LONDON -- On the day the Kay Review (quite rightly) slammed the City for its short-term culture, it's perhaps fitting to remind ourselves that some financial firms have taken the unusual step of generating positive returns for their shareholders over the years. Aberdeen Asset Management (LSE: ADN.L ) , which issued a quarterly update this morning, fits into that category.
Founded in 1983, Aberdeen joined the stock market in 1991, and built up its business acquiring firms such as Murray Johnstone and Edinburgh Fund Managers. Earlier this year, Aberdeen joined the FTSE 100 index for the first time.
Aberdeen is still perhaps best known for getting embroiled in the split-capital investment trust scandal (can that really be 10 years ago?), which saw its shares slump to just 17 pence at the back end of 2002. Today, they change hands for around 243 pence, down a few percent on the day.
Aberdeen can now boast assets under management of 183 billion pounds, although this figure was down marginally on the amount reported for the March-ended quarter, thanks to the general fall in the stock market.
Gross new business for the last nine months came in at 27 billion pounds, down from 34 billion pounds in the same period last year, showing that attracting investor money continues to be tough with the ongoing gloom surrounding Europe. However, a shift of funds toward higher-charging equity funds, and away from other asset classes, should mean an additional 15 million pounds in annual fee income.
Revenues this year should top 800 million pounds, and operating margins are a highly impressive 40%. At the current price, the shares trade on a forward P/E of 12 and offer a prospective yield of just over 4%, making them marginally cheaper than rivals such as Schroders and Ashmore.
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