Magellan says goal to grow client wealth remains 'undiminished'

In an ASX listing on Wednesday, Magellan revealed its adjusted net profit after tax sunk 3 per cent on the year to $399.7 million, while profit before tax and performance fees for the Funds Management business ended at $470.6 million or 11 per cent down on the prior year impacted by investment performance and client outflows impacting management and service fees.  

Average funds under management (FUM) for the full year was $94.3 billion, compared to $103.7 billion last year, and total FUM was $61.3 billion at the end of the reporting period.

The embattled fund manager declared a dividend of 68.9¢ per share for the first six months to 30 June 2022, bringing total dividends for FY22 to 179.0¢ per share.

“Whilst it has been a difficult year for the business, we delivered a number of capital management initiatives that we believe are consistent with our aim to deliver capital efficiency, pay solid dividends and generate attractive returns to shareholders,” said Hamish McLennan, Magellan’s chairman.

“Magellan is highly focused on its core funds management business, and we look forward to the next chapter of the company’s growth under new CEO and managing director, Mr David George,” Mr McLennan added.

Also addressing the fund manager’s muted results, Mr George cited “a number of significant challenges in FY22” which markedly impacted the financial results.

Alluding to the likelihood that material client outflows experienced in the second half of the year will impact FY23, he nevertheless added that “we are very positive on the business moving forward”.

“Despite recent challenges, Magellan’s goal of protecting and growing our clients’ wealth remains undiminished,” Mr George said.

“The current investment landscape is a volatile and difficult one, that should reward outstanding fundamental company research and active management of portfolios, qualities that are trademarks of Magellan products. The team is energised and highly focused on delivering consistent and improved investment returns and, in doing so, restoring stability, confidence and shareholder value,” he continued.

Emphasising the fund manager’s “great potential”, Mr George said with confidence that “the strength of Magellan’s balance sheet” provides the firm with “significant headroom” to invest in its business to deliver for its clients and position itself for future growth.

Major developments at Magellan over the past year have included the resignation of CEO Brett Cairns, the loss of the firm’s largest institutional mandate, and the departure of chairman and chief investment officer, Hamish Douglass.