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Value Partners’ upbeat despite drop in revenue
22 August 2012
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News, Asia, China, Hong Kong
Value Partners Group Limited’s six month results for the period ended June 30 revealed the group’s revenue declined by 30.8% to HK$266.6 million (US$34.37 million) for the period.
Profit attributable to equity holders of the company for the first half of the year was HK$88.2 million, marking a 55.6% decrease from the same period in 2011. The decline was primarily due to a significant drop in performance fees, as most of the funds under the group’s management with performance fee crystallising in the first half of 2012 did not exceed their high watermark or benchmark. However, for most of the group’s major own branded funds, the performance fee crystallisation is at the end of the year, and the performance in the second half of the year would determine whether the group can collect further performance fee in 2012.
Timothy Tse, CEO of Value Partners, said: “In the first half of 2012, volatility remained in the global stock markets and investor sentiment was poor. Despite this challenging industry landscape, our business remains stable and profitable. The group managed to maintain a strong financial position with AUM stably held at US$7.2 billion as at June 30.”
Value Partners recorded net subscriptions of US$71 million in the first half of 2012. Gross subscriptions amounted to US$954 million, and compared to the same period last year, it went down substantially due to poor market sentiment. However, redemptions also decreased in the six month period.
The group’s total expenses amounted to HK$116.8 million (1H 2011: HK$131.6 million). The group’s management continued to exercise stringent cost discipline and aimed to keep fixed operating expenses well covered by its net management fee income, a relatively stable income source. The group’s management measures this objective with the “fixed cost coverage ratio”, an indicator of how many times fixed operating expenses are covered by net management fee income. For the reporting period, the group’s fixed cost coverage was 2.1 times (for the asset management business).
Overall, the group managed to maintain sound financial health. The group’s balance sheet and liquidity remained strong, with a net cash balance of HK$996.3 million. Net cash inflows from operating activities amounted to HK$38.1 million, and the group had no borrowings.
“In Value Partners, long-term fund performance is our core competence. We are determined to delivered sustainable and superior fund performance through our strong and original on-the-ground research team,” said Mr. Tse. “Going forward, as we build Value Partners into a world-class, independent fund house in the region, we will continue to stay very focused on our strategic priorities, including delivering strong long-term fund performance, expanding our distribution network, diversifying our global investor base and capturing business opportunities in mainland China.”
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