Henderson Global Investors saw underlying profits fall 8% last year as it struggled in a challenging sales environment and moved to streamline its business.
In its full-year results for 2012, the group said it had faced a tough time for sales in Europe and the US in particular, and this, combined with lower performance and transaction fees, lead to the drop in revenues.
Underlying pre-tax profit was £146.5m for the year, down from £159.2m for 2011.
AUM increased slightly from £64.3bn to £65.7bn for the year, while the board recommended a 2% dividend rise, giving a final dividend payout of 5.05p per share.
Management fee income decreased by 1% to £355.2m, mainly due to net fund outflows in 2011 and 2012 offsetting the additional quarter of Gartmore revenue in 2012. Transaction fees decreased by 14% to £43.7m, primarily due to the sale of Hermes private equity JV and other one-off fees in 2011.
Performance fees fell by 48% to £33.9m as fees earned from absolute return funds and SICAVs were substantially lower, the group said.
During 2012, the group saw net fund outflows of £3.9bn as market volatility and uncertainty impacted investors’ appetite for risk.
Henderson’s institutional business saw net outflows of £1.9bn, while the retail funds saw net outflows of £1.2bn.
The firm has been rationalising its fund range, simplifying certain parts of its business and reducing headcount to lower staff costs, which has so far cost the firm £9.1m.
A restructure on the equities side has also seen several new appointments including Matt Beesley, Kevin Loome, James de Bunsen and Paul O’Connor.
“Our various initiatives last year all cost money, so we had to redeploy resources from other parts of our business. Although we increased our overall gross sales following the acquisitions of New Star and Gartmore, our net sales remained negative last year, so we conducted a detailed review of our business structure.
"This identified problems with some legacy products and structures and (in a few areas) poor investment performance.”
Part of the move to tackle these weaknesses was to scrap the role of chief investment officer at the start of the year.
Henderson said performance of its UK retail funds has picked up over one year, and its investment trusts have largely outperformed their benchmarks.
“Along with the industry, our absolute return funds were tested by the volatility in markets. However, performance picked up in the second half of the year with the vast majority of our funds being positive for the year,” the statement said.
The asset manager also reported a £2.5m increase in its FSCS levy for 2010/2011.
Chief executive Andrew Formica (pictured) said:"Political and economic uncertainty and the resultant market volatility during 2012 created a challenging sales environment for Henderson. Nonetheless, we remained focused on delivering excellent returns and service to our clients and I am pleased with the continued delivery of strong investment performance.
"We have maintained our rigorous cost discipline and as a result, the financial strength of the business has continued to improve, clearly visible in our balance sheet as we start 2013 in a net cash position.
"By simplifying and streamlining some parts of our business we were also able to make a number of investments which will result in Henderson being a more global business with stronger investment and distribution capabilities. Given all we achieved in 2012, and how we have positioned the business for the year ahead, I am confident about our outlook."
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