Investment house Martin Currie saw its after-tax profits crash last year from £8.9 million to £1.6m, a fraction of the £9.7m it repaid to its Bermuda-based holding company.
Martin Currie Holdings, set up in 2007 when institutions bought 24.9% of the business, has now been repaid £22.2m since 2010, more than the £21m of debt held on the balance sheet of the regulated Martin Currie, which made a net loss in 2011 of £6.7m.
The company's accounts just published at Companies House show that the Edinburgh-based "big boutique" shrank considerably in a year which saw it fined £8.8m by the UK and US regulators for failing to manage a conflict of interest between clients, and forced to sell its successful China business to the managers who were at the centre of the episode.
Pre-tax profit plummeted from £14.1m to £2.3m, far below the 15% fall which was signalled by the company in an upbeat briefing last November.
Ralph Campbell, finance director, said: "The main difference in the numbers is the cost of the regulatory fine of £8.8m."
He would not comment on the size of the holding company debt.
Funds under management, which peaked at £15.7m in 2007, the year in which US private equity group Crestview and institutions connected to Lord Jacob Rothschild bought in, halved from £11.3m to £5.6m, just above their 2002 level.
The group's shareholder funds have now halved since 2007, following the 23% fall last year to £23.1m.
Last month the company unveiled a £25m refinancing by existing investors, including 20 Martin Currie directors.
The Chinese exit helped drive revenues 20% lower to £65.5m last year. Underlying pre-tax profits more than halved to £7.7m, before a one-off £2.6m charge for outsourcing all Currie's back office activities to State Street last January, and share-based payments of £2.8m, up from £1.2m. The company had slashed bonuses in 2009 to preserve jobs in the financial meltdown, but restored them in 2010.
The highest paid director, assumed to be chief executive Willie Watt, saw his salary halved, from £865,000 to £438,000.
Mr Watt admits in the report and accounts to "substantial client losses" in 2011, with weakness in Currie's core Asian and emerging markets exacerbated by a "period of underperformance between 2008 and 2010".
He writes: "We must not be daunted by the fact we have had to go backward to go forward."
He says the China business has been replaced by an alliance with Singapore-based APS, which though "in its infancy" promises "truly exciting prospects for the years ahead".
Mr Watt adds: "We are also advancing our plans to create an Asia hub, based in Singapore."
The chief executive told The Herald last November that the firm's regulatory problems had not deterred any existing or potential new clients.
John Pickard, head of investment, writes: "Despite the short-term bounce in the market at the start of this year, there is unlikely to be any 'rising tide' to carry the bad or mediocre up with the good, so our decisions must be meticulously researched and thoroughly understood."
Martin Currie's clients are 46% institutional, with absolute return revenues falling from 20% to 11% of the total last year and retail revenues at 43%. Almost a quarter of assets were in China, with 22% in Asia.
Latest figures show the £168m Martin Currie Asia Pacific fund towards the top of sector rankings over the past two years, following below-average returns in the prior three years.
Mr Campbell said: "Our directors and strategic investors in the company have reinvested to give us £30m on the balance sheet and we retain over 300% surplus regulatory capital, which puts us in a strong position moving forward.
"As a privately owned company our main focus is on delivering for our clients and not short-term profits, however that said we have every confidence that in the years to come we will return to more normal levels of profitability for our shareholders."
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