BlackRock Reports Steady Results

Stephen Harris

18 January 2008

New York-based asset manager BlackRock has reported net income for the fourth quarter of $322 million and for the year ended 31 December 2007 of $995 million. Reported operating margin for the fourth quarter and full year of 2007 was 32.4 per cent and 26.7 per cent, respectively, compared to 24.2 per cent and 22.5 per cent in comparable periods of 2006. Fourth quarter 2007 results reflect the impact of the acquisition of the fund of funds business of Quellos as well as the first presentation of comparative results including the operations of Merrill Lynch Investment Managers which was acquired in September 2006. Adjusted operating margin was 38.8 per cent for fourth quarter 2007 compared with 37.8 per cent for the fourth quarter 2006. Full year 2007 operating margin, as adjusted, which included the impact of a $92 million increase in amortization of intangible assets associated with the MLIM and Quellos acquisitions, rose approximately one per cent to 37.5 per cent. Assets under management totalled $1.357 trillion at 31 December 2007, up $57.1 billion since third quarter-end and $232 billion since 31 December 2006. Net new business totaled $30.7 billion during the fourth quarter and $137.6 billion for the full year, representing organic growth rates of 9.7 per cent (annualised) and 12.2 per cent, respectively. $21.9 billion of assets came with the acquisition of Quellos’ fund of funds business. Base advisory and administration fees of $1,160 million in fourth quarter 2007 increased $134 million, or 13 per cent, compared to $1,026 million in third quarter 2007 primarily due to a $47 million increase in alternative investment product fees (including approximately $44 million related to Quellos), a $42 million increase in equity and balanced fees, and a $29 million and $16 million increase in cash management and fixed income fees, respectively. Performance fees were $153 million in fourth quarter 2007, compared to $149 million in third quarter 2007. Fourth quarter 2007 performance fees reflect strong investment performance from alternative products (including approximately $16 million related to Quellos), particularly from energy, international equity separate accounts and fixed income hedge funds.