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FUTURE GENERATION AUSTRALIA LIMITED — Capital/Financing Update 2021
Sep 2, 2021
64916_rns_2021-09-02_7def586f-bb73-44cb-b6fa-5bcefeb432c6.pdf
Capital/Financing Update
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ASX announcement & media release
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3 September 2021
Future Generation Australia announces Bonus Issue of Options to all shareholders
The Future Generation Australia Investment Company Limited (ASX: FGX) Board of Directors today announces a onefor-one Bonus Option Issue to all shareholders of the Company, at no additional cost.
Each Future Generation Australia Option provides holders with the right, but not the obligation, to purchase one additional Future Generation Australia share for $1.48 per Option, without paying brokerage fees. The Options can be exercised anytime, up until 28 April 2023. Shares issued on Options exercised on or before 17 November 2021 and held at the dividend record date of 22 November 2021 will receive the fully franked interim dividend of 3.0 cents per share, which represents an annualised fully franked dividend yield of 4.1% and a grossed-up dividend yield of 5.8%[^] on the exercise price of $1.48 per Option.
Chair Jonathan Trollip said: “As we approach the seventh anniversary of Future Generation Australia’s listing on the Australian Securities Exchange, I am pleased that we have delivered shareholders diversified Australian equity exposure, solid investment portfolio performance and increased fully franked dividends since inception. I am excited by the opportunity to significantly grow the Company’s assets to the benefit of all Shareholders and to enhance the Company’s ability to support young Australians at risk.”
The primary purpose of the Bonus Option Issue is to equitably and efficiently grow the Company’s assets, increase its relevance in the market, improve the prospect of broker and research coverage, and gain additional interest from financial planners. As the size of the Company’s assets increase, so does the Company’s social investment and impact. The Company continues to monitor outcomes and work closely with our charity partners to deliver on its social impact objectives.
The Future Generation Australia investment portfolio increased 12.8%[] in the six months to 30 June 2021, outperforming the S&P/ASX All Ordinaries Accumulation Index. The S&P/ASX All Ordinaries Accumulation Index increased 12.6% for the period. Since inception, the investment portfolio has increased 10.8%[] per annum, outperforming the S&P/ASX All Ordinaries Accumulation Index by 2.0% per annum. The investment portfolio’s outperformance has been achieved with less volatility as measured by standard deviation, 11.5% versus the Index’s 14.4%. The investment portfolio has been structured to provide diversification between three broad equity strategies: long equities, absolute bias and market neutral, with the remainder held in cash. As at 30 June 2021, the portfolio was 46.6% long equities, 39.8% absolute bias, 6.8% market neutral and 6.8% cash. The investment portfolio is made up of 18 fund managers with investments in 22 unlisted unit trusts.
The Options will trade on the ASX under the code FGXOA from Tuesday 5 October 2021. Future Generation Australia's share registry, Boardroom Pty Limited, will email Option Exercise Forms on Tuesday 5 October 2021, to eligible shareholders who have elected to receive communication via email to their email addresses on the share register, this email will be sent from [email protected] . Printed copies will be mailed only to those shareholders who elected to receive communication via mail. If you would like to change your communication preferences, please contact Boardroom directly on 1300 737 760 or [email protected] . Future Generation Australia will trade ex-bonus Option entitlement on Thursday 30 September 2021.
The record date to determine entitlements under the Bonus Option Issue is Friday 1 October 2021.
We have attached a factsheet that explains how options work. Please call Company Secretary Jesse Hamilton or Martyn McCathie on (02) 9247 9202 or email [email protected] with any questions about the Bonus Option Issue.
^Grossed-up dividend yield includes the benefits of franking credits and is based on a tax rate of 30.0%.
- futuregeninvest.com.au
ASX announcement & media release
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*Investment portfolio performance is before expenses, fees and taxes to compare to the relevant index which is also before expenses, fees and taxes. ^Based on the 2 September 2021 share price of $1.435 per share.
Dividend coverage is based on the profits reserve of 27.1 cents per share as at 30 June 2021, before the fully franked interim dividend of 3.0 cents per share and before the exercise of any Options issued by the Company.
Indicative timetable
| Indicative timetable | |
|---|---|
| Lodgement of Prospectus and Electronic prospectus available to Shareholders Shares trade ex-bonus Option entitlement Options commence trading on a deferred settlement basis Record date to determine entitlements under the Issue Intended date for issue and entry of Options on the register Despatch of Option Exercise Form Trading in Options commences on ASX Options expire |
|
| Friday 3 September 2021 | |
| Thursday 30 September 2021 | |
| Thursday 30 September 2021 | |
| Friday 1 October 2021 | |
| Monday 4 October 2021 | |
| Tuesday 5 October 2021 | |
| Tuesday 5 October 2021 | |
| Friday 28 April 2023 | |
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- futuregeninvest.com.au
ASX announcement & media release
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Increasing fully franked dividends since inception (cents per share)
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6.0
5.0
4.0
3.0
2.0 4.0 4.1 4.4 4.6 5.0 5.2 6.0
1.0
0.0
2015 2016 2017 2018 2019 2020 2021
Fully franked dividends
Annualised interim dividend
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Dividend dates
| Dividend dates | |
|---|---|
| Ex-dividend date | 19 November 2021 |
| Record date | 22 November 2021 |
| Last election date for DRP | 24 November 2021 |
| Payment date | 26 November 2021 |
Investment portfolio performance
| Since | ||||||
|---|---|---|---|---|---|---|
| Performance at 30 June 2021 | 6 mths |
1 yr |
3 yrs %pa |
5 yrs **%pa ** |
inception % pa (Sept-14) |
Volatility |
| Future Generation Australia | 12.8% | 33.6% | 10.7% | 11.6% | 10.8% | 11.5% |
| S&P/ASX All Ordinaries Accumulation Index | 12.6% | 30.2% | 10.3% | 11.5% | 8.8% | 14.4% |
| Outperformance | +0.2% | +3.4% | +0.4% | +0.1% | +2.0% |
Investment portfolio performance is before expenses, fees and taxes to compare to the relevant index which is also before expenses, fees and taxes. Volatility is measured by standard deviation and is used as a measure of risk.
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- futuregeninvest.com.au
A S X A N N O U N C E M E N T & M E D I A R E L E A S E
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All major platforms provide access to Future Generation Australia, including AMP North, BT Panorama, Colonial First State Wrap, Netwealth, Macquarie Wrap and Hub 24. Future Generation Australia receives coverage from the following independent research providers:
Future Generation Australia 7 Years Listed
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This announcement has been authorised by the Board of Future Generation Investment Company Limited.
About Future Generation Australia
Listed in 2014, Future Generation Investment Company Limited (ASX: FGX) provides:
Shareholders with exposure to leading Australian fund managers without paying management or performance fees.
Charities primarily focused on young Australians at risk with a stream of annual investments.
Fund Managers with a unique opportunity to make a positive difference to Australia’s future generations.
For more information visit www.futuregeninvest.com.au or contact:
Johnathan Trollip Chair T. (02) 9247 9202
Geoff Wilson AO Founder and Director T. (02) 9247 9202
Kate Thorley Acting Chief Executive Officer and Director T. (02) 9247 9202 M. 0405 115 644
James McNamara Head of Corporate Affairs T. (02) 9247 9202 M. 0416 734 080
ABN: 97 063 935 553
LIC options explained
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Many listed investment companies (LICs) issue bonus options to shareholders giving optionholders various benefits, including the opportunity to buy shares at a discount. This fact sheet explains the key features and benefits of LIC options.
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Overview
Key terms
Bonus option issue
Options give the optionholder the right, but not the obligation, to buy shares in the LIC at a fixed price until they expire. If the share price increases above the option exercise price optionholders have the opportunity to acquire new shares at a discount.
The issue of free options to shareholders by a company. A company may issue bonus options when it lists on the ASX (initial public offering) or once it is trading.
Optionholders have two main choices before their options expire:
1 2 Exercise some or Sell some or all all options for the options for a profit.
If optionholders take no action, their options will simply expire.
Exercise some or all options for the exercise price and be issued new shares in the LIC.
Exercise price
The price shares can be purchased when an option is exercised. Sometimes called the strike price.
Expiry date
Buy shares at a discount
The last day to exercise options.
E X A M P L E :
If shares are trading on the ASX above the option exercise price:
Optionholders can exercise their options and be issued new shares in the company at a discount to the current market price.
Receive shares for 20 cents less than their current price
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$1.20
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$1.00
Share price Exercise price
If shares are trading on the ASX below the option exercise price:
Optionholders can choose not to exercise their options and instead buy additional shares on market at less than the exercise price.
Share price is below exercise price - do not exercise
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$1.00
$0.90
Share price Exercise price
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In the money
A phrase used when the share price of the underlying shares is higher than the exercise price of the option.
Option price
The price options are trading at on the ASX.
Underlying shares
The company shares or securities over which the options are issued. Options can be exercised to receive additional underlying shares.
Benefits
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Acquire shares at a discount
Until the time the options expire, optionholders can exercise options to receive shares in the company for a fixed price (the exercise price). If the exercise price is lower than the current price of the underlying shares, optionholders acquire shares at a discount.
Receive dividends
If optionholders exercise their options before the record date for dividends, they are entitled to receive any announced dividends for each option exercised. This assumes the shares received from the exercise of options are held on the dividend record date.
Grow assets
As the Company’s size increases, on-market liquidity for the Shares is also expected to increase, making it easier for Shareholders to buy and sell the Company's Shares. By increasing the size of the Company, this will increase the Company’s relevance in the market, improve the prospect of broker and research coverage and increase interest from financial planners.
Sell options for a gain
As options trade on the ASX, optionholders can sell their options for a profit. Options are issued at no cost to the option holder.
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No brokerage
Unlike buying shares trading on the ASX, exercising options allows optionholders to acquire new shares without paying brokerage.
Flexibility
Optionholders have maximum flexibility and can exercise, sell or hold their options in any combination until they expire.
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If you would like further information about LIC options, please contact us:
(02) 9247 9202 | [email protected] futuregeninvest.com.au
Disclaimer: The information provided in this document is general only. It does not take into account the investment objectives, financial situation or particular needs of any person and may not be appropriate for your requirements. We strongly suggest that investors consult a financial adviser prior to making any investment decision.