Janus Henderson Group plc Reports Second Quarter 2020 Diluted EPS of US$0.55, or US$0.67 on an Adjusted Basis

• Solid long-term investment performance, with 62% and 68% of assets under management (‘AUM’) outperforming relevant benchmarks on a three- and five-year basis, respectively, as at 30 June 2020
• AUM of US$336.7 billion was up 14% compared to the prior quarter, reflecting an improvement in global markets partially offset by net outflows of US$(8.2) billion
• Completed US$22 million of share buybacks during the second quarter
• Board declared quarterly dividend of US$0.36 per share

LONDON–(BUSINESS WIRE)–Janus Henderson Group plc (NYSE/ASX: JHG; ‘JHG’, ‘the Group’) published its second quarter 2020 results for the period ended 30 June 2020.

Second quarter 2020 operating income was US$106.7 million compared to US$(332.4) million in the first quarter 2020 and US$118.5 million in the second quarter 2019. Adjusted operating income, adjusted for one-time, acquisition and transaction related costs, of US$138.4 million compared to US$164.5 million in the first quarter 2020 and US$152.0 million in the second quarter 2019.

Second quarter 2020 diluted earnings per share was US$0.55 compared to US$(1.35) in the first quarter 2020 and US$0.56 in the second quarter 2019. Adjusted diluted earnings per share of US$0.67 increased 12% compared to US$0.60 in the first quarter 2020 and increased 10% versus US$0.61 in the second quarter 2019.

Dick Weil, Chief Executive Officer of Janus Henderson Group plc, stated:

“In the face of the extraordinary challenges resulting from the global COVID-19 pandemic, we have delivered strong financial performance in the second quarter, and our long-term investment performance remains solid.

“Net flows into our Intermediary channel rebounded strongly during the quarter with US$900 million of positive net flows, a 3% annualised organic growth rate; however, the strong progress in this business was offset by outflows across our Institutional channel. Despite these Institutional outflows, we continue to have a strong global pipeline across a diverse set of clients and strategies, and we remain confident in our ability to convert those opportunities into net flows in the quarters to come.

“Looking forward, we are convinced we are on the right path to organic growth and increasing profitability with our strategy of Simple Excellence, and we continue to have a strong focus on costs balanced against appropriate investments to achieve these goals. By continuing to execute on these efforts, we are confident we will be able to deliver for our clients, our owners and our employees, as well as continuing to make positive contributions to the communities in which we operate.”

RESULTS FOR ANNOUNCEMENT TO THE MARKET

These results for announcement to the market include the interim information required to be provided to the Australian Securities Exchange (ASX) under Listing Rule 4.2A and Appendix 4D.

SUMMARY OF FINANCIAL RESULTS (unaudited) (in US$ millions, except per share data or as noted)

The Group presents its financial results in US$ and in accordance with accounting principles generally accepted in the United States of America (‘US GAAP’ or ‘GAAP’). However, JHG management evaluates the profitability of the Group and its ongoing operations using additional non-GAAP financial measures. Management uses these performance measures to evaluate the business, and adjusted values are consistent with internal management reporting. See ‘Reconciliation of non-GAAP financial information’ below for additional information.

		Six months ended
		30 Jun			30 Jun
		2020			2019			% change
GAAP basis:
Revenue		1,072.9			1,055.2			2		%
Operating expenses		1,298.6			812.2			60		%
Operating income		(225.7	)		243.0			(193	)	%
Operating margin		(21.0	)	%	23.0		%	(44.0	)	ppt
Net income attributable to JHG		(144.1	)		203.5			(171	)	%
Diluted earnings per share		(0.79	)		1.03			(177	)	%
Adjusted basis:
Revenue		856.0			851.8			0		%
Operating expenses		553.1			556.4			(1	)	%
Operating income		302.9			295.4			3		%
Operating margin		35.4		%	34.7		%	0.7		ppt
Net income attributable to JHG		239.3			229.7			4		%
Diluted earnings per share		1.28			1.17			10		%
		Three months ended
		30 Jun			31 Mar			30 Jun
		2020			2020			2019
GAAP basis:
Revenue		518.0			554.9			535.9
Operating expenses		411.3			887.3			417.4
Operating income (loss)		106.7			(332.4	)		118.5
Operating margin		20.6		%	(59.9	)	%	22.1		%
Net income (loss) attributable to JHG		102.9			(247.0	)		109.4
Diluted earnings (loss) per share		0.55			(1.35	)		0.56
Adjusted basis:
Revenue		413.3			442.7			434.4
Operating expenses		274.9			278.2			282.4
Operating income		138.4			164.5			152.0
Operating margin		33.5		%	37.2		%	35.0		%
Net income attributable to JHG		126.6			112.7			119.7
Diluted earnings per share		0.67			0.60			0.61

First half 2020 adjusted revenue of US$856.0 million increased slightly from the first half 2019 result of US$851.8 million, as lower management fees in the first half 2020 were offset by higher performance and shareowner servicing fees. First half 2020 adjusted operating income of US$302.9 million improved from US$295.4 million in the first half 2019, primarily due to the factors impacting adjusted revenue.

Second quarter 2020 adjusted revenue of US$413.3 million decreased from the first quarter 2020 result of US$442.7 million due to lower average AUM, partially offset by higher performance fees and net management fee margin. Second quarter 2020 adjusted net income attributable to JHG of US$126.6 million increased from US$112.7 million in the first quarter 2020, primarily due to an improvement in investment gains (losses), net from the second quarter 2019, driven by fair value adjustments in relation to seeded investment products and derivative instruments.

DIVIDEND AND SHARE BUYBACK

On 28 July 2020, the Board declared a second quarter dividend in respect of the three months ended 30 June 2020 of US$0.36 per share. Shareholders on the register on the record date of 10 August 2020 will be paid the dividend on 26 August 2020. Janus Henderson does not offer a dividend reinvestment plan.

As part of the US$200 million on-market buyback programme approved by the Board in February 2020, JHG purchased approximately 1.1 million of its ordinary shares on the NYSE and its CHESS Depositary Interests (CDIs) on the ASX in the second quarter, for a total outlay of US$22.0 million.

Net tangible assets per share
US$		30 Jun 2020		30 Jun 2019
Net tangible assets / (liabilities) per ordinary share		2.61		1.32

Net tangible assets are defined by the ASX as being total assets less intangible assets less total liabilities ranking ahead of, or equally with, claims of ordinary shares.

AUM AND FLOWS (in US$ billions)

FX reflects movement in AUM resulting from changes in foreign currency rates as non-US$ denominated AUM is translated into US$. Redemptions include impact of client switches.

Total Group comparative AUM and flows
		Three months ended
		30 Jun			31 Mar			30 Jun
		2020			2020			2019
Opening AUM		294.4			374.8			357.3
Sales		17.9			21.4			15.6
Redemptions		(26.1	)		(33.6	)		(25.4	)
Net sales / (redemptions)		(8.2	)		(12.2	)		(9.8	)
Market / FX		50.5			(64.0	)		12.3
Acquisitions / (disposals)		—			(4.2	)		—
Closing AUM		336.7			294.4			359.8

Quarterly AUM and flows by capability
					Fixed			Quantitative
		Equities			Income			Equities			Multi-Asset			Alternatives			Total
AUM 30 Jun 2019		191.3			73.5			47.6			35.1			12.3			359.8
Sales		6.0			6.1			0.3			2.4			0.5			15.3
Redemptions		(8.0	)		(4.7	)		(2.7	)		(2.0	)		(1.4	)		(18.8	)
Net sales / (redemptions)		(2.0	)		1.4			(2.4	)		0.4			(0.9	)		(3.5	)
Market / FX		(1.1	)		0.1			0.4			0.8			(0.4	)		(0.2	)
AUM 30 Sep 2019		188.2			75.0			45.6			36.3			11.0			356.1
Sales		9.4			5.6			0.3			2.7			0.7			18.7
Redemptions		(10.7	)		(8.4	)		(3.6	)		(1.3	)		(1.4	)		(25.4	)
Net sales / (redemptions)		(1.3	)		(2.8	)		(3.3	)		1.4			(0.7	)		(6.7	)
Market / FX		17.1			2.6			2.9			2.1			0.7			25.4
AUM 31 Dec 2019		204.0			74.8			45.2			39.8			11.0			374.8
Sales		8.8			8.0			0.4			3.5			0.7			21.4
Redemptions		(15.7	)		(11.4	)		(2.4	)		(2.5	)		(1.6	)		(33.6	)
Net sales / (redemptions)		(6.9	)		(3.4	)		(2.0	)		1.0			(0.9	)		(12.2	)
Market / FX		(43.2	)		(6.1	)		(8.6	)		(5.3	)		(0.8	)		(64.0	)
Acquisitions / (disposals)		(4.0	)		—			—			(0.2	)		—			(4.2	)
AUM 31 Mar 2020		149.9			65.3			34.6			35.3			9.3			294.4
Sales		7.9			6.3			0.4			2.5			0.8			17.9
Redemptions		(12.1	)		(7.0	)		(4.3	)		(1.8	)		(0.9	)		(26.1	)
Net sales / (redemptions)		(4.2	)		(0.7	)		(3.9	)		0.7			(0.1	)		(8.2	)
Market / FX		33.5			5.6			6.8			4.3			0.3			50.5
Reclassification1		(0.1	)		—			—			—			0.1			—
AUM 30 Jun 2020		179.1			70.2			37.5			40.3			9.6			336.7

______________________

¹ Reflects reclassification of an existing fund from Equities to Alternatives.

Average AUM
		Three months ended
		30 Jun		31 Mar		30 Jun
		2020		2020		2019
Equities		168.7		189.3		190.5
Fixed Income		68.7		71.6		72.0
Quantitative Equities		38.0		42.0		48.4
Multi-Asset		38.3		39.4		34.2
Alternatives		9.3		10.4		12.6
Total		323.0		352.7		357.7

INVESTMENT PERFORMANCE
% of AUM outperforming benchmark (at 30 June 2020)
Capability		1 year		3 years		5 years
Equities		52	%	54	%	64	%
Fixed Income		83	%	87	%	96	%
Quantitative Equities		23	%	22	%	9	%
Multi-Asset		93	%	91	%	94	%
Alternatives		96	%	96	%	99	%
Total		60	%	62	%	68	%

Outperformance is measured based on composite performance gross of fees vs primary benchmark, except where a strategy has no benchmark index or corresponding composite in which case the most relevant metric is used: (1) composite gross of fees vs zero for absolute return strategies, (2) fund net of fees vs primary index or (3) fund net of fees vs Morningstar peer group average or median. Non-discretionary and separately managed account assets are included with a corresponding composite where applicable.

Cash management vehicles, ETFs, Managed CDOs, Private Equity funds and custom non-discretionary accounts with no corresponding composite are excluded from the analysis. Excluded assets represent 5% of AUM as at 30 June 2020. Capabilities defined by Janus Henderson.

% of mutual fund AUM in top 2 Morningstar quartiles (at 30 June 2020)
Capability		1 year		3 years		5 years
Equities		59	%	56	%	76	%
Fixed Income		77	%	86	%	74	%
Quantitative Equities		3	%	60	%	8	%
Multi-Asset		90	%	92	%	92	%
Alternatives		98	%	100	%	96	%
Total		67	%	67	%	78	%

Includes Janus Investment Fund, Janus Aspen Series and Clayton Street Trust (US Trusts), Janus Henderson Capital Funds (Dublin based), Dublin and UK OEIC and Investment Trusts, Luxembourg SICAVs and Australian Managed Investment Schemes. The top two Morningstar quartiles represent funds in the top half of their category based on total return. On an asset-weighted basis, 74%, 82%, 82%, 86% and 86% of total mutual fund AUM were in the top 2 Morningstar quartiles for the 10-year periods ended 30 June 2019, 30 September 2019, 31 December 2019, 31 March 2020 and 30 June 2020, respectively. For the one-, three-, five- and 10-year periods ending 30 June 2020, 59%, 61%, 62% and 65% of the 200, 192, 183 and 146 total mutual funds, respectively, were in the top 2 Morningstar quartiles.

Analysis based on ‘primary’ share class (Class I Shares, Institutional Shares or share class with longest history for US Trusts; Class A Shares or share class with longest history for Dublin based; primary share class as defined by Morningstar for other funds). Performance may vary by share class. Rankings may be based, in part, on the performance of a predecessor fund or share class and are calculated by Morningstar using a methodology that differs from that used by Janus Henderson. Methodology differences may have a material effect on the return and therefore the ranking. When an expense waiver is in effect, it may have a material effect on the total return, and therefore the ranking for the period.

ETFs and funds not ranked by Morningstar are excluded from the analysis. Capabilities defined by Janus Henderson. © 2020 Morningstar, Inc. All Rights Reserved.

THIRD QUARTER 2020 RESULTS

Janus Henderson intends to publish its third quarter 2020 results on 29 October 2020.

SECOND QUARTER 2020 RESULTS BRIEFING INFORMATION

Chief Executive Officer Dick Weil and Chief Financial Officer Roger Thompson will present these results on 29 July 2020 on a conference call and webcast to be held at 8am EDT, 1pm BST, 10pm AEST.

Those wishing to participate should call:
			United Kingdom			0800 358 6377 (toll free)
			US & Canada			800 239 9838 (toll free)
			Australia			1 800 573 793 (toll free)
			All other countries			+1 323 794 2551 (this is not a toll free number)
			Conference ID			3404786

Access to the webcast and accompanying slides will be available via the investor relations section of Janus Henderson’s website (ir.janushenderson.com).

About Janus Henderson

Janus Henderson Group is a leading global active asset manager dedicated to helping investors achieve long-term financial goals through a broad range of investment solutions, including equities, fixed income, quantitative equities, multi-asset and alternative asset class strategies.

At 30 June 2020, Janus Henderson had approximately US$337 billion in assets under management, more than 2,000 employees, and offices in 27 cities worldwide. Headquartered in London, the company is listed on the New York Stock Exchange (NYSE) and the Australian Securities Exchange (ASX).

FINANCIAL DISCLOSURES
Condensed consolidated statements of comprehensive income (unaudited)
		Three months ended
		30 Jun			31 Mar			30 Jun
(in US$ millions, except per share data or as noted)		2020			2020			2019
Revenue:
Management fees		407.7			439.6			446.4
Performance fees		17.2			14.6			3.5
Shareowner servicing fees		47.3			50.3			38.3
Other revenue		45.8			50.4			47.7
Total revenue		518.0			554.9			535.9
Operating expenses:
Employee compensation and benefits		145.8			155.6			146.5
Long-term incentive plans		49.1			33.6			49.2
Distribution expenses		104.7			112.2			101.5
Investment administration		12.6			11.7			11.1
Marketing		3.7			6.7			8.1
General, administrative and occupancy		58.0			65.2			67.7
Impairment of goodwill and intangible assets		26.4			487.3			18.0
Depreciation and amortisation		11.0			15.0			15.3
Total operating expenses		411.3			887.3			417.4
Operating income (loss)		106.7			(332.4	)		118.5
Interest expense		(3.2	)		(3.3	)		(4.2	)
Investment gains (losses), net		50.3			(50.5	)		4.8
Other non-operating income, net		8.6			32.2			28.5
Income (loss) before taxes		162.4			(354.0	)		147.6
Income tax benefit (provision)		(30.1	)		68.8			(35.3	)
Net income (loss)		132.3			(285.2	)		112.3
Net loss (income) attributable to noncontrolling interests		(29.4	)		38.2			(2.9	)
Net income (loss) attributable to JHG		102.9			(247.0	)		109.4
Less: allocation of earnings to participating stock-based awards		(3.0	)		—			(3.2	)
Net income (loss) attributable to JHG common shareholders		99.9			(247.0	)		106.2
Basic weighted-average shares outstanding (in millions)		181.8			182.4			190.2
Diluted weighted-average shares outstanding (in millions)		182.1			182.4			190.7
Diluted earnings (loss) per share (in US$)		0.55			(1.35	)		0.56

Reconciliation of non-GAAP financial information

In addition to financial results reported in accordance with GAAP, we compute certain financial measures using non-GAAP components, as defined by the SEC. These measures are not in accordance with, or a substitute for, GAAP, and our financial measures may be different from non-GAAP financial measures used by other companies. We have provided a reconciliation of our non-GAAP components to the most directly comparable GAAP components. The following are reconciliations of US GAAP revenue, operating expenses, operating income (loss), net income (loss) attributable to JHG and diluted earnings (loss) per share to adjusted revenue, adjusted operating expenses, adjusted operating income, adjusted net income attributable to JHG and adjusted diluted earnings per share.

		Three months ended
		30 Jun			31 Mar			30 Jun
(in US$ millions, except per share data or as noted)		2020			2020			2019
Reconciliation of revenue to adjusted revenue
Revenue		518.0			554.9			535.9
Management fees1		(40.2	)		(44.1	)		(46.4	)
Shareowner servicing fees1		(39.0	)		(41.1	)		(29.1	)
Other revenue1		(25.5	)		(27.0	)		(26.0	)
Adjusted revenue		413.3			442.7			434.4
Reconciliation of operating expenses to adjusted operating expenses
Operating expenses		411.3			887.3			417.4
Employee compensation and benefits2		(0.5	)		(1.4	)		(3.1	)
Long-term incentive plans2		0.2			0.1			0.2
Distribution expenses1		(104.7	)		(112.2	)		(101.5	)
General, administration and occupancy2		(2.8	)		(1.9	)		(5.3	)
Impairment of goodwill and intangible assets3		(26.4	)		(487.3	)		(18.0	)
Depreciation and amortisation3		(2.2	)		(6.4	)		(7.3	)
Adjusted operating expenses		274.9			278.2			282.4
Adjusted operating income		138.4			164.5			152.0
Operating margin		20.6		%	(59.9	)	%	22.1		%
Adjusted operating margin		33.5		%	37.2		%	35.0		%
Reconciliation of net income (loss) attributable to JHG to adjusted net income attributable to JHG
Net income (loss) attributable to JHG		102.9			(247.0	)		109.4
Employee compensation and benefits2		0.5			1.4			3.1
Long-term incentive plans2		(0.2	)		(0.1	)		(0.2	)
General, administration and occupancy2		2.8			1.9			5.3
Impairment of goodwill and intangible assets3		26.4			487.3			18.0
Depreciation and amortisation3		2.2			6.4			7.3
Interest expense4		—			0.1			1.0
Investment gains (losses), net		—			—			1.0
Other non-operating income (expenses), net4		(0.6	)		(25.9	)		(22.6	)
Income tax benefit (provision)5		(7.4	)		(111.4	)		(2.6	)
Adjusted net income attributable to JHG		126.6			112.7			119.7
Less: allocation of earnings to participating stock-based awards		(3.7	)		(3.2	)		(3.5	)
Adjusted net income attributable to JHG common shareholders		122.9			109.5			116.2
Weighted-average diluted common shares outstanding – diluted (two class) (in millions)		182.1			182.4			190.7
Diluted earnings (loss) per share (two class) (in US$)		0.55			(1.35	)		0.56
Adjusted diluted earnings per share (two class) (in US$)		0.67			0.60			0.61

1		JHG contracts with third-party intermediaries to distribute and service certain of its investment products. Fees for distribution and servicing related activities are either provided for separately in an investment product’s prospectus or are part of the management fee. Under both arrangements, the fees are collected by JHG and passed through to third-party intermediaries who are responsible for performing the applicable services. The majority of distribution and servicing fees collected by JHG are passed through to third-party intermediaries. JHG management believes that the deduction of distribution and service fees from revenue in the computation of adjusted revenue reflects the pass-through nature of these revenues. In certain arrangements, JHG performs the distribution and servicing activities and retains the applicable fees. Revenues for distribution and servicing activities performed by JHG are not deducted from GAAP revenue.
2		Adjustments primarily represent integration costs in relation to the Merger, including severance costs, legal costs and consulting fees. JHG management believes these costs are not representative of the ongoing operations of the Group.
3		Investment management contracts have been identified as a separately identifiable intangible asset arising on the acquisition of subsidiaries and businesses. Such contracts are recognised at the net present value of the expected future cash flows arising from the contracts at the date of acquisition. For segregated mandate contracts, the intangible asset is amortised on a straight-line basis over the expected life of the contracts. Adjustments also include impairment charges of our goodwill and certain mutual fund investment management agreements and client relationships. JHG management believes these non-cash and acquisition-related costs are not representative of the ongoing operations of the Group.
4		Adjustments for the three months ended 31 March 2020 primarily relate to the gain recognised on the disposal of Geneva during the quarter. Other adjustments include contingent consideration adjustments associated with prior acquisitions and increased debt expense as a consequence of the fair value uplift on debt due to acquisition accounting. JHG management believes these costs are not representative of the ongoing operations of the Group.
5		The tax impact of the adjustments is calculated based on the applicable US or foreign statutory tax rate as it relates to each adjustment. Certain adjustments are either not taxable or not tax-deductible.

Condensed consolidated balance sheets (unaudited)
		30 Jun		31 Dec
(in US$ millions)		2020		2019
Assets:
Cash and cash equivalents		836.6		733.9
Investment securities		219.1		253.5
Property, equipment and software, net		82.5		84.7
Intangible assets and goodwill, net		3,949.0		4,592.9
Assets of consolidated variable interest entities		712.4		1,010.9
Other assets		925.6		945.8
Total assets		6,725.2		7,621.7
Liabilities, redeemable noncontrolling interests and equity:
Long-term debt		314.8		316.2
Deferred tax liabilities, net		600.5		729.1
Liabilities of consolidated variable interest entities		81.0		57.1
Other liabilities		831.3		935.2
Redeemable noncontrolling interests		468.7		677.9
Total equity		4,428.9		4,906.2
Total liabilities, redeemable noncontrolling interests and equity		6,725.2		7,621.7

Condensed consolidated statements of cash flows (unaudited)
		Three months ended
		30 Jun			31 Mar			30 Jun
(in US$ millions)		2020			2020			2019
Cash provided by (used for):
Operating activities		204.6			37.9			117.7
Investing activities		(166.8	)		41.8			(39.8	)
Financing activities		37.4			(46.0	)		(77.2	)
Effect of exchange rate changes		3.0			(28.0	)		(9.6	)
Net change during period		78.2			5.7			(8.9	)

STATUTORY DISCLOSURES

Associates and joint ventures

At 30 June 2020, 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:

• LongTail Alpha LLC. Ownership 20%

Basis of preparation

In the opinion of management of Janus Henderson Group plc, the condensed consolidated financial statements contain all normal recurring adjustments necessary to fairly present the financial position, results of operations and cash flows of JHG in accordance with US GAAP. Such financial statements have been prepared in accordance with the instructions to Form 10‑Q pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The financial statements should be read in conjunction with the annual consolidated financial statements and notes presented in Janus Henderson Group’s Annual Report on Form 10‑K for the year ended 31 December 2019, on file with the SEC (Commission file no. 001‑38103). Events subsequent to the balance sheet date have been evaluated for inclusion in the financial statements through the issuance date and are included in the notes to the condensed consolidated financial statements.

Contacts

Investor enquiries:
Jim Kurtz
US Investor Relations Manager

+1 303 336 4529

jim.kurtz@janushenderson.com

Melanie Horton

Non-US Investor Relations Manager

+44 (0) 20 7818 2905

melanie.horton@janushenderson.com

Or

Investor Relations

investor.relations@janushenderson.com

Media enquiries:
Stephen Sobey

Head of Media Relations

+44 (0) 20 7818 2523

stephen.sobey@janushenderson.com

United Kingdom: FTI Consulting
Tom Blackwell

+44 (0) 20 3727 1051

tom.blackwell@FTIConsulting.com

Asia Pacific: Honner
Craig Morris

+61 2 8248 3757

craig@honner.com.au

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