F&C cuts £23m in costs to power profit but Thames River struggles

F&C’s strategic review helped power a 32% jump in pretax profit in 2012, but its Thames River arm found the going tough in a challenging year for its wholesale business.  

Underlying pretax profit rose from £28.4 million to £37.5 million on the back of cost savings of £23.3 million.  

Net outflows stood at £13.3 billion with strategic partners assets contributing to the lion’s share of this at £11.4 billion. As at 31 December the firm managed £21.9 billion on behalf of Friends Life and expects the life office to withdraw a further £6.2 billion in the first half.

Against this the firm drew satisfaction from winning 54 institutional mandates in 2012, 44 of which were from new clients.

Elsewhere it was a challenging year for wholesale, with net outflows of £1.2 billion.

The group said both its Thames River Global Credit and Global Bond products suffered significant outflows, while the Thames River Multi-alternative division continued to experience outflows, ‘reflecting the significant structural changes in the fund of hedge funds market’.

The difficulties in the wholesale business was the major factor the decline in revenue from £267 million to £243.5 million, with revenues at Thames River falling by £13.7 million. Strategic partner revenues fell from £7.7 million.

Overall assets under management fell from £100 billion in 2011 to £95.2 billion with, positive contribution of around £10 billion in asset performance offset by £13.3 billion in adverse currency movements.

During the year F&C made a number of changes to its management team, with Richard Wilson appointed chief executive. Other changes included the appointment of Steve Ilott as head of multi-strategy investments and Mandy Mannix, who was named head of client management. At the same time Thames River founder Charlie Porter (pictured) stepped down.

F&C chairman Edward Bramson was pleased with the progress the firm made in 2012.