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March 10, 2017

Old Mutual Wealth adjusted operating profit drops 15% in 2016

Old Mutual Wealth has posted a pre-tax adjusted operating profit (AOP) of £260m for the year ended 31 December 2016, a 15% decrease compared to £307m a year ago.

By Verdict Staff

Old Mutual Wealth has posted a pre-tax adjusted operating profit (AOP) of £260m for the year ended 31 December 2016, a 15% decrease compared to £307m a year ago.

The company’s pre-tax operating margin during the year dipped to 32% from 40% in 2015.

Its year-to-date funds under management (FUM) surged to £123.5bn from £104.4bn in the year ago period.

Net client cash flow (NCCF) slumped 25% year-on-year to £5.2bn. Gross sales in 2016 were £21.1bn, a 5% rise compared to £20.1bn in 2015.

AOP at Old Mutual Global Investors (OMGI) was £79m, an increase of 11% from £71m in 2015. The company said that the rise was driven by strong revenue growth.

OMGI’s NCCF slumped 31% to £2.4bn from £3.5bn a year ago, while FUM surged 27% to £31.4bn from £24.7bn a year ago. Gross sales at OMGI were £12.1bn, a increase of 19% from £10.2bn a year earlier.

The UK Platform's AOP was £27m for the year ended 31 December 2016, a 18% slide compared to £33m a year ago. The company attributed the decline to the impact of the decision to remove the minimum investor charge and drawdown charge, the FCA sunset clause and competitive industry margin pressures.

FUM at the UK Platform was £41.4bn on 31 December 2016, a 20% surge from £34.5bn in 2015. NCCF was £2.8bn in 2016 compared to £2.7bn in 2015, while gross sales increased 4% year-on-year to £6.4bn.

AOP at Old Mutual International was £52m in 2016, up 4% from £50m in 2015. Offshore FUM at the segment soared 18% to £18.9bn from £16bn in the prior year, while international offshore net inflows remained stable at £0.7bn.

Quilter Cheviot AOP was £46m in 2016, a 35% surge from £34m in 2015.  NCCF plummeted 20% to £0.8bn from £1bn in the last year, while FUM increased 16% to £20.7bn from £17.8bn a year ago.

Old Mutual Wealth CEO Paul Feeney said: “In 2016 we continued to transition Old Mutual Wealth into a leading, integrated, advice-led, UK investment and wealth management business.   We made a number of acquisitions to grow and consolidate our distribution in the affluent and high net worth markets, we exited a number of non-core operations and continued to build the business for its independent future.

"We were particularly encouraged by the strong net client inflows, which reflect the increasing value of our wealth solutions for our customers and the attractive benefits of our integrated business model, in what has been a challenging year for the sector as a whole.”

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