Aberdeen faces £81m splits bill

ABERDEEN Asset Management faces an £81m bill for its involvement in the split-capital investment trusts scandal today.

Besides a £74m contribution to the industry-wide compensation settlement agreed with the Financial Services Authority, it faces a legal bill of about £7m.

Aberdeen's share of the compensation fund comprises a straight £35m payment plus a further £39m payment for investors who lost money in the Aberdeen Progressive Unit Trust.

Aberdeen is one of 18 City firms that agreed last month to stump up £194m as an industry-wide settlement with the FSA but the size of its share makes it by far the largest single contributor to settlement package. The size of its payments reflects the significance of its role in the debacle.

Splits were sold from the late 1990s as 'safe' investments, carrying little risk of heavy losses. In all, some 20,000 people lost about £600m when the trusts they invested in collapsed. One sold by Aberdeen even described itself as 'the one-year-old who lets you sleep at night'.

Despite the debacle, Aberdeen still managed to pull in a substantial amount of new business elsewhere last year. The company said it had pulled in a net £2bn of new business during the financial year and a further £770m since the end of the year.

Delayed financial results for the 12 months to the end of September showed pre-tax profits before exceptionals in line with forecasts. At £15.1m they were up from £5m in the year before, though turnover was down from £142.3m to £140m. After including exceptional costs, however, the company incurred an £87.6m loss, up sharply from the previous year's deficit of £6.4m.

Aberdeen's chief executive Martin Gilbert said the episode had had a 'huge' impact on the business but he indicated that the settlement with the FSA of the split-capital investment trust debacle on Christmas Eve would draw a line under the matter.

He said that Aberdeen, which completed a restructuring last year after being hit hard by the stock market downturn of 2000-2003, now faces a more secure future.

'We are well positioned to continue the progress we have made and return to a pattern of sustained, profitable growth. I am confident we are well on the way to improving shareholder returns,' he said, pointing to new growth in the Far East and the scale of new business won during the past year as factors that would inspire confidence among shareholders.

Aberdeen said it will pay a second interim dividend of 2p per share, bringing the total annual dividend to 4p per share, unchanged from the previous year.