Listed managed investments - Earnings season wraps up and EAI weighs its options

The IIR LMI Monthly Report provides key LMI market news for the month of August as well as IIR research updates and key data points as at 31 July 2022.

Earnings season wrapped up at August-end. Volatility in the market, particularly the 2H’FY22, was a drag on portfolio performance and impacted earnings for a number of LICs. From an income perspective, it was a positive for shareholders with 84% of LICs declaring a final dividend in line or greater than the previous year (not including special dividends). We will be releasing a full earnings wrap up in the coming weeks.

Key news items include:

• EAI Assessing its Options: In it’s FY22 results released on 30 August 2022, Ellerston Asian Investments Limited (ASX: EAI) reiterated that the Board is seeking to materially reduce the discount and are seeking to deliver to those shareholders who desire liquidity at a price more closely approximate to the underlying asset value, a clear pathway to redeem at NTA while also providing other shareholders the option to remain invested in the strategy. The Company will provide an update on the various alternatives that the Board has been examining and the proposed next steps at the upcoming AGM.
• DJW Raises $63.5m through SPP: On 23 August 2022, DJW announced the results of a Share Purchase Plan (SPP) that was announced earlier in the month. There were applications from 20.8% of eligible shareholders, with the Company raising $63.5m through the issue of new shares at $2.78 per share.
• DUI Announces Share Purchase Plan (SPP): On 18 August 2022, DUI announced a Share Purchase Plan (SPP). Eligible shareholders are able to purchase up to $30,000 of new fully paid ordinary shares in DUI. Shares will be issued at the lower of: (a) $4.69 – a 3% discount to the closing DUI price on the day prior to the announcement, adjusted for the final FY22 dividend; or (b) The VWAP of the DUI price over the last five trading days of the SPP offer period. The closing date of the SPP offer is scheduled for 26 September 2022 with shares scheduled to be issued on 30 September 2022. Participants in the offer will not be entitled to the final FY22 dividend.
• VG1 Updates Dividend Policy: During the month, VG1 announced that the Company is amending its dividend policy. The Company previously had a target dividend yield of 4%p.a. calculated with reference to the share price. The Company will now seek to pay dividends on a semi-annual basis with the payment of at least 4.5 cents per share per half-year period. The Board intends for dividends to be franked to the fullest extent possible and will seek to grow the dividend payment over time. After adjusting for the final FY22 dividend, the Company has 55.3 cents per share in the profits reserve, providing over 6 years of dividend coverage for a 9 cents per share full year dividend payment, subject to the Company having sufficient franking credits.
• VG8 Updates Dividend Policy: During the month,VG8 announced that it had amended its dividend policy. The Company previously had a target dividend yield of 4%p.a. calculated by reference to the VG8 share price. The Company will now being seeking to maintain a semi-annual dividend of 5 cents per share and grow this over time. The Company will seek to frank dividends to the fullest extent possible.
• PGF Provides Dividend Guidance: On 11 August 2022, PM Capital Global Opportunities Fund Limited (ASX: PGF) announced it intends to maintain a minimum semi-annual dividend payment of 5 cents per share going forward, subject to there being no material changes in market conditions and the performance of the portfolio. The dividend guidance is consistent with the dividend guidance provided for FY22 of a full year dividend at least 10 cents per share, which the Company delivered. The Company provides an attractive dividend yield based on the FY22 dividend and the dividend guidance.
• Scheme Meeting for WLE Merger with AEG Scheduled for 15 September 2022: The Scheme meeting to consider and vote on the merger of Absolute Equity Performance Fund Limited (ASX: AEG) and WAM Leaders Limited (ASX: WLE) is scheduled for 15 September 2022 after the courts approved the convening of the meeting during the month. The Scheme proposes that WLE will acquire 100% of the shares in AEG, with AEG shareholders receiving WLE shares as consideration. The number of WLE shares issued will be based on the ratio of the pre-tax NTA of the two companies on the Calculation Date.

See the attached to view the full report.