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Ferret's Stock to Watch: HHG
14:04, Thursday, 21 April 2005

Sydney - Thursday April 21: (RWE Australian Business News)
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A COMPANY TROUBLED BY DISASTER SEEMS TO HAVE COME GOOD

OVERVIEW
********

Some of the confusion and concern among shareholders in HHG
(HHGDA) should be cleared up as the company expects to return the
majority of the cash proceeds following the disposal of the life assets
for $2.6 billion.
Much of the $885 million capital return was arranged at a fixed
price of $1.34 for 52 of every 100 shares held.
The market initially put a price of $1.46 on each share.
But then the shares were adjusted to around $1.60 using Goldman
Sachs JB Were numbers.
Yesterday the HHGDA shares traded 3.5c higher to $1.62.
It followed court approval for the first cancellation of shares
under its return of cash transaction.
HHG expects to return most of the cash proceeds from the
disposal of Life Sciences to shareholders in exchange for share
cancellations.
The CDIs were quoted ex the return of capital on Friday.
HHG plc expects to return the majority of the cash proceeds from
the disposal of Life Services to shareholders in exchange for share
cancellations under two transactions.
The company has received court approval for the first
cancellation of shares under the return of cash transaction.
The cancellation for that transaction is scheduled following the
record date (expected to be April 22) and 1.41 billion of the total 2.71
billion ordinary shares on issue will be cancelled.
The next court hearing will be on April 25, which will be for
the cancellation of shares under the reduction of investor base
transaction.
The number of shares to be cancelled under that transaction will
be announced following the hearing.

PRICE MOVEMENTS
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HHGDA has traded between $1.56 and $1.64 over the past three
days.

*****

Back in February chief executive Roger Yates told shareholders
at an extraordinary general meeting that when HHG listed in Sydney and
London it was clear about what it was trying to achieve.
The goal was to deliver value to shareholders from the Life
Services business and deliver growth through building Henderson Global
Investors, the company's fund management business.
The sale of the Life business achieved the first part of its
objective and the second is on the way with the grow of the Henderson
Fund management business.
The company now comprises principally Henderson Global Investors
which has been given the name of HHG plc.
The new company is a smaller, more streamlined organisation
comprising Henderson Global Investors and the much smaller financial
advisory business, Towry Law.
Henderson Group will continue to be listed on both the London
and Australian stock exchanges and expect the Group to remain as a
member.
Looking forward, the strategic focus of the group will be the
development of Henderson Global Investors as a leading international
fund management business.
CEO Yates pointed to Henderson had proforma net assets of £607
million at 30 June 2004, plus £45 million of additional consideration
retained.
He said Henderson was a well diversified business, operating
throughout UK and Continental Europe, with expanding operations in North
America and Asia.
The company manages a broad range of investment funds for both
institutional and retail investors, across multiple asset classes
including equities, fixed income, property and private
equity.
Total funds under management stand at approximately £69 billion.
This diversification has been a source of strength and stability
during the turbulent market conditions of recent years and the company
intends to retain it.
HHG objective is to build the Henderson operation into a more
profitable and more valuable business.
It will be based on both its core equity and fixed income
offerings and its range of alternative products such as property,
private capital and hedge funds.
In particular, HHG intends to continue to improve margins,
measured by revenues as a percentage of funds under management, by
re-orienting the business to higher margin products.
These include UK and European mutual funds and the alternative
products in property, private capital and hedge funds I described a
moment ago.
In addition, the company we will focus on improving its expense
ratio over the medium term, to a target of 75 per cent which has been
previously outlined before.
Following the closure of Towry Law's international operations in
2004, HHG has been developing Towry Law UK as a standalone business.
The objective is to generate an acceptable margin on revenues
and the management of Towry Law has worked hard on cost reduction during
2004 to create a platform for a better business unit financial
result in 2005 - though this is not likely to be material in the context
of the overall group financial results.
Referring to current prospects the chief executive commented,
"Overall, therefore, we have a good platform on which to build further
value for shareholders.
"Fund management is a growth business with good margins and
good returns on equity and capital.
"Assuming improved investment results and a benign market
environment, the medium and long term prospects for the business are
strong and we are looking forward to the future with confidence, Mr
Yates declared.


BACKGROUND
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The HHG group was formed in December 2003 from the UK-based
operations of AMP.
In May 2003, AMP announced that it would be demerging its
businesses along geographic lines – Australasia and the United Kingdom.
By way of background, the Australian Mutual Provident Society
was founded in Australia in 1848.
It opened its first UK branch office in 1908 and began its
policy of UK expansion in 1989 when its UK operations merged with the
long term insurance business of London Life.
This was followed by the acquisition of Pearl in 1989, a 50%
share in Virgin Direct in 1995, Henderson plc in 1998, NPI Limited in
1999 and finally Towry Law in 2001.
AMP began to refocus its UK business on it core activities in
2001 with an emphasis on product distribution.
It sold the general insurance business of Pearl and merged the
Virgin Direct business with virginmoney.com to create Virgin Money.
In 2002, Henderson's private client business was sold to Newton
Investment Management and Cogent Investment Operations sold to BNP
Paribas Securities Services.
In July 2002, AMP announced its intention to cease writing new
business for most Pearl and London Life with-profits and annuity
products.
During the first six months of 2003, AMP closed the Pearl direct
sales force and sold its UK banking portfolio.
In June 2003, AMP announced that it was effectively closing the
life insurance and pensions books of Pearl, National Provident Life,
London Life and NPI Limited to new business.
In April 2004 HHG sold its 50% joint venture holding in Virgin
Money Group to Virgin Group, the joint venture partner.
In April 2005, HHG sold the Life Services business to LCIG.
The remaining group is focused on asset management.
ENDS