A year after it snapped up its ailing rival New Star Asset Management, Henderson said it was on the look-out for more acquisitions.

Andrew Formica, chief executive, said: “We remain alert to acquisition opportunities but we will be choosy.”

The focus is likely to be on expanding outside the UK, Mr Formica added as he outlined a 20 per cent fall in underlying profits in the year to December.

Profits before exceptional costs fell from £80.3m to £63m. The group incurred costs of £33.8m ($52.1m) on acquiring £8.1bn of New Star funds for £94.2m in April. After exceptionals, pre-tax profits were £15.5m against a loss of £17m last year.

Mr Formica said the first half of 2009 was markedly different from the second, when revenues picked up. Operating margins fell one percentage point to 27.6 per cent but Mr Formica said this masked improvement in profitability from the middle of the year.

Assets under management rose 17 per cent to £58.1bn despite net outflows of £4.6bn. Inflows into higher-margin funds rose to £700m by the end of the year offsetting £4.2bn in withdrawals by Pearl, the insurer.

The outflow of Pearl funds will continue but “will have minimal impact on revenues”, said Mr Formica.

The group, which has £56m in net debt, reported earnings per share of 1.7p, against losses per share of 3.2p in 2008. The total pay-out is held at 6.1p via a 4.25p final.

The shares rose 2.6p to 122.2p.

FT Comment

Henderson is positioning itself to pick off any asset management groups likely to shake loose from the banks or other financial conglomerates. If only Mr Formica can find another opportunity like New Star after it fell into the hands of its banks. Henderson began to reap the benefits of buying New Star faster than expected and after a tough start to the year, Henderson’s revenues have picked up. But a lot rides on stock markets being strong and the group improving margins. The difficulty may be in keeping a lid on costs as its fund managers become emboldened by their recent improvement in investment performance. It is hard to think that the shares – trading on slightly more than 13 times analysts’ forecast earnings per share of 9.3p for the current year – are cheap.

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