Fixed income credit manager BlueBay Asset Management plc (BBAY.L) Friday reported a surge in profit for the six months ended 31 December 2009, reflecting a 146% surge in performance income combined with lower effective corporation tax rate, the absence of exceptional costs, and improved margins.
Assets under management more than doubled from the previous year. The company said it had a strong net fund inflow in January 2010 as estimated.
In a seperate press release, BlueBay announced a secondary placing of up to 13 million existing ordinary shares of 0.1 pence each to be effected through an accelerated book build. The shares are being offered for sale by chief executive officer, Hugh Willis, and the company's CIO, Mark Poole; with each offering up to 6.5 million shares for sale, which in aggregate represents approximately 6.7% of the issued share capital of the company.
Profit for the half-year attributable to to ordinary equity shareholders more than quadrupled to GBP 19.71 million from GBP 4.59 million in the year-ago period. Results of the previous year have been restated to reflect a change in accounting policy. Earnings per share for the half-year rose to 9.9 pence from 2.3 pence in the year-ago period.
Six-month pre-tax profit tripled to GBP 26.01 million from GBP 8.59 million in the prior-year period.
Revenue for the six months grew to GBP 76.72 million from GBP 54.26 million in the comparable period last year.
Total fee income increased 33% to GBP 69.9 million from GBP 52.4 million in the same period last year. Net management fees rose 13% to GBP 49.8 million from GBP 44.3 million in the year-ago period. Crystallised performance fees surged 146% to GBP 20.1 million from GBP 8.1 million in the prior-year period. The company noted that approximately 75% of the current performance fees were generated by the BlueBay Multi-Strategy Fund.
Assets under management more than doubled to US$34.3 billion from US$16.7 billion, driven by six month net inflows of US$6.8 billion and strong fund appreciation of US$2.8 billion. This, combined with the effect of the company's cost reduction programme, lifted operating margins to 37% from 21% in the comparable period last year. Operating profit for the half-year increased to GBP 25.88 million from GBP 7.58 million in the corresponding period last year.
Effective tax rate decreased to 24.2% of profits before tax from 46.7% in the comparable period last year. The directors proposed an interim dividend of 7.5 pence, up 341% from 1.7 pence per share last year. The dividend will be paid on 1 April 2010 to all shareholders on the register at 5 March 2010.
Willis said, "We have previously opined that, just as calendar 2009 was the year in which investors returned to credit markets and focussed primarily on investment grade credit as their entry point, 2010 is likely to be the year in which investors begin to add higher beta credit products to their portfolios, in search of increased returns." "We look forward to continuing to profit from a credit cycle that remains young; on behalf of clients and equity investors alike," Willis added. BBAY.L is currently trading at 320 pence per share, down 26.50 pence or 7.65% on the London Stock Exchange.
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