In a statement on the Australian Securities Exchange (ASX), WAM said its net profit attributable to members was $44.2 million for the year to 30 June 2013, up from $4.3 million in the prior period.
WAM said the increase reflects the change in value of its investment portfolio due to capital management initiatives, which include the Premium merger.
“The company has achieved significant growth this year, increasing shareholders equity by 191.1 per cent through capital management initiatives including the options issue, the successful merger with Premium Investors Limited and an oversubscribed placement,” WAM chief executive Kate Thorley stated.
“WAM Capital’s increased size reduces the company’s fixed administration costs and significantly increases liquidity. WAM Capital is now the eighth largest listed investment company (LIC) in Australia.”
The merger increased WAM’s assets by 28 per cent, or $64.9 million, and WAM has said it will lead to a reduction in the fixed administration expense ratio of the group.
The company also benefited from an options issue, which raised $245 million with 95 per cent of all options exercised and the remainder expired.
As a result of the growth, WAM will pay a fully franked final dividend of 6.0 cents per share, which is an increase of 9.1 per cent on the previous corresponding period and will bring the total dividend for the year up to 12.0 cents per share.
WAM chairman Geoff Wilson told InvestorDaily the improved market performance had the greater influence on the improved results, with the merger only coming into effect in the last six months of the financial year.
The portfolio overall was up 22.7 per cent over the period but was around 36 per cent invested in cash, so the 64 per cent that was in equities returned significantly more than 22.7 per cent, according to Mr Wilson.
“It has been a significant year for the company. Not only were we able to raise some money, but we delivered good returns for our shareholders with that increased capital base,” he said.
Mr Wilson said he looked forward to greater economic activity next year with improved economic uncertainty following the election and a likely stimulatory impact from further reduced interest rates. He also expected an increase in the number of LICs becoming listed on the Australian market.
The group also reiterated its belief that recent regulatory changes would benefit the LIC business model by levelling the playing field.
