FPC turns stronger NTA into a 3 cent final dividend

NTA rises as annual profit retreats

Fat Prophets Global Contrarian Fund Ltd (ASX:FPC) delivered a mixed but shareholder-friendly FY2026 result: profit after tax fell 25.9% to $5.183 million, yet net tangible assets per share climbed to $1.5713 from $1.4819 a year earlier. The board said the result was achieved against a volatile macroeconomic and geopolitical backdrop.

The earnings decline was driven in part by a sharp change in investment revaluations. Realised investment gains rose to $7.658 million from $3.338 million, but unrealised gains of $8.359 million in FY2025 became a $131,000 unrealised loss this year. A $2.981 million foreign exchange gain, compared with a $1.838 million loss last year, helped offset that reversal.

Dividend reaches 10 cents over 18 months

FPC declared an unfranked final dividend of 3.0 cents per share, taking distributions over the past 18 months to 10.0 cents per share. The final payment sits alongside a 5.0 cent fully franked special dividend and a 2.0 cent unfranked interim dividend declared during FY2026, with the company saying the latest distribution is consistent with its expanded dividend policy.

The result comes with an important qualification: the fund’s $3.234 million performance fee was more than six times the $673,000 management fee and absorbed a substantial portion of investment income. Total expenses rose to $5.577 million from $2.343 million, leaving profit before tax at $6.958 million.

Rights issue expands capital base

FPC raised $5.377 million through a one-for-five rights issue during the year and issued 3,786,464 options, each exercisable at $1.80 on or before 9 June 2027. The share count increased to 31.94 million from 27.60 million, despite the company buying back 492,445 shares.

The larger capital base helped lift net assets to $50.183 million from $40.904 million. For investors, however, the capital raising also means the fund’s per-share progress matters more than the headline growth in total assets. The reported NTA increase suggests that the additional shares did not prevent per-share value from rising over the year.

Japanese banks and materials dominate portfolio

The portfolio remains deliberately concentrated. Materials represented 38% of net equity exposure at 30 June, followed by diversified financials at 23%, while consumer services and media each accounted for 9%.

Japan was the fund’s largest geographical conviction, with Sumitomo Mitsui Financial Group the largest individual holding at 8.45% of the investment portfolio. Other major positions included Mizuho Financial Group, Mitsubishi UFJ Financial Group, Evolution Mining and BlackBerry, while the fund also held selected Chinese and Hong Kong companies including Tencent, Alibaba, Baidu and BYD.

Leverage keeps risk firmly in view

The fund’s investment portfolio was valued at $51.683 million, equivalent to about 103% of net assets, against 109% a year earlier. Cash and cash equivalents stood at $47.5 million, offset by $45.02 million in interest-bearing liabilities, leaving a net cash position of $2.48 million in the balance sheet presentation.

That structure is central to the investment case and its risks. FPC explicitly describes itself as a concentrated, leveraged portfolio rather than a low-risk vehicle. A 1% move in listed security prices was estimated to change net assets by approximately $516,830, while the fund also reported maximum net exposure to prime-broking activities of about $54.16 million after outstanding liabilities were offset.

The next clear test is whether the portfolio’s preference for Japanese financials, precious metals, copper and selected China exposures can continue to translate into higher NTA per share without a renewed drag from unrealised losses, currency movements or financing costs. The AGM is scheduled for 22 October, but the harder question will be visible in the portfolio itself: whether the fund’s contrarian bets are becoming more valuable, or merely more volatile.