Ninety One plc (LON:N91) has announced its interim results for the six months to 30 September 2023.
Highlights
‒ Challenging market and business conditions.
‒ Closing assets under management decreased by 5% in the six months, to £123.1 billion.
‒ Net outflows of £4.3 billion.
‒ Basic earnings per share decreased by 5% to 8.9 pence and adjusted earnings per share decreased by 9% to 8.2 pence.
‒ Adjusted operating profit margin unchanged at 32.6%.
‒ Interim dividend of 5.9 pence per share.
‒ Competitive long-term investment performance.
‒ Staff shareholding increased to 29.4%.
| £ billion | 30 September 2023 | 30 September 2022 | 31 March 2023 |
| Assets under management | 123.1 | 132.3 | 129.3 |
| Net flows | (4.3) | (3.2) | (10.6) |
| Average assets under management | 125.3 | 138.2 | 134.9 |
| Key financials(1) | Six months to 30 September 2023 | Six months to 30 September 2022 | Change% |
| Profit before tax (£’m) | 104.0 | 110.6 | (6) |
| Adjusted operating profit (£’m) | 97.9 | 107.9 | (9) |
| Adjusted operating profit margin | 32.6% | 32.6% | |
| Basic earnings per share (p) | 8.9 | 9.4 | (5) |
| Basic headline earnings per share (p) | 8.9 | 9.4 | (5) |
| Adjusted earnings per share (p) | 8.2 | 9.0 | (9) |
| Interim dividend per share (p) | 5.9 | 6.5 | (9) |
Note: (1) Please refer to explanations and definitions on pages 12-14.
Hendrik du Toit, Founder and Chief Executive Officer, commented:
“Rising interest rates and increased geopolitical uncertainty have contributed to continued investor caution. Equity markets have been driven by narrow sectoral and geographic performance. These factors have dampened investor appetite for emerging markets and public equities in general. We expect these conditions to remain for the rest of the financial year.
“Our response is to intensify our efforts in areas in which we can compete for market leadership, delivering best-in-class service to our clients and applying strict cost discipline, while maintaining our long-term growth mindset. In times like these the owner culture we have nurtured over many years becomes a critical success factor. The people of Ninety One have the team spirit, skill and self belief to prevail in the face of hostile business conditions. In spite of the well-known structural challenges faced by the active investment management industry, the dominant headwinds are cyclical in nature. We are confident in our ability to regain our growth momentum.”
Investor presentation
A presentation to investors and financial analysts will be held at our London office (55 Gresham Street, EC2V 7EL) at 9.00 am (UK time) on 15 November 2023. There will be a live webcast available for those unable to attend. The webcast registration link is available at https://ninetyone.com/interim-results-webinar.
A copy of the presentation will be made available on the Company’s website at https://ninetyone.com/interim-results-presentation at 8.00 am (UK time).
CHIEF EXECUTIVE OFFICER’S REVIEW
The operating conditions during the first half of the 2024 financial year continued to be extremely challenging. The caution we signalled at the beginning of this reporting period was justified. The impact of sharply rising long-term interest rates and geopolitical risks have continued to dampen investor risk appetite. On the surface, equity markets rose, but the rally was extremely narrow and largely restricted to a small number of large US technology companies.
Ninety One is a “risk-on” business operating in what we have described as a “risk-off” environment. Ours is a predominantly long-only business, inherently exposed to the price volatility of the financial assets in which we invest client capital. This exposure adds significant shareholder value over time but is currently not supportive of value creation. We know that successful investing is about taking sensible risks over the long term to generate excess returns. This is what we aim to do for our clients, even if near-term conditions are not supportive of price levels for risk assets. Since our inception in 1991, we have dealt with these inevitable periods of adverse market conditions by applying our well-tested investment processes, concentrating on our clients and their requirements, and ensuring that our people are focused on the task at hand and are equipped with the necessary resources to do so.
Our response to the current headwinds is not to change course, but to focus on our chosen areas of expertise and continue to seek market-leading positions which could be scaled up in the years to come. We continue to deepen our relationships within our target segments. In our chosen markets we build long-term relationships with leading asset owners and asset platforms. Our South African business continues to do well. In this market we offer a broader set of strategies than in the rest of the world to support our market leadership. Our efforts in North America, the largest savings market in the world, will pay off once risk appetite returns.
Our business model remains people centric, capital light and technology enabled. Through the cycle we continue to build our intergenerational talent pipeline, maintain capital discipline and invest in supporting technology and the digitalisation of our business. Stability and our owner-culture are key foundations for Ninety One and we have no intention of undermining them because of temporary headwinds. Our people now own over 29% of the equity in Ninety One, which is an indication of our long-term orientation and appropriate alignment of interests with our stakeholders. As always, we are mindful of our cost line and the need for cost discipline through the cycle.
In line with our stated purpose of investing for a better tomorrow, through building a better firm, striving to invest better and actively contributing to a better world, our sustainability efforts continue unabated. Ninety One intends to play its part in the financing of the transition to a more sustainable global economy. We are working hard to grow our portfolio of sustainable strategies to give our clients exposure to the winning companies of tomorrow and to benefit from the growing opportunities offered by the energy transition alongside the dynamism of emerging markets.
Outlook
At the end of the previous financial year, we signalled caution about the near term. Our working assumption is that we will be operating in challenging markets for some time to come.
We continue to build our business for the long term, while applying appropriate cost discipline. Ninety One is a resilient business with a long track record of operating in different market conditions. We see ample long-term growth opportunities ahead in spite of current market conditions and the rapidly changing world in which we operate. These growth opportunities depend on our ability to deliver for our clients in a highly competitive industry.
We intend to navigate the current turbulence with confidence. This is not a time for distractions. Our attention is firmly on execution. Now, more than ever, we will focus on the investment task at hand and do our best to meet the needs of our clients.
