FUND management group Artemis has posted a 143% increase in its annual profits to £21.7 million In a separate development, Cornelian Asset Managers, another Edinburgh-based fund manager and a spin-out from Noble Group, said it was on track for growth following the appointment of David Ritchie, the former Scottish Widows chief investment officer, as its new chairman.
The news comes as a survey from Scottish Financial Enterprise (SFE) shows continued strong confidence in the financial services sector.
In a Companies House filing, Artemis revealed that group turnover rose to £69.3m in the year to 31 December 2004, (up from £51.8m the previous year), while pre-tax profits were up 143%, to £21.7m in 2004 compared to £8.9m in 2003.
After the payment of dividends of £5.5m, retained profits of £10.5m were transferred to reserves. Some of this will be channelled into improving the group’s IT infrastructure to meet new Financial Services Authority ‘unbundling’ requirements.
Artemis has also nearly doubled its assets under management in the past 12 months. AUM grew from £4 billion at the end of September 2004 to £7.5bn a year later.
Artemis chief executive Mark Tyndall said: “People like our products and performance has been very good across our whole range of funds.”
The company has hired William Littlewood, formerly of the London-based Jupiter Asset Management, to launch a global hedge fund. It also appointed Jacob de Tusch-Lec from US investment bank Merrill Lynch to join its SmartGARP team which identifies mispriced stocks for its three large cap funds. The group now employs 80 people, of whom 30 work in its Melville Street office in Edinburgh, with 40 in London and “six or seven in the field”. It has 13 fund managers in all, nine of whom are based in London.
Artemis’s two hedge funds, a European one launched in 2001 and a UK one launched last March, have attracted about £150m. “They contributed around 5% to group profits in 2004, ” said Tyndall.
Its institutional funds, targeted at professional investors such as pension find and endowments, have seen inflows of £2bn since their 2003 launch. “We’ve been making sure the actuarial consultants understand what we’re doing so their clients can take advantage of that, ” said Tyndall. He said the group has “continued to grow very strongly in 2005”.
However, Tyndall stressed that Artemis — which he co-founded with three former Ivory & Sime colleagues, with backing from venture capitalists Apax, in 1997 — is keen not to lose sight of its roots as a retail investment house, selling investment products to individual investors. Artemis was recently named as boutique of the year at the Financial News institutional asset management awards.
At the smaller Cornelian Asset Managers, Ritchie, 61, has taken over as chairman from Graeme MacLennan, who retired after seven years on the private client specialist’s board.
Ritchie, who was deputy chief executive at Scottish Widows until 1998, joined Cornelian as a non-executive director in April. In 20 years at the helm of Scottish Widows’s investment arm, he boosted third-party institutional mandates from 0% to 30% of assets.
Ritchie has a string of other non-executive roles, including Edinburgh New Income Trust and Schroder UK Growth Fund. Jeremy Richardson, the former Scotland international who founded Cornelian as Noble Asset Managers in 1992, said: “As a relatively small business we are delighted to have attracted someone of David’s calibre. We are at a high growth stage in our business, have recently rebranded and launched the CF Cornelian Investment Funds OEIC.”
Cornelian, which has £170m in funds under management. But Richardson believes he now has the right team to grow this to more than £1bn through a mix of organic growth and acquisitions. “We now have our ducks in a row across all areas of our business.”
In SFE’s quarterly survey, 69% of financial services firms predict their business performance will improve in the last quarter of the year. Just over half the respondents reported a rise in profits in the third quarter, with 92% saying margins were either at or above their 2004 levels.
Amanda Harvie, SFE chief executive, said prospects for financial services continued to improve although “overall sentiment is slightly less optimistic than in our last survey”.
This article was published in the Sunday Herald on 6 November 2005