Milton : Half Year Review 31 December 2016

MILTON VALUE PROPOSITION Milton pays fully franked dividends half yearly

Y Milton has paid a dividend every year since listing in 1958

Y Milton has maintained its 2017 fully franked interim dividend at 8.7cents per share

Milton provides exposure to a diverse portfolio of Australian listed companies

Y Investment portfolio at 31 December 2016 was valued at $2.7 billion

Milton is an efficient, low cost and professional investment manager

Y Total annualised operating costs represented 0.12% per annum of average total assets in the half year ended 31 December 2016

Y Milton is internally managed and no fees are paid to an external manager

MILTON IS A TRADITIONAL LISTED INVESTMENT COMPANY

Its key objective is to pay increasing fully franked dividends per share out of the dividends that it receives from its long

PORTFOLIO

Even though the market was reasonably fully valued throughout the six months, opportunities did arise that enabled a total of $38 million to be invested in 28 companies. Companies new to the portfolio were Charter Hall Group, Charter Hall Long Wale REIT, Henderson Group PLC and Growthpoint Properties.

The next twelve months will be an interesting time for global markets as the U.S. transitions to a new president and the UK negotiates its Brexit.

Mr Gooch said, "If history is anything to go by the markets are likely to over react, both on the upside and the downside, to news as the year progresses. Our internal investment team will continue to seek out further opportunities to deploy some of its $80 million of available cash and to trim holdings that no longer meet Milton's investment criteria.

In the meantime, Milton is reasonably fully invested with available cash representing around 3% of total assets and the portfolio is positioned to deliver a reliable and growing dividend stream over the long term."

THE 20 LARGEST INVESTMENTS: MILTON CORPORATION LIMITED

ABN 18 000 041 421

HALF YEAR REVIEW - 31 DECEMBER 2016

Y Fully franked interim ordinary dividend:

Interim ordinary dividend has been maintained at

8.7 cents per share

Y Dividend Reinvestment Plan in operation for the interim dividend

Last day for receipt of an election notice for participation in the plan is 17 February 2017.

Y Earnings per share:

Down 11.6% to 9.32 cents (excluding special investment revenue)

Down 12.2% to 9.34 cents (including special investment revenue)

Y Profit after tax:

Down 10.7% to $60.6 million (excluding special investment revenue)

term holdings of assets including Australian equities, interest

bearing securities and real property.

At 31 December 2016 Market

Value

Share of

Total

Down 11.4% to $60.8 million (including special

Milton is not a speculative investor and does not sell its

$million Assets %

Westpac Banking Corporation 340.7 11.7

investment revenue)

of shareholders.

Milton seeks to invest in well managed companies and trusts that are listed on the Australian Securities Exchange, have a profitable history and the expectation of dividend growth.

DIRECTORS

R.D. Millner (Chairman) K.J. Eley

J.F. Church F.G. Gooch (MD)

Alternatively you can call Link Market Services on

[phone] or Toll Free on 1800 641 024

assets to increase profit for distribution to shareholders.	Commonwealth Bank	256.3	8.8	Y Net tangible asset backing per share (NTA):
Capital profits are reinvested by the company for the benefit	National Australia Bank	145.9	5.0	Down 0.7% to $4.47 (before provision for tax on

W H Soul Pattinson 138.8 4.8

Wesfarmers Limited 119.5 4.1

ANZ Banking Group 102.5 3.5

BHP Billiton 91.1 3.1

Bank of Queensland 86.7 3.0

Telstra Corporation 76.4 2.6

Bendigo and Adelaide Bank 72.6 2.5

Woolworths Limited 70.0 2.4

G.L. Crampton I.A. Pollard				AGL Energy	59.6	2.0
CSL Limited	59.5	2.0
SHARE REGISTRY MATTERS: Shareholders with access to the internet can mange their				Macquarie Group AP Eagers Suncorp Group	56.9 53.8 44.8	2.0 1.8 1.5
holding details and vote	online	by	visiting	Brickworks Limited	44.0	1.5
www.linkmarketservices.com.au.	Blackmores Limited	37.9	1.3

Perpetual Limited 64.5 2.2

ALS Limited 36.7 1.3

Total value of Top 20 1,958.2 67.1

Total assets 2,912.9

unrealised capital gains)

Down 0.3% to $3.97 (after provision for tax on unrealised capital gains)

(Comparative figures refer to results for the half year ended 31 December 2015)

CONTACT DETAILS

Level 4, 50 Pitt Street, Sydney NSW 2000 PO Box R1836, Royal Exchange NSW 1225 Phone: [phone] Fax: [phone]

Web address:www.milton.com.au

This document is not a prospectus and does not seek to invite applications for shares in the Company.

RESULTS FOR THE HALF YEAR TO 31 DECEMBER 2016

Movement

FULLY FRANKED DIVIDEND HISTORY

2017 2016 2015 2014 2013

Final (cps)	9.9	9.9	9.4	8.6
Total (cps)	18.6	18.4	17.6	16.4

Interim (cps) (1)8.7 (1)8.7 8.5 8.2 7.8

Milton's managing director, Mr Frank Gooch said, "Increased dividend receipts from 50% of the number of companies held in the investment portfolio were not sufficient to offset lower dividends from a small number of companies, particularly those exposed to the resources and

$million on pcp

Ordinary investment revenue	61.7	-6.1%
Interest	1.4	+2.0%
Net trading gains	0.3	-92.0%
Other revenue	0.2	-9.3%
Net profits of joint ventures	0.7	-36.5%
Administration costs(1)	(1.8)	+2.5%
Operating profit before tax	62.5	-11.4%

Tax expense (1.9) -28.0%

Special (cps) -0.4 0.4 0.5

(1)Dividend "ex date" is 15 February 2017 and the payment date is 2 March 2017.

The directors have declared a fully franked interim dividend of 8.7 cents per share, which is in line with the previous interim dividend. This dividend will be paid on 2 March 2017.

One of the benefits of the LIC structure is that the fully franked dividend can be at least maintained even though

energy sectors, and so investment income fell by 6% this half."

Total assets at 31 December 2016 included an investment portfolio valued at $2.7 billion, cash of $131 million and other assets amounting to $39 million.

Total Returns to 31 December 2016

Underlying operating profit after tax

60.6 -10.7%

Per cent per annum

earnings have declined.

"The reliability of the fully franked ordinary dividend is a

Special dividends after tax 0.2 -78.7% Net profit after tax60.8 -11.4%

(1) Administration costs represented 0.12% of average total assets.

key attraction for many of our 24,270 shareholders and they are very much aware that Milton has paid a dividend every year since 1958 and the full year dividend has increased each year over the last five years," Mr Gooch said.

BALANCE SHEET

At 31 December 2016

2015

Dividend Reinvestment Plan

The Dividend Reinvestment Plan (DRP) will operate for the interim dividend. Shareholders may elect to have all or part of their dividend payment reinvested in new ordinary shares. The pricing of the new DRP shares will be based on the volume weighted average selling price of Milton shares over

1 year	3 Years	5 Years	10 Years	15 Years
TPR	3.9	5.6	11.5	5.1	8.8
TSR	-0.5	5.3	13.4	4.6	8.7
XAOAI	11.7	6.8	11.6	4.5	8.1

Total portfolio returns (TPR) are based on movements in NTA and

$million $million

Cash & liquids	131	141
Investments	2,743	2,741
Other assets	39	38
Total Assets	2,913	2,920
Liabilities	(1)	(2)

Net assets before provision for tax on

unrealised capital gains 2,9122,918

Provision for tax on unrealised

capital gains (330)(333)

Net assets 2,582 2,585

Net Tangible Assets (NTA)

Before provision for tax on unrealised

capital gains $4.47$4.50

After provision for tax on unrealised

capital gains $3.97$3.98

the five business day period commencing on 17 February 2017 being the first trading day after the Record Date. The last day for the receipt of an election notice for participation in the plan is 17 February 2017.

COMMENTARY

Milton Corporation Limited has reported its net profit after tax for the six months to 31 December 2016 of $60.8 million out of which a fully franked interim dividend of 8.7 cents per share will be paid.

Excluding special dividends, underlying operating profit was $60.6 million, which is 10.7% below that of the previous corresponding half. The lower profit was mainly attributable to a reduction in ordinary dividend income and trading profits earned in this half.

The portfolio of investments in Australian listed companies and trusts delivered dividend and trust distributions totalling

$61.7 million, including $55 million of franked dividends.

are therefore after expenses and tax liabilities and do not take into

account the benefit of franking credits.

Total shareholder returns (TSR) are based on share price movements and do not take into account the benefit of franking credits.

All Ordinaries accumulation returns (XAOAI) are before expenses and tax liabilities and do not take into account the benefit of franking credits.

OUTLOOK

Looking forward, the second half underlying operating profit is currently expected to be an improvement on the previous corresponding half. However, the 2017 full year result is likely to be lower than last year.

Milton has sufficient franking credits, retained earnings and liquidity to enable the fully franked, full year ordinary dividend to be maintained at 18.6 cents per share. Directors will take this and other factors into account when considering the final dividend.