F&C blames £2.5bn fall in assets on weak euro

F&C has seen pre-tax profits double for the first half of the year, though it suffered a £2.5bn drop in assets under management.

For the six months to 30 June, it generated a pre-tax profit of £12.4m, compared to £6.3m in H1 2009.

However, it suffered a post-tax loss of £19.5m which it attributed to costs involved in advisory and legal fees and its acquisition of Thames River. It compares to a loss £8.7m during the same period last year.

F&C blamed the £2.5bn fall in AUM on the weakening euro which reduced funds under management by £4.9bn.

During the period, it generated £2.8bn of new business, but still saw a net outflow of £605m.

The group has also reduced its interim dividend from 2p to 1p and will use the free cash to reduce its debt burden.

Meanwhile, it expects the Thames River acquisition to be completed by 1 September 2010.

F&C CEO Alain Grisay says the company's strategy of improving fund flows and higher margin business is gaining momentum one year on from achieving independence.

"Our three key strategic priorities are to accelerate revenue growth, manage the cost base to create greater flexibility and to strengthen our capital position through the progressive reduction of debt funded in part through a reduced dividend," he says.

"The acquisition of Thames River Capital, to be completed imminently, is a core component of our plan. Thames River is already performing well as a standalone business, with £381 million of net sales year to date, and we believe that as part of the F&C group there will be considerable cross-selling opportunities."