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Old Mutual Wealth increases profit by 14 per cent to GBP108m

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Old Mutual Wealth, comprising Skandia and Old Mutual Global Investors, has announced IFRS adjusted operating profit (AOP), pre-tax of GBP108m for the first half of 2013, up by 14 per cent compared to the prior year figure of GBP95m.

 
The H1 2012 profit figure included GBP10m from the Skandia business in Finland which was sold last year.  Excluding that from the 2012 figures, on a like for like basis AOP was up 27 per cent in 2013.
 
Gross inflows for the period were GBP6.7bn, up 26 per cent (H1 2012: GBP5.4bn), and funds under management (FUM) stood at GBP75.2bn as at 30 June 2013, an increase of nine per cent since the start of the year.
 
Net client cash flow stood at GBP0.8bn for the period (H1 2012: GBP0.8bn). This includes GBP0.8bn of outflows from Old Mutual Global Investors as a result of the sale of Skandia Nordic by Old Mutual last year, meaning net sales from continuing businesses were double those achieved in the first half of 2012.
 
Old Mutual Global Investors (OMGI) had a strong first half of the year with gross sales of GBP3.5bn (H1 2012: GBP1.8bn, which did not include OMAM UK for Q1 2012). Adjusted operating profit increased significantly to GBP8m (H1 2012: GBP3m). FUM reached GBP14.8bn as at 30 June 2013. Investment performance of OMGI funds remains strong with 49 per cent of funds in the first quartile over three years, and 69 per cent above the median. 
 
The Skandia UK platform had a strong second quarter following a slow start to the year as a result of RDR implementation, with sales in Q2 2013 exceeding Q1 by 40 per cent.  The platform was profitable during the period with net inflows up eight per cent to GBP1.3bn in the first half of the year (H1 2012: GBP1.2bn) and gross sales of GBP2.3bn (H1 2012: GBP2.2bn). The Skandia platform is now one of the few platforms in the market that is already compliant for new business with the new platform rules that come into effect in April 2014 and April 2016.
 
Skandia International, the cross-border business of Old Mutual Wealth, saw very strong sales growth during the period with net client cash flow up 316 per cent to GBP254m (H1 2012: GBP61m) and gross sales up 20 per cent to GBP931m (H1 2012: GBP775m). This helped increase FUM by six per cent, to GBP14.7bn. Sales growth was driven by increased distribution reach in most regions together with the renewed demand for single premium portfolio bond products globally, particularly in South Africa, Europe and Asia. Adjusted operating profit for Skandia International was GBP31m, a decrease compared to the reported figure in H1 2012 (GBP36m) and an increase of 19 per cent after excluding the Finland business which was sold in 2012 and contributed GBP10m to the H1 2012 profit figure.
 
Sales in the European open book were also strong with net inflows of GBP364m (H1 2012: GBP133m) driven by significant sales growth in both France and Italy.  Adjusted operating profit for Skandia’s open books of business in France, Italy and Poland was GBP11m (H1 2012: GBP1m) and the closed books of business in Austria, Germany and Switzerland contributed significantly to the GBP53m adjusted operating profit recorded by Old Mutual Wealth’s heritage business, which includes legacy business in the UK.
 
“Our aim is to be the best investment business in the market and these results, with strong sales growth and profitability, are a good endorsement of the proposition we are offering financial advisers,” says Paul Feeney, chief executive of Old Mutual Wealth. “This is the first period where we have really seen the benefits of the merger of Old Mutual Asset Managers (UK) and Skandia Investment Group into OMGI, with substantial growth in sales and profit. What is particularly pleasing to see is the constant daily flows into the majority of OMGI’s fund range.
 

“The UK platform had a slow start to the year as we implemented significant changes to accommodate the RDR but it is pleasing to see a significant pick up during the second quarter which has led to growth in both sales and profit for the first half of the year overall. We continue to work with financial advisers to ensure our proposition is aligned to their needs and ongoing new business volumes are encouraging.”  

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