LONDON -- Schroders (SDR 1.79%) announced its audited final results this morning, which saw its assets under management hit record levels, reaching 212 billion pounds in 2012 compared to 187.3 billion pounds the previous year.
However, pre-tax profits were down to 360 million pounds against 407.3 million pounds in 2011, dragging the earnings per share down with it to yield 104.7 pence compared to 115.9 pence per share the previous year. The British multinational asset management company did raise its full-year dividend, though -- in line with its policy to raise them progressively -- to 43 pence, which is a 4 pence increase on 2011's 39 pence and puts Schroders on a yield of 2.1%.
Blame for the profits drop-off was attributed to client departures and weaker activity from its private banking business, with net revenues there falling 17% as lower management fees elsewhere led the exodus.
Concerns over the eurozone saw financial markets fluctuate over the course of the year, impacting Schroders' business mainly in the first half. However, as "actions were taken in Europe to address the challenges facing the single currency and the likelihood of a hard landing for the Chinese economy receded," equity markets soared and sentiment improved. This led to "four quarters of positive net new business flows in Institutional and Intermediary, [9.4 billion pounds] of net new business for the year as a whole and assets under management reaching their highest ever level of [212 billion pounds]."
Two acquisitions were made over the year, which enhances Schroders' organic growth strategy. The first was in the emerging market of India, with a 25% stake in Axis Asset Management, while the second was the purchase of STW, a U.S. fixed-income business with $11.6bn of assets under management at year-end.
Despite the drop-off in profits, shares in Schroders put on 3.2%, or 65 pence, to reach 2,101 pence in early trade this morning. This is due largely to analysts having previously forecast a consensus pre-tax profit of 351.7 million pounds, with the company's 360 million pounds figure outperforming expectations.
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