Henderson Group Plc Annual Report 2014
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Annual Report 2014 Report Annual Henderson Group plc Group Henderson ANNUAL REPORT 2014 Contents Performance highlights Strategic report Investment outperformance Net new money growth1 2 Henderson at a glance 4 Chairman’s statement 11 7 Chief Executive’s review 83% 11% 12 Business model of funds over three years 6 83 14 Our strategy 82 16 Guiding principles 69 66 18 Key performance indicators 62 -6 20 Financial review -8 24 Distribution and client service 28 Our core capabilities -13 34 Our people 36 Risk management 2010 2011 2012 2013 2014 20102011 2011 2012 2013 2014 40 Corporate responsibility 1. As a percentage of opening AUM from continuing operations. Governance Assets under management Diluted earnings per share2 44 Corporate governance 48 Board of Directors 50 Committee reports £ p 14.7 14.7 bn 81.2 57 Directors’ report 81.2 75.2 13.0 60 Directors’ remuneration report 65.6 64.3 10.9 61.6 62 Directors’ remuneration policy 10.3 74 Annual report on remuneration 87 Directors’ responsibilities 7.3 statement 88 Independent auditors’ report Financial statements 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 97 Group and Company 2. Calculation based on continuing underlying profit after tax attributable to equity holders financial statements of the parent (see note 2 on page 19). Other information Net cash Dividend per share 146 Glossary 148 Shareholder information £ 77.7 150 Summary of movements in AUM 77.7m 9.00p 151 Five year financial summary 9.00 56.3 8.00 7.15 7.00 17.9 6.50 2012 2013 2014 -20.8 -28.0 2010 2011 2010 2011 2012 2013 2014 In this report Pages 1 to 43 of the 2014 Annual Report constitute the Strategic report This symbol will direct you to more which has been signed on behalf of the Board: information within this report. This report and additional information about the Group can be found online at henderson.com/IR Richard Gillingwater Andrew Formica Chairman Chief Executive Strategic report CLIENT FOCUS Alexander Henderson, our first client When Henderson was founded in 1934, the company was not named after a fund manager, an executive or an office location – it was named after its first client. 80 years of continuous service have nurtured a trusting relationship with clients – their needs are at the heart of everything we do, built into our DNA. The Group continues to serve the Henderson family to this day. Now an independent active asset manager and with investment expertise across asset classes, Henderson offers clients access to all major markets around the globe, with core capabilities in European Equities, Global Equities, Global Fixed Income, Multi-Asset and Alternatives. Throughout this Annual Report, we pay tribute to our current clients, just as we commemorate our founding client and namesake. Henderson Group Annual Report 2014 1 Henderson at a glance Our mission To be a trusted global asset manager, focused on delivering excellent performance and service to our clients. Our philosophy Active fund management, with our clients’ needs at the heart of everything we do. 2014 highlights • Assets under management of £81.2bn, up 8% • 11% net new money growth1 • Strong investment performance with 83% of funds outperforming over three years2 • Investment into our investment capabilities, distribution reach and infrastructure • Launch of TIAA Henderson Real Estate, of which we own a 40% share • Acquisition of Geneva Capital Management North America UK Europe3 GROWTH AND GROWTH GLOBALISATION • Established Retail distribution network • Institutional potential strengthened with • Most established market • Strong Retail presence acquisition of Geneva • Strong Retail and • Opportunities to Capital Management Institutional client base selectively expand our • 22 investment professionals • 177 investment professionals Institutional presence • 40 distribution experts • 152 distribution experts • 31 distribution experts Our offi ces Note: All data as at 31 December 2014, unless stated otherwise. 1. Net fl ows as a percentage of opening AUM from continuing operations. 2. Percentage of funds, on an asset-weighted basis, that are outperforming relative to benchmark, percentile ranking or absolute where appropriate and includes Henderson UK Property OEIC. 3. Includes Middle East and Africa. 2 Henderson Group Annual Report 2014 Strategic report AUM £ Our clients are 35.2 81.2 bn fi nancial professionals, AUM by client private investors and channel (£bn) institutional investors 46.0 Total Institutional Total Retail 25.8 • Restructured in 2014 • 24 investment 35.2 AUM by professionals Asia We have four key product (£bn) • 24 distribution experts product ranges – UK OEICs and Unit Trusts, SICAVs, US Mutuals and Institutional 14.2 6.0 UK OEICs and Unit Trusts US Mutuals SICAVs Institutional 19 19 Australia 6 We have fi ve core AUM by core investment capabilities – capability (%) European Equities, Global Equities, Global 32 Fixed Income, Multi-Asset 24 and Alternatives • Fledgling business with strong brand and heritage European Equities Multi-Asset • 3 investment professionals Global Equities Alternatives • 5 distribution experts Global Fixed Income Henderson Group Annual Report 2014 3 Chairman’s statement Henderson’s strategic philosophy of being client-led is deeply ingrained in our corporate history. Richard Gillingwater Chairman Dear Shareholder During the last year, some of the Board spent time visiting our UK retail transfer agent, International It is a great privilege to chair Henderson in the Financial Data Services, to review how a subset of our company’s 80th year. This anniversary has given me the clients buy and sell into our funds and how their queries opportunity to look back over the company’s history, as and concerns are dealt with. I, personally, am keen well as forward to its future. A series of familiar themes to meet a wide cross section of clients. I have met emerge. First, the boldness with which our founding with all the Chairs of our Investment Trusts and client invested. Alexander Henderson made his fortune have received valuable feedback. In addition, Angela through railway investments as far afield as South Seymour-Jackson’s arrival on the Board brings a new America, Spain and East Africa, and was one of the client-centric perspective, based on her significant early pioneers of global investing. It strikes me that he experience in retail financial services. The Board would have approved of the high conviction, active, also recognised the value of its regular discussions global approach which unites our fund managers today. around clients. Second, the tradition of innovation which began with Alexander Henderson and continued with Henderson During 2014, a comprehensive external evaluation of the Administration, founded to manage his estate. In the Board was carried out by Independent Board Evaluation. 1950s and 60s, Henderson Administration switched This found that the Board was effective in its operation early into equities from bonds to capture the benefits and had improved from the previous evaluation. of growth, and built a reputation for well managed investment trusts. Third, longstanding relationships, built 2014 viewed from the Boardroom on trust. Alexander Henderson’s stockbroking business When the next instalment of Henderson’s corporate was merged into Cazenove Ackroyd in 1932, and history is written, I would like to think that 2014 will JP Morgan Cazenove remains one of our corporate be remembered as a year of disciplined investment in advisers to this day. The words written by the third growth, for the benefit of our clients. We took decisions Lord Faringdon to introduce his book commemorating to continue to build our investment management the company’s 50th anniversary ring as true now as capabilities, to support geographic expansion in North they did in 1984: “To maintain our standards, we will America and Australia, and to continue to invest in continue to depend upon our own people, on the host global platforms. Most of our investments focused on of international connections we are lucky enough to organic growth, but these initiatives were supplemented have and, above all, on satisfied clients.” in October by the acquisition of Geneva Capital Management, to accelerate our progress in North A client-focused Board America. The launch of TIAA Henderson Real Estate Henderson’s strategic philosophy of being client-led in April marked the implementation of a significant is deeply ingrained in our corporate history. It is of vital strategic project, to give clients invested in Property importance that we respect the fact that we are trusted exposure to a larger scale business, with access to with our clients’ money, on which their future wellbeing capital to accelerate future growth. This, combined may depend. I see it as a key part of the Board’s with the roll off of our Henderson Private Equity role to set a clear tone from the top, and to reinforce business, demonstrates Henderson’s strategic a client-centric attitude across the firm. Customer focus on the liquid end of asset management. interests and treating customers fairly are topics discussed regularly and in depth by the Board, and the quality of information made available to us has increased significantly. 4 Henderson Group Annual Report 2014 Strategic report CLIENT FOCUS Henderson has helped shape the delivery of our investment thoughts to our group – they have been a pioneer in that regard. Ben Gutteridge — Brewin Dolphin Henderson Group Annual Report 2014 5 Chairman’s statement continued Our fi nancial results during the year showed the Conclusion benefi ts of long-term strategic decision making, In our 80th anniversary year, Henderson has continued including the acquisitions of New Star Asset its long tradition of investing in people, capabilities Management in 2009 and Gartmore in 2011. and relationships, to deliver excellent performance Henderson delivered net client infl ows of £7.1bn, and service to our clients. Our growth and globalisation signifi cantly outperforming our peer group in our ambitions are on track, and I am confi dent in our ability major markets.