Amcil (AMH), the small Melbourne-based listed investment company (LIC) reported a sharp rise in interim profit because of greater trading activity in the six months in the options market, but the company says it close to ‘fully invested’ meaning it is looking for the market to recover ground in coming months.
“The Company is close to fully invested and Directors believe the recent fall in the market has driven valuations back toward more attractive buying levels,” directors said yesterday.
At the same time, the company has started a share purchase plan priced at a 2.5% discount to the market. It is due to close on February 25.
“In a portfolio that has an investment approach that can scan for the best opportunities in the market, irrespective of company size, it is important to have the flexibility to take advantage of market conditions and other opportunities such as IPO’s,” director said.
The company says it is looking to raise between $7 million to $10 million from the share purchase scheme. In its December half report yesterday, Amcil said it expects "markets to remain volatile in light of uncertainty about growth prospects in China, higher interest rates in the US and from a domestic perspective an economy looking for renewed growth."
Profit for the half-year was $5.1 million, up 79.9% from $2.8 million the previous corresponding period.
"This was primarily due to the increased use of the trading and options written portfolios, which together recorded gains before tax of $3.2 million ($41,000 in the previous corresponding period),” directors said.
Revenue from investments was $3.64 million, up 1.1% from $3.60 million in the previous corresponding period. This excludes capital gains on investments.
Net tangible asset backing per share before any provision for tax on unrealised gains at 31 December 2015 was 93 cents per share, up from 87 cents at the end of the previous corresponding period.
A final dividend of 4 cents per share (fully franked) in respect of the financial year ended 30 June 2015 was paid on 25 August 2015. The company does not pay a an interim dividend. Amcil said its investment portfolio’s returns have benefited from repositioning some exposure towards mid and smaller companies.
"In this context, the best performing stocks over the half year were in companies such as Treasury Wine Estates, iProperty Group, Tassal Group, Citadel Group, AMA Group and Japara Healthcare. Of the larger companies in the portfolio CSL and Brambles also delivered strong returns to the portfolio.” Amcil added some new companies to its portfolio in the half year. These included Mainfreight, OzForex Group (prior to the current takeover offer), Wellcom Group, Woodside Petroleum, Vocus Communications, Ardent Leisure, Seek and Paragon Care.
The purchase of Woodside Petroleum was as a result of the rebalancing of exposure to the energy sector with the complete sale of the holding in Santos and a reduced exposure to Oil Search. The other major increase was adding to the existing holding in Healthscope, given the ongoing attractiveness of the healthcare sector as a long term investment proposition.
To accommodate these changes, Amcil lowered its exposure to the banking sector, including a reduction in Westpac and Commonwealth Bank positions. Other sales included large cap holdings AMP and Computershare, as well as Brickworks, Asciano (partial sale in response to the takeover offer) and Vicinity Centres. Energy Developments was also taken over by DUET Group through the period.
