The in-play Pie Funds Management has reported a more than 40 per cent drop in net profit over the 12 months to March 31 this year as rising expenses more than cancelled out revenue gains.
According to the latest Pie annual accounts released last week, the $1 billion boutique racked up $15.5 million plus in expenses over the 12-month period compared to $10.1 million in the previous year: employee costs rose from $5.4 million to $8.3 million as ‘other’ expenses jumped from $4.5 million to $6.9 million during the year.
The Auckland-headquartered manager has been in expansion mode in recent years with a range of initiatives that include opening a Hawke’s Bay satellite office, putting boots on the ground in London, starting a financial advisory business and launching the Juno KiwiSaver scheme.
Meanwhile, during the 2018/19 financial year Pie saw revenue climb to almost $19.7 million, representing a $2.3 million year-on-year increase.
Investment management fees accounted for almost $10.4 million of Pie revenue during the year as performance fees held steady at about $8.5 million – almost exactly the same as the 2017/18 period – in what will be the last time the manager books this income line.
Pie abolished performance fees as of April 1 this year while raising the underlying investment management fee on most products.
In aggregate, Pie investment and performance fees totaled about 2 per cent of the firm’s approximately $1 billion under management.
Pie’s accounts also include inaugural income of over $169,000 from its recently-launched advisory arm while the group’s Juno magazine pulled in more than $241,000 in advertising revenue ($224,000 last year).
The boutique manager, headed by Mike Taylor, is currently shopping around for equity partners in an offer that reportedly values the business at about $100 million.
Under the deal, prospective purchasers can buy either a 25 per cent or 75 per cent stake in Pie, according to sources who have sighted the paperwork.
Pie issued about 14,000 shares (to staff and investors) in the 2017/18 tax year at a price of about $213 each, implying an enterprise value of about $84 million at the time (based on a total equity pool of just over 394,000 shares). Mike and Jacqueline Taylor own almost 40 per cent of the company.
Over the most recent financial year, Pie also paid out dividends of $3.17 per share, or a total $1.25 million compared to $1.48 million in the previous annual period.