Salter Brothers Emerging Companies Limited reported a 45.5% drop in half-year profit to $5.7 million, alongside a declared fully franked interim dividend of 2 cents per share.
- Profit after tax down 45.5% to $5.7 million
- Revenue declined 46.4% to $8.8 million
- Net assets rose to $90 million despite profit fall
- Interim dividend of 2 cents per share declared
- Post-period asset disposals generated significant gains
Half-Year Financial Performance
Salter Brothers Emerging Companies Limited (ASX: SB2) has released its half-year results for the period ending 31 December 2025, revealing a marked decline in profitability. The company’s profit after tax fell by 45.5% to $5.7 million, down from $10.5 million in the previous corresponding period. This drop was accompanied by a 46.4% decrease in revenues, which fell to $8.8 million.
The decline in earnings was primarily driven by lower net gains on financial instruments, which halved to $8.2 million from $16.2 million a year earlier. Dividend income, however, increased modestly to $595,000, reflecting some resilience in the company’s portfolio.
Cost Management and Cash Flow
On the expense front, Salter Brothers managed to reduce total expenses (excluding income tax) by $443,000 to $1.07 million. This improvement was largely due to the absence of a performance fee that was incurred in the prior period. Despite this, net operating cash inflows dropped to $1.6 million from $3 million, reflecting a narrower margin between investment sales and purchases.
Balance Sheet and Net Tangible Assets
Net assets increased by $3.2 million to $90 million, supported by portfolio value appreciation even after accounting for dividends paid and share buy-backs. The company’s net tangible asset (NTA) backing per share rose to 1.071 post tax, up from 1.019 at the previous year-end, signalling underlying asset strength despite the profit contraction.
Dividend and Post-Period Developments
The board declared a fully franked interim dividend of 2 cents per share, payable on 23 April 2026, amounting to an estimated $1.7 million. This dividend reflects the company’s commitment to returning value to shareholders despite the challenging half-year results.
Notably, after the reporting period, Salter Brothers completed the disposal of its unlisted equity holdings in Sphere For Good and SB SPV No.1 Pty Ltd (IPSI). The IPSI sale generated net proceeds of $14.1 million, delivering a $7.4 million gain over the carrying value. These transactions, while non-adjusting for the half-year accounts, could positively influence future earnings and cash flow.
Outlook and Management
The company continues to operate under the management of Salter Brothers Funds Management Pty Ltd, with no significant changes in its investment mandate. The directors expressed confidence in the company’s financial position and ability to meet its obligations. However, the halving of profits and reduced cash inflows highlight the challenges facing investment funds amid fluctuating market conditions.
Bottom Line?
Salter Brothers’ interim results underscore a cautious market environment, with asset disposals and dividends hinting at strategic portfolio repositioning ahead.
Questions in the middle?
- How will the recent disposal gains from IPSI and Sphere For Good impact future earnings?
- What is the outlook for performance fees given the absence in this half-year?
- How sustainable is the declared dividend amid lower profits and cash flow?