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Magellan announces new product alongside statutory profit growth

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Magellan has announced the launch of a new product and an enhanced US distribution platform in an attempt to win back trust.

In an ASX listing on Thursday, Magellan revealed its adjusted net profit after tax edged down 5 per cent in the first half of financial year 2024 to $93.5 million, following a 60 per cent drop a year earlier.

Statutory net profit after tax gained 24 per cent to $104.1 million, suggesting that the embattled fund manager may have finally reached greener pasture.

Average funds under management slipped again by 31 per cent to $36.9 billion, however, the fund manager has recorded several months of FUM growth following a long period of outflows.

The fund manager declared a dividend of 29.4 cents per share for the six months to 31 December 2023, down 37 per cent from a year earlier.

Magellan also announced several changes, including the appointment of Sophia Rahmani to the role of managing director of Magellan’s main operating subsidiary, Magellan Asset Management Limited, effective in May 2024.

Magellan’s executive chairman, Andrew Formica, said he will remain as the executive chair for an interim period to ensure the firm maintains continuity and stability, focusing his attention on Magellan’s strategic development, while Ms Rahmani focuses on the firm’s funds management business.

“With a new executive leadership structure in place, and a number of legacy issues behind us, including having addressed the Employee Share Purchase Plan loans and the uncertainty around our Magellan Global Fund (Closed Class) (MGF), I am confident the business is in a strong position to rebuild and grow,” Mr Formica said.

In parallel with these “important” steps, Mr Formica said Magellan has made progress on its strategic agenda, including announcing on Thursday an enhanced and refocused US distribution platform, and disclosing plans to launch a new product – the Magellan Unconstrained Fund – to retail investors.

“These initiatives and progress demonstrate that we are moving forward with pace at our strategic objective of becoming the asset manager of choice in the Australian market across a diversified offering. This includes continuing to assess strategic growth opportunities that are value accretive to the business and our shareholders,” he said.

“Most importantly, our investment teams continue to deliver improved investment performance across our strategies, adding value for our clients. I am confident that this will lead to continued improvement in our net flows, which have seen signs of stabilisation in recent quarters.”

Admitting that “more needs to be done”, Mr Formica said Magellan remains a “highly profitable business, with robust operating cash flows and significant financial strength in the form of our strong balance sheet”.

“I am encouraged by the progress we are making and am confident our strong foundations position us well to deliver positive outcomes for our clients and shareholders.”