AMCIL LIMITED — AGM Information 2019

Oct 9, 2019

10 October 2019

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 2019 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 2019

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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(a) 3.5 cent dividend (interim and special) paid February 2019.

Management expense ratio of 0.72%

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Our Approach

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AMCIL as a listed investment company

Shareholders Disciplined Transparent own the Company investment approach Tax effective Low cost – no Benefits of a performance fees closed end fund

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Annual performance can vary quite differently to the index – portfolio performance each financial year with franking*

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Components of share price return – 10 year return to 30 September 2019, including franking, has been 10.5% per annum

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

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Share price relative to net asset backing per share

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Performance and the Portfolio

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Portfolio performance including benefit of franking credits* – to 30 September 2019

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

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Some sectors of the market have been very strong over the 12 months to 30 September 2019

Includes dividends

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AMCIL’s investment focus

We are long term investors in high quality companies reflecting our greatest conviction. Focused portfolio covering large, medium and small companies.

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

Can utilise buy and write option strategies and small trading portfolio when appropriate to generate additional fully franked income.

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AMCIL’s investment approach – focus on investing in quality companies that can grow over the long term

Companies that have a sustainable competitive advantage:

• Unique set of assets

• Sustainable over the long term – have survival characteristics

• Independence from outside influences

• Business exhibits leadership position or developing one

• Makes returns above cost of capital

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AMCIL’s investment approach focus on investing in quality companies that can grow over the long term continued

Are run by people we can trust:

• Shareholder focus (owner/driver)

• Passionate about their business

• Have deep understanding of industry and their business

• Are good stewards of capital

• Willing to take long term views on what is best for the business

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AMCIL’s investment approach focus on investing in quality companies that can grow over the long term continued

• Preference for businesses which generate more consistent earnings streams

• With strong balance sheets – avoid companies with high levels of debt

• Want to invest in companies that can grow over the long term

• Seek to buy these stocks when we identify value

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Companies with a dominant market position

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Competitive advantage in growing green energy opportunities with a strong Return on Equity and balance sheet.

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Strong management team, high returns, lowest cost, good balance sheet, investing in R&D for future earnings growth.

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High quality portfolio of difficult to replicate assets and demand underpinned by an ageing population. Strong financial metrics.

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High quality portfolio of pathology assets globally. Opportunities to increase scale via industry consolidation. Medical leadership culture.

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Very strong market position with broadening distribution network and sustainable competitive advantage. Strong balance sheet.

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Companies with a sustainable competitive advantage

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Very unique toll road assets which benefit from population growth and have set inflation linked pricing. Further opportunities to add new growth projects which support long term cash flow growth.

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Attractive monopolistic assets which generate attractive returns. Opportunities to invest to generate further growth. Strong management team.

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Dominant market position in Australia auto classifieds with a growing presence in South Korea and South America. Technology investment provides competitive advantage. Strong management team.

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Bunnings (60% of Wesfarmers) is a leading DIY retailer generating very attractive growth and returns. Lowest cost and scale provide competitive advantage. Management very focused on growing returns on capital. Strong balance sheet.

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Owner/driver companies

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Emerging leader in logistics solutions globally. Unique owner/driver culture which enables long term view of investment. Generates attractive Return on Invested Capital (ROIC).

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Strong management team who have built a successful Australian business which generates attractive returns. Seeking to replicate this in the US.

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Founder led telecommunications business which is utilising its strong balance sheet to build long life, high ROIC data centre assets.

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Quality portfolio of difficult to replicate assets seeking to reduce freight costs and benefit from the modal shift from road to rail. Focused management who take a long term view.

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continued Owner/driver companies

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Dominant market position in the provision of online employment classifieds in Australia and New Zealand. Emerging market opportunities in China, South East Asia and South America.

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Founder led business which is currently being taken over by a large Korean advertising agency.

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Founder led business which has developed a very strong brand in the Australian 4WD parts market. Long runway in overseas markets provides opportunity to capture substantial market share.

Founder led, content management software business. Invested heavily in R&D over many years, is now generating strong growth in annuity style revenues.

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Option strategies are used to enhance the income of the portfolio

• Banks and resource companies face some challenges in terms of longer term growth and offer a more cyclical earnings profile

• However, they rank highly on our quality ranking (given strong industry/asset positioning) and when bought at attractive prices offer attractive franked income

• Using option strategies further adds to the income generated from the investment and compensates for the lower expected growth outlook

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Top 20 investments as at 30 September 2019

Focused Portfolio – 36 holdings in total

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Rank	Company	% of Portfolio
1	CSL Limited	7.6%
2	National Australia Bank*	5.7%
3	Mainfreight	4.7%
4	Macquarie Group	4.4%
5	Transurban Group	4.3%
6	BHP*	4.2%
7	Wesfarmers	4.0%
8	James Hardie Industries	3.5%
9	Sydney Airport	3.4%
10	Reliance Worldwide Corporation	3.1%

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

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continued Top 20 investments as at 30 September 2019

Focused Portfolio – 36 holdings in total

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Rank	Company	% of Portfolio
11	EQT Holdings	3.0%
12	Carsales.com	3.0%
13	Qube Holdings	2.9%
14	Wellcom Group	2.9%
15	Commonwealth Bank of Australia*	2.8%
16	Oil Search	2.7%
17	Objective Corporation	2.6%
18	Reece	2.6%
19	Sonic Healthcare	2.6%
20	Seek Limited	2.5%

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

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Current factors at play in the market

• Interest rates are very low globally and appear to be going lower

• Investors search for yield in the low rate environment has driven up equity prices

• Multiples for high PE stocks vs low PE stocks (growth vs value) are at extreme levels

• US/China trade war and Brexit creating uncertainty

• Slowing growth in Chinese economy is impacting outlook for growth for Australia’s resource companies

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With valuations remaining well above the long term average for high PE stocks

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Source: Goldman Sachs Research

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How the portfolio is positioned in this environment

• Reduced number of holdings in the portfolio

• Quality, including balance sheet strength, before growth and value

• Cash available to buy long term value in substantial dips

• Currently in an investment environment where returns are likely to be more subdued – income strategies, including buy and write call options can be attractive

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Closing Comments

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Issues to consider

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