Clime Capital combines record profit with a qualified audit over unlisted assets

KPMG qualifies audit over unlisted assets

Clime Capital Limited (ASX:CAM) has produced a strong headline result with an uncomfortable footnote: KPMG could not obtain enough evidence to verify the value of $36.2 million of unlisted unit trusts at 30 June 2026. The auditor’s qualified opinion means the reported values of those investments, together with associated income, management fees and performance fees, may require adjustment, although the company has not quantified any potential change.

The disputed assets represented a substantial portion of CAM’s $137.4 million investment portfolio. KPMG said the missing evidence included reliable financial information, recent independent valuations of secured properties or other supporting material from the managers of the underlying trusts. The issue also affected $1.516 million of accrued interest income linked to those investments, as well as $2.245 million of performance fees and $1.549 million of management fees.

Profit and portfolio returns rebound

Against that uncertainty, CAM reported after-tax profit of $10.3 million, up from $3.1 million in FY25, on pre-tax profit of $13.4 million. Net unrealised investment gains swung to $11.0 million from a $4.6 million loss, while investment revenue rose to $7.9 million. The company said its portfolio generated a gross return of approximately 17% for the year.

Pre-tax net tangible assets rose to 82 cents per share from 77 cents, while after-tax NTA stood at 84 cents. The portfolio’s composition changed materially during the year: listed equities fell to $77.1 million from $94.5 million, while unlisted unit trusts increased to $58.3 million from $37.3 million. CAM said the listed portfolio benefited from active management, including positions in CSL, BHP, Rio Tinto, Woolworths, Coles and Computershare, but those comments do not resolve the separate valuation question surrounding its private holdings.

Dividend stream remains intact

The board declared ordinary dividends of 5.4 cents per share over FY26 and added a 0.5 cent special dividend, both 50% franked where applicable. It also declared a September-quarter dividend of 1.35 cents per share, 50% franked. The profit reserve increased to $35.8 million, providing a visible buffer for distributions, although the qualified opinion leaves open whether reported asset values and future earnings will ultimately support the same pace.

CAM continued its capital management programme, buying back 9.48 million ordinary shares at an average price of 69.2 cents and 1.0 million CAMG convertible notes during the year. The share buyback reduced issued shares to 140.8 million at year-end. CAM’s estimated pre-tax NTA was 81.5 cents per share at 30 September, according to the company’s unaudited update, compared with a reported 69-cent year-end share price.

Higher CAMG funding cost adds pressure

The company also reshaped its funding base. The CAMG coupon rose from 5.25% to 6.5%, payments shifted from quarterly to monthly and maturity was extended to 30 November 2028. Notes outstanding stood at 39.0 million at 30 June, with a carrying value of $39.5 million. Finance costs increased to $3.5 million, including a $703,827 loss on remeasurement associated with the restructuring.

CAM’s directors said they were conducting a detailed review of the information received on the unlisted investments and were not currently aware of any valuation adjustments required. The next meaningful test is therefore not another dividend announcement but the quality of the evidence supporting those assets. Until that question is settled, the impressive profit figure and the reliability of the reported NTA remain linked to valuations that the auditor could not independently verify.