Hi Adrian, Trust all is going well
We have been working hard on getting files up to date and hope to have draft returns available soon.
It is our aim to be providing management style accounts during the year so that as trustees, you can be much more pro active with a goal of increasing investment return.
As I am drafting this, Craig is making some notes to incorporate into this Nesletter
A few years ago I attended with a group of fellow accountants specializing in Super, a private session with the ATO head of superannuation compliance. She flagged that both ATO and ASIC will enhance compliance. We are now seeing this with several auditors being sanctioned, even de-registered.
Simply put they are requiring trustees to adhere to regulations including comparing to Investment Strategies.
We will be taking the lead here for our clients with reports, minutes, resolutions etc. to better demonstrate that our clients in their capacities of trustees are managing their super funds in a proper manner.
More on this later.
For the past two years you have "topped up" your contributions in June. If you intend repeating this strategy you can contribute earlier than June, the effect of which is being to benefit from the lower tax rate applying to super.
No doubt you will be aware of the governments intention to tax unrealized gains. Presently this will not affect you, however we are watching this closely and when you are fortunate enough to join the $3mill. cohort we will advise you of implications and alternatives.
I do fear this is the thin end of the wedge. No doubt the principle will be applied more widely.
I can state this with confidence because Treasury have canvassed the concept over the years, especially applyng to Family Trusts which the ATO, ASIC and Treasury despise.
FY25 – A good year
MHi Adrian,
I write to provide a portfolio update
+Income is an important part of investment returns – ASX Bank hybrids pay quarterly distributions – shares half yearly
Banks have rounded out a good dividend period although ANZ, MQG and NAB hit accounts in early FY26.
Stand out performers included COL, MQG, ORG, QAN and WES
The RBA cut the cash rate twice in FY25 with the cash rate falling from 4.35% to 3.85%
There is an expectation that there will be more rate cuts in FY26 perhaps as early as the August meeting after the RBA held rates steady at the July meeting. The RBA is ‘data driven’ and appears to be waiting for more data before cutting rates. We welcome the prudent approach by the RBA.
We are stock pickers.
Your concentrated portfolio of around 30 securities is diversified across stocks and sectors
Diversification is part of our risk mitigation strategy
We expect periods of volatility – Trump Tariffs, Geopolitical events & interest rate expectations
ASX Bank Hybrids are an important allocation and reduce overall portfolio volatility
STO is the second largest energy company listed on the ASX – Woodside Energy – WDS is the largest.
STO is a core holding in your portfolio – it is a large holding as STO took over OSH and you received STO shares as consideration
Now STO is a potential takeover target.
STO is the second largest energy company listed on the ASX – Woodside Energy – WDS is the largest.
STO is a core holding in your portfolio – it is a large holding as STO took over OSH and you received STO shares as overcome including the Foreign Investment Review Board or FIRB.
Should the deal complete there is the potential of a 14% return.
Regardless of the takeover, we are of the view that STO is a BUY.
It has high quality assets from STO and integrating the OSH assets.
STO is on the verge of generating strong free cash flow & potentially higher dividends
It would be a shame for STO to be taken over on the cheap but the indicative bid puts STO in play & I rate it a BUY.
Recall – Origin ORG received takeover bids from Private Equity
We recommended to reject the bid – ORG is trading some 20% higher than the bid & is paying attractive dividends –
There is news about UK based Octopus Energy and a potential demerger of Kracken that could unlock value for ORG shareholders – more details later
Should the STO go binding we are likely to reject as around $8.90 for complete control is not sufficient for long term investors
Every deal is different and we weigh them up on their merits. IFL bid from CC Capital just went binding – CCC have bid $4.80 cash – sit tight – no action at this stage
• Bank dividends have been paid.
• Company Reporting season commences in August – dividends announced – payable in September & October.
• ASX Bank Hybrids next distributions in September
• The cash rate has peaked – rates to continue falling in FY26.
• The IPO window [new floats on ASX] has finally opened with the successful re listing of Virgin Airlines
• We expect M&A or takeovers to be an ongoing thematic – will monitor & weigh up the merits of each deal like we are currently doing with IFL & STO and AIO, ORG & SYD in previous periods
Large cap or Blue Chip shares have outperformed smaller companies in recent years
Small Cap companies tend to do well in a falling interest rate environment
Economists are predicting a further 0.5% to 0.75% of cash rate cuts in FY26 – the cash rate to potentially reach 3.1%.
Praemium PPS – a financial services technology company remains a top pick – PPS is on track to generate in excess of $100 million of revenue, is profitable and has recently become a dividend payer. PPS remains a high conviction buy – PPS recently provided a quarterly update and are in the process of on boarding new accounts from brokers Bell Potter, Euroz Hartley and Morgans.
Impedimed IPD- flagged significant sales growth with their last quarterly update – Craig recently met with CEO and senior management –IPD released to the ASX that they have won an account with Legacy Health and have pre announced US sales of 44 SOZO units for the quarter - we look forward to more details at the next quarterly update in late July. Starting to see some buying return to IPD – retain high conviction long term Buy call and recommend adding to holding.
You deployed around $275k in to ASX securities for the fiscal year.We thank you for backing our recommendations – some of the highlights from your purchase prices include STO, QAN, IFL [assuming you get $4.80 cash takeover price], IPD, ORG and PPS.Off Market Transfers were completed to the new Marine Pearl Account
FY25 was a good year for your portfolio.
Gains have been extended into July.
Next up we have Company Reporting Season in August ahead of dividend payment period September/October with September quarter
Hybrid distributions pending also In the meantime there are the ‘event driven’ stocks like IFL/STO with a binding and non binding offers on the table & IPD where we may get more news flow as early as July 31 with its quarterly update.
The cash rate has peaked – we expect more rate cuts this cycle.