Tough times at F&C

However, the underlying picture is slightly less gloomy. While underlying profits after tax fell from £50.2m to £38.3m in 2007, assets under management dropped just 4.8 per cent to £98.6bn. Inevitably, this hit fee income, with base management fees down from £246.4m to £236.3m, while performance-related fee income fell from £20.8m to £7.9m. F&C has also struggled with the uncertainty generated by majority shareholder Friends Provident, putting its 52 per cent stake up for sale. However, Friends Provident has now decided to distribute its holding in F&C to its own shareholders later this year, although F&C will retain a separate listing.

Last year was also to have seen management focusing on year two of a three-year restructuring plan, but arrival of such grim financial market conditions effectively put this on hold. However, the plan - to focus on generating inflows in high margin areas of business - remains in place, and the average rate on new institutional business is 30 per cent higher than fees earned on outflows.

Numis Securities expects pre-tax profits of £53.7m for 2009 and EPS of 7.6p.

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