'Robust financial position': Magellan (ASX:MFG) share price surges 13% on half-year earnings

Why are Magellan's results exciting investors today?

| More on:
A wide-eyed happy woman with long brown hair and wearing a pink top holds her hands up in delight after hearing positive news

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Magellan share price is surging on the back of its half-year financial results 
  •  Magellan declared a 13% boost to its interim dividend at 110.1 cents per share
  • The company also revealed details of a new capital management plan 

The Magellan Financial Group Ltd (ASX: MFG) share price is surging today after the wealth manager released its half-year results.

At the time of writing, Magellan shares are swapping hands at $20.75 apiece, a 13.26% gain. In comparison, the S&P/ASX 200 Index (ASX: XJO) is falling 0.97%.

Let's take a look at what the funds manager reported today.

Magellan share price soaring

Highlights of the company's half-year (H1 FY22) results include:

  • Net profit after tax (NPAT) of $251.6 million, 24% more than the previous corresponding period (PCP) of H1 FY21
  • Adjusted NPAT surged 16% to $248.1 million
  • Adjusted revenue and other income up 15% to $384.1 million
  • Adjusted diluted earnings per share up 15% to 134.4 cents per share
  • Average funds under management up 12% to $112.7 billion.

What else happened in the half?

The company reported a 13% boost in its net tangible assets to $992.8 million. Its cash, financial, assets, and investments also increased 13% to $1,016.7 million. The company has no debt.

Magellan declared an interim dividend of 110.1 cents per share, a 13% increase on PCP. Magellan said its strong cash flows mean it can pay out 90-95% of its funds management profits. The dividend will be paid on 8 March.

Magellan believes it has "significant headroom" to continue to invest in the business. The company predicts its funds management expenses for FY22 will be between $125 to $130 million.

Management commentary

Speaking on the results boosting the Magellan share price today, interim CEO Kirsten Morton said:

Magellan has faced a number of challenges over recent months, however the group remains in a robust financial position and has delivered strong financial results for the period.

Magellan has a robust balance sheet with no debt and net tangible assets of $992.8 million, strong margins and operating cash flows which will enable us to continue to support and invest in the business.

We are focused on our core funds management business and delivering upon our investment objectives for our clients.

What's next for Magellan?

Magellan will offer a 1 for 8 bonus issue of options to shareholders as part of a 'significant' capital management plan revealed today. These options will have an exercise price of $35 each with a five-year term. A prospectus will be lodged likely in March.

Further, Magellan intends to issue $10 million unlisted options to its staff. These options will also have a $35 exercise price and a five-year term.

Magellan is also considering implementing an on-market share buyback subject to market conditions. The company is suspending its dividend reinvestment plan and has no intention to invest further via Magellan Capital Partners.

Commenting on this initiative, Magellan chairman Hamish McLennan said:

We believe the capital management initiatives announced today will be attractive to shareholders and reflect our focus on our core funds management business.

These initiatives and proposals are in line with our aim to deliver capital efficiency, solid dividends and attractive returns for shareholders.

Magellan share price summary

The Magellan share price has dived 54% in the past year. In 2022, it has fallen 2.5%.

For perspective, the benchmark ASX 200 index has returned 4.8% in the past year.

Magellan has a market capitalisation of about $3.4 billion based on today's share price.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Earnings Results

A man looking at his laptop and thinking.
Earnings Results

Why did the Aristocrat share price just plunge 13%?

Investors are smashing the Aristocrat share price today. But why?

Read more »

A woman wearing yellow smiles and drinks coffee while on laptop.
Earnings Results

CBA share price edges higher on $2.6b quarterly profit

Let's see how Australia's largest bank performed during the quarter.

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Technology Shares

Life360 share price rockets 14% on record Q1 result

This market darling's rapid growth has continued so far in 2025.

Read more »

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares
Earnings Results

Why is the QBE share price racing ahead of the benchmark on Friday?

Investors are bidding up QBE shares today. But why?

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Earnings Results

Macquarie share price leaps higher on rising full-year profits

Macquarie reported its full year FY 2025 results today. Here's why ASX investors are reacting enthusiastically.

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Technology Shares

Guess which ASX 200 tech stock is crashing 14% on results day

This tech stock is having a rough time today. But why?

Read more »

Worried woman calculating domestic bills.
Earnings Results

ANZ share price falls on half-year results

How did the bank perform during the first half? Let's find out.

Read more »

Man looking happy and excited as he looks at his mobile phone.
Bank Shares

NAB share price jumps on solid half year results

Investors have responded positively to the bank's results.

Read more »