This article first appeared on GuruFocus .
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Underlying Net Profit After Tax (NPAT):AUD14.8 million, down 43% from AUD26 million in the prior corresponding period.
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Statutory Net Loss After Tax:AUD1.5 million, compared with a profit of AUD58.2 million in FY25.
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Total Underlying Income:AUD25.1 million, down 48%.
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Boutique Income:AUD7.1 million, reflecting portfolio exits.
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Interest Income:AUD16.8 million, now 67% of underlying income.
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Total Overheads:AUD9.4 million, down 41%.
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Corporate Overheads:AUD5.4 million, down 21%.
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Interest Expense:AUD2.6 million, down from AUD6.7 million after debt repayment.
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Underlying Earnings Per Share (EPS):AUD0.502, down 10%.
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Underlying Pre-tax Cash Earnings:AUD14.4 million, representing 91% of underlying profit before tax.
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Total Dividends Declared:AUD0.48 per share, up 12%.
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Fair Value Net Asset Value (NAV) per Share:AUD16.18 at June 30, up 4% from AUD15.51 a year earlier.
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Statutory NAV per Share:AUD13.96 at June 30.
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Funds Under Management:AUD26.4 billion, down from AUD30 billion.
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Cash and Short-term Deposits:AUD157.7 million at year-end, up AUD19.8 million.
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Corporate Net Assets:AUD174.9 million, up from AUD144.3 million.
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Total Liabilities:Down 89% to AUD8.9 million.
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Shares on Issue:Declined 7% to 27.9 million shares.
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Share Buyback:Repurchased over 2.2 million shares at a cost of AUD22.9 million.
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Total Shareholder Return (FY26):10.4%, versus 6.1% for the S&P/ASX 200.
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Total Shareholder Return (5-year annualized):18.4%, versus 7.8% for the S&P/ASX 200.
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Release Date: August 27, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Total shareholder return exceeded the broader market over both the past financial year and the past five years.
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Declared total dividends of AUD0.48 per share, a 12% increase from the prior year, including the first franked dividends since 2023.
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Reduced total overhead expenses by 41% compared to the prior year, with further cost reductions expected in FY27.
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Fair value NAV per share increased to AUD16.18, up 4% year-over-year, and has compounded at over 14% per annum over the past five years.
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Eliminated all financial debt and strengthened the balance sheet, with cash and short-term deposits increasing to AUD157.7 million.
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Continued capital management through an on-market share buyback, reducing shares on issue by 7% during the period.
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Successfully exited non-core holdings (Janus Henderson, Aether) and partially sold Victory Park Capital, generating proceeds for capital returns.
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Interest income now covers corporate overheads more than three times over, providing a strong cash buffer.
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Commenced a strategic review to explore options to further optimize shareholder value, including a potential acquisition of River Capital.
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Underlying pre-tax cash earnings conversion was strong at 91% of underlying profit before tax.
Negative Points
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Underlying net profit after tax declined 43% to AUD14.8 million due to a reshaped earnings base.
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Statutory net loss after tax of AUD1.5 million, driven by non-cash fair value adjustments and absence of prior-year gains on sale.
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Funds under management decreased from AUD30 billion to AUD26.4 billion, partly due to the exit from Aether and a stronger Australian dollar.
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Boutique income fell significantly to AUD7.1 million, reflecting the exits of several portfolio companies.
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The fair value of Victory Park Capital reduced due to slower fundraising and higher discount rates for private credit strategies.
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The company received a non-binding proposal from River Capital at an implied valuation of AUD13 per share, which is below the fair value NAV of AUD16.18 per share.
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The strategic review introduces uncertainty regarding the company's future direction and potential outcomes.
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Interest expense and investment management fees, while rolling off in FY27, contributed to lower earnings in FY26.
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The share price has historically traded below fair value NAV, and liquidity remains low, with daily volumes sometimes near zero.
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The company's portfolio is now heavily weighted towards cash, making it challenging to maintain historical return levels.
Q & A Highlights
Q: Can you provide more detail on the drivers behind the valuation uplift for Roc Partners? A: Ron Patel (Acting CFO) explained that Roc Partners had a positive fundraising outlook, and after revisiting their model in more detail, the outlook for the next five years of cash flows supported an uplift in fair value. Michael Clarke (Managing Director) added that the uplift also reflects the consistent valuation framework now applied across all portfolio investments.
Q: Is there a market for selling the Abacus bonds, or do you plan to hold them until maturity? A: Michael Clarke (Managing Director) stated that the company monitors the market for the bonds regularly, but they would only look to exit prior to maturity if there was a sufficient premium over the AUD25 face value in the period leading up to maturity in 2028. He clarified that the bonds held are not the same as the listed bond many follow.
Q: At the AUD16.18 fair value NAV, the 6.3 million shares proposed as consideration for River Capital implies a valuation of roughly AUD100 million. Would the Board need to believe River is worth substantially more than that to consider the transaction in shareholders' interests? A: Michael Clarke (Managing Director) noted that it is very early days, as the proposal was only received in August. He clarified that the fair value NAV is a moment-in-time valuation without allowance for the cost of running the company. He acknowledged the math but stated no determinations have been made yet, and the Board will work through the analysis with advisors.
Q: Is it fair to say the Board's history of valuing its own assets, as evidenced by capital markets transactions, is pretty good? A: Michael Clarke (Managing Director) agreed, noting that over the last three years, virtually all transactions were undertaken at either close to or above fair value. He emphasized that the valuation approach is designed to be rigorous and supportable, and the company has reviewed the methodology to confirm confidence in its veracity.
Q: With AUD8-9 per share in cash and short-term investments, the AUD13 price implies a huge discount to the quality boutique part of the portfolio. Is that a reasonable characterization? A: Michael Clarke (Managing Director) pushed back on the "huge discount" characterization, noting that as an ongoing concern, one would deduct AUD1-2 per share for the cost of running the company. He highlighted that the shares have historically traded below fair value NAV, and the stock is illiquid, with daily volumes ranging from zero to low tens of thousands of shares.
Q: Given the success of the previous off-market buyback, is that option open to the company again to intensify remaining shareholders' interest in the quality boutiques? A: Michael Clarke (Managing Director) confirmed that the Board will consider all options, including on-market and off-market buybacks, as part of the strategic review. He noted that the previous off-market buyback at AUD12 was a judgment made by the Board based on advisor input, and that fair value NAV at that time was well below current levels.
Q: Would any shares acquired by River Capital principals through the book build be subject to escrow, or would that only apply to the consideration shares? A: Michael Clarke (Managing Director) stated it is very early days, but his understanding is that any increase in stakes would likely be subject to escrow. He confirmed the company will update the market under continuous disclosure requirements as they work through the proposal.
Q: Would there be a maximum percentage that River Capital principals and their associates would be committed to acquire through the book build? A: Michael Clarke (Managing Director) noted that all parties would be bound by rules around majority shareholder issues and takeover provisions. He acknowledged it is a very complicated transaction involving movements of shares through time, and both PAC and River Capital would need to be extremely mindful of regulatory requirements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
