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Pengana (ASX:PCG) share price on watch on 25% growth of HY21 dividend

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The Pengana Capital Group Ltd (ASX: PCG) share price is under the spotlight today after the fund manager announced its FY21 half-year result and a big dividend increase.

Pengana’s FY21 half-year result

The fund manager announced that its funds under management (FUM) grew by 15%, ending at $3.59 billion in December 2020. The investment performance contributed $463 million and it saw positive net inflows of $81 million. However, distributions were a negative impact of $80 million.

Management fee revenue increased by 1.6% to $17.7 million. Pengana said the benefit of higher FUM at the period end will be reflected in the second half of the year. Performance fee revenue jumped 88.9% to $10.3 million. Net fund direct expenses improved 21.4% to $1.4 million as the business focused on reducing expenses.

The fund manager said that its funds achieved strong investment performance, with all strategies outperforming respective benchmarks for the period.

The management fee margin decreased to 1.15%, down from 1.21% in FY20. The total fee margin rose to 1.87% including the performance fees.

Operating earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 30.2% to $8.25 million. Underlying profit before tax grew by 17% to $9.2 million. Underlying earnings per share (EPS) went up 13% to 5.96 cents.

However, statutory profit declined slightly to $3.17 million and statutory EPS dropped to 3.79 cents.

Dividend declared

Pengana announced an interim dividend of 5 cents per share, which was an increase of 25% compared to the prior corresponding period.

Pengana share price movements

Over the last year the Pengana share price has risen 34%. However, over the last six months the Pengana share price has gone up 68%.

CEO commentary

The Pengana managing director and CEO Russel Pillemer said:

Admist a highly volatile macro environment navigating around the uncertainty of vaccine trials, US election jitters, Brexit fallout and deteriorating China-US relations, all the major Pengana strategies delivered strong absolute and relative returns in the period, outperforming their respective benchmarks.

The trend towards higher margin products highlighted in our last annual report continues, as well as our increase in international equity products which comprised 53% of FUM at 31 December 2020.

Pengana’s outlook

The fund manager said that whilst the period had a high level of uncertainty and volatility in the global landscape, its strategic focus is always on the long-term growth and success of the company. Pengana believes it’s this focus on the long-term that led to the strong result in the period.

Mr Pillemer concluded:

The foundational steps we have taken in the last few years have been designed to build a platform for future growth and I have never been more confident; particularly as I am surrounded by talented people at all levels at Pengana, our product offering has never been more diverse and our ability to service and interact with our investors on a personal and digital level has never been better.

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