AFIC raises dividend after $242m result
The Australian Foundation Investment Company also announced the retirement of two of its longest-serving board members, former BHP Billiton chairman Don Argus, and its chairman, Bruce Teele, who joined the board in 1966.
AFIC is Australia's biggest listed investment group, with $5.7 billion under management.
It made a net profit in the year to June 30 of $242.7 million, compared to $219.9 million in the previous corresponding period.
Ross Barker, AFIC's managing director, said falling local interest rates and an improving US equity market gave the fund a boost this year, and he was happy with the 1¢ increase in the company's dividend (to 14¢ fully franked) which came after a number of years of no increases.
However, he warned that business and consumer confidence had become subdued in recent months, with the outlook for corporate profitability and the looming federal election weighing on investor sentiment.
He also warned of potential "headwinds" hitting global markets in the medium term.
"One of the biggest things we're thinking about is how the US and Europe deal with their huge government debt situations," Mr Barker said.
"You can't have continuing record-low interest rates forever. That'll change at some point and how that unravels is going to be a very important thing for global markets."
AFIC's portfolio return for the 12 months was 24.4 per cent, compared with the S&P ASX 200 Index of 22.8 per cent.
The fund's net operating result, which measures the underlying income from its portfolio, was $234.3 million, up 14.4 per cent from $204.8 million the previous year.
The performance was largely helped by its major bank holdings, and other high-yielding stocks such as Wesfarmers and Telstra.
Some of the fund's major transactions in the period included QBE Insurance, Suncorp, Coca-Cola Amatil, CSL and Sonic Healthcare.
"Healthcare's been a theme that we've wanted to increase in our portfolio over recent years, but it's always been fairly expensive," Mr Barker said.
"We've been following QBE for quite a while, and we think there's some positives there for the company in the medium to long term."
AFIC's Australian Infrastructure Fund was sold as a result of its assets being acquired by the Future Fund. Other sales included holdings in Metcash and CFS Retail Property.
After denying rumours in recent weeks, Don Argus and Bruce Teele have told AFIC's board that they plan to retire at the fund's annual general meeting on October 9.
It means Mr Argus's retreat from corporate life continues. He retired as chairman of Brambles in 2008, and stepped down as chairman of BHP Billiton in 2010.
Frequently Asked Questions about this Article…
AFIC raised its dividend by 1 cent to 14 cents fully franked — the first increase after several years. Management said falling local interest rates and an improving US equity market helped lift returns, supporting the dividend increase.
AFIC reported a net profit of $242.7 million for the year to June 30, up from $219.9 million the prior year. Its portfolio return for 12 months was 24.4%, ahead of the S&P/ASX 200’s 22.8%, and assets under management were $5.7 billion.
AFIC’s performance was largely helped by its major bank holdings and other high‑yielding stocks such as Wesfarmers and Telstra, along with supportive market conditions like lower local interest rates and improved US equity markets.
AFIC announced the planned retirement of two long‑serving board members: former BHP Billiton chairman Don Argus and chairman Bruce Teele. Both will retire at the fund’s annual general meeting on October 9; Teele has been on the board since 1966.
Major transactions included holdings in QBE Insurance, Suncorp, Coca‑Cola Amatil, CSL and Sonic Healthcare. AFIC also sold its Australian Infrastructure Fund after its assets were acquired by the Future Fund, and it sold stakes in Metcash and CFS Retail Property.
AFIC has been increasing exposure to the healthcare sector over recent years, though management noted healthcare stocks have often been relatively expensive. The fund has also been watching and adding positions in insurance names like QBE.
AFIC warned that business and consumer confidence had become subdued, the outlook for corporate profitability was uncertain, and the looming federal election could weigh on sentiment. Management also flagged medium‑term global risks around how the US and Europe manage large government debt and the potential end of record‑low interest rates.
AFIC’s net operating result, which measures the underlying income from its portfolio, was $234.3 million — up 14.4% from $204.8 million the previous year. This differs from the reported net profit ($242.7 million) by focusing on operating income from investments.
Call 1300 880 160
Start a chat
Schedule a call
