Aust Unity to grow despite profit drop
Australian Unityis to double the size of its financial planning business and launch a new superannuation administration service by the end of October despite reporting a significant drop in after-tax profits for the 2003 financial year.
Profits tumbled more than 35 per cent, down to $6.5 million compared to $10.1 million for the 2002 financial year.
Managing director Ian Ferres says the drop in profit was due to increasing the reserves in its general insurance business as well as a $5 million write-off in the Australian Unity pharmacy business.
“We have also been spending more on IT systems, and some of the general insurance reserves were held in equities, which performed badly during the year,” he says.
However operating revenues for the group were up 10 per cent and the organisation attracted 35,000 new customers over the year.
Inflows into its funds management operations also rose, up $180 million to push its funds under management out to $1.2 billion.
Ferres, announcing the profit results yesterday, also confirmed Australian Unity’s expansion plans to increase planner numbers and launch a super admin system.
“We aim to have 50 planners in a couple of years and push the funds under administration to $200 million by the end of next year,” he says.
“Without pressure, planners are using a lot of Australian Unity products and we are getting about 25 per cent of the funds under advice - which is ahead of budget.”
The new superannuation administration service will be launched by the end of this month and will target corporate funds with between 50 and 300 members.
“We will be offering a total service with cross-benefits in areas such as general insurance premiums for the members,” Ferres says.
Over the past 12 months Australian Unity has rationalised some products, including its socially responsible investment trusts.
“We have decided you can’t be everything to everybody so we are specialising in certain areas,” Ferres says.
One of these specialist areas is micro-caps and Australian Unity subsidiary Acorn now has $200 million of funds under management. It operates a wholesale trust and Ferres expects funds under management to double in the next six months as it wins more mandates.
Property operations within its funds management division were in profit but Ferres says it’s getting harder to find properties offering the level of returns expected by investors.
“Investors expect 9 per cent returns from property syndicates and we find it hard to get properties that will achieve that figure,” he says.
Australian Unity’s latest syndicates, with properties in Tamworth and Ballarat, have almost raised the required amount and Ferres says the company will launch another syndicate in the new year.
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