The Platinum Asset Management Ltd (ASX: PTM) share price will be one to watch tomorrow following the release of its preliminary full year results after the market close on Wednesday.
How did Platinum perform in FY 2020?
Platinum had a tough 12 months in FY 2020 and saw a sharp decline in funds under management (FUM) weigh on its revenue and profit.
For the 12 months ended 30 June 2020, Platinum reported a 13.7% decrease in FUM to $21.4 billion. This was driven by net fund outflows of $3 billion during the year, with absolute investment returns contributing $0.2 billion to its FUMs.
This weighed on its management fee revenues for the year, which decreased 6.5% year on year. Positively, the company reported a rebound in its performance fee revenue from $0.3 million to $9.1 million. This was primarily attributable to strong relative performance by the Asia ex Japan and Healthcare strategies.
This ultimately led to total revenue and other income coming in at $298.7 million, down 0.2% from FY 2019.
Platinum's costs increased by $1.5 million in FY 2020 to $77.9 million. This was due to an increase in occupancy related expenses (up $1.8 million due to office fit-out costs) and share-based payments expenses. These increases offset a decrease in staff costs and custody and unit registry fees.
As a result of this increase in its costs, Platinum's net profit fell 1.3% to $155.6 million in FY 2020. This represents 26.76 cents on a per share basis.
Challenging year.
Management acknowledged that FY 2020 was a challenging year for the company.
It commented: "It has been a somewhat challenging year for Platinum Asset Management Limited with investment returns for our flagship Platinum International Fund overshadowing some strong investment performance in other areas, most notably our Asia ex-Japan and International Health Care focused strategies. This underperformance in the flagship fund translated into net fund outflows and lower funds under management, albeit that overall revenues were flat for the year and profit after tax was down only slightly, by 2%, when compared to the prior period."
Outlook.
Positively, Platinum's Managing Director, Andrew Clifford, appears cautiously optimistic on the future.
He commented: "COVID-19 has roiled markets. Despite the global economic and investment backdrop, the world will reset and over time, will work its way out of recession. Importantly, many companies will be the beneficiary of this, and it is here that the opportunity set is vast and exciting. The investment team remains focused on ensuring the portfolios are positioned accordingly."
