Mark Freeman, Managing Director, CEO and Portfolio Manager of AMCIL (ASX:AMH), discusses FY24 full-year results.
Geoff Driver: My name is Geoff Driver, General Manager of Business Development and Investor Relations for AMCIL Investments (ASX:AMH). I have with me today Mark Freeman, who's the Managing Director and CEO…
Mark Freeman: Geoff.
Geoff Driver: ..and also the Portfolio Manager for AMCIL. So, Mark, we've just announced our results for the 23/24 financial year. Perhaps you could just take us through some of the highlights.
Mark Freeman: Yeah, so I'll just touch on some of the details and then we'll come back and talk more broadly about the portfolio and some of the activity. The full-year profit was 7.5 million compared to the previous corresponding period of 7.6 million. Dividends received were down marginally, with the largest decline coming from the expected fall in dividend by BHP (ASX:BHP). This decline was largely offset by new holdings in the portfolio, being National Australia Bank (ASX:NAB), IDP Education (ASX:IEL) and Telstra (ASX:TLS). Auckland Airport (ASX:AIA) also resumed paying dividends. Directors have declared a final dividend of 3 cents per share, fully franked, bringing total dividends for the year to 4 cents per share, having paid a 1 cent interim dividend.
The return for AMCIL including franking over the 12 months was 20.5 per cent, ahead of the 200 accumulation index, which was up 13.5 per cent, including franking in both of those calculations. The management and expense ratio for the company has decreased from 0.66 to 0.56 per cent. The fall in the MER was due to a lower level of costs as well as the high average portfolio value over the year. AMCIL's portfolio is managed internally and does not charge any additional fees, which leads to lower costs for shareholders when compared to similar products in the market.
Geoff Driver: Thanks Mark. So, you touched on the very strong portfolio performance for the year. What were the key drivers of the performance for the portfolio?
Mark Freeman: Yeah, look, we had a lot of stocks in our portfolio that did well over the year. Now, if I just characterise that some of our larger holdings, such as Wesfarmers (ASX:WES), performed really well for us, we would call that a stalwart business. We love the Bunnings business. It's performed really well and we continue to be attracted to that business, but pleasingly a lot of what we call our owner driver, and we've talked about this in the past… Our focus on AMCIL is finding businesses and particularly people that we think are great at running businesses, owner driver stocks. We've got a large concentration of those in AMCIL. It's something that makes AMCIL a little bit different. A lot of those perform really well. If you look at companies like Gentrack (ASX:GTK), which has been a bit of a turnaround story, but now a growth company with the CEO having a significant equity stake, it did particularly well.
Businesses like Goodman Group (ASX:GMG)… is in that owner driver category as well, performed very strongly. Some of our companies have been around for a long time, like Carsales (ASX:CAR), also performed very well. Netwealth (ASX:NWL), which is another one of our owner driver businesses also had a strong year. So, look, across the board, many of our companies perform well in the environment.
Geoff Driver: Thanks, Mark. So in an environment which was in a market that was generally rising, really over most of the financial year, how did you look to manage the portfolio and what sort of changes did you make there?
Mark Freeman: Yeah, look, we do hold a portfolio of high-quality stocks, and I always find it difficult to trim the stocks I like, but we did take the top off on some stocks. We always look to try and find new companies that are coming through, and again, a focus on owner driver businesses. So, we bought some Altium (ASX:ALU), which has got those characteristics. The CEO is a large shareholder. And then that subsequently had a takeover bid, so that performed really well for us. We also put PSC insurance (ASX:PSI) in as well, but that also was subject to a takeover, but also another owner driver stock, so again, that thematic working well for us. We built up a good stake now in the Objective Corporation (ASX:OCL). We've added Mineral Resources (ASX:MIN). TechnologyOne (ASX:TNE) is kind of like a second-stage owner driver stock, but still with the same characteristics that we look for.
So we're still finding opportunities to add those. Also taking a very small position in a company called PWR Holdings (ASX:PWH), which has got that similar characteristic. So, we'll continue to build on those companies. But we still look for price dislocations amongst the larger companies. We did exit our Medibank (ASX:MPL) over the year. We'd made some really good gains on that. Essentially, we replaced it with Telstra (ASX:TLS), which we think got a good dividend yield and some good growth prospects ahead of it. And we did add some banks earlier in the year, so again, we don't have an index position, but we had added to our banking stocks and they work well for us over the year as well.
Geoff Driver: Thanks, Mark. So, a very strong market for the year, very strong portfolio performance for the year. What's your view of the next six to 12 months for AMCIL?
Mark Freeman: Yeah. Well, look, a lot of our stocks have had good runs, but I am more of a long-term investor, but the outlook for our businesses is still good. I think we're just going to be a bit patient now. We do take the top off some stocks when they run really hard. We've got the capacity to do more buying. Where we see it at the moment, the markets do look a little bit full to us. Some of the valuation metrics on the index price-to-sales, price-to-book. The market's pushing up there a bit, and it's had a strong six months or so. So, we're a bit cautious, and we're going into reporting season. You always get a bit of volatility during reporting season and opportunities always come up. And we always say that it's best to have the companies that you really like ready to go, either adding to existing positions or adding new ones. In any one year, you always five or six really good opportunities, and make sure you grab those when they present. We do continue to trawl the market. We are looking for some other stocks that we see a bit of value in. But we've got to make sure we always stick with the quality, stick with CEOs and management teams that we can back, and that's really the focus of AMCIL.
Geoff Driver: All right. Thank you Mark, and thanks for your time.
Mark Freeman: Okay, thanks, Geoff.
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