Wam Leaders (WLE) H2 2024 earnings summary

Executive summary

• Portfolio returned 2.8% for FY2024, underperforming the S&P/ASX 200 Accumulation Index, mainly due to defensive positioning and select detractors.

• Since inception in May 2016, annualized portfolio performance is 12.5%, outperforming the index by 3.6% per annum.

• Fully franked full year dividend for FY2024 increased to 9.2 cents per share, with a 7.2% yield based on recent share price.

• Profits reserve at 30 June 2024 stands at 29.5 cents per share, covering 3.2 years of dividends.

• Merger with QV Equities Limited was completed, accretive to NTA and franking account, adding over 3,000 shareholders.

Financial highlights

• Pre-tax NTA per share at 30 June 2024 was $1.34; at 31 July 2024, $1.37 per share.

• Operating profit before tax was $20.2 million; after tax, $22.3 million for FY2024.

• Total dividends paid since inception reached 48.75 cents per share.

• Grossed-up dividend yield stands at 10.3%.

• Dividend Reinvestment Plan (DRP) remains active, with the final dividend of 4.6 cps eligible.

Outlook and guidance

• Anticipates a shift from interest rate hikes to cuts, with market pricing in a soft landing, though risks of a hard landing remain.

• Australia faces moderate recession pressures, with mixed economic indicators.

• US Federal Reserve implied rates expected to decline from 5.33% in July 2024 to below 3% by July 2025.

• Management expects portfolio performance to improve, driven by turnarounds in key holdings and moderation in overvalued sectors.

• Dividend guidance remains consistent, with a focus on maintaining a high fully franked yield.