The WAM Capital Ltd (ASX: WAM) share price is performing well today after the company released its earnings covering the full 2022 financial year. WAM Capital shares are currently trading at $1.87 each, up 0.81% for the day.
This comes after the listed investment company (LIC) closed at $1.85 last week and opened at $1.86 a share this morning.
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What did WAM Capital report?
- Operating loss before tax of $425.9 million. That's down from the profit of $343.3 million from FY21
- Loss after tax of $293.7 million. That's down from the profit of $266.6 million from FY21
- WAM Capital investment portfolio performance of -18.8% for the year
- A final dividend of 7.75 cents per share declared
What else happened in FY22?
As a LIC, WAM Capital invests in a portfolio of other ASX shares and assets on behalf of its shareholders. The company stated that its after-tax operating loss of $293.7 million was "boosted by a $132.2 million income tax benefit, delivered through the tax benefit on the operating loss for the period and franking credits received on franked dividend income from investee companies".
But the company stated that its operating loss for the year was "a result of the performance of the investment portfolio over the year".
The WAM Capital portfolio's loss of 18.8% for FY22 was a slight outperformance of the S&P/ASX Small Ordinaries Accumulation Index. This benchmark lost 19.5% over the same period.
But it was also a marked underperformance of its other benchmark, the S&P/ASX All Ordinaries Accumulation Index. This fell by 7.4%. The LIC held an average cash position of 13.7% over FY22.
Over FY22, WAM Capital finalised the acquisitions of the PM Capital Asian Opportunities Fund, the Westoz Investment Company and Ozgrwoth Limited. The LIC advised it had achieved returns on investment of 16%, 21% and 22% on these acquisitions, respectively.
WAM Capital declared a final dividend of 7.75 cents per share, fully franked. This will be paid on 28 October after the company trades ex-dividend on 17 October.
That was consistent with the company's last interim dividend and its final dividend for FY21. This brings WAM Capital's full-year dividend to a fully franked 15.5 cents per share, the same amount it has paid annually since 2018.
What did management say?
Here's some of what Geoff Wilson, founder of Wilson Asset Management (WAM) and chair of WAM Capital, had to say:
The 2022 financial year was a turbulent period for equity markets…
The WAM Capital investment portfolio decreased 18.8%, with an average cash weighting of 13.7% over the year. Since inception, WAM Capital has achieved an investment portfolio return of 14.7% per annum, outperforming the S&P/ASX All Ordinaries Accumulation Index by 6.7% per annum.
This long term investment portfolio outperformance has been achieved with WAM Capital's diligent and proven investment approach, which focuses on identifying undervalued growth companies with a catalyst.
In these uncertain times, we remain focused on our commitment to our proven investment process that has provided solid returns for over 20 years.
What's next?
Turning to FY23, and WAM Capital warns that "the company's ability to continue paying fully franked dividends is dependent on generating additional profits reserves, through positive investment portfolio performance, and franking credits".
It told investors that as of 30 June 2022, WAM Capital had 8.7 cents per share in its profit reserves. Of this, 7.75 cents will be doled out in the October final dividend.
That means WAM Capital had just 1 cent per share in profit reserves as of 30 June if we take this dividend into account.
WAM Capital share price snapshot
The WAM Capital share price remains down by 16.3% year to date in 2022 thus far (at the time of writing) and by 15.2% over the past 12 months. This ASX LIC offers a trailing dividend yield of 8.31% at the current share price.
