30th Jun 2006 18:32
Henderson Group plc30 June 2006 Pearl IMAs & trading update 30 June 2006 Henderson Group announces today that it has entered into a number of newInvestment Management Agreements (IMAs) and other related agreements with Pearl.The key terms of the new agreements are set out below: • The overall impact on Henderson Group earnings from the new agreements with Pearl is expected to be broadly neutral during the period up to April 2015, relative to previous assumptions.• Pearl will continue to use Henderson Global Investors (Henderson) as a fund manager, but will now have more market flexibility to withdraw and/or re-allocate assets between investment capabilities.• Henderson has agreed a schedule of fees for the management of Pearl's listed assets. If actual fees fall below certain thresholds, Pearl agrees to pay compensation payments to Henderson to make good the shortfall, until April 2015. Pearl can terminate the new IMAs on three months' notice, but the compensation payments will still be payable to Henderson in all but a very limited number of exceptional circumstances.• There also exists a realistic opportunity for Henderson to earn performance fees on top of the management fees for listed assets.• Management of direct property investments (AUM: £466 million at 31 May 2006) and European private equity (AUM: £156 million at 31 May 2006) will be transferred to Pearl, although Pearl will continue to hold investments in Henderson's range of property funds and Henderson will continue to manage Pearl's remaining interests in private equity funds.• Pearl Group Limited will receive a payment from Henderson, of approximately £12 million, in full and final settlement of all claims relating to non-tax warranties outstanding under the sale of the Life Services business agreement entered into last year. This will be deducted from the £50 million already held by Henderson Group on its balance sheet against warranties and indemnities given as part of the sale agreement. Henderson Group will report its 2006 half-year results on 25 August 2006.Despite recent market volatility, Henderson Group continues to perform strongly.In particular: • Henderson is on track to beat its 74% cost to income ratio target for 2006 and, assuming benign markets, our objective is to improve this ratio further. We will provide a new target for 2007 when we report our 2006 half-year results.• Subject to shareholder and UK Court approval, approximately £200 million surplus capital will be returned to shareholders by the end of October.• In conjunction with this return of surplus capital, Henderson Group has agreed with its Pension Scheme Trustees to contribute £80 million, in excess of regular contributions, over the next two years towards the Scheme's deficit, to strengthen its mortality provisions and to re-orientate the Scheme's investment strategy to a liability driven investment approach. £40 million of this amount was provided for under IAS principles on the 31 December 2005 balance sheet and, as previously announced, the Towry Law UK sale proceeds have been earmarked to fund the balance of the additional contributions.• In addition, the Board continues to review the efficiency of the Henderson Group balance sheet. The Board is in the process of considering a further capital return in 2007, subject to finalisation by the regulatory authorities of the new Capital Requirements Directive, gearing the Group balance sheet to a prudent degree and benign market conditions. Comment from Chief Executive, Roger Yates: "Overall, the new IMAs are asatisfactory outcome for both parties. Pearl achieves more flexibility overassets under management and we achieve certainty of revenues and a realisticopportunity to earn performance fees. The new agreements provide a sustainablebasis for the relationship over the next nine years. Meanwhile, Henderson'sbusiness performance continues to improve and we remain confident that we willshow further good growth this year." Jonathan Moss, Managing Director Pearl Assurance commented: "We are pleased tohave reached agreement with Henderson on a new series of Investment ManagementAgreements. These address the matters raised by Pearl with Henderson earlierthis year. We look forward to a long and successful relationship with Hendersonin the future." Henderson Group plc4 BroadgateLondon EC2M 2DARegistered in EnglandNo. 2072534 ABN 30 106 988 836 Details of teleconference on Monday, 3 July: Conference title: Henderson GroupChairperson: Roger Yates Australia - 5.00 pm (Sydney time), 8.00 am (London time) FromAustralia 1800 9890 15 (free call)United Kingdom 0500 5510 88 (free call)All other countries +44 (0)20 7162 0125 (this is not a free call) Notes to editors About Henderson Group plc Henderson Group plc is headquartered in London and listed on the London andAustralian stock exchanges. It is a member of both the FTSE 250 and the ASX 200indices. Henderson Group consists of Henderson Global Investors, a leadingEuropean based investment manager with over £67.7 billion of assets undermanagement and the Corporate office. As at 31 December 2005, Pearl Group's assets managed by Henderson GlobalInvestors were £28.0 billion. The focus of the Group is to build the asset management operations into a moreprofitable and valuable business. About the sale of the Life Services businessFurther information can be found in the Circular sent to shareholders in early2005. This document is available from the Henderson Group website. Further information www.henderson.com or Investor enquiriesMav WynnHenderson Group Head of Investor Relations +44 20 7818 5135 [email protected] Media enquiriesUnited Kingdom - FinsburyAndrew Mitchell +44 20 7251 3801Australia - CanningsGloria Barton +61 2 9252 0622 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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