Janus Henderson Group Earnings 2021-03-31
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
OR
for the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
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(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of April 26, 2021, there were
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
JANUS HENDERSON GROUP PLC
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(U.S. Dollars in Millions, Except Share Data)
March 31, | December 31, | |||||
| 2021 |
| 2020 | |||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | | $ | | ||
Investment securities |
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Fees and other receivables |
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OEIC and unit trust receivables |
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Assets of consolidated VIEs: | ||||||
Cash and cash equivalents | | | ||||
Investment securities | | | ||||
Other current assets | | | ||||
Other current assets | | | ||||
Total current assets |
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Non-current assets: | ||||||
Property, equipment and software, net |
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Intangible assets, net |
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Goodwill |
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Retirement benefit asset, net | | | ||||
Other non-current assets |
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Total assets | $ | | $ | | ||
LIABILITIES | ||||||
Current liabilities: | ||||||
Accounts payable and accrued liabilities | $ | | $ | | ||
Current portion of accrued compensation, benefits and staff costs |
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OEIC and unit trust payables | | | ||||
Liabilities of consolidated VIEs: | ||||||
Accounts payable and accrued liabilities |
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Total current liabilities |
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Non-current liabilities: | ||||||
Accrued compensation, benefits and staff costs | | | ||||
Long-term debt |
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Deferred tax liabilities, net |
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Retirement benefit obligations, net | | | ||||
Other non-current liabilities |
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Total liabilities |
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Commitments and contingencies (See Note 14) | ||||||
REDEEMABLE NONCONTROLLING INTERESTS |
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EQUITY | ||||||
Common stock, $ |
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Additional paid-in-capital | | | ||||
Treasury shares, |
| ( |
| ( | ||
Accumulated other comprehensive loss, net of tax |
| ( |
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Retained earnings | | | ||||
Total shareholders’ equity |
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Nonredeemable noncontrolling interests |
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Total equity |
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Total liabilities, redeemable noncontrolling interests and equity | $ | | $ | | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
JANUS HENDERSON GROUP PLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(U.S. Dollars in Millions, Except per Share Data)
Three months ended | ||||||
March 31, | ||||||
| 2021 |
| 2020 | |||
Revenue: | ||||||
Management fees | $ | | $ | | ||
Performance fees |
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Shareowner servicing fees |
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Other revenue | | | ||||
Total revenue |
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Operating expenses: | ||||||
Employee compensation and benefits |
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Long-term incentive plans |
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Distribution expenses | | | ||||
Investment administration | | | ||||
Marketing |
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General, administrative and occupancy |
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Impairment of goodwill and intangible assets | | | ||||
Depreciation and amortization |
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Total operating expenses |
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Operating income (loss) |
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| ( | ||
Interest expense |
| ( |
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Investment gains (losses), net |
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| ( | ||
Other non-operating income (expenses), net | ( | | ||||
Income (loss) before taxes |
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| ( | ||
Income tax benefit (provision) |
| ( |
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Net income (loss) |
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| ( | ||
Net loss attributable to noncontrolling interests |
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Net income (loss) attributable to JHG | $ | | $ | ( | ||
Earnings (loss) per share attributable to JHG common shareholders: | ||||||
Basic | $ | | $ | ( | ||
Diluted | $ | | $ | ( | ||
Other comprehensive income (loss), net of tax: | ||||||
Foreign currency translation gains (losses) | $ | | $ | ( | ||
Actuarial gains |
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Other comprehensive income (loss), net of tax |
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| ( | ||
Other comprehensive (income) loss attributable to noncontrolling interests |
| ( |
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Other comprehensive income (loss) attributable to JHG | $ | | $ | ( | ||
Total comprehensive income (loss) | $ | | $ | ( | ||
Total comprehensive loss attributable to noncontrolling interests |
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Total comprehensive income (loss) attributable to JHG | $ | | $ | ( | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
JANUS HENDERSON GROUP PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(U.S. Dollars in Millions)
Three months ended | ||||||
March 31, | ||||||
2021 | 2020 | |||||
CASH FLOWS PROVIDED BY (USED FOR): | ||||||
Operating activities: | ||||||
Net income (loss) | $ | | $ | ( | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||
Depreciation and amortization | | | ||||
Impairment of goodwill and intangible assets | | | ||||
Deferred income taxes | | ( | ||||
Stock-based compensation plan expense | | | ||||
Gain on sale of Geneva | — | ( | ||||
Investment (gains) losses, net | ( | | ||||
Contingent consideration fair value adjustment | — | ( | ||||
Other, net | ( | ( | ||||
Changes in operating assets and liabilities: | ||||||
OEIC and unit trust receivables and payables | ( | | ||||
Other assets | | | ||||
Other accruals and liabilities | ( | ( | ||||
Net operating activities | | | ||||
Investing activities: | ||||||
Sales (purchases) of: | ||||||
Investment securities, net | | | ||||
Property, equipment and software | ( | ( | ||||
Investment securities by consolidated seeded investment products, net | ( | ( | ||||
Cash received (paid) on settled seed capital hedges, net | ( | | ||||
Dividends received from equity-method investments | | | ||||
Receipt of contingent consideration payments from sale of Volantis | | — | ||||
Receipt of contingent consideration payments from sale of Geneva | | — | ||||
Proceeds from sale of Geneva | — | | ||||
Net investing activities | | | ||||
Financing activities: | ||||||
Proceeds from stock-based compensation plans | | — | ||||
Purchase of common stock for stock-based compensation plans | ( | ( | ||||
Purchase of common stock from Dai-ichi Life and share buyback program | ( | ( | ||||
Dividends paid to shareholders | ( | ( | ||||
Payment of contingent consideration | — | ( | ||||
Distributions to noncontrolling interests | ( | ( | ||||
Third-party sales in consolidated seeded investment products, net | | | ||||
Principal payments under capital lease obligations | — | ( | ||||
Net financing activities | ( | ( | ||||
Cash and cash equivalents: | ||||||
Effect of foreign exchange rate changes | | ( | ||||
Net change | ( | | ||||
At beginning of period | | | ||||
At end of period | $ | | $ | | ||
Supplemental cash flow information: | ||||||
Cash paid for interest | $ | | $ | | ||
Cash paid for income taxes, net of refunds | $ | | $ | | ||
Reconciliation of cash and cash equivalents: | ||||||
Cash and cash equivalents | $ | | $ | | ||
Cash and cash equivalents held in consolidated VIEs | | | ||||
Total cash and cash equivalents | $ | | $ | | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
JANUS HENDERSON GROUP PLC
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
(Amounts in Millions)
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Additional | other | Nonredeemable | |||||||||||||||||||||
Number of | Common | paid-in | Treasury | comprehensive | Retained | noncontrolling | Total | ||||||||||||||||
shares | stock | capital | shares | loss | earnings | interests | equity | ||||||||||||||||
Balance at January 1, 2021 | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | ||||||||
Net income | — | — | — | — |
| — | | ( |
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Other comprehensive income | — | — | — | — | |
| — | — |
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Dividends paid to shareholders ($ | — | — | — | — |
| — | ( | — |
| ( | |||||||||||||
Purchase of common stock from Dai-ichi Life and share buyback program | ( | ( | — | — | — | ( | — | ( | |||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | |||||||||||||||
Fair value adjustments to redeemable noncontrolling interests | — | — | — | — | — | ( | — | ( | |||||||||||||||
Purchase of common stock for stock-based compensation plans |
| — |
| — | ( | ( |
| — | — | — |
| ( | |||||||||||
Vesting of stock-based compensation plans | — | — | ( | |
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| — | |||||||||||||
Stock-based compensation plan expense | — |
| — | | — |
| — | — | — |
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Proceeds from stock-based compensation plans | — | — | | — | — | — | — | | |||||||||||||||
Balance at March 31, 2021 | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | ||||||||
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| Accumulated |
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Additional | other | Nonredeemable | |||||||||||||||||||||
Number of | Common | paid-in | Treasury | comprehensive | Retained | noncontrolling | Total | ||||||||||||||||
shares | stock | capital | shares | loss | earnings | interests | equity | ||||||||||||||||
Balance at January 1, 2020 | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | ||||||||
Net loss | — | — | — | — |
| — | ( | ( |
| ( | |||||||||||||
Other comprehensive loss | — | — | — | — | ( |
| — | — |
| ( | |||||||||||||
Dividends paid to shareholders ($ | — | — | — | — |
| — | ( | — |
| ( | |||||||||||||
Share buyback program | ( | ( | — | — | — | ( | — | ( | |||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | |||||||||||||||
Purchase of common stock for stock-based compensation plans |
| — |
| — | ( | ( |
| — | — | — |
| ( | |||||||||||
Vesting of stock-based compensation plans | — | — | ( | |
| — | — | — | — | ||||||||||||||
Stock-based compensation plan expense | — |
| — | | — |
| — | — | — | | |||||||||||||
Balance at March 31, 2020 | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
JANUS HENDERSON GROUP PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1 — Basis of Presentation and Significant Accounting Policies
Basis of Presentation
In the opinion of management of Janus Henderson Group plc (“JHG,” “the Company,” “we,” “us,” “our” and similar terms), the accompanying unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary to fairly state our financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Such financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP are not required for interim reporting purposes and have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the annual consolidated financial statements and notes presented in our Annual Report on Form 10-K for the year ended December 31, 2020. Events subsequent to the balance sheet date have been evaluated for inclusion in the accompanying financial statements through the issuance date.
Recent Accounting Pronouncements Adopted
Income Taxes
In December 2019, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is part of the FASB’s initiative to reduce complexity in accounting standards. The ASU eliminates certain exceptions to the general principles of ASC 740, Income Taxes, and simplifies income tax accounting in several areas. We adopted the ASU, which was effective as of January 1, 2021. The adoption of this ASU did not have a material impact on our results of operations or financial position.
Note 2 — Consolidation
Variable Interest Entities
Consolidated Variable Interest Entities
Our consolidated variable interest entities (“VIEs”) as of March 31, 2021, and December 31, 2020, include certain consolidated seeded investment products in which we have an investment and act as the investment manager. The assets of these VIEs are not available to us or our creditors. We may not, under any circumstances, access cash, cash equivalents or other assets held by consolidated VIEs to use in our operating activities or otherwise. In addition, the investors in these VIEs have no recourse to the credit of JHG.
Unconsolidated Variable Interest Entities
The following table presents the carrying value of investment securities included on our Condensed Consolidated Balance Sheets pertaining to unconsolidated VIEs (in millions):
| March 31, |
| December 31, | |||
2021 | 2020 | |||||
Unconsolidated VIEs | $ | | $ | | ||
Our total exposure to unconsolidated VIEs represents the value of our economic ownership interest in the investment securities.
5
Voting Rights Entities
Consolidated Voting Rights Entities
The following table presents the balances related to consolidated voting rights entities (“VREs”) that were recorded on our Condensed Consolidated Balance Sheets, including our net interest in these products (in millions):
| March 31, |
| December 31, | |||
2021 | 2020 | |||||
Investment securities | $ | | $ | | ||
Cash and cash equivalents | |
| | |||
Other current assets | | | ||||
Accounts payable and accrued liabilities | ( | ( | ||||
Total | $ | | $ | | ||
Our total exposure to consolidated VREs represents the value of our economic ownership interest in these seeded investment products.
Unconsolidated Voting Rights Entities
The following table presents the carrying value of investment securities included on our Condensed Consolidated Balance Sheets pertaining to unconsolidated VREs (in millions):
| March 31, |
| December 31, | |||
2021 | 2020 | |||||
Unconsolidated VREs | $ | | $ | | ||
Our total exposure to unconsolidated VREs represents the value of our economic ownership interest in the investment securities.
Note 3 — Investment Securities
Our investment securities as of March 31, 2021, and December 31, 2020, are summarized as follows (in millions):
March 31, | December 31, | |||||
| 2021 |
| 2020 | |||
Seeded investment products: | ||||||
Consolidated VIEs | $ | | $ | | ||
Consolidated VREs | | | ||||
Unconsolidated VIEs and VREs | | | ||||
Separate accounts | | | ||||
Pooled investment funds | | | ||||
Total seeded investment products |
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Investments related to deferred compensation plans |
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Other investments | | | ||||
Total investment securities | $ | | $ | | ||
6