Rivco Australia’s half-year profit plunged 91% to $2.1 million amid a 35% revenue drop, even as the company boosted its leased water portfolio to 80% and maintained a fully franked dividend.
- Revenue declines 35% to $5.78 million
- Net profit after tax collapses 91% to $2.1 million
- Lease portfolio increases to 80%, enhancing revenue visibility
- Fully franked dividend of 3.72 cents per share paid
- Unrealised water entitlement gains of $67.6 million excluded from accounts
Sharp Profit Decline Despite Portfolio Strengthening
Rivco Australia (ASX:RIV) posted a stark 91% plunge in net profit after tax to $2.099 million for the half-year ending 30 June 2026, dragged down by a 35% fall in revenue to $5.781 million. This dramatic earnings contraction contrasts with the company’s efforts to increase its leased water portfolio to 80%, a move intended to provide greater contracted revenue certainty.
Dividend Maintained Amid Earnings Pressure
Despite the profit slump, Rivco declared a fully franked dividend of 3.72 cents per share, consistent with the previous half-year. This payout reflects the company’s commitment to delivering shareholder returns even as earnings falter. The dividend reinvestment plan remained active, allowing shareholders to acquire new shares at a volume-weighted average price before the record date.
Net Asset Value Holds Steady on Fair Value Basis
Rivco’s net asset value (NAV) per share was $1.298 based on Australian Accounting Standards, slightly down from $1.322 at the end of 2025. However, on a fair market value basis; which includes unrealised gains on water entitlements; the NAV edged up marginally to $1.597 from $1.591. The company is carrying $67.6 million in unrealised gains on its water entitlements portfolio, which are excluded from statutory financials due to accounting rules.
Water Entitlements Portfolio and Lease Metrics
The company’s water entitlements are valued at $244 million on a fair market basis, with temporary entitlements adding another $2.6 million. Increasing the lease percentage to 80% improves the visibility of contracted revenue streams, a critical factor amid volatile water markets. This follows previous expansions of the leased portfolio, which had reached approximately 82% by value in recent months.
Accounting Standards Mask Underlying Asset Gains
While statutory accounts show a reduced NAV per share, the fair value approach suggests underlying asset values remain robust. The exclusion of $67.6 million in unrealised gains on water entitlements highlights the divergence between accounting treatment and market valuation. Investors should weigh this gap carefully when assessing the company’s financial health and intrinsic value.
Bottom Line?
Rivco’s earnings slump contrasts with its growing leased portfolio and stable dividend, leaving investors to watch whether contracted revenue can offset market headwinds in the coming quarters.
Questions in the middle?
- Will Rivco’s increased lease coverage translate into improved earnings stability?
- How might the exclusion of unrealised water entitlement gains affect investor valuation?
- Could dividend sustainability come under pressure if revenue declines persist?