The absence of major transaction contributions to first-half profits and management’s reiterated guidance for progress in the full year throws the burden on results in the second half, notably the incidence of large transactions. Firm news on the dividend front may also have an impact on price performance. The process of shifting to higher quality AUM continues. The MPC Capital (DE:MPCKk) shares trade at 1.9x NAV.
H1 profits held back by non-recurrence of once-offs in comparable period
Total revenues fell by 1% to €22.7m but quality improved on the back of a heartening 3% rise in management services income to €18.7m, albeit insufficient to counterbalance a 20% drop in transaction services revenue to €3.8m. The negative effect was magnified at the operating profit level by the non-recurrence of €2.6m contributions in the comparable period of 2016. To this extent, the result for H1 2017 was more representative of ongoing underlying operations. An expected increase in the number of transactions underpins management’s reiterated forecast of 10% FY revenue growth with improving EBT margins.
Structural improvement in AUM
The overall figure for AUM recorded a decline of 2% to €5.0bn, but this masks a number of positive trends and effects. The new business of €0.4bn in AUM reflects the benefits of the well-stocked pipeline of projects beginning to come through, which almost offset negative currency effects and some asset sales. The quality of the asset book was boosted as the ongoing process of running off the legacy book of fund assets continues. Total value of legacy assets fell in absolute terms and now accounts for 55% of the total compared to 56% at the end of 2016.
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