Melbourne-based listed investment company, AMCIL has reported a modest improvement in interim profit for the period to December 31 and is looking for more of the same in the second half with $8 million in cash to invest and a swag of attractive targets, according to yesterday’s interim profit statement.
The company yesterday told the ASX that net earnings before gains or losses had risen to $3.3 million, up 18.9% from $2.8 million in the previous corresponding period.
Reported Profit for the half-year was $5.0 million, up 21.1% from the previous corresponding period.
This figure includes "unrealised gains or losses on puttable instruments in the investment portfolio and on open options positions.”
The previous corresponding period’s reported profit of $4.2 million has been restated to include unrealised gains on puttable instruments. It also included realised capital gains on the Company’s investment portfolio until the adoption of the new accounting standard AASB 9 on December 7, 2009.
Directors said revenue from investments was $3.8 million, up 33.9% from $2.8 million in the previous corresponding period.
No interim dividend will be paid, which is normal for this company. The shares unchanged on 68c yesterday.
AMCIL is the smaller of the three listed investors in the same group. The others are Australian Foundation (which reports on Thursday) and Djerriwarrh Investments, which reported last week.
Directors said that the portfolio return over the six months to 31 December 2010 was 15.2% compared to the broader Australian equity market which increased by 12.8%.
"This reflects the benefit of AMCIL’s investment approach which allows it to include companies from across the entire market in a concentrated portfolio in ways that can materially impact performance.
"In particular, share prices of companies in the resources and resource related services sectors have been very strong. In this context AMCIL’s portfolio benefited from the gains in holdings such as Iluka Resources, BHP Billiton, Pan Australian Resources, Bradken, Alumina and Campbell Brothers.
"Other companies to generate sound returns in this period were Hastings Diversified Utility Fund, Mitchell Communications, which was taken-over by Aegis Group Plc, Transurban, Brambles, Victoria Petroleum and Oil Search.
The increase in earnings was the result of two factors, directors said.
"The first was the lift in dividends received as many companies, particularly the banks, restored dividends toward pre financial crises levels.
"Secondly the portfolio was larger following investment of funds raised in the share purchase plan in December 2009."
Directors said the company made a number of purchases over the six months to 31 December 2010, many of which were through placements. Major purchases during the period were in iSelect, which is currently unlisted, Victoria Petroleum, ANZ Banking Group, Trust Company, Amalgamated Holdings, Eastern Star Gas and Australian Infrastructure Fund. iSelect and Amalgamated Holdings are new to the portfolio.
"The market moves into the second half of the financial year with some renewed confidence in global growth emerging. AMCIL has completed another successful share purchase plan in January 2011 which raised just over $7 million.
"As a result the Company has $8 million of cash to invest, which is approximately 5 percent of the total portfolio. Whilst the recent momentum in the market has been in the resources and related sectors the share price performance of many companies with attractive long term business models have not been as strong.
"In our view, for a thematic investor like AMCIL, this is likely to provide opportunities to invest these funds at attractive valuations as we move into the remainder of the financial year," directors said.
