The investment management company Hunter Hall International Limited (ASX:HHL) released financial results for the 1H16 period. Hunter Hall improved its operating profit by 28.5%. However, the company provided a gloomy outlook as it expects its profits to drop 25% during the next six months.
The company recorded a net profit after tax of $4.4 million for the six-month period to 31 December 2015, which is a 159% increase on the previous comparable period. However, the operating profit from investment management rose 28.5% to $3.3 million. Hunter Hall’s net profit amplified due to various non-recurring items including net performance fees of $713,000 and investment gains of nearly $1.8 million. Revenue from investment management rose 10.1% to $8.4 million, relative to the $7.6 million recorded in the previous period.
Furthermore, operating expenses were reduced by 3.1% to $5.1 million. Funds under Management declined 4.9% to $1.064 billion, when compared sequentially to the June 2015 period. The decline was a result of the positive investment performance of $26 million being more than offset by net outflows of $34 million and distributions amounting to $47 million. However, when compared to the December 2014 period, the Funds under Management increased 5.1%.
The company’s High Conviction Equities Trust (HCT) increased 113.5% in 12 months to 31 December 2015. The fund rose 36.3% over the six months to December 2015. Investments in HCT also delivered $169,000 in dividend and distribution income.
However, its Global Ethical Trust declined 8.3%, while the Australian Value Trust rose 20.8% and the Australian Equities Fund added 14.1% over the period.
Hunter Hall stated that it is considering a number of strategic initiatives to improve its competitive position. These initiatives may have an impact on short term results while it expects to increase the long term profitability. The operating profit from investment management is expected to decline by 25% for the six months to 30 June 2016.
HHL rose 2.2% to $2.83 as at 2:40 PM (AEDT).
Author: Imran Valibhoy
Feb 12, 2016
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.