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Annual General Meeting Presentation September 2025 For personal use only
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Annual General Meeting / September 2025 Australian Foundation Investment Company Limited and its subsidiary AICS (AFSL 303209), their related entities and each of their respective directors, officers and agents (together the Disclosers) have prepared the information contained in these materials in good faith. However, no warranty (express or implied) is made as to the accuracy, completeness or reliability of any statements, estimates or opinions or other information contained in these materials (any of which may change without notice) and to the maximum extent permitted by law, the Disclosers disclaim all liability and responsibility (including, without limitation, any liability arising from fault or negligence on the part of any or all of the Disclosers) for any direct or indirect loss or damage which may be suffered by any recipient through relying on anything contained in or omitted from these materials. This information has been prepared and provided by AICS. To the extent that it includes any financial product advice, the advice is of a general nature only and does not take into account any individual’s objectives, financial situation or particular needs. Before making an investment decision an individual should assess whether it meets their own needs and consult a financial advisor. ABN: 56 004 147 120 Disclaimer 6 For personal use only
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Annual General Meeting / September 2025 Overview and Investment Objectives Mark Freeman Financial Results Andrew Porter Markets and the Portfolio David Grace Recent portfolio activity Winston Chong Outlook David Grace 2 Agenda 7 For personal use only
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Annual General Meeting / September 2025 Overview and Investment ObjectivesFor personal use only
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Annual General Meeting / September 2025 Predominantly invests in Australian and New Zealand companies Largest listed investment company on the ASX, 150k shareholders, independent Board of Directors Shareholders own the ‘management rights’ to the portfolio Management expense ratio of 0.16% with no performance fees Long term investor with low turnover (tax effective) Long history of growing/stable fully franked dividends Team manages three other funds – Djerriwarrh, Mirrabooka and AMCIL 9 Our Company 9 For personal use only
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Annual General Meeting / September 2025 Investment Objectives The Company’s primary investment goals are: • to pay stable to growing dividends over time; and • to provide attractive total returns over the medium to long term. 10 For personal use only
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Annual General Meeting / September 2025 Stable to Growing Dividend for Shareholders AFIC’s franking reserve balance ensures we can pay a consistent dividend even through volatile times – full year dividends for the last 7 financial years. Current franking credit balance sufficient to pay 55c Dividend 11 For personal use only
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Annual General Meeting / September 2025 Attractive Total Returns Over the Long-Term $10k in AFIC $178k $10k in the Index $146k Excludes the benefit of franking. AFIC NTA vs S&P ASX 200 Accumulation Index 12 For personal use only
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Annual General Meeting / September 2025 Financial ResultsFor personal use only
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Annual General Meeting / September 2025 Summary Full Year Results 14 For personal use only
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Annual General Meeting / September 2025 Share Price Relative to Net Tangible Asset (NTA) 31 August 2025 NTA: $8.34 Share price: $7.33 15 For personal use only
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Annual General Meeting / September 2025 Markets and the Portfolio For personal use only
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Annual General Meeting / September 2025 Portfolio Performance to 31 August 2025 Per annum returns. Assumes the full benefit of franking credits. Only includes franking that has been paid out. Past performance is not indicative of future performance. 17 For personal use only
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Annual General Meeting / September 2025 CGT not yet paid out as franking -0.74% Management expenses -0.16% Portfolio: Key Contributors +0.9% Index Winners Missed: Gold -1.1% Factors Behind Recent AFIC Portfolio Performance Portfolio Factors Non-Portfolio Factors Portfolio: Key Detractors -4.0% 18 For personal use only
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Annual General Meeting / September 2025 Despite Near Term Headwinds Long-Term Opportunity Remains Significant. • • Market leader in plumbing distribution in Australia and New Zealand. • US housing market currently in a downturn. • Highly capable board and management team. Strong balance sheet. • Market leader in fibre cement cladding for US houses. • Inappropriate capital structure in acquiring AZEK. • Well positioned to capture significant market share over the long term. • Strong market position in all business units. • Demand for core IG product remains resilient and strong. • The outlook for US healthcare funding remains highly uncertain • Highly cash generative business with a strong balance sheet. • Logistics operator with strong market positions in Australia and NZ. • Near term earnings challenges on weak NZ economic conditions. • Highly capable board and management team. Net cash balance sheet. 19 For personal use only
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Annual General Meeting / September 2025 Share Prices Have Diverged From Earnings Growth - 50 100 150 200 250 - 200 400 600 800 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 EPS US Cents Share Price USD (RHS) - 40 80 120 160 200 - 200 400 600 800 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 EPS AU Cents Share Price AUD (RHS) Source: FactSet 20 For personal use only
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Annual General Meeting / September 2025 14x 16x 18x 20x 22x 24x 26x 28x 30x Valuation Metrics – Price to Earnings of CBA vs. CSL 2020 2021 2022 2023 2024 2025 Source: FactSet 15x 20x 25x 30x 35x 40x 45x 50x 26.3x 17.9x 2020 2021 2022 2023 2024 2025 21 For personal use only
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Annual General Meeting / September 2025 Mainfreight – Share Price Tracks Earnings Source: FactSet 22 0 10 20 30 40 50 60 70 80 90 0.0 1.0 2.0 3.0 4.0 5.0 EPS NZD (LHS) Share Price NZD (RHS) For personal use only
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Annual General Meeting / September 2025 80 100 120 140 160 180 200 220 240 0 4 8 12 16 20 24 28 32 US Single Family Housing Starts Index (RHS) REH A$ Share Price (LHS) 80 100 120 140 160 180 200 220 240 0 6 12 18 24 30 36 42 48 54 60 US Single Family Housing Starts Index (RHS) JHX A$ Share Price (LHS) A Cyclical Downturn Causing Short-Term Headwinds Source: US Census Bureau, FactSet • Market leader in a large, growing market • Debt-funded acquisition has weighed on the share price • Market opportunity remains unchanged • Founder led. Market leader in Australia • Less established US business facing cyclical headwinds • Long-term opportunity remains but may require patience 2013 2016 2019 2022 2025 2013 2016 2019 2022 2025 23 For personal use only
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Annual General Meeting / September 2025 - 500 1,000 1,500 2,000 2,500 3,000 3,500 The Gold Price Has Run to All Time Highs Source: Macrotrends 1975 1985 1995 2005 2015 2025 The gold price has reached record highs, driven by geopolitical uncertainty, Central Bank Buying, rising Government debt, and easing monetary conditions (rate cuts) History shows these moves are often extreme in both directions Gold mining stocks have outperformed substantially These companies can have complex operations and limited lifespans, meaning it can be difficult to have long-term conviction Price (USD) 24 For personal use only
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Annual General Meeting / September 2025 Recent Portfolio Activity For personal use only
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Annual General Meeting / September 2025 Active Portfolio Management – Recent Transactions Additions to Existing Holdings New Purchases Trimmed Holdings Complete Disposals Nil. 26 For personal use only
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Annual General Meeting / September 2025 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 5x 10x 15x 20x 25x 30x 35x 40x Why Are We Trimming Wesfarmers? 2005 2010 2015 2020 2025 Source: FactSet 36.3x 2.7% 2005 2010 2015 2020 2025 Price to Earnings Dividend yield 27 For personal use only
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Annual General Meeting / September 2025 Goodman Group Short Term Weakness Concerns about slowing capex by hyperscalers 0 5 10 15 20 25 30 35 40 45 GMG Share Price (A$) The Long Term Opportunity Significant data centre development pipeline 0.2 GW 2.0 GW North America Continental Europe/UK 0.5 GW Hong Kong SAR 1.0 GW Australia & New Zealand 1.3 GW Japan LOS ANGELES GREATER LONDON AMSTERDAM FRANKFURT PARISMILAN MARDID TOKYO OSAKA SYDNEY AUCKLAND Source: Goodman Group Source: Factset HONG KONG MELBOURNE 28 For personal use only
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Annual General Meeting / September 2025 0 50 100 150 200 250 300 350 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 ARB Export Sales (A$m) ARB Corporation The Long Term Opportunity Short Term Weakness Soft Australian vehicle market and US tariff concerns 29 Growing traction in US export sales 0 10 20 30 40 50 60 ARB Share Price (A$) Source: ARB Source: Factset For personal use only
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Annual General Meeting / September 2025 Outlook For personal use only
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Annual General Meeting / September 2025 24% 27%17% 32% Our Confidence in the Long-Term Portfolio Outlook Remains Strong AFIC StalwartsGrowth Companies IncomeCyclicals Excludes cash. 31 For personal use only
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Annual General Meeting / September 2025 50 100 150 200 250 300 US Market – Market Valuation Following Earnings Higher Source: FactSet 2005 2009 2013 2017 2021 2025 2005 2009 2013 2017 2021 2025 S&P 500 Price / Earnings NTM S&P 500 EPS (USD $/Share) 10x 13x 16x 19x 22x 25x 32 For personal use only
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Annual General Meeting / September 2025 250 300 350 400 450 500 550 600 Australian Market – Market Valuation and Earnings Disconnected Source: FactSet S&P/ASX 200 Price / Earnings NTM 7x 9x 11x 13x 15x 17x 19x 21x 2005 2009 2013 2017 2021 2025 2005 2009 2013 2017 2021 2025 S&P/ASX 200 EPS (AUD $/Share) 33 For personal use only
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Annual General Meeting / September 2025 Summary Performance has been disappointing the last 12 months. It’s not where we expect it to be. A small number of stocks have significantly underperformed. We have reviewed all portfolio holdings and believe the portfolio remains well positioned to deliver our investment objectives. We maintain investment in a portfolio of quality companies with good prospects to deliver meaningful earnings growth over the medium to long term. Reinforce value considerations within our process. We increased our dividend in FY25 despite aggregate dividends from ASX 200 companies being below the prior year. 34 For personal use only
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Annual General Meeting / September 2025 Outlook Low economic growth is providing an increasingly challenging environment for companies to grow earnings. Slowing revenue growth means cost out initiatives increasingly required. In many cases, the valuations of companies with perceived earnings certainty is now at extreme levels, driven more by capital flows rather than a true reflection of fundamental value. Portfolio positioning increasingly defensive with a particular focus on balance sheet strength. We are cautious on valuations, over paying for even high quality companies will likely to lead to poor investment returns over the longer term. The portfolio is invested in well managed companies with proven track records of financial discipline capturing value-accretive opportunities as they arise. 35 For personal use only
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Annual General Meeting / September 2025 International Portfolio • Portfolio was first initiated in May 2021. At 30 June 2025 valued at $168.1 million (1.6% of the AFIC total portfolio). • Significant preparatory work has been done for establishing a separate global investment company in the future. • We are still considering the most appropriate next steps for this initiative. • AFIC’s global portfolio returned 14.0% for the financial year, an attractive return for shareholders although below our benchmark. • Medium term performance since inception: Gross Returns in $A 30 June 2025 3 Years Since Inception %pa %pa AFIC Global Portfolio 21.0 14.0 Benchmark 20.3 14.0 Source: Northern Trust 36 For personal use only
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Annual General Meeting / September 2025 Snapshot of the International Portfolio which has 43 holdings 37 For personal use only
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