Ferret's Stock to Watch: HENDERSON GROUP PLC 08:38, Friday, July 20, 2007
A COMPANY THAT HAS DONE WELL GOING ITS OWN WAY
Sydney - Friday - July 2O: (RWE Aust Business News) ***************************************************
OVERVIEW ********
Traders have finally picked up on an encouraging profit update released to the Stock Exchange yesterday on behalf of Henderson Group plc (ASX:HGI).
The ANZ Bank seems to have seen the writing on the wall back in June when it became a major 5 per cent stakeholder.
This was the company that emerged unscathed from that disastrous AMP foray into the British/European market some years ago.
When AMP demerged, the Australian and New Zealand investment management operations of Henderson were retained by AMP, while the UK, European, North American and Asian operations became Henderson (HHG).
AMP shareholders on the demerger received one HHG share for each AMP share that they then held back on December 19, 2003.
All shareholders held shares in the two new regionally focused listed companies.
It was then up to shareholders to decide whether they wished to keep or sell their shares in one or both of the new companies.
Henderson Group appears to have never looked back since the demerger.
The London-based Henderson Group has announced an update on its business performance during the first half of 2007 and its current outlook for the remainder of the year.
The group will report its interim results for the six months to June 30 on August 24.
Henderson previously indicated it planned to return about 200 million pounds to shareholders in the second half.
Based on a prudent current assessment of forecast cash-flows, regulatory, seed and working capital requirements, the group now expects to return up to 250 million pounds in the fourth quarter of 2007.
"Improving investment performance and generally benign markets have facilitated fundraising across a range of the group's higher margin products in the first half of 2007," directors said.
"If these factors persist during the remainder of the year, prospects for the business remain good."
In the first six months of the year net sales across Henderson wholesale funds totalled 0.9 billion pounds (1H06: 0.9bn pounds).
"Within this total, US mutual fund sales were particularly strong, helped by excellent investment performance across the range and by greater enthusiasm amongst US investors for international equity funds," directors said.
Investment performance in the group's institutional business continued to recover and the directors expected a gradual stabilisation of assets under management in this area by the end of 2007.
In the first half Henderson experienced institutional net outflows of 0.7 billion pounds, compared with 2.9bn pounds outflows in the first half and 0.3bn pounds outflows in the second half of 2006.
"Despite these outflows, our institutional revenues are still expected to increase this year as a result of higher-margin business wins," the directors noted.
Investment performance in the group's property funds was "excellent" in 2006, with 92pc of funds beating their benchmarks.
As a result performance fee generation has been strong, which will be recognised in the first-half results.
SHARE PRICE MOVEMENTS *********************
Shares of Henderson yesterday rose 12c to $4. Rolling high for the year is $4.17 and low $1.83. Dividend is 7.64c to yield 1.91 per cent. earnings per share is 13.65c while price/earnings ratio is 29.3.
The company has 574.4 million shares on issue with a market cap of $2.3 billion.
At Henderson Group's annual general meeting back in May, chairman Rupert Pennant-Rea told shareholders that the company had taken the final step in transforming itself into a pure fund management business a year ago, with the sale of Towry Law UK just before the 2006 AGM.
The Group continued to make good financial progress in 2006, with pre-tax profit from continuing operations up 30 per cent on 2005, mostly due to increased profitability in Henderson Global Investors.
Investment performance improved across a wide range of funds, which helped to attract healthy flows of money into higher margin activities.
As well as producing good profit growth, the Group generated strong cash flow and returned just over one billion pounds to shareholders in the past two years.
"But we still feel the balance sheet should be working harder, and two recent events have provided us with the opportunity to make this happen," the chairman declared.
"We started paying dividends last year, and we intend to maintain a sustainable flow from now on, so we will stick to a 50 per cent pay-out ratio for the time being."
Directors recommended a dividend of 2.27 pence per share for the second half of last year.
For holders of CDIs, the $A equivalent will be around 5.46c and the $NZ equivalent will be around 6.1c.
This brings the total dividend for 2006 to 3.15 pence per share, or around 7.64c (Australia) and around 8.57c (New Zealand).
Overall, the Board remains confident about the Group's prospects and is determined to continue creating value for clients and shareholders.
BACKGROUND **********
The Henderson Group of companies was formed in December 2003 and listed on the ASX at the same time.
In April 2004 the Group sold its 50 per cent joint venture holding in Virgin Money Group to Virgin Group, the joint venture partner.
In April 2005 the company sold its Life Services business and changed its name to Henderson Group.
In December 2005 Henderson Group entered into an agreement to sell Towry Law UK. The sale was completed in May 2006.
In March 1998, Henderson was acquired by AMP and was subsequently integrated with AMP Asset Management's operations in the UK and Australasia as Henderson Global Investors.
When AMP demerged, the Australian and New Zealand investment management operations were retained by AMP, while the UK, European, North American and Asian operations became Henderson.
Henderson Group is the holding company of the investment management group Henderson Global Investors.
Henderson Group is headquartered in London and since December 2003 has been listed on the London Stock Exchange and Australian Securities Exchange - appearing in the FTSE 250 and ASX 200 indices.
It has about 135,000 shareholders worldwide.
Established in 1934, Henderson Global Investors is a leading independent global asset management firm.
The company provides its institutional, retail and high net-worth clients with access to skilled investment professionals representing a broad range of asset classes, including equities, fixed income, property and private capital.
Henderson is one of Europe's largest investment managers, with 61.9 billion pounds in assets under management (as at December 31) and employs around 900 people worldwide.
