HGG17 Aug 2011 10:31
Underlying profits rise at Henderson
Date: Wednesday 17 Aug 2011
LONDON (ShareCast) - A £51.7m charge related to the costs of troubled rival Gartmore sent fund manager Henderson Group into the red at the halfway stage, but has not soured the group on its acquisition.
"The integration of Gartmore is exceeding our expectations," revealed Henderson's chief executive, Andrew Formica, as the group announced a 78% increase in underlying profit before tax for the first half of the year.
Adjusted pre-tax profit surged to £86.4m from £48.5m the year before, while recurring profit before tax climbed to £48.6m from £41.6m. The one-off cost for integrating Gartmore saw the company fall into the red at the pre-tax level, however, with a loss of £3.1m.
Profit after tax dipped to £13.8m from £33.0m the year before. Diluted earnings per share jumped to 7.1p from 4.5p last year.
Assets under management (AuM) at the end of the reporting period stood at £74.4bn, up from £61.6bn at the end of 2010. Gartmore's AuM at the time the takeover completed (4 April) totalled £15.7bn.
Fixed income and equity funds continued to perform well with 82% and 75% of assets, respectively, achieving or beating their benchmarks over three years.
Total fee income advanced to £254.5m from £178.6m the year before. Total fee margin improved in the first half due to higher transaction and performance fees and three months revenue from Gartmore. The improving management fee margin illustrates the shift from institutional to retail business along with the acquisition of Gartmore, the company said. Net margins have improved as underlying profits benefit from increases in both fee and operating margins.
Net inflows into Henderson retail funds of £0.6bn in the first half of 2011 were partly offset by £0.3bn of net outflows from Gartmore retail funds. The Henderson institutional net outflows of £2.6bn were mainly from long-standing lower margin mandates where clients have, despite strong performance, rebalanced their portfolios.
The interim dividend has been hiked by 5% to 1.95p from 1.85p at the interim stage in 2010.
"We expect the recent market turmoil to continue in the short- to medium-term, which will dampen investor appetite. That said, we will invest selectively in our business to ensure that we deliver the best product and best service to our clients whilst we continue to manage our cost base actively," the company said.
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