AMCIL LIMITED — AGM Information 2018

Oct 10, 2018

11 October 2018

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 2018 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

Annual General Meeting 2018

Presentation

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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Financial Results

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Financial Results

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Management expense ratio of 0.69%

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Tax Legislation – Franking Credits

• As previously highlighted the Federal Government was considering retrospective legislation to prevent Investment Companies claiming the lower company tax rate – this has now been legislated.

• The last two final dividends, paid in August 2017 and August 2018, were franked using the corporate tax rate of 27.5% (being the legislated tax rate at that time).

• Following the passing of this legislation, the corporate tax rate used to determine the franking credit for these two dividends will now be 30%.

• Revised dividend statements were sent to shareholders on 21 September 2018

• 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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Labor Party Policy on ending refundability of franking credits – our response

• AMCIL has provided a template letter on its website for shareholders to write to their parliamentary representatives - personal examples are likely to have the biggest impact on local members.

• We have engaged through various industry groups to lobby on your behalf.

• Publicised where appropriate through the media.

• Submission by AMCIL to the house economics committee.

Email: economics.reps@aph.gov.au

Mail: Committee Secretary Standing Committee on Economics PO Box 6021,Parliament House, Canberra ACT 2600

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The Investment Approach

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AMCIL’s Approach

Focused portfolio covering large and small companies.

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

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

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Profile of the Portfolio by Value – as at September 2018

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Portfolio Performance Including Benefit of Franking Credits* – to 30 September 2018

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After tax and expenses. Ignores benefits of LIC tax credits.

• Assumes an investor can take full advantage of the franking credits.

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Components of Share Price Return – 10 Years to 30 September 2018

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• Assumes an investor can take full advantage of franking credits.

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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.

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

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

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The Portfolio is Positioned Around the Following Key Attributes Core Holdings

Large companies with strong structural positions.

Businesses with long term growth opportunities, many of which are outside top 20 ASX.

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The Portfolio is Positioned Around the Following Key Attributes continued

Strategic Holdings

Companies in a cyclical/turnaround phase with earnings upside

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Latent value in assets

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Income, including option strategies

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Some Recent Adjustments to the Portfolio

New Additions

Complete Sales

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Top 20 Investments as at 30 September 2018

Rank	Company	% of Portfolio
1	CSL	5.9%
2	BHP	5.5%
3	Lifestyle Communities	3.6%
4	~~~~Based on net operating result Westpac BankingCorporation	3.6%
5	Macquarie Group	3.6%
6	Mainfreight	3.5%
7	Qube Holdings	3.1%
8	Oil Search*	3.1%
9	National Australia Bank*	2.9%
10	Commonwealth Bank of Australia*	2.8%

• Indicates that options were outstanding against part of the holding.

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continued Top 20 Investments as at 30 September 2018

Rank	Company	% of Portfolio
11	James Hardie Industries	2.8%
12	Transurban Group	2.7%
13	CYBG	2.5%
14	Freedom Foods Group	2.4%
15	Brickworks	2.3%
16	Carsales.com	2.2%
17	Woolworths Group*	2.2%
18	IRESS*	2.2%
19	Computershare*	2.1%
20	Sonic Healthcare	2.1%

• Indicates that options were outstanding against part of the holding.

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The Market and Closing Comments

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Small and Mid Caps Continue to Drive Market Returns – Year to 30 September 2018

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Index
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Source: FactSet

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Divergence of 1 Year Returns* to 30 September 2018 Across Sectors – ‘Growth’ Sectors at Elevated Levels

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*Includes dividends

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The market has been willing to pay up for high PE stocks which have outperformed low PE names by 25% year to date

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Source: FactSet, UBS

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Details of Share Purchase Plan (SPP) Announced 20 September

• Up to a maximum of $15,000 per registered shareholder.

• Shares issued under the SPP will rank equally for future dividends.

• Price determined by VWAP 5 days up to including closing date – no discount.

• Record date 19 September, applications sent 27 September.

• Offer closes Monday, 29 October.

• Shares expected to be issued 7 November .

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Share Price Relative to Net Asset Backing

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More recently we have also seen a lift in option market volatility which is beginning to provide some opportunities

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Index
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Volatility

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Issues to Consider

• High prices for many ‘growth stocks’.

• Rising interest rates globally (although unlikely in Australia).

• China, including trade tariffs and commodity prices.

• Domestic economy, including impact of elevated debt.

• Financial Services enquiry and potential impacts.

• Threats to franking credit regime and more generally superannuation.

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