Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Achieved 24% year-on-year revenue growth, reaching a significant milestone of $100 million in revenue for FY24.
- Underlying profit increased by 57% compared to FY23, demonstrating strong financial performance.
- Full year statutory NPAT was up 80% to $11.8 million, indicating robust profitability.
- Successfully integrated Christian Super, contributing to higher revenues and improved profit margins.
- Declared a record high dividend of $0.09 per share for the full year, reflecting confidence in future growth.
Negative Points
- Took a further and final fair value write-down of $2.16 million on the investment in Sentient Impact Group, which failed to meet growth ambitions.
- Operating expenses increased by 16% to $74.4 million, driven by higher employment costs and IT expenses.
- Despite revenue growth, the underlying cost-to-income ratio remains relatively high at 74%.
- The acquisition of Altius Asset Management is expected to decrease the overall fee margin to approximately 0.9%, potentially impacting profitability.
- Investment in new capabilities and technology resulted in increased costs, which may affect short-term profit margins.
Q & A Highlights
Q: You've clearly had strong growth over the last four years. How does the Board feel about how the strategy is going?
A: John McMurdo, CEO: We are confident we're on the right path and have built the right business model and differentiation strategy to continue to be successful. Our strategy focuses on a strong, differentiated, trusted retail brand, high-margin active management, and a multichannel distribution strategy. The Board and management team are very confident about our prospects going forward.
Q: Congratulations on the strong earnings growth. Is something close to your recent 20-plus percent earnings cumulative average growth rate sustainable, do you think?
A: John McMurdo, CEO: While I won't give specific guidance, I believe the short answer is yes. With 40 consecutive quarters of positive flows, a strong brand, and a well-developed B2C direct acquisition marketing engine, we are well-positioned for continued growth. We also see new revenue streams emerging from product and asset class diversification.
Q: Mark, there's a question about the unit cost savings expected following the transformation program, particularly the $4 million annual savings. Can you provide more detail on how this will play out next year?
A: Mark Simons, CFO: We've been investing in a scalable and efficient business platform, negotiating compelling rate cards with key service providers. The unit cost savings will commence from the period we complete these transitions, both happening in FY25.
Q: What do you mean by growth in private market opportunities? Is this private credit or social infrastructure?
A: John Woods, Deputy CIO: Private markets are a broad asset class. We've recently hired a new Head of Private Markets to develop this strategy further. We launched our first offering in this space, the infrastructure debt fund, and see ways to expand domestically and internationally.
Q: Can you provide some color on the recent investment performance and whether you think it will impact flows?
A: John McMurdo, CEO: Our investment approach is benchmark-unaware, leading to periods of outperformance or underperformance. However, our long-term track record is strong. For example, our Australian shares fund has a 30-year compound performance of 9.7% against a benchmark of 7.5%.
Q: Mark, can you elaborate on the write-downs related to the Sentient investment and confirm whether it's now valued at zero?
A: Mark Simons, CFO: We invested $5.2 million in Sentient in 2021 to extend our impact capability. The investment has been disappointing, and we've written it down by $4.8 million, recovering $0.4 million. It is now valued at zero.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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