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HHG back in the black with HY04 profit
25/08/04 By: Stephen Blaxhall

HHG Group today reported operating profit before tax and other items of GBP51 million for the six months to June 30, 2004, compared to a net loss of GBP34 million, while HHG's profit on ordinary activities before tax of GBPP46 million compared to a loss of GBP902 million for the corresponding period in 2003. The company also advised that no ordinary dividend is proposed for first half 2004.

It was previously reported that subject to ongoing review, dividends are not likely to be paid in, or in respect of, the years 2004 or 2005.

“Assuming flat investment markets, we expect to maintain margins for Henderson and achieve further efficiency improvements in Life Services in 2004," said the company’s chief executive Roger Yates.


Operating profit before taxation for Henderson for first half 2004 was GBP 25m, up 92% from GBP 13m for first half 2003. Operating expenses grew by 18% to GBP 92m for first half 2004, with the company advising that The majority of the increase related to variable costs for example, employee remuneration, incentivisation and pension costs, the company said.

During first half 2004 total assets under management reduced by GBP 2.2bn to GBP68.4bn. Underlying this position were expected net outflows in Life Services (-GBP1.2bn), external business (-GBP 1.5bn) and AMP Limited Group (-GBP 0.4bn) and a positive adjustment for market improvements (GBP 0.9m).

Total fee income in first half 2004 of GBP116m was 23% up on first half 2003 as management fees increased 16% on the first half 2003.

The company’s revenue was offset by gains in higher margin areas such as absolute return funds, collatoralised debt obligation funds, US and European Horizon mutual funds and property products, HHG’s statement said.

"We now have a simpler corporate structure and a stronger balance sheet and the business is better placed to meet upcoming regulatory changes," said Mr Yates

Henderson’s cost to income ratio said it had improved in the first half of 2004 to 79% compared to 86% in first half 2003.

Life Services operating profit before tax and other items of GBP 32 million for the first half of 2004 compared favourably to the loss of GBP 40 million in the first half of 2003.

During the period, the company realised its investment in Virgin Money and bought out the remaining holding in Henderson from the Pearl shareholder fund.

At close of the market Wednesday HHG were up 3c at $1.31