WAM Capital has reported a significant drop in operating profit before tax (96.4 per cent) to $6m and an 88.4 per cent drop in net profit after tax to $14.5m.
WAM chair, Geoff Wilson, explained that the 2019 financial year was a dynamic year for equity markets, as the global economy began to falter in the December quarter.
This was followed by an announcement by the Federal Reserve in January to pause its interest rate increases and signalled the end of the quantitative tightening.
“This, coupled with aggressive Chinese stimulus, drove equity markets to new heights as interest rates fell and the global economy weakened,” Wilson said in the statement issued to the Australian Securities Exchange (ASX).
“Large-cap companies drove the US market’s gains. The S&P 500 index climbed 10.4 per cent during the year in local terms. In contrast, the small-cap focused Russell 2000 index fell by 3.4 per cent in local terms.
“The divergence of large-cap and small—cap returns globally was mirrored in Australia,” he said.
For the 12-month period, the WAM Capital investment portfolio increased two per cent, climbing 5.4 per cent in the final quarter and rebounding 12.4 per cent in the six months to 30 June, 2019.
The board of directors declared a fully franked final dividend of 7.75 cents per share which brought the final dividend for the 2019 fully franked dividend to 15.5 cents per share.
“Despite our circumspect outlook, we continue to identify and act on opportunities in the market and are confident that the WAM Capital portfolio is comprised of companies with valuation upside and compelling fundamentals.”