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Henderson suffers £4 billion outflow

Henderson suffers £4 billion outflow

Henderson Group continued to suffer net outflows over 2016 following the Brexit vote, totalling £4 billion over the year, compared to £8.5 billion of inflows in the previous year.

According to the company’s full year results to the end of December 2016, the outflows were attributed to a pull-back of exposure from European assets.

‘At the start of the year, clients reduced their risk appetite and demand for European assets moderated. This theme continued throughout the year as political events unfolded, most notably the UK's referendum on EU membership and the US presidential election,’ the company noted.

Aside from outflows from European assets, the company saw redemptions from its UK Property fund in the immediate aftermath of the EU referendum. The fund re-opened on 14 October 2016.

Assets under management were up 10% to £101 billion, which was due to positive markets and forex movements.

Underlying profit before tax was down from £220 million to £212.7 million. This was hit by a £73.5 million of acquisition related and non-recurring items, which resulted in a total pre-tax profit decrease of 32% to £109.6 million.

Net income was down to £594.7 million, driven by lower performance fees of £40.4 million, down 59%. However, management fees increased 8% to £505.9 million.

Chief executive Andrew Formica (pictured) said that the group’s integration with Janus Capital is advanced and is expected to complete by the end of May.

Henderson announced its merger with Janus Capital last year which will create a company with around $320 billion in assets under management.

The ‘merger of equals’ is expected to deliver around $110 million in cost synergies. Formica said that although there is very little overlap of the businesses and there should not be many redundancies there may be some where there are overlaps, for example in support services.

Formica said: ‘In Janus Henderson we are building an investment manager centred on delivering for our clients, that creates opportunities for our colleagues and retains the freedom to innovate, change and grow. I very much look forward to working even more closely with Dick Weil and our new colleagues from Janus.’

The group also recognised non-recurring costs of £12.1 million in relation to the Janus deal.

Elsewhere, the board recommended a final dividend of 7.30p per share.

Formica added: 'Henderson has delivered resilient financial performance in a year of extraordinary turbulence in politics and financial markets. It is testament to our strategic progress over the past three years that we report assets under management and management fees at record levels – progress that has enabled us to continue to move forward through the proposed merger with Janus Capital Group.'

He added that the operational implications of Brexit are 'relatively contained' in the short term, although admited that the impacts of the decision will not be known for years. 

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