ASX turns up heat on Clime Capital following KPMG scrutiny

The ASX has also raised concerns over Clime Capital's valuation of its unlisted assets portfolio and the qualified opinion that was eventually handed down by its auditor KPMG.

The bourse sought clarification on how Clime Capital came to value its unlisted unit trusts of $36,205,754 and pay management fees and performance fees. This comes off the back of KPMG saying Clime could not provide "sufficient evidence," such as reliable financial information, recent independent valuations of secured properties or other reliable information to value the unit trusts, whose net assets were deemed to be valued at $36,205,754 at the end of June 30.

"The insufficiency of the audit evidence also relates to these unlisted unit trusts comprising $27,900,000 as at 30 June 2025," KPMG said.

"Further, the fair value of these unlisted unit trusts at 30 June 2026 is a key input in determining the performance fee expense of $2,244,643 and management fee expense of $1,549,017 under the Company's agreement with its investment manager."

Clime Capital booked performance fees of $2.2 million in FY26 because it "significantly outperformed the benchmark".

Some of its unlisted assets are held in trusts managed by Securities Bailment Solutions (SBS), namely SBS Mortgage, SBS Mortgage4 and SBS Mortgage5.

Others include the Southern Cross Poultry Fund Investment Trust, Elanor Hotel Accommodation Fund and Bluewater Square Syndicate.

Clime Capital was suspended from the ASX for failing to submit its FY26 annual report by the deadline, with the delay caused by KPMG raising concerns over the unlisted assets' valuations.

The ASX is now weighing in. Shortly after Clime Capital submitted its annual report on October 5 and was reinstated to the ASX the day after, it asked if the valuations it provided to the auditor comply with the requirements of the accounting standards and gave a true and fair view of its financial performance and position.

In response, Clime Capital chair John Abernethy said directors formed their opinion based on the financial information and underlying investment documentation available to the board at the time the financial statements were approved.

"This included confirmation from the external investment manager of the unlisted unit trusts valued at $36,205,754 (the "relevant unlisted trusts") that no impairment, write-down or provision in respect of the assets of any trust was applicable at 30 June 2026, and independent appraisals/valuations in respect of some of the relevant unit trusts received by CAM's investment manager up to the date of approving the financial statements."

The ASX also pressed on why directors were unable to provide sufficient evidence, such as reliable financial information, to enable its auditor to test the net asset value of the unlisted unit trusts.

Abernethy pointed to ASIC's June 2026 guidance concerning private credit valuations, and that KPMG "requested a significant amount of new and additional information including recent valuations for all unlisted assets."

"The time required to obtain recent valuations, complete year-end reporting and verify security arrangements for some relevant unlisted unit trusts meant that the relevant external investment manager was not able to provide all the evidence requested by the company's auditor within the FY26 audit timetable," Abernethy said.

Ahead of the 2027 half-year reporting round, Abernethy said a detailed review of the valuations and reporting relating to its unlisted investments will complete in November 2026, "subject to receiving the outstanding independent valuations and supporting information."

The group has also engaged an external firm to complete an independent review of its private debt portfolio.

"The brief for this review includes making recommendations on processes relating to valuations, security arrangements, unit trust structures, documentation, governance and risk management practices," he said, adding that this review and the implementation of any recommendations is intended to ensure that Clime Capital is able to obtain an unmodified review conclusion for its financial statements for the half-year ended 31 December 2026.