CVC’s No-Dividend Strategy Highlights Risks in Property Development Cycle

Financial Turnaround and Income Growth

CVC Limited has reported a net profit after tax attributable to shareholders of $0.5 million for the year ended 30 June 2025, a notable turnaround from a $2.5 million loss in the previous year. This improvement was underpinned by a 70.3% increase in total income to $40.2 million, primarily driven by settlements of residential and industrial land sales across its portfolio.

The company’s underlying net profit after tax rose to $1.2 million, reflecting operational progress despite the transactional nature of its property investments. Earnings per share improved to 0.5 cents, while net assets per share remained steady at $1.49. However, the Board highlighted that independent market valuations suggest the true net asset value could be closer to $2.95 per share, indicating significant unrealised value in the property portfolio.

Capital Management and Debt Strategy

CVC’s business model focuses on acquiring and optimising large-scale land holdings, many of which are in early stages prioritising capital appreciation over immediate income. To support this, the company has maintained a conservative capital management strategy, emphasizing liquidity and prudent use of debt.

During FY25, CVC successfully raised approximately $15 million through the issuance of 150,000 new loan notes, which trade on the ASX under the code CVCHA. The company also deployed $25 million into industrial projects in Victoria, $4.3 million toward the Liverpool project in New South Wales, and $1.5 million into the Norwell Valley project. The Board believes this cautious approach positions CVC well to meet upcoming capital commitments and pursue strategic acquisitions.

Progress on Key Property Projects

Significant milestones were achieved on several fronts. Rezoning approval was secured for the Officer South Project in Victoria, designating 23 hectares for industrial use and enabling development permits to progress. The Victorian Government’s initiation of the Derrimut Fields Precinct Structure Plan further supports CVC’s 80-hectare land parcel, with settlement expected in 2028.

In New South Wales, Marsden Park North was identified for state-led rezoning under the State Significant Rezoning Policy, with CVC optimistic about the process. The Moore Point Precinct in Liverpool also advanced, with planning proposals recognized as State Significant and targeting over 5,000 apartments. These developments, alongside approvals for the Donnybrook industrial project, underscore CVC’s growing industrial land exposure.

Non-Property Investments and Risk Considerations

Non-property investments continue to shrink as a proportion of the business, valued at $28.2 million and generating a pre-tax loss of $3.1 million. The company is actively reducing exposure in this segment to focus on core property assets.

CVC acknowledges several risks inherent in its business, including property market fluctuations, project approval uncertainties, development delays, and liquidity constraints. The Board emphasizes capital protection and rigorous risk management to safeguard shareholder value.

Outlook and Market Positioning

Looking ahead to FY26, CVC anticipates a pivotal year with multiple planning approvals expected and potential profits from both planned and opportunistic divestments as assets mature. The company continues to simplify its business model and portfolio, aiming to enhance long-term shareholder returns.

Despite the positive momentum, no dividend guidance was provided due to the transactional nature of operations and ongoing capital commitments. Post-year-end, CVC is actively refinancing key loans to maintain financial flexibility.