London City Equities Posts $500K Profit, Raises Dividend 67% After $11.3M Gain

Strong Capital Gains Drive Improved Financial Performance

London City Equities Limited has reported a marked turnaround for the year ended 30 June 2025, posting a profit after tax of $500,000 compared to a loss of $6,482 in the prior year. This improvement was largely driven by a substantial capital gain of $11.3 million realised through the strategic reduction of its holding in Fiducian Group, a long-term investment that had become overweight in the portfolio amid a buoyant stock market.

The company’s revenue from ordinary activities rose 45% to $1.81 million, reflecting higher dividend income and proceeds from trading investments. Despite increased litigation expenses related to ongoing legal action against Excelsior Capital Limited, London City managed to boost its net tangible assets per share by 15% to 78.6 cents.

Dividend Increase Signals Confidence

In light of the improved financial position, the board declared a fully franked dividend of 2.5 cents per share, comprising a 1.5 cent ordinary dividend and a 1 cent special dividend; a 67% increase on the previous year’s payout. The dividend reinvestment plan will continue to operate, although no share buy-back program is currently in place.

Directors highlighted the strength of the company’s cash reserves, with liquid funds exceeding $13 million following further reductions in Fiducian shares post-year end. The unaudited net asset backing per share is estimated to have risen to 81.5 cents, underscoring the company’s solid capital base.

Legal Challenges Cast a Shadow

London City’s 9.2% stake in Excelsior Capital remains a source of concern. The company is actively pursuing Federal Court proceedings seeking the winding up of Excelsior and the return of shareholder funds, primarily invested in unlisted hedge funds. Complications have arisen with a key defendant and director relocating to Monaco, a development not yet disclosed by Excelsior. London City is assessing the implications of this move on the ongoing litigation.

Despite these challenges, London City maintains a cautious but optimistic outlook, balancing portfolio adjustments with legal risk management. The company continues to rely on its management agreement with Imperial Pacific Asset Management Pty Limited, which oversees portfolio performance and strategic decisions.

Outlook and Market Position

London City’s approach of realising gains from strong-performing assets while managing exposure to riskier holdings appears to be paying off. The company’s focus on delivering steady, fully franked dividends aligns with its capital management strategy aimed at providing attractive medium to long-term returns. However, the resolution of the Excelsior litigation remains a key uncertainty that could influence future results.

As the audit process concludes, investors will be watching closely for any adjustments to these preliminary results and for updates on the legal proceedings. The company’s ability to navigate these complexities will be critical to sustaining momentum and shareholder confidence.