Best funds manager to buy is well positioned with product, people, performance, parent and price (5Ps of funds manager stock selection). We used this framework to pick HGG, and it proved to be a great call.

1. Stock Focus
Henderson Group PLC. (HGG)
1
GLOBALLY DIVERSIFIED FUNDS MANAGER WITH RISING FUM OUTLOOK
RECOMMENDATION : POSITIVE
We initiate with a Positive view and $2.17 blended valuation.
BROADLY DIVERSIFIED FUNDS MANAGER
HGG provides a differentiated exposure for Australian investors:
 UK funds exposure.
 Second largest ASX-listed funds manager with ~A$100bn FUM ($123bn
AMP Capital Investors is largest).
 Diversification (by product, asset class, investor base and geography).
IMPROVING FUM GROWTH OUTLOOK
Despite recent FUM decline, the outlook is for recovery given:
 Switching driven by regulatory change (“UK RDR”) expected to abate in
mid-2013.
 FUM stabilisation of acquired businesses (New Star; Gartmore).
 Roll-out of new products including UK RDR compliant funds, fixed
income and USA funds.
 Distribution focus with an Australasian strategy to be announced and
new distribution alliances in place.
 Cyclical recovery prospects.
KEY CATALYSTS
Catalysts for unwind of HGG’s 20-30% peer-relative valuation discount
include:
 Net funds flow growth turnaround.
 Performance fee increase. ~38% total FUM has performance fee
potential. Although we expect subdued performance fees in 2H12, we
see upside as performance fees/total FUM normalises at ~6bp.
 Resolution of litigation. A preliminary hearing decided in HGG’s favour
and it is currently unclear whether the plaintiffs will appeal.
Trading Data
Last Price $1.75
12 month range $1.36 - $1.99
Market Cap $1,228m
Free Float $1,228m (100%)
Avg. Daily Volume 3.4m
Avg. Daily Value $6.0m
12 month return (historical) 5.5%
Our base case view is that ROIC peaks in
FY14, then declines in FY15 as the Phoenix
FUM Investment Management Agreement
(IMA) rolls off.
Margins decline is driven by: (i) sector-
wide pressure on margins; and (ii)
changing business mix towards increased
lower-margin fixed income and property
funds.
Earnings Forecasts
Yr to June 09A 10A 11A 12E 13E 14E
EBITDA (£m) 81.5 111.8 176.1 150.7 167.1 182.4
Rep NPAT (£m) 13.8 77.9 34.0 67.1 82.7 98.8
Adj NPAT (£m) 57.4 80.1 125.6 126.3 128.7 141.0
Underlying EPS (pence) 7.1 9.4 12.4 11.5 11.7 12.8
EPS Gth (%) N/A 33.0 31.5 (7.5) 1.6 9.6
PER (x) 16.1 12.1 9.2 9.9 9.8 8.9
DPS (p) 6.0 7.0 7.1 7.4 7.6 8.3
Yield (%) 3.4 4.0 4.0 4.2 4.4 4.8
Franking (%) 0% 0% 0% 0% 0% 0%
ROE (%) 20% 23% 16% 16% 17% 18%
EV/EBITDA (x) 10.6 7.2 4.7 5.3 4.4 3.7
Net Debt/EBITDA (x) 0.8 0.0 0.1 (0.1) (0.4) (0.7)
Int. Cover (x) 17.0 13.7 12.5 20.1 45.7 50.0
Valuation (blended) A$2.17
George Gabriel, CFA
ggabriel@evansandpartners.com.au
November 20, 2012
+61 3 9631 9853

2. 2
CONTENTS
1. BUSINESS OVERVIEW 3
 Description 4
 History 4
 Product Overview 4
2. INVESTMENT VIEW 4
 The Five “Ps” of Funds Management:
o People 5
o Process 5
o Performance 6
o Price 7
o Parent 7
 Funds Analysis:
o Investor Mix 7
o Phoenix Funds 7
o Funds Flows 8
o Distribution 9
 Balance Sheet 9
 Investment leverage 10
 Currency 10
3. KEY RISKS 10
 Phoenix FUM 11
 UK Retail Distribution Review (RDR) 11
 Litigation risk 12
 Key person risk 12
4. VALUATION 12

3. 3
1. BUSINESS OVERVIEW
(i) Description
Henderson Group plc (HGG) is an independent funds management group listed on both the London Stock Exchange
and the ASX. It is the second largest Australian fund manager by FUM (AMP Capital Investors $123bn; AMP
Financial Services $114bn; Australian Super $46bn; and BTT $46bn) and one the UK’s leading asset managers
(Table 10).
It is well diversified across each of the following:
 Asset classes – include equities, fixed income, property, infrastructure and private equity (Table 1).
 Products – the top 20 funds by FUM are summarised in Table 2 and Chart 1 summarises the product range.
 Investment style – a mix of long-only and absolute return mandates implement a wide range of styles.
 Geographies –investors are from the UK (69%), Continental Europe (16%), USA (9%) and Australasia (6%)
(Table 6).
 Investor mix –include institutional and retail investors investing in funds, individually managed accounts,
through platforms or dedicated distribution arrangements (eg. JV with Sesame Bankhall Group, a dealership of
~11,000 advisors).
(ii) History
Established in 1934, ASX-listed in 1983, acquired by AMP in 1998, then divested by AMP in 2003. AMP retained the
Australian and New Zealand investment management operations, whilst HGG retained the UK, European, North
American and Asian operations.
Its recent focus has been on integrating two substantial acquisitions:
 New Star Asset Management acquired for £115m in scrip and cash in April 2009. New Star had ~£10bn FUM
(vs. HGG’s £49.5bn at the time). New Star increased HGG’s UK retail scale and distribution, enhanced its funds
range, strengthened investment capabilities and offered cost synergies.
 Gartmore acquired for £365.4m in April 2011 in a scrip transaction (net cost). Gartmore:
o Provided FUM of ~£15.3bn and expanded HGG’s fund range to include absolute return funds, giving
HGG ~$6bn of absolute return focused product.
o Increased its exposure to retail FUM. Prior to Gartmore, ~37% of Henderson's £61.6bn FUM was retail.
Adding Gartmore's £11.1bn increased HGG’s total retail assets to 55% or £34bn.
o Added hedge fund capabilities including Japanese, European, UK, and financials long/short.
The acquisition was followed by product rationalisation, cost reduction, improving performance,
selective product growth and investment in distribution.
(iii) Product overview
HGG is well diversified across asset classes, with 54% weighting in equities, 26% property, 19% in fixed income
and 1% private equity (Table 1, Chart 1). HGG is targeting growth within the gaps in its business mix including US
fixed income products and emerging market funds and is also expected to announce its strategy for the Australian
funds management market in the next few months.
TABLE 1: ASSET CLASS, FUM, MANAGEMENT FEES AND GEOGRPAHY
FUM Overview
Asset Class
Base MGMT
Fee FUM (£m) % FUM Channel
Base MGMT
Fee FUM (£m) % FUM Geography % FUM
Equities 0.71% 34,685 54% Retail 0.76% 29,079 45% UK 69%
Fixed income 0.27% 16,765 26% Institutional (ex Phoenix) 0.38% 28,921 45% Europe (ex UK) 16%
Property 0.46% 12,407 19% Phoenix Not Discl. 6,825 11% Americas 9%
Private equity N/A 968 1% Asia/Australasia 6%
HGG 0.54% 64,825 100% HGG 0.54% 64,825 100% HGG 100%
Source: EAP, HGG. Phoenix FUM and private equity margins are not disclosed.

4. 4
TABLE 2: HGG TOP 20 FUNDS BY FUM AND THEIR PERFORMANCE
Fund FUM £m Asset Class 1 year 3 years 5 years
All Stocks Credit 1,891 Fixed Income
International Opportunities 1,471 Global Equity
Horizon Pan-European Equity 1,258 European Equity
European Selected Opportunities 1,116 European Equity
Global Technology 1,092 Global Equity
Long Dated Credit 1,053 Fixed Income
Strategic Bond 1,023 Fixed Income
Latin American 946 Emerging Mkts Equity
UK Enhanced 867 UK Equity
Cautiously Managed 818 UK Equity
European Growth 807 European Equity
Fixed Interest Monthly Income 771 Fixed Income
Global Equity Income (US) 695 Global Equity
Continental European 664 European Equity
Multi-Manager Income and Growth 663 Multi Asset
Preference and Bond 596 Fixed Income
Global Equity Income 526 Global Equity
Global Property 521 Property
Credit Alpha 516 Fixed Income
US Growth 495 US Equity
Total 17,789
Source: HGG
2. FUNDAMENTAL INVESTMENT VIEW
(i) Investment View
We are Positive on HGG for the following reasons:
Broadly Diversified Asset Manager
 HGG provides diversified exposure across asset classes, investment styles, geographies, investors
and distribution channels, which should mitigate the cyclical volatility inherent in funds management.
 Multiple diversification benefits include (i) reduced key person risk; (ii) increasing prospects of regular
performance fees; (iii) distribution synergies; and (iv) growth options.
Re-rating catalysts exist
HGG trades at a 20-30% discount to (global and domestic) peers; its discount relative to the ASX200 is
approaching historical lows (Chart 13). The following are potential catalysts for unwinding HGG’s valuation
discount:
 FUM loss stabilises then turns around. We highlight that the rate of FUM decline is diminishing
(“negative second derivative”). FUM loss has been partly cyclical and partly structural driven by (i)
Gartmore integration; and (ii) FUM re-allocation in advance of UK Retail Distribution Review (RDR) on 1 Jan
2013. We would expect these drivers of FUM loss to abate by mid-2013. The UK’s RDR is similar to Australia’s
FOFA (ie. banning payment of commissions and rebates to financial advisers from funds managers) and is
resulting in FUM re-allocations from advisers (and some consequent FUM loss for HGG) in advance of RDR’s
operative date from 1 Jan 2013. Refer “Funds Flow” section for discussion.
 Resolution of the PFI Secondary Fund II litigation. As at 16 Nov 2012, preliminary proceedings
considering an alleged breach of mandate by HGG in the PFI Secondary Fund II have been decided in HGG’s
favour. At the time of writing, it is unclear whether the plaintiffs will appeal or continue their action. Refer “Key
Risks” for further discussion.
Top 20 Funds
1st Quartile
2nd Quartile
3rd Quartile
4th Quartile
1Y % FUM
1st Q'tile 63.54%
2nd Q'tile 2.93%
3rd Q'tile 18.19%
4th Q'tile 15.35%
5Y % FUM
1st Q'tile 61.57%
2nd Q'tile 30.74%
3rd Q'tile 0%
4th Q'tile 7.68%

5. 5
 Phoenix’s 10-year IMA expires (expected in June 2015) with minimal subsequent loss of its £6.7bn
FUM or loss of margin to HGG. Refer “Key Risks” for discussion.
Investment Leverage
For maximum leverage to rising markets, investors should seek funds managers with the highest cost-to-income
ratio, equities market leverage and performance fee potential.
 HGG’s equity markets leverage is in the middle of its peer group (Table 7), with every 10% increase
in its relevant equity index translating to ~12% FY13F EPS upside.
 Performance fee potential varies between periods, but given HGG’s diversified funds portfolio, we expect an
average of 6bp/total FUM in performance fee p.a.. For fund managers with a narrower product range, it is
difficult to predict whether any performance fees are received in any particular year.
Funds Under Management (FUM) Growth Outlook
The FUM growth outlook is driven by:
 Distribution growth strategies include (i) a focus on Australasia, including the $1.3 trillion Australian market for
the first time; (ii) new US products; (iii) new distribution alliances to be announced.
 Cyclical FUM recovery, particularly UK retail. As negative macro newsflow abates, retail FUM historically
increases. Given that ~70% of retail FUM is UK-sourced and European equities performance has been strong
to date but not yet resulted in FUM flow, we expect HGG to benefit as Europe’s outlook improves. What is
required is an absence of bad news as opposed to unequivocal good news.
 Roll-out of new products including US domestic products, fixed income.
Strategic Acquisitions
 Acquisitions have complemented HGG’s existing product and distribution capabilities.
 HGG does not currently anticipate any further significant acquisitions. The focus is more likely to be on small
established teams from established funds management businesses and bolt-on acquisitions.
(ii) The “Five Ps” of funds management – People, Process, Performance, Price, Parent
 People
A key benefit of HGG’s diversification is that key person risk is diminished. Of 1,062 employees in Europe, US and
Asia-Pacific, there are 276 investment professionals with an average 14 years’ investment experience.
HGG does not disclose details of employee compensation. However it commenced a wide culture of equity
participation in 2004-05, with share schemes now available to all staff. Fully vested, staff would hold around ~13%
of total equity. Fund managers’ remuneration comprises: (i) fixed base salary; (ii) 1/3 share of performance fees
(for long-only funds) or 50% (for absolute return funds); (iii) a gross equity bonus scheme where they share in
growth of the HGG business; and (iv) a short-term incentive scheme.
 Process
HGG’s investment process varies across its investment products and asset classes (equity, fixed income, absolute
return funds, property). Chart 1 summarises the range of products in each asset class. Table 2 lists the Top 20
funds by FUM, a total of GBP17.8bn or ~28% total FUM.

6. 6
CHART 1: HGG’s BROAD PRODUCT RANGE
Source: Company Presentation
 Investment Performance
HGG’s investment performance across its entire portfolio of funds has been strong. Table 3 summarises
performance as at 1H12:
o 1-year performance trend is improving, with 64% of funds at or above benchmark vs 61% in FY11.
o 3-year performance has been consistently strong, with 76% of funds at or above benchmark.
Charts 2-3 summarise asset class performance as at 1H12. Property performance is improving dramatically,
from ~23% of funds with 3 year benchmark outperformance to ~48% with 1 year outperformance.
HGG recently provided an update for 3Q12, performance is strong in both fixed income and equities.
o Equities performance is improving across both 1 and 3-years. Over 1 year, outperformance has
improved to 70% (58% in 1H12). Over 3 years, 73% of equities funds are at/above benchmark (66% 1H12).
o HGG is particularly strong in fixed income. Over 1 year, 92% have outperformed (78% in 1H12). Over
3 years, 85% of funds outperformed (98% as at 1H12).
TABLE 3: FUNDS AS AT OR ABOVE BENCHMARK (%) AS AT 1H12
FY11 1H12 FY11 1H12
UK OEICs/Unit Trusts 35% 57 60 70 80
SICAVs 11% 75 71 94 88
US Mutuals 4% 24 28 18 19
Investment Trusts 6% 64 79 75 59
Offshore Absolute Return Funds 4% 52 22 89 73
Segregated Institutional Mandates 21% 71 81 97 83
Total 82% 61 64 76 76
Source: Company Reports. Note 'OEICs' are unique to the UK, open-ended investment companies.
SICAVs are similar to OEICs and US Mutual Funds, open-ended collective investment schemes.
One-Year Three-Year
% FUM

7. 7
CHART 2: % FUNDS AT/ABOVE BENCHMARK (1Y) CHART 3: % FUNDS AT/ABOVE BENCHMARK (3Y)
0
20
40
60
80
100
FY09 1H10 FY10 1H11 FY11 1H12
Equities FI Property
0
20
40
60
80
100
FY09 1H10 FY10 1H11 FY11 1H12
Equities FI Property
Source: Company Reports Source: Company Reports
 Price
Total fees comprise the sum of Base Management and Performance Fees. Base Management fees
comprise ~89% of 2H12 total funds management fees.
Table 4 summarises historical FUM margins on both Base Management and Performance Fees. Note that given the
April 2011 acquisition of Gartmore, only 2H11 and 1H12 fees are indicative of the current HGG Group FUM
mix. During 2H11 and 1H12:
o Average Base Fee/FUM is 55bp.
o Average Performance Fee/FUM is 6bp. Given HGG is well diversified across multiple products and its
performance remains strong, we believe it is reasonable to factor into our base case an average cross-
cycle performance fee margin of 6bp/FUM.
TABLE 4: PERFORMANCE FEES DIVERSIFICATION AND BASE FEES
Fees (£m) 1H09 2H09 1H10 2H10 1H11 2H11 1H12 FY09 FY10 FY11
Institutional Clients 3.0 18.0 19.9 10.9 19.1 2.0 14.5 21.0 30.8 21.1
Property 1.0 0.6 0.3 0.2 0.5 1.3 3.1 1.6 0.5 1.8
SICAVs 0.1 0.1 1.2 0.1 13.8 0.1 2.1 0.2 1.3 13.9
Private Equity 0.0 0.0 0.0 4.8 0.3 -0.2 1.6 0.0 4.8 0.1
Abs Return Funds 1.1 6.7 3.0 1.5 17.4 5.1 0.8 7.8 4.5 22.5
Investment Trusts 0.0 1.0 0.2 0.7 1.6 2.6 0.1 1.0 0.9 4.2
UK OEICs 0.0 0.0 0.0 0.0 1.6 0.0 0.0 0.0 0.0 1.6
Performance Fees 5.2 26.4 24.6 18.2 54.3 10.9 22.2 31.6 42.8 65.2
Perf Fees/FUM 0.01% 0.05% 0.04% 0.03% 0.07% 0.02% 0.03% 0.05% 0.07% 0.10%
Base Fees 98.2 128.6 137.4 145.1 176.0 184.5 178.8 226.8 282.5 360.5
Base Fees/FUM (Ann'd) 0.38% 0.46% 0.48% 0.49% 0.52% 0.53% 0.56% 0.42% 0.47% 0.57%
Source: Company Reports
Table 1 summarises the average net management fee per asset class and investor channel, whilst Table 4
summarises the Base and Performance Fees across key segments. Key points are:
o Retail FUM is a key element of HGG’s growth strategy, with an average net management fee of
76bps, double that of the margin on institutional funds (ex Phoenix) of 38bps.
o Retail equities provide the highest average margin, and institutional fixed income the lowest.
o Average net management fees for Private Equity or the Phoenix FUM are not disclosed.
 Parent
The free float is ~100% with approx 1,113m shares on issues (on both the ASX and LSE). HGG provides monthly
disclosures of the aggregate number of shares on issue.

8. 8
(iii) Funds Analysis
In weak/flatter markets, the key driver of FUM is net funds flow, which in turn is driven by performance,
distribution and fund maturity (with more mature fund managers likely to have net outflows).
 Investor mix
HGG’s investor mix is 45% retail and 55% institutional FUM (44% institutional funds and 11% Phoenix
assurance funds). Retail FUM net funds flow is positively correlated with the UK FTSE index and the absence of
negative macroeconomic newsflow.
TABLE 5: HGG FUM BY DISTRIBUTION CHANNEL
Retail 28,202 28,641 45% 29,079
Institutional (ex Phoenix) 29,601 29,261 45% 28,921
Phoenix 6,481 6,653 11% 6,825
Total 64,284 64,555 100% 64,825
Distribution channel
FUM Dec
2011
(£m)
Average
FY12
FUM
(£m)
% Total
FUM
FUM Sep
2012
(£m)
Source: EAP Research, Company Reports
 Phoenix Funds
Phoenix Group is one of the largest providers of insurance services in the UK. In 2005, when AMP sold Phoenix
(formerly Pearl Group) to Sun Capital Partners, HGG entered into a 10-year Investment Management Agreement
(IMA). During this period, HGG receives guaranteed fee income even if Phoenix withdraws this FUM. HGG does not
disclose its Phoenix FUM margin.
Our base case assumes the entire Phoenix FUM is withdrawn by June 2015, when the IMA’s term expires.
 Fund flows
Recent trends in funds flow include:
o FUM outflows were largest in 1H11, following the April 2011 Gartmore acquisition, with most outflows in
institutional equities (Charts 4-6).
o Retail FUM showed some signs of stabilisation as adverse macroeconomic newsflow subsided. In 1Q12, total
retail FUM appeared to stabilise, down -0.4% (compared to -2.6% in 4Q11 and -2.8% in 3Q11). However, as
adverse macro newsflow was released, retail FUM declined -2.7% in 2Q12 and then improved to -1.1% 3Q12.
The outlook for funds flows is:
o Re-allocation of FUM by clients of acquired funds (Gartmore and New Star) is expected to continue to abate.
o FUM reallocation in anticipation of the commencement of the UK Retail Distribution Review (RDR) in Jan 2013 is
expected to slow and eventually cease some time in 2013. Financial advisers have already been redirecting
FUM away from platforms which will no longer provide them with trail income to platforms which will (Chart 4).
CHART 4: FUM FLOWS BY CHANNEL CHART 5: FUM FLOWS BY BUSINESS
-3,000
-2,500
-2,000
-1,500
-1,000
-500
0
500
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Insto Retail
-3,000
-2,500
-2,000
-1,500
-1,000
-500
0
500
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Phoenix PE Prop IM
Source: Company Reports Source: Company Reports

9. 9
CHART 6: FUM FLOWS BY ASSET CLASS CHART 7: HGG FUM BY ASSET CLASS
-3,500
-3,000
-2,500
-2,000
-1,500
-1,000
-500
0
500
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Private Equity Property
FI Equities
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Private Equity Property
Fixed Income Equities
Source: Company Reports Source: Company Reports
 Distribution
HGG sources 69% of FUM in the UK, 16% in Europe, 9% in the Americas and 6% in Asia/Australasia (Table 6). It
is targeting FUM growth in the US and Australasia.
Distribution will be HGG’s key focus in the next few years with the focus on retail, emerging markets
and global fixed interest funds. HGG’s strategy is to drive FUM through a combination of new products (fixed
income, USA exposures), new geographies (Australasia and USA), new distribution arrangements (eg. JV with
Sesame Bankhall Group, a dealership of ~11,000 advisors) and organic growth in existing products
(improving UK retail offering including hedge funds).
TABLE 6: HGG FUM SOURCE BY GEOGRAPHY
% Total
FUM
FUM
June
2012
(£b) Comments
UK 69% 43.6 Significant retail FUM in the UK.
Europe (ex UK) 16% 10.2 Heavy weighting towards equities and continental Europe in particular. Performance has been
good (top quartile) but has not yet translated into higher flows. We expect that this will
translate into higher flows as markets improve over time
Americas 9% 6.0 US FUM is evenly split between insto and retail. Over the next 5-7 years, HGG hopes to
increase its US investor base from ~15% total to ~33%. One key constraint for US growth is a
narrow product range. Currently, most of the US product is international and European
equities, with potential to expand to credit products and domestic equity offerings.
Management is looking at medium-term strategies of increasing US-based FUM.
Asia/Australasia 6% 3.8 HGG hopes to increase its Asian investor base from ~5% to ~15-20%.
Total 100% 63.6
Source: EAP Research, Company Reports
(iv) Balance sheet
Most listed funds managers have negative net debt as they generate large amounts of free cash flow (Chart 8).
However, HGG has a higher level of gearing driven by its acquisition debt finance through a “2016 Note” of
GBP150m senior, unrated, fixed 7.25% notes listed on the LSE of acquisitions. Nevertheless, HGG has a low level
of net debt/equity and high levels of interest coverage (Charts 8-9).

10. 10
CHART 8: NET DEBT/EQUITY (%) CHART 9: EBIT/INTEREST EXPENSE
-50%
-40%
-30%
-20%
-10%
0%
10%
PPT TRG IFL PTM MFG HGG BTT
-20x
-10x
0x
10x
20x
30x
40x
BTT MFG IFL AMP TRG HGG PPT
Source: EAP Research Estimates Source: EAP Research Estimates
(v) Investment Leverage
For maximum leverage to rising markets, investors should seek fund managers with the highest cost-
to-income ratio, equities market leverage and performance fee potential. HGG is in the middle of its
peer group on these metrics (Charts 10-11).
o Cost-to-income ratio. The fixed cost base of a fund manager provides operating leverage to rising (and
falling) markets. HGG is in the middle of its peer group (Chart 10).
o Equities market leverage. A 10% increase in the UK FTSE translates to ~12% EPS increase, the middle of
HGG’s peer group. (Table 7).
o Performance fee potential. Given its diversified portfolio and strong 3 year performance record, HGG has
substantial potential for substantial performance fees.
CHART 10: COST TO INCOME RATIOS OF AUSTRALIAN LISTED FUNDS MANAGERS
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Source: EAP, Factset. AMP CWM = Contemporary Wealth Management segment. AMP CI = Capital Investors segment.

11. 11
TABLE 7: EQUITY MARKETS LEVERAGE
BTT PPT HGG MFG PTM IFL
Relevant Index
ASX
200/FTSE
ASX 200 FTSE 100 MSCI World MSCI World ASX 200
Currency A$m A$m £m A$m A$m A$m
FY13F FUM 46,600 23,600 65,985 4,816 15,158 27,400
Equities % of total FUM 53% 73% 54% 100% 100% 50%
Total equities FUM 24,698 17,134 35,632 4,816 15,158 13,700
10% increase in equities FUM 2,470 1,713 3,563 482 1,516 1,370
Base management fee ratio 0.40% 0.77% 0.54% 0.65% 1.25% 0.41%
Additional base mgmt fees pre-tax 9.9 13.2 19.2 3.1 18.9 5.6
FY13F consensus NPAT 49.0 68.6 128.7 19.8 122.9 106.2
Additional fees/total FY13F earnings 14.1% 13.5% 12.0% 11.1% 10.8% 3.7%
Source: EAP Research Estimates. NB. MFG excludes impact of £1.5bn institutional mandate to be funded in CY13.
(vi) Currency
HGG hedges most of its currency exposures. The majority of FUM, revenue and costs are denominated in Sterling
with most clients located in UK. HGG’s primary foreign currency exposures are to hedge fund seed investments in
property and private equity funds. However, these are hedged and rolled quarterly.
3. KEY RISKS
(i) Phoenix FUM
Our base case assumes all the £6.6bn (~11% total FUM) Phoenix FUM is withdrawn by June 2015,
when the IMA’s term expires.
However, there is an upside risk that HGG may retain some of this FUM (we have assumed 50% Phoenix FUM
retention in our Bull Case scenario).
(ii) UK Retail Distribution Review (RDR)
The UK’s regulatory reforms, called “Retail Distribution Review (RDR)”, will apply from 1 Jan 2013 in the UK. RDR is
similar to Australia’s Future of Financial Advice (FOFA) reforms. Its key impact is to prohibit funds managers from
paying advisors for distributing their products.
At the 1H12 result, HGG stated that RDR could have a “high single-digit” impact on its retail margin. However, HGG
has already launched a number of products which are “RDR compliant” together with its distribution partner
Sesame Bankhall Group (largest restricted adviser network in the UK) which HGG believes positions it well for the
adviser market and their clients.
(iii) Litigation risk
Potential Impacts
HGG is currently defending litigation initiated by institutional investors in its Henderson PFI Secondary Fund II.
HGG closed its PFI Secondary Fund II at €859m after having raised £573.5m with a stated intention to focus on the
secondary market for operating public infrastructure with private capital. In Dec 2006, the Fund acquired the John
Laing infrastructure business, a specialist owner, operator and manager of public sector infrastructure assets in the
UK and internationally, after a “bidding war” with Allianz.
The plaintiffs (a collection of UK pension funds) claim they invested based on misrepresentation and that the fund
invested in breach of mandate.

12. 12
On 16 Nov 2012, HGG announced the trial judge ruled that HGG had NOT breached its investment mandate. It
remains open to the plaintiffs to: (i) appeal this decision; and (ii) continue on the grounds of alleged
misrepresentation.
At this stage, it is unclear whether the matter continues and what amount of damages could be sought.
(iv) Limited key person risk
Key person risk is limited by:
 Employee diversification. With 276 investment professionals, exposure to any individual “rock star” fund
manager is limited.
 Scale. We estimate that are ~400 funds in total. The largest fund by FUM is the Henderson All Stocks Credit
Fund, which comprises 3% of the total FUM.
 High level of staff ownership, with staff owning ~13% of the equity in the business.
4. VALUATION
Our blended valuation of HGG is $2.18.
TABLE 8: BLENDED VALUATION
Methodology Key Inputs Value (GBP)
Discounted Cash Flow 11.2% WACC £1.39
PE ratio 12.5x PE multiple £1.43
Average valuation (GBP) £1.41
AUDGBP 12-mth forward rate 0.65
Blended Valation (A$) $2.17
Source: EAP Research Estimates
(i) Valuation discount
HGG’s discount relative to the ASX200 is approaching historical lows. Its existing FY13F PE of ~10x is:
 A ~33% discount to its 15x average PE since its 2003 re-listing (Chart 11).
 A ~27% discount to the 14.1x average of its Australian peer group (Chart 12).
 A ~23% discount to the ASX200 industrials (Chart 13).
 A ~40% discount to UK peers (Table 9).
The 3 key reasons for HGG’s valuation discount are:
 FUM decline trend driven by Gartmore integration and the commencement of UK Retail Distribution Review in
Jan 2013. Refer “Funds Flow” section for discussion.
 Litigation risk of the Henderson PFI Secondary Fund II. Refer “Key Risks” for discussion.
 Phoenix Funds FUM decline. Refer “Key Risks” for discussion.
CHART 11: HGG Forward PE (x) CHART 12: DOMESTIC COMPARABLES
0
5
10
15
20
25
30
PER FY1 (x) +1 Stdev
-1 Stdev Avg
Source: EAP, Factset Source: EAP, Factset

13. 13
CHART 13: HGG PREM/DISC to ASX200 INDUST. CHART 14: EV/EBITDA
-60%
-40%
-20%
0%
20%
40%
60%
Prem/Disc Avg.
0x
1x
2x
3x
4x
5x
6x
7x
8x
9x
10x
Source: EAP, Factset, Bloomberg Source: EAP, Factset
CHART 15: AUS. PEERS’ ABSOLUTE PE MULTIPLE CHART 16: SECTOR PREM/(DISC) to ASX200
10x
12x
14x
16x
18x
20x
22x
PEr Avg
+1 Stdev -1 Stdev
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Prem/Disc Avg +1 Stdev -1 Stdev
Source: EAP, Factset, Bloomberg Source: EAP, Factset, Bloomberg
(ii) Discounted Cash Flow Valuation Scenarios
Table 9 summarises our bear, base and bull case scenarios. We have factor in margin decline driven by
competition, changing business mix, increased demand for passive investment and regulatory focus on fees. Only
the bull case assumes that some of the Phoenix FUM is retained. Performance fees vary from 5bp (bear case) to
7bp (bull case) of total FUM.
TABLE 9: SCENARIO ANALYSIS
Scenario Base Mgmt Fee
Performance
Fee
FUM
DCF Valuation
(£)
DCF Valuation
(A$)
Bear Declines to 38bp
(-16bp) by FY18
0.05%/FUM Loss of Phoenix (3Q15),
FUM growth +5% from
FY15F
£0.89 $1.37
Base Declines to 43bp
(-11bp) by FY18
0.06%/FUM Loss of Phoenix (3Q15),
FUM growth +6% from
FY15F
£1.39 $2.13
Bull Declines to 48bp
(-6bp) by FY18
0.07%/FUM Retain 25% Phoenix (3Q15),
Net funds flows +7% from
FY15
£1.79 $2.75
Source: EAP Research Estimates

14. 14
TABLE 10: HGG V INTERNATIONAL PEERS
2012 2013 2014 2012 2013 2014 2012 2013 2014
AUS
AMP 14.1 13.1 12.0 5.6% 6.1% 6.6% 26.4 20.8 19.0 8.8%
BT IM 14.7 11.1 10.6 6.3% 7.7% 7.9% 11.7 8.5 7.6 1.2%
Henderson 9.8 9.9 9.0 6.5% 6.9% 7.3% 7.6 7.1 6.2 1.8%
IOOF 74.9 14.0 12.5 6.1% 6.5% 7.1% 12.3 10.8 9.3 5.1%
Magellan 52.0 381.0 216.7 1.0% 0.2% 0.4% 38.5 24.7 13.4 14.2%
Perpetual 49.1 17.3 13.9 3.1% 3.8% 6.0% 11.6 11.0 8.4 2.2%
Platinum 16.0 16.7 15.1 5.8% 6.1% 6.5% 10.9 11.1 9.9 11.8%
Average 32.9 66.2 41.4 4.9% 5.3% 6.0% 17.0 13.4 10.5 6.5%
Weighted Average 21.4 25.4 18.8 5.5% 5.9% 6.5% 21.3 17.1 15.1 7.8%
UK
Aberdeen 15.8 13.7 12.0 3.1% 3.6% 4.2% 11.7 9.6 7.9 2.1%
F&C 14.9 10.5 9.4 3.0% 3.1% 3.4% 8.7 6.4 5.7 0.1%
Hargreaves Lansdown 31.5 26.1 22.6 2.9% 3.4% 3.9% 22.9 19.5 17.0 13.1%
Henderson 9.9 10.0 9.0 6.4% 6.8% 7.3% 7.9 7.4 6.5 1.8%
Jupiter 13.3 11.8 10.5 3.1% 3.4% 3.6% 10.4 8.7 7.2 3.7%
Schroders 15.7 13.9 12.5 2.6% 2.8% 3.0% 6.2 4.7 3.7 1.0%
St James' Place 19.5 16.1 10.4 2.7% 3.2% 3.7% 9.0 7.8 7.1 6.0%
Average 16.9 14.2 11.6 5.3% 4.2% 4.8% 10.5 8.8 7.5 4.0%
Weighted Average 18.6 15.8 13.3 4.3% 3.8% 4.3% 11.5 9.6 8.2 4.3%
US
Affiliated Managers 16.6 13.9 12.2 0.0% 0.0% 0.0% 15.2 8.8 4.2 2.2%
Alliance Bernstein 18.2 11.9 10.2 6.6% 8.6% 9.8% 15.0 12.3 10.2 0.4%
BlackRock 14.3 12.7 11.4 3.1% 3.4% 3.7% 9.7 8.3 7.2 1.0%
Eaton Vance 16.5 14.7 13.3 2.5% 2.6% 2.8% 9.5 8.8 8.0 2.0%
Federated Investors 11.4 10.8 9.9 10.7% 5.1% 5.4% 7.3 6.5 5.8 0.7%
Fortress 9.9 7.2 6.1 5.8% 7.7% 10.7% 8.7 6.7 5.0 5.3%
Franklin Resources 14.6 13.3 11.9 2.4% 1.2% 1.0% 9.4 8.0 6.8 3.4%
Janus Capital 15.3 13.8 11.2 2.9% 3.2% 3.2% 8.2 7.0 5.5 1.1%
Legg Mason 16.3 11.3 9.4 1.8% 2.0% 1.7% 9.8 8.5 7.6 0.6%
Och Ziff 7.8 7.3 6.6 11.4% 11.7% 12.9% 5.1 4.0 3.4 10.4%
T. Rowe Price 19.2 16.9 15.0 2.1% 2.3% 2.5% 11.4 9.9 8.6 4.6%
Waddell & Reed 11.3 10.0 9.0 2.2% 2.3% 2.3% 11.6 9.6 8.6 2.3%
Average 14.1 11.9 10.4 4.1% 4.0% 4.5% 10.1 8.2 6.7 2.8%
Weighted Average 14.5 12.8 11.3 2.9% 2.8% 3.0% 8.4 6.9 5.8 2.3%
Source: FactSet
EV/EBIT (x)Forward PER (x) Dividend Yield (%)
EV/FUM

15. 15
FINANCIAL SUMMARY
Henderson Group PLC. HGG
As at: 20/11/2012 Recommendation: Positive Share Price $1.75
Year end June 2011A 2012E 2013E 2014E
INCOME STATEMENT
Sales Revenue £m 477 432 451 469
Consolidated EBITDA £m 176 151 167 182
D&A £m 3 3 3 3
Consolidated EBIT £m 173 148 164 180
Net Interest £m 14 7 4 4
Tax Expense £m (14) (8) (21) (25)
Associates/Minorities £m 0 0 0 0
Adj NPAT £m 126 126 129 141
NRIs £m (34) 0 0 0
Reported NPAT £m 34 67 83 99
Shares on Issue (end period) m 1,098 1,104 1,104 1,104
EFPOWA m 1,013 1,101 1,104 1,104
EPS ¢ 12.4 11.5 11.7 12.8
DPS ¢ 7.1 7.4 7.6 8.3
Franking % 0% 0% 0% 0%
GROWTH/PROFITABILITY RATIOS
Sales Growth % 31.7% (9.5)% 4.4% 4.0%
EBITDA Growth % 57.5% (14.4)% 10.9% 9.2%
EBIT Growth % 59.4% (14.6)% 11.2% 9.4%
EPS Growth % 31.5% (7.5)% 1.6% 9.6%
EBITDA/Sales % 36.9% 34.9% 37.1% 38.9%
EBIT/Sales % 36.3% 34.3% 36.5% 38.4%
EBIT Interest Cover x 12.5 20.1 45.7 50.0
Tax Rate % 21.1% 10.1% 20.0% 20.0%
ROE % 16.0% 16.3% 16.7% 18.1%
ROFE % 29.8% 18.9% 22.4% 26.6%
CASH FLOW
EBITDA £m 176 151 167 182
Change in Working Capital £m 55 (29) 5 4
Other £m (127) 0 0 0
Gross Operating Cash Flow £m 103 122 172 187
Net Interest Paid £m (16) (7) (4) (4)
Tax Paid £m (13) (8) (21) (25)
Net Operating Cash Flow £m 75 107 148 159
Maintenance Capex £m (1) (1) (1) (1)
Free Cash Flow £m 74 106 146 157
Dividends Paid £m (70) (79) (92) (87)
Expansionary Capex £m 0 0 0 0
Acquisitions £m 201 0 0 0
Asset Sales £m 6 0 0 0
Dividends Received £m 4 0 0 0
Shares Issues/Buybacks £m (22) 0 0 0
Other £m 34 0 0 0
Increase in Net Cash/(Debt) £m 227 27 54 70
GOCF/EBITDA % 59% 81% 103% 102%
Total Capex/Sales % 0.3% 0.3% 0.3% 0.3%
Total Capex/Depreciation x (0.5) (0.5) (0.5) (0.5)
Year end June 2011A 2012E 2013E 2014E
VALUATION METRICS
PER x 9.2 9.9 9.8 8.9
P/EG (2YR) x
Dividend Yield % 4.0% 4.2% 4.4% 4.8%
EV/EBITDA x 4.7 5.3 4.4 3.7
EV/EBIT x 4.7 5.4 4.5 3.7
P/FCF x 10.9 7.6 5.5 5.1
P/BV x 1.6 1.6 1.6 1.6
BALANCE SHEET
Assets
Cash £m 274 158 213 283
Working Capital £m 168 189 197 205
PP&E £m 20 20 20 20
Intangibles £m 765 716 665 613
Investments £m 69 69 69 69
Other £m 395 395 395 395
Total Assets £m 1,690 1,546 1,558 1,585
Liabilities
Debt £m 291 149 149 149
Working Capital £m 343 356 368 388
Other £m 269 269 269 269
Total Liabilities £m 903 774 786 806
Equity £m 787 773 772 779
Capital Employed £m 805 763 708 645
Net Debt/(Cash) £m 18 (10) (64) (134)
Net Debt/Equity % 2.2% (1.2%) (8.3%) (17.2%)
Net Debt/Debt+Equity % 2.2% (1.3)% (9.0)% (20.8)%
Net Debt/EBITDA x 0.1 (0.1) (0.4) (0.7)
Working Capital/Sales % (36.6%) (38.7%) (37.9%) (39.0%)
D&A/PP&E % (15.2%) (14.4%) (13.6%) (12.9%)
DCF VALUATION £m £/share
Risk Free Rate 6.5% Equity Value 1,531 £1.39
Market Risk Premium 6.0% (Net Debt)/Cash (35) £(0.03)
Beta 1.15 Franking Credits £0.00
WACC 11.2% DCF Valuation £1.39
Group EBITDA £m 0 0 0 0
DIVISIONAL SUMMARY
28%
30%
32%
34%
36%
38%
40%
2010 2011 2012 2013 2014
Margin Trends
EBITDA/Sales EBIT/Sales
8
16
24
32
40
48
56
-24%
-19%
-14%
-9%
-4%
1%
6%
2010 2011 2012 2013 2014
Gearing & Interest Cover
Net Debt/Net Debt+Equity (%) EBIT Interest Cover (x)
8%
12%
16%
20%
24%
28%
32%
2010 2011 2012 2013 2014
Return Trends
ROE ROA ROFE - Reported

16. 16
RESEARCH RECOMMENDATION DEFINITIONS
Positive Stock is expected to outperform the S&P/ASX 200 over the coming 24 months
Neutral Stock expected to perform in line with the S&P/ASX 200 over the coming 24 months
Negative Stock is expected to underperform the S&P/ASX 200 over the coming 24 months
Speculative Stock has limited history from which to derive a fundamental investment view or its prospects
are highly dependent on event risk, eg. Successful exploration, scientific breakthrough, high
commodity prices, regulatory change, etc.
Suspended Stock is temporarily suspended due to compliance with applicable regulatory and/or Evans &
Partners policies in circumstances where Evans & Partners is acting in an advisory capacity.
Not Rated Stock is not included in our investment research universe.
Research Criteria Definitions
Recommendations are primarily determined with reference to how a stock ranks relative to the S&P/ASX 200 on
the following criteria:
Valuation Rolling 12 month prospective multiples (composite of Price-to-Earnings Ratio, Dividend
Yield and EV/EBITDA), or long-term NPV for resource stocks.
Earnings Outlook Forecast 2 year EPS growth.
Earnings Momentum Percentage change in the current consensus EPS estimate for the stock (rolling 1 year
forward basis) over the consensus EPS estimate for the stock 3 months ago.
Shareholder Returns Composite of forecast ROE (rolling 1 year forward basis) and the percentage change in
ROE over 2 years.
Debt Servicing Capacity Rolling 12 month EBIT Interest Cover ratio.
Cyclical Risk Qualitative assessment of the 2 year outlook for a stock/industry’s profit cycle.
Industry Quality Qualitative assessment of an industry’s growth/returns potential and company specific
management capability.
Financial Transparency If we don’t understand it, we won’t recommend it.
For stocks where Evans & Partners does not generate its own forecasts, Bloomberg consensus data is used.
Analysts can introduce other factors when determining their recommendation, with any material factors stated in
the written research where appropriate.

17. 17
GENERAL RESEARCH DISCLAIMER, WARNING & DISCLOSURES
This document is provided by Evans and Partners ABN 85 125 338 785, holder of AFSL 318075.
The information is general advice only and does not take into consideration an investor’s objectives, financial situation or needs. Before acting on
the advice, investors should consider the appropriateness of the advice, having regard to the investor’s objectives, financial situation and needs. If
the advice relates to a financial product that is the subject of a Product Disclosure Statement (e.g. unlisted managed funds) investors should obtain
the PDS and consider it before making any decision about whether to acquire the product.
The material contained in this document is for information purposes only and does not constitute an offer, solicitation or recommendation with
respect to the purchase or sale of securities. It should not be regarded by recipients as a substitute for the exercise of their own judgment.
Investors should be aware that past performance is not an infallible indicator of future performance and future returns are not guaranteed.
Any opinions and/or recommendations expressed in this material are subject to change without notice and Evans and Partners is not under any
obligation to update or keep current the information contained herein. References made to third parties are based on information believed to be
reliable but are not guaranteed as being accurate.
This document is provided to the recipient only and is not to be distributed to third parties without the prior consent of Evans and Partners.
EVANS AND PARTNERS DISCLOSURE OF INTERESTS
Evans and Partners and its respective officers and associates may have an interest in the securities or derivatives of any entities referred to in this
material.
Evans and Partners does, and seeks to do, business with companies that are the subject of its research reports.
EVANS AND PARTNERS CORPORATE RELATIONSHIP DISCLOSURE
AFI: Evans and Partners have arranged, managed or co-managed a public offering of the company or its affiliates in the past 12 months.
AYUHA: Evans and Partners have arranged, managed or co-managed a public offering of the company or its affiliates in the past 12 months.
BHP: A director of Evans and Partners Pty Ltd Advisory Board is a director of BHP Billiton Ltd.
BSL: A director of Evans and Partners Pty Ltd Advisory Board is a director of BlueScope Steel Ltd.
BOQ, BOQPA, BOQPC: A director of Evans and Partners Pty Ltd Advisory Board is a director of Bank of Queensland.
CNGHA: Evans and Partners managed or co-managed a public offering of securities of the company or its affiliates in the past 12 months.
HBSHB: Evans and Partners managed or co-managed a public offering of securities of the company or its affiliates in the past 12 months.
HHY: Evans and Partners has been appointed by the Issuer as Broker to an on-market buy-back. Accordingly, Evans and Partners is unable to give
Sellers advice in respect to a sale of this security.
LLC: A director of Evans and Partners Pty Ltd Advisory Board is a director of Lend Lease Corporation Ltd.
MEF: Evans and Partners has been appointed by the Issuer as Broker to an on-market buy-back. Accordingly, Evans and Partners is unable to give
Sellers advice in respect to a sale of this security.
MQG: MQCPA: A director of Evans and Partners Pty Ltd Advisory Board is a director of Macquarie Group Ltd.
MGR: A director of Evans and Partners Pty Ltd Advisory Board is a director of Mirvac Group.
NXT: Evans and Partners has been appointed as Lead Manager to the proposed IPO of the Asia Pacific Data Centre Trust by NXT and expects to
receive fees for acting in this capacity.
ORG: A director of Evans and Partners Pty Ltd Advisory Board is a director of Origin Energy Ltd.
PPC: Evans and Partners managed or co-managed a public offering of securities of the company or its affiliates in the past 12 months.
OOH: Evans and Partners have arranged, managed or co-managed a public offering of the company or its affiliates in the past 12 months.
SAR: Evans and Partners managed or co-managed a public offering of securities of the company or its affiliates in the past 12 months.
SPT: Evans and Partners acted in an advisory capacity for the bidder in relation to the proposed offer made to Spotless Group as announced 9 May
2011.
SWM: A director of Evans and Partners Pty Ltd Board is a director of Seven West Media Ltd.
TTSHA: Evans and Partners managed or co-managed a public offering of securities of the company or its affiliates in the past 12 months.
TOX: Evans and Partners managed or co-managed a public offering of securities of the company or its affiliates in the past 12 months.
WHF: Evans and Partners managed or co-managed a public offering of securities of the company or its affiliates in the past 12 months.
RESEARCH ANALYST CERTIFICATION
I, George Gabriel, CFA, hereby certify that all the views expressed in this report accurately reflect my personal views about the subject investment
theme &/or company securities. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific
recommendations or views expressed in this report.
RESEARCH ANALYST DISCLOSURE OF INTEREST
I, George Gabriel, CFA, &/or entities in which I have a pecuniary interest, have an exposure to the following securities &/or managed products: BPT.
DISCLAIMER
Except for any liability which cannot be excluded, Evans & Partners, its directors, employees & agents accept no liability or responsibility whatsoever
for any loss or damage of any kind, direct or indirect, arising out of the use of all or any part of this material. All information is correct at the time
of publication; additional information may be available upon request.