ABERDEEN Asset Management (Aberdeen) revealed yesterday that it had won nearly #1000m of new funds in the first seven-and-a-half months of its financial year, as it unveiled a doubling of interim pre-tax profits to #7m before exceptionals.
The profits rise was made possible by its acquisition late last summer of life office Scottish Provident's Prolific asset management business, but the #977m of new funds brought in since represents organic growth.
The timing of the Prolific deal was fortuitous because it reduced Aberdeen's heavy exposure to Asia just before the worst of the financial crisis struck.
After #3.32m of exceptional costs for Prolific's integration, which relate to redundancies and the expense of having two back office functions for a transitional period, Aberdeen's overall pre-tax profits for the six months to March 31 were #3.68m.
Tony Cummings, fund management analyst at Schroders, raised his pre-exceptional profits forecast for the full year from #13.5m to #14m, and he expects total one-off costs of between #4m and #4.25m.
Richard Andrews, analyst at stockbroker Greig Middleton, said he would be increasing his forecast from #13m to about #13.5m or #14m before one-off costs.
But Aberdeen shares, which have surged since late February and remain near the top of their recent trading range, slipped 0.5p to 129.5p. The company raised its interim dividend 20% to 1.5p.
The latest results from Aberdeen were in stark contrast to the 17% fall in annual pre-exceptional profits, to #5.81m, reported in December.
An exuberant Martin Gilbert, Aberdeen's chief executive, said of the interims: ''They are great, absolutely great.''
During the six months, Aberdeen's funds under management rose 14.5% to #13.4bn, and #527m of this represented new business rather than stock market movements. The growth was achieved in spite of the Asian financial crisis, which slashed the value of funds invested in the region.
About #310m of the #527m of new funds came from unit trust and personal equity plan (Pep) sales, #65m went into offshore funds, #30m came from share issues by Aberdeen's investment trusts, #95m from UK institutional investors including local authorities, and #25m from institutions in the US and Far East.
Since the halfway point, Aberdeen has secured another #450m of funds. About #100m of this came from unit trust and Pep sales, #15m went into offshore funds, #170m came from UK institutions, #25m came from the Far East and US, and #140m was generated by investment trust share issues.
Gilbert said around half the #50m of new funds from overseas institutions had come from the US - a market which Aberdeen is trying hard to break into through its joint venture with near-20% shareholder Phoenix Home Life.
Referring to the #25m of new funds from the US, something of a drop in the ocean in the context of the near-#1000m total, Gilbert added: ''It is really the start in the US. We are now moving forward so it is quite good news.''
Asked if he was expecting a strong full-year result, he replied: ''It has been an incredible first seven months. These things depend on stock markets, which are (at a) reasonably buoyant level. If markets stay at around the levels they are at at the moment, we will have a good one.'' But he added: ''I am cautious on markets.''
The Prolific deal, which has given Scottish Provident a 40.8% stake in Aberdeen, boosted the investment house's funds under management three-and-a-half-fold at the time, from #3100m to #11bn. Aberdeen's profits only doubled because Prolific's business, which includes management of Scottish Provident's funds, yielded lower margins.
Gilbert does not consider there is much need to make further acquisitions in a consolidating sector which is expected to see more takeover action.
He said: ''Clearly, if we have that sort of growth organically, it is taking up most of our resources at the moment. Typically, these sort of (stages) in the market (cycle) have not been the best time to acquire firms but, again, we always look.
''If opportunities arise, we will have a look at them (but) they never occur when you want them to.''
n EDINBURGH Fund Managers (Edinburgh) told shareholders at its annual meeting yesterday that it was enjoying ''encouraging growth'' in new business.
Chief executive Iain Watt said after the meeting that there was a ''good possibility'' Edinburgh would achieve its target of bringing in #555m of new funds in its current financial year to January 31.
Chairman Colin Ross told shareholders that Edinburgh was starting to make ''positive inroads'' into the Independent Financial Adviser market-place and that it had recently opened an office in Toronto. This is run by Scottish expatriate Jim Clark, who worked for a consultancy in the Canadian city.
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