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Brexit uncertainty hits Henderson profit

AAP logoAAP 28/07/2016 Trevor Chappell

Global asset manger Henderson Group's half year profit has dropped 41 per cent amid market uncertainty related to Britain's referendum on its place in the European Union.

Henderson, which is listed on the Australian and London share markets, said its clients pulled back from investing in European assets and UK property before the 'Brexit' poll, and particularly after the June 23 vote to leave the EU.

Henderson made a net profit of GBP53.1 million in the six months to June 30, down from GBP90.6 million a year earlier.

In the UK, the aftermath of the EU referendum has monopolised the news agenda, and the uncertain outlook for both Britain and Europe has reduced activity among clients in the UK, Europe and the US, chief executive Andrew Formica said.

"These first half market conditions led to a reduction in performance fees for the business of approximately GBP30 million, which in turn drove lower underlying profits and earnings compared to the same period last year," he said.

Mr Formica said the outflows experienced in the run up to the Brexit vote and immediately afterwards had set the group back to where it was in the third quarter of 2015.

It is impossible to predict exactly what flows will look like in coming quarters, but Henderson's strong investment performance and strong client relationships should offer the group some protection, he said.

"From an operational perspective, the message here is one of minimal impact as far as we can see for the time being," Mr Formica said.

A strategy of geographical diversification had resulted in Henderson's UK assets under management coming down from 70 per cent of its business to 50 cent in the last two years, with the group making acquisitions in Australia, the US and emerging markets, he said.

Interest in Henderson's investment products in those markets had grown in the first half, and that trend was continuing in the current half, Mr Formica said.

Henderson's total assets under management grew to GBP95 billion.

The company's shares were pummelled in the wake of the Brexit vote, plunging from $5.13 to a low of $3.49 on July 7. The drop wiped about $2.4 billion from Henderson's market capitalisation.

Henderson shares have since made a partial recovery, and they ended Thursday's session 20 cents higher at $4.04.

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