17-Feb-2021: Interim Results Update, Dividend and Bonus Options Issue plus Appendix 4D and 2021 Half Year Results
Also: 16-Feb-2021: Weekly NTA 12 February 2021
Interim Results Update, Interim Dividend and Bonus Options Issue
- Strong investment performance: 14.8% portfolio return for the half
- Commencement of fully franked dividends: Interim dividend of 2.0 cps fully franked
- Attractive dividend reinvestment terms: 3% DRP issue price discount
- Bonus options issue: 1 for 3 bonus options exercisable at $1.50 per option by 31 August 2022
Half Year Results
WCM Global Growth Limited (WQG or the Company) today announced an outstanding result with net operating profit after tax for the half-year ended 31 December 2020 of $27.21 million.
The strong profit result reflects continued investment outperformance of the Company’s Portfolio Manager, WCM Investment Management LLC (WCM). The portfolio has delivered a return of 14.8% over the reporting period, outperforming its benchmark the MSCI All-Country World ex-Australia Index by 3.5%.
For the half-year ended 31 December 2020, the pre-tax net tangible asset value per share of the Company has increased from $1.45 as at 30 June 2020 to $1.65, after payment of a 2.0 cents per share dividend (50% franked) on 30 September 2020.
Fully Franked Interim Dividend of 2.0 cps
The Board is delighted with the progress made in relation to the Company’s dividend policy. Dividends were commenced in August 2019 and in September 2020 WQG commenced partial franking of dividends, together with the implementation of a Dividend Reinvestment Plan (DRP).
The Company has further enhanced its dividend policy and is pleased to announce the commencement of fully franked dividends, where possible, with the declaration of an interim dividend of 2.0 cents per share which will be 100% franked. The interim dividend will be paid on 31 March 2021, with a Record Date of 19 March 2021.
It is expected that any FY2021 final dividend will also be fully franked.
Bonus Options Issue
The Company is pleased to advise that the Board has resolved to issue bonus loyalty options (Options). These Options will be issued on a one (1) for three (3) basis and allow holders to subscribe for new shares in the Company at a fixed exercise price of $1.50 per share. The exercise period will run until 31 August 2022 and the Options are expected to list on the ASX under the code “WQGOA”.
The issue of the Options as a bonus, at no cost to shareholders, rewards the loyalty and ongoing support of the Company’s existing shareholders.
Shareholders should note that new shares issued pursuant to the DRP for the interim dividend will be eligible to receive the 1 for 3 bonus Options issue.
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--- click on the links at the top for more, including all of the Key Dates for the dividend and the options ---
I note that the NTA of WQG as at 12-Feb-2021 (5 days ago) was $1.75, so issuing options at $1.50 is an interesting move and will obviously cause significant dillution unless the share price drops below $1.50 and very few options are exercised. WQG closed at $1.59 this afternoon.
On the plus side, at least it's only a 1 for 3 issue of options, rather than the 1 for 1 issue that WAM Global (WGB) have proposed. I'm a big fan of WCM (in Laguna Beach, California) who are the investment managers of this fund, but not so much Contango (ASX:CGA) who manage the marketing and shareholder relations aspects of the fund here in Australia. I know a lot of shareholders like free options, but I don't like to see them issued when they mainly serve to increase the FUM and therefore the fees generated for the managers, while dilluting the NTA or NAV. Good for those who exercise them at a discount to the prevailing share price, but not good for those who choose not to. One possible outcome is that these options could act like an anchor through until their expiry in August 2022 because WQG shareholders can and will sell existing shares on-market to cover the cost of exercising their options at $1.50, as long as the prevailing price is north of $1.50. The higher the WQG share price tries to go, the more likely people will sell shares to fund their options conversion. Which is likely to put a ceiling of sorts on the SP.
[I hold WQG shares.]