F&C Has Full-Year Loss as Expenses, Financing Costs Rise

F&C Asset Management Plc, whose shareholders ousted Chairman Nick MacAndrew last month, posted a full-year loss as operating expenses and financing costs rose.

The net loss for 2010 was 16.6 million pounds ($26.8 million), compared with a profit of 15.9 million pounds a year earlier, the London-based firm said today in a statement. That beat the 18.9 million-pound loss forecast by six analysts surveyed by Bloomberg.

“We feel the underlying building blocks for a recovery in our profitability have been put in place,” Chief Executive Officer Alain Grisay said on a call with reporters. “To ensure we maximize the delivery of value to shareholders the board will review F&C’s strategy over the coming months.”

Edward Bramson, founder of activist shareholder Sherborne Investors LLC, replaced MacAndrew as chairman of the fund manager last month after criticizing the company’s levels of debt and recent acquisitions. At a shareholder meeting in February, Bramson said he planned to work with the company’s current management to formulate a new strategy.

F&C’s operating expenses rose 6 percent to 247.3 million pounds in 2010, while financing costs climbed 11 percent to 33.6 million pounds. Net revenue was 243.2 million pounds, compared with 225.1 million pounds a year earlier.

The net loss was driven by accounting charges that reduced the value of past acquisitions such as REIT Asset Management in 2008 and Thames River Capital LLP last year, Chief Financial Officer David Logan said on the call.

Assets Under Management

Assets under management increased 8 percent to 105.8 billion pounds and the group’s average net management fee margin was 22.6 basis points, compared with 21.8 basis points a year earlier. A basis point is 0.01 percentage point.

F&C cut its second-half dividend 50 percent to 2 pence a share, in line with the reduction in the first six months of the year. That means the full-year dividend will be 3 pence a share, matching the analysts’ estimates.

Before his appointment as chairman, Bramson criticized F&C’s board for its “expensive borrowings to pay for high-priced acquisitions” such as Thames River last year. He also said he would pursue “conservative financial policies in the future” after the firm’s net debt doubled from 2006 to 2010.

It’s too early to disclose details of the company’s strategic changes, said Grisay, who proposed that shareholders should support former Chairman MacAndrew at last month’s emergency general meeting. “There is no dispute, there are no arguments,” he said. “It’s entirely professional and it’s been like that quite frankly within an hour of the EGM.”

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