Magellan raises H1 profit, defies setbacks

Steven Deare |

Magellan Financial Group has overcome recent turmoil to post a higher first-half profit and is offering deals on options to shareholders who stayed loyal.

Magellan on Friday reported net profit rose 24 per cent to $251 million despite losing boss Brett Cairns, a major contract and substantial share price value in the six months to December 31.

The charging of management and services fees on about $95 billion worth of funds under management was the biggest contributor to profit. This fee revenue rose 13 per cent to $352 million.

Shareholders will have a one-for-eight options offer, priced at $35 per option.

The company also flagged it may offer an on-market share buyback, depending on market conditions.

Staff will also be rewarded with 10 million unlisted options.

Chairman Hamish McLennan said while the bonus issue of options was a potential source of value for shareholders, there was more work to do.

“I am very confident Magellan has the team and processes to overcome recent setbacks, and we remain extremely focused on improving outcomes for shareholders.”

The company promoted Kirsten Morton to interim chief executive in the wake of Mr Cairns leaving, with the permanent boss yet to be decided.

Shareholders will receive an interim dividend of 110.1 cents per share, 75 per cent franked. This payment is more than the 97.1 cents from this time last year.

Magellan has an 11 per cent stake in the Guzman y Gomez Mexican food chain and its directors include former Australian Wallabies rugby captain John Eales. 

Shares in the company rose to a record $74.91 on February 14, 2020.

Problems then emerged in 2021 and shares plummeted.

The setbacks included previous chairman Hamish Douglass taking medical leave following a relationship breakdown and media claims he would sell his 12 per cent stake in the fund manager. He did not.

Magellan shares on the ASX moved higher as the trading day continued.

They were up 18 per cent to $21.66 at 1454 AEDT.