The Magellan Financial Group Ltd (ASX: MFG) share price has jumped 15% after the investment manager revealed its FY23 result and a special dividend.
FY23 result
Here are some of the highlights from the 12 months to 30 June 2023:
- Average funds under management (FUM) fell 48% to $48.8 billion
- Profit before tax and performance fees of funds management business down 55% to $212.3 million
- Statutory net profit after tax (NPAT) down 52% to $182.7 million
- Adjusted profit / earnings per share (EPS) down 56% to $0.955
- Operating cashflow of $186.6 million
- Annual ordinary dividend of $0.867, down 52%
- Special dividend of $0.30 per share declared
The business has been working hard with its investment team on collaboration, information flow and efficiency. Investment ideas are “being brought forward earlier and prioritised more efficiently.”
Magallan said these changes have facilitated “early signs” of performance improvement, particularly in the global shares strategy, which outperformed the benchmark in the second half of the year, and contributed $11 million in performance fees.
The company’s operating expenses of $121.3 million was below its FY23 guidance target range. It’s expecting further cost benefits from changes made to flow through in FY24 and onwards. FY24 funds management business operating expenses are expected to be between $95 million and $100 million. Achieving, or beating this goal, would be helpful for the Magellan share price.
Other highlights
Magellan also announced that the business has reverted to its former ‘business as usual’ structure with David George as the CEO and Managing Director, while Gerald Stack will be head of investments.
It also launched two new products – its energy transition strategy and its Airlie Small Companies Fund, both of which “address areas of growing client demand”.
At the end of the financial year, it had $945.3 million of cash, financial assets and investments in associates.
It owns 36% of Barrenjoey and 16% of FinClear. Combined, they delivered a post-tax loss of $11.5 million for Magellan.
Barrenjoey has largely completed the build-out of its key business lines, with fixed income derivatives, equity financing and private capital going live. Establishment costs are expected to declined materially in FY24. It’s focused on growing market share and diversifying revenue.
Final thoughts on the Magellan share price
This has clearly excited investors. I’m not sure if it can keep the run going, but the payment of the special dividend is very useful for returns.
For Magellan, the key will probably be whether it can continue to deliver long-term returns. That’s hard to predict, but it can grow FUM with its various strategies, that would be a good development. For now, FUM continues to flow out. It’s not at the top of my watchlist, but it’s possible it could do well from here.
