AFIC Cashed Up But Patient

AFIC Cashed Up But Patient

MEDIA RELEASE - HALF YEAR RESULT TO 31 DECEMBER 2008

28 January 2009

AFIC has continued to hold a relatively strong cash position during the past six months.

This approach in concert with its ongoing strategy of avoiding exposure to companies with complex business models and or high levels of debt meant its portfolio was relatively less impacted by the recent market turbulence. The AFIC portfolio outperformed the general market by 3% with a fall of 24% over the December half year compared to the 27% decline in the general market.

AFIC had a cash holding of $236 million at 31 December 2008.

The Net Operating Profit was down marginally to $107.8 million from $110.7 million last year. Income from investments and deposit interest were up however this was offset by a decline in the value of the Trading Portfolio.

The interim dividend has been maintained at 8 cents per share. The Dividend Reinvestment Plan for the interim dividend has been maintained with the discount increasing from 0% to 5%.

The major sales in the Investment Portfolio were driven by corporate activity, St George Bank was taken over by Westpac and Queensland Gas was taken over by British Gas. The Company also decided to divest its position in ConnectEast and sell the majority of its holding in Suncorp-Metway during the period.

Whilst AFIC has been taking a cautious approach to investing, recent capital raisings have provided some opportunities to invest. As a result the major purchases during the half year were Alumina, Commonwealth Bank, Incitec Pivot, National Australia Bank, QBE Insurance, Tox Free Solutions and Westpac.

Recent conditions provide investors with a number of challenges, not least of which is understanding the full implications of current events and time frames for equity market recovery. As a long term investor AFIC has taken some opportunities to buy selected stocks with good business franchises, primarily though capital raisings, to appropriately position the portfolio for an eventual improvement in economic conditions. However, the Company remains very cautious about how quickly global economic conditions will improve and the short term outlook for company profitability, including dividends. As a result,

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