AMCIL LIMITED — AGM Information 2017

Oct 11, 2017

12 October 2017

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

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Electronic Lodgement

AMCIL Limited 2017 Annual General Meeting Presentation

Dear Sir / Madam

Please find attached a presentation that will be delivered to shareholders at the Company’s Annual General Meeting to be held today.

Yours faithfully

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Matthew Rowe Company Secretary

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Disclaimer

AMCIL Limited and Australian Investment Company Services Limited (AFSL: 303209) 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. Any reader is strongly advised to make their own enquiries and seek independent professional advice regarding information contained in these materials.

These materials have been prepared solely for the purpose of information and do not constitute, nor are they intended to constitute advice nor an offer or invitation to any person to subscribe for, buy or sell any shares or any other securities.

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Results and Shareholder Returns

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AMCIL’s Approach

Focused portfolio covering large and small companies.

Aim is to provide:

• attractive returns through strong capital growth over the medium to long term; and

• the generation of fully franked income.

Our size means small companies can have an equally important impact on portfolio returns as large ones.

Use of the trading portfolio and buy and write option strategies to generate additional fully franked income.

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Financial Year Summary – to 30 June 2017

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Dividend Reflects the Policy of Paying out all Available Franking Credits Each Year

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Changes to Tax Legislation – Franking Credits

• The Federal Government has proposed retrospective legislation to prevent Investment Companies claiming the lower company tax rate until 2023–24.

• If enacted, AMCIL will continue to pay tax at 30%, and frank its dividends at 30% until 2023–24.

• This includes the 3.5 cent final dividend (franked at 27.5%), paid to shareholders in August 2017. If legislation is confirmed, AMCIL will re-issue a dividend statement before the end of the financial year.

• What does it mean for franking credits? – assuming a dividend of $100:

• previous dividend with franking credits at 27.5% of $37.93 will be replaced.

• new statement showing dividend of $100 with franking credits at 30% of $42.86.

• does not change shares issued under DRP or cash payment.

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Share Price Return Including Dividends and Benefit of Franking Credits – 10 Years to 30 September 2017

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• Assumes the reinvestment of dividends. This chart calculates the benefit of franking credits at the time dividends are paid for both AMCIL and the index. In practice there is a timing difference between receipt of the dividend and the realisation of the franking benefit in the following tax year.

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Share Price is Trading at a Small Discount to Net Asset Backing

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The Market and Portfolio

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The Market by Company Size Over the Year to 30 September 2017

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Source: FactSet
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Mid Cap Resource Sector Returns Have Been Very Strong Over the Year to 30 September 2017 – Iluka is in AMCIL’s Portfolio

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Portfolio Performance Including Benefit of Franking Credits* – to 30 September 2017

After tax and expenses. Ignores benefits LIC tax credits. * Assumes an investor can take full advantage of the franking credits.

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Performance of the Portfolio Each Financial Year can vary quite markedly from the S&P/ASX 200 Accumulation Index

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Note assumes an investor can take full advantage of the franking credits.

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Total Portfolio Returns including Dividends and Benefit of Franking Credits – 10 Years to 30 September 2017

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• Assumes the reinvestment of dividends. This chart calculates the benefit of franking credits at the time dividends are paid for both AMCIL and the index. In practice there is a timing difference between receipt of the dividend and the realisation of the franking benefit in the following tax year.

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How AMCIL Invests – What we Look for in Companies

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Board and management, financial position, as well as some key financial metrics – the level of gearing and cash flow.

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Ability of companies to grow earnings over time, which ultimately should produce good dividend and capital growth.

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Value tries to reflect the opportunity a business has to prosper and thrive over the medium to long term.

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How we have gone about Positioning the Portfolio

• Larger companies offering growth and/or income through the use of buy and write option strategies.

• Companies with good prospects for expansion:

• very good management,

• credible growth; and

• unique product positions

• Opportunities where value is more immediately on offer.

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Positioning of the Portfolio – Larger Companies

Offering growth

For buy and write option strategies

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Positioning of the Portfolio – Growth Companies Very good management, credible growth, unique product positions.

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Positioning of the Portfolio – Value Opportunities Undervalued situations: Recent purchases.

Reducing positions.

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Top 20 Investments as at 30 September 2017

Rank	Company	% of Portfolio
1	BHP*	5.4%
2	National Australia Bank*	4.9%
~~*~~ 3	Westpac BankingCorporation*	4.8%
~~Base~~ 4	~~d on net operating result~~ Lifestyle Communities	4.5%
5	Commonwealth Bank of Australia*	4.1%
6	CSL*	4.0%
7	Qube Holdings*	3.4%
8	Mainfreight	3.4%
9	James Hardie Industries*	3.2%
10	Oil Search*	2.9%

• Indicates that options were outstanding against part of the holding. Note percentage of Portfolio excludes the impact of cash holding at $16.6 million.

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continued Top 20 Investments as at 30 September 2017

Rank	Company	% of Portfolio
11	Transurban Group	2.7%
12	IRESS*	2.6%
13	Treasury Wine Estates*	2.6%
~~*~~Base 14	d on net operating result CYBG	2.3%
15	Computershare*	2.3%
16	Amcor*	2.3%
17	Seek*	2.3%
18	Rio Tinto*	2.2%
19	Iluka Resources*	2.1%
20	Wesfarmers*	2.1%

• Indicates that options were outstanding against part of the holding. Note percentage of Portfolio excludes the impact of cash holding at $16.6 million.

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Some Recent Adjustments to the Portfolio

Added:

Complete sales:

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Significant Repositioning of the Portfolio has occurred already this Financial Year

• Total sales $37.7 million – 9 holdings sold completely.

• Purchases of $34.1 million – 4 new holdings added.

• One of the key characteristics is the quality of management.

• $58 million of the portfolio covered by call options – of this $6 million are subject to being exercised.

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Moving Forward

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Moving Forward

The Australian equity market has lagged the US – 1 year to 30 September 2017

Although valuations for many companies in Australia are still at the top end – P/E ratio for S&P/ASX 200 index

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Source: FactSet Source: FactSet
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Moving Forward

• Significant repositioning of the portfolio has occurred.

• AMCIL holds a relatively strong cash position.

• Remain cautious about growth for a number of sectors, although buy and write strategies can still generate good returns.

• Market volatility will produce opportunities even in good companies.

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