Clime Investment Management Returns to Profit, Proposes Dividend
Clime Investment Management has reported a return to profitability in the December half, proposing an interim dividend and unveiling strategic initiatives to drive future growth.
- Company returns to profit in December half
- Interim dividend of at least 0.2 cents per share proposed
- Over $250,000 IT cost savings reinvested in technology upgrades
- Funds under management slightly decreased to $1.63 billion
- New appointments strengthen operational and investment capabilities
Return to Profitability and Dividend Proposal
Clime Investment Management Limited (ASX: CIW) has announced a significant turnaround, returning to profitability in the December half of FY25. This marks a welcome shift after nearly three years without dividends, with Managing Director Michael Baragwanath recommending an interim dividend of at least 0.2 cents per share. The company retains over 1 cent per share in franking credits, underscoring a strengthened balance sheet position.
The profit was achieved despite absorbing abnormal expenses and reflects the successful execution of cost-saving initiatives and operational efficiencies. Clime closed the half with approximately $1 million in cash and $3.5 million in liquid assets, including income-yielding notes.
Operational Enhancements and Strategic Investments
During the quarter, Clime undertook a comprehensive review of its insurance arrangements and legacy liabilities related to the divested Madison Financial Services License. Collaboration with Infocus Securities Australia Pty Ltd was highlighted as instrumental in resolving these legacy matters pragmatically.
Significant IT cost savings exceeding $250,000 were realised and fully reinvested into upgrading middle office and advisory technology. This includes process automation and hardware replacements, alongside a review of funds management software aimed at enhancing reporting and transaction capabilities. Notably, Clime has initiated project scoping for a renewed "Clime Direct" platform targeting self-directed investors with AI integration, signaling a forward-looking digital strategy.
Client Engagement and Distribution Strategy
Clime is refocusing on the core activities that originally built the company, including direct client engagement, public events, strategic sponsorships, and content tailored for financial advisers. Plans to relocate Sydney and Melbourne offices to more client-friendly locations aim to facilitate in-person meetings and events, reinforcing relationship-building efforts.
The company’s digital communication strategy has yielded remarkable organic growth, with unique account reach soaring from under 1,000 to over 21,000 without additional marketing spend. Chairman John Abernethy’s economic commentary has resonated strongly on social media platforms such as TikTok and Instagram, attracting hundreds of thousands of views and enhancing brand visibility.
Funds Under Management and Investment Performance
As of 31 December 2024, Clime’s Funds Under Management (FUM) stood at $1.63 billion, a slight decrease of 1.5% from the previous quarter, primarily due to market movements and pension payments. Funds Under Advice (FUA) also declined modestly to $953 million. Despite these small decreases, the company maintains a diversified asset base across separately managed accounts, managed funds, and listed investment companies.
Investment returns for 2024 were robust, with Clime’s multi-asset portfolios delivering double-digit pre-tax returns. Balanced, Growth, and High Growth SMA strategies posted returns of 8.84%, 11.89%, and 13.86%, respectively, benefiting from strong international equities and a weakening Australian dollar. Chief Investment Officer Will Riggall emphasized ongoing opportunities amid market valuation extremes, with a commitment to active management and cost reduction in fund offerings.
Strengthening Team and Future Outlook
Key appointments at the end of 2024 included an operations manager and two new investment managers to oversee listed assets and wholesale offerings. These hires reflect Clime’s focus on bolstering front-line capabilities and operational complexity management.
Looking ahead, Clime aims to build on its positive momentum by enhancing product offerings and distribution frameworks. The company acknowledges that while cost savings will become more challenging, its diversified business model across private client advice and multi-asset products provides resilience and growth potential. The upcoming half-year profit and dividend announcement, expected in late February, will be a critical milestone for investors.
Bottom Line?
Clime’s return to profit and dividend signals a turning point, but sustained growth hinges on execution of its strategic renewal.
Questions in the middle?
- How will Clime’s new AI-driven 'Clime Direct' platform impact client acquisition and retention?
- Can the company reverse the recent slight decline in funds under management amid volatile markets?
- What are the risks and opportunities in Clime’s plan to expand direct client engagement and physical office presence?