An apparently solid performance in 2014-15 by Australian Foundation Investment Co (AFI), the country’s biggest listed investment company (LIC) failed to move the shares yesterday which ended up just 5 cents higher at $6.30.
AFI reported a 15.5% lift in net profit to $293.5 million for the year to June 30, despite underperforming its benchmarked index – thanks to less than stellar performances by some of its big investments such as Woolworths, Wesfarmers, BHP Billiton and Rio Tinto.
Revenue rose 14.3% to $325.6 million in the year to June.
Shareholders will receive a final dividend of 14 cents per year, steady on the final for 2013-14.
That took the total dividend for the year to 23 cents per share, fully-franked, up from 22 cents last year, thanks to the one cent lift (to 9 cents) in the interim payout in February.
Total portfolio return for the year was 3.9% again the 5.7% rise for the S&P/ASX200 accumulation index, with a three-year return of 14.9% a year which was also less than the index gain of 15.1%.
AFI 1Y – Australian Foundation lifts NPAT, dividend steady
AFIC had just on $164 million in cash at the end of June, and says it is preparing to ride through the expected volatility in markets marked by a slowing Chinese economy, troubles in Europe and adjustments in monetary policy settings by the Federal Reserve in the US.
"However the low interest rate environment in Australia is likely to provide underlying support to the market even if there are setbacks. AFIC has the financial resources to take advantage of any market adjustments should they occur,” the company said in a statement with yesterday’s profit report.
Major purchases in the portfolio included CSL and Asciano during the year, the company said in its report.
"The Company participated in the rights issues of National Australia Bank and AGL. Federation Centres was introduced to the portfolio during the year with this holding further increased as a result of the merger with Novion Property Group.
"Other new companies added to the portfolio included Healthscope (via its IPO), Cover-More Group, Veda Group, Regis Healthcare (via its IPO) and Sims Metal Management,“ AFIC said.
The largest sales resulted from the takeover of Toll Holdings by Japan Post and activity in the Company’s small buy and write portfolio which led to the exercise of call options in Telstra, CSL, Transurban and Suncorp.
The Commonwealth Bank, Westpac and National Australia Bank were in the company’s top five investments, along with BHP Billiton and Telstra Corporation.
The top 25 investments accounted for just over 77% of the group portfolio at the end of June this year (with a value of $4.965 billion) against the $5.06 billion value at the end of June 2015, which accounted for 80% of the total portfolio.
