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Henderson's profits slip 8% on performance fee weakness

by James Phillipps on Feb 27, 2013 at 10:15

Henderson's profits slip 8% on performance fee weakness

Henderson has seen an 8% fall in underlying profits, blaming the group’s ‘relatively high’ exposure to both Europe and equities, but said cost savings of a similar level were achieved.

Underlying profits fell from £159.2 million to £146.5 million year-on-year in the 12 months to the end of December, but the group’s assets under management nudged up from £64.3 billion to £65.7 billion.

Chief executive Andrew Formica (pictured) pointed to the group’s restructuring of its investment team and international expansion as future drivers of growth but admitted 2012 had been challenging.

Management fee income fell by 1% to £355.2 million, largely due to net fund outflows for the second consecutive year. Performance fees slumped by 48% to £33.9 million as earnings derived from absolute return and Sicav mandates fell.

Despite this, the group said it has a £954 million regulatory capital surplus and recommended a final dividend of 5.05p per share, a 2% increase.

Formica said: 'We made good progress in our key strategic objectives, including strengthening our retail business and expanding global and absolute return products, adding to our presence outside of Europe.'

Jonathan Goslin, an analyst at Edison Investment Research, said: 'Revenue growth was in line with expectations although PBT was marginally lower due to a reduction in operating margins. There are early signs that outflows slowed materially from its higher margin retail business in Q4, supporting our longer term thesis that gross flows will begin to show through as the consolidation and rationalisation programmes come to an end. Although the total impact of the RDR is still as yet unknown, Henderson should be less affected than its closest rival Jupiter due to its large institutional business.'

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