2021 Annual General Meeting Presentation

5 October 2021



The Manager
ASX Market Announcements
Australian Securities Exchange
Exchange Centre
Level 4
20 Bridge Street
Sydney NSW 2000


Electronic Lodgement


Australian Foundation Investment Company Limited
2021 Annual General Meeting Presentation


Dear Sir / Madam

The following presentation will be delivered to shareholders at the Company’s Annual
General Meeting to be held today.

Yours faithfully


Matthew Rowe
Company Secretary


Authorised for release by the Company Secretary

Annual General Meeting
2021

Annual General Meeting 2021
Board Members
John Paterson
Chairman and Independent
Non-Executive Director
Craig Drummond
Independent Non-Executive
Director
Mark Freeman
Managing Director
Julie Fahey
Independent Non-Executive
Director
David A Peever
Independent Non-Executive
Director
Rebecca Dee-Bradbury
Independent Non-Executive
Director
Graeme R Liebelt
Independent Non-Executive
Director
Catherine M Walter AM
Independent Non-Executive
Director
Peter J Williams
Independent Non-Executive
Director
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Annual General Meeting
2021
Presentation

Annual General Meeting 2021
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.
Disclaimer
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Annual General Meeting 2021
Our Company
Invests in Australian and New Zealand companies –looking for quality for the long term.
Largest listed investment company on the ASX at $9.4bn at 31 August 2021 (also listed on NZX), 160k shareholders, full
transparency from being listed,independent Board of Directors providing strong governance.
Shareholders own the ‘management rights’ to the portfolio – no external funds management business deriving
an income from the portfolio.
Management expense ratio of 0.14% with no performance fees.
Long term investor with low turnover –tax has less of a negative impact on shareholder returns compared with high
turnover funds.
Long history of growing/stable fully franked dividends.
Team manages three other funds –Djerriwarrh, Mirrabookaand AMCIL which adds significantly to the effectiveness
of the investment process and idea generation.
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Annual General Meeting 2021
Investment Team
David Grace
Portfolio Manager
Kieran Kennedy
Portfolio Manager
Brett McNeill
Portfolio Manager
Rosie Malcolm
Portfolio Manager
Andrew Sutherland
Portfolio Manager
Nga Lucas
Investment Analyst
Olga Kosciuczyk
Investment Analyst
Stuart Low
Investment Analyst
Jeremy Moore
Dealer
Gilbert Battistella
Graduate Investment
Analyst
Nicky Sun
Graduate Investment
Analyst
Jaye Guy
Investment Analyst
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Annual General Meeting 2021
Long term value in the context of recent market moves
Source: FactSetSource: FactSet
Price to Book -
S&P/ASX 200 Index
Price to Sales -
S&P/ASX 200 Index
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Annual General Meeting 2021
Result Summary

Annual General Meeting 2021
Result Summary
*Assumes an investor can take full advantage of the franking credits
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Annual General Meeting 2021
AFIC’s share price relativeto the NTA- 31 August 2021
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Annual General Meeting 2021
Investment Objectives and
Approach

Annual General Meeting 2021
Investment Objectives
The Company aims to provide
shareholders with attractive investment
returns through access to a growing
stream of fully franked dividends
and growth in capital invested.
The Company’s primary investment goals are:
• to pay dividends which, over time, grow
faster than the rate of inflation; and
• to provide attractive total returns over
the medium to long term.
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Annual General Meeting 2021
Our investment process – how we assess quality
Uniqueness of Assets
Long-term Sustainability
Independence
People
EarningsConsistency
Financial Strength
Competitivelandscape, leadership position, can the assets be replicated
Barriersto entry, sustainability of competitive advantage, track record of new entrants,
threat of substitution
Pricing power, bargaining power of suppliers, government interference, exposure to
commodity cycles
Owner/driver model, insider buying/selling, track record, remuneration incentives,
corporate governance
Volatility and quality of earnings, cash flow analysis
Balancesheet gearing, structure of the debt book, dividend policy, ability to invest for
future growth
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Annual General Meeting 2021
Long term investor in companies, not traders of share prices
Identify quality companies with sound growth prospects that we can buy at a reasonable price
This supports our belief in the power of compounding returns from great businesses
Our research process is built on observing the key characteristics of a company that our experience
indicates will produce strong investment returns
Our investment process – focus on long term quality
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Annual General Meeting 2021
Long-term approach
AFIC invests in high quality companies and benefits from compounding returns.
RMD Total Shareholder Return (%)
First added to the portfolio: August 2013
First added to the portfolio: November 2010
ARB Total Shareholder Return (%)
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Annual General Meeting 2021
ESG is integrated into our investment framework
oAssessment of ESG risk factors is an important part of our investment process as the
sustainability of a business is a key input in our assessment of a company.
oAs a long-term investor, we seek to invest in companies that have strong governance and risk
management processes, which includes consideration of environmental and social risks.
oWe regularly review companies to ensure ongoing alignment with our investment framework.
oWe conduct our own evaluation of the merits of any shareholder resolution and take input from
proxy advisors.
oWe vote on all company resolutions as part of ourregular engagement with companies.
oWe actively engage with companies when we have concerns those resolutions are not aligned
with shareholders’ interests.
Engagement with companies
Approach to Environmental, Social and Governance (ESG) factors
Voting on resolutions is one of the key functions that a shareholder has in ensuring better long-
term returns and management of investment risk:
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Annual General Meeting 2021
Markets and The Portfolio

Annual General Meeting 2021
Market and key sector performance*- Year to 31 August 2021
* includes dividends but not franking
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Annual General Meeting 2021
Source: Mercer Investment Performance Survey of Wholesale-Equity – Australia. Note AFIC’s return is after tax paid and
costs. The universe for Wholesale-Equity – Australia returns are before tax and after fees
Over the 4-year period to 31 August 2021 AFIC has a higher
portfolio return with less volatility than the S&P/ASX 200 Index
(both exclude franking)
Note AFIC share price returns have a significantly lower volatility (beta
and standard deviation) than the Index.
Portfolio performance, including franking*
- per annum returns to 31 August 2021
Portfolio performance metrics
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Annual General Meeting 2021
AFIC’s Performance relative to the Index (FY20-FY21)
4000
4500
5000
5500
6000
6500
7000
7500
8000
S&P/ASX200 Index
AFIC's Outperformance1H20
+1.69%
AFIC's Outperformance2H20
+1.87%
AFIC's Outperformance1H21
+1.43%
AFIC's Outperformance2H21
+1.02%
1H202H20
1H21
2H21
Source: FactSet
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Annual General Meeting 2021
Portfolio Update - Recent Transactions
New
Purchases
SalesTrimmed
Additions to
existing holdings
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Annual General Meeting 2021
Core holdings with significant
long-term opportunity

Annual General Meeting 2021
Xero
•Cloud accounting penetration continues to grow
globallydriven by Government digitization initiatives
•Strong market positions in Australia, New
Zealand and the UK with growing presence in
rest of world
•Strong subscriber and ARPU growth supported
by high R&D investment and acquisitions
•Long runway of growth with large growing global
addressable markets
0
100
200
300
400
500
600
700
800
FY17FY18FY19FY20FY21
$NZm
AustraliaNZUKNorth AmericaROW
Xero Revenue: FY17-FY21
$407m
$700m
$849m
Source: Xero
$553m
$295m
•Software-as-a-service (SAAS) revenue model and
leading SAAS economics delivers superior returns
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Annual General Meeting 2021
Carsales
•Dominant market position in used car classifieds in Australia with 4.4m average monthly unique
audience (4.5x lead over nearest competitor).
•Growing contribution from international businesses, now represents ~35% of group profit.
•“CarsalesSelect” to facilitate a fully digital car buying/selling experience for consumers and dealers.
US (TRADER INTERACTIVE)
Recreational market share
SOUTH KOREA (ENCAR)
Full year market share v competition
Source: Carsales
Full year market share v competition
BRAZIL (WEBMOTORS)
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Annual General Meeting 2021
For every 100 U.S. adults...
4 KNOW THEY HAVE SLEEP APNEA
22 DON’T KNOW THEY HAVE IT
ResMed
•Market leader in the treatment of Obstructive Sleep
Apnea(OSA).
•Condition remains largely undiagnosed. Provenlink
between the incidence of obesity and requirement for
OSA treatment.
•Significantinvestment in Research and
Developmentbeing 7% of sales.
•Resmedinvesting in raising consumer awareness
around OSA.
•High returnon capitalwith a strong balance sheet.
Source: © 2019 ResMed
Sleep apneais more than 80% undiagnosed...
... and is highly prevalent in other chronic conditions
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Annual General Meeting 2021
•Fibre cement market share has doubled since
2005, all other materials have declined.
•Marketleader in fibre cement siding with
more than 90% market share
•Favourably exposed to the shift to lightweight
materials being less carbon intensive
James Hardie
Vinyl
Stucco
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005200620072008200920102011201220132014201520162017201820192020
Brick
Fibre cement
Wood
Wall Share Chart
Source: Macquarie, US Census Bureau’s Characteristics of Housing survey
Other
•High return oncapital and strong balance
sheet.
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Annual General Meeting 2021
Top 30 holdings – 31 August 2021
RankCompany% ofPortfolio
1
Commonwealth Bank of Australia8.4%
2
CSL 7.3%
3
BHP Group 6.5%
4
Wesfarmers 4.7%
5
Westpac Banking Corporation4.3%
6
Macquarie Group 3.9%
7
Transurban Group 3.7%
8
National Australia Bank 3.3%
9
Mainfreight 3.1%
10
Woolworths Group 2.9%
Total Portfolio 64 Holdings
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Annual General Meeting 2021
Top 30 holdings – 31 August 2021 continued
RankCompany% ofPortfolio
11
James Hardie Industries*2.7%
12
Australia and New Zealand Banking Group2.5%
13
Rio Tinto2.2%
14
Telstra Corporation*2.2%
15
Sydney Airport2.2%
16
Amcor2.2%
17
ARB Corporation1.9%
18
ResMed1.8%
19
Sonic Healthcare1.7%
20
Goodman Group1.6%
Total Portfolio 64 Holdings
* Options were outstanding against part of the holding.
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Annual General Meeting 2021
Top 30 holdings – 31 August 2021 continued
RankCompany% ofPortfolio
21
Carsales.com1.6%
22
Reece1.6%
23
Coles Group1.6%
24
Ramsay Health Care1.4%
25
Xero1.3%
26
ASX1.3%
27
Fisher & Paykel Healthcare Corporation1.3%
28
Seek1.3%
29
IRESS1.2%
30
Brambles1.2%
Total Portfolio 64Holdings
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Annual General Meeting 2021
Closing Comments

Annual General Meeting 2021
Outlook
We are mindful of:
•China growth slowing.
•Inflationary environment and potential end of rate easing cycle.
•Company dividends recovering.
Outlook for earnings growth remains solid, companies with international earnings
relatively better positioned to deliver.
Holding a diversified portfolio of quality companies remains appropriate.
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Annual General Meeting 2021
International Portfolio
Invested a small amount ($47m/50bps) in International companies in May 2021.
Portfolio holdings in 39 companies.
Performance so far has been encouraging.
Applying the AFIC way of investing to International companies.
Looking to build a consistent track record.
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