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Clime IM profit plunges by 73%

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Clime Investment Management recorded a 73 per cent plummet in net profit for the full year, but the company has high hopes for future growth after its recent $4.4 million purchase of advice business Madison Financial Group.

The group reported a profit after tax attributable to members of $397,428 for financial year 2020, while revenue was clipped by 4 per cent, to $11.9 million.

Although operating earnings were $1.05 million, an 89 per cent surge from the prior corresponding period, funds management and investment software revenue was down 0.9 per cent. 

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There had also been no contribution in the second half from performance fees, given the March market correction, leading to net performance fees after team incentives totalling at $1.76 million, down 6 per cent.

The company added the market downfall in March had also had a significant negative impact on its balance sheet holding of shares in Clime Capital, with the total contribution to group results from balance sheet investments during the year being 172 per cent down, to -$820,000.

The recent $4.4 million acquisition of advice business Madison Financial Group had also eaten into the year’s result, with further one-off legal, professional and product consolidation expenses of $318,732.

However government support in the form of JobKeeper and ATO recoveries somewhat offset the items, supplying $355,000.

Clime had felt the impacts of COVID, with chief executive Rod Bristow stating staff and directors had operated at reduced salaries for a number of months.

Gross funds under management, excluding Madison, was $982 million, as at 30 June, compared to $924 million the year before. 

But with Madison, the group now has more than $4.5 billion in group funds under management and advice.

Clime Investment Management chair Donald McLay stated in a letter to shareholders the group is expecting accelerated growth in revenue, earnings and assets under management as it integrates with Madison.

The board directors have proposed a fully franked final dividend of 1 cent per share, making the total 2 cents for the year – compared to 2.25 cents the year before.

 

Clime IM profit plunges by 73%
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Sarah Simpkins

Sarah Simpkins

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].

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