Future Generation Global Limited reported a notable decline in half-year profits but raised its fully franked interim dividend, underscoring confidence in its investment strategy and ongoing commitment to youth mental health initiatives.
- Half-year revenue down 35.1%, net profit after tax down 39.0%
- Investment portfolio rose 6.4%, outperforming MSCI AC World Index
- Interim dividend increased to 4.0 cents per share, fully franked
- Social investment commitment reaches $6.6 million for youth mental health
- Board and fund managers continue pro bono support, reducing fees
Financial Performance Overview
Future Generation Global Limited has released its half-year results for the period ending 30 June 2025, revealing a mixed financial picture. The company reported revenue of $42.87 million, down 35.1% from the previous corresponding period, and a net profit after tax of $27.38 million, marking a 39.0% decline. These decreases reflect a moderation in global equity market returns compared to the strong performance seen in the prior year.
Despite the profit contraction, the company’s investment portfolio delivered a 6.4% increase over the six months, outperforming the MSCI AC World Index (AUD), which rose 3.6%, and the MSCI World SMID Cap Index, which increased 3.0%. This outperformance is attributed to the portfolio’s strategic small to mid-cap bias and underweight exposure to North America, capitalising on stronger returns in UK, European, and emerging markets amid a weaker US dollar.
Dividend and Shareholder Returns
In a move that signals confidence in its long-term strategy, Future Generation Global declared a fully franked interim dividend of 4.0 cents per share, up from 3.7 cents in the previous interim period. This dividend equates to an annualised fully franked yield of 5.3% based on the 30 June 2025 share price, significantly higher than average global equity market yields. The company’s total shareholder return (TSR) for the period was 10.4%, boosted by both portfolio performance and a narrowing discount of the share price to net tangible asset backing.
Social Impact Commitment
Future Generation Global continues to distinguish itself through its social investment focus. The company is set to invest $6.6 million in organisations dedicated to preventing mental ill-health among young Australians, bringing total social investments since inception to $50.5 million. This commitment represents 1.0% per annum of the company’s average monthly net assets and underscores its dual mission of delivering financial returns alongside meaningful social impact.
The company’s social impact partners have expanded their reach and reported positive outcomes, with 75% of measured metrics showing improvement for young participants. This sustained investment in youth mental health prevention positions Future Generation Global as one of the largest private funders in this critical area.
Operational Highlights and Governance
The company benefits from a unique fee structure, with its 16 global fund managers and various service providers offering their expertise on a pro bono basis. This arrangement saved shareholders an estimated $10.7 million annually, far exceeding the 1.0% social investment allocation. The Board and Investment Committee continue to oversee a diversified portfolio designed to balance risk and return, with a focus on fundamentals, earnings growth, and valuation.
Notably, the Board acknowledged the departure of Jonathan Nicholas, a valued director since 2019, and thanked founding Investment Committee member Sean Webster for his contributions. The company’s financial statements were independently reviewed by Pitcher Partners Sydney, with no issues raised.
Bottom Line?
Future Generation Global’s raised dividend amid profit pressures highlights resilience, but sustaining growth and social impact will require navigating evolving market dynamics.
Questions in the middle?
- Can Future Generation Global sustain its dividend growth given the profit decline?
- How will shifts in global equity markets affect the company’s small to mid-cap focused portfolio?
- What impact will shareholder voting have on the allocation of social investment funds?