Australian Foundation Investment Company (AFI) H2 2024 earnings summary

Executive summary

• Portfolio delivered a 15.1% return including franking, outperforming the ASX 200's 13.5% for the year and maintaining a long-term record of stable, growing fully franked dividends.

• Largest listed investment company on the ASX with 160,000 shareholders and a long history of stable, fully franked dividends.

• Focuses on investing in Australian and New Zealand companies, aiming for stable to growing dividends and attractive total returns over the medium to long term.

• Profit for the year was AUD 296.4 million, down from AUD 310.2 million, mainly due to lower dividends from the resources sector.

• Management expense ratio remains low at 0.15%, with no performance fees, supporting cost efficiency for shareholders.

Financial highlights

• Dividend increased by 4% for the year, with a fully franked final dividend of AUD 0.145 per share and a total dividend of AUD 0.26, up from AUD 0.25 in FY2023.

• Portfolio return of 15.1% (including franking) exceeded the ASX 200's 13.5%.

• Five-year annualized portfolio return of 9.3% versus the ASX 200's 8.7%.

• NTA per share at 30 June 2024 was AUD 7.88; share price was AUD 7.15, trading at a 9% discount to NTA.

• Cash holdings rose to just under 3% of the portfolio, above the typical 1-2%, reflecting a cautious stance amid strong market rallies.

Outlook and guidance

• Domestic economic growth has moderated, with slowing consumer spending and a challenging earnings environment.

• Interest rates are near the end of the rising cycle, and inflation appears to have peaked.

• Expectation for market return drivers to broaden beyond financials and IT; focus remains on well-managed companies with proven financial discipline.