Henderson raises final dividend: Touche Remnant contributes 1.5m pounds in first three months after acquisition

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The Independent Online
HENDERSON Administration, the fund management group, is paying a slightly higher final dividend as an indication of the benefits it expects from Touche Remnant, the rival firm bought for pounds 43m six months ago.

Despite lower profits and earnings, Henderson's final payout rises 1p to 29.5p to make a total of 42p. Ben Wrey, chairman, said shareholders had supported a very substantial acquisition and it was going very well.

After charging pounds 3.75m of redundancy and other integration costs to the balance sheet, during its first three months with the group Touche contributed profits of pounds 1.5m (including interest on its cash). In the previous year it made only pounds 332,000.

This enabled Henderson to report pre-tax profits of pounds 14.6m, down from pounds 17m the previous year. Funds under management and administration grew 55 per cent to pounds 11.5bn thanks to the addition of Touche Remnant's money and rising shares.

However, Henderson is still losing pension fund clients in the aftermath of bad investment performance in 1987 and 1988. Six months ago the company said it had staunched the losses and was back on the shortlists of influential pension consultants.

But the hoped-for client gains have not materialised and losses continue, albeit at a slower rate. 'We have not been as successful as we hoped at winning new business,' said Mr Wrey.

Henderson lays part of the blame on the recent concentration of pension fund business in the hands of the big four - Gartmore, Mercury, Schroders and Phillips & Drew. Ian Buckley, investment director, said investment performance had improved and consultants were prepared to recommend Henderson - 'But there is a big gap between being recommended and actually winning.'

The company is planning a big marketing push to private investors, who are again turning to equity investments because of lower interest rates and increased confidence.

Henderson is already seeing a flow of funds into investment trust savings schemes and better sales of unit trusts. Jeremy Edwards, managing director, said the unit trust industry was going to see the same boost as in past recoveries.

Henderson must first rationalise the 35 funds it has after acquiring 13 from Touche Remnant. Mergers will reduce the range to 21 unit trusts by the end of the summer. The group is also seeking a managing director for its unit trust arm after losing Graham Kane to Morgan Grenfell.

Henderson's treatment of Touche Remnant's pounds 15.8m of assets involves a pounds 6.9m fair value adjustment, largely because of Touche's pounds 15m pension fund. The fund is still substantially in surplus despite a contribution holiday which began seven years ago.

Philip Gibbs, of Barclays de Zoete Wedd, is forecasting a pre-tax profit of pounds 20m or more this year.