F&C Asset Management (FCAM) cut core operating expenses by £23.3m to £160.5m as the group emerged from a restructuring following a boardroom shake-out in 2011. And while non-recurring and other exceptional items wiped out headline profits, underlying operating profits rose 9 per cent to £71.2m, and on the same basis margins rose from 24.4 per cent to 29.2 per cent.
But the group continued to haemorrhage funds, so despite a £10.1bn positive investment performance, assets under management fell from £100.1bn to £95.2bn after net outflows of £13.3bn. Adverse currency movements trimmed a further £1.7bn. Of the outflows, £5.3bn was the consequence of Friends Life withdrawing assets to be managed in-house, and F&C expects further Friends Life withdrawals of £6.2bn in the first half of this year.
F&C's other problem is that a large chunk of its assets are managed for strategic partners, where fees - group fee income fell 9 per cent to £243.1m - for managing assets are considerably lower. Moreover, most of these relationships, which give F&C exclusive management rights, are now reaching maturity. And it remains unclear how many of these relationships will be renewed.
Analysts at Numis are forecasting adjusted pre-tax profits of £73.8m and EPS of 10.3p.
| F&C ASSET MANAGEMENT (FCAM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 108p | MARKET VALUE: | £600m | |
| TOUCH: | 107-108p | 12-MONTH HIGH: | 112p | LOW: 64p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | NA | |
| NET ASSET VALUE: | 96p* | NET DEBT: | 18% | |
| Year to 31 Dec | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2008 | -67.3 | -10.7 | 6.00 |
| 2009 | 8.70 | 3.20 | 6.00 |
| 2010 | -19.2 | -3.30 | 3.00 |
| 2011 | -1.50 | -0.10 | 3.00 |
| 2012 | -2.50 | -0.10 | 3.00 |
| % change | - | - | - |
Ex-div: 3 Apr Payment: 24 May Includes intangible assets of £704m, or 127p a share | |||
