Janus Henderson Group PLC (JHG) 2007 Q2 法說會逐字稿

Okay. We might make a start if that's okay. So welcome to the -- to Henderson's 2007 interim results presentation and if you're listening in by phone or via the website hopefully you can hear us. In addition to the presentation that we're making today there's more detail in the Stock Exchange announcement and in the Appendix 4D, which we lodged earlier today, and you can find all those on the website at www.henderson.com.

I'm going to make a few initial comments about the results and then Toby Hiscock, our CFO, will cover the financial aspects of the figures in more detail. I'll touch on key business develops after that and then we'll -- we're very happy to take questions that you may have.

So starting with an overview of the results, we think it's a very good first half result. Group operating profit before non-recurring items up 31% to GBP60.5 million and earnings per share before non-recurring items up 73% to 5.7p per share. Within that headline, Henderson Global Investors increased profits by 32% to GBP61.4 million, with an associated improvement in the cost to income ratio to 65.6%, which was down from 69.2% in the first half of 2006. And overall, assets under management remained broadly stable at just over GBP61.5 billion.

Now the corporate line showed a small negative number, negative GBP0.9 billion -- GBP0.9 million in the first half, due principally to the GBP200 million of cash that we returned last year. As we've announced before, we raised GBP175 million of debt earlier in the year and the Board's declared and interim dividend this time of 1.66p per share which shareholders will get on October 29.

There are a couple of non-recurring items in the numbers in relation to our investment in BPI and to the staff pension scheme, and as we've indicated before we plan to return GBP250 million to shareholders later this year, which we'll do by means of a special dividend and simultaneous share consolidation. And again, Toby will elaborate on those points later in the presentation.

So those are the headlines and I'll get Toby to take you through the financials.

Okay. Thanks, Roger. Morning everyone. So as Roger just mentioned, profits for the Group pre-tax and before non-recurring items in the first half of this year increased by 31% to GBP60.5 million. Including the non-recurring items, the total operating profit pre-tax for the Group was GBP101 million. Within the Group number Henderson delivered a 32% increase in net profit pre-tax to GBP61.4 million and corporate made a small loss of GBP0.9 million.

Corporate costs were low in the first half of this year, however, do bear in mind that the first half 2006 number included one-off legal and professional expenses of GBP2 million. We expect corporate costs to be approximately GBP10 million for the whole of 2007. Corporate net interest income declined to GBP4.1 million in the first half of the year from GBP6.6 million in the first half of last year.

The interest income earned on corporate cash, including the debt proceeds which we received in May of this year, offset the interest expense paid on the debt. We expect corporate net interest income to be around GBP6 million or GBP7 million for the whole of this year. That's higher than previous guidance and takes account of forecast cash balances after the planned special dividend in October of this year.

Profit before tax from the two non-recurring items amounted to GBP40.5 million in the first half this year. The first non-recurring item is an accounting gain of GBP31.8 million on the Group's investment in BPI following its merger within BPVN. GBP16.3 million of this has been received in cash by way of a special dividend. For the time being, we retain an equity investment in the merged bank, that's BP, of approximately GBP70 million.

Secondly, there was a non-recurring GBP8.7 million pension scheme service credit in the first half this year. That arose from an agreed change to staff benefits which took effect from April 2007.

Turning to tax, the effective tax rate for the Group before the non-recurring items was 14.7% in the first half of this year and the effective tax charge on all operations was 11.4%. We still expect a Group tax rate on continuing operations, excluding any non-recurring items, of between 10% and 15% for 2007 and 2008 before reverting to the statutory UK corporate tax rate in 2009 or 2010. And, as you probably know, the UK statutory tax rate will move from 30% down to 28% with effect from April of next year.

Moving on to slide four, here we see that the Henderson result in further detail. And management fee income for Henderson increased by 19% to GBP129.5 million in the first half of this year. Although total assets under management remained steady we've added more higher margin assets since the first half of last year and that, together with higher investment markets in this period, has resulted in increased management fee income. The largest contributors to the increase in management fee income were property, wholesale, and hedge Funds.

Transaction fee income was GBP10 million in the first half of 2007, GBP2.6 million lower than in the first half of last year largely due to the lower property transaction fees, whereas net performance fees rose strongly by 44% from the first half of last year to just under GBP35 million in the first half of this year. These fees came from a range of products and a number of Funds that we earned performance fees on also continued to rise. The largest contributors to performance fee income in the first half of this year were hedge Funds, property, investment trusts, and Pearl Funds. We expect net performance fees in the second half of this year to be close to, in amount, to the same period last year, which was approximately GBP13 million.

That then takes us to total fee income in the first half of this year of GBP174.4 million, a 20% increase on the first half of last year. Investment income in Henderson declined by 32%, GBP4.3 million, as realized returns from our Seed investments in Henderson products, which we recognized in the first half of last year, were not repeated in the first half of this year.

Nevertheless, as a result of the higher management and performance fee income earned during the first half of 2007 our fee margins, on average assets under management, all increased with total management and net margins up on prior periods.

Looking briefly back three years, you can see that our performance fees and total revenues tend to be higher in the first half compared to the second half of the year. This is due to the timing of performance fee opportunities. As a result, margins in the second half of the year tend to remain relatively flat compared to the first half and we expect this pattern to continue through 2007.

Moving on to costs, Henderson's operating expenses increased 12% from the first half 2006 to just under GBP116 million. That was due to higher staff and other expenses. The 14% increase in staff costs was entirely due to higher variable pay, that is bonus and share plan costs, and that reflects the improved operational performance of the business.

Other expenses increased also largely due to a GBP1.6 million increase in marketing spend and some specific balance sheet provisioning of approximately GBP3 million. These increases were partially offset by savings in investment administration, office expenses, and IT costs. And importantly, the increase in operating expenses was more than offset by the increase in total revenues which resulted in an improvement in Henderson's cost to income ratio from 69.2% to 65.6%. Assuming markets remain at or close to their current levels, we're confident that Henderson will reach its cost to income ratio target of 70% for the full year 2007.

Further to my comments on staff costs in the previous slide, here we show the rise in variable staff costs, namely bonus and share plan costs, which was in line with increased income. The decrease in fixed staff costs from the second half of last year to the first half of this year relates to management actions on pension costs. Overall, staff costs have remained stable as a percentage of our total income.

The balance sheet remains strong with good liquidity, appropriate gearing, and prudent provisions. In May of this year we successfully completed a debut five year unrated sterling debt issuance. We raised GBP175 million at a price of five year guilds plus 125 basis points. This has allowed us to improve the efficiency of the Group's balance sheet and gives us more flexibility in terms of our capital planning. You will see the gearing ratios on this slide both actual and proforma for the proposed cash return in the fourth quarter of this year and we remain comfortable with this position. The Group's regulatory capital surplus also remains healthy even after allowing for the upcoming return of cash.

Within the net asset totals on the previous slide Group cash and cash equivalents amounted to GBP452 million at the end of June this year. This is allocated as follows. GBP50 million for regulatory and working capital. Now, our regulatory capital requirement has remained unchanged at about GBP75 million although the cash we need to allocate towards this requirement has reduced largely as a result of a favorable impact of capital requirements directive. GBP36 million of cash supports accounting provisions, the largest of which remains in relation to a legacy product we're selling in Towry Law International. GBP44 million of cash supports pension commitments comprising the remaining GBP40 million of the GBP80 million of additional contributions promised to the Henderson staff pension scheme. And a GBP4 million escrow balance mainly relating to the Pearl sale agreement.

We're still holding GBP38 million of cash against warranties and indemnities still open under the Pearl and Towry Law UK sale agreements. We've earmarked another GBP19 million of cash for continued investment in Henderson products and that leaves the interim and special dividends for 2007 of GBP265 million in aggregate.

So, as we've announced today, we propose to pay a special dividend in the fourth quarter of 2007. This payment will be made subject to shareholder approval of a simultaneous share consolidation. The total amount of the special dividend will be approximately GBP250 million, which equates to 27.6p or equivalent per share. The share consolidation has the purpose of maintaining parity of our share price and earnings per share both before and after the payment of the special dividend. And it's common practice in the UK market.

An extraordinary general meeting of our shareholders to consider, and if thought fit to approve the share consolidation, is scheduled for October 9. This will be followed by an expected record date for both the special and ordinary interim dividends of October 19 with payments to be made by October 29. A circular and notice of meeting setting out the details of this proposal including the share consolidation ratio will be sent to shareholders in early September. For the time being we've included a simplified example in the appendix of this slide pack to show you what the impact might be on our share price and issued share capital.

I'll now hand you back to Roger.

Thanks, Toby. The rest of this presentation is really about investment performance and Fund flows so let's start with investment performance. At the top of the slide we've put the headline numbers for equities, fixed income and property and I guess the overall picture is fine and better than it was historically in equities and fixed income and property obviously is still very strong.

The most important numbers on that slide really are about performance in the high margin business areas, because that's obviously where the growth in revenues and profits is coming from. And within those high margin business areas in general performance is really pretty good.

Picking out a few individual items, the UK wholesale performance numbers are very important and they've shown a steady improvement, they're now pretty good. They're particularly good in the UK equity products like UK equity income, which is really where the bulk of industry sales take place. So it's very important that we've got strong numbers in those areas. And I think those numbers bode well for future flows in UK wholesale, not so much in 2007 but really 2008. So we're working very hard, obviously, on that.

Staying with these high margin business lines we also enjoyed some standout performance in US wholesale, in investment trusts and in property. Hedge Funds also delivered good results. The only slightly weaker area was the Horizon range of Funds which we sell into Europe and Asia and obviously we're working hard to make sure we improve that position.

In the lower margin products towards the bottom of the slide there's a continuing gradual improvement in equity and fixed income and another comparatively strong performance from the enhanced index line of business. In the round then we think investment performance is pretty good. But as I say, it's most important in those high margin business lines because that's where we plan to grow our assets under management in the future.

Another way of thinking about investment performance obviously is the outcome on performance fees. As you heard from Toby, we really enjoyed a very strong first half result there, so almost GBP35 million of performance fees compared to just over GBP24 million last year. And it's really good to see those performance fees coming right across the board in our business - from Hedge, from [long only], from property and even from Pearl where we gained a performance fee in the first half. And again just as importantly, those fees came from 57 different clients. So a very diverse range of clients in type but also by number up from 43 different clients at last year. So again we're very pleased with that outcome.

Now with markets the way they are, I think it would be prudent to assume that it's more challenging to earn performance fees and that's why, I think you heard Toby say, that if we can match last year or something like that, the second half of last year, which was GBP13 million in the second half of last year, we'd be satisfied with that. And then obviously we'll move forward into 2008. But in the round I think we're really pleased about the diversity of our performance fee outcome and obviously the quantum of it.

Moving on to Fund flows, as we've already shown, total assets under management, broadly flat over the period at just under GBP62 billion. And moving from left to right on this slide we started the year at GBP61.9 billion, markets added GBP1.8 billion net. The lower margin institutional book saw outflows of GBP0.7 billion. High margin net flows were positive GBP0.4 billion, although as you'll see in a moment that understates our success in that area. And finally Pearl outflows were GBP1.8 billion in line with the expected run-off of that business, which takes us to assets under management at the end of June of GBP61.6 billion.

To put that into a longer term context, this slide shows that since 2002 our high margin assets under management, shown in green here, have grown from about GBP13 billion to GBP28 billion, which is almost a 19% compound annual growth rate. By contrast our lower margin institutional and Pearl assets have obviously shrunk significantly for all the reasons we've discussed before - the run-off of the Pearl book, the outflow of balance Funds and so on.

So I think there are two major points really on that slide. The first is that high margin business now accounts for 45% of our total assets under management, up from 19% in 2002. And secondly the relative margins on that high margin business mean that Group revenues and profits, we've been able to drive those higher despite outflows in other parts of the business.

This next slide has a little bit more detail on Fund flows. I think this is where my comment that the GBP0.4 billion of high margin inflows I think slightly understates our success here. Mostly because two of our wholesale businesses, US and Horizon, really did pretty well in the first half. The US added GBP0.7 billion of net new money and that business is developing really well. It achieved the fifth largest market share of net flows amongst all international and global Fund providers in the first half of 2007. Little old Henderson working the US for the first time, it's just making tremendous progress.

Then Horizon Funds that we sell into Europe and Asia added GBP0.3 billion, and that number would have been higher had it not been for outflows in property securities Funds towards the end of the period, obviously in a trend in common with the rest of the industry.

UK wholesale was flat over the period, but as I said before, we're encouraged by prospects in that area because of a very strong performance in some of those key UK equity products. And because we've now got so many more ratings of Fund managers by external third party, so, for example, if you look at Citywire ratings of Fund managers, whereas a year,18 months ago we had one, we've got seven today, plus good performance, equals good outlook I think for 2008 in that business.

Next on the list, CDOs. The outflow there represents the winding up of three CDOs at our clients request. Performance good in all three cases, so no issue there but obviously an outflow. And probably while I'm on the topic of CDOs, it's a topical area, I should say that we're very comfortable with our client portfolios. No direct exposure to sub prime, no issues there, we're very comfortable.

Property we saw a net inflow of GBP0.4 billion, probably a slower pace of investment in the first half than we had in 2006. The pricing in property market's really very competitive, especially in Europe where most of our efforts to invest are going. So a lot of competition for good quality assets. That might pick up a little bit in the second half of 2007 but for prudence I would probably pencil in something similar for the second half as we achieved in the first half of this year. Which means that the GBP1.8 billion pipeline that we have of assets, it's taking in general a little longer to get that money invested.

Hedge Funds' performance, good in the first half, you see that in the performance fees. Not so much going on in terms of new launches so flows, pretty flat. Private equity, really quite a quiet period, the main focus was on integrating John Laing which we obviously acquired last year. And we're pretty enthusiastic actually about the prospects for the infrastructure business of which that is part. Also in private equity we launched a second Asia Fund which we aim to complete in late 2007 early 2008.

Overall, for Fund flows for the second half, it's probably wise to assume a more challenging environment though I should say we still expect to grow our high margin businesses. I expect that the wholesale arena will be harder. Once investors' confidence gets dented, it normally feeds through to flows. That depends when and where markets settle. But we've got lots of other opportunities to grow our business.

For example, in the property arena besides the property pipeline of GBP1.8 billion that you've heard about, we've got three new property Funds. One in Asia called Pagoda, one in Germany and a third one in Italy called Azzurro. So lots to shoot at there. A third infrastructure Fund, the second Asia Private Equity Fund that I just referred to and a new Fund, the so-called Active Engagement Fund which we'll start raising the money for in the fourth quarter.

Now how much of all that falls into 2007 second half rather than early 2008? It's quite hard to tell, but the opportunities are certainly there, whatever happens in the wholesale markets. And I should say the long term picture in wholesale for us I think is still encouraging. The progress we're making in North America is just tremendous and as long as we can keep performance moving and new products coming to that market, that's good. And you've hear about the UK, stronger performance in the right products for the first time in some time.

The institutional book I think will stabilize by the end of the year, not enough to recoup the assets lost in the first half, but enough to give us hope that 2007 will be the last year of outflows. And certainly from a revenue point of view we would expect 2008 to be positive in institutional, in terms of revenues.

And finally we should remind you of Pearls' stated intention to remove GBP5 billion of assets in the second half of the year of 2007. Although as we've said before, that won't have any significant impact on earnings relative to previous assumptions because of the revenue underpin agreement that we have with that client.

So overall I think the picture is the same one we've had for some time, namely revenues gained from high margin inflows offsetting those lost from lower margin outflows.

And we've shown the impact of that over time -- we've shown these slides before. And really this is comparing the percentage of assets under management which come from high margin businesses with the revenue percentage coming from those businesses. So you can see -- you've heard me say once already today, high margin business is 45% of our total assets under management but almost 80% of revenues now. It increasingly is the business.

So this may be the last year we show these slides because it's starting to get to the point where high margin flows really represent pretty much the whole of Henderson's revenues. And I think that reinforces the theme running right through this and previous presentations, it's the improving mix of business which is driving Henderson's revenues and profits higher. And we expect that to continue.

I think I'll just say a few words finally about the rest of '07 and beyond. So taking corporate first, here we think costs will be approximately GBP10 million for 2007 in line with previous guidance. Corporate net interest income GBP6 million to GBP7 million for the full year. We'll pay the interim dividend in October with the special dividend obviously assuming we get shareholder approval for the share consolidation.

In Henderson, as always, the main focus has to be on investment performance. Given where we're starting from which is a broadly satisfactory position that means sustaining it where it's good and dealing with the one or two areas that are lagging. And then we've got to translate that through to Fund flows, particularly in those high margin business lines, wholesale, hedge, property ,private capital and I should say good margin institutional business where we can find it.

Although the background for Fund flows is probably going to be harder in the second half, as you've heard we've got a good number of initiatives on the block which we think gives us a good chance of countering that trend if it appears.

And that emphasis on high margin products, still driving revenues and profitability higher. As you heard from Toby, assuming that there are no disasters in market we're very confident of meeting our cost to income ratio target for the year of 70%. So notwithstanding the challenges of the market, we think we're in good shape. Business is healthy, on track to deliver for the year, everything going according to plan.

So that's the formal part of the presentation over. We'll now take questions and we'll start obviously with people in the room. And then if there are any on the phone we'll take those secondly. Okay, any questions?

Two questions. One is you mentioned somewhere that you are comfortable with the current level of gearing. So I just would like to get some more background about how you think about gearing, what the ratios are you're looking at and how this could be developing?

And then the second question would be about -- I just wondered whether we could get an idea about flows to date in the second half of the year.

Do you want to do gearing Toby and I'll do flows?

Yes. Okay. When we approached the debt issuance we said that we would be prudent. We wouldn't be overly aggressive and in the event we went to the top end of the range, 175 and the price was good, as you know. I think the guidance that we've given on the ratios to our debt holders remains intact. We're looking at a debt equity ratio over the term of the issuance which is about five years of 50% or thereabouts. The proforma number as you've seen post this upcoming capital return will be a little bit north of that.

And as for coverage somewhere between 8 and 10 times. It's about 10 times at the moment based on first half results. A debt EBITDA ratio of 2 times or less -- it's about 1.5 times based on the first half results. Bear in mind that the first half is a bigger half than the second half as a rule. So we've annualized some of those numbers in the slide and therefore, that needs taking into account.

But in the round, I can't add much more than to say that we think what we've got is appropriate. There are certainly no plans to do any more issuance. And we'll move on from there.

On flows, it's still relatively early in the period obviously and I'll try and give you a few highlights. July was pretty reasonable, hedge was quite good in July, property was reasonable in July. August obviously has been harder. If you take our various retail businesses, the US has remained good through all this turmoil. We haven't had one down day in net sales in North America, which is amazing to me. So that's a pretty good picture.

And Horizon has been -- it's been a bit tougher especially in things like property securities, which has had further outflows. But on the other hand we've got an Absolute Fixed Income Return Fund and that's done very well and good for those in there. So those two things are sort of broadly balancing each other out.

UK retail, a little bit similar so equities at the margin outflows but we've got a good fixed income franchise with John Pattullo in the UK in his preference and Bond Fund and Strategic Bond Fund, so we've had inflows there. Institutional nothing much to report.

And then property, just trying to get the money invested. As I say, it's tracking I think to do something similar, maybe a tiny bit better for the second half as far as I can see. And then you've got all the Fund launches that I talked about which are still ahead. How much fall into Q4 and how much within Q1, [as a rate] it's hard to judge at this stage. But things are fine. I'll touch wood when I say that, but.

Hi, could I -- sorry, apologies if I missed it, could I just get an update on what your total assets under management are for the hedge Fund area this time round?

In total it's about $3 billion. And if you look in the -- I think on the presentation slide it says $1.5 billion I think. I'm saying this from memory. In the Appendix 4D it says $1.1 billion but that's because the hedge Funds that sit in -- that our institutional clients have got with us, we've included that in institutional rather than hedge Funds. So that's the disparity, but it's about $3 billion.

Thanks.

Hi, just a question on the cost income ratio. Do you feel that you might be under any pressure on your fixed cost base due to increased competition for your Fund managers in terms of both attracting new ones and retaining existing staff?

The short answer's no. It's always a competitive market for talent and the fact that we have so many different reward schemes is a reflection of that. But I would say, in general, we've never found it easier to attract good people. I think people like the combination of a firm which is effectively a collection of different businesses where people have a lot of transparency about the relationship between what they do and what they get paid. But also, you know, so it looks a bit like a boutique, but also it's got an industrial strength infrastructure. I think people like that combination.

And I would say, at the margin, a lot of those people that left to set up their boutique hedge Fund operations, there's a bit of flow back the other way. And if we can pick up interesting talent, that's good. The hottest area of all, in our business, is property. The market for good property people is just white-hot and that's where we've got to focus our attention and make sure we work hard on retention. But I don't think there's anything that, in all that, that will prevent us achieving our objectives as regards the cost income ratio.

Thank you. And just a follow-up question. Have you seen an increase in consultants upgrading your Funds?

Yes, we have. Sometimes that's been associated with an individual new recruit. So, for example, Graham Kitchen and Andy Jones came from Threadneedle and Perpetual respectively, and they're well known to the consultants, so they've had upgrades and are getting on shortlists. And then actually, probably the biggest number have come in the fixed income arena, and David Jacob, who runs our fixed income team is sat in the corner. And you, I can't remember if you can -- can you remember how many different upgrades?

(Inaudible - microphone inaccessible)

Yes. And his team are getting on shortlists and buyer lists by the consultants. So that augurs well for 2008 and that's why I say that, hopefully, 2007 is the last year of outflows. And because we had the chance to sell high margin business to institutional clients, we're reasonably confident that from a revenue perspective in particular, 2008 will be better than 2007.

Can I ask a question about the visibility on the performance fees in the H2? When I look at that I think that's pretty brave to put anything down on paper about your expectation there, given the high proportion that comes from the hedge Fund area and what we're seeing on the variability on returns on those in July and August. How much of that has been done from a bottom up basis? Or how much of it is you just saying, well we did that in H2 '06 and we would like to achieve that in H2 of '07?

We're not in the -- we're not people who are finger in the air types. So when we say something we generally have good reason for saying it. When we look at the range of opportunities we have in the second half, we can see the opportunity to earn a range of performance fees. Is it possible it could be lower than the 13 million that we achieved in the second half of last year? Yes, it is. Is it likely to be zero? I think that's just as unlikely, myself, but time will tell. Is it likely to be 20 rather than 13? No. On our assessment.

And then for 2008 I think we've always tried to guide people to what we think, which is that if you take performance fees and transaction fees together, you know, the way we model it, we expect about 50 million from the two different things; from performance fees and transaction fees together. And we'll see how that plays out in 2008. But with the diversity and the number of Funds we have, where we have a performance fee opportunity, it would be disappointing if we weren't able to deliver to that standard.

Thank you.

There's a question on the phone?

Our first question comes from the line of Jason Streets. Please go ahead with your question, announcing your company name.

Good morning. Jason Streets from Evolution. Two questions, please. The first one; John Laing revenues. I've got a note in my spreadsheet that, that was going to come through transaction fees. Now I can't believe I made that up, did you change a policy on that? And is it now going through normal Fund management fees? Maybe I did make it up. I can't imagine why.

Hi, Jason. I can't believe you've made anything up, either. Nor would we. Toby, do you want to deal with that?

Yes, sure. Well, there was a transaction fee when we completed the transaction in late 2006. So it went through second half 2006, although there was an offset from a sort of accelerated amortization of the placement fees that also we incurred in relation to that transaction as well, i.e. in raising the infrastructure Funds in relation to it. So it was really a net zero in 2006.

And GBP8 million or so of annual revenue is just coming through ordinary management fees now?

Yes.

Fine. Okay, thanks very much. The second question was on property performance fees. I'm just wondering, are these performance fees, are they alpha fees or beta fees? I mean, do they depend you outperforming an index or are they largely a function of just increased values?

Yes, the bulk of them are, from memory, relative to a benchmark, so IPD type and property benchmarks. There are a couple I think, particularly in Europe, which are absolute, so to the extent we do better than zero, or, I think one has LIBOR as a benchmark, so we get a performance fee on that. But I think the bulk of them are effectively related to IPD benchmarks, be they retail, industrial or office.

Do you think earning those property performance fees is going to be harder in the future than it has been? Or is it always hard and you're just particularly good at it?

Generous fellow, Jason. I think it will be a bit harder in the future and I only say that because, although different property markets are at different stages of the cycle, you know, the UK probably furthest advanced, i.e. about to turn down, and Asia probably least far advanced, in a market that has peaked or is peaking, it is just harder. So I would expect it to be a bit tougher there.

Okay. Thanks very much.

Our next question comes from the line of Saurabh Mukherjea. Please go ahead with your question, announcing your company name.

Hi there, Clear Capital's Saurabh Mukherjea here. Gents, three questions, if I may? The first one is, could we have some more color on the initiatives you mentioned you have in mind to counter a slower environment for Fund inflows?

The second one is around, a sub-part of question one, really -- the second one is around new Fund launches, where do you see them coming from going forward?

And lastly, on your property Funds, what are the lock-in periods there?

What -- just say the first one again, I got the second and third ones.

The first one was, I think, right at the end of your presentation you mentioned that you have [core initiatives] in place to counter a slower environment for Fund inflows in case the environment does slow down. So I just want some more color on that?

Well, so question one and question two are linked because question two is really about new Fund launches. So, what I said was that I'm assuming that the retail environments are just tougher in the second half. Although, as I said, we're still progressing very well in the United States, although July and August are normally quite slow months because of holidays. And UK and Europe seem, at the moment, to be flat-ish as far as we can see in the second half.

To offset that, we've got a whole set of Fund launches. So, we've got the second Asia Private Equity Fund which will go for a second close later this year. We've got the, possibly a third infrastructure Fund, I'm not sure whether that'll be Q4 or Q1. We've got three property Funds, one in Asia which we actually sent out a press release on, it's called Pagoda which is a [funded] funds vehicle, and the headline in the FT was, Henderson aims to raise $1 billion in Asia property. If we do raise $1 billion we'll be jolly happy with that. But we'll see how that develops.

And then a second one in Germany, a couple of hundred million, and then a third one in Italy, splendidly named Azzurro Fund. Then, we've got a couple of new Fund launches in the Horizon range focused on these [130 30] type products. We might do a global financials Fund, we're looking at that. And finally we've got a new joint venture with PWC which is called the Activist Fund which again will be Q4/early Q1 2008.

So there's lots to shoot at, some of those things will go swimmingly well, some will go less well, but it's fantastic to be part of a diversified business that has those sort of opportunities when other parts of the industry are facing a more adverse environment.

And the second question, property lock-ins?

Fund lock-ins, you might remember that better than me, Toby?

Yes. Well, the Jersey Property Unit Trust which are the major vehicles here have normal lives of somewhere between seven and ten years. There's an option to extend those towards the end of the term. So they give us good visibility of management fees over the medium term. Clients can trade out but it has to be on a match bargain basis quarterly.

Thank you.

There are no further questions from the phone lines.

Okay thank you. Any more questions here? No, okay, really appreciate your time. Thanks for coming and we'll be around for a few more minutes, so if you want to grab us, feel free.