It's an understatement to say heavy exposure to European equities isn’t serving fund manager Henderson Group (HGG) particularly well this year. It saw a surge in net outflows running up to the EU referendum, according to chief executive Andrew Formica, a trend which worsened significantly once Britain voted ‘leave’. For the six months ended June, the group recorded £2bn in net outflows – the worst performance since 2011.
Overall, assets under management rose 3 per cent thanks to beneficial foreign exchange movements, but underlying pre-tax profits fell 14 per cent to £101m as a result of lower performance fees, £123m in compensation costs and higher non-staff operating costs. Although flows are moderating, Mr Formica reckons the group is still losing close to £100m a week in net outflows.
Still, a strong balance sheet and net cash position allowed the group to nudge the interim dividend up 3 per cent. Mr Formica argues the absence of a financial crisis similar to that of 2008 should give clients more confidence to resume investing in the near-term.
Analysts at Numis still expect pre-tax profits of £223m for the year ending December 2016, giving EPS of 15.6p, compared to £220m and 17.2p in FY2015.
| HENDERSON GROUP (HGG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 231p | MARKET VALUE: | £ 2.62bn | |
| TOUCH: | 231-231.3p | 12-MONTH HIGH: | 314p | LOW: 193p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 92p* | NET CASH: | £151m | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 365 | 98.1 | 8.3 | 3.1 |
| 2016 | 357 | 68.4 | 4.9 | 3.2 |
| % change | -2 | -30 | -41 | +3 |
Ex-div:25 Aug Payment:16 Sep *Includes intangible assets of £672m or 59p a share | ||||
