London City Equities Limited reports a robust 12% increase in its investment portfolio for the half year ending December 2024, driven by strong Fiducian Group performance and strategic share sales, enabling higher dividend payouts despite ongoing legal challenges.
- 12% rise in investment portfolio value over six months
- Significant contribution from Fiducian Group share price uplift
- Reduction of Fiducian stake from 7% to below 5% in October
- Ongoing Federal Court legal action against Excelsior Capital
- Cash holdings represent 30% of net assets, supporting increased dividends
Strong Portfolio Performance
London City Equities Limited has delivered a notable 12% increase in its investment portfolio value for the half year ending 31 December 2024. This uplift was largely driven by a near 20% surge in the market value of its long-held stake in Fiducian Group, a key contributor to the company’s financial results.
The company’s directors reported a net gain of $2.04 million during the period, with shareholders’ equity rising from $21.25 million in June to $23.56 million by December. This translated to net assets per share increasing to 75 cents, up from 61 cents a year earlier.
Strategic Shareholding Adjustments
In a strategic move, London City reduced its Fiducian Group holding from 7% to below 5% in October, realising capital gains while maintaining a significant position. This sale contributed to the company’s strong cash position, which now represents 30% of net assets, a substantial buffer that supports operational flexibility and shareholder returns.
Despite the reduction, London City remains a major Fiducian shareholder, signalling confidence in the company’s prospects while managing exposure prudently.
Challenges with Excelsior Capital
Not all investments have performed as expected. London City’s 14% stake in Excelsior Capital, held jointly with associates, has underperformed relative to market indices. The board has openly criticised Excelsior’s portfolio structure and continues to pursue legal action in the Federal Court seeking liquidation and the return of funds to shareholders.
The legal proceedings remain unpredictable, injecting an element of uncertainty into London City’s future financial outlook. The company’s stance underscores a commitment to protecting shareholder value amid challenging circumstances.
Dividend Growth and Financial Position
Supported by higher dividend income and proceeds from Fiducian share sales, London City has been able to increase its dividend payouts to shareholders. This reflects a positive cash flow position and a board confident in the company’s financial health.
The balance sheet shows total assets of $27 million, up from $22.9 million a year earlier, with liabilities remaining modest. The future income tax benefit has decreased, reflecting changes in tax positions, but overall net assets have strengthened.
Chairman Peter EJ Murray highlighted the company’s strong cash holdings and prudent capital management as key factors enabling ongoing shareholder returns despite market uncertainties.
Bottom Line?
London City’s robust portfolio gains and strategic cash management set the stage for continued dividend growth, though legal uncertainties linger.
Questions in the middle?
- What is the potential timeline and impact of the Federal Court case against Excelsior Capital?
- How will London City balance maintaining significant Fiducian exposure with risk management?
- Could further portfolio restructuring or asset sales be on the horizon to enhance returns?