Few companies know more about the importance of managing investors’ expectations than fund managers themselves, so the reiteration yesterday by Henderson Group that it expects to “meet or beat” last year’s operating profits is of considerable comfort.

That the Anglo-Australian asset manager, which has £56 billion of funds under its belt, can be so unequivocal so early in the year might seem unnecessarily bold at a time when financial markets remain febrile. But that confidence does not appear wholly unfounded. Although Henderson’s cost base has recently swollen – it had operating expenses of £225 million last year, only £33 million less than its management fees – it has already taken action on that front, making £20 million of preemptive cuts in February and identifying £10 million more.

As yesterday’s update showed, its revenues appear to be holding up well, too. Excluding the effects of the previously flagged withdrawal of £2.9 billion of funds by Pearl, Henderson pulled in £900 million of net new money in the first four months of this year: £800 million in lower margin institutional funds and the balance in higher-margin products – notably property, which accounted for about 15 per cent of management fees last year.

However, it expects that trend to accelerate in the second half of the year. It still has £2 billion of uninvested property mandates, which will generate both management and transaction fees as the funds are deployed. Henderson also plans to reopen some of its previously closed hedge funds. Given that its existing stable continues to generate positive returns – which not all of its peers can boast – it appears well placed to garner additional cash.

Buying into Henderson now requires the belief that it can pull in further funds in other high-margin areas, such as US and UK wholesale, its Horizon funds, private equity and structured products, which is something of a leap. With its corporate tax rate set to revert towards 28 per cent in 2009, from between 12 per cent and 15 per cent this year, the company also needs investment markets, at the very least, to get no worse so that profits lost to the Revenue can be replaced readily.

This suggests that at 132½p, or 11 times current-year earnings, and yielding 4.7 per cent, Henderson can be no more than a “hold”.

BT Group

Three months is a long time in BT. The below-forecast sales growth and poor cashflow revealed in February’s third-quarter results triggered a 10 per cent fall in its shares. Yesterday’s fourth-quarter numbers contained no such shocks – which is just as well, since they were the last delivered by Ben Verwaayen, BT’s chief executive, and those on which he would presumably like to be judged.

Revenues and earnings exceeded forecasts and closely watched margins in BT’s global services division rose from 10.9 per cent to 13.7 per cent – within sight of management’s medium-term target of 15 per cent. Reassuringly, that division, accounting for nearly 40 per cent of sales, appears to have felt no impact from economic slowdown. Revenue in the US was up by a fifth.

Predictably, unbundling – whereby competitors put their own equipment into BT’s exchanges and pay it less as a result – continues to take its toll of wholesale revenues, down 12 per cent on the year. The bigger question remains how much farther this phenomenon has to run. Only Carphone Warehouse has taken the route of “full” unbundling and the blow would be hard should the likes of BSkyB, Tiscali and Orange follow suit.

However, for now, solid growth by Openreach and in retail broadband, in which sales were up 25 per cent, partially mitigate that threat. With BT’s pension fund surplus rising to £2.9 billion over the past three months, aided by an increase in corporate bond yields, the other major source of recent investor concern has also been defused.

That should leave attention focused on the dividend, which, although covered only 1.5 times by forecast earnings, offers a prospective yield of 7 per cent this year and next year 7.7 per cent. At 235¼p, or ten times 2008 earnings, BT is a solid buy.

Luminar

It has been a long and painful journey. But the transformation outlined three years ago by Stephen Thomas, the chief executive of Luminar, is well on the way to being achieved. By 2011 the group will have a core of 110 venues, of which 74 will be branded as Oceana, Liquid, Life or Lava & Ignite.

Mr Thomas has been criticised but even grudging observers now recognise his achievements. The new licensing laws changed for ever the dynamics of the late-night market and Luminar’s new generation of large entertainment venues are Mr Thomas’s solution. It is no coincidence that rivals suffer wherever one opens. He claims that 22 nearby pubs and clubs were put up for sale in the wake of the opening of the Oceana in Birmingham.

Luminar yesterday reported a 12 per cent increase in pretax profits before exceptionals, despite the smoking ban and the fragile consumer environment. Like-for-like sales in its core dancing division were up a creditable 1.6 per cent. The figure for its branded venues is an even more impressive 4.8 per cent.

Mr Thomas admits to a recent “chat” with Royal Bank of Scotland but says he is not a big fan of the concept of taking Luminar private so long as the transformation is incomplete. But he added that if, come 2011, the shares fail to reflect what he has achieved, he will not hesitate to “do something about it”.

At 326½p, Luminar is trading at 9.5 times current-year earnings, with a revalued freehold estate worth £180 million, more than offsetting £140 million of net debt. Buy.

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