Platinum Asset Management recorded statutory net profit after tax (NPAT) of $45.1 million for the year ending 30 June 2024, down 44.2 per cent from the prior corresponding period.
In an ASX announcement on Thursday, it said funds under management (FUM) slumped 25.2 per cent to $13 billion.
Average FUM, meanwhile, was recorded at $15.3 billion, lower than the average FUM of $18.1 billion for FY22–23.
The change in closing FUM, the firm said, was driven by positive investment returns of $700 million and net fund outflows of $4.9 billion.
Statutory profit before tax was $73.1 million, a $37.4 million decrease on FY22–23. The main cause of the fall, Platinum explained, was a $27.1 million slip in management fees.
Moreover, adjusted earnings before interest and tax was down 18.8 per cent to $82.9 million, largely attributed to a decrease in fee revenue, but somewhat offset by a decrease in adjusted expenses.
The group also earned no performance fee revenue, down from $1.2 million in revenue in FY22–23.
“We recognise that it has been a challenging year for the company and consequently our shareholders,” Platinum chair Guy Strapp said on Thursday.
“Recognising the need for change, in August 2023, we announced that Andrew Clifford would step aside as managing director and chief executive officer whilst the board embarked on a search for Andrew’s replacement.”
“Following an extensive international search, we were pleased to welcome Jeff Peters to the role of CEO in January 2024, bringing with him deep asset management and turnaround experience,” Strapp said.
Shortly after Peters’ appointment, Platinum announced its “turnaround program”, which included measures to reduce costs and “right size” the business.
With most of this work complete, Strapp said the firm is now moving into the “growth” phase of the program.
Moreover, total expenses for FY23–24 increased by $11.2 million to $111.8 million.
However, adjusted expenses, which excluded costs incurred from the turnaround program, decreased $9.2 million to $91.5 million in FY23–24.
The FY23–24 turnaround program implementation costs included employee expenses of $19.5 million, the majority of which related to an $11.4 million non-cash charge for accelerated share-based payment expenses in respect to those employees who ceased employment during FY23–24.
The board determined to pay a 2024 final fully franked ordinary dividend of 4 cents per share, bringing the total dividend paid for the 2024 financial year of 10 cents per share.
Platinum’s ‘contrarian’ approach faces challenges
Although the majority of Platinum’s investment strategies delivered absolute returns above 5 per cent in FY23–24, Platinum conceded that most of its managed funds and portfolios lagged the broader market returns.
The strongest-performing fund was the Platinum International Technology Fund, returning 26 per cent for the year ending 30 June 2024.
Meanwhile, its International Fund and Global Fund (long only) delivered returns of 4.8 per cent and 6.1 per cent, respectively.
In a letter to shareholders, Peters said it has been a difficult environment for Platinum’s “contrarian approach to investing”.
“The 12 year-long bull market has generated strong client interest for passive investment products over actively managed investments, and flows have favoured ‘growth-style’ funds, which tend to generate strong relative performance in these bull markets,” Peters said.
“We believe this growth-style of investing could be challenged in the near term, as recent market corrections have indicated, and it is for this reason that we believe our investment approach will be rewarded over the course of the cycle.
“While the second half of the financial year saw an improvement in absolute investment returns for our two largest funds, the Platinum International Fund and Platinum Asia Fund (and many of the other funds), the weaker relative investment returns across the board resulted in a significant reduction in funds under management of 25 per cent.”
