AUI’s Profit Climbs to $27.3M, Dividend Steady at 17 Cents

• Profit after tax rises 7% to $27.3 million
• Revenue declines 2.7% amid market headwinds
• Interim dividend maintained at 17.0 cents fully franked
• Pre-tax Net Tangible Asset backing increases to $13.11 per share
• Proposed merger with Diversified United Investment Limited to boost equity by over $1 billion

Solid Profit Growth Despite Revenue Pressure

Australian United Investment Company Limited (AUI) has delivered a robust half-year performance for the period ending 31 December 2025, reporting a 7% increase in profit after tax to $27.3 million. This comes despite a 2.7% decline in revenue to $28.2 million, reflecting a challenging market environment marked by uneven sector performances.

Excluding special income items such as special dividends and fair value movements on options, revenue fell 3.4% and profit after tax declined 4.2%, indicating underlying pressures. However, earnings per share rose to 22.0 cents, up 6.8%, supported by these one-off gains.

Dividend Stability and Portfolio Strength

The company has maintained its interim dividend at 17.0 cents per share, fully franked, continuing a long-standing track record of reliable dividend payments since 1994. The Pre-tax Net Tangible Asset (NTA) backing rose modestly to $13.11 per share, underscoring the portfolio’s resilience amid market fluctuations.

AUI remains fully invested in a diversified portfolio of 37 leading Australian companies, with notable overweight positions in resource giants like Rio Tinto and Newmont contributing positively to performance. Conversely, holdings in sectors such as healthcare and technology, including companies like CSL and ResMed, weighed on returns.

Borrowings and Share Buyback Activity

Borrowings increased significantly to $90 million, drawn from available facilities of $125 million, reflecting a strategic use of leverage. The company also executed an on-market share buyback, purchasing and cancelling over half a million shares at an average price of $11.21, a move aimed at enhancing shareholder value by reducing share count.

Strategic Merger with Diversified United Investment Limited

In a major corporate development, AUI announced a proposed merger with Diversified United Investment Limited (DUI), expected to complete in late April 2026 pending shareholder and regulatory approvals. The scheme involves AUI acquiring all DUI shares it does not already own in exchange for new AUI shares, potentially issuing an estimated 97.2 million new shares and increasing total equity and net assets by approximately $1.1 billion.

The merger aligns two companies with similar long-term investment philosophies, modest borrowings, low operating costs, and a commitment to fully franked dividends. This consolidation is poised to create a more substantial investment vehicle with enhanced scale and diversification benefits for shareholders.

Cautious Market Outlook

Despite the positive results and strategic moves, AUI’s directors express caution about the broader market, which they view as near all-time highs driven more by valuation multiples than earnings growth. Concerns include domestic productivity challenges and international trade uncertainties. Nonetheless, government liquidity measures have supported market resilience.

Looking ahead, AUI intends to maintain its dividend policy, including a full-year fully franked dividend target of 37 cents per share and a special fully franked dividend of 8 cents per share, reflecting confidence in its portfolio and cash flow generation.

Bottom Line?

As AUI navigates market headwinds and a landmark merger, investors will watch closely how scale and strategy translate into future returns.

Questions in the middle?

• How will the merger with DUI impact AUI’s portfolio composition and risk profile?
• What are the potential effects of recent option fair value fluctuations on upcoming earnings?
• Will AUI’s cautious market outlook lead to changes in investment strategy or dividend policy?