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Henderson Group - 2015 Interim Results

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RNS Number : 4995U
Henderson Group plc
30 July 2015
 



2015 Interim Results

 

 

30 July 2015

 

Henderson Group plc (Henderson or the Group) published its Interim Results for the six months ended 30 June 2015 on 30 July 2015. The comments below refer to the period from 1 January to 30 June 2015 (the period) unless otherwise stated.

 

Financial highlights

 

·        Assets under management (AUM) at 30 June 2015 up 10% to £82.1bn (30 June 2014: £74.7bn)

·        Net inflows for the period of £5.6bn (30 June 2014: £5.0bn)

·        Underlying profit before tax from continuing operations up 29% to £117.4m (30 June 2014: £90.7m)

·        Underlying continuing diluted EPS of 8.9p (30 June 2014: 6.8p)

·        Capital surplus of £113m without recourse to the waiver from consolidated supervision

·        Interim dividend of 3.10p per share (30 June 2014: 2.60p per share)

·        Share buyback programme to be initiated in 2H15, with shares to the value of £25.0m to be purchased by year end.

 

Business update

 

·        Consistently strong investment performance: 83% of funds outperforming relevant metrics over three years as at 30 June 2015

·        Annualised net new money growth of 14% in the period (30 June 2014: 15%)

·        Sale of 40% stake in TH Real Estate in June 2015

·        Acquisitions of Perennial Fixed Interest, Perennial Growth Management and 90 West in Australia announced in June 2015. 

 

Andrew Formica, Chief Executive of Henderson, said: "We are very pleased to have delivered another six months of record net inflows, built on consistently strong investment performance for our clients which highlights the strength of our active approach.

 

"During the period, we continued to deliver on our strategy and attracted inflows from an increasingly global client base and product line. The acquisitions of Perennial Fixed Interest, Perennial Growth Management and 90 West will accelerate the growth of our Australian business and firmly establish our presence in this important market.

 

"We remain relatively positive on the market outlook, but are conscious that lingering investor caution during the northern hemisphere summer could affect flows across the industry in the third quarter. Nevertheless, Henderson remains well positioned. With strong sales momentum, increased brand recognition, excellent investment performance and disciplined investment in new initiatives, we are focused on outperforming the market and delivering our ambitious plans for future growth."

 

Results for Announcement to the Market

 

To view the full details of the 2015 Interim Results, paste the following link into your web browser:

 

http://www.rns-pdf.londonstockexchange.com/rns/4995U_1-2015-7-29.pdf 

 

To view the full details of the 2015 Interim Results Presentation, paste the following link into your web browser:

 

http://www.rns-pdf.londonstockexchange.com/rns/4995U_2-2015-7-29.pdf

 

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.

 

Amounts in £m unless otherwise stated

6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited & restated1

Change %

Management fees (net of commissions)

230.4

193.7

19

Performance fees

48.8

45.2

8

Other income

16.9

15.8

7

Underlying net fee income from continuing operations

296.1

254.7

16

Income from associates and joint ventures

0.4

2.0

(80)

Finance income

15.3

5.2

194

Underlying net income from continuing operations

311.8

261.9

19

    Fixed employee compensation and benefits1

(47.6)

(43.0)

(11)

   Variable employee compensation and benefits

(84.3)

(71.0)

(19)

Employee compensation and benefits

(131.9)

(114.0)

(16)

Non-staff operating expenses1

(56.7)

(51.6)

(10)

Total underlying operating expenses from continuing operations

(188.6)

(165.6)

(14)

Finance expenses

(5.8)

(5.6)

(4)

Total underlying expenses from continuing operations

(194.4)

(171.2)

(14)

Underlying profit before tax from continuing operations2

117.4

90.7

29

Underlying profit before tax from discontinued operation

-

6.3

(100)

Underlying profit before tax from total operations

117.4

97.0

21

Acquisition related and non-recurring items from total operations

(19.3)

112.7

(117)

Profit before tax from total operations

98.1

209.7

(53)

Tax charge on underlying profit from continuing operations

(15.6)

(12.7)

(23)

Tax charge on underlying profit from discontinued operation

-

(1.0)

100

Tax credit/(charge) on acquisition related and non-recurring items

8.1

(9.4)

186

Total tax charge

(7.5)

(23.1)

68

Profit after tax

90.6

186.6

(51)





Operating margin3

36.3%

35.0%

4

Compensation ratio1,4

44.5%

44.8%

1

Earnings per share (non-GAAP) 2,5




Basic on continuing underlying profit6

9.3p

7.2p

29

Diluted on continuing underlying profit7

8.9p

6.8p

31

 

1.       Certain items (including training and recruitment agency costs) have been reclassified from employee compensation and benefits to other expenses. There is no impact on prior year profits. Prior    full year comparatives were restated in the 2014 Annual Report and Accounts.

2.       Underlying profit, while not a GAAP measure, in the opinion of the Directors gives relevant information on the profitability of the Group and its ongoing operations.

3.       Net fee income from continuing operations less total operating expenses from continuing operations, divided by net fee income from continuing operations.

4.       Employee compensation and benefits from continuing operations, divided by net fee income from continuing operations.

5.       Based on continuing underlying profit after tax attributable to owners of the parent.

6.       Based on weighted average number of shares in issue less weighted average number of own shares held during the period.

7.       Based on weighted average number of shares in issue less weighted average number of own shares held during the period adjusted for the dilutive potential of share
awards and share options.

 

 

Dividend

On 29 July 2015, the board of directors of Henderson Group plc (the Board) declared an interim dividend in respect of the six months ended 30 June 2015 of 3.10p per share (1H14: 2.60p per share). Henderson Group plc does not offer a dividend reinvestment plan.

 

 

 

Amount per security
pence

Franked amount per security
pence





2015 interim dividend per share

3.10

-




Record date

28 August 2015


Payment date

18 September 2015


 

Net tangible assets per ordinary share

 

 

 

30 June 2015
pence

30 June 2014
pence




Net tangible assets per ordinary share

31

29

 

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.

 

Market briefing

 

Management will present these results on 30 July 2015 at 4.45pm (Sydney time)/7.45am (London time).

 

Webcast details

You can log on to a webcast of the results briefing which will start at 4.45pm (Sydney time)/7.45am (London time). Go to www.henderson.com/ir and click on the relevant link on the homepage. An archive of the webcast will be available shortly after the event.

 

Teleconference details

We recommend participants start dialling in 5-10 minutes prior to the start of the presentation. To telephone link-up to the briefing, dial one of the following numbers from 4.45pm (Sydney time)/7.45am (London time):

 

From:


United Kingdom

0800 694 0257 (free call)

Australia

1800 020 199 (free call)

All other countries

+44 (0) 1452 555 566 (this is not a free call number)

Conference title

Henderson Group, Interim Results Briefing

Conference ID

78501636

Chairperson

Andrew Formica

Replay number from:


United Kingdom

0800 953 1533 Access code: 78501636

All other countries

+44 (0) 1452 550 000 Access code: 78501636


(available from 30 July to 13 August 2015)


Further information

Investor enquiries:

Media enquiries:

Miriam McKay, Head of Investor Relations

Angela Warburton, Global Head of Communications

+44 (0) 20 7818 2106

+44 (0) 20 7818 3010

miriam.mckay@henderson.com

angela.warburton@henderson.com



Louise Curran, Investor Relations Manager

United Kingdom: Maitland

+44 (0) 20 7818 5927

Peter Ogden

louise.curran@henderson.com

+44 (0) 20 7379 5151

or


HendersonInvestorRelations@henderson.com

Australia: Cannings


Luis Garcia


+61 (0) 2 8284 9911

 

About Henderson

 

Henderson is an independent global asset manager, specialising in active investment. Named after its first client and founded in 1934, Henderson is a client-focused global business with over 900 employees worldwide and assets under management of £82.1bn (30 June 2015). Its core areas of investment expertise are European Equities, Global Equities, Global Fixed Income, Multi-Asset and Alternatives.

 

Henderson is dual-listed on the Australian Securities Exchange (ASX) and the London Stock Exchange (LSE) and has a market capitalisation of approximately £3.0bn (28 July 2015).

 

Further information can be found at www.henderson.com/ir.

 

Forward-Looking Statements and Other Important Information

 

This announcement contains forward-looking statements with respect to the financial condition, results and business of Henderson Group plc. By their nature, forward-looking statements involve risk and uncertainty because they relate to events, and depend on circumstances, that will occur in the future. Henderson's actual future results may differ materially from the results expressed or implied in these forward-looking statements. Nothing in this announcement should be construed as a profit forecast.

 

The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement. Nothing in this announcement should be construed as, or is intended to be, a solicitation for or an offer to provide investment advisory services.

 

 

Business Review

 

In 1H15, we delivered strong investment performance for our clients, record net inflows of £5.6bn, a 29% increase in underlying profit on continuing operations and an increase in continuing underlying diluted EPS of 31%. Our interim dividend has risen to 3.10p per share, and we will initiate a share buyback programme to the value of £25.0m in 2H15, to reflect our strong business performance and improving capital position.

 

Strategically, we made good progress on our organic growth initiatives, rationalised our involvement in property with the sale of our 40% stake in TH Real Estate and accelerated our growth plans in Australia with the announcement of the acquisitions of Perennial Fixed Interest Pty Ltd (Perennial Fixed Interest), Perennial Growth Management Pty Ltd (Perennial Growth Management) and 90 West Management Limited (90 West).

 

Assets under management (AUM)

 

£m


1Q15

2Q15


Opening AUM
1 Jan 2015

Net flows

Market/ FX

Acqs
&
displs
¹

Closing AUM 31 Mar 2015

Net flows

Market/ FX

Acqs
&
displs2

Closing AUM 30 Jun 2015

Retail

46,007

2,898

2,969

470

52,344

1,791

(1,593)

(1,041)

51,501

Institutional

35,155

656

1,196

-

37,007

249

(1,035)

(5,626)

30,595

Total

81,162

3,554

4,165

470

89,351

2,040

(2,628)

(6,667)

82,096

 

1.       Represents the merger of the Old Mutual property fund into Henderson UK Property OEIC.

2.       Represents the net impact of the property transactions completed on 1 June 2015 (£5.7bn), the transfer of Richard Pease's European Special Situations fund (£1.0bn) and the additional stake taken by the Group in 90 West in May 2015 (£0.1bn).

 

AUM increased to £82.1bn at 30 June 2015, reflecting net inflows of £5.6bn, market and FX movements of £1.5bn and a net £6.2bn reduction from acquisitions and disposals.

 

Net inflows of client money of £5.6bn in the period were ahead of the previous record £5.0bn achieved in the same period in 2014. We benefited from excellent investment performance from European assets during a period of strong client demand. The increasing diversity of our funds meant that our top 10 best-selling funds in the period included long/short equity, fixed income, property and global equity as well as European equities.

 

Market and FX movements contributed a positive £1.5bn for the period. Markets suffered reversals in June, driven by political uncertainty in Europe and market declines in China. The effect of these reversals was exaggerated by the significant increase in the value of sterling after the unexpected UK election result.

 

Acquisitions and disposals in the period saw us restructure our involvement in property as an asset class and accelerate our growth plans in Australia. The £470m Old Mutual property fund was merged into the Henderson UK Property OEIC (HUKPOEIC) in 1Q15, and in 2Q15 we sold our 40% stake in TH Real Estate to TIAA-CREF. HUKPOEIC remains one of our best-selling funds, with AUM of £3.7bn, and it will continue to be sub-advised by TH Real Estate. Richard Pease departed with his £1.0bn European Special Situations fund in June 2015, honouring a one-off arrangement struck at the time of the New Star acquisition in 2009. Also in June, we announced the acceleration of our Australian growth plan with three Australian acquisitions. The 90 West transaction closed in May and the Perennial transactions are expected to close in 4Q15.

 

Investment performance

Investment performance remained strong in the period, with 83% of our funds outperforming on a three year basis.

 

Percentage of funds at or exceeding benchmark as at 30 June 2015

Core capability

AUM

1 year

3 years

European Equities

£18.2bn

90%

91%

Global Equities

£26.0bn

79%

69%

Global Fixed Income

£20.6bn

54%

80%

Multi-Asset

£5.1bn

70%

93%

Alternatives

£12.2bn

87%

100%

Total

£82.1bn

76%

83%

Performance is calculated as a percentage of funds, asset-weighted, that are outperforming based on the relevant metric: peer quartile ranking for Retail, positive for absolute return, positive versus benchmark for Institutional.

 

 

Progress on strategic priorities

In our 2013 Annual Report, we described a strategy focused on growth and globalisation which, if implemented successfully, will see us deliver a sustained period of organic growth supplemented by value accretive acquisitions. Assuming market growth in line with the long-term average, the output of our strategy will see a doubling of our assets under management by 2018.

 

We identified four key areas of focus to achieve our strategic objectives and have made progress in each area during the period.

 

Deliver first-class investment performance and service to our clients

Investment performance remained strong, with 83% of funds outperforming on a three year basis. Of particular note was our European Equities performance, with 91% of funds outperforming over three years. We continue to strive to put our clients' interests at the heart of every business decision, and were particularly pleased to have built goodwill with our UK retail clients by handling all aspects of Richard Pease's departure in a client-focused manner. By contrast, the flotation of the John Laing Group represented the best possible exit for the private equity funds invested, but we were very disappointed in the outcome for some of our clients.

 

Shape our global product offering to meet the current and future needs of our clients

Our investments in new capabilities showed good early progress in the period, with our US high yield team delivering top decile performance and our new emerging markets teams attracting client interest earlier than we expected. We continue to develop our global product range, with a greater focus this year on alternatives styles, institutional offerings and our growing businesses in Australia and the US.

 

Diversify our global business

In the US, integration of Geneva Capital Management LLC (Geneva) is proceeding well, with investment performance improving and outflows slowing as client demand for Geneva's quality growth investment style rebuilds. In June 2015, we announced the acquisitions of Perennial Fixed Interest, Perennial Growth Management and 90 West in Australia, which together will add c£5.6bn of AUM, combine domestic investment management capabilities with our globally-focused offerings and provide exposure to a broader institutional and retail client base. The 90 West transaction closed in May 2015 and the Perennial transactions are due to close in 4Q15.

 

Operate efficiently

Building operating leverage and capital strength are key components of our growth and globalisation strategy. A key area of focus this year is to deliver an improvement in our operating margin after a period of carefully targeted investment in our business, so we are pleased to be able to report a 1H15 operating margin of 36.3%, up from 35.0% in 1H14. We are also pleased to have delivered a regulatory capital surplus of £113m, without recourse to our waiver from consolidated supervision. Given strong business results and an improved capital position, we have decided to initiate a share buyback programme in 2H15 to the value of £25.0m.

 

Financial Review

 

The commentary below refers to continuing underlying profit which, while not a GAAP measure, in the opinion of the Directors gives relevant information on the profitability of the Group and its ongoing operations.

 

Financial performance

Underlying profit before tax on continuing operations for the period was £117.4m, up 29% compared to 1H14. The most significant contributor to this growth was a 19% increase in management fees, driven by continued strong inflows in 1H15.

 

With investment in new capabilities having peaked in 2014, we delivered an improved operating margin in 1H15 of 36.3% (1H14: 35.0%).

 

Income drivers

Underlying net income from continuing operations for the period was £311.8m, up 19%. Management fees increased to £230.4m (1H14: £193.7m), reflecting a sustained period of strong inflows and investment performance. Management fee margins averaged 56.7bps compared to 57.8bps for FY14, with the reduction driven by changes in business mix. Recent fixed income mandate wins and the run-off of our private equity business reduced average institutional margins, while strength in our retail equities business had a positive mix effect.

 

Performance fees of £48.8m (1H14: £45.2m) reflected continued strong investment returns for our clients, with a strong contribution from the SICAV range and good absolute return performance.

 

Other income, largely administration fees charged on UK funds, was up slightly at £16.9m.

 

Income from associates and joint ventures reduced significantly to £0.4m (1H14: £2.0m), reflecting lower profits from TH Real Estate before we sold our 40% stake on 1 June 2015, together with the impact of the disposal of the Intrinsic Cirilium Investment Company Limited joint venture on 1 December 2014.

 

Finance income increased to £15.3m (1H14: £5.2m), boosted by a £9.1m gain on the seed capital we had invested in property funds which we have now sold.

 

Expense drivers

Total expenses from continuing operations were £194.4m, up 14%.

 

Fixed employee compensation and benefits were up 11% to £47.6m. This reflects the integration of Geneva, wage increases and the full year effect of last year's investments, as well as a limited number of new hires.

 

Variable employee compensation and benefits were up 19% to £84.3m - the outcome of our remuneration schemes being structured to reward strong business results, particularly investment performance and flows. Despite the rise in variable compensation, our compensation ratio fell from 44.8% in 1H14 to 44.5% in 1H15.

 

Non-staff operating expenses increased by 10% to £56.7m as we capitalised on strong sales momentum and continued to build out our global infrastructure, in part to accommodate regulatory change.

 

Tax

The tax charge on the Group's continuing underlying profit for the period was £15.6m, with one-off credits in 1H15 resulting in an effective tax rate of 13.3%.

 

Earnings per share (EPS)

Diluted underlying EPS on continuing operations was 8.9p per share, up 31%. This increase reflects a number of factors, the largest of which being higher underlying profits, with a lower tax rate and the reduction in the weighted average number of shares in issue also contributing to the rise.

 

Acquisition related and non-recurring items

Acquisition related and non-recurring items are disclosed separately from the Group's underlying profit to provide a clearer view of the components of total profit. Total losses from these items were £11.2m in 1H15. Acquisition related losses of £23.6m after tax were offset by a non-recurring gain of £12.4m after tax, which mainly relates to the sale of the Group's 40% stake in TH Real Estate.

 

Capital and liquidity management

Total cash and cash equivalents at 30 June 2015 were £282.9m. Unrestricted cash stood at £269.1m after excluding manager dealing accounts, restricted cash and cash held in consolidated structured entities. With gross debt at par amounting to £150.0m, the Group had a net cash position of £119.1m at 30 June 2015 (30 June 2014: £102.8m). We intend to repay our £150.0m senior notes maturing in March 2016 from cash resources.

 

With regard to our regulatory capital position, we will continue to operate under an investment firm waiver from consolidated supervision until April 2016. However, based on our own calculations, we had a regulatory capital surplus of £113m at 30 June 2015 without recourse to the waiver (31 December 2014: £44.0m). This includes deductions for the interim dividend and share buyback.

 

Dividend

The Board declared an interim dividend of 3.10p per share in respect of the six months ended 30 June 2015 (30 June 2014: 2.60p per share). In setting the interim dividend, the Board considered earnings excluding the one-off profit on the sale of seed capital investments in property funds. We continue to operate a progressive ordinary dividend policy and expect to grow ordinary dividends broadly in line with earnings growth over the medium term.

 

Share buyback

In the last six months, our capital position has significantly strengthened and is now at a satisfactory level. This gives us increased flexibility around how we choose to redeploy cash flow and capital, whether that be through organic investment, acquisitions or returns to shareholders. Reflecting our strong business performance and improved capital position, we are now in a position to consider enhancing returns to shareholders, in addition to the ordinary dividend policy. In light of this, the Board has decided to implement a share buyback programme of £25.0m during the course of 2H15.

 

Summary of movements in AUM

£m

Opening AUM1

1 Jan 2015

Net flows

1H15

Market/FX

1H15

Acquisitions & disposals2,6

1H15

Closing AUM

30 Jun 20152

Closing AUM  net management fee bps

30 Jun 20153

Retail







UK OEICs/Unit Trusts/Other4

20,615

703

736

(571)

21,483


SICAVs

14,171

2,585

43

-

16,799


US Mutuals

6,005

1,346

301

-

7,652


Investment Trusts

5,216

55

296

-

5,567


Total Retail

46,007

4,689

1,376

(571)

51,501

74

Institutional







UK OEICs/Unit Trusts

9,093

(114)

90

-

9,069


SICAVs

1,266

334

(14)

-

1,586


Offshore Absolute Return funds

2,513

(29)

66

(249)

2,301


Segregated Mandates

15,530

767

281

340

16,918


TH Real Estate (40% share)

5,650

154

(87)

(5,717)

-


Private Equity funds

823

(128)

(179)

-

516


Other5

280

(79)

4

-

205


Total Institutional

35,155

905

161

(5,626)

30,595

28

TOTAL GROUP

81,162

5,594

1,537

(6,197)

82,096

57








By capability







European Equities

15,265

2,748

1,193

(1,041)

18,165


Global Equities

25,731

(782)

934

91

25,974


Global Fixed Income

19,196

1,861

(476)

-

20,581


Multi-Asset

5,211

(191)

98

-

5,118


Alternatives

15,759

1,958

(212)

(5,247)

12,258


TOTAL GROUP

81,162

5,594

1,537

(6,197)

82,096









By asset class







Equity

50,706

3,049

2,187

(950)

54,992

69

Fixed Income

21,322

2,035

(484)

-

22,873

32

Property

8,295

637

14

(5,247)

3,699

n/a

Private Equity

839

(127)

(180)

-

532

n/a

TOTAL GROUP

81,162

5,594

1,537

(6,197)

82,096

57








Absolute Return sub analysis







Retail

3,395

967

(100)

-

4,262


Institutional

3,222

213

(118)

-

3,317


TOTAL ABSOLUTE RETURN

6,617

1,180

(218)

-

7,579


 

1. The Group records AUM and net flows when management or performance fees are generated on an investment mandate as well as its percentage participation in the AUM of associates and joint ventures. For associates and joint ventures, where the Group either sub-advises the AUM or where the AUM is contracted to Henderson and sub-advised by the joint venture partner, the Group will show 100% of that AUM rather than the percentage of participation. Where one fund or client invests part or all of its portfolio into another Henderson fund, AUM or flow is shown only against that portfolio that is ultimately managed by the Group rather than the client or fund vehicle initially invested in, except where shown by capability, where AUM is shown by the capability for which the client invests in. All cross holdings are eliminated.

2. Acquisitions and disposals reflect the merger of the Old Mutual property fund into Henderson UK Property OEIC, £0.5bn, the net impact of the property transactions completed on 1 June 2015, (£5.7bn), the transfer of Richard Pease's European Special Situations fund, (£1.0bn), and the additional stake taken by the Group in 90 West in May 2015, £0.1bn.

3. AUM used for margin purposes excludes joint venture and associate AUM (except where either Henderson sub-advises the AUM or where the AUM is contracted to Henderson and sub-advised by the joint venture partner).

4. Other includes Australian managed investment schemes and Singapore Mutuals.

5. Includes US Mutuals and Managed Collateralised Debt Obligations (CDOs).

6. Includes a reclassification from Segregated Mandates to Offshore Absolute Return of £0.2bn. The acquisition of the additional stake in 90 West, representing £0.1bn, is included in the £0.3bn for Segregated Mandates.

 

Consolidated Financial Results

 


1H15

1H14

FY14 

FY13 

FY12

FY11

Unaudited

Unaudited & restated1

Audited

Audited

Unaudited

Unaudited

£m

£m

£m

£m

£m

£m

Income







Management fees (net of commissions)

230.4

193.7

403.5

331.9

301.9

309.8

Performance fees

48.8

45.2

82.8

94.5

30.4

63.4

Other income

16.9

15.8

32.5

34.9

39.2

48.3

Underlying net fee income from continuing operations

296.1

254.7

518.8

461.3

371.5

421.5

Income/(loss) from associates and joint ventures

0.4

2.0

5.1

1.8

(0.9)

Finance income

15.3

5.2

10.1

10.2

14.1

11.6

Underlying net income from continuing operations

311.8

261.9

534.0

473.3

385.6

432.2

Expenses







Fixed employee compensation and benefits1

(47.6)

(43.0)

(88.4)

(80.6)

(83.3)

(82.3)

Variable employee compensation and benefits

(84.3)

(71.0)

(143.6)

(128.8)

(70.6)

(96.5)

Employee compensation and benefits

(131.9)

(114.0)

(232.0)

(209.4)

(153.9)

(178.8)

Investment administration

(15.4)

(15.0)

(30.2)

(24.4)

(24.8)

(27.2)

Information technology

(9.8)

(8.2)

(17.1)

(17.1)

(14.4)

(13.5)

Office expenses

(8.1)

(7.0)

(15.0)

(13.7)

(13.3)

(13.3)

Depreciation

(2.6)

(2.2)

(4.7)

(3.2)

(2.8)

(2.9)

Other expenses1

(20.8)

(19.2)

(35.6)

(28.9)

(35.5)

(39.0)

Total underlying operating expenses from continuing operations

(188.6)

(165.6)

(334.6)

(296.7)

(244.7)

(274.7)

Finance expenses

(5.8)

(5.6)

(11.6)

(11.1)

(14.3)

(17.2)

Total underlying expenses from continuing operations

(194.4)

(171.2)

(346.2)

(307.8)

(259.0)

(291.9)

Underlying profit before tax from continuing operations2

117.4

90.7

187.8

165.5

126.6

140.3

Underlying profit before tax from discontinued operation

6.3

7.6

24.6

26.4

19.7

Underlying profit before tax from total operations2

117.4

97.0

195.4

190.1

153.0

160.0

Tax on underlying profit from continuing operations

(15.6)

(12.7)

(20.6)

(17.9)

(15.3)

(30.2)

Tax on underlying profit from discontinued operation

(1.0)

(1.3)

(2.9)

(4.2)

(3.4)

Total underlying profit after tax

101.8

83.3

173.5

169.3

133.5

126.4

Acquisition related items

(30.3)

(29.2)

(57.0)

(58.4)

(64.1)

(77.0)

Non-recurring items

11.0

141.9

145.0

(4.3)

13.8

(69.2)

Tax on acquisition related items

6.7

5.2

11.2

17.9

18.5

19.4

Tax on non-recurring items

1.4

(14.6)

(14.2)

0.6

4.7

16.2

Non-recurring tax credit

18.9

Total acquisition related and non-recurring items after tax

(11.2)

103.3

85.0

(44.2)

(27.1)

(91.7)

Total profit

90.6

186.6

258.5

125.1

106.4

34.7

Attributable to:







Owners of the parent

90.6

186.6

258.5

125.1

106.2

34.8

Non-controlling interests

0.2

(0.1)

Continuing key performance indicators (unaudited)







Operating margin3 (%)

36.3

35.0 

35.5

35.7

34.1

34.8

Compensation ratio1,4 (%)

44.5

44.8 

44.7

45.4

41.4

42.4

Average number of full-time employees

929

857 

875

812

861

838

Assets under management (AUM) at period end (£bn)

82.1

74.7 

81.2

63.7

53.9

52.7

Average AUM for the period (£bn) for margin calculations on continuing basis

81.8

66.7 

69.9

59.0

53.4

56.2

Management fee margin (bps)

56.7

58.1 

57.8

56.3

56.5

55.1

Total fee margin (bps)

72.4

76.4 

74.3

78.2

69.6

75.0

Net margin5 (bps)

28.7

27.2 

26.9

28.1

23.7

25.0

Basic and diluted earnings per share (EPS)







Weighted average number of ordinary shares for basic EPS (m)

1,095.4

1,080.4 

1,085.2

1,058.8

1,034.0

954.1

Weighted average number of ordinary shares for diluted EPS (m)

1,146.7

1,153.4 

1,139.8

1,137.0

1,082.0

1,012.7

Basic on continuing underlying profit2,6 (p)

9.3

7.2 

15.4

13.9

10.8

11.6

Basic on total underlying profit2,6 (p)

9.3

7.7 

16.0

16.0

12.9

13.3

Basic (p)

8.3

17.3 

23.8

11.8

10.3

3.6

Diluted on continuing underlying profit2,6 (p)

8.9

6.8 

14.7

13.0

10.3

10.9

Diluted on total underlying profit2,6 (p)

8.9

7.2 

15.2

14.9

12.3

12.5

Diluted (p)

7.9

16.2 

22.7

11.0

9.8

3.4

Dividend per share (p)

3.10

2.60 

9.00

8.00

7.15

7.00

Investment performance7 (unaudited)







Funds at or exceeding benchmark over one year (%)

76

69

66

78

73

59

Funds at or exceeding benchmark over three years (%)

83

 86

83

82

69

66

1.       Certain items (including training and recruitment agency costs) have been reclassified from employee compensation and benefits to other expenses. There is no impact on prior year profits. Prior full year comparatives were restated in the 2014 Annual Report and Accounts.

2.       Underlying profit, while not a GAAP measure, in the opinion of the Directors gives relevant information on the profitability of the Group and its ongoing operations.

3.       Net fee income from continuing operations less total operating expenses from continuing operations, divided by net fee income from continuing operations.

4.       Employee compensation and benefits from continuing operations, divided by net fee income from continuing operations.

5.       Net margin calculated on underlying profit before tax.

6.       Based on underlying profit after tax attributable to equity holders of the parent.

7.       Asset-weighted investment performance of funds measured over one and three years.

 

Risk Management

 

The key risks within the Group fall into a number of distinct categories and the means adopted to mitigate them are both varied and relevant to the particular risk concerned. Information regarding the key risks and their mitigation is set out in the Group's 2014 Annual Report and Accounts on pages 36 to 39 and the related governance framework is set out on pages 44 to 56. These risks and the Group's response to them have not changed significantly from those described in the Group's 2014 Annual Report and Accounts.

 

On 2 June 2015, the Group announced the acquisition of Perennial Fixed Interest and Perennial Growth Management, fixed income and equity managers respectively based in Australia. In a separate transaction, the Group completed the acquisition of the remaining equity that it did not already own in the Australian equity manager, 90 West. The Perennial transactions are expected to close in 4Q15. An appropriate governance structure has been established to oversee the steps necessary for the Perennial acquisitions to be completed and for these, and the 90 West businesses to be managed in accordance with the Group's standard operating model. The risks have been assessed and appropriate resources assigned; the existing risk appetite thresholds have not been exceeded, nor are they likely to be.

 

Directors' Report

 

The directors of Henderson Group plc (the Directors) present their report for the six months ended 30 June 2015. The Board approved the financial results for the six months ended 30 June 2015 on 29 July 2015.

 

Directors

The Directors who served during the six months ended 30 June 2015 and up to the date of this report, unless otherwise stated, are shown below:

 

Richard Gillingwater (Chairman)

Andrew Formica (Chief Executive)

Roger Thompson (Chief Financial Officer)

Sarah Arkle

Kevin Dolan

Tim How

Robert Jeens

Angela Seymour-Jackson.

 

All Directors are expected to stand for reappointment at the 2016 Annual General Meeting.

 

Business review and results

The Group's results for the six months ended 30 June 2015 are shown in the Interim Consolidated Income Statement on page 19. A review of the six months ended 30 June 2015 and future business developments is covered in the Business and Financial Reviews on pages 7 to 11.

 

Rounding

In accordance with the Australian Securities and Investments Commission Class Order 98/0100, amounts in the Interim Report and Accounts have been rounded to the nearest £0.1m sterling, unless stated otherwise.

 

Independent auditors

PricewaterhouseCoopers LLP were reappointed as independent auditors on 30 April 2015 at the 2015 Annual General Meeting.

 

Directors' declaration

In the opinion of the Directors:

 

·        the Interim Condensed Consolidated Financial Statements set out on pages 19 to 41:

 

-   give a true and fair view (as set out in section 305 of the Australian Corporations Act 2001) of the Group's consolidated financial position as at 30 June 2015 and of its performance for the six months ended on that date; and

 

-   have been prepared in accordance with the Disclosure and Transparency Rule 4.2.6R of the United Kingdom's Financial Conduct Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed;

 

·        there are reasonable grounds to believe that the Group will be able to pay its debts as and when they fall due; and

 

·        the financial records of the Group have been properly maintained and the Interim 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 and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

Signed in accordance with a resolution of the Board:

 

 

 

 

Andrew Formica                                                                               Roger Thompson

Chief Executive                                                                                   Chief Financial Officer

29 July 2015                                                                                       29 July 2015

 

Statement of Directors' Responsibilities

 

The Directors confirm that to the best of their knowledge, in relation to the Interim Condensed Consolidated Financial Statements, that:

 

·           the Interim Condensed Consolidated Financial Statements have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting' as adopted by the European Union;

 

·           the Interim Report and Accounts include a fair review of the information required by Disclosure and Transparency Rule 4.2.7R, being an indication of important events that have occurred during the first six months of the current financial year, and their impact on the Interim Condensed Consolidated Financial Statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

 

·           the Interim Report and Accounts include a fair review of the information required by Disclosure and Transparency Rule 4.2.8R, being disclosure of related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or the performance of the Group during that period and of any changes in the related party transactions described in the last annual report that could have a material effect on the financial position or performance of the Group in the first six months of the current financial year.

 

 

 

 

Signed in accordance with a resolution of the Board:

 

 

 

 

 

Andrew Formica                                                                               Roger Thompson

Chief Executive                                                                                   Chief Financial Officer

29 July 2015                                                                                       29 July 2015

 

Independent Review Report to Henderson Group plc

 

Report on the Interim Condensed Consolidated Financial Statements

Our conclusion

We have reviewed the Interim Condensed Consolidated Financial Statements, defined below, in the Interim Report and Accounts of Henderson Group plc for the six months ended 30 June 2015. Based on our review, nothing has come to our attention that causes us to believe that the Interim Condensed Consolidated Financial Statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

This conclusion is to be read in the context of what we say in the remainder of this report.

What we have reviewed

The Interim Condensed Consolidated Financial Statements, which are prepared by Henderson Group plc, comprise:

·       the Interim Consolidated Statement of Financial Position as at 30 June 2015;

·       the Interim Consolidated Income Statement and Interim Consolidated Statement of Comprehensive Income for the period then ended;

·       the Interim Consolidated Statement of Changes in Equity for the period then ended;

·       the Interim Consolidated Statement of Cash Flows for the period then ended; and

·       the notes to the Interim Condensed Consolidated Financial Statements.

As disclosed in note 2, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union.

The Interim Condensed Consolidated Financial Statements included in the Interim Report and Accounts have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

What a review of interim condensed consolidated financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

We have read the other information contained in the Interim Report and Accounts and considered whether it contains any apparent misstatements or material inconsistencies with the information in the Interim Condensed Consolidated Financial Statements.

 

Responsibilities for the Interim Condensed Consolidated Financial Statements and the review

 

Our responsibilities and those of the Directors

The Interim Report and Accounts, including the Interim Condensed Consolidated Financial Statements, is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Interim Report and Accounts in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

Our responsibility is to express to the Company a conclusion on the Interim Condensed Consolidated Financial Statements in the Interim Report and Accounts based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of complying with the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

 

 

 

PricewaterhouseCoopers LLP

Chartered Accountants

29 July 2015

 

7 More London Riverside

London

SE1 2RT

 

Notes:

 

·    The maintenance and integrity of the Henderson Group plc website are the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

·     Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Interim Consolidated Income Statement

 

For the six months ended 30 June 2015



6 months ended 30 June 2015

Unaudited

6 months ended 30 June 2014 Unaudited

 

 


Underlying profit

Acquisition related and non-recurring items

(note 5)

Total

Underlying profit

Acquisition related and non-recurring items

(note 5)

Total


Notes

£m

£m

£m

£m

£m

£m

Income








Gross fee and deferred income

3

365.4

365.4

321.1

321.1

Commissions and deferred acquisition costs


(69.3)

(69.3)

(66.4)

(66.4)

Net fee income


296.1

296.1

254.7

254.7

Income/(loss) from associates and joint ventures

11

0.4

(0.5)

(0.1)

2.0

(2.6)

(0.6)

Finance income


15.3

11.5

26.8

5.2

5.2

Net income from continuing operations


311.8

11.0

322.8

261.9

(2.6)

259.3









Expenses








Operating expenses


(186.0)

(0.8)

(186.8)

(163.4)

(163.4)

Amortisation and depreciation


(2.6)

(28.6)

(31.2)

(2.2)

(26.0)

(28.2)

Total operating expenses


(188.6)

(29.4)

(218.0)

(165.6)

(26.0)

(191.6)

Finance expenses


(5.8)

(0.9)

(6.7)

(5.6)

(0.6)

(6.2)

Total expenses from continuing operations


(194.4)

(30.3)

(224.7)

(171.2)

(26.6)

(197.8)

Profit/(loss) before tax from continuing operations


117.4

(19.3)

98.1

90.7

(29.2)

61.5

Tax (charge)/credit on continuing operations


(15.6)

8.1

(7.5)

(12.7)

5.2

(7.5)

Profit/(loss) after tax from continuing operations


101.8

(11.2)

90.6

78.0

(24.0)

54.0

Discontinued operation








- Profit before tax

7

6.3

141.9

148.2

- Tax charge

7

(1.0)

(14.6)

(15.6)

- Profit after tax from discontinued operation


5.3

127.3

132.6

Profit/(loss) before tax from total operations


117.4

(19.3)

98.1

97.0

112.7

209.7

Tax (charge)/credit on total operations

6

(15.6)

8.1

(7.5)

(13.7)

(9.4)

(23.1)

Profit/(loss) after tax attributable to owners of the parent


101.8

(11.2)

90.6

83.3

103.3

186.6









Total profit attributable to owners of the parent arises from:








Continuing operations




90.6



54.0

Discontinued operation






132.6





90.6



186.6

Basic and diluted earnings per share from continuing operations








Basic

9.3



8.3p



5.0p

Diluted

9.3



7.9p



4.7p









Basic and diluted earnings per share from total operations








Basic

9.4



8.3p



17.3p

Diluted

9.4



7.9p



16.2p

 



12 months ended 31 December 2014

Audited

 

 


Underlying profit

Acquisition related and non-recurring items

(note 5)

Total


Notes

£m

£m

£m

Income





Gross fee and deferred income

3

651.2

651.2

Commissions and deferred acquisition costs


(132.4)

(132.4)

Net fee income


518.8

518.8

Income/(loss) from associates and joint ventures

11

5.1

(7.2)

(2.1)

Finance income


10.1

11.5

21.6

Net income from continuing operations


534.0

4.3

538.3






Expenses





Operating expenses


(329.9)

(1.3)

(331.2)

Amortisation and depreciation


(4.7)

(53.7)

(58.4)

Total operating expenses


(334.6)

(55.0)

(389.6)

Finance expenses


(11.6)

(1.5)

(13.1)

Total expenses from continuing operations


(346.2)

(56.5)

(402.7)

Profit/(loss) before tax from continuing operations


187.8

(52.2)

135.6

Tax (charge)/credit on continuing operations


(20.6)

11.9

(8.7)

Profit/(loss) after tax from continuing operations


167.2

(40.3)

126.9

Discontinued operation





- Profit before tax

7

7.6

140.2

147.8

- Tax charge

7

(1.3)

   (14.9)

(16.2)

- Profit after tax from discontinued operation


6.3

125.3

131.6

Profit before tax from total operations


195.4

88.0

283.4

Tax charge on total operations

6

(21.9)

(3.0)

(24.9)

Profit after tax attributable to owners of the parent


173.5

85.0

258.5






Total profit attributable to owners of the parent arises from:





Continuing operations




126.9

Discontinued operation




131.6





258.5

Basic and diluted earnings per share from continuing operations





Basic

9.3



11.7p

Diluted

9.3



11.1p






Basic and diluted earnings per share from total operations





Basic

9.4



23.8p

Diluted

9.4



22.7p

 

Interim Consolidated Statement of Comprehensive Income

 

For the six months ended 30 June 2015

 


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited

 

Notes

£m

£m

£m

Profit after tax


90.6

186.6

258.5






Other comprehensive (expense)/income










Items that may be reclassified to the Consolidated Income Statement





Exchange differences on translation of foreign operations


(7.9)

(3.8)

0.1

Exchange differences transferred to the Consolidated Income Statement on disposal of foreign operations


0.5

(1.9)

(1.9)

Available-for-sale financial assets:





Net gains on revaluation


13.5

3.5

Reclassification to the Consolidated Income Statement on impairment due to distribution


0.6

0.6

Reclassification to the Consolidated Income Statement on disposal


(9.2)

(6.7)

Tax effect of revaluation

6

0.1






Items that will not be reclassified to the Consolidated Income Statement





Actuarial (losses)/gains:





On defined benefit pension schemes (after tax deducted at source)

12.3

(2.7)

(0.9)

17.6

On other items


0.1

Tax effect of actuarial (losses)/gains

6

0.1

0.1

Other comprehensive (expense)/income after tax


(5.8)

(5.9)

13.5

Total comprehensive income after tax


84.8

180.7

272.0






Attributable to:





Owners of the parent


78.6

180.7

273.6

Non-controlling interests


6.2

(1.6)



84.8

180.7

272.0






Interim Consolidated Statement of Financial Position

 

As at 30 June 2015



30 June 2015

Unaudited

30 June 2014

Unaudited

31 December 2014

Audited


Notes

£m

£m

£m

Non-current assets





Intangible assets


657.9

618.6

677.9

Investments accounted for using the equity method

11

2.8

79.1

74.4

Property and equipment


14.5

15.4

15.1

Retirement benefit assets

12.1

127.9

106.2

128.1

Deferred tax assets


32.4

40.1

36.0

Trade and other receivables


0.1

39.0

1.3



835.6

898.4

932.8

Current assets





Available-for-sale financial assets

13

62.0

63.0

71.0

Financial assets at fair value through profit or loss

13

123.7

29.2

35.9

Current tax assets


0.9

2.3

Trade and other receivables


342.3

300.5

275.9

Cash and cash equivalents

13

282.9

272.4

234.5



811.8

665.1

619.6

Assets classified as held for sale

7

29.9

84.8

Total assets


1,647.4

1,593.4

1,637.2






Non-current liabilities





Debt instrument in issue

13

149.2

149.4

Trade and other payables


49.6

45.7

44.6

Retirement benefit obligations

12.1

8.6

8.1

8.5

Provisions


11.6

11.7

9.7

Deferred tax liabilities


33.6

44.1

38.9



103.4

258.8

251.1

Current liabilities





Debt instrument in issue

13

149.7

Trade and other payables


362.8

348.5

316.0

Provisions


1.1

3.0

3.1

Current tax liabilities


17.1

30.7

23.0



530.7

382.2

342.1

Liabilities classified as held for sale

7

26.0

Total liabilities


634.1

641.0

619.2






Net assets


1,013.3

952.4

1,018.0






Capital and reserves





Share capital


142.6

141.6

142.4

Share premium


747.9

731.1

743.9

Own shares held


(101.4)

(85.1)

(94.7)

Translation reserve


(9.1)

(5.6)

(1.7)

Revaluation reserve


7.9

11.3

9.8

Profit and loss reserve


217.3

155.6

216.4

Equity attributable to owners of the parent


1,005.2

948.9

1,016.1

Non-controlling interests


8.1

3.5

1.9

Total equity


1,013.3

952.4

1,018.0

 

 

Approved by the Board on 29 July 2015.

 

Interim Consolidated Statement of Changes in Equity

 

For the six months ended 30 June 2015


Share capital

Share premium

Own shares held

Translation reserve

Revaluation reserve

Profit and loss reserve

Equity attributable to owners of the parent

Non-controlling interests

Total equity


£m

£m

£m

£m

£m

£m

£m

£m

£m

At 1 January 2014

140.4

708.6

(69.4)

0.1

10.7

41.9

832.3

4.0

836.3

Profit after tax

186.6

186.6

186.6

Other comprehensive (expense)/income after tax

(5.7)

0.6

(0.8)

(5.9)

(5.9)

Total comprehensive (expense)/income

(5.7)

0.6

185.8

180.7

180.7

Disposal of non-controlling interest

(0.5)

(0.5)

Dividends paid to equity shareholders

(64.0)

(64.0)

(64.0)

Purchase of own shares

(26.8)

(26.8)

(26.8)

Vesting of share schemes

34.4

(34.4)

Issue of shares for share schemes

1.2

22.5

(23.3)

0.4

0.4

Movement in equity-settled share scheme expenses

20.9

20.9

20.9

Tax on equity-settled share schemes

5.4

5.4

5.4

At 30 June 2014

141.6

731.1

(85.1)

(5.6)

11.3

155.6

948.9

3.5

952.4

Profit after tax

71.9

71.9

71.9

Other comprehensive income/(expense) after tax

3.9

(1.5)

18.6

21.0

(1.6)

19.4

Total comprehensive income/(expense)

3.9

(1.5)

90.5

92.9

(1.6)

91.3

Dividends paid to equity shareholders

(28.9)

(28.9)

(28.9)

Purchase of own shares

(6.2)

(6.2)

(6.2)

Vesting of share schemes

9.8

(9.8)

-

Issue of shares for share schemes

0.8

 

12.8

(13.2)

0.4

0.4

Movement in equity-settled share scheme expenses

14.4

14.4

14.4

Tax on equity-settled share schemes

(5.4)

(5.4)

(5.4)

At 31 December 2014

142.4

743.9

(94.7)

(1.7)

9.8

216.4

1,016.1

1.9

1,018.0

Profit after tax

90.6

90.6

90.6

Other comprehensive (expense)/income after tax

(7.4)

(1.9)

(2.7)

(12.0)

6.2

(5.8)

Total comprehensive (expense)/income

(7.4)

(1.9)

87.9

78.6

6.2

84.8

Dividends paid to equity shareholders

(70.9)

(70.9)

(70.9)

Purchase of own shares

(50.5)

(50.5)

(50.5)

Vesting of share schemes

48.0

(48.0)

Issue of shares for share schemes

0.2

4.0

(4.2)

Movement in equity-settled share scheme expenses

25.0

25.0

25.0

Tax on equity-settled share schemes

6.9

6.9

6.9

At 30 June 2015

142.6

747.9

(101.4)

(9.1)

7.9

217.3

1,005.2

8.1

1,013.3

 

Interim Consolidated Statement of Cash Flows

 

For the six months ended 30 June 2015



6 months ended

30 June 2015

Unaudited

6 months ended 

30 June 2014 

Unaudited 

12 months ended

31 December 2014

Audited


Notes

£m

£m 

£m

Net cash flows generated from operating activities

10

63.6

22.6

123.0






Cash flows from investing activities





Proceeds from disposals of:





- Property business, net of cash disposed


101.7

104.7

- seed capital investments


30.2

15.1

37.9

- interests in associates


84.0

13.7

- plant and equipment


0.4

Acquisition of subsidiaries, including cash acquired


(1.6)

(76.1)

Dividends from associates and distributions from joint ventures


2.4

3.8

Purchases of:





- seed capital investments


(12.3)

(7.0)

(77.1)

- property and equipment


(0.7)

(0.3)

(1.6)

- computer software intangible assets


(2.4)

(2.2)

(4.1)

- investments in associates and joint ventures


(4.0)

(0.8)

(0.8)

- investment management contracts


(2.6)

Net cash flows generated from investing activities


90.6

108.9

0.8






Cash flows from financing activities





Proceeds from issue of shares


8.0

3.6

7.3

Purchase of own shares for share schemes


(50.5)

(23.4)

(33.0)

Dividends paid to equity shareholders

8

(70.9)

(64.0)

(92.9)

Interest paid on debt instrument in issue


(5.4)

(5.4)

(10.9)

Non-controlling interests' investments in consolidated funds


5.9

28.8

Payments to non-controlling interests on seed capital investments


(12.2)

Net cash flows used in financing activities


(112.9)

(89.2)

(112.9)

Effects of exchange rate changes


(1.2)

(2.2)

(0.4)

Net increase in cash and cash equivalents


40.1

40.1

10.5

Cash and cash equivalents at beginning of period


242.8

232.3

232.3

Cash and cash equivalents at end of period


282.9

272.4

242.8

 

Reconciliation of cash and cash equivalents

 



As at

30 June 2015

Unaudited

As at

30 June 2014

Unaudited

As at

31 December 2014

Audited



£m

£m

£m

Cash and cash equivalents


282.9

272.4

234.5

Cash and cash equivalents classified as held for sale


8.3

Total cash and cash equivalents


282.9

272.4

242.8

 

Notes to the Interim Condensed Consolidated Financial Statements

 

1.      Corporate information

 

Henderson Group plc (the Company) is a public limited company incorporated in Jersey and tax resident in the United Kingdom. The Company's ordinary shares are traded on the LSE and CHESS Depositary Interests are traded on the ASX.

 

The Interim Condensed Consolidated Financial Statements of the Group for the six months ended 30 June 2015 were authorised for issue by the Board on 29 July 2015.

 

The results for the six months ended 30 June 2015 are unaudited but have been reviewed by the auditors, PricewaterhouseCoopers LLP. The results for the six months ended 30 June 2014 were also unaudited but were reviewed by PricewaterhouseCoopers LLP. The condensed comparative figures for the full year ended 31 December 2014 have been taken from the Henderson Group plc Annual Report and Accounts. The 2014 financial statements in the 2014 Annual Report and Accounts were audited by PricewaterhouseCoopers LLP and their report was unqualified. Henderson Group plc's 2014 Annual Report and Accounts have been filed with the Jersey Financial Services Commission Companies Registry. The Interim Condensed Consolidated Financial Statements do not constitute statutory accounts.

 

2.      Basis of preparation and significant accounting policies

 

Basis of preparation

The Interim Condensed Consolidated Financial Statements for the six months ended 30 June 2015 have been prepared in accordance with IAS 34, 'Interim Financial Reporting' as adopted by the European Union.

 

The Interim Condensed Consolidated Financial Statements do not include all the information and disclosures required in the annual financial statements and therefore should be read in conjunction with Henderson Group plc's 2014 Annual Report and Accounts, which were prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

 

The Directors are satisfied that the Group has and will maintain sufficient financial resources to enable it to continue operating for at least 12 months from the date of approval of the 2015 Interim Results. The Directors closely monitored the material uncertainties inherent in current and expected market conditions, the trading performance of the Group and the debt instruments issued by the Group in 2011. After thorough examination, the Directors are satisfied that the Group has and will maintain sufficient financial resources to enable it to continue operating in the foreseeable future, and therefore, continue to adopt the going concern basis in preparing the Interim Report and Accounts. This has been considered as part of the Group's Risk Management procedures set out in the Risk Management section of the Interim Report and Accounts. Therefore, they continue to adopt the going concern basis in preparing the Interim Report and Accounts.

 

Significant accounting policies

The accounting policies adopted in the preparation of the Interim Condensed Consolidated Financial Statements are consistent with those followed in the preparation of Henderson Group plc's 2014 Annual Report and Accounts.

 

3.      Segmental information

 

Henderson is an investment manager, operating throughout Europe with operations in North America and Asia. The Group manages a broad range of actively managed investment products for institutional and retail investors, across five capabilities, being European Equities, Global Equities, Global Fixed Income, Multi-Asset and Alternatives, including Private Equity and Property. Management operates across product lines, distribution channels and geographic regions. All investment product types are sold in most, if not all, of these regions, and are managed in various locations. Information is reported to the chief operating decision maker, the Board, on an aggregated basis. Strategic and financial management decisions are determined centrally by the Board and, on this basis, the Group is a single segment investment management business.

 

Entity-wide disclosures

Revenues by product from continuing operations


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


£m

£m

£m

UK OEICs/unit trusts

135.4

130.0

254.9

SICAVs

125.4

85.5

178.7

US mutuals

32.2

29.3

57.1

Segregated mandates

30.1

24.8

51.8

Offshore absolute return funds

20.5

30.0

63.3

Other

21.8

21.5

45.4

Gross fee and deferred income

365.4

321.1

651.2

 

Geographic information

Revenues from clients from continuing operations


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


£m

£m

£m

UK

234.9

225.3

447.2

Luxembourg

83.5

62.2

132.3

Americas

44.6

30.8

66.5

Japan

0.9

0.4

0.8

Singapore

0.7

1.1

1.9

Australia

0.5

0.3

1.1

Other

0.3

1.0

1.4

Gross fee and deferred income

365.4

321.1

651.2

The geographical revenue information is split according to the country in which the revenue is generated, not necessarily where the client is based. The Group does not have a single client which accounts for more than 10% of revenues.

 

Non-current assets


As at

30 June 2015

Unaudited

As at

30 June 2014

Unaudited

As at

31 December 2014

Audited


£m

£m

£m

UK

578.9

700.1

670.4

Americas

84.3

3.4

88.3

Other

12.0

9.6

8.7


675.2

713.1

767.4

Non-current assets for this purpose consist of intangible assets, investments accounted for using the equity method and property and equipment.

 

4.      Seasonality of operations

 

The Group's revenue streams are not generally seasonal in nature, with management fees and other income accruing evenly during the year. Performance fees are recognised when the prescribed performance hurdles have been achieved and it is probable that the fee will crystallise as a result. The hurdles coincide with the underlying fund year ends. The year ends of offshore absolute return funds and SICAVs are biased to the first half of the year. In addition, given the uncertain nature of performance fees, these can fluctuate from period to period. Finance income includes gains on disposal of seed capital investments and consequently can fluctuate.

 

5.      Acquisition related and non-recurring items from continuing operations

 

Acquisition related and non-recurring items relating to the discontinued operation are analysed in note 7.

 



6 months ended 30 June 2015

6 months ended 30 June 2014

 

 


Acquisition related items

Unaudited

Non-recurring items

Unaudited

Total

Unaudited

Acquisition related items

Unaudited

Non-recurring items

Unaudited

Total

Unaudited



£m

£m

£m

£m

£m

£m

Loss from associates and joint ventures








Associate intangible amortisation


0.8

0.8

2.6

2.6

TH Real Estate establishment costs


(0.3)

(0.3)



0.8

(0.3)

0.5

2.6

2.6

Finance income








TH Real Estate gain on sale


(11.4)

(11.4)

Australian acquisitions


(0.1)

(0.1)



(11.5)

(11.5)

Operating expenses and amortisation








Intangible amortisation


28.6

28.6

26.0

26.0

Australian acquisitions


0.8

0.8



28.6

0.8

29.4

26.0

26.0

Finance expenses








Void property finance charge


0.4

0.4

0.6

0.6

Geneva deferred consideration finance charge


0.5

0.5



0.9

0.9

0.6

0.6

Total loss/(profit) before tax from continuing operations


30.3

(11.0)

19.3

29.2

29.2

Tax credit


(6.7)

(1.4)

(8.1)

(5.2)

(5.2)

Total loss/(profit) after tax from continuing operations


23.6

(12.4)

11.2

24.0

24.0




12 months ended 31 December 2014

 

 





Acquisition related items

Audited

Non-recurring items

Audited

Total

Audited






£m

£m

£m

Loss from associates and joint ventures








Associate intangible amortisation





1.8

1.8

TH Real Estate establishment costs





5.4

5.4






1.8

5.4

7.2

Finance income








ICICL disposal





(11.5)

(11.5)






(11.5)

(11.5)

Operating expenses and amortisation








Intangible amortisation





53.7

53.7

FSCS refund





(2.9)

(2.9)

Geneva deal and integration costs





4.2

4.2






53.7

1.3

55.0

Finance expenses








Void property finance charge





1.2

1.2

Geneva deferred consideration finance charge





0.3

0.3






1.5

1.5

Total loss/(profit) before tax from continuing operations





57.0

(4.8)

52.2

Tax credit





(11.2)

(0.7)

(11.9)

Total loss/(profit) after tax from continuing operations





45.8

(5.5)

40.3

 

5.1     Non-recurring items

 

Six months ended 30 June 2015

 

TH Real Estate

Loss from associates and joint ventures

A £0.3m adjustment to the £5.4m one-off establishment costs recognised in 2H14 has been made in the period.

Finance income

On 1 June 2015, the Group sold its 40% stake in TH Real Estate, resulting in an £11.4m gain. Refer to note 11 for further detail regarding the transaction.

Australia acquisitions

Finance income

A £0.1m gain has been recognised on the revaluation of the Group's previous 41.4% stake in 90 West, based on the transaction price on 29 May 2015 when the Group acquired the remaining 58.6% of shares. Refer to note 15 for further detail regarding the transaction.

Operating expenses and amortisation

The Group has incurred costs of £0.8m in the period relating to the acquisition of 90 West and the proposed acquisition of Perennial Fixed Interest Partners Pty Ltd and Perennial Growth Management Pty Ltd. Refer to note 15 for further detail regarding the transactions.

 

12 months ended 31 December 2014

 

TH Real Estate establishment costs

TH Real Estate incurred one-off establishment costs, of which £5.4m is the Group's share (after tax where applicable), for the year ended 31 December 2014.

Intrinsic Cirilium Investment Company Limited (ICICL) disposal

The Group completed the sale of its 50% stake in ICICL, resulting in an £11.5m gain.

FSCS refund

The Financial Services Compensation Scheme (FSCS) has made a partial refund to the Group of £2.9m relating to the 2010/2011 Keydata cross subsidy levy. This amount was recognised as a credit in operating expenses to reflect the original treatment of the expense recognised in 2010 and 2012.

Geneva deal and integration costs

Deal and integration costs of £4.2m were incurred by the Group during the year ended 31 December 2014 relating to the acquisition of Geneva.

 

6.      Tax

 

Tax recognised in the Interim Consolidated Income Statement


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


£m

£m

£m

Current tax:




- charge for the period

12.1

27.2

42.1

- adjustments in respect of prior period

(3.3)

0.1

(5.4)

Deferred tax:




- credit for the period

(1.0)

(4.2)

(13.4)

- adjustments in respect of prior period

(0.3)

-

1.6

Total tax charged to the Interim Consolidated Income Statement

7.5

23.1

24.9

 

Tax recognised in the Interim Consolidated Statement of Comprehensive Income


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


£m

£m

£m

Deferred tax credit in relation to available-for-sale financial assets

(0.1)

Deferred tax credit in relation to actuarial (losses)/gains

(0.1)

(0.1)

Total tax credited to the Interim Consolidated Statement of Comprehensive Income

(0.1)

(0.2)

 

Reconciliation of profit before tax to tax charge

The tax charge for the period is reconciled to the profit before tax in the Interim Consolidated Income Statement as follows:


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


£m

£m

£m

Profit before tax

98.1

209.7

283.4





Tax charge at the pro rata UK statutory corporation tax rate of 20.25%

(1H14 and FY14: 21.5%)

19.9

45.1

60.9





Factors affecting the tax charge:




Differences in effective tax rates on overseas profits

(5.8)

(2.7)

(11.2)

Adjustments in respect of prior period

(3.6)

0.1

(3.8)

Non-taxable income and disallowable expenditure

(3.0)

(18.0)

(20.0)

Utilisation of previously unrecognised temporary difference

(1.4)

(1.7)

(2.2)

Changes in statutory tax rates

0.4

0.9

Other items

1.4

(0.1)

0.3

Total tax charged in the Interim Consolidated Income Statement

7.5

23.1

24.9

 

 

7.      Discontinued operation and assets and liabilities classified as held for sale

 

On 1 April 2014, the Group completed transactions which resulted in the disposal of the Property business and simultaneously recognised a 40% share in the newly formed joint venture - TH Real Estate. The Property business was classified as a discontinued operation and the results of this business are presented below.

 


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


£m

£m

£m

Net fee income

18.0

19.3

Income from associates and joint ventures

0.1

0.1

Finance income

0.2

0.2

Net income

18.3

19.6

Operating expenses

(12.0)

(12.0)

Underlying profit before tax from discontinued operation

6.3

7.6

Tax on underlying profit

(1.0)

(1.3)

Underlying profit after tax from discontinued operation

5.3

6.3

Non-recurring items - profit on disposal of Property business

150.6

148.9

Non-recurring items - deal costs

(8.7)

(8.7)

Tax charge on non-recurring items

(14.6)

(14.9)

Profit after tax from discontinued operation

132.6

131.6

 

Assets and liabilities classified as held for sale


As at

30 June 2015

Unaudited

As at

30 June 2014

Unaudited

As at

31 December 2014

Audited


£m

£m

£m

Financial assets at fair value through profit or loss

3.0

71.7

Available-for-sale financial assets

26.9

4.8

Cash and cash equivalents

8.3

Total assets classified as held for sale

29.9

84.8

Trade and other payables

26.0

Total liabilities classified as held for sale

26.0

 

Asset and liabilities classified as held for sale in the prior year related to seed capital investments.

 

As at 31 December 2014, the Group classified assets and liabilities of consolidated seed capital investments invested in 2014 as held for sale, on the basis that the seed capital investments would be redeemed within a year. During the period, it has been identified that redeeming a seed capital investment within a year is less than probable unless there is specific information available about a redemption on a certain seed capital investment. Based on this change in assumption, the Group has transferred the assets and liabilities that were held for sale as at 31 December 2014 to their respective lines in the Interim Consolidated Statement of Financial Position as at 30 June 2015.

 

8.      Dividends

 


6 months to

30 June 2015

Unaudited

6 months to

30 June 2014

Unaudited


£m

£m

£m

Dividends on ordinary shares declared and paid in the period:




Final dividend in respect of 2013

64.0

64.0

Interim dividend in respect of 2014

-

28.9

Final dividend in respect of 2014

70.9

-

-

Total dividends paid and charged to equity

70.9

64.0

92.9





Dividends on ordinary shares declared post the reporting date:




Interim dividend in respect of 1H15 profit: 3.10p per share payable in 2H15

35.4

n/a

n/a

 

An interim dividend of £35.4m (3.10p per share) was declared by the Board on 29 July 2015. This will be payable on 18 September 2015 to shareholders on the register at 28 August 2015.

 

The difference between the proposed final dividend as reported in the 2014 Annual Report and Accounts (£72.9m) and the dividend paid out during the period (£70.9m), represents the dividends waived by employee benefit trusts on shares held in the trust on behalf of Group employees partly offset by the dividends payable on the new shares issued between 31 December 2014 and the dividend record date. The amount waived in respect of the interim dividend declared for 2015 will be established by the trustees of the employee benefit trusts on 28 August 2015, being the dividend record date.

 

9.      Earnings per share

 

Weighted average number of shares

 

The weighted average number of shares for the purpose of calculating earnings per share is as follows:


6 months ended

30 June 2015

Unaudited

no. (millions)

6 months ended

30 June 2014

Unaudited

no. (millions)

12 months ended

31 December 2014

Audited

no. (millions)

Weighted average




Issued share capital

1,140.4

1,126.0

1,130.9

Less: own shares held

(45.0)

(45.6)

(45.7)

Weighted average number of ordinary shares for the purpose of

basic earnings per share

1,095.4

1,080.4

1,085.2

Add: dilutive potential of share options and unconditional awards

51.3

73.0

54.6

Weighted average number of ordinary shares for the purpose of
diluted earnings per share

1,146.7

1,153.4

1,139.8

 

Basic and diluted earnings per share have been calculated on the profit attributable to owners of the parent. The difference between the weighted average number of shares used in the basic earnings per share and the diluted earnings per share calculations reflects the dilutive impact of outstanding share options, which are anticipated to vest based on market conditions as at 30 June 2015.

 

9.1     On continuing underlying profit after tax attributable to owners of the parent

 

Earnings


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


£m

£m

£m

Continuing profit after tax attributable to owners of the parent

90.6

54.0

126.9

Add back:




Acquisition related and non-recurring items after tax (note 5)

11.2

24.0

40.3

Earnings for the purpose of basic and diluted earnings per share

101.8

78.0

167.2

 

Earnings per share


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


pence

pence

pence

Basic

9.3

7.2

15.4

Diluted

8.9

6.8

14.7

 

9.2     On total underlying profit after tax attributable to owners of the parent

 

Earnings


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


£m

£m

£m

Total profit after tax attributable to owners of the parent

90.6

186.6

258.5

Add back:




Acquisition related and non-recurring items after tax

11.2

(103.3)

(85.0)

Earnings for the purpose of basic and diluted earnings per share

101.8

83.3

173.5

 

Earnings per share


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


pence

pence

pence

Basic

9.3

7.7

16.0

Diluted

8.9

7.2

15.2

 

9.3     On continuing profit after tax attributable to owners of the parent

 

Earnings


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


£m

£m

£m

Earnings for the purpose of basic and diluted earnings per share

90.6

54.0

126.9

 

Earnings per share


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


pence

pence

pence

Basic

8.3

5.0

11.7

Diluted

7.9

4.7

11.1

 

9.4     On total profit after tax attributable to owners of the parent

 

Earnings


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


£m

£m

£m

Earnings for the purpose of basic and diluted earnings per share

90.6

186.6

258.5

 

Earnings per share


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


pence

pence

pence

Basic

8.3

17.3

23.8

Diluted

7.9

16.2

22.7

 

 

9.5     On discontinued profit after tax attributable to owners of the parent

 

Earnings


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


£m

£m

£m

Earnings for the purpose of basic and diluted earnings per share

132.6

131.6

 

Earnings per share


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


pence

pence

pence

Basic

12.3

12.1

Diluted

11.5

11.5

 

 

10.    Operating cash flows reconciliation

 



6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited



£m

£m

£m

Cash flows from operating activities





Profit before tax


98.1

209.7

283.4

Adjustments to reconcile profit before tax to net cash flows generated from operating activities:





- debt instrument interest expense


5.8

5.6

11.6

- share-based payment charges


16.7

17.6

28.8

- intangible amortisation


30.7

29.5

57.6

- share of (income)/loss from associates and joint ventures


(0.7)

(2.1)

0.3

- property and equipment depreciation


1.3

1.3

2.6

- gain on disposal of seed capital investments


(9.2)

(1.6)

(3.7)

- seed capital investment impairment


0.6

0.6

- loss on disposal of property and equipment


0.1

0.8

- contributions to retirement benefit schemes in excess of costs recognised


(2.5)

(2.6)

(5.5)

- other finance income


(0.9)

- net movements on other provisions


0.2

0.1

- finance expenses


0.9

0.6

1.5

- gain on disposal of associates


(11.4)

(11.5)

- profit on disposal of Property business before deal costs


(150.6)

(148.9)

Cash flows generated from operating activities before changes in operating assets and liabilities


129.0

108.1

217.7

Net changes in operating assets and liabilities


(58.9)

(84.1)

(74.7)

Net tax paid


(6.5)

(1.4)

(20.0)

Net cash flows generated from operating activities


63.6

22.6

123.0

 

11.    Investments accounted for using the equity method

 

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.


Country of incorporation and principal place of operation

Functional currency

Percentage owned as at 30 June 2015

Percentage owned as at  30 June 2014

 

Percentage

owned as at

31 December 2014

Intrinsic Cirilium Investment Company Limited

UK

GBP

50%

Northern Pines Henderson Capital GP LLC

USA

USD

50%

50%

50%

Northern Pines Henderson Capital LLC

USA

USD

50%

50%

50%

Optimum Investment Management Limited

UK

GBP

50%

50%

50%

TIAA Henderson Real Estate Limited

UK

GBP

40%

40%

90 West Asset Management Limited

Australia

AUD

41%

41%

 

On 29 May 2015, the Group acquired the remaining 58.6% of the share capital of 90 West. As a result, this investment has been transferred from an investment in associate to an investment in subsidiary. See note 15 for further details.

 

The Group's share of net assets and share of net loss from associates and joint ventures from continuing operations are as follows:




30 June 2015

Unaudited

30 June 2014 Unaudited

31 December 2014 Audited




£m

£m

£m

Share of aggregate net assets



2.8

79.1

74.4

Share of loss after tax



(0.1)

(0.6)

(2.1)

 

Disposal of TH Real Estate

On 1 June 2015, the Group sold its 40% stake in TH Real Estate, with a carrying value of £73.3m, for consideration of £84.0m. The Group was due £15.5m at FY14 (1H14: £21.7m) from TH Real Estate relating to trading and other assets. This was fully repaid in 1H15 prior to or as a part of the 1 June 2015 transaction.

 

12.    Retirement benefits

12.1   Retirement benefit assets and obligations recognised in the Interim Consolidated Statement of Financial Position

 

The retirement benefit assets and obligations in respect of the pension schemes, after tax deducted at source, were as follows at 30 June 2015:


As at

30 June 2015

Unaudited

As at

30 June 2014

Unaudited

As at

31 December 2014 Audited


£m

£m

£m

Retirement benefit assets




Henderson Group Pension Scheme

127.9

106.2

128.1





Retirement benefit obligations




Henderson Group unapproved pension scheme

(8.6)

(8.1)

(8.5)


119.3

98.1

119.6

 

12.2   Pension expense recognised in the Interim Consolidated Income Statement

 

The pension expense recognised in the Interim Consolidated Income Statement comprises the following:


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


£m

£m

£m

Charges/(credits) relating to defined benefit and unapproved pension schemes




Administration costs

0.5

0.5

0.8

Current service costs

0.6

0.5

1.1

Net interest credit

(2.6)

(2.4)

(4.5)


(1.5)

(1.4)

(2.6)

Contributions to money purchase members' accounts

2.6

2.6

5.1

1.1

1.2

2.5

 

12.3   Actuarial (losses)/gains recognised in the Interim Consolidated Statement of Comprehensive Income

 


6 months ended 30 June 2015 Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


£m

£m

£m

Actuarial (losses)/gains

(2.4)

(0.2)

29.4

Tax at source

(0.3)

(0.7)

(11.8)

Actuarial (losses)/gains recognised in the Interim Consolidated Statement of Comprehensive Income

(2.7)

(0.9)

17.6

 

 

13.    Fair value of financial instruments

 

Total financial assets and liabilities

The following table sets out the financial assets and liabilities of the Group:

 


Carrying value

Fair value


As at

30 June 2015

Unaudited

As at

30 June 2014

Unaudited

As at

31 December 2014

Audited

As at

30 June 2015

Unaudited

As at

30 June 2014

Unaudited

As at

31 December 2014

Audited


£m

£m

£m

£m

£m

£m

Financial assets at fair value through profit or loss

123.7

29.2

35.9

123.7

29.2

35.9

Financial assets at fair value through profit or loss classified as held for sale

3.0

71.7

3.0

71.7

Total financial assets at fair value through profit or loss

123.7

32.2

107.6

123.7

32.2

107.6








Available-for-sale financial assets

62.0

63.0

71.0

62.0

63.0

71.0

Available-for-sale financial assets classified as held for sale

26.9

4.8

26.9

4.8

Total available-for-sale financial assets

62.0

89.9

75.8

62.0

89.9

75.8








Accrued income, OEIC and unit trust debtors and trade and other debtors

331.0

329.7

267.6

331.0

329.7

267.6

Cash and cash equivalents

282.9

272.4

234.5

282.9

272.4

234.5

Cash and cash equivalents classified as held for sale

8.3

8.3

Total loans receivable and cash

613.9

602.1

510.4

613.9

602.1

510.4

Total financial assets

799.6

724.2

693.8

799.6

724.2

693.8








Debt instrument in issue

149.7

149.2

149.4

156.3

158.3

157.4

Trade and other payables (excluding deferred income)

345.7

367.4

327.0

345.7

367.4

327.0

Total loans and payables carried at amortised cost

495.4

516.6

476.4

502.0

525.7

484.4








Trade and other payables at fair value through profit or loss

65.0

23.3

31.1

65.0

23.3

31.1

Trade and other payables at fair value through profit or loss classified as held for sale

26.0

26.0

Provisions

12.7

14.7

12.8

12.7

14.7

12.8

Total other financial liabilities

77.7

38.0

69.9

77.7

38.0

69.9

Total financial liabilities

573.1

554.6

546.3

579.7

563.7

554.3

 

Financial assets at fair value through profit or loss mainly consist of seed capital investments and investments in the Group's fund products which are held, in employee benefit trusts, against outstanding deferred compensation arrangements. Any movement in the fair value of the assets held against deferred compensation liabilities is offset by a corresponding movement in the deferred compensation liability. Both movements are recognised through the Consolidated Income Statement. Available-for-sale financial assets consist of seed capital investments.

 

The Group enters into forward foreign exchange contracts to hedge seed capital investments classified as available-for-sale and as fair value through profit or loss financial assets denominated in foreign currency. Forward foreign exchange contracts are also used to hedge the translation of certain consolidated structured entities. In addition, the Group entered into a number of contracts for difference, credit default indices, futures and total return swaps to hedge the market movements of specific available-for-sale and fair value through profit or loss financial assets. The Group applies fair value hedge accounting in certain circumstances. These derivatives are disclosed in financial assets at fair value through profit or loss.

 

Current loans receivable and trade and other payables carried at amortised cost, included in the table, represent balances mainly settling in a short timeframe, and accordingly, the fair value of these assets and liabilities is considered to be materially equal to their carrying value after taking into account any impairment.

 

Fair value hierarchy

The following asset types are carried at fair value after initial recognition.

 

The Group uses the following hierarchy for determining and disclosing the fair value of financial assets and liabilities by valuation technique:

·           Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

·           Level 2: other techniques where all inputs, which have a significant effect on the recorded fair value, are observable, either directly or indirectly; and

·           Level 3: techniques where inputs which have a significant effect on the recorded fair value that are not based on observable market data. These are predominantly investments in property and private equity funds and valuations are derived by the relevant fund manager teams based on a variety of valuation techniques.

 



As at 30 June 2015

Unaudited

Level 1

Level 2

Level 3



£m

£m

£m

£m

Financial assets at fair value through profit or loss


123.7

110.0

13.7

Available-for-sale financial assets


62.0

24.7

37.3

Total financial instruments measured at fair value


185.7

134.7

13.7

37.3

 


As at 30 June 2014

Unaudited

Level 1

Level 2

Level 3


£m

£m

£m

£m

Financial assets at fair value through profit or loss

32.2

25.8

6.4

- 

Available-for-sale financial assets

89.9

27.6

62.3

Total financial instruments measured at fair value

122.1

53.4

6.4

62.3

 


As at 31 December 2014

Audited

Level 1

Level 2

Level 3


£m

£m

£m

£m

Financial assets at fair value through profit or loss

107.6

98.7

8.9

- 

Available-for-sale financial assets

75.8

28.0

47.8

Total financial instruments measured at fair value

183.4

126.7

8.9

47.8

 

At 30 June 2015, the Group held £77.7m (1H14: £38.0m; FY14: £69.9m) of Level 3 financial liabilities at fair value through profit or loss. These represent non-controlling interests in consolidated structured entities, contingent deferred consideration and provisions. With respect to non-controlling interests in consolidated structured entities, the fair value movements are primarily driven by fair value changes in investments held in these funds. Sensitivity analysis around likely possible changes to the inputs into the valuations of these liabilities has been performed and resulted in no significant difference to the fair values recognised that, if adjusted for, would impact the profit attributable to the owners of the parent.

 

During the period, there were no transfers in or out of Level 1, Level 2 and Level 3 (1H14: £nil; FY14: £nil).

 

The following is a reconciliation of the movements in the Group's financial assets classified as Level 3 during the period:


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


£m

£m

£m

Fair value at 1 January

47.8

61.4

61.4

Additions

1.7

1.9

Disposals

(11.4)

(0.2)

(22.8)

Movements recognised in the Consolidated Income Statement

(1.5)

Transfer from Consolidated Statement of Comprehensive Income to Consolidated Income Statement

(9.1)

(0.6)

(0.6)

Fair value movements recognised in the Consolidated Statement of Comprehensive Income

11.5

7.9


37.3

62.3

47.8

 

Level 3 investments at 30 June 2015 mainly comprise private equity investments. Private equity investments are valued using a combination of the enterprise value/EBITDA multiple method and the discounted cash flow method. Significant unobservable inputs include long-term revenue growth rates and pre-tax operating margin, taking into account management's experience and knowledge of market conditions of the specific industries. As the fair value measurement of the financial assets included in Level 3 is based on unobservable inputs, a change in one or more underlying assumptions could result in a significant change in fair value. However, due to the numerous different factors affecting the assets, the impact cannot be quantified.

 

The fair value of the Level 3 financial assets are based on 31 March 2015 valuations. The events between valuation date and reporting date have been considered with respect to the 31 March 2015 valuations and no adjustments were considered necessary.

 

14.    Contingent liabilities

 

The 2014 Annual Report and Accounts presented full details of contingent liabilities that the Group was exposed to as at 31 December 2014. During the six months to 30 June 2015, the Group has become party to the following additional contingent liability:

 

·    Under the Share Sale Agreement dated 27 April 2015 relating to the acquisition by entities controlled by TIAA-CREF of Henderson Global Investors (Holdings) Limited's remaining 40% shareholding in TIAA Henderson Real Estate Limited, the Group gave certain warranties relating to itself and its shareholding in TIAA Henderson Real Estate Limited.  These warranties are subject to certain exclusions and limitations (including a financial cap) and will expire on 1 June 2017.

 

As at the approval date of the Interim Condensed Consolidated Financial Statements, the Group neither foresees nor has it been notified of any claims under outstanding warranties and indemnities from the abovementioned or those set out in the 2014 Annual Report and Accounts.

 

15.    Movement in controlled entities

 

Acquisitions

Proposed acquisition of Perennial Fixed Interest Partners Pty Ltd and Perennial Growth Management Pty Ltd

On 2 June 2015, the Group announced that it has agreed to acquire Perennial Fixed Interest and Perennial Growth Management. The sellers will receive upfront consideration and a deferred component dependent on future business performance, payable after two and four years. The transactions are expected to complete in 4Q15 subject to certain conditions being satisfied by both parties.

 

Acquisition of 90 West Asset Management Limited

On 29 May 2015, the Group acquired the remaining 58.6% of the shares of 90 West. The acquisition of 90 West will enable the Group to fully benefit from the pipeline of new business the Group and 90 West created together, this being the main driver of the goodwill recognised. 90 West was previously equity accounted for as an associate and has now been fully consolidated. The total cost of the acquisition recognised is A$12.2m (£6.1m) comprising: an upfront payment of A$4.3m (£2.2m); deferred consideration of A$2.8m (£1.4m); and the fair value of the Group's previously held 41.4% interest at A$5.1m (£2.5m). Contingent payments linked to the continuing employment of the sellers will be recognised through the Consolidated Income Statement over the period of the earn-out as an acquisition related charge. The consideration of A$12.2m (£6.1m) less net assets acquired of A$0.7m (£0.3m) has been recognised provisionally as goodwill.

 

Disposal

On 27 January 2015, the Group disposed of its controlling interests in the following entity:

 

·    Anglo-Sino Henderson Investment Consultancy (Beijing) Co Ltd.

 

16.    Related parties

 

Disclosures relating to associates and joint ventures and Group pension schemes are covered in notes 11 and 12 respectively.

 

Compensation of key management personnel (including Directors)

The remuneration of all Executive and Non-Executive Directors, other members of the Executive Committee, certain other members of senior management and heads of control functions, representing key management personnel, is disclosed below:


6 months ended

30 June 2015

Unaudited

6 months ended

30 June 2014

Unaudited

12 months ended

31 December 2014

Audited


£m

£m

£m

Short-term employee benefits

2.5

2.3

15.0

Post-employment benefits

0.2

0.2

0.4

Share-based payments

7.4

8.0

5.9


10.1

10.5

21.3

 

17.    Events after the reporting date

 

The Board has not, as at the approval date of the Interim Condensed Consolidated Financial Statements, received any information concerning significant conditions in existence at the reporting date, which has not been reflected in the Interim Condensed Consolidated Financial Statements as presented. However, the Board has given due regard to the events described below which occurred after the reporting date.

 

On 29 July 2015, an interim dividend of 3.10p per share was declared by the Board payable on 18 September 2015 to shareholders on the register at 28 August 2015.

 

On 29 July 2015, the Board approved a share buyback programme, with shares to the value of £25.0m to be purchased before 31 December 2015.

 

Glossary

 

ASX

Australian Securities Exchange

 

AUM

Assets under management

 

Board

The board of directors of Henderson Group plc

 

bps

Basis points

 

Company

Henderson Group plc

 

compensation ratio

Employee compensation and benefits from continuing operations, divided by net fee income from continuing operations

 

continuing operations

Continuing operations represent the Group's ongoing business operations excluding the property interests transferred as a result of transactions completed on 1 April 2014

 

Directors

The directors of Henderson Group plc

 

EBITDA

Earnings before interest, tax, depreciation and amortisation

 

EPS

Earnings per share

 

FX

Foreign exchange

 

GAAP

Generally accepted accounting principles

 

Geneva

Geneva Capital Management LLC

 

Group or Henderson

Henderson Group plc and its controlled entities carrying out core investment management activities

 

IAS

International Accounting Standard

 

LSE

London Stock Exchange

 

management fee margin

Management fees divided by average assets under management

 

net margin

Underlying profit from continuing operations divided by average assets under management

 

New Star

New Star Asset Management Group PLC and its controlled entities

 

OEIC

Open-ended investment company

 

operating margin

Net fee income from continuing operations less total operating expenses from continuing operations, divided by net fee income from continuing operations

 

Perennial Fixed Interest

Perennial Fixed Interest Partners Pty Ltd

 

Perennial Growth Management

Perennial Growth Management Pty Ltd

 

SICAV

Société d'investissement à capital variable (collective investment scheme)

 

TH Real Estate

TIAA Henderson Real Estate Limited, a property investment management joint venture business between TIAA-CREF and Henderson

 

total fee margin

Net fee income from continuing operations divided by average assets under management

 

underlying profit

Recurring profit before acquisition related and non-recurring items

 

90 West

90 West Asset Management Limited

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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