- Strong investment performance, with 72% and 80% of assets under
management (‘AUM’) outperforming relevant benchmarks on a 3 and 5
year basis, respectively, as at 30 June 2019
- Second quarter net income of US$109.4 million and adjusted net
income of US$119.7 million
- AUM of US$359.8 billion, up 1% compared to the prior quarter,
reflecting positive markets partially offset by net outflows of
US$9.8 billion
- Completed US$75 million of share buybacks during the second
quarter; US$94 million remains authorised for buybacks in 2019
- Board declared quarterly dividend of US$0.36 per share
Janus Henderson Group plc (NYSE/ASX: JHG; ‘JHG’, ‘the Group’)
published its second quarter 2019 results for the period ended 30
June 2019.
Second quarter 2019 net income attributable to JHG was US$109.4
million compared to US$94.1 million in the first quarter 2019 and
US$140.6 million in the second quarter 2018. Adjusted net income
attributable to JHG, adjusted for one-time, acquisition and
transaction related costs, of US$119.7 million increased 9%
compared to US$110.0 million in the first quarter 2019 and declined
20% compared to US$149.9 million in the second quarter 2018.
Second quarter 2019 diluted earnings per share was US$0.56
compared to US$0.48 in the first quarter 2019 and US$0.70 in the
second quarter 2018. Adjusted diluted earnings per share of US$0.61
increased 9% compared to US$0.56 in the first quarter 2019 and
declined 18% versus US$0.74 in the second quarter 2018.
Dick Weil, Chief Executive
Officer of Janus Henderson Group plc, stated:
“Our investment performance and financial results in the second
quarter and over longer periods are strong; however, the net flow
result remains challenging.
“Overall, we are seeing improving trends across many areas of
our business, but the current concentration of outflows is masking
much of this progress.
“We remain committed to the strategic agenda we have laid out,
which is to provide dependable excellence and deliver on our
promises to our clients, shareholders and employees.”
RESULTS FOR ANNOUNCEMENT TO THE
MARKET
These results for announcement to
the market include the interim information required to be provided
to the Australian Securities Exchange (ASX) under Listing Rule 4.2A
and Appendix 4D.
SUMMARY OF FINANCIAL RESULTS
(unaudited) (in US$ millions, except per share data or as
noted)
The Group presents its financial results in US$ and in
accordance with accounting principles generally accepted in the
United States of America (‘US GAAP’ or ‘GAAP’). However, in the
opinion of Management, the profitability of the Group and its
ongoing operations is best evaluated using additional non-GAAP
financial measures on an adjusted basis. See adjusted statements of
income reconciliation for additional information.
Six months ended
30 Jun
30 Jun
2019
2018
% change
GAAP
basis:
Revenue
1,055.2
1,180.1
(11)
%
Operating expenses
812.2
828.6
(2)
%
Operating income
243.0
351.5
(31)
%
Operating margin
23.0
%
29.8
%
(6.8)
ppt
Net income attributable to JHG
203.5
305.8
(33)
%
Diluted earnings per share
1.03
1.51
(32)
%
Adjusted
basis:
Revenue
851.8
948.1
(10)
%
Operating expenses
556.4
567.9
(2)
%
Operating income
295.4
380.2
(22)
%
Operating margin
34.7
%
40.1
%
(5.4)
ppt
Net income attributable to JHG
229.7
293.5
(22)
%
Diluted earnings per share
1.17
1.45
(20)
%
Three months ended
30 Jun
31 Mar
30 Jun
2019
2019
2018
GAAP
basis:
Revenue
535.9
519.3
592.4
Operating expenses
417.4
394.8
417.1
Operating income
118.5
124.5
175.3
Operating margin
22.1
%
24.0
%
29.6
%
Net income attributable to JHG
109.4
94.1
140.6
Diluted earnings per share
0.56
0.48
0.70
Adjusted
basis:
Revenue
434.4
417.4
477.7
Operating expenses
282.4
274.0
286.3
Operating income
152.0
143.4
191.4
Operating margin
35.0
%
34.4
%
40.1
%
Net income attributable to JHG
119.7
110.0
149.9
Diluted earnings per share
0.61
0.56
0.74
First half 2019 adjusted revenue of US$851.8 million decreased
from the first half 2018 result of US$948.1 million, primarily due
to lower management fees associated with lower average AUM in the
first half 2019, in addition to a decline in performance fees.
First half 2019 adjusted operating income of US$295.4 million
declined from US$380.2 million in the first half 2018, driven by
lower revenue partially offset by lower operating expenses.
Second quarter 2019 adjusted revenue of US$434.4 million
improved from the first quarter 2019 result of US$417.4 million
primarily due to higher average AUM and improved performance fees.
Second quarter 2019 adjusted operating income of US$152.0 million
improved from US$143.4 million in the first quarter 2019, with
higher adjusted revenue slightly offset by higher operating
expenses.
DIVIDEND AND SHARE
BUYBACK
On 30 July 2019, the Board declared a second quarter dividend in
respect of the three months ended 30 June 2019 of US$0.36 per
share. Shareholders on the register on the record date of 12 August
2019 will be paid the dividend on 28 August 2019. Janus Henderson
does not offer a dividend reinvestment plan.
As part of the US$200 million on-market buyback programme
approved by the Board in February, JHG purchased approximately 3.5
million of its ordinary shares on the NYSE and its CHESS Depositary
Interests (CDIs) on the ASX in the second quarter, for a total
outlay of US$75 million.
Net tangible assets per
share
US$
30 Jun
2019
30 Jun
2018
Net tangible assets / (liabilities) per
ordinary share
1.53
1.18
Net tangible assets are defined by the ASX as being total assets
less intangible assets less total liabilities ranking ahead of, or
equally with, claims of ordinary shares.
AUM AND FLOWS (in US$
billions)
FX reflects movement in AUM resulting from changes in foreign
currency rates as non-USD denominated AUM is translated into USD.
Redemptions include impact of client switches. The reclassification
in the fourth quarter 2018 reflects an operational reclassification
of an existing client’s funds.
Total Group comparative AUM and
flows
Three months
ended
30 Jun
31 Mar
30 Jun
2019
2019
2018
Opening AUM
357.3
328.5
371.9
Sales
15.6
15.6
17.1
Redemptions
(25.4
)
(23.0
)
(19.8
)
Net sales / (redemptions)
(9.8
)
(7.4
)
(2.7
)
Market / FX
12.3
36.2
0.9
Closing AUM
359.8
357.3
370.1
Quarterly AUM and flows by
capability
Fixed
Quantitative
Equities
Income
Equities
Multi-Asset
Alternatives
Total
AUM 30 Jun 2018
193.3
76.5
50.1
32.6
17.6
370.1
Sales
6.8
6.0
1.3
2.2
1.4
17.7
Redemptions
(9.9
)
(7.6
)
(1.3
)
(1.3
)
(1.9
)
(22.0
)
Net sales / (redemptions)
(3.1
)
(1.6
)
(0.0
)
0.9
(0.5
)
(4.3
)
Market / FX
9.0
(0.4
)
2.8
1.1
(0.2
)
12.3
AUM 30 Sep 2018
199.2
74.5
52.9
34.6
16.9
378.1
Sales
8.6
4.7
0.3
2.3
0.7
16.6
Redemptions
(12.7
)
(6.0
)
(1.4
)
(2.0
)
(2.9
)
(25.0
)
Net sales / (redemptions)
(4.1
)
(1.3
)
(1.1
)
0.3
(2.2
)
(8.4
)
Market / FX
(29.2
)
(1.3
)
(7.5
)
(2.5
)
(0.7
)
(41.2
)
Reclassification
1.7
0.5
—
(2.2
)
—
—
AUM 31 Dec 2018
167.6
72.4
44.3
30.2
14.0
328.5
Sales
6.9
4.9
0.7
2.2
0.9
15.6
Redemptions
(9.8
)
(7.7
)
(1.7
)
(1.5
)
(2.3
)
(23.0
)
Net sales / (redemptions)
(2.9
)
(2.8
)
(1.0
)
0.7
(1.4
)
(7.4
)
Market / FX
24.1
2.9
6.3
2.5
0.4
36.2
AUM 31 Mar 2019
188.8
72.5
49.6
33.4
13.0
357.3
Sales
6.9
5.5
0.2
2.1
0.9
15.6
Redemptions
(12.9
)
(5.2
)
(4.3
)
(1.5
)
(1.5
)
(25.4
)
Net sales / (redemptions)
(6.0
)
0.3
(4.1
)
0.6
(0.6
)
(9.8
)
Market / FX
8.5
0.7
2.1
1.1
(0.1
)
12.3
AUM 30 Jun 2019
191.3
73.5
47.6
35.1
12.3
359.8
Average AUM
Three months
ended
30 Jun
31 Mar
30 Jun
2019
2019
2018
Equities
190.5
182.8
191.0
Fixed Income
72.0
73.3
77.9
Quantitative Equities
48.4
48.3
50.0
Multi-Asset
34.2
32.1
31.9
Alternatives
12.6
13.5
18.3
Total
357.7
350.0
369.1
INVESTMENT PERFORMANCE
% of AUM outperforming benchmark (at 30
June 2019)
Capability
1 year
3 years
5 years
Equities
73
%
74
%
83
%
Fixed Income
61
%
90
%
89
%
Quantitative Equities
32
%
11
%
39
%
Multi-Asset
90
%
91
%
92
%
Alternatives
39
%
100
%
100
%
Total
66
%
72
%
80
%
Note: Outperformance is measured based on composite performance
gross of fees vs primary benchmark, except where a strategy has no
benchmark index or corresponding composite in which case the most
relevant metric is used: (1) composite gross of fees vs zero for
absolute return strategies, (2) fund net of fees vs primary index
or (3) fund net of fees vs Morningstar peer group average or
median. Non-discretionary and separately managed account assets are
included with a corresponding composite where applicable.
Cash management vehicles, ETFs, Managed CDOs, Private Equity
funds and custom non-discretionary accounts with no corresponding
composite are excluded from the analysis. Excluded assets represent
4% of AUM as at 30 June 2019. Capabilities defined by Janus
Henderson.
% of mutual fund AUM in top 2
Morningstar quartiles (at 30 June 2019)
Capability
1 year
3 years
5 years
Equities
85
%
70
%
88
%
Fixed Income
50
%
50
%
51
%
Quantitative Equities
61
%
3
%
51
%
Multi-Asset
87
%
87
%
88
%
Alternatives
32
%
58
%
58
%
Total
78
%
68
%
81
%
Note: Includes Janus Investment Fund, Janus Aspen Series and
Clayton Street Trust (US Trusts), Janus Henderson Capital Funds
(Dublin based), Dublin and UK OEIC and Investment Trusts,
Luxembourg SICAVs and Australian Managed Investment Schemes. The
top two Morningstar quartiles represent funds in the top half of
their category based on total return. On an asset-weighted basis,
74% of total mutual fund AUM was in the top 2 Morningstar quartiles
for the 10-year period ended 30 June 2019. For the 1-, 3-, 5- and
10-year periods ending 30 June 2019, 62%, 52%, 62% and 62% of the
205, 199, 182 and 147 total mutual funds, respectively, were in the
top 2 Morningstar quartiles.
Analysis based on ‘primary’ share class (Class I Shares,
Institutional Shares or share class with longest history for US
Trusts; Class A Shares or share class with longest history for
Dublin based; primary share class as defined by Morningstar for
other funds). Performance may vary by share class. Rankings may be
based, in part, on the performance of a predecessor fund or share
class and are calculated by Morningstar using a methodology that
differs from that used by Janus Henderson. Methodology differences
may have a material effect on the return and therefore the ranking.
When an expense waiver is in effect, it may have a material effect
on the total return, and therefore the ranking for the period.
ETFs and funds not ranked by Morningstar are excluded from the
analysis. Capabilities defined by JHG. © 2019 Morningstar, Inc. All
Rights Reserved.
THIRD QUARTER 2019
RESULTS
Janus Henderson intends to publish its third quarter 2019
results on 30 October 2019.
SECOND QUARTER 2019 RESULTS
BRIEFING INFORMATION
Chief Executive Officer Dick Weil and Chief Financial Officer
Roger Thompson will present these results on 31 July 2019 on a
conference call and webcast to be held at 8am EDT, 1pm BST, 10pm
AEST.
Those wishing to participate should call:
United Kingdom
0800 358 6377 (toll free)
US & Canada
800 239 9838 (toll free)
Australia
1 800 573 793 (toll free)
All other countries
+1 323 794 2551 (this is not a
toll free number)
Conference ID
9749827
Access to the webcast and accompanying slides will be available
via the investor relations section of Janus Henderson’s website
(www.janushenderson.com/IR).
About Janus Henderson
Janus Henderson Group (JHG) is a leading global active asset
manager dedicated to helping investors achieve long-term financial
goals through a broad range of investment solutions, including
equities, fixed income, quantitative equities, multi-asset and
alternative asset class strategies.
Janus Henderson has approximately US$360 billion in assets under
management (at 30 June 2019), more than 2,000 employees, and
offices in 28 cities worldwide. Headquartered in London, the
company is listed on the New York Stock Exchange (NYSE) and the
Australian Securities Exchange (ASX).
FINANCIAL DISCLOSURES
Period ending 30 June 2018 reflects the reclassification of
certain revenue amounts from ‘Other revenue’ to ‘Shareowner
servicing fees’.
Condensed consolidated statements of
comprehensive income (unaudited)
Three months
ended
30 Jun
31 Mar
30 Jun
(in US$ millions, except per
share data or as noted)
2019
2019
2018
Revenue:
Management fees
446.4
441.9
493.5
Performance fees
3.5
(5.6
)
13.5
Shareowner servicing fees
38.3
35.9
38.7
Other revenue
47.7
47.1
46.7
Total revenue
535.9
519.3
592.4
Operating
expenses:
Employee compensation and benefits
146.5
145.0
151.0
Long-term incentive plans
49.2
48.4
55.2
Distribution expenses
101.5
101.9
114.7
Investment administration
11.1
11.8
11.7
Marketing
8.1
7.5
9.5
General, administrative and occupancy
67.7
65.2
59.2
Depreciation and amortisation
33.3
15.0
15.8
Total operating
expenses
417.4
394.8
417.1
Operating income
118.5
124.5
175.3
Interest expense
(4.2
)
(4.1
)
(3.9
)
Investment gains (losses), net
4.8
13.3
(16.6
)
Other non-operating income (expenses),
net
28.5
(3.9
)
13.9
Income before taxes
147.6
129.8
168.7
Income tax provision
(35.3
)
(29.9
)
(38.2
)
Net income
112.3
99.9
130.5
Net loss (income) attributable to
noncontrolling interests
(2.9
)
(5.8
)
10.1
Net income attributable to
JHG
109.4
94.1
140.6
Less: allocation of earnings to
participating stock-based awards
(3.2
)
(2.4
)
(3.8
)
Net income attributable to JHG
common shareholders
106.2
91.7
136.8
Basic weighted-average shares outstanding
(in millions)
190.2
191.8
195.8
Diluted weighted-average shares
outstanding (in millions)
190.7
192.5
196.6
Diluted earnings per share (in
US$)
0.56
0.48
0.70
Adjusted statements of income
(unaudited)
The following are reconciliations of US GAAP basis revenues,
operating income, net income attributable to JHG and diluted
earnings per share to adjusted revenues, adjusted operating income,
adjusted net income attributable to JHG and adjusted diluted
earnings per share.
Three months
ended
30 Jun
31 Mar
30 Jun
(in US$ millions, except per
share data or as noted)
2019
2019
2018
Reconciliation of revenue to
adjusted revenue
Revenue
535.9
519.3
592.4
Distribution expenses1
(101.5
)
(101.9
)
(114.7
)
Adjusted revenue
434.4
417.4
477.7
Reconciliation of operating
income to adjusted operating income
Operating income
118.5
124.5
175.3
Employee compensation and benefits2,3
3.1
4.3
6.0
Long-term incentive plans2
(0.2
)
(0.2
)
0.7
Investment administration2
—
—
0.7
Marketing2
—
—
(0.2
)
General, administration and
occupancy2,3
5.3
7.4
1.5
Depreciation and amortisation2,4
25.3
7.4
7.4
Adjusted operating income
152.0
143.4
191.4
Operating margin
22.1
%
24.0
%
29.6
Adjusted operating margin
35.0
%
34.4
%
40.1
Reconciliation of net income
attributable to JHG to adjusted net income attributable to
JHG
Net income attributable to JHG
109.4
94.1
140.6
Employee compensation and benefits2,3
3.1
4.3
6.0
Long-term incentive plans2
(0.2
)
(0.2
)
0.7
Investment administration2
—
—
0.7
Marketing2
—
—
(0.2
)
General, administration and
occupancy2,3
5.3
7.4
1.5
Depreciation and amortisation2,4
25.3
7.4
7.4
Interest expense3
1.0
0.9
0.7
Investment gains (losses), net2
1.0
—
—
Other non-operating income (expenses),
net3
(22.6
)
0.4
(4.0
)
Income tax provision5
(2.6
)
(4.3
)
(3.5
)
Adjusted net income attributable
to JHG
119.7
110.0
149.9
Less: allocation of earnings to
participating stock-based awards
(3.5
)
(2.8
)
(4.1
)
Adjusted net income attributable
to JHG common shareholders
116.2
107.2
145.8
Weighted-average diluted common shares
outstanding – diluted (two class) (in millions)
190.7
192.5
196.6
Diluted earnings per share (two
class) (in US$)
0.56
0.48
0.70
Adjusted diluted earnings per
share (two class) (in US$)
0.61
0.56
0.74
____________________
1
Substantially all distribution expenses are paid to financial
intermediaries for the distribution of JHG’s investment products.
JHG management believes that the deduction of third-party
distribution, service and advisory expenses from revenue in the
computation of net revenue reflects the nature of these expenses,
as these costs are passed through to external parties that perform
functions on behalf of, and distribute, the Group’s managed
AUM.
2
Adjustments primarily represent integration costs in relation to
the Merger, including severance costs, legal costs and consulting
fees. JHG management believes these costs do not represent the
ongoing operations of the Group.
3
2019 adjustments primarily represent contingent consideration
adjustments associated with acquisitions prior to the Merger and
increased debt expense as a consequence of the fair value uplift on
debt due to acquisition accounting. Adjustments for the three
months ended 30 June 2018 primarily represent fair value movements
on options issued to Dai-ichi in addition to contingent
consideration costs associated with acquisitions prior to the
merger. JHG management believes these costs do not represent the
ongoing operations of the Group.
4
Investment management contracts have been identified as a
separately identifiable intangible asset arising on the acquisition
of subsidiaries and businesses. Such contracts are recognised at
the net present value of the expected future cash flows arising
from the contracts at the date of acquisition. For segregated
mandate contracts, the intangible asset is amortised on a
straight-line basis over the expected life of the contracts. The
three months ended 30 June 2019 also include a US$18 million
impairment of certain mutual fund contracts. JHG management
believes these non-cash and acquisition-related costs do not
represent the ongoing operations of the Group.
5
The tax impact of the adjustments is calculated based on the US
or foreign statutory tax rate as they relate to each adjustment.
Certain adjustments are either not taxable or not
tax-deductible.
Condensed consolidated balance sheets
(unaudited)
30 Jun
31 Dec
(in US$ millions)
2019
2018
Assets:
Cash and cash equivalents
707.0
880.4
Investment securities
246.8
291.8
Property, equipment and software, net
72.6
69.5
Intangible assets and goodwill, net
4,567.1
4,601.3
Assets of consolidated variable interest
entities
340.0
323.9
Other assets
926.6
745.0
Total assets
6,860.1
6,911.9
Liabilities, redeemable
noncontrolling interests and equity:
Debt
317.7
319.1
Deferred tax liabilities, net
727.6
729.9
Liabilities of consolidated variable
interest entities
4.8
6.5
Other liabilities
835.9
859.5
Redeemable noncontrolling interests
153.6
136.1
Total equity
4,820.5
4,860.8
Total liabilities, redeemable
noncontrolling interests and equity
6,860.1
6,911.9
Condensed consolidated statements of
cash flows (unaudited)
Three months
ended
30 Jun
31 Mar
30 Jun
(in US$ millions)
2019
2019
2018
Cash provided by (used
for):
Operating activities
117.7
(34.7
)
119.2
Investing activities
(39.8
)
51.3
44.4
Financing activities
(77.2
)
(198.3
)
(98.4
)
Effect of exchange rate changes
(9.6
)
5.0
(26.8
)
Net change during
period
(8.9
)
(176.7
)
38.4
STATUTORY DISCLOSURES
Associates and joint
ventures
At 30 June 2019, the Group holds interests in the following
associates and joint ventures managed through shareholder
agreements with third party investors, accounted for under the
equity method:
- Long Tail Alpha LLC. Ownership 20%
Basis of preparation
In the opinion of management of Janus Henderson Group plc, the
condensed consolidated financial statements contain all normal
recurring adjustments necessary to fairly present the financial
position, results of operations and cash flows of JHG in accordance
with US GAAP. Such financial statements have been prepared in
accordance with the instructions to Form 10-Q pursuant to the rules
and regulations of the SEC. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with GAAP have been condensed or omitted pursuant to
such rules and regulations. The financial statements should be read
in conjunction with the annual consolidated financial statements
and notes presented in Janus Henderson Group’s Annual Report on
Form 10-K for the year ended 31 December 2018, on file with the SEC
(Commission file no. 001-38103). Events subsequent to the balance
sheet date have been evaluated for inclusion in the financial
statements through the issuance date and are included in the notes
to the condensed consolidated financial statements.
Corporate governance principles
and recommendations
In the opinion of the Directors, the financial records of the
Group have been properly maintained, and the Condensed Consolidated
Financial Statements comply with the appropriate accounting
standards and give a true and fair view of the financial position
and performance of the Group. This opinion has been formed on the
basis of a sound system of risk management and internal control
which is operating effectively.
FORWARD-LOOKING STATEMENTS
DISCLAIMER
Past performance is no guarantee of future results. Investing
involves risk, including the possible loss of principal and
fluctuation of value.
This document includes statements concerning potential future
events involving Janus Henderson Group plc that could differ
materially from the events that actually occur. The differences
could be caused by a number of factors including those factors
identified in Janus Henderson Group’s Annual Report on Form 10-K
for the fiscal year ended 31 December 2018, on file with the
Securities and Exchange Commission (Commission file no. 001‑38103),
including those that appear under headings such as ‘Risk Factors’
and ‘Management’s Discussion and Analysis of Financial Condition
and Results of Operations’. Many of these factors are beyond the
control of JHG and its management. Any forward-looking statements
contained in this document are as at the date on which such
statements were made. Janus Henderson Group assumes no duty to
update them, even if experience, unexpected events, or future
changes make it clear that any projected results expressed or
implied therein will not be realised.
Annualised, pro forma, projected and estimated numbers are used
for illustrative purposes only, are not forecasts and may not
reflect actual results.
The information, statements and opinions contained in this
document do not constitute a public offer under any applicable
legislation or an offer to sell or solicitation of any offer to buy
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