Ninety One maintains earnings and declares dividend despite challenging conditions

CFO Kim McFarland says the half-year ended 30 September was a period of intense client activity.

Independent investment manager Ninety One has delivered a solid performance for the six months ended 30 September 2020.

“Overall, we showed our resilience and ingenuity in an exceptionally tough market,” says Ninety One CFO Kim McFarland. “The positive mindset and strong culture of Ninety One were significant contributors to this performance.”

She says that the company has maintained its earnings and declared a maiden interim dividend despite the challenging conditions. “We also managed to further build our capital base, enhancing our balance sheet, and increased our staff shareholding in the business to 22.5 percent.”

The highlights of the results include:

  • Assets under management increased by 15 percent to £119,0 billion, though average AUM decreased by three percent.
  • Net outflows of £0.3 billion.
  • Net revenue decreased by one percent to £297.3 million, although performance fees increased substantially (to £18 million).
  • Profit before tax increased by three percent to £94.8 million.
  • Basic earnings per share increased by one percent to 7.9p and adjusted earnings per share remained flat.
  • Declared an interim dividend of 5.9 pence per share.
  • Staff shareholding increased to 22.5 percent.

The loss of a few large institutional mandates, relating to the prior period performance and the company’s experience of a cautious approach in the advisor channel, contributed to its performance in this period. “Our business is in a better place than at the beginning of the reporting period in terms of performance and pipeline visibility, but flows look likely to remain performance and market sensitive for the near term,” Kim says.

She explains that, in South Africa, Ninety One will play a key role in addressing the challenge of growing the economy to restore growth, confidence and employment. “We continue to see long-term growth opportunities in markets in which we operate, and we are ready and energised to increase our intensity and to deliver value for our clients, while investing to support our long-term growth.”

Expanding client base
Kim says that one of the biggest challenges Ninety One faced during Covid-19 was reaching new client opportunities. “This period has shown us that the market conditions we experienced this year favoured incumbents more than before.”

She explains that the pandemic saw an initial “risk-off” approach from clients in the advisor channel.

“We are also impacted by lower than usual levels of pipeline visibility in parts of the institutional market, which affected our new business momentum,” she adds.

To adapt to this new reality, Ninety One learnt new and efficient methods of client engagement. “This was a period of intense client activity, and we had to adapt to doing much of that virtually,” Kim explains. “We invested heavily in technology and into our people to meet his new challenge.”

She says that the business managed to get closer to its clients despite the challenges. “I can say with confidence that we have never had client recognition like we have had in the last six months.”

Ninety One has also taken steps to keep its business simple. The company announced the intended disposal of Silica, its third-party administration business in South Africa, and an external partnership to sub-advise the remainder of its Africa Private Equity business.

“Our South African business leveraged its leadership position and our long investment performance track record to deliver strong results, despite very weak economic conditions in the country,” Kim concludes.