EDINBURGH'S low profile but high reward investment house Walter Scott & Partners recorded a spectacular rise in profit last year, as it hiked turnover by more than 25 per cent to £203million.

Its seven directors earned an average £2.5m apiece and the company settled a liability to pay a former director additional "post-retirement benefit" linked to the company's fee income, in the sum of £31.5m.

The former director has never been named, but the US-owned company says the agreement was "unique to the director receiving the benefit".

The firm was sold by foun-der and major shareholder Dr Walter Scott to Mellon Financial, now Bank of New York Mellon, in 2006, for a reported £400m.

The firm's £43m revenue uplift in 2013 generated an even higher £48m increase in operating and pre-tax profits, which both rose by 50 per cent to £144m, according to accounts just filed at Companies House, helped by a £5m or eight per cent fall in its costs.

In 2012, Walter Scott reported a 1 per cent slide in profits on a turnover rise of 11 per cent, following investment which added £17m to costs.

But in a stellar 2013, the firm saw its own net assets rise 78 per cent from £136m to £243m, and assets under management jump 22 per cent from £36.7billion to £44.6bn.

Its US parent however took out only £5m as a dividend in 2013 after £40m the previous year.

Writing in the accounts, the directors said: "The company has continued to operate profitably and there have been no significant changes in its operations during the year. Walter Scott is a provider of global equity portfolio management services to institutional investors around the worlds.

"The business has consistently applied the same investment philosophy and investment process throughout its entire history."

Although 11 directors served on the board, the year saw three resignations and the death in June 2013 of chairman Ken Lyall.

He had joined the firm soon after it was founded by Walter Scott and two coll-eagues in 1983, and took over as chairman in 2007 succeeding Dr Scott, who had sold the firm a year earlier for a reported £400m.

Dr Scott's lieutenant Alan Macfarlane, said to have netted around £80m from the sale, has since co-founded Dundas Global Investors, which has built over £300m of assets in four years but is aiming for significant growth.

Walter Scott & Partners has now more than trebled its assets under management since being acquired by Mellon Financial.

The accounts say the firm "adopts a total rewards and pay for performance remuneration philosophy".

In 2012, the 106 staff shared in salaries and wages of £36.2m in the year, giving an average of more than £341,000.

Last year, the 99 staff shared a wage and pensions bill of £52m, producing an average reward of around £515,000 per employee. However the seven directors took £17.7m, an average of more than £2.5m, compared with £17.2m shared between 10 directors the previous year.

The highest-paid director saw total emoluments rise from £4.5m to £6.5m.

Directors are also entitled to shares, the report says. The bank paid out shares worth £1.4m in respect of the 2012 incentive plan, and the reserve account for share-based payments showed the liability rising by 50 per cent to £4.6m.

The accounts again flag up a provision in relation to a potential overseas fund tax liability, which has almost doubled to £22.8m.

It said it was "currently discussing tax issues in relation to six LLC funds with the UK tax authority".

The post-retirement pay-ment to the unnamed former director was first noted in 20011's accounts, when it widened from £27.5m to £31.5m, partly offset by a tax asset. Last year, the firm had it actuarially valued and set-tled the liability, though around £17m has yet to be paid.