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Platinum Asset Management Limited (ASX:PTM) reports more FUM and outperformance in FY18

Yesterday evening, Platinum Asset Management Limited (ASX: PTM) reported its annual result for the year ended 30 June 2018, showing a slight increase in profit.

The internationally-focused fund manager reported a 5.9% increase of revenue to $353.3 million.

Fee revenue grew by 5.2% to $328.7 million. This was mostly driven by the 13.1% increase in funds under management (FUM) to $25.7 billion over the course of the year. This growth occurred despite the Platinum Trust Funds and Platinum Global Fund fees being reduced from 1.5% to 1.35% at the start of the year. When this change was first announced the company estimated revenue could fall by 9%.

Performance fees also helped lift revenue. Seven funds delivered returns in excess of 14%, resulting in performance fees generated of $21.9 million.

The investments held by Platinum delivered investment gains for the year of $24.6 million.

Expenses increased by $22 million to $85 million during the year, primarily due to staff remuneration increasing by $15 million to $49.2 million. Platinum pays its staff bonuses when the funds outperform the benchmark by more than 1% for both the last year and three years. This profit share plan is capped at 5% of pre-tax fee income.

Net profit after tax (NPAT) attributable to shareholders grew by 1.7% to $189.3 million and earnings per share (EPS) increased by 2% to 32.36 cents.

Pleasingly, the full year 2018 dividend was increased by 6.7% to 32 cents per share.

Kerr Neilson recently handed over the leadership reins to Andrew Clifford as the new Managing Director and Chief Executive Officer from 1 July 2018. However, Mr Neilson continues as an Executive Director and a full-time member of Platinum’s investment team. Mr Neilson will still contribute ideas, mentor junior members of the team and provide support to further Platinum’s various offshore distribution initiatives.

Foolish takeaway

Platinum currently offers a grossed-up dividend yield of 8.6%, which is an attractive yield for a growing business. If Platinum continues to outperform then it could be worth buying at this beaten-down price, particularly if Asia continues to grow strongly economically.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Platinum Investment Management Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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