18th Jul 2008 07:08
ABERDEEN ASSET MANAGEMENT PLC
INTERIM MANAGEMENT STATEMENT - 3 MONTHS TO 30 JUNE 2008
Highlights
Increase in assets under management to £113.7bn
£5.6bn of new business won during the quarter
Acquisition of Goodman Property Investors completed
£57m of annualised cost savings identified
Martin Gilbert, Chief Executive of Aberdeen, commented:
"Despite these challenging market conditions, we continue to win new business across the Group's core asset classes and increase assets under management. At the same time, we are focusing on increasing our efficiency as a business and have identified £57m of annualised cost savings.
"Whilst market conditions may continue to be volatile, our global presence, breadth of products, quality of people and strong balance sheet all ensure we are well positioned to continue to make progress."
The equity, bond and property markets in which Aberdeen operates have continued to be volatile and are likely to remain so in the near future. Despite this unhelpful background, the Group has continued to attract healthy levels of new business, albeit redemptions have also continued at higher levels than experienced in more settled market conditions. Taking into account the assets added by the acquisition of Goodman Property Investors which was completed in the quarter, assets under management ("AUM") grew to £113.7 billion at 30 June 2008 (£107.3 billion at 31 March 2008). The principal changes in AUM in the quarter are shown in the following table.
|
Equities & fixed income £m |
Property £m |
Total £m |
|
|
AUM at 31 March 2008 |
90,112 |
17,175 |
107,287 |
|
Corporate acquisitions |
- |
7,315 |
7,315 |
|
Net new business |
337 |
540 |
877 |
|
Market movements, performance & FX |
(1,396) |
(396) |
(1,792) |
|
AUM at 30 June 2008 |
89,053 |
24,634 |
113,687 |
Gross new business wins for the quarter totalled £5.6 billion, compared to £6.4 billion for the same quarter last year, bringing the total for the nine month period to 30 June 2008 to £16.5 billion (2007 - £17.3 billion). A further £2.5 billion of new mandates had been awarded to the Group at 30 June 2008 but not funded at that date. Redemptions have continued to run at approximately 50% higher than last year's levels as many investors have reduced risk appetites in current market conditions. Assets withdrawn by clients in the quarter totalled £4.7 billion (2007 - £3.1 billion), bringing total redemptions for the nine month period to 30 June 2008 to £15.1 billion (compared to £10.1 billion for the nine month period to 30 June 2007). An analysis of the new business figures for the 9 months to 30 June 2008 is provided at the end of this statement.
Our investment teams have continued to pursue the disciplined bottom up approach to security selection which is at the heart of the Group's investment philosophy and process. The key equity disciplines of Asia Pacific, global emerging markets and global equities have continued to deliver excellent performance and, with the relevant benchmarks having given up much of the short term gains they enjoyed in 2007, these strategies are once again ahead of benchmark over both the long term and the short term. Our fixed income performance has recovered strongly in the quarter to June, following a difficult first half year in which credit spreads widened significantly. As we have reported previously, we have always had negligible exposure to the more toxic instruments in the fixed income market and the nature of the portfolios we manage is such that our investors will be able to sit out the turbulent markets and await the reversal of the mark-to-market declines which have impacted on performance in 2007 and early 2008.
We completed the acquisition of Goodman Property Investors ("GPI") on 30 May, adding some £7.3 billion of property AUM. The integration of the GPI business with the Group's existing property division is proceeding in accordance with the timetable and we expect the GPI team to transfer to our London office towards the end of 2008. Integration of the DEGI property fund management business, which was acquired earlier in the year, is also proceeding according to plan.
We reported at the time of our interim results that we were in the process of implementing certain cost cutting measures and that we expected to identify further savings in due course. We have now identified £27 million of annualised savings within the fund management division and £30 million in the property division, including approximately £7 million of synergies to be derived from the DEGI and GPI acquisitions. There will be some consequential reduction in annualised income from elimination of low margin property business, but we expect the net annualised benefit of these cost savings to be approximately £40 million before tax. We expect approximately £3 million of net benefit to be reflected in the second half of the current financial year, rising to approximately £35 million for the financial year to 30 September 2009, with the full annualised benefit reflected in subsequent years. One-off costs associated with these cost savings are expected to be approximately £12 million.
We decided in October 2007 that it was in the best interests of clients and the Group to close temporarily a number of fixed income strategies because of the large number of active searches we were already pursuing. Since October we have absorbed a significant proportion of the new business pipeline that had built up, with £1.4 billion of our reported inflows for the 9 months to 30 June arising from conversion of the pipeline in these strategies. We intend to reopen all these strategies so that institutional investors will once more have access to our highly regarded fixed income team whilst also maintaining the high level of service our clients have come to expect. We believe that this reopening is timely given the current market turmoil and the longer term opportunities now available.
We have also been considering the volume of searches we are pursuing for global emerging market ("GEM") equity mandates and we have decided that we should undertake a temporary close to new segregated business with effect from 31 July. This closure will enable us to concentrate on converting the pipeline of potential new GEM equity business whilst ensuring that existing client requirements, in terms of strong performance and already high service standards, are not compromised by the take-on of new business. The closure will not affect potential investment in our GEM equity pooled funds, nor will it prevent us accepting any additional investment from our existing clients. We will review this decision on an ongoing basis.
It is likely that market conditions will remain difficult in the coming months but we remain confident of our ability to add further profitable new business across our diverse range of equity, fixed income and property capabilities.
For further information, please contact:
|
Aberdeen Asset Management PLC |
|
|
Martin Gilbert, Chief Executive |
020 7463 6000 |
|
Maitland |
020 7379 5151 |
|
Neil Bennett |
07900 000777 |
|
Charlotte Walsh |
07813 889660 |
ASSETS UNDER MANAGEMENT AT 30 JUNE 2008
|
30 Jun 08 £m |
31 March 08 £m |
|
|
By type of mandate: |
||
|
Institutional mandates |
86,051 |
80,433 |
|
Open end funds (excluding property funds) |
11,357 |
11,068 |
|
Closed end funds (excluding property funds) |
5,564 |
5,702 |
|
Property funds |
10,715 |
10,084 |
|
113,687 |
107,287 |
|
|
By asset class: |
||
|
Fixed income |
47,431 |
47,963 |
|
Equities |
35,227 |
35,598 |
|
Property |
24,634 |
17,175 |
|
Multi Asset |
6,395 |
6,551 |
|
113,687 |
107,287 |
OVERALL NEW BUSINESS FLOWS FOR 9 MONTHS TO 30 JUNE 2008
|
Qtr to 31 Dec 07 |
Qtr to 31 Mar 08 |
6 mths to 31 Mar 08 |
Qtr to 30 Jun 08 |
9 mths to 30 Jun 08 |
|
|
Gross inflows: |
|||||
|
Fixed income |
2,807 |
1,839 |
4,646 |
2,109 |
6,755 |
|
Equities |
1,321 |
3,176 |
4,497 |
2,549 |
7,046 |
|
Property |
859 |
503 |
1,362 |
836 |
2,198 |
|
Multi Asset |
265 |
67 |
332 |
141 |
473 |
|
5,252 |
5,585 |
10,837 |
5,636 |
16,472 |
|
|
Outflows: |
|||||
|
Fixed income |
1,844 |
2,812 |
4,656 |
2,223 |
6,878 |
|
Equities |
2,885 |
2,152 |
5,037 |
1,854 |
6,890 |
|
Property |
175 |
200 |
376 |
297 |
672 |
|
Multi Asset |
206 |
88 |
295 |
386 |
681 |
|
5,110 |
5,252 |
10,362 |
4,759 |
15,121 |
|
|
Net flows: |
|||||
|
Fixed income |
963 |
(973) |
(10) |
(113) |
(123) |
|
Equities |
(1,564) |
1,025 |
(539) |
695 |
156 |
|
Property |
684 |
302 |
986 |
540 |
1,526 |
|
Multi Asset |
59 |
(21) |
37 |
(245) |
(207) |
|
142 |
333 |
475 |
877 |
1,351 |
NEW BUSINESS FLOWS FOR 9 MONTHS TO 30 JUNE 2008 - FIXED INCOME
|
Qtr to 31 Dec 07 |
Qtr to 31 Mar 08 |
6 mths to 31 Mar 08 |
Qtr to 30 Jun 08 |
9 mths to 30 Jun 08 |
|
|
Gross inflows: |
|||||
|
Asia Pacific |
369 |
112 |
481 |
299 |
780 |
|
Emerging markets |
301 |
49 |
350 |
55 |
405 |
|
Europe |
125 |
92 |
217 |
137 |
355 |
|
Global |
355 |
517 |
872 |
829 |
1,701 |
|
High yield |
132 |
59 |
191 |
77 |
268 |
|
UK |
856 |
254 |
1,110 |
170 |
1,279 |
|
Unfunded strategies |
- |
36 |
36 |
- |
36 |
|
US |
669 |
719 |
1,388 |
542 |
1,931 |
|
2,807 |
1,838 |
4,646 |
2,109 |
6,755 |
|
|
Outflows: |
|||||
|
Asia Pacific |
553 |
838 |
1,390 |
467 |
1,857 |
|
Emerging markets |
123 |
283 |
405 |
55 |
461 |
|
Europe |
39 |
49 |
88 |
304 |
392 |
|
Global |
424 |
339 |
763 |
167 |
929 |
|
High yield |
131 |
92 |
222 |
40 |
262 |
|
UK |
307 |
521 |
828 |
505 |
1,333 |
|
Unfunded strategies |
- |
- |
- |
- |
- |
|
US |
268 |
691 |
959 |
685 |
1,644 |
|
1,844 |
2,812 |
4,656 |
2,223 |
6,878 |
|
|
Net flows: |
|||||
|
Asia Pacific |
(184) |
(726) |
(909) |
(167) |
(1,077) |
|
Emerging markets |
178 |
(234) |
(55) |
(1) |
(56) |
|
Europe |
86 |
43 |
129 |
(167) |
(37) |
|
Global |
(69) |
178 |
109 |
663 |
772 |
|
High yield |
1 |
(32) |
(31) |
37 |
6 |
|
UK |
548 |
(267) |
282 |
(335) |
(54) |
|
Unfunded strategies |
- |
36 |
36 |
- |
36 |
|
US |
401 |
28 |
430 |
(143) |
287 |
|
963 |
(973) |
(10) |
(113) |
(123) |
NEW BUSINESS FLOWS FOR 9 MONTHS TO 30 JUNE 2008 - EQUITIES
|
Qtr to 31 Dec 07 |
Qtr to 31 Mar 08 |
6 mths to 31 Mar 08 |
Qtr to 30 Jun 08 |
9 mths to 30 Jun 08 |
|
|
Gross inflows: |
|||||
|
Asia Pacific |
677 |
1,027 |
1,705 |
1,052 |
2,756 |
|
Global emerging markets |
297 |
765 |
1,062 |
680 |
1,742 |
|
Europe |
18 |
17 |
35 |
22 |
57 |
|
Global & EAFE |
233 |
968 |
1,201 |
569 |
1,770 |
|
Specialist |
25 |
234 |
259 |
41 |
299 |
|
UK |
25 |
51 |
76 |
66 |
142 |
|
US |
46 |
114 |
161 |
120 |
281 |
|
1,321 |
3,176 |
4,497 |
2,549 |
7,046 |
|
|
Outflows: |
|||||
|
Asia Pacific |
2,256 |
1,211 |
3,467 |
1,046 |
4,513 |
|
Global emerging markets |
153 |
210 |
363 |
205 |
568 |
|
Europe |
45 |
37 |
82 |
50 |
132 |
|
Global & EAFE |
65 |
82 |
147 |
79 |
226 |
|
Specialist |
43 |
326 |
369 |
193 |
562 |
|
UK |
143 |
88 |
232 |
125 |
357 |
|
US |
180 |
198 |
378 |
155 |
533 |
|
2,885 |
2,152 |
5,037 |
1,854 |
6,890 |
|
|
Net flows: |
|||||
|
Asia Pacific |
(1,579) |
(183) |
(1,762) |
6 |
(1,756) |
|
Global emerging markets |
144 |
556 |
699 |
474 |
1,174 |
|
Europe |
(27) |
(20) |
(47) |
(28) |
(75) |
|
Global & EAFE |
168 |
886 |
1,054 |
490 |
1,544 |
|
Specialist |
(18) |
(92) |
(110) |
(153) |
(263) |
|
UK |
(118) |
(38) |
(156) |
(60) |
(215) |
|
US |
(133) |
(84) |
(217) |
(35) |
(253) |
|
(1,564) |
1,025 |
(539) |
695 |
156 |
Note: Figures in the above tables may appear not to add due to rounding differences.
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