Executives
DIRECTORS’ REPORT
19
Australian Foundation Investment Company Limited
Annual Report 2026

Contents
The Directors present AFIC’s 2026 Remuneration Report, which outlines key aspects of our remuneration policy and remuneration
awarded this year.
Leadership Changes
AFIC announced in February 2026 that Mark Freeman, the Managing Director and Chief Executive Officer (CEO), would retire at the end
of June 2026. Table 3 shows the amounts that were paid to him (or are due to be paid to him) for the year ended 30 June 2026,
including annual incentive for that year.
Alison Gibson was announced as the new Managing Director and CEO with effect from 13 July 2026. A transitional Incentive Plan will
be in place for her for the year ended 30 June 2027, details of which will be in the 2027 Annual Report.
Note on Incentives
The Remuneration Committee uses a range of performance measures to inform their deliberations. Whilst the Incentive Plan is termed
the ‘annual’ Incentive Plan, the performance measures used cover one, three, five and ten years. The plan is therefore a mixture of short
and long term incentives. The Remuneration Committee considers the various measures holistically to make a determination on the
progress of AFIC (and the other LICs) in meeting their defined investment goals.
Awards under the Incentive Plan are paid in cash. Executives are required to use 25 per cent of the pre-tax amount of any incentive
that vests to purchase shares in AFIC and/or the other LICs (see below). Executives are expected to build over time and maintain
an appropriate holding not only in AFIC shares, but also in shares in the other LICs to which the Executives provide service.
Note on AFIC’s Proportion of the Costs Detailed in the Remuneration Report
The Remuneration Report is required to show the salary and incentives that the Group Executives receive. It does not accurately reflect
the actual cost to AFIC shareholders of this remuneration as the other companies that the Executives provide services to (Djerriwarrh
Investments Ltd, Mirrabooka Investments Ltd and AMCIL Ltd, collectively ‘the LICs’) pay for a proportion of these costs.
The total remuneration shown in Table 3 is $3.5 million.
Of this, 41 per cent (or $1.4 million) is or will be paid for by the other LICs through the service agreements with AFIC’s subsidiary,
Australian Investment Company Services Ltd (AICS).
Therefore, 59 per cent, or $2.1 million, will be borne by AFIC and its shareholders.
The report is structured as follows:
1. Remuneration policy, link to performance and outcomes
2. Structure of remuneration
3. Contract terms
4. Non-Executive Director remuneration
Appendix
A. Remuneration Governance
B. Annual Incentives: Details of Outcomes and Conditions
C. Directors and Executives: Equity Holdings and Other Transactions
D. Potential Clawback of Incentives
E. Detailed Performance Measures by Investment Company
1. Remuneration Policy, Link to Performance and Outcomes
1.1 What is Our Remuneration Policy?
AFIC is an investor in securities which are listed mainly in Australia and New Zealand. Our primary investment goals are to
‘provide attractive total returns over the medium to long term and to pay a stable to growing ordinary dividend over time’.
DIRECTORS’ REPORT
Remuneration Report
20
Australian Foundation Investment Company Limited
Annual Report 2026
20
Annual Report 2025
Australian Foundation Investment Company Limited

To achieve this we need to attract and retain professional, competent and highly motivated Executives and staff through offering
attractive remuneration arrangements which:
• reflect market conditions;
• recognise the skills, experience, roles and responsibilities of the individuals;
• align with shareholder interests; and
• align with the risk management strategies.
Generally, we seek to set total remuneration above the median level of the sectors in which we operate.
Remuneration for the Group’s Executives has two main elements:
• Fixed Annual Remuneration (FAR); and
• performance-related pay (Incentive Plan).
FAR is determined with reference to levels necessary to recruit and retain staff with the relevant skills and experience in the industry in
which the Group operates. We utilise external input, seeking to ensure that the FAR meets these reference levels. This includes industry
data provided by the Financial Institutions Remuneration Group Inc. (FIRG) for the financial services industry. The costs of the FAR
(and the personal element of the Incentive Plan) are allocated to the LICs based on an internal estimate of work performed, which
is subject to Board approval.
Through performance-related pay, the remuneration is adjusted to reflect the risks that the Company and its shareholders face and
how the Company has responded to those risks. In particular:
• the key performance indicators chosen to determine performance-related pay are those that the Company considers most relevant
to its objectives of improving shareholder wealth over the medium to long term, whilst also considering the relative levels of risk;
• the focus is on performance over the medium to long term. A smaller proportion of the Incentive Plan is based on investment returns
over the most recent year’s performance; and
• Executives agree to invest 25 per cent of the pre-tax annual cash incentive in AFIC shares and/or shares of the other investment
companies that AICS currently or will in the future provide services to, and to hold these shares for a minimum of four years.
1.2 What is Our Target Remuneration Mix?
The target remuneration mix for Executives is as follows:
Managing Director’s
Target Remuneration Mix
Other Executives’ Target
Remuneration Mix
Fixed Annual Remuneration 50%
Annual incentive 50%
Fixed Annual Remuneration 67%
Annual incentive 33%
1.3 How is the Remuneration Paid in 2026 Linked to Performance?
1.3.1 Fixed Remuneration
Most Executives received increases in their fixed annual remuneration this year. AFIC continues to operate in a highly competitive
market, and salary levels are reviewed at least annually. The Company aims to attract and retain Executives who are extremely
competent and highly motivated.
21
Australian Foundation Investment Company Limited
Annual Report 2026
21
Annual Report 2025
Australian Foundation Investment Company Limited

Performance-related Pay
This section shows how incentive measurements are split between AFIC and the other investment companies.
%Result
AFIC investment performance32Table 2
AFIC other metrics 8Table 1
Percentage of incentive determined by AFIC performance40
Other LIC investment performance28Table 9
Other LIC other metrics12Table 9
Percentage of incentive determined by other LIC performance40
Total percentage of incentive determined by AFIC/other LIC performance80
Personal metrics20n/a
100
See Section 2 for more details on the measures used in determining the annual incentives.
Commentary
The short term investment performance for AFIC across the period continues to be disappointing. The extent of the underperformance
has impacted on the medium and longer term figures as well. This underperformance, which was reflected across the other LICs (with
the exception of Djerriwarrh, which continues to outperform its yield targets) was reflected in the proportion of incentive that failed to vest.
60 per cent of the incentive payable is borne by AFIC, and this includes personal metrics, profit and dividend growth and the MER,
as well as investment performance. Therefore, only part of the incentive shown as vested is borne by AFIC, with the remainder being
recharged to the other LICs.
The extreme disparity between the Resources Index (where AFIC is historically underweight, up 50 per cent) and the Industrials Index
(where AFIC is historically overweight, down 4.5 per cent) was an important part of this underperformance.
AMCIL also underperformed on its performance measures. Being a smaller conviction fund, the investment performance can be volatile
in the short term, and the current period has been very disappointing. Mirrabooka, for the first time in many years, also suffered
significant short term underperformance, as the disparity between Resources in the small-cap sectors and the industrials was even
more pronounced than in the large-cap sector.
AMCIL’s MER increased slightly from 0.56 per cent to 0.57 per cent, whilst Mirrabooka’s MER fell from 0.54 per cent to 0.52 per cent.
Djerriwarrh also underperformed on its performance measures. However, a significant element of Djerriwarrh’s value proposition is its
ability to pay a fully franked dividend yield higher than that obtainable from the broader market. This has continued during the current
year, and Djerriwarrh has increased its annual dividend each year since 2021. Djerriwarrh’s MER decreased during the year, primarily
due to the profit it received from its associated entity AICS, as a result of personnel changes. This is unlikely to be repeated in the
upcoming year.
The MER for AFIC has decreased from 0.16 per cent to 0.14 per cent, primarily as a result of the personnel changes noted above and
the non-vesting of incentives – AFIC consolidates the results of its subsidiary AICS, which contains the costs of the staff employed to
manage the day-to-day affairs of AFIC and the other LICs.
Earnings growth remains subdued for AFIC, although the current year did see growth despite lower dividends from companies such as
Woodside, no repetition of last year’s special dividend from Woolworths, and the reduction in AFIC’s CBA holding. The full year dividend
and special dividend were maintained at last year’s rate, which was a significant increase on the year before.
Detailed information about the performance of each investment company is provided in Section E of the Appendix.
Remuneration Report continued
DIRECTORS’ REPORT
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Table 1: Non-investment Return Performance Measures
Performance MeasureBenchmark ResultAFIC Result
Comparison to
Benchmark
Growth in net profitEst. CPI over 5 years: 4.4%
7.5%Favourable
Management expense ratio (MER)n/a*
0.14%Favourable
Outcome: Achieved Partially achieved Not achieved
Table 2: Investment Return Performance Measures
^
MeasureBenchmark ResultAFIC Result
Comparison to
Benchmark
Investment return – 1 year6.1%
0.2%Unfavourable
Investment return – 3 years10.6%
8.2%Unfavourable
Investment return – 5 years7.8%
5.9%Unfavourable
Investment return – 10 years9.5%
8.6%Unfavourable
Grossed-up return – 1 year7.2%
0.9%Unfavourable
Grossed-up return – 3 years11.9%
8.7%Unfavourable
Grossed-up return – 5 years9.2%
6.4%Unfavourable
Grossed-up return – 10 years10.9%
9.6%Unfavourable
Risk/Reward – 5 years0.70
0.40Unfavourable
Outcome: Achieved Partially achieved Not achieved
* Favourable to Board established targets and external benchmarks – see above.
^ See Table 7. Note that investment return figures exclude expenses and tax, and the latter in particular can have a meaningful impact on the grossed-up
returns as these tax figures are only included when paid out as dividends. This explains in part the disparity in the differential to the benchmark between
the two measures utilised.
1.3.3 Remuneration Outcomes
The below table discloses the actual remuneration outcomes received by the Company’s Executives during the year.
Table 3: Actual Executive Remuneration Outcomes
Short
Term
Post-
employment
Total
FAR
$
Annual
Incentive
$
Total
Remune-
ration
$
Fixed/
Perform-
ance-
related
%
Total
Borne
by AFIC
$
Total
Borne
by Other
LICs
$
Incentive
Forfeited
$
Base
Salary
$
Super-
annuation
$
Mark Freeman – Managing Director (Retired 30 June 2026)*
2026943,90030,000973,900359,6611,333,56173%/27%781,750551,811(614,239)
2025943,90030,000973,900439,7161,413,61669%/31%753,214660,402(534,184)
Andrew Porter – Chief Financial Officer
2026758,00030,000788,000145,504933,50484%/16%560,544372,960(248,496)
2025758,00030,000788,000177,891965,891 82%/18%549,000416,891(216,109)
Geoff Driver – General Manager –
Business Development and Investor Relations
2026608,80030,000638,800116,357755,15785%/15%453,420301,737(203,043)
2025608,80030,000638,800144,209783,00982%/18%445,052337,957(175,191)
Matthew Rowe – Company Secretary
2026346,80030,000376,80069,576446,37684%/16%268,037178,339(118,824)
2025334,10030,000364,10082,196446,29682%/18%253,668192,628(99,854)
The value of incentive forfeited is the difference between the target amount and the amount awarded. See Table 6.
Information about Non-Executive Director remuneration is provided in Section 4 Non-Executive Director Remuneration.
* As part of the arrangements for his retirement, Mark Freeman will be paid his Fixed Annual Remuneration until the end of August 2026. Following that
date he will be paid his employment entitlements (unused annual leave and long service leave) as of that date and two months’ worth of his maximum
annual incentive (equivalent to $162,316).
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2. Structure of Remuneration
2.1 Fixed Annual Remuneration (FAR)
The FAR component of an Executive’s remuneration comprises base salary, superannuation guarantee contributions and fringe benefits.
Executives can elect to receive a portion of their FAR in the form of additional superannuation contributions or fringe benefits. This will
not affect the gross amount payable by the Group.
2.2 Incentive Plan
The table below outlines the key terms and conditions of the Incentive Plan.
Table 4: Annual Incentives – Key Terms and Conditions
Managing DirectorOther Executives
Targeted per cent of FAR 100 per cent50 per cent
ObjectivesAlign remuneration with the creation of shareholder wealth.
Measures reflect the management of the Group and the other investment companies, as well as the key
investment returns that reflect the creation of shareholder wealth.
Performance measuresCompany performance (20 per cent); investment performance (60 per cent); personal objectives
(20 per cent)
Relative weightings of
investment companies for
investment and Company-
related performance
AFIC: 40 per cent
Djerriwarrh Investments Limited: 16 per cent
AMCIL Limited: 12 per cent
Mirrabooka Investments Limited: 12 per cent
Personal objectives: 20 per cent (allocated on same basis as FAR)
Delivery of awardIncentive is paid in cash, but 25 per cent of the pre-tax amount received is used by recipients to acquire
shares in AFIC and/or the other investment companies, which they agree to hold for minimum of four years.
Performance measured
in 2026
See Table 1 and Table 2 for AFIC. Djerriwarrh outperformed on yield and MER. Mirrabooka
outperformed on MER. AMCIL underperformed.
Outcomes for 2026
(see Table 6 for details)
37 per centAverage 37 per cent
The structure of the Incentive Plan and the performance conditions and weightings used are subject to regular review by the
Remuneration Committee.
It may also change or suspend any part of the incentive payment arrangements. If relevant targets are not achieved but performance
is close to the target, some of the incentive may be paid. This would be noted as ‘partially achieved’ or ‘in line’ in Table 2. Where stretch
levels of performance are achieved above target, then higher amounts may be paid at the discretion of the Board. To date, total annual
incentives paid to each Executive have never exceeded target.
For more detailed information about the annual incentive performance conditions and outcomes for 2026 please refer to Appendix B
Annual Incentives: Details of Outcomes and Conditions.
Remuneration Report continued
DIRECTORS’ REPORT
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3. Contract Terms
Each Executive is employed under an open-ended contract, the terms of which can be varied by mutual agreement. There are no
contractual provisions for cessation of employment other than statutory requirements except for the Managing Director, who has a
six-month notice period. Either the Company or the Executive can give notice in accordance with these requirements. There are no
other specific payments to be made as a consequence of termination beyond those required by statute. Should there be any payments,
these will be at the Board’s discretion.
Material breaches of the terms of employment will normally result in the termination of an Executive’s employment.
4. Non-Executive Director Remuneration
Shareholders approve the maximum aggregate amount of remuneration per year available to be allocated between Non-Executive
Directors (NEDs). In proposing the amount for consideration by shareholders, the Remuneration Committee takes into account the
time demands made on Directors together with such factors as the general level of fees paid to Australian corporate directors.
For NEDs who are charged with the responsibility of oversight of the Company’s activities, a fixed annual fee is paid with no element
of performance-related pay.
The amount approved at the AGM in October 2019 was $1,250,000 per annum, which is the maximum amount that may be paid
in total to all NEDs.
On appointment, the Company enters into a deed of access and indemnity with each NED. There are no termination payments
due at the cessation of office, and any Director may retire or resign from the Board, or be removed by a resolution of shareholders.
The amounts paid to each NED, and the figures for the corresponding period, are set out below. The Board held Directors’ fees
unchanged for the 2025/26 year.
Table 5: Non-Executive Director Remuneration
Primary
(Fee/Base
Salary)
$
Post-
employment
(Superannuation)
$
Total
Remuneration
$
CM Drummond – Chairman
2026213,1345,866219,000
2025196,41322,587219,000
RP Dee-Bradbury – Non-Executive Director
2026100,8858,815109,700
202598,38611,314109,700
JA Fahey – Non-Executive Director
202697,94611,754109,700
202598,38611,314109,700
KM Hudson – Non-Executive Director
2026106,7622,938109,700
2025106,8712,829109,700
GR Liebelt – Non-Executive Director
2026109,700–109,700
2025106,8712,829109,700
RL Murray – Non-Executive Director
202697,94611,754109,700
202598,38611,314109,700
DA Peever – Non-Executive Director
202697,94611,754109,700
202598,38611,314109,700
Total remuneration of Non-Executive Directors
2026824,31952,881877,200
2025803,69973,501877,200
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Appendix
A. Remuneration Governance
Responsibilities of the Board and the Remuneration Committee
It is the Board’s responsibility to review and approve the recommendations of the Remuneration Committee.
For more information, the Charter of the Board is available on the Company’s website.
The Remuneration Committee’s primary responsibilities include:
• reviewing the level of fees for NEDs and the Chairman;
• reviewing the Managing Director’s remuneration arrangements;
• evaluating the Managing Director’s performance;
• reviewing the remuneration arrangements for other senior Executives;
• monitoring legislative developments with regards to Executive remuneration; and
• monitoring the Group’s compliance with requirements in this area.
For more information, the Charter of the Remuneration Committee is available on the Company’s website.
The Remuneration Committee is composed of three NEDs (GR Liebelt (Chairman), CM Drummond and RP Dee-Bradbury) and meets
at least twice per year.
Policy on Hedging
The Company provides no lending or leveraging arrangements to its Executives, who are prohibited by Company policy from entering
hedging arrangements that mitigate the possibility that ‘at risk’ incentive payments may not vest.
Use of Remuneration Consultants
The Managing Director makes recommendations to the Remuneration Committee with regards to the remuneration levels and structure
of the KMP. The Company has not engaged a remuneration adviser in the last two years.
The Company also participates in the annual FIRG survey of fund managers to understand current remuneration levels and practices.
B. Annual Incentives: Details of Outcomes and Conditions
Table 6 below shows the annual incentives paid to individual Executives as a result of AFIC’s and the other investment companies’
performance on financial metrics and the individual’s achievement of their own personal objectives. Table 7 sets out the detailed terms
and conditions of the annual incentives.
Table 6: Annual Incentive Outcomes
Executive
% of
Target Paid
$
Paid
% of Target
Forfeited
$
Forfeited
Mark Freeman36.9%$359,66163.1%$614,239
Andrew Porter36.9%$145,50463.1%$248,496
Geoff Driver36.4%$116,35763.6%$203,043
Matthew Rowe36.9%$69,57663.1%$118,824
Remuneration Report continued
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Table 7: Executive Annual Incentive Performance Conditions
Performance Areas and
Relative WeightingPerformance MeasuresPurpose of Measure
Company performance (20 per cent)
The relevant weightings of the investment
companies are:
• AFIC: 50 per cent
• Djerriwarrh Investments Limited:
20 per cent
• AMCIL Limited: 15 per cent
• Mirrabooka Investments Limited:
15 per cent
• Operating result and dividend growth
– measured over five years against CPI.
• Management expense ratio (MER): at
Board discretion, generally measured
against prior years’ results.
• Dividend yield (DJW only).
• Net operating result reflects the ability
of the Company to meet its dividend
objectives. The dividends of both MIR
and AMH vary from year to year and are
not a key objective for those companies.
• MER reflects the costs of running
the Company.
• Maintaining a dividend yield above the
market’s is an important object for DJW.
Investment performance (60 per cent)
The relevant weightings of the investment
companies are:
• AFIC: 50 per cent
• Djerriwarrh Investments Limited:
20 per cent
• AMCIL Limited: 15 per cent
• Mirrabooka Investments Limited:
15 per cent
• Relative investment return: measure of the
return on the portfolio invested (including
cash) over the previous one, three, five
and 10 years, relative to the S&P/ASX
200 Accumulation Index (Combined
Mid Cap 50 and Small Ordinaries for
Mirrabooka, and a modified S&P/ASX 200
Accumulation Index for Djerriwarrh).
• Risk/reward – measure of the return that
AFIC’s portfolio generates as a ratio of the
volatility risk that such a portfolio incurs.
• Grossed-up return (GR): measure of
the movement in the net asset backing
of the Company (per share) plus the
dividends assumed to be reinvested
grossed up for franking credits over the
previous one, three, five and 10 years.
This return is compared to the S&P/ASX
200 Accumulation Index grossed up for
franking credits (Combined Mid Cap 50
and Small Ordinaries for Mirrabooka, and
a modified S&P/ASX 200 Accumulation
Index for Djerriwarrh).
• The Board considers that the metrics
used reflect, over the medium to long
term, the Company’s investment
return objectives.
• Investment return: reflects the returns
generated by the mix of the investments
that the Company has invested in.
These reflect the value added to
shareholders’ wealth by the investment
decisions of the Company.
• Risk/reward: reflects the aim for AFIC’s
portfolio to be designed to face less
volatility risk than the market generally.
• Grossed-up return (GR): reflects the
movement in the value of the underlying
portfolio over the period with the
additional recognition of the importance
of franking credits.
Note: The Remuneration Committee has
discretion to determine, at the time of
the review, what it considers to be the
appropriate level of return to be used.
Personal objectives (20 per cent)
These costs are allocated to AFIC
and to the LICs on the same proportion
as the FAR
Includes:
• advice to the Board;
• succession planning;
• management of staff;
• risk management;
• shareholder stewardship; and
• promotion of corporate culture.
These measures all contribute to the
efficient running of the Group, and the
other investment companies, enhancing
investment outcomes.
Personal objectives are included in incentive
calculations to encourage out-performance
on non-financial metrics. These metrics can
be important determinants of business
success in the medium term. The Managing
Director reviews the performance of
each Executive with the Remuneration
Committee, and the Remuneration
Committee alone determines how the
Managing Director is performing against
their objectives.
50 per cent is awarded based on the
individual’s execution of their role and
50 per cent on alignment with the
Company’s culture.
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C. Directors and Executives: Equity Holdings and Other Transactions
This table sets out reconciliations of shares issued by the Group and held directly, indirectly or beneficially by Non-Executive Directors
and Executives of the Group, or by entities to which they were related.
Table 8: Shareholdings of Directors and Executives
Opening
Balance
Changes
During Year
Closing
Balance
CM Drummond68,411148,291216,702
RM Freeman199,8899,616209,505
RP Dee-Bradbury15,7706,20721,977
JA Fahey5,6222715,893
KM Hudson8,0003848,384
GR Liebelt663,629–663,629
RL Murray8,31520,92829,243
DA Peever37,2699,79247,061
GN Driver168,2248,092176,316
MJ Rowe17,0232,59319,616
AJB Porter207,0701,938209,008
Other Arrangements with Non-Executive Directors
The Chairs of the LICs are provided offices within premises rented by the Group. These offices are provided on an ex-officio basis
with no rent being charged to the individual.
D. Potential Clawback of Incentives
The Directors consider that the Incentive Plan allows for sufficient ‘clawback’ in the case of a material misstatement of the Group’s
financial statements or in any other case where the Board considers that such remuneration would be an ‘inappropriate benefit’.
The Directors, in their absolute discretion, may take such clawback actions as they deem necessary or appropriate to address
the events that give rise to an ‘inappropriate benefit’. Such actions may include:
1. cancelling or requiring the forfeiture of some or all of the Executive’s incentive payments;
2. adjusting the Executive’s future performance-based remuneration;
3. dismissing the Executive and/or initiating legal action; and/or
4. any other action the Directors consider appropriate.
The Directors are not required to show loss to the Company in order to determine that an ‘inappropriate benefit’ should be subject
to clawback.
E. Detailed Performance Measures by Investment Company
Table 9 shows the performance of AFIC and the other investment companies over the past five years, including details of investment
return and gross return (GR). These measures, which represent growth in shareholder wealth, are used in part to determine the vesting
of AFIC’s incentive plans to Executives and the Investment Team.
Remuneration Report continued
DIRECTORS’ REPORT
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Table 9: Detailed Performance Measures for AFIC and the Other Investment Companies
Year Ending 30 June
10-year
Return
5-year
Return
3-year
Return 20262025202420232022
Comparative returns
S&P/ASX 200 Accumulation Return9.45%7.76%10.62%6.11%13.81%12.10%14.78%-6.47%
Modified S&P/ASX 200 Accumulation*8.86%7.68%9.69%6.11%11.92%10.72%12.59%-6.47%
Gross S&P/ASX 200 Accumulation Return10.88%9.16%11.88%7.21%15.06%13.52%16.64%-5.12%
Modified Gross S&P/ASX 200
Accumulation Return*9.87%8.66%10.56%7.21%12.79%11.71%13.90%-5.12%
Combined Mid Cap 50 and Small Ordinaries
Accumulation Return
^
8.82%5.16%9.75%7.08%14.35%7.95%13.21%-14.06%
Gross Combined Mid Cap 50 and Small Ordinaries
Accumulation Return
^
9.67%5.91%10.50%7.79%15.16%8.71%14.19%-13.52%
Yield on ASX 200 grossed up for franking creditsn/an/an/a4.1%4.2%4.7%5.6%5.1%
Australian Foundation Investment Company Limited
Mercer risk/rewardn/a77/96n/an/an/an/an/an/a
Growth in earnings per share-0.2%7.5%-2.3%3.2%-4.6%-5.2%7.7%42.9%
Management expense ration/an/an/a0.14%0.16%0.15%0.14%0.16%
Gross return9.55%6.43%8.74%0.90%10.69%15.12%13.91%-6.78%
Investment return8.57%5.85%8.23%0.15%10.85%14.21%12.81%-7.08%
Djerriwarrh Investments Limited
Growth in net operating result per sharen/an/a1.3%1.5%1.0%1.3%5.8%30.9%
Management expense ration/an/an/a0.41%0.47%0.42%0.40%0.45%
Gross return8.16%6.10%7.99%2.83%7.80%13.59%14.20%-6.51%
Investment return6.89%5.52%7.08%1.99%7.41%12.08%13.60%-6.21%
Gross yield on NTA at end of June n/an/an/a7.0%6.5%6.5%6.8%6.7%
Mirrabooka Investments Limited
Management expense ration/an/an/a0.52%0.54%0.56%0.59%0.46%
Gross return9.19%1.72%5.29%-10.76%11.42%17.40%17.91%-20.87%
Investment return9.02%2.36%5.54%-10.71%11.95%17.61%18.08%-19.04%
AMCIL Limited
Management expense ration/an/an/a0.57%0.56%0.56%0.66%0.52%
Gross return7.59%2.33%4.89%-9.97%6.37%20.50%13.46%-14.31%
Investment return7.76%2.56%4.83%-10.45%7.31%19.90%12.42%-12.40%
* Used for Djerriwarrh Investments Limited.
^ Used for Mirrabooka Investments Limited.
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DIRECTORS’ REPORT
Details of non-audit services performed by the auditors may be found in Note F2 of the Financial Report.
The Board of Directors has considered the position and, in accordance with the advice received from the Audit Committee, is satisfied
that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not
compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartiality and objectivity
of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in the Corporations Act 2001
including reviewing or auditing the auditor’s own work, acting in a management or a decision-making capacity for the Company,
acting as advocate for the Company, or jointly sharing economic risk and rewards.
A copy of the Auditor’s Independence Declaration is set out on page 31.
This report is made in accordance with a resolution of the Directors.
Craig M Drummond
Chairman
27 July 2026
Non-audit Services
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DIRECTORS’ REPORT
Auditor’s Independence Declaration
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006,
GPO Box 1331 MELBOURNE VIC 3001
T: +61 3 8603 1000, F: +61 3 8603 1999, www.pwc.com.au
pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Auditor’s Independence Declaration
As lead auditor of Australian Foundation Investment Company Limited's financial report and review of
specified sustainability disclosures within the sustainability report for the year ended 30 June 2026, I
declare that, to the best of my knowledge and belief, there have been:
a)no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation
to the audit of the financial report or the review of the review of specified sustainability disclosures;
and
b)no contraventions of any applicable code of professional conduct in relation to the audit of the
financial report or the review of the review of specified sustainability disclosures.
Kate L Logan Melbourne
Partner 27 July 2026
PricewaterhouseCoopers
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FINANCIAL REPORT
33 Financial Statements
33 Consolidated Income Statement
34 Consolidated Statement of
Comprehensive Income
35 Consolidated Balance Sheet
36 Consolidated Statement of
Changes in Equity
38 Consolidated Cash Flow
Statement
39 Notes to the Consolidated
Financial Statements
39 A. Understanding AFIC’s
Financial Performance
39 A1. How AFIC Manages
its Capital
39 A2. Investments Held and
How They are Measured
40 A3. Operating Income
41 A4. Dividends Paid
42 A5. Earnings Per Share
43 B. Costs, Tax and Risk
43 B1. Management Costs
43 B2. Tax
44 B3. Risk
46 C. Unrecognised Items
46 C1. Contingencies
47 D. Balance Sheet
Reconciliations
47 D1. Current Assets – Cash
47 D2. Credit Facilities
47 D3. Revaluation Reserve
48 D4. Realised Capital
Gains Reserve
48 D5. Retained Profits
48 D6. Share Capital
49 E. Income Statement
Reconciliations
49 E1. Reconciliation of Net Cash
Flows From Operating
Activities to Profit
49 E2. Tax Reconciliations
50 F. Further Information
50 F1. Related Parties
50 F2. Remuneration of Auditors
51 F3. Segment Reporting
51 F4. Summary of Other
Accounting Policies
52 F5. Performance Bond
53 F6. Share Incentive
Arrangements
54 F7. Principles of Consolidation
54 F8. Subsidiaries
54 F9. Lease Commitments
55 F10. Parent Entity Financial
Information
32
Annual Report 2026
Australian Foundation Investment Company Limited

Note
2026
$’000
2025
$’000
Dividends and distributions A3319,326312,620
Interest income from deposits A36,1239,195
Other revenueA36,4966,311
Total revenue331,945328,126
Net gains on trading portfolio A38,5302,294
Income from operating activities340,475330,420
Finance costs(2,155)(1,208)
Administration expenses B1(20,138)(22,991)
Profit before income tax expense 318,182306,221
Income tax expenseB2, E2(24,685)(21,250)
Profit for the year293,497284,971
Profit is attributable to:
Equity holders of Australian Foundation Investment Company Ltd293,105284,912
Minority interest39259
293,497284,971
CentsCents
Basic earnings per shareA523.4222.71
This Income Statement should be read in conjunction with the accompanying notes.
Consolidated Income Statement
For the Year Ended 30 June 2026
FINANCIAL REPORT
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Australian Foundation Investment Company Limited

Year to 30 June 2026Year to 30 June 2025
Revenue
1
$’000
Capital
1
$’000
Total
$’000
Revenue
1
$’000
Capital
1
$’000
Total
$’000
Profit for the year293,497–293,497284,971–284,971
Other comprehensive Income
Items that will not be recycled through
the Income Statement
Gains/(losses) for the period –(347,784)(347,784)–731,229731,229
Tax on above–101,031101,031–(222,552)(222,552)
Total other comprehensive income–(246,753)(246,753)–508,677508,677
Total comprehensive income 293,497(246,753)46,744284,971508,677793,648
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 2026Year to 30 June 2025
Revenue
$’000
Capital
$’000
Total
$’000
Revenue
$’000
Capital
$’000
Total
$’000
Equity holders of Australian
Foundation Investment Company 293,105(246,753)46,352284,912508,677793,589
Minority Interests392–39259–59
293,497(246,753)46,744284,971508,677793,648
This Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
Consolidated Statement of Comprehensive Income
For the Year Ended 30 June 2026
FINANCIAL REPORT
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Note
2026
$’000
2025
$’000
Current assets
Cash D189,538280,769
Receivables56,81639,534
Trading portfolio5465,773
Total current assets146,900326,076
Non-current assets
Investment portfolioA29,668,57010,254,757
Fixtures and fittings224155
Total non-current assets9,668,79410,254,912
Total assets9,815,69410,580,988
Current liabilities
Payables3,5071,335
Borrowings – bank debt–10,000
Tax payable22,399113,483
Provisions6,6507,084
Total current liabilities32,556131,902
Non-current liabilities
Provisions38169
Deferred tax liabilities – other967233
Deferred tax liabilities – investment portfolioB21,560,1951,707,918
Total non-current liabilities1,561,2001,708,320
Total liabilities1,593,7561,840,222
Net assets8,221,9388,740,766
Shareholders’ equity
Share capitalA1, D63,054,7553,210,196
Revaluation reserveA1, D33,241,3353,651,333
Realised capital gains reserveA1, D4726,992799,329
General reserveA123,63723,637
Retained profitsA1, D51,172,9951,054,439
Parent entity interest8,219,7148,738,934
Minority interest2,2241,832
Total equity8,221,9388,740,766
This Balance Sheet should be read in conjunction with the accompanying notes.
Consolidated Balance Sheet
As at 30 June 2026
FINANCIAL REPORT
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Year Ended 30 June 2026Note
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 year3,210,1963,651,333799,32923,6371,054,4398,738,9341,8328,740,766
Dividends paid to shareholdersA4––(235,582)–(174,549)(410,131)–(410,131)
– Dividend Reinvestment PlanD688,202––––88,202–88,202
Share buy-backsD6(242,780)––––(242,780)–(242,780)
Other share capital adjustments(863)––––(863)–(863)
Total transactions with shareholders(155,441)–(235,582)–(174,549)(565,572)–(565,572)
Profit for the year––
––293,105293,105392293,497
Other comprehensive income (net of tax)
Net losses for the period–(246,753)
–––(246,753)–(246,753)
Other comprehensive income for the year–(246,753)–––(246,753)–(246,753)
Transfer to realised capital gains of cumulative gains on investments sold–(163,245)163,245–––––
Total equity at the end of the year3,054,7553,241,335
726,99223,6371,172,9958,219,7142,2248,221,938
Year Ended 30 June 2025Note
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 year3,204,9503,449,280546,95323,6371,034,7948,259,6141,7738,261,387
Dividends paid to shareholdersA4––(54,248)–(265,267)(319,515)–(319,515)
– Dividend Reinvestment PlanD671,842––––71,842–71,842
Share buy-backsD6(66,274)––––(66,274)(66,274)
Other share capital adjustments(322)––––(322)–(322)
Total transactions with shareholders5,246–(54,248)–(265,267)(314,269)–(314,269)
Profit for the year––––284,912284,91259284,971
Other comprehensive income (net of tax)
Net gains for the period–508,677
–––508,677–508,677
Other comprehensive income for the year–508,677–––508,677–508,677
Transfer to realised capital gains of cumulative gains on investments sold–(306,624)306,624–––––
Total equity at the end of the year3,210,1963,651,333799,32923,6371,054,4398,738,9341,8328,740,766
This Statement of Changes in Equity should be read in conjunction with the accompanying notes
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2026
FINANCIAL REPORT
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Year Ended 30 June 2026Note
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 year3,210,1963,651,333799,32923,6371,054,4398,738,9341,8328,740,766
Dividends paid to shareholdersA4––(235,582)–(174,549)(410,131)–(410,131)
– Dividend Reinvestment PlanD688,202––––88,202–88,202
Share buy-backsD6(242,780)––––(242,780)–(242,780)
Other share capital adjustments(863)––––(863)–(863)
Total transactions with shareholders(155,441)–(235,582)–(174,549)(565,572)–(565,572)
Profit for the year––
––293,105293,105392293,497
Other comprehensive income (net of tax)
Net losses for the period–(246,753)
–––(246,753)–(246,753)
Other comprehensive income for the year–(246,753)–––(246,753)–(246,753)
Transfer to realised capital gains of cumulative gains on investments sold–(163,245)163,245–––––
Total equity at the end of the year3,054,7553,241,335
726,99223,6371,172,9958,219,7142,2248,221,938
Year Ended 30 June 2025Note
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 year3,204,9503,449,280546,95323,6371,034,7948,259,6141,7738,261,387
Dividends paid to shareholdersA4––(54,248)–(265,267)(319,515)–(319,515)
– Dividend Reinvestment PlanD671,842––––71,842–71,842
Share buy-backsD6(66,274)––––(66,274)(66,274)
Other share capital adjustments(322)––––(322)–(322)
Total transactions with shareholders5,246–(54,248)–(265,267)(314,269)–(314,269)
Profit for the year––––284,912284,91259284,971
Other comprehensive income (net of tax)
Net gains for the period–508,677
–––508,677–508,677
Other comprehensive income for the year–508,677–––508,677–508,677
Transfer to realised capital gains of cumulative gains on investments sold–(306,624)306,624–––––
Total equity at the end of the year3,210,1963,651,333799,32923,6371,054,4398,738,9341,8328,740,766
This Statement of Changes in Equity should be read in conjunction with the accompanying notes
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Consolidated Cash Flow Statement
For the Year Ended 30 June 2026
FINANCIAL REPORT
Note
2026
$’000
Inflows/
(Outflows)
2025
$’000
Inflows/
(Outflow)
Cash flows from operating activities
Sales from trading portfolio 23,69520,481
Purchases for trading portfolio (9,938)(18,573)
Interest received6,1239,370
Dividends and distributions received315,850312,779
335,730324,057
Other revenue6,4926,583
Administration expenses(17,939)(21,921)
Finance costs paid(2,155)(1,208)
Taxes paid(41,586)(28,255)
Net cash inflow/(outflow) from operating activitiesE1280,542279,256
Cash flows from investing activities
Sales from investment portfolio988,759791,260
Purchases for investment portfolio (766,487)(609,806)
Taxes paid on sales from investment portfolio(118,351)(31,287)
Payment for fixed assets(113)(179)
Net cash inflow/(outflow) from investing activities103,808149,988
Cash flows from financing activities
Draw-down on liquidity facilities199,500–
Repayment of liquidity facilities(209,500)–
Share issue transaction costs(863)(322)
Share buy-backs(242,780)(66,274)
Dividends paid(321,938)(248,378)
Net cash inflow/(outflow) from financing activities(575,581)(314,974)
Net increase/(decrease) in cash held(191,231)114,270
Cash at the beginning of the year280,769166,499
Cash at the end of the yearD189,538280,769
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.
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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:
2026
$’000
2025
$’000
Share capital3,054,7553,210,196
Revaluation reserve3,241,3353,651,333
Realised capital gains reserve726,992799,329
General reserve23,63723,637
Retained profits1,172,9951,054,439
8,219,7148,738,934
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 consists 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:
2026
$’000
2025
$’000
Equity instruments (excluding below) 8,428,8008,889,034
Equity instruments (over which options may be written)1,091,1161,201,664
Equity instruments (listed on non-Australian/New Zealand Exchanges)148,654164,059
9,668,57010,254,757
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.
Notes to the Consolidated Financial Statements
FINANCIAL REPORT
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Notes to the Consolidated Financial Statements continued
FINANCIAL REPORT
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 2026 and
30 June 2025 were as follows:
30 June 2026
$
30 June 2025
$
Net tangible asset backing per share
Before tax7.938.33
After tax6.676.97
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 $999.1 million (2025: $791.7 million) of equity securities were sold. The cumulative gain on the sale of securities was
$163.2 million for the period after tax (2025: $306.6 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.
A3. Operating Income
The total income received from AFIC’s investments is set out below.
Dividends and Distributions
2026
$’000
2025
$’000
Income from securities held in investment portfolio at 30 June298,760302,257
Income from investment securities sold during the year20,56610,188
Income from securities held in trading portfolio at 30 June–175
Income from trading securities sold during the year––
319,326312,620
Interest income
Revenue from deposits and cash management trusts6,1239,195
Other revenue
Administration fees6,4936,274
Other income 337
6,4966,311
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.
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Australian Foundation Investment Company Limited

Trading Income
Net gains on the trading portfolio are set out below.
Net Gains
2026
$’000
2025
$’000
Net realised gains/(losses) from trading portfolio – shares/securities (158)14
– options8,3453,179
Unrealised gains/(losses) from trading portfolio – shares/securities15(729)
– options328(170)
8,5302,294
If all call options were exercised, this would lead to the sale of $167.5 million worth of securities at an agreed price – the ‘exposure’
(2025: $42.9 million).
A4. Dividends Paid
The dividends paid and payable for the year ended 30 June 2026 are shown below:
2026
$’000
2025
$’000
(a) Dividends Paid During the Year
Final dividend for the year ended 30 June 2025 of 14.5 cents plus a special dividend of 5.0
cents both fully franked at 30 per cent paid, 28 August 2025 (2025: 14.5 cents fully franked
at 30 per cent, paid on 30 August 2024)235,582174,798
Interim dividend for the year ended 30 June 2026 of 12.0 cents per share plus a special
dividend of 2.5 cents both fully franked at 30 per cent, paid 26 February 2026 (2025: 12.0 cents
fully franked at 30 per cent, paid 25 February 2025)174,549144,717
410,131319,515
Dividends paid or payable in cash321,929247,673
Dividends reinvested in shares88,20271,842
410,131319,515
Dividends forgone via DSSP16,09012,331
(b) Franking Credits
Opening balance of franking account at 1 July277,643263,771
Franking credits on dividends received95,91197,068
Tax paid during the year159,55759,026
Franking credits paid on ordinary dividends paid(175,771)(136,935)
Franking credits deducted on DSSP shares issued(6,897)(5,287)
Closing balance of franking account350,443277,643
Adjustments for tax payable in respect of the current year’s profits and the receipt
of dividends recognised as receivables29,479121,079
Adjusted closing balance379,922398,722
Impact on the franking account of dividends declared but not recognised as a liability
at the end of the financial year:(89,848)(104,803)
Net available 290,074293,919
These franking account balances would allow AFIC to frank additional dividend payments
up to an amount of:676,839685,811
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.
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Notes to the Consolidated Financial Statements continued
FINANCIAL REPORT
2026
$’000
2025
$’000
(c) New Zealand Imputation Account
(Figures in A$ at year-end exchange rate: 2026: $NZ$1.22:$A1; 2025: $NZ1.08:$A1)
Opening balance 9,69519,243
Imputation credits on dividends received8,7969,737
Imputation credits on dividends paid–(18,027)
Closing balance18,49110,953
A New Zealand imputation credit on New Zealand 4.0 cents of the dividend will be attached
to the final dividend to be paid on 28 August 2026. There was no New Zealand imputation
credit attached to the final dividend for the year ended 30 June 2025.
(d) Dividends Declared After Balance Date
Since the end of the year Directors have declared a final dividend of 14.5 cents per share
plus a special dividend of 2.5 cents per share, both fully franked at 30 per cent. The
aggregate amount of the final and special dividends for the year to 30 June 2026 to be
paid on 28 August 2026, but not recognised as a liability at the end of the financial year is 209,645
(e) Listed Investment Company Capital Gain Account
Balance of the Listed Investment Company (LIC) capital gain account at 1 July:282,57464,650
Capital gains (including LIC gains received from dividends)87,506272,172
LIC gains paid as part of dividend(235,582)(54,248)
Balance at 30 June134,498 282,574
This equates to an attributable gain of:192,141403,677
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. $176 million attributable gain is attached to the final and special
dividends to be paid on 28 August 2026.
A5. Earnings Per Share
The table below shows the earnings per share based on the profit for the year:
Basic Earnings Per Share
2026
Number
2025
Number
Weighted average number of ordinary shares used as the denominator1,251,556,3981,254,334,970
$’000 $’000
Profit for the year 293,105284,912
Cents Cents
Basic earnings per share23.4222.71
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B. Costs, Tax and Risk
B1. Management Costs
The total management expenses for the period are as follows:
2026
$’000
2025
$’000
Rental expense relating to non-cancellable leases (773)(736)
Employee benefit expenses (12,734)(15,076)
Depreciation charge(44)(24)
Other administration expenses(6,587)(7,155)
(20,138)(22,991)
Employee Benefit Expenses
A major component of employee benefit expenses is Directors’ and Executives’ remuneration. This has been summarised below:
Short Term
Benefits
$
Post-
employment
Benefits
$
Total
$
2026
Non-Executive Directors 824,31952,881877,200
Executives3,348,598120,0003,468,598
Total4,172,917172,8814,345,798
2025
Non-Executive Directors803,69973,501877,200
Executives3,488,812120,0003,608,812
Total4,292,511193,5014,486,012
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.
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.
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Notes to the Consolidated Financial Statements continued
FINANCIAL REPORT
Tax Expense
The income tax expense for the period is shown below:
(a) Reconciliation of Income Tax Expense to Prima Facie Tax Payable
2026
$’000
2025
$’000
Profit before income tax expense 318,182306,221
Tax at the Australian tax rate of 30 per cent (2025: 30 per cent)95,45591,866
Tax offset for franked dividends received(67,135)(67,947)
Sundry items whose tax treatment differs from accounting treatment197514
28,51724,433
Over provision in prior years(3,832)(3,183)
Total tax expense24,68521,250
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.
2026
$’000
2025
$’000
Deferred tax liabilities on unrealised gains in the investment portfolio1,560,1951,707,918
Opening balance at 1 July1,707,9181,603,716
Tax on realised gains(46,692)(118,350)
(Credited)/charged to OCI for ordinary securities on gains or losses for the period(101,031)222,552
1,560,1951,707,918
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 per cent and 10 per cent, if spread equally over all assets in the investment portfolio, would have led
to a reduction in AFIC’s comprehensive income of $338.4 million and $676.8 million respectively, at a tax rate of 30 per cent (2025:
$358.9 million and $717.8 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.
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AFIC’s total investment exposure by sector is as below:
2026
%
2025
%
Energy3.333.33
Materials18.2912.81
Industrials11.6411.51
Consumer Discretionary7.147.41
Consumer Staples 5.823.85
Banks 19.1420.17
Other Financials 9.899.90
Real Estate4.985.09
Telecommunications7.457.37
Healthcare8.7212.31
Information Technology2.683.55
Utilities0.000.03
Cash0.922.67
Securities representing over 5 per cent of the investment portfolio at 30 June were
BHP11.77.4
Commonwealth Bank of Australia8.39.4
Macquarie Group5.54.8
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 per cent) part of the total portfolio (2025: 1.6 per cent).
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.
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 2026, no such
investments are held (2025: 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 six months.
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Notes to the Consolidated Financial Statements continued
FINANCIAL REPORT
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.
30 June 2026
Less Than
6 Months
$’000
6-12 Months
$’000
Greater
Than 1 Year
$’000
Total
Contractual
Cash Flows
$’000
Carrying
Amount
$’000
Non-derivatives
Payables3,507––3,5073,507
Borrowings–––––
3,507––3,5073,507
Derivatives
Options in trading portfolio*–––––
–––––
30 June 2025
Less Than
6 Months
$’000
6-12 Months
$’000
Greater
Than 1 Year
$’000
Total
Contractual
Cash Flows
$’000
Carrying
Amount
$’000
Non-derivatives
Payables1,335––1,3351,335
Borrowings10,000––10,00010,000
11,335––11,33511,335
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 June 2026 or 30 June 2025.
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.
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Further information that shareholders 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
2026
$’000
2025
$’000
Cash at bank 79,796280,181
Cash with custodian9,742588
89,538280,769
Cash holdings yielded an average floating interest rate of 3.82 per cent (2025: 4.08 per cent). 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
2026
$’000
2025
$’000
Commonwealth Bank of Australia – cash advance facility 130,00080,000
Amount drawn down at 30 June––
Undrawn facilities at 30 June130,00080,000
Westpac Bank – cash advance facility 20,000–
Amount drawn down at 30 June––
Undrawn facilities at 30 June20,000–
National Australia Bank – cash advance facility –20,000
Amount drawn down at 30 June–10,000
Undrawn facilities at 30 June–10,000
Total short term loan facilities150,000100,000
Total drawn down at 30 June–10,000
Total undrawn facilities at 30 June150,00090,000
The above borrowings, with the exception of the previous 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 Board decided to increase the total
amount of facilities during the year.
D3. Revaluation Reserve
2026
$’000
2025
$’000
Opening balance at 1 July3,651,3333,449,280
Gains/(losses) on investment portfolio
Equity instruments(347,784)731,229
Provision for tax on above101,031(222,552)
Cumulative taxable realised (gains)/losses (net of tax)(163,245)(306,624)
3,241,3353,651,333
This reserve is used to record increments and decrements on the revaluation of the investment portfolio as described in accounting
policy Note A2.
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Notes to the Consolidated Financial Statements continued
FINANCIAL REPORT
D4. Realised Capital Gains Reserve
2026
$’000
2025
$’000
Opening balance at 1 July799,329546,953
Dividends paid(235,582)(54,248)
Cumulative taxable realised gains/(losses) (net of tax)163,245306,624
726,992799,329
This reserve records gains or losses after applicable taxation arising from disposal of securities in the investment portfolio as described
in Note A2.
D5. Retained Profits
2026
$’000
2025
$’000
Opening balance at 1 July1,054,4391,034,794
Dividends paid(174,549)(265,267)
Profit for the year293,105284,912
1,172,9951,054,439
This reserve relates to past profits.
D6. Share Capital
Movements in Share Capital
DateDetailsNotes
Number
of Shares
’000
Issue
Price
$
Paid-up
Capital
$’000
1/07/2024Balance1,251,5703,204,950
30/08/2024Dividend Reinvestment Plani5,4617.2639,650
30/08/2024Dividend Substitution Share Planii9207.26n/a
25/02/2025Dividend Reinvestment Plani4,3507.4032,192
25/02/2025Dividend Substitution Share Planii7647.40n/a
VariousShare buy-backsiii(9,006)–(66,274)
VariousCosts of issue––(322)
30/06/2025Balance1,254,0593,210,196
28/08/2025Dividend Reinvestment Plani6,9307.3550,935
28/08/2025Dividend Substitution Share Planii1,2187.35n/a
26/02/2026Dividend Reinvestment Plani5,4016.9037,267
26/02/2026Dividend Substitution Share Planii1,0336.90n/a
VariousShare buy-backsiii(35,435)–(242,780)
VariousCosts of issue––(863)
30/06/2026Balance1,233,2063,054,755
1. 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 and Cboe in the five days
after the shares begin trading on an ex-dividend basis.
2. 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.
3. The Group has an on-market share buy-back program. During the financial year, 35.4 million shares were bought back at an average price of $6.85
(2025: 9.0 million shares at an average price of $7.36).
All shares have been fully paid, rank pari passu and have no par value.
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E. Income Statement Reconciliations
E1. Reconciliation of Net Cash Flows From Operating Activities to Profit
2026
$’000
2025
$’000
Profit for the year293,497284,971
Net decrease/(increase) in trading portfolio5,227(386)
Dividends received as securities under DRP investments–(1,420)
Decrease/(increase) in current receivables(17,282)2,891
– Less increase/(decrease) in receivables for investment portfolio15,619504
Increase/(decrease) in deferred tax liabilities(146,989)103,198
– Less (increase)/decrease in deferred tax liability on investment portfolio147,723(104,202)
Increase/(decrease) in current payables2,17279
– Less (increase)/decrease in dividends payable8714
– Less (increase)/decrease in payables for investment portfolio509(509)
Increase/(decrease) in provision for tax payable(91,084)79,378
Capital gains tax charge taken through equity(46,692)(118,350)
Prior year taxes paid relating to capital gains118,35131,287
Depreciation4424
Increase/(decrease) in other provisions/non-cash items (561)1,077
Net cash flows from operating activities280,542279,256
E2. Tax Reconciliations
Tax Expense Composition
2026
$’000
2025
$’000
Charge for tax payable relating to the current year27,78325,437
Over provision in prior years(3,832)(3,183)
Increase/(decrease) in deferred tax liabilities734(1,004)
24,68521,250
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(101,031)222,552
(101,031)222,552
Deferred Tax Assets and Liabilities
The deferred tax balances are attributable to:
2026
$’000
2025
$’000
(a) Tax on unrealised gains or losses in the trading portfolio(318)(127)
(b) Provisions and expenses charged to the accounting profit which are not yet tax deductible2,1952,393
(c) Interest and dividend income receivable which is not assessable for tax until receipt(2,844)(2,499)
(967)(233)
Movements:
Opening balance at 1 July(233)(1,237)
Credited/(charged) to Income Statement(734)1,004
(967)(233)
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.
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Notes to the Consolidated Financial Statements continued
FINANCIAL REPORT
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) AICS Transactions with Minority Interests
The below transactions were with Djerriwarrh Investments Ltd as a minority interest holder in the Company’s subsidiary.
2026
$’000
2025
$’000
Administration expenses charged for the year2,7702,738
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 $21.2 million (2025: $22.7 million) and it received dividend income during the year of $1.5 million
(2025: $1.1 million).
(b) AICS Transactions with Other Listed Investment Companies
AICS had the following transactions with other Listed Investment Companies to which it provides services:
2026
$’000
2025
$’000
Administration expenses charged for the year to Mirrabooka Investments Ltd2,6192,448
Administration expenses charged for the year to AMCIL Ltd1,1811,343
At the end of June, the Company’s investment in Mirrabooka Investments Ltd, which is measured at fair value through OCI as part of
the investment portfolio, was valued at $37.7 million (2025: $49.9 million) and it received dividend income during the year of $1.7 million
(2025: $1.2 million). The Company did not have an investment in AMCIL Ltd during the year.
F2. Remuneration of Auditors
For the year the auditor earned or will earn the following remuneration including GST:
2026
$
2025
$
PricewaterhouseCoopers
Audit services
Audit or review of financial reports 190,799184,884
Audit-related services
Limited assurance engagement over specific sustainability disclosures54,450–
AFSL compliance audit and review10,1849,868
Permitted non-audit services
Review of realised CGT balances70,95067,760
Preparation and lodgement of tax returns41,92140,623
Total remuneration368,304303,135
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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 one investment comprising more than 10 per cent of AFIC’s income – BHP
12.5 per cent (2025: one investment: BHP (12.0 per cent)).
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 27 July 2026 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.
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:
PhraseAASB Terminology
Market valueFair value for actively traded securities
CashCash and cash equivalents
Share capitalContributed equity
OptionsDerivatives written over equity instruments that are valued at fair value through profit or loss
HybridsEquity 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 2026 (‘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 Note 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.
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Notes to the Consolidated Financial Statements continued
FINANCIAL REPORT
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.
(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 for 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 2026/183,
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 Licence 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.
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F6. Share Incentive Arrangements
Share Incentive Arrangements
The Group has a number of share incentive arrangements. These 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 per cent 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 per cent 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.
5,381 AFIC shares for the Incentive Plan (2025: 20,309 shares) were purchased by Executives in the year (in relation to the prior year)
with a fair value (being the acquisition price) of $38,845 (2025: $148,606). 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 $6,000 per annum. After PAYG is deducted, $3,000 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 $6,000. 50 per cent 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, 33 per cent of the possible maximum
was awarded, and 50 per cent of this was used to buy shares in Mirrabooka Investments 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):
2026
$’000
2025
$’000
Share-based payment expense 58 64
(d) Liability
The total liability arising from share-based payment transactions is included in the current liabilities for ‘provisions’.
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Notes to the Consolidated Financial Statements continued
FINANCIAL REPORT
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 per cent 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
IncorporationClass of Shares
Equity Holding
20262025
Australian Investment Company Services LtdAustralia Ordinary75%75%
The investment in AICS is accounted for at cost in the individual financial statements of AFIC.
F9. Lease Commitments
The Group has entered into a non-cancellable operating lease for the use of its premises for six years with effect from 1 July 2022.
Current commitments relating to leases at balance date for the current lease (including GST) is:
2026
$’000
2025
$’000
Due within one year618589
Later than one year but less than five6481,266
Greater than five years––
1,2661,855
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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:
2026
$’000
2025
$’000
Balance sheet
Current assets133,188313,566
Total assets9,801,75710,568,324
Current liabilities25,355124,232
Total liabilities1,588,5651,834,736
Shareholders’ equity
Issued capital3,054,9053,210,346
Reserves
Revaluation reserve3,241,3353,651,333
Realised capital gains reserve726,992799,329
General reserve23,63723,637
Retained earnings1,166,3231,048,943
5,158,2875,523,242
Total shareholders’ equity8,213,1928,733,588
Profit or loss for the year291,929284,735
Total comprehensive income 45,176793,412
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Australian Foundation Investment Company Limited

As disclosed in Note F8 to the financial statements, the Company has one subsidiary, Australian Investment Company Services Limited (AICS).
The Company owns 75 per cent of AICS (the other 25 per cent being owned by Djerriwarrh Investments Limited). AICS is a body
corporate, incorporated and tax resident in Australia.
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
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In the Directors’ opinion:
(1) the financial statements and notes set out on pages 33 to 55 are in accordance with the Corporations Act 2001 including:
(a) complying with the accounting standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
(b) giving a true and fair view of the entity’s financial position as at 30 June 2026 and of its performance for the financial year ended
on that date;
(2) the Consolidated Entity Disclosure Statement is true and correct; and
(3) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
Note F4 to the financial statements confirms that the financial statements also comply with International Financial Reporting Standards
as issued by the International Accounting Standards Board.
This declaration is made in accordance with a resolution of the Directors.
This declaration has been made after receiving the declarations required to be made to the Directors by the Managing Director and the
Chief Financial Officer regarding the financial statements in accordance with Section 295A of the Corporations Act 2001 for the financial
year ended 30 June 2026. The declarations received were that, in the opinion of the Managing Director and the Chief Financial Officer to
the best of their knowledge, the financial records of the Company have been properly maintained, that the financial statements comply
with accounting standards and that they give a true and fair view.
Craig M Drummond
Chairman
Melbourne
27 July 2026
DIRECTORS’ DECLARATION
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INDEPENDENT AUDIT REPORT

PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006,
GPO Box 1331 MELBOURNE VIC 3001
T: +61 3 8603 1000, F: +61 3 8603 1999, www.pwc.com.au

pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Independent auditor’s report
To the members of Australian Foundation Investment Company Limited
Report on the audit of the financial report
Our opinion
In our opinion, the accompanying financial report of Australian Foundation Investment Company
Limited (the Company) and its controlled entity (together the Group) is in accordance with the
Corporations Act 2001, including:
a) giving a true and fair view of the Group’s financial position as at 30 June 2026 and of its financial
performance for the year then ended; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The financial report comprises:
• the consolidated balance sheet as at 30 June 2026;
• the consolidated income statement for the year then ended;
• the consolidated statement of comprehensive income for the year then ended;
• the consolidated statement of changes in equity for the year then ended;
• the consolidated cash flow statement for the year then ended;
• the notes to the consolidated financial statements, including material accounting policy information
and other explanatory information;
• the consolidated entity disclosure statement as at 30 June 2026; and
• the directors’ declaration.
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2
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the
Code) that are relevant to audits of the financial report of public interest entities in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion
on the financial report as a whole, taking into account the geographic and management structure of the
Group, its accounting processes and controls and the industry in which it operates.
Audit Scope
Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
Our audit focused on assessing the financial report for risks of material misstatement in account
balances, classes of transactions or disclosures, and designing and performing audit procedures to obtain
reasonable assurance that the financial statements as a whole were free of material misstatement due to
fraud or error. This included identifying areas of higher risk, based on quantitative and qualitative
assessments of the Group's operations and activities.
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3
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report for the current period. The key audit matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. Further, any commentary on the outcomes of a particular audit
procedure is made in that context. We communicated the key audit matter to the Audit Committee.
Key audit matter How our audit addressed the key audit
matter
Investment Portfolio
Refer to note A2 ($9,668.6 million)

The Investment Portfolio held by the Group of $9,668.6 million as at 30
June 2026 predominantly consists of listed Australian equities, as well as a
smaller portfolio of listed international equities.

Whilst there is no significant judgement in determining the existence or
valuation of the Group’s investments, investments represent a key measure
of the Group’s performance and comprise a significant proportion of total
assets in the consolidated balance sheet. The fluctuations in investments
will also impact the realised and unrealised gains/(losses) recognised in the
consolidated statement of comprehensive income. Given the pervasive
nature investments have on the Group’s key financial metrics, we
determined the existence and valuation of investments to be a key audit
matter.

Our procedures included the following:

1) Agreed the investment quantity holdings at
30 June 2026 to third party confirmations or
registry sources.

2) Obtained the purchases and sales listing for
the year ended 30 June 2026 and agreed a
sample of purchases and sales transactions to
contracts.

3) Performed a reconciliation of the opening
investment portfolio balances (quantity of
holdings and value), purchases, sales and
other relevant transactions, and agreed this
back to the 30 June 2026 closing investment
portfolio.

4) Agreed quoted market prices used to fair
value listed equity investments at 30 June
2026 to third party market pricing sources.

Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report for the year ended 30 June 2026, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon through our opinion on the financial report. We have
issued a separate opinion on the remuneration report and a separate limited assurance conclusion on
selected sustainability information within the sustainability report section of the annual report.
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4
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report in accordance
with Australian Accounting Standards and the Corporations Act 2001, including giving a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of
the financial report that is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at: https://auasb.gov.au/media/bwvjcgre/ar1_2024.pdf. This
description forms part of our auditor’s report.
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Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in the directors’ report for the year ended
30 June 2026.
In our opinion, the remuneration report of Australian Foundation Investment Company Limited for the
year ended 30 June 2026 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the remuneration
report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the remuneration report, based on our audit conducted in accordance with Australian
Auditing Standards.
PricewaterhouseCoopers
Kate L Logan Melbourne
Partner 27 July 2026
INDEPENDENT AUDIT REPORT continued
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SUSTAINABILITY REPORT
About This Report
This report sets out AFIC’s climate-related financial disclosures for the year ended 30 June 2026. Disclosures have been prepared
in accordance with AASB S2 Climate-related Disclosures, issued by the Australian Accounting Standards Board (AASB), and
for the same consolidated reporting entity as AFIC’s consolidated financial statements (refer to Note F8 in AFIC’s Annual Report).
The scope of this report is limited to AFIC’s own operations and assets. It does not extend to any related investment entities
or external managers with which AFIC may have commercial or governance relationships.
In line with AASB S2 transitional relief, AFIC has not included a Scope 3 emission inventory in this reporting year.
Directors’ Declaration
In accordance with a resolution of the Directors of AFIC, I declare that in the opinion of the Directors:
1. The Company has taken all reasonable steps to ensure that this climate-related disclosure is in accordance with the
Corporations Act 2001, including:
a. Presenting a true and fair view of AFIC’s climate-related financial positions as of 30 June 2026, and of its performance
for the year ended on that date.
b. Complying with Australian Accounting Standard AASB S2 Climate-related Disclosures.
Craig M Drummond
Chairman
27 July 2026
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1. Introduction
AFIC is a Listed Investment Company (LIC) focused on paying a stable to growing dividend over time and providing attractive total
returns over the medium to long term through a diversified portfolio of primarily Australian listed equities. The Company is governed
by a Board committed to maintaining high standards of ethical conduct and corporate governance, appropriate to AFIC’s scale and
investment mandate.
AFIC’s investment model operates through a defined value chain that spans capital allocation, portfolio construction, monitoring and
downstream shareholder outcomes. While AFIC does not maintain a traditional supply chain or operate physical assets, climate-related
risks and opportunities can influence decision-making across each stage of this investment process.
Climate-related risks and opportunities are considered as part of AFIC’s broader approach to portfolio risk oversight. This includes
identifying material financial exposures arising from market, policy or physical climate changes that may impact the performance
or valuation of AFIC’s holdings.
2. Governance
This section covers the governance processes, controls and procedures AFIC uses to monitor and manage climate-related risks
and opportunities.
2.1 Board Structure, Roles and Governance Responsibilities
The AFIC Board is responsible for overseeing the Company’s long term strategy, risk management and performance, including the
management of climate-related risks and opportunities where material to investment outcomes. The responsibilities of the Board and
Committees for climate-related matters are formally documented in relevant Committee Charters and Terms of Reference, which outline
oversight roles, reporting responsibilities, and the frequency of climate-related reviews.
Climate-related matters are formally considered by the Board at least annually, with additional updates provided when significant
developments or emerging risks arise. In FY26, the Board considered climate-related risks and opportunities at two meetings, covering
AFIC’s AASB S2 disclosure obligations, and portfolio exposures. The Board also reviews the Company’s approach to scenario analysis
at least annually, or when significant changes occur and considers how climate-related risks and opportunities may affect long term
strategic decisions.
Board responsibilities are supported by the Investment, Audit, Nomination and Remuneration Committees. These Committees meet
regularly and report into the Board on matters including:
• Investment Committee: climate risks and opportunities affecting portfolio performance and valuation (biannual agenda item);
• Audit Committee: adequacy of climate-related financial risk controls, including annual CFO-led review of processes;
• Nomination Committee: annual review of Board and management skills matrix and climate-related capability development; and
• Remuneration Committee: advises the Board on Executive and Director remuneration, including performance assessment and
remuneration policy.
Figure 1: AFIC’s Governance Structure for Oversight of Climate-related Risks and Opportunities
Board of Directors
Investment
Committee
Audit
Committee
Remuneration
Committee
Nomination
Committee
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