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F&C battles on

RESULTS: Losses widen, and F&C Asset Management cuts the dividend to help reduce debt
August 26, 2010

F&C Asset Management's shares fell by 7 per cent after an increased writedown on unit-linked liabilities widened pre-tax losses, and the investment manager also announced a 50 per cent cut in the interim dividend.

IC TIP: Hold at 58p

F&C experienced mixed fortunes during the first half, with a stronger first quarter for equity prices sharply reversed in the second quarter. Assets under management fell by 2.6 per cent from the end of 2009 to £95.3bn, although much of the decline reflected sterling's strength against the euro, with 55 per cent of group investments denominated in euros. On a constant currency basis, assets would have risen 2.5 per cent to £100.2bn.

There was a net £605m outflow of funds, the lowest level of first-half outflows for six years. Net flows were positive in the highest fee categories, which more than offset the fall in fee income from institutional outflows. In fact, total investment management fees rose 6 per cent to £115.4m. Within this, performance fees slipped from £1.6m to £0.6m but the bulk of performance fees - £18.7m last year - are reported in the second half.

Numis is forecasting full-year pre-tax profits of £45.2m and EPS of 5.2p (from £41.1m and 5.7p in 2009).

F&C ASSET MANAGEMENT(FCAM)
ORD PRICE:58pMARKET VALUE:£295m
TOUCH:57-59p12-MONTH HIGH:85pLOW: 46p
DIVIDEND YIELD:8.6%PE RATIO:52
NET ASSET VALUE:104p*NET DEBT:15%

Half-year to 30 JunPre-tax profit (£m)Earnings per share (p)Dividend share (p)
2009-11.3-1.992.00
2010-19.7-4.121.00
% change---50

Ex-div: 29 Sep

Payment: 22 Oct

*Includes intangible assets of £772m, or 152p a share.

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