Aberdeen Asset Management Annual Profit Rises; To Buy SWIP From Lloyds

(RTTNews) - Aberdeen Asset Management Plc (ADN.L, ABDNF.PK) Monday reported higher annual profit as revenues climbed 24 percent and Assets under Management increased 7 percent. The company also announced a 39 percent increase in full-year dividend.

Separately, the asset manager agreed to buy Lloyds Banking Group Plc.'s (LLOY.L, LYG) asset management business Scottish Widows Investment Partnership Group Limited or SWIP for an initial consideration of about 560 million pounds payable in Aberdeen shares.

Martin Gilbert, CEO, said, "These results are testament to the breadth and scale of Aberdeen and our long-term investment track record. We are very pleased to have delivered another year of strong growth in revenues and earnings despite the uncertainties in global financial markets and emerging markets in particular.''

For the year ended September 30, pre-tax profit increased to 390.3 million pounds ($629.6 million) from 269.7 million pounds in the previous year.

Underlying profit before tax was 482.7 million pounds while it totaled 347.8 million pounds in the prior year.

Profit attributable to equityholders of the parent company climbed to 307.7 million pounds from 208.7 million pounds in the prior year. Earnings per share increased to 26.2 pence from 17.6 pence.

Net revenue climbed 24 percent to 1.079 billion pounds from 869.2 million pounds in the prior year, as healthy growth in recurring management fees was supplemented by increased performance fee income.

Around 95 percent of net revenue was earned from recurring fees, and the blended average management fee rate increased to 50.0 basis points from last year's 45.1 basis points.

Assets under Management or AuM increased 7 percent to 200.4 billion pounds from 187.2 billion pounds.

According to the asset manager, in new business, the momentum of flows has been biased towards higher margin pooled funds which now represent 49 percent of total AuM. They have been sourced principally from core equity product offerings.

Gross new business of 43.9 billion pounds was added during the year,, compared to 36.0 billion pounds last year. These were sourced from investors in EMEA excluding UK representing 40 percent, the Americas with 23 percent and the UK totaling around 19 percent and Asia Pacific 18 percent. Full year net outflows were 2.5 billion pounds.

The board recommended a final dividend of 10.0 pence per share, up from 7.1 pence per share in the prior year, taking full year dividend to 16.0 pence per share from last year's 11.5 pence per share.

Looking ahead, the company believes that markets and investor sentiment may remain volatile for the foreseeable future. However, the firm said it has entered a new financial year in a strong financial position and remains well placed to continue the group's profitable growth.

In a separate statement, Aberdeen announced a definitive agreement to form a long-term strategic relationship with Lloyds Banking.

Aberdeen will acquire SWIP and SWIP's related private equity and infrastructure fund management businesses.

The acquired business includes the Investment Solutions division of SWIP which is a separate investment group responsible for design, development and management of investment solutions for Lloyds' wealth clients.

The strategic relationship will operate across Lloyds' Wealth, Insurance, Commercial Banking and Retail businesses. It is expected to result in a stronger asset management offering for customers.

Aberdeen will issue 131.8 million of its new shares to Lloyds, equivalent to around 9.9 percent stake in the group following completion of the acquisition.

In addition, there will be a performance-related five year earn-out payment of up to 100 million pounds dependent on growth delivered by the strategic relationship with Lloyds in the Investment Solutions business.

The acquired business will add around 136 billion pounds of AuM with annualized revenues of 234 million pounds to the group. The acquisition is expected to be materially enhancing to underlying earnings per share in first full financial year after completion.

While SWIP strengthens Aberdeen's existing offering in fixed income and property, the acquisition of Investment Solutions transforms the firm's ability to offer fiduciary management and strengthens asset allocation, multi-asset and multi-manager capabilities.

ADN.L closed up 1.8 percent on Friday at 426.80 pence.