- AuM down 5 per cent
- 8.8bn pounds net outflows
- Profit down 10 per cent
- Dividend up 12.5 per cent
Aberdeen Asset Management suffered net outflows in a 'demanding' six months to end-March as it completed the acquisition of Scottish Widows Investment Partnership (SWIP) and sentiment tailed off, but said it was seeing signs of a pick-up in sentiment towards emerging economies.
Gross new business inflows fell £10bn to £14.3bn and outflows rose just over £3bn to £23.1bn, resulting from weak investor sentiment from equities and producing £8.8bn of net outflows during the period.
With £4.5bn of negative exchange rate
effect further cancelling out market appreciation of £3.3bn, assets under management pre-acquisition shrank 5% from £200.1bn to £190.4bn - although the addition of SWIP's assets took the total to £324.5bn.
Chief Executive Martin Gilbert said: "Aberdeen has delivered a resilient set of numbers in this half year, given the difficult backdrop for emerging markets. Our disciplined investment approach, long-term investment track record and tradition of client service have enabled us to limit equity outflows whilst we have continued to win mandates in other asset classes, such as fixed income and property."
Pre-tax profit fell 10.4% to £168.7m, while underlying profit, before amortisation of intangible assets and exceptional costs in respect of the SWIP acquisition, was down 2.6% to £217.0m to represent underlying earnings per share down 3.8% to 14.32p.
Yet the interim dividend has been increased 12.5% to 6.75p per share, in line with strategy.
This also reflects management confidence, buoyed by the acclaimed acquisition of SWIP and encouraging signs in some markets.
Said Gilbert: "There are signs of a pick-up in sentiment towards emerging economies, as investors are again identifying opportunities and recognising the fundamental strengths of these markets. Equally encouraging is the healthy improvement in the relative performance of our key equity products so far this year."
"At the end of March we were delighted to complete our acquisition of SWIP and the process of integrating the business is proceeding as planned. The deal adds scale and strengthens further our broad range of investment capabilities and confirms Aberdeen's position as one of the world's leading asset management groups."
The company pointed out that considerable corporate energy was invested during the period in completing the acquisition and the benefits to profitability will begin to accrue in the second half of the financial year.
Operating costs were cut 1% year-on-year, and were 4% lower than for the second half of the last financial year, and management said they had identified and implemented further cost savings over and above the synergies expected from the SWIP transaction.
Looking forward, despite the optimism about indications of some pick-up in investor's opinion of emerging markets, there is some caution that "uncertainty could remain".
Broker Canaccord Genuity was negative: "We see few near-term catalysts to drive the shares
upward from here, given the continued volatility in Emerging markets and expected outflows for the rest of the year. We believe earnings estimates for the full year will remain challenging, and given the lack of immediate catalysts we cut to a HOLD (from Buy). We expect dividends to develop well, given the continued cash generative nature of the business and some slack in terms of the cost base."
Analysts at Barclays were positive on the stock: "However, in the mix it is lower quality performance fees which have caused the revenue miss. If we strip those out we estimate these results are underlying about 3.6% below our expectations. The P&L miss is balanced, in our opinion, by a better management outlook which highlights improving investor sentiment in Mar and recovery in equity investment track record."