Fry pale after demise of BES

The investment column :

Johnson Fry was a name to conjure with when the business expansion scheme was at its height, but has become a pale shadow of its former self since the ending of the scheme in 1993. However, the ebullient Charles Fry who led the business in the glory days of the 1980s has had plenty of experience of snatching victory from the jaws of defeat. Thirty months ago he rescued the remains of JF from the ruin of LIT Holdings, the financial conglomerate into which it was reversed in 1989.

Yesterday Johnson Fry confirmed its continuing recovery, despite announcing pre-tax profits cut from pounds 4.18m to pounds 2.88m in the year to December. The figures were inevitably distorted by the ending of the BES scheme. JF pulled in pounds 250m to invest in decaying repossessed property in the dying days of the scheme and picked up a 10 per cent fee for managing a pounds 30m refurbishment which gave a one-off boost to the 1994 figures.

The legacy of the BES is that the group has been left with managing a pounds 900m property portfolio, half of which is repossessed, which it will be looking to liquidate in two years when the rules allow. That will hit revenues when the time comes, but the good news is that many of the properties are likely to prove unsaleable in the current climate and so at least some of the management contracts will continue.

JF is also in the running for a slice of the work managing the pounds 2bn housing estate of the Ministry of Defence when it goes out to tender.

Meanwhile, the group's more traditional areas of dreaming up new financial products and managing other people's money go from strength to strength. Funds under management up from pounds 270m in 1994 to over pounds 400m now look well on their way to the target of pounds 1bn in three years.

Profits this year of pounds 3.5m would put the shares, up 12p at 134p, on a prospective p/e ratio of 9. Reasonable value, but the market is thin.