The Platinum Asset Management Ltd (ASX: PTM) share price will be one to watch tomorrow following the release of its full year results after the market close.
That release revealed that the asset manager had a very disappointing 12 months during FY 2019.
According to the announcement, for the 12 months ended June 30, Platinum posted a 15.3% decrease in total revenue to $299.32 million.
Things were even worse on the bottom line with the company reporting a 16.7% decline in net profit after tax to $157.65 million and earnings per share of 27.03 cents.
This is quite a contrast to the performance of Magellan Financial Group Ltd (ASX: MFG) over the same period. Earlier this month Magellan reported a 35% jump in adjusted net profit after tax to $364.2 million.
The main driver of Platinum's poor performance was a sharp decline in performance fees from its funds management business segment. They came in at just $30,000 compared to almost $22 million a year earlier.
Management explained: "The Company experienced a decline in overall profits attributable to owners of 16.7%. This was mainly due to the challenging equity markets experienced, which caused the Company to both record an unrealised loss on its seed investments of $988,000 and generate little in the way of absolute return related performance fee income. Whilst both of these items detracted from the annual profit, they remain important long-term contributors to the Company's profits and earnings per share."
Funds under management at June 30 was approximately $24.8 billion, a decrease of 4% from the same period last year. The reduction was driven by net fund outflows of $0.2 billion and the year-end net cash distribution and other capital outflows of $0.9 billion, which was only partly offset by positive market returns of $0.2 billion.
Management blamed unattractive valuations on the underperformance of its funds. Advising: "Platinum has always believed that attractive valuations should be the starting point for any investment decision. This growing divergence between growth and perceived safety on one hand and attractive valuation on the other, led to some short-term investment underperformance for Platinum."
Shareholders will no doubt be hoping that FY 2020 proves to be more successful for the company.
