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Old Mutual Wealth posts £227m profit as sales rise 11%

Old Mutual Wealth has posted a 5 per cent increase in adjusted operating profits, from £217m to £227m, as sales surged to £16bn.

The firm reported an IFRS post-tax loss of £37m for the year to December 2014. The adjusted figure strips out £118m of costs relating to the “amortisation of various intangibles” arising from the acquisition of the Skandia businesses, a £70m loss resulting from the disposal of certain continental businesses and the impact of short-term interest rates.

It also excludes £59m of costs linked to an IT and service overhaul, a programme that has been outsourced to IFDS. The costs of this have risen from £20m in 2013 and are likely to be higher this year.

The firm’s UK platform saw adjusted profits rise from £13m to £19m during the period, with total assets surging 11 per cent, from £27.3bn to £30.8bn. Gross sales on the platform increased from £4.7bn to £5.1bn.

However, net client cash flows dropped from £2.4bn to £2bn, with the firm blaming an increased number of re-registrations and one IFA moving £153m to their own discretionary fund management solution during the year.

Overall gross sales rose 11 per cent year-on-year, from £14.4bn to £16bn, while net client cash flows increased from £2.3bn to £3.7bn. Cirilium, the centralised investment proposition used by Intrinsic, generated net client cash flows of £179m between 1 July and the year-end.

Old Mutual Wealth chief executive Paul Feeney says: “During 2014 we made great progress in aligning our business to what we believe customers need to help them secure their financial future. 

“People don’t wake up in the morning thinking about platforms or individual funds.  They think about how they are going to fund their retirement or their children’s school fees; things that mean something to them.  For that they need advice, the right product, a great performing investment portfolio and excellent service.

“Increasingly I believe advisers and their clients will be looking to source those elements in one place, via companies that can offer an integrated proposition efficiently and cost effectively.  That is what we are aiming to achieve and we will continue to work with advisers to build new products and services that they and their clients need.”

Old Mutual Global Investors’ adjusted operating profit jumped 120 per cent to £33m in 2014, up from £15m for the previous year.

The asset manager also reported that gross sales were up 22 per cent to £9.2bn, from £7.6bn in 2013.

A number of the group’s portfolios attracted strong inflows in 2014. Its Global Equity Absolute Return fund was the firm’s most popular, with sales of £1.7bn. As a result, the portfolio’s assets under management rose by 419 per cent to £1.8bn, from £348m in 2013. Over the 12-month period the fund achieved a 9 per cent return versus 0.16 per cent against its 1 month Libor USD Benchmark.

Richard Buxton’s UK Alpha portfolio came in second place with sales of £1.13bn. The veteran manager, who returned one per cent, in line with his FTSE All-Share benchmark, saw his portfolio’s AUM almost double to £1.87bn, from £1bn.

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