Clime suffers $3.8m loss post-Madison divestment
Clime Investment Management (CIW) has reported a statutory loss of $3.8 million for FY24 following a “challenging period” for the firm.
Announcing its results for the 2023–24 financial year, the company saw a $3.8 million loss, following a $1.9 million loss in the previous financial year – marking a 102 per cent decline.
Clime’s FY24 result included an operating loss of $1.6 million, non-cash amortisation and depreciation charges of $1.36 million, and non-cash asset impairment expense of $0.85 million.
In May 2024, the firm announced its plans to divest Madison Financial Group and WealthPortal to rival licensee Infocus for $2 million, which was officially completed on 30 June. According to Clime, the Madison business reported a loss of $460,000 in FY24.
Clime also recently announced the departure of its group CEO Annick Donat, who stepped down on 31 July after three years in the role. The firm has since appointed Michael Baragwanath as acting managing director.
“The financial year 2024 continued a challenging period for Clime Investment Management, extending the difficulties experienced in 2023,” said John Abernethy, Clime chairman.
“As a result, the board took proactive measures in the second half of the year, initiating the divestment of Madison Financial Group. This strategic move has already yielded positive results, significantly improving CIW’s cash flow and operating profit. As a result, there has been a promising turnaround in CIW’s outlook, as seen in the encouraging trading activity in the early weeks of FY25.”
Abernethy reaffirmed that the Madison business “added significantly” to the cost of the business and posed further risk without “any real benefit” to its internal advice division.
“Further, the licensing business had stagnated inside a market for financial advice that was declining under the weight of regulation and growing industry costs. In summary, the board determined that the group was devoting too many resources, and therefore costs, to Madison which was contributing only about 20 per cent to our group revenue and was in an operational loss position,” he explained.
Following the sale, Clime has now returned to operating profit in the opening months of FY25 and is targeting a minimum $2 million annual operating profit, the firm stated.
Its funds under management (FUM) also rose to $1.6 billion from $1.3 billion due to an investment management mandate of $240 million obtained towards the end of the financial year.
The chairman continued: “I can confirm that the outlook for CIW, in FY25, is for an operating result that will benefit from the significant cost reductions that will directly return CIW to sustainable profitability.
“We believe the company is on a clear path to recovery, and we are confident that the value of the company’s shares will improve over the next 12 months. As we grow, we anticipate that our operating margin will surpass 15 per cent (return on revenue) in FY25, putting us on track to achieve our target of around 30 per cent return in FY26–27.”
AUTHOR
Jasmine Siljic
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