Australian Foundation Investment Company Limited (ASX: AFI) is a closed-end investment company. It focusses on investing in Australian companies which have unique, high-quality assets. The company provides the investors with a decent stream of franked dividends.
Today (i.e., 21 January 2019), the company has announced its results for the half-year ended 31-Dec 2018, which have been reviewed by the auditors. The revenue from operating activities was reported to be $250.3 million for the half year ended 31-Dec 2018, an increase of $96.3 million or 62.5% from the previous corresponding period. This excludes capital gains on investments. The increase was primarily driven by a demerger dividend received because of the Coles demerger from Wesfarmers and participation in the Rio Tinto and BHP off-market buy-backs.
The profit after tax (PAT) for the company stood at $239.8 million for the half year ended 31-December 2018, an increase of 75.4% on the previous corresponding period’s number of $136.7 million, however the PAT attributable to the members were $239.4 million compared to $136.4 in its previous corresponding period, which is an increase of 75.5%. The interim dividend amounts to 10 cents per share, fully franked, the same as last year. Additionally, the company declared a special dividend of 8 cents to distribute the proceeds of its participation in the Rio Tinto and BHP off-market buy-backs.
The company also provided information on the Dividend Reinvestment Plan (DRP) and Dividend Substitution Share Plan (DSSP). The price for these will be set at a 2.5% discount to the Volume Weighted Average Price of the Company’s shares traded on the Australian stock exchange, and Chi-X automated trading systems over the five trading days from when the shares trade ex-dividend. The last date for the receipt of an election notice for participation in the DRP & DSSP is 12 February 2019 at 5.00pm.
Net tangible assets per share before provision for deferred tax on the unrealized gains on the long-term investment portfolio as at 31 December 2018 were $5.69, decreased from $6.15 at the end of the previous corresponding period.
The company invests in a diversified portfolio of Australian equities, seeking to provide attractive income and capital growth over the medium to long term at a low cost. The significant correction in the market has produced a more favourable environment for long-term investment. Valuations have moved towards longer-term averages, which make for a sensible starting point to invest. The volatility is likely to persist at least in the short term as the market is experiencing a changing environment, with interest rates likely to increase further in the US and no short-term solutions to trade and geopolitical dislocations. AFIC will continue to look for opportunities to add positions in companies that have a sustainable competitive advantage, sound balance sheets and, importantly, strong management that can deliver long term benefits to shareholders.
The stock is currently trading at a price of $6.180 with a price increase of 0.98% during the day’s trade. It has a yielded a YTD return of 0.99% and had a market capitalization of $7.3 billion. It has a 52-week high price of $6.440 and a 52-week low of $5.820, with an average volume of 304,816 approximately.
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