Platinum Asset Management shares drop on net profit tumble
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The news: Platinum Asset Management shares fell following the release of its financial year results, which saw the fund manager’s net profit tumble 86.1% to $6.26 million.
The numbers: Platinum’s shares were down 1.85% to 80 cents by 12:40pm AEST and over the last 12 months have tumbled 18.88%.
Platinum released its results after market close on Wednesday and said its profit was impacted by large and non-deductible accounting charges. This included its FY25 turnaround program which had implementation costs of $31.2 million.
Its funds under management (FUM) plunged 39% to $7.9 billion, driven by net outflows of $5.6 billion due to some large one-off redemptions and the termination of an institutional mandate.
Total fee revenue dropped 28% to $125.8 million and management fees fell 28% primarily due to the decline in average FUM. Adjusted EBIT, excluding other income and turnaround costs, was down 33.8% to $54.9 million driven by a decrease in fee revenue.
The board declared not to pay a 2025 final dividend.
The context: During FY25 the challenged fund manager continued its strategy to reset the business and received a number of unsolicited non-binding indicative offers that did not eventuate.
“This instability, combined with sustained lacklustre relative investment performance for our flagship fund, only served to put further pressure on fund outflows and resulted in the loss of a large institutional mandate, with consequential impacts on revenue,” Platinum said.
On 8 July, Platinum announced that it entered into a merger implementation deed with L1 Capital. Shareholders are set to vote on the merger on 22 September. The merged entity would have $16.5 billion in FUM.
If the scheme goes ahead, the merged entity will be renamed as L1 Group with the ticker L1G and remain listed on the ASX. However, names of the funds will remain.
If the merger proceeds Platinum CEO Jeff Peters, non-executive director Rachel Grimes and chair Guy Strapp will continue as directors. It is expected that Anne Loveridge AM, Philip Moffitt and James Simpson will resign from the board.
Neil Chatfield and Jane Stewart (who are nominees of L1 Capital) will be appointed to the board, subject to shareholder approval at the extraordinary general meeting.
On an investor call following the results, Peters said if the merger did not go through the plan would be to continue running Platinum International Fund with existing resources.
What they said: “But we have confidence that that boat will get through, and certainly, we hope it will. And as a result, we would move forward with the sub advisory arrangement on completion date,” Peters said.
“There will be some members of that team [Platinum International Fund] who will go over to L1 Capital International, which will be the group that will be running the strategy. Three of our analysts will be joining them and others from the team will be leaving platinum at the appropriate time.”
The source: ASX
