UPDATE 2-F&C boosted by new business wins, cost savings

Wed Aug 1, 2012 4:43am EDT

Related Topics

* Net loss falls to 4.6 mln stg vs 18.9 mln

* Institutional mandate wins of 1.9 billion stg

* Cost savings rise 3 mln stg to 48.8 mln

By Raji Menon

LONDON, Aug 1 (Reuters) - F&C Asset Management said new wins in its instititional business and higher cost savings had helped the UK fund firm to narrow its net loss in the first half of the year.

Reported loss after tax fell to 4.6 million pounds in the first half of 2012, compared to 18.9 million pounds in the same period last year.

"While markets have been, and are likely to remain challenging for some time, we have made good progress in positioning the group for the future," executive chairman Edward Bramson said in a statement.

The eurozone debt crisis and an economic slowdown have dented investors' appetite for risk, putting pressure on fund managers' revenues.

Total assets under management fell to 98.2 billion pounds, compared to 100.1 billion pounds in the previous year.

The lower than expected fall in assets was down to investment gains of 4.5 billion pounds, which offset client withdrawals of 4.7 billion pounds. However, forex movements of 1.6 billion pounds resulted in the relatively small decline.

Insurance portfolio assets declined by 1.8 billion during the first half. However, the firm said that Friends Life had also notified its intention to withdraw a further 2.8 billion pounds.

F&C is trying to refocus its business on institutional clients, part of a strategic review pursued by Edward Bramson, the activist investor who became chairman after a boardroom coup last year.

The firm said new institional mandates won during the period, but yet to activate, were 1.9 billion pounds, compared to nil at the end of 2011.

In the second part of the review outlined in May, the fund house said it planned to extend its range of investment trusts and continue cost-cutting measures. Operating cost savings rose by 3 million pounds to 48.8 million pounds over this period.

Broker Jefferies which put a 'Buy' rating on the firm said in a note: "The achievement of the savings (bigger and sooner than expected) is the true story."

The firm also announced an unchanged interim dividend of 1 penny per share.

At 0800 GMT, F&C shares were down 2.8 percent to 85.5 pence.

Jefferies analyst Jason Streets said the lower shares were due to "natural profit-taking" after rising from 65 pence to 88 pence in the past 2 months.

Last week, UK fund manager Aberdeen Asset Management reported a slowdown in client inflows, while emerging markets-focused manager Ashmore Group reported a loss of about a fifth of its equity assets in the three months to end-June earlier this month.

"2012 is a transitional year, during which F&C is implementing new business strategies, re-sizing its expense base, and beginning to improve its capital position," Bramson said.

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