AUI Reports 342% Profit Surge on DUI Merger and Portfolio Expansion

Merger Drives Exceptional Profit Growth

Australian United Investment Company Limited (ASX:AUI) delivered a remarkable 342% surge in profit after tax to $220.4 million for the year ended 30 June 2026. This leap was primarily fueled by a $159.9 million gain on acquisition from its merger with Diversified United Investment Pty Limited (DUI), completed on 30 April 2026. The gain reflects the reset of DUI’s tax cost base by $174 million following the formation of a tax consolidated group, a significant non-recurring accounting benefit.

Excluding this and other non-recurring items such as transaction costs and special income, underlying profit after tax rose a more modest 19.9% to $59.3 million, indicating steady operational growth from the combined portfolio.

Portfolio Expansion and Diversification

The merger expanded AUI’s investment portfolio to approximately $3.1 billion at 30 June 2026, nearly doubling its size from the prior year. Importantly, the deal introduced a meaningful allocation to international equities, which now comprise 10.5% of the portfolio, accessed primarily through exchange traded funds and managed funds. This diversification complements AUI’s traditional Australian equities focus, which remains at 87.9% of the portfolio.

With the merger, AUI’s market capitalisation grew to around $2.6 billion, enhancing liquidity and operational scale. The company also anticipates cost savings from eliminating duplicated expenses, though these are yet to be quantified in the results.

Net Tangible Asset Growth and Dividend Continuity

AUI’s Pre-tax Net Tangible Asset (NTA) backing per share rose 5.9% to $13.75, reflecting portfolio appreciation before tax on unrealised gains. On a post-tax basis, including estimated tax on unrealised gains, NTA per share increased 12.5% to $11.91, boosted by the merger’s tax base reset.

Despite the profit spike, the company maintained its fully franked dividend policy, declaring a final ordinary dividend of 20 cents per share and a special dividend of 8 cents, matching the prior year’s total of 28 cents fully franked. Together with the 17 cents interim dividend, total dividends for FY2026 amount to 45 cents per share fully franked. The Board signaled confidence in sustaining the 8 cents special dividend for the next three years, assuming no unforeseen circumstances.

Prudent Financial Management and Outlook

Borrowings increased to $70 million at year-end, supported by expanded bank facilities of $225 million, up from $145 million the previous year. Net debt remains low relative to portfolio size at 0.7%, and interest coverage is robust at 22.6 times underlying profit before interest and tax. AUI also executed an on-market share buyback, cancelling 1.17 million shares at an average price of $11.03, enhancing shareholder value.

Looking ahead, the Board highlighted a cautious outlook amid global economic uncertainties, geopolitical tensions, and domestic challenges such as low productivity and inflationary pressures. The company expects steady underlying earnings but anticipates a modest decline in income per share due to the non-recurring nature of some FY2026 gains. The focus remains on long-term capital growth and reliable fully franked income for shareholders.

Investors will be watching how AUI integrates the DUI portfolio and manages its new international exposure, as well as the sustainability of dividend payments amid evolving market conditions.