Acquisition costs hit Henderson profits as retail assets surge to £57bn

Reception Feb 2014(1)

Significant acquisition costs weighed on Henderson’s profits last year as net retail flows of £8bn helped boost assets under management to £57bn.

The firm’s full year results for 2015, published today, reveal pre-tax profits dropped 41 per cent year-on-year, from £283.4m to £167.9m, primarily due to acquisition and disposal costs, and other non-recurring items totalling £52.1m.

Acquisitions and disposals reflect the merger of the Old Mutual property fund into Henderson UK Property OEIC in January 2015, the net impact of the sale of the firm’s 40 per cent share of TH Real Estate, the transfer of Richard Pease’s European Special Situations fund, the additional stake taken by the group in 90 West Asset Management in May 2015, and the completion of a deal to buy Perennial Fixed Interest and Perennial Growth Management on 1 November 2015.

By contrast, in 2014 acquisitions and disposals added £88m to the fund manager’s bottom line.

When these costs are stripped out, profit from continuing operations was up 17 per cent, from £187.8m to £220m.

Retail AUM soared from £46bn at the start of 2015 to £57bn at the end of December as Henderson recorded strong net retail flows throughout the 12-month period.

Management fees net of commissions were up 16 per cent, from £403.5m to £468.3m, while performance fees surged 19 per cent, from £82.8m to £98.7m.

In the UK, Henderson says asset flows were strongest into passive managers rather than active sectors, although it insists it is seeing “continuing demand” for the Henderson UK Property and UK Absolute Return funds.

Henderson chief executive Andrew Formica says: “2015 was another strong year for Henderson. Our active investment management capabilities delivered excellent returns for our clients in difficult market conditions, and we achieved record net inflows and underlying profits. Our organic growth initiatives are making good progress, with encouraging performance from new investment teams and AUM growth in all regions, notably the US, Continental Europe and Latin America. We accelerated our growth plans in Australia with three acquisitions in the course of the year.

“The first few weeks of 2016 have been challenging for investors and our clients, with a wide range of economic and geo-political risks weighing on markets. We will review our short term plans if difficult market conditions persist, but remain focused on our long term goals to grow and globalise our business.”