WAM Active Limited has reported a robust half-year performance with a 33.2% increase in net profit and a fully franked interim dividend of 3.0 cents per share, underscoring its commitment to shareholder returns despite ongoing legal challenges.
- Net profit after tax rose 33.2% to $5.38 million for H1 FY2025
- Investment portfolio outperformed ASX All Ordinaries by 10.6%, up 17.5%
- Fully franked interim dividend declared at 3.0 cents per share, up 34.9%
- Net tangible asset backing per share increased to $0.93 after tax
- Ongoing legal proceedings against Keybridge Capital continue to unfold
Strong Financial Performance Amid Market Volatility
WAM Active Limited has delivered a compelling half-year financial report for the six months ending 31 December 2024, showcasing a significant uplift in profitability and shareholder returns. The company recorded a net profit after tax of $5.38 million, marking a 33.2% increase compared to the prior corresponding period. This performance was driven by a 17.5% rise in the investment portfolio, which notably outpaced the S&P/ASX All Ordinaries Accumulation Index's 6.9% gain by 10.6 percentage points.
The company’s active trading strategy continues to demonstrate its value proposition, delivering a low correlation to traditional markets while generating strong absolute returns. WAM Active’s investment portfolio growth since inception now stands at an impressive 11.5% per annum, outperforming the benchmark index by 5.6% annually.
Dividend Policy and Shareholder Value
Reflecting its robust earnings and franking credit position, WAM Active declared a fully franked interim dividend of 3.0 cents per share, representing a 34.9% increase from the previous interim dividend. This dividend is payable on 30 April 2025, with the Dividend Reinvestment Plan (DRP) operating without discount, allowing shareholders to compound their investment at prevailing market prices.
The net tangible asset (NTA) backing per share also improved, rising to $0.93 after tax, up from $0.86 at the previous half-year mark. This growth in NTA, alongside consistent dividend payments, underscores the company’s commitment to preserving capital and delivering steady income streams to investors.
Operational Costs and Fee Impact
While the investment portfolio’s performance was strong, the net tangible asset growth was somewhat tempered by accrued performance fees of 3.2%, alongside legal and professional fees related to corporate activities, management fees, and other company expenses. These costs collectively reduced the NTA growth from the portfolio’s gross return but remain within expected operational parameters for an actively managed investment company.
Legal Proceedings Cast a Shadow
WAM Active continues to pursue legal action against Keybridge Capital, seeking recovery of approximately $5 million transferred without shareholder approval. Despite the Supreme Court of New South Wales declining to wind up Keybridge, the company has been granted leave to pursue Keybridge’s directors for recovery of these funds, which were allegedly used to acquire a residence in Lake Como. Asset freezing orders remain in place against Keybridge’s managing director, and WAM Active is actively contesting Keybridge’s recent attempts to adjourn shareholder meetings and appoint a voluntary administrator.
This ongoing dispute introduces an element of uncertainty, though WAM Active’s management remains focused on its strategic investment objectives and shareholder value creation.
Outlook and Strategic Focus
With a solid half-year result and a clear dividend policy, WAM Active is well positioned to navigate the evolving market landscape. The company’s active management approach, combined with disciplined capital allocation and a focus on fully franked dividends, continues to appeal to investors seeking income and growth with lower volatility.
However, the unfolding legal matters with Keybridge Capital warrant close attention, as their resolution could materially impact future financial outcomes and investor sentiment.
Bottom Line?
WAM Active’s strong half-year results reinforce its investment strategy, but legal uncertainties with Keybridge Capital remain a watchpoint.
Questions in the middle?
- How will the ongoing Keybridge Capital litigation affect WAM Active’s future cash flows and asset values?
- Will the widening discount to NTA persist, and how might it influence total shareholder returns going forward?
- What are the prospects for sustaining or increasing fully franked dividends amid rising operational costs?