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Aberdeen turns the corner

The manager's net asset outflows have fallen sharply, and by more than expected
May 2, 2017

This could be the last set of half-year figures from Aberdeen Asset Management (ADN) before its proposed merger with life assurance group Standard Life (SL.). Subject to regulatory and shareholder approval, that deal is expected to complete in Aberdeen's fourth quarter ending September 2017.

IC TIP: Hold at 290.3p

The trading climate showed a positive turn. For while there was a £10.5bn net outflow of funds in the first quarter, this had slowed markedly to £2.9bn in the second quarter amid signs of recovery in emerging markets, where Aberdeen recorded net inflows of £800m.

Operational improvements are in train, with steps now completed to make annualised savings of £70m, although operating expenses in the first half were still up by £19m to £346m after sterling's weakness added £45m to the cost base. On a constant-currency basis, costs fell by £26m from a year earlier. This helped to improve the operating margin to 35.3 per cent, from 32.6 per cent in the year to September 2016.

With net revenue boosted by stronger markets and currency variations, performance-related fee income jumped from £1.5m a year earlier to £7.8m, while the blended average management fee rate was steady at 33.7 basis points.

Broker Numis forecasts pre-tax profit of £357m for the year to September 2017 and EPS of 21.1p (from 353m and 20.7p in FY2016).

ABERDEEN ASSET MANAGEMENT (ADN)
ORD PRICE:290.3pMARKET VALUE:£3.83bn
TOUCH:290.2-290.3p12-MONTH HIGH:354pLOW: 213p
DIVIDEND YIELD:6.7%PE RATIO:23
NET ASSET VALUE:124p*NET CASH:£498m

Half-year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2016539995.57.5
20175891156.27.5
% change+9+16+13-

Ex-div: 11 May

Payment: 15 Jun

*Includes intangible assets of £1.4bn, or 109p a share