Henderson Group - GM Chairman's address

General Meeting Chairman's address

22 March 2011

Henderson Group plc ("Henderson Group") is holding its General Meeting today for Henderson Group's shareholders to vote on the proposed acquisition of Gartmore Group Limited.

The script for the opening addresses by the Chairman is attached.

Henderson Group plc

47 Esplanade

St Helier

Jersey JE1 0BD

Registered in Jersey

No. 101484

ABN 67 133 992 766

Chairman's address

I will now talk more about Gartmore and why this acquisition meets our strategic and financial criteria and why we as a Board are recommending it as in the best interests of shareholders. Gartmore is an established, traditional equity and alternative asset management firm. It distributes retail funds, alternative funds and segregated mandates to clients in the UK, Continental Europe, North and South America and Japan. It is headquartered in London, incorporated in the Cayman Islands and is listed on the London Stock Exchange. Gartmore has offices in Tokyo, Boston, Madrid and Frankfurt and employs approximately 300 people including around 80 investment professionals.

Gartmore offers a variety of capabilities. It has over the last ten years built a significant alternative asset management business, that represents roughly 17% of its assets under management. £1.6 billion of this is in hedge funds and the balance is held through an interest in a private equity JV with Hermes. This is in addition to its longstanding long-only equities business, making it one of the few asset managers with significant expertise in both market segments.

As at 31 December 2010, it had £16.5 billion assets under management net of notified redemptions. These assets deliver an estimated net revenue run-rate of £163 million. When they announced their full year results, they reported that between December 31st and 18 February net outflows had been £792 million. These outflows are around 5% of assets under management, in line with our expectations. We therefore continue to have confidence that we will achieve an attractive operating margin from the Gartmore business.

Given Gartmore's high level of retail and alternative funds its net management fees are 83bps, compared with Henderson Group's at 48bps.

We have signed up a number of the key portfolio managers, who between them (and including the sub-advised assets of Gartmore), manage around 84% of Gartmore's assets under management and produce 90% of the revenues. Signing up these managers gives certainty and comfort to clients. We are working closely with everyone at Gartmore to ensure that the integration process goes as smoothly as possible. We have received considerable co-operation from all those at Gartmore and we thank them for their support. We also note the overwhelming support of the transaction received from Gartmore shareholders at their meeting yesterday. This means we are well on track to meet our integration timetable.

The proposed transaction creates significant value for Gartmore and Henderson shareholders. It is being financed by an all equity offer for 100% of the issued shares of Gartmore. We are offering 2 Henderson shares for every 3 Gartmore shares. So at yesterday's closing price this values each Gartmore share at 107.5p and values the total Gartmore equity at £391.4 million. The fact that it is an all equity deal means that Gartmore shareholders will participate in the benefits of the transaction.

Let me talk a bit more about this potential value creation. Gartmore historically had an operating margin in the low thirties, which means that we reckon we can extract substantial synergies from combining Gartmore with Henderson. Even on prudent assumptions about assets under management, we do not expect the operating margin to be less than 50%. As such, we should be able to move our combined operating margin to 35%, with a medium term aim of closer to 40%.

Clearly the financial benefits of this transaction are compelling. Even more important is that we accelerate our strategic plans in a number of key areas. First, it fits our higher margin growth strategy. Secondly, we expand and strengthen our product range, notably in UK retail and Absolute Return. We fill gaps in our investment capabilities, especially in two priority areas we have been seeking to fill - Global Equities and Emerging Markets Equities. We also add new capabilities in large cap companies, particularly in Absolute Return Funds. We already have good distribution in the UK, US and Europe. However, this acquisition will extend our distribution network into other areas such as Japan, and enhance our Global hedge distribution.

This transaction has compelling strategic and financial benefits and creates value for clients and shareholders. In particular, it will generate a significant enhancement in underlying earnings per share and underlying returns are expected to exceed our cost of capital from 2011, in each case before integration and deal costs. To deliver this, we will draw on our experience from the successful integration of New Star to give Gartmore's clients comfort and make the transition as seamless as possible.

Overall, the acquisition reinforces Henderson Group's position as a high margin, diversified fund management group with product strength in traditional long-only and absolute return offerings.