F&C Asset Management has warned it faces "signicant" short term headwinds following the loss of its strategic partnerships, as it urged shareholders to approve a £700m takeover deal.
The asset manager reported a net inflow in its consumer and institutional business of £1.3bn last year, compared to a £1.9bn net outflow in 2012.
However, this was dwarfed by a £20bn strategic partner outflow, leading to an overall group net outflow of £19bn for 2013.
Statutory profit after tax came in at £10.2m, against £2.6m the previous year, while group underlying profit was £69.2m, up from £51.9m. Net revenue was £241.2m, down from £243.5m in 2012, including a £10.8m reduction from strategic partners.
F&C said it remains exposed to the future actions of its strategic partners.
Chief executive Richard Wilson said: “The group faces significant headwinds in the short term as our strategic partner assets decline and the growth from our consumer and institutional business, which is starting to emerge, takes time to develop.
“In 2013 some £20bn of strategic partner assets were withdrawn as their contracts matured. The combined annualised revenue loss associated with these assets and related fee changes, including F&C REIT, is some £35.5m, of which £11.3m is reflected in the 2013 results given the timing of withdrawals during the year.
“While the company remains exposed to the future actions of our strategic partners, who collectively accounted for 51.5% of our year-end AUM and 29% of our 2013 net revenue, I believe that the positive momentum we have created within the business was a key factor in attracting the offer from BMO Global Asset Management announced on 28 January this year.”
Meanwhile, the group’s assets under management stood at £82.1bn, down from £95.2bn last year. Net debt was reduced from £97.3m to £76m.
The cost-cutting plans put in motion by Sherborne’s Edward Bramson before he stepped down from the board last year have helped improve the business. F&C said it remains on track to meet cost reduction targets.
Meanwhile, the board has recommended shareholders vote in favour of a takeover by the Bank of Montreal (BMO), which tabled a £700m bid for the company at the start of the year.
"The proposed transaction with BMO provides shareholders with an attractive premium against the medium-term standalone prospects and valuation of your company and the board has unanimously recommended that shareholders vote in favour of the acquisition," the group said.
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