Martin Currie bounces back from China crisis

Willie Watt said Martin Currie had returned to 2010 course. Picture: Contributed
Willie Watt said Martin Currie had returned to 2010 course. Picture: Contributed
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ASSET manager Martin Currie has bounced back to profitability after overcoming a major setback in Asia.

Chief executive Willie Watt said he was “pleased with growth” at the Edinburgh-based company and will be preparing for the next phase of the firm’s development now that it has put a conflict of interest crisis in China behind it.

The company is due to unveil an operating profit of £4.8 million for the year against a £9.3m loss in 2012 which was its first deficit in more than 130 years.

That loss followed an exodus of money from the firm after it was found guilty of the fraudulent use of client funds in China in 2008-9 and fined by US and UK regulators.

The turnaround over the last year included a return of confidence in its Asia business, including investments from Australia, which have helped restore funds under management from £4.7 billion in 2012 to £5.6bn – the figure for 2011.

There were net new inflows of £457m. Group revenue grew 47 per cent from £33.8m to £49.6m. Cash on the balance sheet increased from £12.8m to £17.9m.

“We said we would bounce back and we also said we could maintain the infrastructure of the company,” said Watt. He said the board has stuck to its pledge last year to take the full loss on the accounts to avoid making job losses, and job numbers have been maintained at about 200, most of which are in Edinburgh.

He said the company was now back on the course set in 2010 to build the business around three core strategies – absolute returns, drivers for growth and equity income – and these latest accounts showed that progress was being made. The rolling long-term strategic plan set out in that year “remains relevant and is delivering”, he said.

“The last plan we had was radical because we had just come out of the global financial crisis. This time it will be more of a continuation of the things we have been doing.”

Watt said it was now important to drive up income and the programme would be constantly reviewed. This year the firm will be targeting the US for a higher percentage of overall sales.

“It has achieved what we have set out to achieve in terms of the growth drivers. But we feel that there is a considerable way to go before it will have achieved its ultimate ambitions for the business in terms of growth andrevenues,” Watt said.

“Last year’s performance was ahead of plan but if you go back five years we would have wanted to be further on than we are now. We still believe we can achieve those targets.”

Watt said the fund management industry was likely to be a beneficiary of the Chancellor’s recent rule changes on annuities which may encourage consumers to look at different asset classes to save for their retirement.

He said the company was apolitical but “not disinterested” in Scottish independence. “We feel the uncertainty is a real issue in that it will take a significant amount of time before the key issues that impact on financial services are resolved.

“We are not making a judgment call on currency or European Union membership but the negotiations on these things are likely to be long and complex and during that time there will be uncertainty and that comes at a cost.

“We are committed to remaining in Scotland but we are committed to doing the best job for our clients and ensuring that nothing happens that is detrimental to our clients’s interests. Scotland remains an attractive place in which to be based and we hope it will remain so.”