Aust Unity prepares for demutualisation decision
Australian Unity has boosted profits on the back of growing funds under management (FUM) as it edges closes to a decision on a possible demutualisation.
The mutual fund manager reported an after-tax profit of $13.4 million, up 65 per cent as its FUM climbed to $2.8 billion for the 2005 financial year.
Australian Unity group managing director Rohan Mead said moving the business away from its traditional bond products had boosted inflows.
“It is the newer unitised products that have been enjoying success [with inflows] while the traditional friendly society bonds are attracting less support,” he says.
Gross inflows for the year were $525 million, which when adjusted for outflows, came down to $310 million.
The growth of inflows was driven by the fund manager’s mortgage trust, property funds and increasing inflows at its microcap joint venture Acorn.
The traditional bond products attracted inflows of $24.2 million, but this was countered with outflows of almost $46 million.
The total FUM in traditional friendly society bond products now stands at $484 million.
The funds management business of Australian Unity generated a pre-tax profit of $4.7 million, up from $556,000 in 2004.
Mead said there would be further new products to propel the growth in FUM and the company was looking at ways of securitising its retirement village assets into investor products.
The company would also look at more joint ventures with boutique funds managers after its success with Acorn and its latest move into this area with Vianova.
The financial planning arm turned in another loss for the year although its revenues doubled to $1.85 million. The before-tax loss was $1 million, compared to a $1.1 million loss in 2004 financial year.
Meanwhile, Australian Unity edged towards a demutualisation decision with the appointment of consultants to prepare a report weighing up the options for members.
Consultants including Towers Perrin, Deloittes and Benson Partners will produce the valuation report of the fund manager.
The next step is to put a motion to the annual general meeting next month asking the members to amend the corporate structure to allow any demutualisation proposal to be put to a significant number of them. The significant number is to be set at 20 per cent of the membership attending a demutualisation meeting, although the move to end the mutual structure will still need a 75 per cent vote of the 200,000 members of Australian Unity.
Chairman Alan Castleman said the move was designed to stop any small minority of members pushing through a change in the company against the wishes of the general membership.
“The proposed ensures that members are properly informed of the consequences of any demutualisation-like proposal, before they are asked to vote on it,’ he said.
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