Future Generation Investment Company Ltd (ASX: FGX) announced its full year result to 31 December 2019.
It's a philanthropic listed investment company (LIC) which donates 1% of its net assets to youth charities each year.
Future Generation Australia's FY19 result
The LIC reported an operating profit before tax of $25.5 million and an operating profit after tax of $22.4 million in FY19.
LICs generate investment returns, so the return in percentage terms could be more helpful in understanding the result. Future Generation reported that its investment portfolio increased by 20.7% in the 12 months to 31 December 2019 with an average cash level of 9.9%. This compared to the 24.1% return from the S&P/ASX All Ordinaries Accumulation Index.
Since inception, the investment portfolio has increased 9.5% per annum, outperforming the index by 1.3% per annum.
The fund managers, who work for free for Future Generation Australia, delivered shareholders $6.6 million in savings during 2019 through forgone management and performance fees. The value of the leading service providers, as well as the Board and Investment Committee who work for free, totalled $0.9 million. These savings exceeded the $4.6 million annual donation.
It's on track to deliver a donation of $5.2 million in 2020, which would bring the total to over $21.8 million since inception.
Future Generation dividend
The Board of Future Generation increased its final dividend by 13% to 2.6 cents per share. That brings the full year dividend per share to 5 cents, an increase of 8.7% on last year.
Future Generation Australia had a profit reserve of 8.7 cents per share at the end of the year.
What is the yield and discount to the net tangible assets (NTA)?
Using the annual dividend of 5 cents per share for the yield calculation, it has a grossed-up dividend yield of 6.6%. The rolling half-year dividend may now by 2.6 cents per share, which would be a grossed-up yield of 6.9%.
The LIC releases its NTA every month to the market. Within January's update it was revealed that Future Generation was trading at a 12.2% discount to the share price on 13 February 2020. Since then the ASX share market has dropped 10% and Future Generation's share price has fallen 6.5%, so the NTA discount is still likely to be close to 10% or at least in the high single digits.
