'Excellent' is the verdict on AAM's performance

Published on Monday 29 November 2010 20:17

Martin Gilbert, the chief executive of Aberdeen Asset Management, hailed an "excellent year" for Scotland's largest asset manager as improved markets and new business boosted the firm's profits and assets in the year to 30 September.

The firm beat the City's expectations on a number of counts, including a more than 30 billion rise in assets under management to 178.7bn.

It also said it will have paid off last year's 150 million bank debt by the start of the new year to become net cash positive.

The firm, which recently said it aimed for "growth at a Scottish price", confirmed it was not actively pursuing new acquisitions after swallowing two businesses last year, preferring instead to focus on organic growth and building its existing balance sheet.

Early this year the firm acquired an operation from Royal Bank of Scotland and last year one from Credit Suisse. AAM said yesterday the "high quality" RBS alternatives business, which it acquired in January for 84.7m, created a "credible opportunity to diversify our new business flows further" and that there was "considerable scope" to grow the business.

However, continuing costs of the absorption of the Credit Suisse business continued to hit profits. Bill Rattray, the firm's finance director, confirmed that integration costs following the deal were the chunkiest part of exceptions costs, lowering profits by a further 12.5m in the year but this down from 18.5m in 2009. The firm said the cost of the RBS acquisition had hit profits by about 1.6m this year.

Pre-tax profits more than doubled to 210m before exceptionals and 125.6m after - turning around a wafer thin pre-tax profit situation last year when the firm only managed 10.5m. The firm also boosted its dividend from 6p to 7p.

The firm said it enjoyed a "record level" of business wins, with inflows of investors' cash attracted by AAM's emerging market and global equities funds. Overall net inflows were back in the black - 2.6bn compared to outflows of 10.7bn last year. The firm's fixed income and money market funds were still starved of investors, seeing outflows of 44bn albeit these were at a slower rate than last year, the firm noted.

Brokers at Evolution noted that the firm more than trebled its performance fees to 30.3m, which it said was a "positive surprise".AAM said that although an increase of fees was "welcome" it only represented 4.7 per cent of its income.

Gilbert said: "This has been an excellent year for Aberdeen in which we have taken full advantage of the improvement in financial markets and the new business opportunities.

"I am particularly pleased we have achieved this whilst strengthening our balance sheet still further, with the result that the business will move into a net cash position shortly as we continue to prioritise organic growth Financial markets still pose many challenges and uncertainties but we are confident that we are well placed to continue our growth."