MPC Capital O.N. (DE:MPCKk) met its 2017 financial performance targets. The share price has suffered in the recent shake-out. P/NAV has slipped to a relatively undemanding 1.83x. The current phase of investment in business development will only begin to bear fruit fully next year and the possibility of a capital increase to support this strategy may weigh on the share price.
2017 still ‘transitional’
Underlying revenue growth of 11% in 2017 was in line with management’s forecast. Pre-tax profit (EBT) margin also grew in line with forecasts. Pre-tax profit rose to €17.4m versus €15.7m in FY16. Key management services income declined by 9% from €40.2m to €36.5m over the course of the year, reversing the upward trend in H117 when it rose 1% to €18.7m. This was driven by a decline in fees from old business which outstripped fees from new business. According to management, FY17 may be viewed as a transitional year. Contrary to some analyst expectations, no dividend was paid.
Flat AUM figure masks major shifts
Total assets under management (AUM) were unchanged at €5.1bn but this masks some significant shifts, in part reflecting the lumpiness of MPC’s business. The company surpassed its goals by bringing in €1.1bn of gross new AUM. The structure of the AUM base improved with a shrinkage in discontinued product assets from €0.7bn to €0.5bn. The steady downward trend in the importance of legacy retail business continued. Institutional business accounted for 47% of AUM at end 2017 up from 44% at end 2016. MPC lost a large (€350m) asset management mandate. But for €0.3bn of revaluation effects reflecting improved conditions in the shipping markets total, AUM would actually have declined.
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