henderson global investors

\\HDS.Int\Data\CS\UK\2011\!P\G11\TPS Citywire November.ppt

This document is solely for the use of professional s and is not for general public distribution

Tim StevensonFund Manager, Pan European Equities

November 2011

Corporate EuropeFitter, leaner, meaner?

1\\HDS.Int\Data\CS\UK\2011\!P\G11\TPS Citywire November.ppt

Henderson Horizon Pan European Equity Fund

� Launched in 2001

� Focus on quality, consistent, reliable companies

� Large-cap, liquid portfolio

� No more than 60 holdings

� Maximum cash 5% (except in exceptional circumstances)

� Minimum position size 1% Source: MorningStar, Henderson Global Investors, 30 September 2011Quartile ranks at 31 October 2011

Tim StevensonFund Manager28-years’ investment experienceJoined Henderson in 1986

William StormontFund Manager11-years’ investment experienceJoined Henderson in 2007

Horizon Pan European Equity team

€2.3bn assets under management

Overview

Top quartile performance over 1, 3 and 5 years


Defining our ideal investment

Modelcompany

Qualitymanagementwith sound

strategy

Consistentgrowth

Strong marketposition

Attractive valuation

Growing endmarkets

Strong balancesheet


Performance - quality pays in the long run

Source: Henderson Global Investors, 31 October 2011Note: Net of fees in Euros

17.015.2Since inception

18.515.85 year

18.315.23 year

17.216.41 year

Risk (volatility) Fund (%) Benchmark (%)

3+15.3+53.0Since inception (Nov 2001)

8-17.8-5.25 years

20+21.6+28.63 years

21-5.6-3.51 year

17-9.1-7.1Year to date

13-8.0-4.93 months

Percentile rankFTSE Europe Index (%)Fund (%)

Tenth year of adding value


Macro environment and corporate health


Macro environment

An ever changing landscape

Growth

� US – OK

� China and Emerging Markets – also OK

� Europe – poor, flat at best


Macro environment

Recent events

� EFSF expansion

� Greece forced to toe the line to achieve 50% write-offs

� Politicians taking a harder line with enforcing Euro membership rules

� New Head of the ECB – making his mark


European companies are in good shape

Leverage has decreased

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Jun-

81

Jun-

84

Jun-

87

Jun-

90

Jun-

93

Jun-

96

Jun-

99

Jun-

02

Jun-

05

Jun-

08

Jun-

11

European companies net debt to EBITDA (Ex financials)

Source: Worldscope, UBS, Dealogic, Credit Suisse research, Henderson Global Investors, at 30 September 2011

0

100

200

300

400

500

600

700

800

900

Q3

2001

Q2

2002

Q1

2003

Q4

2003

Q3

2004

Q2

2005

Q1

2006

Q4

2006

Q3

2007

Q2

2008

Q1

2009

Q4

2009

Q3

2010

Q2

2011

European cash on corporate balance sheets (€bn)

Cash balances reaching new highs


Stock example – Fresenius

Investment case

� Global healthcare provider

� Duopoly in dialysis care

� Structural growth from Asia, hospital privatisation and changing demographics

� Free cash flow yield >10%

� Net debt to EBITDA

� 3.9x 2008

� 2.4x 2011e

Dividend Growth

EPS Growth

4.08

3.192.862.65

2.16

1.77

1.370.94

1.090.77

0.0

1.0

2.0

3.0

4.0

5.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010E

UR

0.34 0.39

0.71

0.42

0.76

0.500.46

0.580.67

0.86

0.2

0.4

0.6

0.8

1.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

EU

R

Source: Deutsche Bank, Henderson Global Investors, at 31 October 2011


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

European universe Horizon Pan EuropeanEquity Fund

Japan Asia and Emerging MarketsNorth America Developed Europe

31%

20%

47%

Source: Henderson Global Investors, SG cross asset research, at 30 September 2011

Note: European universe refers to Morgan Stanley universe, based on 2011 estimated revenue

Revenue of underlying companies by region

European companies have international exposure

30

80

130

180

230

280

330

Jul-9

9

Jul-0

0

Jul-0

1

Jul-0

2

Jul-0

3

Jul-0

4

Jul-0

5

Jul-0

6

Jul-0

7

Jul-0

8

Jul-0

9

Jul-1

0

Jul-1

1

Europe - International companies Europe - Domestic companies

Source: ASR, DataStream, Henderson Global Investors, at 29 September 2011

...but we are aware it is becoming a crowded trade

29%

15%

54%


Stock example – Inditex

Investment case

� Global fashion retailer:

� Zara

� Massimo Dutti

� Bershka

� Oysho

� Pull and Bear

� 30% exposure to emerging markets

� Strong balance sheet, €3bn net cash

� Recent launch of Zara online Source: Deutsche Bank, Henderson Global Investors, at 31 October 2011

Dividend Growth

EPS Growth

2.78

2.112.022.01

1.611.291.03

0.74

0.75

0.580.430.0

0.5

1.0

1.5

2.0

2.5

3.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011E

UR

0.01 0.11 0.14

0.48

1.051.05

1.60

0.350.67

0.841.20

0.0

0.5

1.0

1.5

2.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

EU

R


Portfolio DNA

14.516.5Return on equity

1.3x1.1xNet Debt to EBITDA**

6.314.8Forecast dividend growth

8.611.3Forecast earnings growth

-1.31.5Historic 5 year earnings growth

4.63.9Yield

10.312.01 year forward P/E

BenchmarkPortfolioConsensus data

Source: UBS, Henderson, at 31 October 2011* Includes 9.0% Oil and Gas** Excludes financials

12.0Financials

51.0Quality growth

37.0Cyclicals*

Portfolio (%)Stock classification


Current positioning

-10 -5 0 5 10

Cash

Financials

Materials

Utilities

Consumer Stap.

Telecoms

Energy

Consumer Disc.

Healthcare

IT

Industrials

Sector weights relative to benchmark

Source: Henderson Global Investors, at 1 November 2011

%

� Reduced cyclical exposure within the Industrials sector

� Underweight Pharmaceuticals but overweight medical services

� Highly selective consumer exposures

� Significantly underweight banks but have moved to overweight in Insurance

� Prefer Telecoms to Utilities, where we are seeing consolidation and pricing power


Relative sub-sector exposure (%)

-5 -3 -1 1 3 5

OtherIndustrials

IndustrialConglomerates

ElectricalEquipment

BusinessServices

Air Freight,Marine &Logistics

Industrials sub-sector weightsrelative to benchmark

%

Source: Henderson Global Investors, at 1 November 2011

-10 -5 0 5 10

Banks

DiversifiedFinancialServices

Insurance

Financials sub-sector weightsrelative to benchmark

%


Market outlook

Risks

� Lack of growth, sovereign default contagion, bank recapitalisation and regulation

� Deleveraging of governments and economies ongoing

Reasons for optimism

� Company management – saying and doing the right things

� Equities underpinned by strong cash-flow, M&A and appealing valuations

� Progressing toward sovereign crisis resolution

� In a low growth world quality companies can still prosper

Focus on quality, consistent, reliable companies


Market outlook (cont’d)

Source: The Economist


Appendix


Henderson Pan European Equity Team

Source: Henderson Global Investors, at 30 September 2011Note: Values in brackets show year of joining Henderson and number of years of investment experience

* Year joined Gartmore** Dealing and Operations***Investment Specialist

John Bennett(2010; 24 years)*

Eleanor Cameron**(2010; 23 years)*

Léopold Arminjon(2007; 15 years)*

Asim Rahman(2010; 11 years)*

Tim Stevenson(1986; 28 years)

Bill Stormont(2007; 11 years)

Paul Casson(2005; 14 years)

Nick Sheridan(2009; 21 years)

Richard Brown CFA***(2007; 2 years)

KeyHead of team

Runs long/short Runs long-only and long/short

Runs long-only


Why are we still underweight banks?

10

15

20

25

30

35

40

45

31 May 11 24 Jun 11 18 Jul 11 11 Aug 11 04 Sep 11 28 Sep 11

Societe Generale share price

0200

400600800

1000120014001600

1986 1991 1996 2001 2006 2011

Japanese banks

0

10

20

30

40

50

60

70

80

90

100

Sep

-09

Jan-

10

May

-10

Sep

-10

Jan-

11

May

-11

Sep

-11

Euribor OIS

LIBOR OIS

Bank offer rates

September’s Soc Gen moves, -22%, +9%, -26%, +11%, -15%, +25%, -12%, +23%

Source: Henderson Global Investors, Bloomberg, at 30 September 2011

€

%


Company management

� “In summary we're very pleased with our momentum and the consistent performance in the first half.... our focus remains on investing for growth and executing on our key strategies while, of course, being fully prepared to respond appropriately, as we did three years ago, should we see any significant change in luxury demand.” Stacey Cartwright, Burberry CFO

� “SAP’s pipeline remains very strong and companies continue to invest in information technology, in particular in innovative software solutions... ongoing uncertain macroeconomic environment prevented us from raising targets.” SAP

� “This purchase will allow the company to obtain leading positions on skin and hair care markets and enter a new niche – mouth care products,” Paul Polman, Unilever CEO on the purchase of Kalina

Doing and saying the right things


Top 10 holdings

Source: Factset, UBS, IBES, Henderson Global Investors, at 31 October 2011

3.5

3.9

5.5

8.0

1.8

4.8

1.4

3.2

1.4

6.4

Dividend yield (%)

13.93.3GermanyFresenius Medical Care

14.03.4SpainAmadeus IT

13.23.6GermanyFresenius Se

14.32.9FranceSodexo

2.73.0UKVodafone Group

13.43.1GermanySAP

9.73.2UKRoyal Dutch Shell

8.73.8GermanyDeutsche Post

Name Country Portfolio weight (%) EPS growth 1-year forward (%)

Roche Holding Switzerland 3.0 8.8

BP UK 3.0 0.4


Equity market supports – growth themes

� Infrastructure (Schneider)

� Restructuring/operational improvements (Deutsche Post)

� Outsourcing non-core activities (Capita)

� Technology (SAP)

� Demographics (Fresenius)


Biographies

Tim StevensonDirector, European Specialist Equities

Career :1991 Director, European Equities

1986 Henderson Global InvestorsFund Manager, Europe, with responsibility for overseas clients

1984 Aetna Montagu Asset Management LimitedResponsible for European Investments for ERISA clients and MIM Pension Funds

1983 Savory MillnEuropean Analyst

Education: Christian Albrechts Universitat zu Kiel

Sussex University,BA (Hons) Economics and European Studies

William StormontFund Manager, Pan European Equities

Career :2007 Henderson Global Investors

Fund Manager, Pan European Equities

2005 Hedge Fund Sales, European Equities

2004 Head of International Hedge Fund Sales

2002 Hedge Fund Sales, European Small/Large Cap

2000 ABN AMRO, EquitiesEuropean Smaller Companies Strategist

1995 University of Durham, Boundary and Security Bulletin(1995 – 1998)Regional Editor

1995 International Affairs Consultant (1995 – 1999)

1993 South Sea China Project (1993 – 1998)Senior Policy Analyst

Education: University of British Columbia MBA Strategic Management BA International Relations


Henderson Global Investors201 Bishopsgate, London EC2M 3AETel: 020 7818 1818 Fax: 020 7818 1819

Important InformationThis document is solely for the use of professional s and is not for general public distribution. The Henderson Horizon Fund (the “Fund”) is a Luxembourg SICAV incorporated on 30 May 1985. This document is intended solely for the use of professionals and is not for general public distribution. Any investment application will be made solely on the basis of the information contained in the Fund’s full prospectus (including all relevant covering documents), which will contain investment restrictions. This document is intended as a summary only and potential investors must read the Fund’s full prospectus before investing. A copy of the Fund’s full and simplified prospectuses can be obtained from Henderson Global Investors Limited in its capacity as Investment Manager and Distributor.

Issued in the UK by Henderson Global Investors. Henderson Global Investors is the name under which Henderson Global Investors Limited (reg. no. 906355) (incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE and authorised and regulated by the Financial Services Authority) provide investment products and services. Telephone calls may be recorded and monitored.

Past performance is not a guide to future performance. The performance data does not take into account the commissions and costs incurred on the issue and redemption of units. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. If you invest through a third party provider you are advised to consult them directly as charges, performance and terms and conditions may differ materially.

The securities included in this document are not registered in the Foreign Securities Registry of the Superintendencia de Valores y Seguros for public offering and, therefore, the use of this document is only for general information purposes.

Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment.

The Fund is a recognised collective investment scheme for the purpose of promotion into the United Kingdom. Potential investors in the United Kingdom are advised that all, or most, of the protections afforded by the United Kingdom regulatory system will not apply to an investment in the Fund and that compensation will not be available under the United Kingdom Financial Services Compensation Scheme.

A copy of the Fund’s full and simplified prospectuses, articles of incorporation, annual and semi-annual reports can be obtained free of cost from the Fund’s: Austrian Paying Agent Raiffeisen Zentralbank Österreich AG, Am Stadtpark 9, A-1030 Vienna; French Paying Agent BNP Paribas Securities Services, 3, rue d’Antin, F-75002 Paris; German Information Agent Marcard, Stein & Co, Ballindamm 36, 20095 Hamburg; Belgian Financial Service Provider Dresdner Van Moer Courtens S.A./N.V. Société de bourse, Drève du Prieuré 19, 1160 Bruxelles; Spanish Representative Allfunds Bank S.A. Estafeta, 6 Complejo Plaza de la Fuente, La Moraleja, Alcobendas 28109 Madrid; or Swiss Representative BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, 8002 Zurich who are also the Swiss Paying Agent.

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