Portfolio returned 15.1%, beat benchmark by 1.6pp as NAV rose 9.3%

That capital return drove net assets attributable up 9.3% to $8.3b, above the historical baseline mean of $7.4b and outside the prior three-year range.

The income side weakened. Investment income (revenue return) declined 1.2% to $326.1m, PBT fell 3.6% to $318.9m, and NPAT fell 4.3% to $296.4m. The expense ratio held at 0.15%, and the $10.0m bank facility was unchanged against $166.5m of cash on hand.

Beating the benchmark by 1.6pp after lagging by 2.7pp last year is the clearest economic positive for an LIC, where stock-selection skill ultimately drives long-term shareholder return. The $940.3m investment total return is well above the historical mean of $663.3m, even though it sits within the historical range.

Income return softened while capital return strengthened. A 1.2% decline in investment income, combined with the effective tax rate rising to 7.1% (vs 6.2% prior, above the historical baseline mean of 5.0%), produced the faster 4.3% NPAT decline. This matters because LIC distributions are paid from accounting profit and franking credits, not unrealised gains, so weaker portfolio dividend income tightens the link between earnings and distributions.

Distributions ran ahead of NPAT. The payout ratio against NPAT rose to 102.9% from 74.4% prior, with the Board electing to source 4.5cps of the final dividend from realised capital gains. That is workable while franking reserves and realised gains support it, but the underlying recurring revenue stream no longer fully covers the announced distribution.

The HY24 release showed profit after tax of $150.0m, down 8.3% on prior corresponding period, and HY24 represented 51.7% of full-year investment income — so the second half did not recover lost ground on the income line. The result therefore confirms FY24 ended with capital return doing the heavy lifting and income return weakening, but does not support a directional view on FY25 either way.

The $940.3m total return is $277.0m above the historical mean, while investment income at $326.1m is only $17.5m above its own historical mean. Net asset growth is durable to the extent equity markets hold; it is not the same quality as growing dividend income from the underlying portfolio.

The tax line compounded the income softness: at 7.1%, the effective rate is outside the prior three-year range of 3.6%–6.2%, which is why NPAT fell faster than PBT (a 0.7pp gap). Operating cash inflow of $289.3m was down 8.9%; for an investment company this primarily reflects dividend receipts from portfolio holdings rather than working-capital movements, and broadly tracks the softer investment income line. ROE of 3.6% sits at the lower edge of the historical range (mean 4.1%), driven by NAV growing faster than recurring earnings.

This briefing cannot assess the sustainability of portfolio outperformance, the trajectory of franking credit balances, or the specific holdings driving the FY24 capital return.