Rising Costs and Market Risks Challenge MFF Despite Strong Asset Growth

Financial Performance and Dividend

MFF Capital Investments Limited has released its annual results for the year ended 30 June 2025, reporting a net profit after tax of $431.97 million, down 3.4% from $447.36 million the previous year. Despite this slight decline, the company’s net assets grew significantly by 17.9% to $2.44 billion, reflecting strong capital growth and portfolio appreciation.

The Board declared a fully franked final dividend of 9.0 cents per share, up from 7.0 cents last year, bringing total dividends for the year to 17.0 cents per share. The dividend remains fully franked at the 30% corporate tax rate, underscoring MFF’s commitment to delivering tax-efficient income to shareholders.

Strategic Acquisition of Montaka Global

A key highlight of the year was the acquisition of Montaka Global Pty Ltd and Montaka Global Investments Pty Ltd, specialist global equities fund managers with approximately $345 million in funds under management. Completed in February 2025 for nominal consideration, this acquisition broadens MFF’s global investment capabilities and adds incremental expertise in fund management and research.

Montaka’s integration has led to a rise in operating expenses, which increased to $10.6 million from $4.2 million last year, reflecting the expanded operational footprint. Montaka contributed $7.6 million in revenue and $479,000 in net profit since acquisition, with pro forma figures suggesting a modest impact on full-year results had the acquisition occurred earlier.

Portfolio and Investment Approach

MFF’s investment portfolio remained largely stable during the year, focused on advantaged businesses with strong market positions, high liquidity, and above-average growth prospects. The company continues to employ a disciplined, long-term capital allocation strategy, emphasizing risk management and adaptation to evolving market and regulatory environments.

The portfolio manager highlighted the resilience of portfolio companies amid geopolitical tensions, inflationary pressures, and regulatory challenges. Technology and artificial intelligence investments remain a key theme, with MFF positioning itself to benefit from ongoing digital transformation while remaining cautious about market volatility and macroeconomic uncertainties.

Balance Sheet Strength and Capital Management

MFF maintains a strong balance sheet with net cash of approximately $199.5 million and prudent borrowing limits capped at 20% of investments. The company’s net tangible assets per share rose to $5.021 pre-tax and $4.167 post-tax, reflecting portfolio appreciation and retained earnings.

The Board continues to monitor capital management opportunities, including share buy-backs, though no buy-backs were undertaken during the year. The company also plans to transition administrative operations in-house in fiscal 2026, ending its long-standing service agreement with Magellan Asset Management.

Governance and Outlook

MFF’s governance framework remains robust, with a focus on risk management, compliance, and transparent reporting. The company’s auditor, Ernst & Young, provided an unqualified audit opinion, affirming the integrity of the financial statements.

Looking ahead, MFF acknowledges the ongoing challenges posed by regulatory changes, geopolitical risks, and market fluctuations. However, the company’s disciplined investment philosophy, strong portfolio, and enhanced capabilities through Montaka position it well for sustainable long-term growth and shareholder value creation.