Clime Capital Limited reported a 29% drop in net profit for FY25 but maintained its quarterly dividends and rolled over convertible notes with enhanced terms. The company is pivoting towards a debt-focused portfolio to boost income stability.
- Net profit after tax declined 29% to $3.06 million
- Revenue fell 18% to $7.43 million amid lower dividends and higher unrealised losses
- Quarterly dividends held steady at 1.35 cents per share, 50% franked
- Convertible notes rolled over with coupon increase to 6.5% and extended maturity to 2028
- Strategic shift towards high-yield debt portfolio replacing direct property investments
Financial Performance Overview
Clime Capital Limited (ASX, CAM) disclosed its audited results for the year ended 30 June 2025, revealing a net profit after tax of $3.06 million, down 29% from $4.33 million in the prior year. Revenue from ordinary activities also declined 18% to $7.43 million, primarily due to reduced dividends and distributions alongside increased unrealised losses on investments.
Despite these headwinds, the company maintained its dividend policy, declaring fully franked quarterly dividends of 1.35 cents per share, amounting to 5.4 cents annually. This steady dividend reflects the Board’s commitment to delivering consistent income to shareholders amid market volatility.
Strategic Portfolio Transformation
The Chairman, John Abernethy, highlighted significant portfolio changes during FY25. Notably, Clime Capital is transitioning from a direct property portfolio to a debt portfolio composed of first mortgage securities targeting a predictable yield of approximately 9% per annum. This move aims to enhance income stability and introduce “portable alpha”, a strategy to separate market returns from excess returns, thereby improving risk-adjusted performance.
The company also emphasized a renewed focus on value-based equity investments, leveraging enhanced investment management expertise under newly appointed Chief Investment Officer Leo Economides. This strategic pivot is designed to generate higher and more consistent returns while managing risk prudently.
Capital Management and Convertible Notes
Clime Capital successfully completed a $4.3 million share purchase plan during the year and continued its on-market buyback program, repurchasing 2.8 million ordinary shares and 697,000 convertible notes at discounts to net tangible asset backing. These actions reflect an active approach to capital management aimed at enhancing shareholder value.
In a notable development post-year-end, noteholders approved amendments to the company’s convertible notes (ASX, CAMG), increasing the coupon rate from 5.25% to 6.5% per annum, shifting interest payments from quarterly to monthly, and extending maturity to November 2028. The Board also approved a prospectus to issue up to 14 million new convertible notes on these improved terms, signaling confidence in the company’s funding strategy.
Balance Sheet and Net Tangible Assets
Net tangible assets per share declined slightly to $0.77 pre-tax from $0.81 in the prior year, reflecting the impact of lower investment income and portfolio adjustments. After-tax NTA remained steady at $0.81. The company’s balance sheet remains robust, supported by diversified investments in listed equities and unlisted unit trusts valued at $131.8 million.
Governance and Remuneration
The Board comprises experienced directors including Chairman John Abernethy and independent directors Diana D’Ambra AM and Marc Schwartz. Remuneration disclosures indicate stable director fees and no material changes in key management personnel. The auditor, Pitcher Partners Sydney, issued an unqualified opinion on the financial statements, affirming the integrity of the reporting.
Looking ahead, Clime Capital’s strategy to blend income-generating equities with secured credit investments positions it uniquely among listed investment companies, targeting steady dividend growth with moderated risk exposure.
Bottom Line?
Clime Capital’s FY25 results underscore a challenging market backdrop but reveal a strategic recalibration that could enhance income resilience and shareholder returns in the years ahead.
Questions in the middle?
- How will the shift to a debt-focused portfolio impact Clime Capital’s risk profile and return consistency?
- What are the market’s expectations for the new convertible notes issuance and its effect on capital structure?
- Can the company sustain dividend growth amid ongoing market volatility and lower equity yields?