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Aberdeen Asset Management 's profits may have come in just below analysts' expectations, but profits before exceptional items rose from £79.9m to £94.3m in the period. Pre-tax profits were dragged down by integration costs associated with the acquisitions made during the year, as well as the settlement of a legal action.
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Indeed, the underlying business performed well, with assets under management (AUM) up 30 per cent at £95.3bn, with the post year-end acquisition of Nationwide Financial Services in the US boosting the total AUM to over £100bn for the first time. Two purchases made during the year, DeAM Australia and Glasgow Investment managers, added £5bn to AUM.
The group also enjoyed a net fund inflow of £8.7bn and a further £3.1bn of mandates have been awarded since the year-end. Crucially, operating costs, up 10 per cent at £251m, rose proportionately less than income, while the balance sheet has been strengthened by the issue of $400m of subordinated debt - that's been used to help finance acquisitions and repay debt. Landsbanki is forecasting 2008 adjusted pre-tax profits of £125m and EPS of 13.4p (£94.3m and 11.1p in 2007).
| ABERDEEN ASSET MANAGEMENT (ADN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 167p | MARKET VALUE: | £1,050m | |
| TOUCH: | 166-167p | 12-MONTH HIGH: | 225p | LOW: 157p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 46 | |
| NET ASSET VALUE: | 67p* | NET DEBT: | 9% | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p)** | Dividend per share (p)** |
|---|---|---|---|---|
| 2003 | 142 | -6.40 | -5.64 | 2.57 |
| 2004 | 140 | -87.6 | -22.5 | 2.57 |
| 2005 | 156 | 31.6 | 6.68 | 3.00 |
| 2006 | 302 | 53.8 | 6.41 | 4.40 |
| 2007 | 348 | 23.7 | 3.61 | 5.50 |
| % change | +15 | -56 | -44 | +25 |
Ex-div: 12 Dec Payment: 23 Jan *Includes intangible assets of £620m or 99p a share **Adjusted for 2005's rights issue |
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The shares, on a forward PE of 12, aren't especially pricey for the sector, and unlike some of its peers, Aberdeen isn't suffering from an outflow of funds. So, although the shares have slipped from our original buy tip (192p, 13 April 2006), we reiterate that stance. Buy.
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
