Interim report
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Australian Foundation Investment Company Limited Contents • Results for Announcement to the Market • Media Release • Appendix 4D Accounts • Independent Auditors’ Review Report This half-year report is presented under listing rule 4.2A and should be read in conjunction with the Company’s 2024 Annual Report. This announcement was authorised for release by the Board of Australian Foundation Investment Company Limited. Australian Foundation Investment Company Limited ABN 56 004 147 120 1 For personal use only
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Australian Foundation Investment Company Limited Results for Announcement to the Market The reporting period is the half year ended 31 December 2024, with the prior corresponding period being the half year ended 31 December 2023. The half year financial report has been reviewed by the Company’s auditors. > Profit after tax was $154.2 million, up 2.7% on the previous corresponding period’s $150.1 million. > Profit after tax attributable to members was $154.2 million (up 2.8% on the previous corresponding period’s $150.0 million). > Revenue from operating activities was $173.5 million, up $5.1 million or 3.0% from the previous corresponding period. This excludes capital gains on investments. > Investment income for the six months to 31 December 2024 was $166.3 million, up from $162.7 million in the corresponding period last year. The increase was largely because of a special dividend from Woolworths Group and increased holdings in BHP, Woodside Energy Group and Telstra Group over the course of the calendar year. These dividend increases offset the lower contribution from major bank dividends as holdings were reduced through the period. > The interim dividend is 12.0 cents per share, fully franked, up 0.5 cents from the previous corresponding period. The dividend will be paid on 25 February 2025 to ordinary shareholders on the register on 4 February 2025, and the shares are expected to commence trading on an ex- dividend basis on 3 February 2025. There is no conduit foreign income component of the dividend. No LIC gains are attached to the interim dividend. > A Dividend Reinvestment Plan (DRP) and Dividend Substitution Share Plan (DSSP) are available, the price for which will be set at a nil discount to the Volume Weighted Average Price of the Company’s shares traded on the ASX and Cboe automated trading systems over the five trading days from when the shares trade ex- dividend. The last date for the receipt of an election notice for participation in the DRP and DSSP is 5pm (AEDT) on 5 February 2025. > The final dividend for the 2024 financial year was 14.5 cents per share (fully franked), and it was paid to shareholders on 30 August 2024. > Portfolio return for the half year was 7.2%, including franking. The return for the S&P/ASX 200 Accumulation Index was 7.6% including franking over this period. In the 12 months to 31 December 2024 the portfolio return was 13.2%, ahead of the S&P/ASX 200 Accumulation Index return over this period including franking of 12.7%. AFIC’s performance returns are after costs. > Net tangible assets per share before any provision for deferred tax on the unrealised gains on the long term investment portfolio as at 31 December 2024 were $8.24, up from $7.62 at 31 December 2023 (both before allowing for any announced dividends). > The Company will be providing an update on these results via a webcast for shareholders on Wednesday 22 January 2025 at 3.30 p.m. (AEDT). Details are on the website at afi.com.au. 2 For personal use only
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Australian Foundation Investment Company Limited 12-month portfolio return outperforms in strong market conditions. Increase in the interim dividend. Half Year Report to 31 December 2024 AFIC’s investment focus is on a diversified portfolio of Australian equities, seeking to provide attractive income and capital growth to shareholders over the medium to long term. This is achieved at a low cost, with lower volatility than the market, and with low portfolio turnover which produces tax-effective outcomes for shareholders. AFIC’s management expense ratio is 0.15% (annualised) with no additional fees. Half Year Profit was $154.2 million. In the corresponding period last year, Half Year Profit was $150.1 million. Earnings per share for the half year was 12.3 cents per share. The interim dividend declared is 12.0 cents per share fully franked, an increase from 11.5 cents per share from the corresponding period last year. Increasing the interim dividend is in line with our long term objective of seeking to equalise the quantum of the interim and final dividends over time. During the period a significant amount of realised taxable gains were incurred from sales as market valuations became stretched and some portfolio positions were reduced. The largest sale in this context was a small proportion of the holding in the Commonwealth Bank of Australia. These sales will generate franking credits from the tax payable on these transactions which further reinforces AFIC’s franking reserves. However, the trimming of portfolio positions where tax is payable also impacts reported portfolio returns as AFIC’s performance is reported after tax paid and costs. Portfolio return for the half year was 7.2%, including franking. The return for the S&P/ASX 200 Accumulation Index was 7.6% including franking over this period. In the 12 months to 31 December 2024 the portfolio return was 13.2%, ahead of the S&P/ASX 200 Accumulation Index return over this period including franking of 12.7%. Portfolio return* (including the full benefit of franking) to 31 December 2024. * Per annum returns other than for six months. AFIC’s performance figures are after costs and tax. Past performance is not indicative of future performance. 3 For personal use only
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Australian Foundation Investment Company Limited Market Commentary and Portfolio Performance The S&P/ASX 200 Accumulation Index including the benefit of franking, rose 12.7% in the calendar year to 31 December 2024 driven by the very strong performance of the Information Technology and Banking sectors. Throughout the year, valuations in both sectors saw a significant re- rating higher in price earnings multiples as investor confidence increased around their perceived lower earnings risk relative to the broader market. Both sectors ended the year with valuations at very high levels. The Resources sector underperformed in 2024 as softening demand from China significantly weighed on commodity prices. To date, China’s easing policy stance is yet to materialise in accelerating economic growth. AFIC’s portfolio outperformed the Index with a return of 13.2% including franking for the 12 months to 31 December 2024 (return figures including franking only include the benefit of franking which AFIC has distributed to shareholders). The portfolio relative outperformance over the twelve-month period can be largely attributed to holdings in Netwealth Group, Fisher & Paykel Healthcare, ResMed, Wesfarmers, JB Hi-Fi, Goodman Group and Macquarie Group. Meaningful detractors to performance came from IDP Education, Domino’s Pizza Enterprises, and long-term core holdings James Hardie Industries and Transurban Group. The underweight portfolio position in the Resources sector, which has underperformed, also contributed to relative outperformance. It has been a conscious decision to be underweight in this sector for some time given our concerns about the outlook for growth in China. Five and 10-year portfolio return figures to 31 December 2024 including franking were 9.7% and 9.4% per annum respectively. The S&P/ASX 200 Accumulation Index over these corresponding periods including franking were 9.4% and 10.0% per annum. These figures include the full benefit of franking, with AFIC’s return after costs. This performance has been achieved with lower portfolio volatility than the market and more consistent dividend income. Portfolio Adjustments During the year, we increased our holdings in BHP, Woodside Energy Group, Telstra Group, Cochlear, James Hardie Industries and WiseTech Global. We consider long term prospects for all these companies remains strong. These purchases were transacted during periods of short term negative news flow, providing attractive buying opportunities for long term investors. All these companies hold strong market positions and generate meaningful free cash flow enabling reinvestment into their asset base for future earnings growth. We initiated positions in five companies during the 12 month period: Ampol, Worley, Macquarie Technology, BlueScope Steel, and Sigma Healthcare. Ampol is Australia’s leading integrated energy company engaged in refining, supply and marketing of petroleum and maintains a significant convenience retail footprint. Worley is a market leader in engineering and consulting services to the global energy, chemical and resources industries. Macquarie Technology is a data centre, cloud and telecommunications business. BlueScope Steel is a global leader in metal coating and painting products servicing a wide range of end markets and Sigma Healthcare operates in wholesale and community pharmacy with a proposed merger with Chemist Warehouse, a market leader in operating retail pharmacies. We exited Ramsay Health Care as significant structural changes in the industry are likely to continue to undermine their competitive position, and Domino’s Pizza Enterprises considering their long-term prospects appear to be increasingly challenged. Mineral Resources was sold because of the disappointing corporate governance practices that have emerged. International Portfolio We have continued to manage the global portfolio (within the AFIC portfolio) over the period. This portfolio was first initiated in May 2021. We have been trialling this portfolio for over three years. AFIC has invested a total of $106.8 million of shareholder capital in the global portfolio, which is valued at $164.2 million as at 31 December, 2024. At current value, the global portfolio represents about 1.6% of the overall AFIC portfolio. 4 For personal use only
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Australian Foundation Investment Company Limited We are encouraged by the performance of this portfolio which has exceeded its benchmark index (the MSCI World Index ex Australia) since its inception. We are currently working through the most appropriate next steps for this initiative, including the options for establishing a separate low-cost global investment company in the future. Outlook The outlook for equity markets remains highly uncertain. Heightened geopolitical tensions coupled with election outcomes in many developed markets may lead to a wide dispersion of potential investment outcomes in the near term. Accordingly, equity market volatility is expected to remain a feature. The operating environment for many companies appears set to become increasingly challenged. Sales growth appears set to slow as economic growth and consumer confidence remain subdued while cost inflation remains elevated, albeit now growing at a slower rate. Following two strong years of performance, the Australian equity market now appears more fully priced. In this environment, we are cautiously allocating capital as the price you pay for any investment plays a large role in investment returns, even over extended time periods. As long term investors, we are looking to utilise prevalent share price volatility to allocate capital to quality companies at attractive prices, where long term growth prospects remain strong. Our focus remains on quality companies that maintain a strong balance sheet, operate unique assets and are run by highly capable boards and management teams. Please direct any enquiries to: Mark Freeman Geoff Driver Managing Director General Manager (03) 9225 2101 (03) 9225 2102 22 January 2025 5 For personal use only
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Australian Foundation Investment Company Limited Major Transactions in the Investment Portfolio (6 months to end December 2024) Acquisitions Cost ($’000) BHP 95,416 Worley 45,163 BlueScope Steel 27,868 Ampol 21,905 Cochlear 20,310 Disposals Proceeds ($’000) Commonwealth Bank of Australia 190,178 Ramsay Health Care* 51,040 Mineral Resources* 35,342 Westpac Banking Corporation 35,089 Domino’s Pizza Enterprises* 31,879 *Complete disposal from the portfolio. New Companies Added to the Portfolio Worley BlueScope Steel Sigma Healthcare 6 For personal use only
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Australian Foundation Investment Company Limited Top 25 Investments at 31 December 2024 Includes investments held in both the investment and trading portfolios. Value at Closing Prices at 31 December 2024 Total Value $ Million % of the Portfolio 1 Commonwealth Bank of Australia 975.4 9.7% 2 BHP Group 820.8 8.1% 3 CSL 722.0 7.2% 4 Macquarie Group* 476.0 4.7% 5 National Australia Bank* 457.3 4.5% 6 Wesfarmers 454.2 4.5% 7 Westpac Banking Corporation 429.3 4.3% 8 Transurban Group 363.3 3.6% 9 Goodman Group 361.9 3.6% 10 Telstra Group 262.5 2.6% 11 James Hardie Industries 229.2 2.3% 12 Rio Tinto 218.7 2.2% 13 ResMed 214.8 2.1% 14 ANZ Group Holdings 211.6 2.1% 15 CAR Group* 205.0 2.0% 16 Woolworths Group 203.3 2.0% 17 Woodside Energy Group 200.9 2.0% 18 Coles Group* 183.4 1.8% 19 Mainfreight 160.0 1.6% 20 ARB Corporation 150.5 1.5% 21 Amcor 144.0 1.4% 22 Xero 140.7 1.4% 23 REA Group 134.6 1.3% 24 Reece 126.0 1.2% 25 Fisher & Paykel Healthcare 125.8 1.2% Total 7,971.1 As percentage of total portfolio value (excludes cash) 79.0% * Indicates that options were outstanding against part of the holding. 7 For personal use only
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Australian Foundation Investment Company Limited Portfolio Performance to 31 December 2024 Performance Measures to 31 December 2024 6 Months 1 Year 3 Years % pa 5 Years % pa 10 Years % pa Portfolio Return – Net Asset Backing Return Including Dividends Reinvested 6.4% 11.7% 5.5% 8.1% 7.7% S&P/ASX 200 Accumulation Index 6.9% 11.4% 7.4% 8.1% 8.5% Portfolio Return – Net Asset Backing Gross Return Including Dividends Reinvested* 7.2% 13.2% 7.0% 9.7% 9.4% S&P/ASX 200 Gross Accumulation Index* 7.6% 12.7% 8.9% 9.4% 10.0% * Incorporates the benefit of franking credits for those who can fully utilise them. Note: AFIC net asset per share growth plus dividend series is calculated after management expenses, income tax and capital gains tax on realised sales of investments. It should also be noted that Index returns for the market do not include the impact of management expenses and tax on their performance. 8For personal use only
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AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED ABN 56 004 147 120 HALF-YEAR REPORT 31 DECEMBER 2024 9 For personal use only
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COMPANY PARTICULARS Australian Foundation Investment Company Limited (“AFIC”) ABN 56 004 147 120 AFIC is a Listed Investment Company. As such it is an investor in equities and similar securities on the stock market primarily in Australia. Directors: Craig M. Drummond, Chairman Rebecca P. Dee-Bradbury Julie A. Fahey Katie M. Hudson Graeme R. Liebelt Richard L. Murray David A. Peever R. Mark Freeman, Managing Director Company Secretaries: Matthew J. Rowe Andrew J.B. Porter Auditor: PricewaterhouseCoopers, Chartered Accountants Country of incorporation: Australia Registered office: Level 21 101 Collins Street Melbourne, Victoria 3000 Contact Details: Mail Address: Telephone : Facsimile: Email: Internet address: Level 21, 101 Collins St., Melbourne, Victoria 3000 (03) 9650 9911 (03) 9650 9100 invest@afi.com.au afi.com.au For enquiries regarding net asset backing (as advised each month to the Australian Securities Exchange): Telephone: 1800 780 784 (toll free) Share Registrar: MUFG Corporate Markets (AU) Limited Mail Address: AFIC Shareholder enquiry lines : E-mail: Facsimile: Internet: Locked Bag A14, Sydney South, NSW, 1235 1300 857 499 (Aus) +64 9375 5998 (NZ) afi@cm.mpms.mufg.com (02) 9287 0303 au.investorcentre.mpms.mufg.com For all enquiries relating to shareholdings, dividends and related matters, please contact the share registrar. Securities Exchange Codes: AFI Ordinary shares (ASX and NZX) 10 For personal use only
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DIRECTORS' REPORT The Directors present their report in relation to the half-year to 31 December 2024 on the consolidated entity (“the Group”) consisting of Australian Foundation Investment Company Limited (“the Company” and “AFIC”) and its subsidiary, Australian Investment Company Services Limited (“AICS”). Directors The following persons were Directors of the Company during the half-year and up to the date of this report: C.M. Drummond (appointed July 2021, appointed Chairman October 2023) R.P. Dee-Bradbury (appointed May 2019) J.A. Fahey (appointed April 2021) K.M. Hudson (appointed January 2024) G.R. Liebelt (appointed June 2012) R.L. Murray (appointed January 2024) D.A. Peever (appointed November 2013) R.M. Freeman (appointed January 2018) Review of the Group's operations and results Overview AFIC’s investment focus is on a diversified portfolio of primarily Australian equities. There has been no change in the nature of the Company’s activities during the period. Its primary objectives are to pay dividends which, over time, will grow at a faster rate than inflation, and to generate attractive total returns in terms of growth in net asset backing plus dividends. Profit Performance and Dividend Profit for the half-year was $154.2 million, up 2.7% from the previous corresponding period. The net profit per share for the six months to 31 December 2024 was 12.3 cents per share with an interim dividend declared of 12.0 cents per share fully-franked, an increase of 0.5 cents on the previous corresponding period. The portfolio return for the 6 months (measured by change in net asset backing per share plus dividends reinvested) was 6.4% compared to the return of the S&P/ASX 200 Accumulation Index for the same period which was 6.9%. AFIC’s portfolio return is calculated after management fees, income tax and capital gains tax on realised sales of investments and does not reflect the value of franking credits or LIC credits attached to the dividends. Index returns for the market do not include the impact of management expenses and tax on their performance. During the half-year 6.4 million shares were issued under the DRP and the DSSP resulting in an additional $39.5 million of capital (after costs). In addition, 4.8 million shares were bought back under the Company’s on-market buy-back programme. 11 For personal use only
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Auditors’ independence declaration A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 13. Rounding of amounts to nearest thousand dollars The Group is of a kind referred to in the ASIC Corporations’ (Rounding in Financial/Directors’ Reports) Instrument 2016/191, relating to the "rounding off" of amounts in the directors' report and financial report. Unless specifically stated otherwise, amounts in the directors' report and financial report have been rounded off to the nearest thousand dollars in accordance with that Instrument. This report is made in accordance with a resolution of the Directors. C.M. Drummond Chairman Melbourne 22 January 2025 12 For personal use only
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CONSOLIDATED INCOME STATEMENT FOR THE HALF-YEAR ENDED 31 DECEMBER 2024 Note Half-year 2024 Half-year 2023 $’000 $’000 Dividends and distributions 166,298 162,673 Revenue from deposits and bank bills 4,126 3,263 Other revenue 3,113 2,491 Total revenue 173,537 168,427 Net gains/(losses) on trading portfolio 1,892 1,332 Income from operating activities 3 175,429 169,759 Finance & related costs (631) (700) Administration expenses (10,900) (8,691) Profit before income tax expense 163,898 160,368 Income tax expense (9,734) (10,289) Profit for the half-year 154,164 150,079 Profit is attributable to : Equity holders (members) of Australian Foundation Investment Company Ltd 154,162 149,997 Minority Interest 2 82 154,164 150,079 Cents Cents Basic earnings per share 8 12.29 12.05 This Income Statement should be read in conjunction with the accompanying notes. 14 For personal use only
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2024 Half-Year to 31 December 2024 Half-Year to 31 December 2023 Revenue Capital Total Revenue Capital Total $’000 $’000 $’000 $’000 $’000 $’000 Profit for the half-year 154,164 - 154,164 150,079 - 150,079 Other Comprehensive Income Items that will not be recycled through the Income Statement Gains for the period on equity securities in the investment portfolio - 531,401 531,401 - 582,535 582,535 Tax on above - (162,605) (162,605) - (176,807) (176,807) Total other comprehensive income 1 - 368,796 368,796 - 405,728 405,728 Total comprehensive income 2 154,164 368,796 522,960 150,079 405,728 555,807 1 Net capital income not accounted for through the Income Statement 2 This is the company’s Net Return for the half-year, which includes the Net Profit plus the net realised and unrealised gains or losses on the Company’s investment portfolio. Half-Year to 31 December 2024 Half-Year to 31 December 2023 Revenue Capital Total Revenue Capital Total $’000 $’000 $’000 $’000 $’000 $’000 Total Comprehensive Income is attributable to: Equity holders of Australian Foundation Investment Company Ltd 154,162 368,796 522,958 149,997 405,728 555,725 Minority Interest 2 - 2 82 - 82 154,164 368,796 522,960 150,079 405,728 555,807 This Statement of Comprehensive Income should be read in conjunction with the accompanying notes. 15For personal use only
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CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2024 31 Dec 30 June 2024 2024 Note $’000 $’000 Current assets Cash 294,114 166,499 Receivables 12,775 42,425 Trading portfolio 4 5,641 5,387 Total current assets 312,530 214,311 Non-current assets Deferred tax assets - other 1,328 - Investment portfolio 10,081,228 9,703,558 Total non-current assets 10,082,556 9,703,558 Total assets 10,395,086 9,917,869 Current liabilities Payables 1,661 1,256 Borrowings – bank debt 10,000 10,000 Tax payable 53,093 34,105 Provisions 4,389 6,014 Total current liabilities 69,143 51,375 Non-current liabilities Provisions 151 154 Deferred tax liabilities - other - 1,237 Deferred tax liabilities - investment portfolio 5 1,712,903 1,603,716 Total non-current liabilities 1,713,054 1,605,107 Total liabilities 1,782,197 1,656,482 Net Assets 8,612,889 8,261,387 Shareholders' equity Share Capital 6 3,208,290 3,204,950 Revaluation Reserve 3,679,098 3,449,280 Realised Capital Gains Reserve 631,683 546,953 General Reserve 23,637 23,637 Retained Profits 1,068,406 1,034,794 Parent Entity Interest 8,611,114 8,259,614 Minority Interest 1,775 1,773 Total equity 8,612,889 8,261,387 This Balance Sheet should be read in conjunction with the accompanying notes. 16 For personal use only
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2024 Attributable to members of Australian Foundation Investment Company Ltd Half-Year to 31 December 2024 Note 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 half- year 3,204,950 3,449,280 546,953 23,637 1,034,794 8,259,614 1,773 8,261,387 Dividends paid 7 - - (54,248) - (120,550) (174,798) - (174,798) Shares issued - Dividend Reinvestment Plan 6 39,650 - - - - 39,650 - 39,650 Shares bought-back 6 (36,156) - - - - (36,156) (36,156) Other Share Capital Adjustments 6 (154) - - - - (154) - (154) Total transactions with shareholders 3,340 - (54,248) - (120,550) (171,458) - (171,458) - Profit for the half-year - - - - 154,162 154,162 2 154,164 Net gains for the period on equity securities in the investment portfolio - 368,796 - - - 368,796 - 368,796 Other Comprehensive Income for the half- year - 368,796 - - - 368,796 - 368,796 Transfer to Realised Capital Gains Reserve of net cumulative gains (after tax) on investments sold - (138,978) 138,978 - - - - - Total equity at the end of the half-year 3,208,290 3,679,098 631,683 23,637 1,068,406 8,611,114 1,775 8,612,889 This Statement of Changes in Equity should be read in conjunction with the accompanying notes. 17 For personal use only
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2023 Attributable to members of Australian Foundation Investment Company Ltd Half-Year to 31 December 2023 Note 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 half- year 3,136,282 2,926,191 509,741 23,637 960,171 7,556,022 1,534 7,557,556 Dividends paid 7 - - (83,588) - (83,588) (167,176) - (167,176) Shares issued - Dividend Reinvestment Plan 37,121 - - - - 37,121 - 37,121 Other Share Capital Adjustments (90) - - - - (90) - (90) Total transactions with shareholders 37,031 - (83,588) - (83,588) (130,145) - (130,145) Profit for the half-year - - - - 149,997 149,997 82 150,079 Other Comprehensive Income for the half-year Net gains for the period on equity securities in the investment portfolio - 405,728 - - - 405,728 - 405,728 Other Comprehensive Income for the half- year - 405,728 - - - 405,728 - 405,728 Transfer to Realised Capital Gains Reserve of net cumulative gains (after tax) on investments sold - (59,469) 59,469 - - - - - Total equity at the end of the half-year 3,173,313 3,272,450 485,622 23,637 1,026,580 7,981,602 1,616 7,983,218 This Statement of Changes in Equity should be read in conjunction with the accompanying notes 18 For personal use only
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CONSOLIDATED CASH FLOW STATEMENT FOR THE HALF-YEAR ENDED 31 DECEMBER 2024 Half-year Half-year 2024 2023 $’000 $’000 INFLOWS/ INFLOWS/ (OUTFLOWS) (OUTFLOWS) Cash flows from operating activities Sales from trading portfolio 11,225 10,229 Purchases for trading portfolio (9,586) (6,240) Interest received 4,215 3,340 Dividends and distributions received 194,598 190,537 200,452 197,866 Other receipts 3,108 2,470 Administration expenses (12,360) (10,903) Finance costs paid (631) (700) Taxes paid (14,227) (13,876) Net cash inflow/(outflow) from operating activities 176,342 174,857 Cash flows from investing activities Sales from investment portfolio 479,038 332,260 Purchases for investment portfolio (325,306) (281,529) Taxes paid on capital gains (31,287) (26,246) Net cash inflow/(outflow) from investing activities 122,445 24,485 Cash flows from financing activities Share issue costs (154) (90) Shares bought-back (36,156) - Dividends paid (134,862) (129,557) Net cash inflow/(outflow) from financing activities (171,172) (129,647) Net increase/(decrease) in cash held 127,615 69,695 Cash at the beginning of the half-year 166,499 165,385 Cash at the end of the half-year 294,114 235,080 This Cash Flow Statement should be read in conjunction with the accompanying notes. 19 For personal use only
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NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2024 1. Basis of preparation of half-year financial report This general purpose half-year financial report has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001. This half-year financial report does not include all the notes of the type normally included in an annual financial report. This report should be read in conjunction with the 2024 Annual Report and public announcements made by the Group during the half-year, in accordance with the continuous disclosure requirements of the Corporations Act 2001. The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period. In the interests of transparency in its reporting, the Group uses the phrase “market value” in place of the AASB terminology “fair value for actively traded securities.” The Company’s investments in listed securities are valued at the closing price on the ASX on the last trading day before the period end. 2. Financial reporting by segments The Group consists of a Listed Investment Company and a subsidiary which provides administration services to it and to other Listed Investment Companies in Australia. It has no reportable business or geographic segments. (a) Segment information provided to the Board The internal reporting provided to the Board for the Group’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 the Group’s Net Tangible Asset announcements to the ASX). The relevant amounts as at 31 December 2024 and 31 December 2023 were as follows: 2024 $ 2023 $ Net tangible asset backing per share Before Tax 8.24 7.62 After Tax 6.87 6.40 (b) Other segment information Segment Revenue Revenues from external parties are derived from the receipt of dividend, distribution and interest income, and income arising on the trading portfolio. The Company is domiciled in Australia and the Group’s dividend and distribution income is predominantly from entities which maintain a listing in Australia. The Group has a diversified portfolio of investments, with only two investments comprising more than 10% of the Group’s income (including trading portfolio) for the half-year ended 31 December 2024 – BHP 13.3% and Commonwealth Bank 10.2% (2023 : 2 – BHP 13.0% and Commonwealth Bank 11.0%). 20 For personal use only
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3. Income from operating activities Half-year 2024 $'000 Half-year 2023 $'000 Income from operating activities is comprised of the following: Dividends & distributions securities held in investment portfolio 166,298 162,596 securities held in trading portfolio - 77 166,298 162,673 Interest income deposits and income from bank bills 4,126 3,263 4,126 3,263 Net gains/(losses) and write downs net gains from trading portfolio sales 1,004 2,039 unrealised gains/(losses) in trading portfolio 888 (707) 1,892 1,332 Administration fees received from other Listed Investment Companies 3,017 2,458 Expenses recovered from other Listed Investment Companies 85 4 Other expenses recovered 6 27 Sundry income 5 2 175,429 169,759 4. Trading portfolio As part of the activities of the trading portfolio, the Company enters into option contracts for the purpose of enhancing returns, offsetting risk or providing opportunities to acquire or sell securities at advantageous prices. As at balance date there were call options outstanding which, if they were all exercised, would require the Company to deliver securities to the value of $95.6 million (30 June 2024: $34.5 million). 21 For personal use only
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5. Deferred tax liabilities – investment portfolio In accordance with AASB 112 Income Taxes , deferred tax liabilities have been recognised for Capital Gains Tax on the unrealised gain in the investment portfolio at current tax rates (30%) totalling $1,712.9 million (30 June 2024 : $1,603.7 million). As the Directors do not intend to dispose of the portfolio, this tax liability may not be crystallised at this amount. 6. Shareholders’ equity – share capital Movements in Share Capital of the Company during the half-year were as follows: Date Details Notes Number of shares ’000 Issue price $ Paid-up Capital $’000 01/07/2024 Opening Balance 1,251,570 3,204,950 30/08/2024 Dividend Reinvestment Plan i 5,461 7.26 39,650 30/08/2024 Dividend Substitution Share Plan ii 920 7.26 n/a Various On-market buybacks iii (4,831) (36,156) Various Other Share Capital adjustments - (154) 31/12/2024 Balance 1,253,120 3,208,290 i The Company has a Dividend Reinvestment Plan under which some shareholders elected to have all or part of their dividend payment reinvested in new ordinary shares. Pricing of the new DRP shares was based on the average selling price of shares traded on the Australian Securities Exchange & Cboe automated trading systems in the five days from the day the shares begin trading on an ex-dividend basis. ii The Company has a Dividend Substitution Share Plan under which some shareholders elected to forego all or part of their dividend payment and receive shares instead. Pricing of the new DSSP shares was done on the same basis as the DRP. iii The Company introduced an on-market Buy-Back Programme in December 2000. This plan remains active. During the year, 4,831,108 shares were bought back at an average price of $7.48. 7. Dividends Half-year 2024 $’000 Half-year 2023 $’000 Dividends (fully franked) paid during the period 174,798 167,176 (excluding DSSP shares) (14.5 cents per share) (14 cents per share) Dividends not recognised at period end Since the end of the half-year the Directors have declared an interim dividend of 12.0 cents per share, fully franked. The aggregate amount of the proposed interim dividend expected to be paid on 25 February 2025, but not recognised as a liability at the end of the half-year is 150,374 22 For personal use only
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8. Earnings per Share Half-year 2024 Half-year 2023 Number Number Weighted average number of ordinary shares used as the denominator 1,254,483,603 1,244,426,335 $’000 $’000 Profit after tax for the half-year attributable to members of the Company 154,162 149,997 Cents Cents Basic earnings per share 12.29 12.05 There are no dilutive instruments on issue and consequently diluted earnings per share are the same as basic earnings per share. 9. Events subsequent to balance date Since 31 December 2024 to the date of this report there has been no event specific to the Group of which the Directors are aware which has had a material effect on the Group or its financial position. 10. Contingencies At balance date Directors are not aware of any material contingent liabilities or contingent assets other than those already disclosed elsewhere in the financial report. 23 For personal use only
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DIRECTORS' DECLARATION In the Directors’ opinion: (a) the financial statements and notes set out on pages 14 to 23 are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (ii) giving a true and fair view of the Group’s financial position as at 31 December 2024 and of its performance, as represented by the results of the operations, changes in equity and cash flows, for the half-year ended on that date; and (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the Directors. C.M. Drummond Chairman Melbourne 22 January 2025 24 For personal use only
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26 For personal use only