Fund manager Walter Scott & Partners has reported a sharp fall in profits but remains one of Scotland’s best-paying firms with staff picking up an average of almost £300,000 each.
Newly-published accounts show that pre-tax profits at the Edinburgh-based company fell to just under £79.3 million in 2014 from £144m the year before. Turnover dipped by less than 1 per cent to £202m but there was a near-3 per cent rise in assets under management to £45.8 billion.
The flexible cost base ensures profit margins can be sustainedCompany annual report
Walter Scott is led by managing director Jane Henderson – who has been with the firm for some 20 years – and executive chairman Rodger Nisbet, who joined in 1993 after running his own property business.
The latest Companies House filings show that the bill for salaries and wages fell to £29.6m from £43.1m a year earlier, while the headcount was unchanged at 99, of which six were directors, down from seven in 2013.
That gives an average of almost £299,000 for each member of staff, compared with more than £435,000 the year before.
According to the pay report, the firm’s highest-paid director received just under £5m in emoluments and long-term incentives for 2014, down from £6.5m.Despite the fall in profits, a dividend of £95m was paid to the firm’s parent group, the financial services giant Bank of New York (BNY) Mellon, up from just £5m in 2013. The year before that, the dividend payment had been £40m.
Walter Scott, which is run from offices on the capital’s historic Charlotte Square, provides global equity portfolio services to institutional investors around the world.
There was little explanation for the full-year outcome in the accounts. Writing in the annual report, the firm’s directors said: “The business has consistently applied the same investment philosophy and investment process throughout its entire history.
“The objective for all long-term investors is to maintain and enhance the after-inflation purchasing power of their assets.
“Walter Scott targets long-term compound real returns of 7 per cent to 10 per cent pre annum for the portfolios it manages. This is most likely to be achieved by investing in companies with high rates of internal wealth generation which in time translates into total return for the investor.
“Thus the firm’s research efforts are directed towards identifying companies that meet its investment criteria.”
They added: “The company’s revenues are exposed to equity market risk and currency risk. The flexible cost base, with a relatively low percentage of fixed costs, ensures that profit margins can be sustained in times of market downturn.”
Mellon reportedly paid £400m to take control of Walter Scott in 2006. The takeover valued the 70 per cent stake held by the company’s eponymous founder at about £280m.
A former star of Ivory & Sime, Scott founded the firm in 1983 and was renowned for wearing a kilt to meetings with potential clients in countries such as the US.
The nuclear physics graduate left Walter Scott in 2007.
The accounts also reveal that charitable donations totalled £295,547 last year, up from £225,697 in 2013.
The Walter Scott & Partners Foundation’s policy is “predominately directed towards charities providing services and support to various groups facing special challenges, those providing education and smaller, local charities”.