Australian Foundation Investment Company Limited

For the half year, AFIC reported profit of $147 million, down 4.6% year over year, equal to $0.117 per share. The company maintained the interim ordinary dividend at $0.12 per share and paid a $0.025 special dividend, with another $0.025 special dividend expected with the full-year result. NTA performance was minus 2% for the 6 months to December 2025 and 1.2% over 1 year, both behind the broader market. Management said the portfolio value was $9.9 billion at December 2025, down from $10.4 billion at 31 December 2024, and the net tangible asset value was $7.90 per share. The management expense ratio was 0.11%.

Mark Freeman struck a disappointed but constructive tone, saying the Board and team were clearly disappointed with the result, especially the short-term performance and NTA underperformance. He emphasized that the portfolio still holds good companies with strong balance sheets and long-term profit growth potential, and said the issue is not poor businesses, but rather some market areas they missed. He also stressed the need to keep improving execution, especially in buying and selling, while staying true to the firm’s long-term framework.

Andrew Porter focused on the numbers and on dividend support. He said profit was $147 million, down 4.6%, with lower income mainly because some large holdings cut dividends, citing BHP as an example where dividend income fell from $23 million in the prior 6 months to $19 million this half; he also mentioned Woodside and Woolworths. He explained the high-looking tax charge as a mix effect from lower franked income and timing differences in deferred tax, and noted that the MER was 0.11% and the portfolio was $9.9 billion versus $10.4 billion at December 2024. He also pointed to the discount to NTA of about 9% and said buybacks would continue if market conditions allow.

Analysts asked about combining the group’s four LICs, and management said each has a different role: AFIC is broad-based, Djerriwarrh is higher-yielding, and Mirrabooka focuses on small and mid-caps, so consolidation is not seen as necessary right now. On the persistent discount to NTA, management said it is frustrating but not unusual for traditional LICs when markets are hot, and they are responding with buybacks, more marketing, and investor education. Questions on portfolio repositioning led management to say they are leaning more into diversified small- and mid-cap exposure and are open to more international exposure if value is there. On specific holdings, they defended CSL and IDP as long-term holds, described the Mineral Resources exit as a short-term mistake, and said they remain skeptical of mining-sector M&A such as the Rio-Glencore discussion.