Investment funds group Aberdeen Asset Management bounced back from the slit capital trust mis-selling scandal to book a 70 per cent rise in annual profits.
The group, which has a thriving private equity business in Birmingham, said yesterday that pretax profits for the year to September 30 came in at £25.7 million compared with £15.1 million last time.
After stripping out goodwill charges and exceptional items, AAM showed a profit of £13 million compared with the loss of £87.6 million it incurred the year before thanks in part to the costs of the split-capital trust fiasco.
The group set aside nearly £78 million in 2004 as part of a scheme involving 17 other firms to compensate investors who had lost money.
AAM said the improvement in the bottom line this time was due mainly to a £3.6 billion net inflow of funds during the year and the fact that it achieved a 30 per cent investment management operating margin.
The dividend is raised by
16.5 per cent to 3p.
Turnover rose by 11.4 per cent to £140 million and assets under management soared nearly threefold to £59.7 billion following the acquisition of the Deutsche Asset Management (DeAm) business from Deutsche Bank at the end of the year.
The subsequent acquisition of DeAm's American operations had since contributed further assets of about £12 billion, group chairman Charles Irby said.
Yesterday's profit figures did not include any contribution from DeAm, so the figures looked particularly satisfying due to the improved profit and business inflows, analysts said.
"The main driver is that they are winning new money from clients and that has accelerated," said Katrina Preston, analyst at brokers Bridgewell Securities.
Altium Securities analyst Martin Cross said DeAm were 'doing better than expected in terms of fund retention' and should deliver a "very material lift" to earnings in the current year. AAM said that much of the improved profit stemmed from new business wins from clients around the world, including inflows from the US.
Under the July deal with Deutsche Bank, Aberdeen acquired a business with £ 46.3 billion of assets, including £32 billion of fixedinterest funds in Britain and the United States.
Aberdeen had aimed to retain at least 90 per cent of these fixed-income assets. So far it has kept 95 per cent of UK-based funds and 99 per cent of US-based funds, a spokesman said.
The acquisition also involved about £14 billion of equities and multi-asset funds, and the firm is confident of keeping at least 30 per cent of this money. Aberdeen will make a deferred payment for these assets next June depending on the amount retained.
Mr Irby said 2005 had been a "highly significant year, during which net fund inflows have been strong, the operating margin has been raised towards a more acceptable level and gearing has been reduced substantially.
AAM's Birmingham office trades under the Aberdeen Murray Johnstone Private Equity umbrella and has about £300 million under management.