Clime IM makes ‘rapid return’ to profits following shareholder backlash
Clime Investment Management has declared a small profit in the December quarter following a statutory loss of $3.8 million in FY24 and subsequent shareholder backlash.
Announcing its results for the December quarter, Michael Baragwanath, managing director of Clime, said the company’s cost-out initiatives have resulted in a “rapid return to a solid financial position” with a small profit.
Clime declared a profit and finished the half-year period with $1 million of cash and $3.5 million of liquid assets and income yielding notes. The size of the profit will be detailed in its half-year results in February.
“In previous updates we outlined cost-out initiatives and potential savings. These activities, combined with an unrelenting focus on delivering value for both our shareholders and importantly our valued clients, has resulted in a rapid return to a solid financial position and delivered a small profit in the December half year,” Baragwanath stated.
“Initially, we expected to see the benefits of these efforts in the June half of FY25. However, I am delighted to report that the company has successfully covered the cost of abnormal expenses, will declare a profit, and finish the half with $1 million of cash and $3.5 million of liquid assets and income yielding notes.”
Clime’s funds under management (FUM) saw a small decrease of 1.8 per cent from $1.66 billion in the September quarter to $1.63 billion as at 31 December 2024. This was primarily due to market movements at the December close and pensions paid to retired clients, the firm stated.
Meanwhile, its funds under advice (FUA) in the Clime Private Wealth division also saw a slight decline of 1.5 per cent from $967 million in September to $953 million in December.
Baragwanath continued: “Notably, after an absence of near three years, I will recommend to the board that an interim dividend of at least 0.2 cents per share is paid based on both our unaudited half year performance and the trends I see flowing into the second half and into FY26. Clime retains over 1 cent per share in franking credits.”
During the quarter, Clime also completed several key initiatives, including:
- A comprehensive review of its insurance arrangements and potential liabilities related to claims from the now sold Madison Financial Services Licence.
- Worked closely with the team at Infocus Securities Australia to address legacy matters.
- Finalised its IT systems review, with over $250,000 in IT services cost savings realised.
- Reinvested 100 per cent of these savings in improving its middle office and advice technology.
- Reviewed its funds management software solutions with the aim of improving reporting and transaction capability in the near future.
- Commenced project scoping for a renewed “Clime Direct” offer designed for self-directed investors and utilising artificial intelligence.
While Clime has returned to profitable growth, the managing director said there are “no laurels to rest on” with the business still requiring further improvements and transformation.
“The business still requires careful husbandry, further improvements and a little bit of luck to successfully navigate its way back to sustainable compound income growth.
“The outlook for Clime is positive, we have a broad capability for a business our size and numerous opportunities to increase revenue, improve profitability and lower the overall cost for our existing clients. This is a fortunate position to be in.”
In August, the firm announced its results for financial year 2024 and reported a statutory loss of $3.8 million amid a “challenging period”. This followed a $1.9 million loss in the previous financial year.
Speaking at the AGM in November, chair John Abernethy said: “Clearly the results were unsatisfactory and required corrective actions.”
The firm faced shareholder backlash as a result of the financial results and announced corrective actions to return the firm to profitability.
The next quarter will centre on improving its products and distribution framework, Baragwanath said, with the firm committed to positioning Clime for “substantial profit growth”.
AUTHOR
Jasmine Siljic
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