Pinnacle Investment Management has managed to somewhat push through the COVID-19 crisis, reporting a 5.6 per cent rise in profit year-on-year after seeing a slight decline in performance fee revenue.
The group secured a net profit after tax (NPAT) attributable to shareholders of 32.2 million for the 2020 financial year, up by 5.6 per cent year-on-year.
Meanwhile revenue from continuing operations increased by 6 per cent to $22.4 million.
Due to the COVID-driven market decline, Pinnacle’s performance-based fee revenue was lower than otherwise expected – with revenues totalling at $11 million in the second half compared with $11.4 in the previous half.
Its aggregate affiliates’ funds under management of $58.7 billion was up from $54.3 billion the year before. The group saw net inflows for the full year of $3 billion, including $900 million from retail, of which $200 million came from the group’s listed investment companies or trusts (LICs/LITs).
The affiliates produced revenues of $291 million, up by 22.9 per cent, and including performance fees of $26.7 million.
Pinnacle’s FUM however was down by $2.9 billion at the end of the six months leading to 30 June, with market movements and investment performance causing decreases totalling at $3.9 billion.
Pinnacle has also signalled that due to its results being more subdued than it aimed for, most of the group’s executives will see no salary increases, no net long-term incentive issuance during the year and short-term bonuses will sit at a maximum of half of the normal expectation.
Pinnacle managing director Ian Macoun noted net inflows had been lower than in recent years and below the group’s expectations at the start of the year, but it still managed to see money coming in during both halves.
Meanwhile chair Alan Watson said the outcome was “solid”, given the prevailing circumstances.
“It is encouraging to note the early evidence of the benefits of the increasing diversity of the business across asset classes, sources of client funds, and exposure to performance fee potential,” Mr Watson said.
“Entering FY21 the firm is poised to resume growth, to react to possible further external adversity and to take advantage of opportunities that may materialise.”
In his letter to shareholders, the chair added the company is [part way] through its diversification process across asset classes and funds under management – and it has already shielded Pinnacle from the market shake-ups.
“We were particularly assisted in this regard by significant performance fees in five [affiliates], by the pace of inflows from offshore investors beginning to increase, and by the performance and positioning of our increasingly diverse stable of specialist, high conviction active fund managers,” Mr Watson wrote.
Equity market conditions and regulatory risk were cited as the major business risks facing the group.
Diluted earnings per share were 17.9 cents, up by 4.7 per cent year-on-year. The board declared a fully franked dividend of 8.5 cents, taking total dividends for the financial year to 15.4 cents, the same as the year before.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
T. Rowe Price has assessed the growing parallels between 1970s stagflation and today. ...
CommSec has predicted local shares will move higher during 2022-23. ...