TIDMJUP
RNS Number : 3299H
Jupiter Fund Management PLC
27 July 2023
Results for the six months ended 30 June 2023
27 July 2023
A good start to the year in a challenging environment
-- Despite an uncertain macro backdrop, we delivered a good
start to 2023 with robust financial performance and growth in
assets under management (AUM)
-- Underlying profit before tax increased 56% to GBP46.4m (2022
H1: GBP29.7m) and statutory profit before tax grew 85% to GBP34.8m
(2022 H1: GBP18.8m)
-- Gross flows remained strong at GBP7.7bn, underpinned by
continued momentum in the institutional channel, and Jupiter
generated small positive net inflows across the period
-- AUM grew 2% and ended the period at GBP51.4bn (31 December
2022: GBP50.2bn)
-- Total dividends of 6.4p per share. This comprises an ordinary
dividend of 3.5p per share and a special dividend of 2.9p per
share
Six months
ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
AUM (GBPbn) 51.4 48.8 50.2
--------------------------- -------------- ----------------- ------------------
Net flows (GBPbn) - (3.6) (3.5)
--------------------------- -------------- ----------------- ------------------
Net revenue(1) (GBPm) 181.0 202.4 397.3
--------------------------- -------------- ----------------- ------------------
Statutory profit before
tax(2) (GBPm) 34.8 18.8 58.0
--------------------------- -------------- ----------------- ------------------
Basic earnings per share
(EPS)(2) (p) 4.6 2.6 8.9
--------------------------- -------------- ----------------- ------------------
Underlying profit before
tax(1) (GBPm) 46.4 29.7 77.6
--------------------------- -------------- ----------------- ------------------
Underlying EPS(1) (p) 6.7 4.2 11.3
--------------------------- -------------- ----------------- ------------------
Total dividends per share 6.4 7.9 8.4
--------------------------- -------------- ----------------- ------------------
Cost:income ratio(1) 71% 67% 69%
--------------------------- -------------- ----------------- ------------------
1 The Group's use of alternative performance measures is
explained on pages 25 to 28.
2 IFRS measures.
Matthew Beesley, Chief Executive Officer, commented:
"Despite the continued volatile market environment leading to
muted retail investor appetite, Jupiter has had a good first half
of the year, delivering a robust financial performance. We saw
small positive net flows, driven by another strong performance in
the institutional channel and AUM increased by 2%.
We continue to diversify our client base, with institutional AUM
now accounting for 18% of Group assets and international AUM at
36%. We have nearly completed the fund rationalisation programme
and have identified higher than expected cost savings during the
period.
Our strong capital position allows us to invest for growth and
we plan to launch our range of thematic funds by the end of the
year. In addition, we are returning capital to our shareholders
through a special dividend.
It's clear from these results that our strategic focus is
generating positive outcomes and we are confident that continuing
to deliver on the strategy will help to return Jupiter to sustained
growth."
Analyst presentation
There will be an analyst presentation at 11:00am BST on 27 July
2023.
The presentation will be held at The Zig Zag Building, 70
Victoria Street, London, SW1E 6SQ and will also be accessible via a
live webcast. The webcast is available at:
https://secure.emincote.com/client/jupiter/jfm033 . Please note
that questions can be asked either in-person at the presentation or
via the webcast.
The results announcement and the presentation will be available
at https://www.jupiteram.com/investor-relations . Copies may also
be obtained from the registered office of the Company at The Zig
Zag Building, 70 Victoria Street, London, SW1E 6SQ.
The interim report and accounts will be available on the Group's
website at: https://www.jupiteram.com/investor-relations.
For further information please contact:
Investors Media
Jupiter Sam Fuschillo Despina Constantinides
+44 (0)20 3817 1530 +44 (0)20 3817 1278
Edelman Smithfield Latika Shah Andrew Wilde
+44 (0)7950 671 948 +44 (0)7786 022 022
LEI Number: 5493003DJ1G01IMQ7S28
Forward-looking statements
This announcement contains forward-looking statements with
respect to the financial condition, results of operations and
businesses of the Group. Such statements and forecasts involve risk
and uncertainty because they relate to events and depend upon
circumstances in the future. There are a number of factors that
could cause actual results or developments to differ materially
from those expressed or implied by forward-looking statements and
forecasts. Forward-looking statements and forecasts are based on
the Directors' current view and information known to them at the
date of this announcement. The Directors do not make any
undertaking to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
Nothing in this announcement should be construed as a profit
forecast.
Management statement
We are pleased to report a good first half in 2023, with
progress against our strategic objectives despite the ongoing and
well-known market challenges.
Interest rates continued to rise globally and markets remained
volatile, weighing upon investor sentiment, particularly in the
retail channel. Despite that, we generated small positive net flows
over the six-month period, led by another strong performance in the
institutional channel.
We remain focused on those aspects of our business that we can
control and executing our strategy: increasing scale, decreasing
undue complexity, broadening our appeal to clients, and deepening
relationships with our stakeholders.
AUM grew by 2% in the period to GBP51.4bn (2022 H2: GBP50.2bn),
predominantly driven by positive market movements. Lower average
AUM compared to H1 22 led to net revenues of GBP181.0m (2022 H1:
GBP202.4m) and our continued rigorous focus on cost control
resulted in underlying profit before tax of GBP46.4m (2022 H1:
GBP29.7m).
We continue to have a strong capital base and have today
announced an ordinary dividend of 3.5p per share, in line with our
policy of returning 50% of pre-performance fee earnings. In order
to honour our previous capital return commitments, we have also
announced a special dividend of 2.9p per share, payable in
September.
Progress against our strategic objectives
At our full-year 2022 results we detailed four key strategic
objectives that would be key in driving Jupiter's success going
forward and we have made progress against each of these in the
first half of 2023. These objectives were to:
-- Increase scale in select geographies and channels;
-- Decrease undue complexity with costs managed carefully
through a relentless pursuit of efficiency;
-- Broaden our appeal to clients with new and existing
investment strategies, while also exploring additional methods of
delivery; and
-- Deepen relationships with all stakeholders with purpose and
sustainability embedded in all we do.
Increasing scale across the Group continues to be the most
important of these objectives, as delivering absolute revenue
growth will be critical to our ongoing success. There is clear
ongoing positive momentum in the institutional channel with net
inflows of over GBP1.7bn in the first six months. AUM from
institutional clients is now at a record level of over GBP9bn, or
18% of Group AUM. We continue to develop strong relationships with
consultants and the number of 'Buy' ratings on our investment
strategies has increased from 18 to 20. Our pipeline remains strong
and we are optimistic on seeing continued momentum over the medium
term.
We also continue to grow scale in our international businesses.
We generated GBP2bn of net inflows from clients based overseas in
the first half, with positive net inflows from clients in Asia,
continental Europe and the Americas. Total international AUM is now
at over GBP18bn, or 36% of the Group's AUM (2022 H1: 28%).
We have also continued to remove undue complexity from within
our business, following the restructuring of our operating model
last year. The fund rationalisation programme is now mostly
complete and, because of the focus on the tail of sub-scale funds,
the resulting attrition rate remains low at 0.7% of Group AUM. We
remain focused on cost control with further savings identified and
implemented.
We continue to evolve our product range to ensure we broaden our
appeal to clients with a differentiated offering. Subject to
regulatory approvals, we hope to launch our range of five thematic
funds in the fourth quarter, run by our successful Systematic
team.
And finally, we remain focused on deepening relationships with
all stakeholders including our clients, our people, our
shareholders, our regulators and the wider society in which we
operate . We are a human capital business and we are pleased to
report that our most recent employee opinion survey saw increases
in most key metrics, including a five percentage point rise of the
overall engagement score.
Improving flow picture, driven by institutional success
Jupiter had small positive net inflows for the first half of
2023. Following positive net inflows in H2 2022, this is the first
12-month period of net inflows since 2017.
Gross flows have continued to be strong, with GBP7.7bn from
clients in the first half (2022 H1: GBP6.9bn).
The institutional channel was again the driver behind these
positive flows, with GBP1.7bn of net inflows in the first half, and
a total of GBP3.5bn over the last 12 months. The flows were
encouragingly diversified by region and investment strategy, but
also in size.
The retail channel continued to see outflows, with net
redemptions from funds of GBP1.7bn as an uncertain
macro-environment again weighed upon client demand. Although our UK
retail business improved from a challenging first quarter, it was
the source of the majority of our net outflows. These were
predominantly from areas which remained short of client demand,
such as UK and European equities and the Merlin fund of funds
range, despite the latter's ongoing strong performance.
Elsewhere, our range of Global strategies collected over GBP600m
of net inflows in the period. Within Fixed Income, Dynamic Bond has
returned to small positive flows in each of the last two
quarters.
Total AUM increased by 2% to GBP51.4bn (31 December 2022:
GBP50.2bn) as a result of these slightly positive net flows and
positive market and other movements of GBP1.2bn.
31 December Q1 net Market and 30 June
2022 flows Q2 net flows H1 net flows other movements 2023
GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn
=================== ============ ======= ============= ============= ================= ========
Retail, wholesale
& investment
trusts 43.4 (1.0) (0.7) (1.7) 0.4 42.1
=================== ============ ======= ============= ============= ================= ========
Institutional 6.8 0.1 1.6 1.7 0.8 9.3
=================== ============ ======= ============= ============= ================= ========
Total 50.2 (0.9) 0.9 -(1) 1.2 51.4
=================== ============ ======= ============= ============= ================= ========
of which is
invested in
mutual funds 39.3 (1.1) (0.6) (1.7) 0.5 38.1
=================== ============ ======= ============= ============= ================= ========
1 Total net flows for the period of GBP23m.
Robust financial performance
Despite the uncertain market backdrop, we have delivered robust
financial performance in the first half of the year. We have
remained focused on retaining an efficient operating model centred
around our clients, supported by risk management and investment in
key areas of growth. Although AUM increased over the period,
average AUM fell to GBP50.9bn (2022 H1: GBP54.8bn). This decrease
in average AUM and change in business mix led to net revenue being
11% lower at GBP181.0m (2022 H1: GBP202.4m). Total net revenue
included GBP0.4m of performance fees (2022 H1: GBP0.7m).
As the shape of our business changes, with greater weighting
towards institutional clients, we have seen a three basis point
decline in the net management fee margin to 71 bps over the first
half. Our focus remains on growing absolute revenues. We recognise
that management fee margins will decline as we build scale,
continue to see success with institutional clients and deepen
relationships with strategic partners. In aggregate, we believe
that these lower margins will be paired with a larger, more
diversified and less volatile revenue base.
We remain focused on controlling costs wherever possible and the
management actions taken in the second half of 2022 have come
through this year.
Fixed staff costs reduced to GBP37.0m (2022 H1: GBP37.9m) while
variable staff costs decreased to GBP41.4m (2022 H1: GBP63.9m),
driven primarily by lower performance fee-related deferred
compensation costs.
Excluding the impact of net performance fees, our total
compensation ratio has increased to 41% (2022 H1: 38%), in line
with our expectations. This increase is necessary in the short term
to ensure we attract and retain key talent and build scale across
the business.
Non-compensation costs of GBP53.8m (2022 H1: GBP58.4m) were
carefully managed lower in the first half. A proportion of our
non-compensation costs are linked to AUM levels, which has driven
some of this reduction, but we have also identified further planned
cost savings, some of which are reflected in these results.
Total expenses before exceptional items were 17% lower than the
first half of 2022 at GBP132.2m (2022 H1: GBP160.2m). Excluding the
impact of performance fee-related pay and exceptional items, the
Group's total administrative expenses were GBP128.7m (2022 H1:
GBP135.3m).
There were exceptional items of GBP11.6m (2022 H1: GBP10.9m),
which mainly comprised amortisation of intangible assets and
deferred compensation charges relating to the 2020 Merian
acquisition.
Excluding the impact of net performance fees, underlying profit
before tax and exceptional items was GBP49.5m (2022 H1: GBP53.9m).
With the impact of deferred performance-fee related compensation
costs, underlying profit before tax was GBP46.4m (2022 H1:
GBP29.7m), with statutory profit before tax of GBP34.8m (2022 H1:
GBP18.8m).
Including net performance fees, underlying EPS was 6.7p (2022
H1: 4.2p) and basic statutory EPS was 4.6p (2022: 2.6p). Underlying
EPS, excluding the impact of net performance fees, was 7.1p (2022
H1: 7.8p).
Six months ended 30 June Six months ended 30 June
2023 2022
=================== ====================================== ==============================================
Before net Before
performance Net performance net performance Net performance
GBPm fees fees Total fees fees Total
=================== ============ =============== ======= =================== ================ =======
Net revenue 180.6 0.4 181.0 201.7 0.7 202.4
==================== ============ =============== ======= =================== ================ =========
Fixed staff costs (37.0) - (37.0) (37.9) - (37.9)
==================== ============ =============== ======= =================== ================ =========
Variable staff
costs (37.9) (3.5) (41.4) (39.0) (24.9) (63.9)
==================== ============ =============== ======= =================== ================ =========
Non-compensation
costs (53.8) - (53.8) (58.4) - (58.4)
Administrative
expenses(1) (128.7) (3.5) (132.2) (135.3) (24.9) (160.2)
Other gains/(losses) 0.4 - 0.4 (8.2) - (8.2)
Amortisation of
intangible
assets(2) (1.0) - (1.0) (1.0) - (1.0)
Operating profit
before exceptional
items 51.3 (3.1) 48.2 57.2 (24.2) 33.0
==================== ============ =============== ======= =================== ================ =========
Net finance costs (1.8) - (1.8) (3.3) - (3.3)
==================== ============ =============== ======= =================== ================ =========
Underlying profit
before tax 49.5 (3.1) 46.4 53.9 (24.2) 29.7
==================== ============ =============== ======= =================== ================ =========
Exceptional items (11.6) - (11.6) (10.9) - (10.9)
==================== ============ =============== ======= =================== ================ =========
Statutory profit
before tax 37.9 (3.1) 34.8 43.0 (24.2) 18.8
==================== ============ =============== ======= =================== ================ =========
1 Administrative expenses exclude GBP2.2m of variable staff
costs classified as exceptional (2022 H1: GBP1.5m).
2 Amortisation of intangible assets excludes GBP9.4m classified
as exceptional (2022 H1: GBP9.4m).
Active, high-conviction investment
Jupiter's purpose is clear. We exist to create a better future
for our clients and the planet with our active investment
excellence.
The recent market dynamics have at times created a challenging
backdrop for our range of investment capabilities which, in
aggregate, have led to a weaker aggregate investment performance
metric than we would typically expect.
At 30 June 2023, 52% of our mutual fund AUM had delivered
above-median performance against their peer group over three years
(31 December 2022: 51% of mutual fund AUM), of which 32% of mutual
fund AUM had delivered first quartile performance (31 December
2022: 40% of mutual fund AUM).
Measured over one year, 53% of mutual fund AUM (31 December
2022: 49% of mutual fund AUM) delivered above-median performance,
whereas over five years this was 58% of mutual fund AUM (31
December 2022: 53% of mutual fund AUM).
Although these figures are not where we would hope to be, they
have been driven by a small number of some of our largest funds
which are below their median, including in our unconstrained fixed
income funds and European equities. However, eight out of our top
12 funds by AUM remain above median over the key three-year
period.
Segregated mandates and investment trusts now make up GBP13.3bn,
or 26% of our AUM (31 December 2022: GBP10.9bn, or 22% of our AUM).
At the period end, 72% of AUM in segregated mandates and investment
trusts were above their benchmarks over three years (31 December
2022: 59%).
A strong capital base
The Group maintains a strong capital base. As we move through
the transitional period of a new regulatory regime, our capital
surplus has increased to GBP147m, with total regulatory capital
representing three times coverage of our regulatory requirements of
GBP72m.
In line with our policy of paying out 50% of underlying EPS
before performance fees, the Board have proposed an interim
ordinary dividend of 3.5p per share. In order to honour our
previous capital return commitments, the Board have also proposed a
special dividend of 2.9p per share. The dividends will be paid on 1
September 2023 to shareholders on the register at the close of
business on 4 August 2023.
Our policy, as part of our overall capital allocation framework,
allows us to return capital to shareholders on a clear, sustainable
basis and, if there are no capital needs, we expect to make further
returns of additional capital to shareholders at the appropriate
time.
Looking forward through 2023
In what has been an uncertain and volatile backdrop, it has been
a good start to the year. Our financial performance has been robust
and we have made pleasing progress against each of our strategic
objectives.
We have generated net positive flows over both six and 12 month
periods and are cautiously optimistic that a well-diversified
pipeline will continue to deliver further AUM gains in future
periods.
Our capital base is strong and we will look for opportunities to
further develop our business, both organically and inorganically.
The short-term outlook remains uncertain, but we are
well-positioned for growth over the medium term and confident that
our strategy is the right one.
Matthew Beesley
Chief Executive Officer
26 July 2023
Consolidated income statement
for the six months ended 30 June 2023
Six months Year ended
ended Six months ended 31 December
Notes 30 June 2023 30 June 2022 2022
GBPm GBPm GBPm
Revenue 1 200.2 226.5 443.5
Fee and commission
expenses 1 (19.2) (24.1) (46.2)
--------------
Net revenue 1 181.0 202.4 397.3
Administrative expenses 3 (134.4) (161.7) (302.3)
Other gains/(losses) 4 0.4 (8.2) (9.7)
Amortisation of intangible
assets 9 (10.4) (10.4) (21.0)
--------------
Operating profit 36.6 22.1 64.3
Net finance costs 5 (1.8) (3.3) (6.3)
--------------
Profit before taxation 34.8 18.8 58.0
Income tax expense 6 (10.6) (4.3) (10.1)
--------------
Profit for the period(1) 24.2 14.5 47.9
============== ================= =============
Earnings per share
Basic 7 4.6p 2.6p 8.9p
Diluted 7 4.6p 2.5p 8.8p
(1) Non-controlling interests are presented in the Consolidated
statement of changes of equity.
Consolidated statement of comprehensive income
for the six months ended 30 June 2023
Six months Six months Year ended
ended ended 31 December
30 June 2023 30 June 2022 2022
GBPm GBPm GBPm
Profit for the year 24.2 14.5 47.9
-------------- -------------- ------------
Items that may be reclassified
subsequently to profit or loss
Exchange movements on translation
of subsidiary undertakings (2.1) 2.9 3.4
--------------
Other comprehensive (loss)/income
for the year net of tax (2.1) 2.9 3.4
Total comprehensive income
for the year net of tax 22.1 17.4 51.3
============== ============== ============
Consolidated balance sheet
at 30 June 2023
30 June 30 June 31 December
Notes 2023 2022 2022
GBPm GBPm GBPm
NON-CURRENT ASSETS
Goodwill 8 570.6 570.6 570.6
Intangible assets 9 26.7 43.6 35.2
Property, plant and equipment 10 38.9 42.5 40.9
Deferred tax assets 19.4 24.6 19.4
Trade and other receivables 0.3 0.4 0.4
-------- -------- -------------
655.9 681.7 666.5
CURRENT ASSETS
Financial assets at fair
value through profit or
loss 11 166.8 247.5 167.8
Trade and other receivables 205.7 295.4 124.1
Current income tax asset 3.1 3.9 3.3
Cash and cash equivalents 12 284.0 213.9 280.3
-------- -------- -------------
659.6 760.7 575.5
-------- -------- -------------
TOTAL ASSETS 1,315.5 1,442.4 1,242.0
======== ======== =============
EQUITY ATTRIBUTABLE TO
SHAREHOLDERS
Share capital 14 10.9 11.1 10.9
Own share reserve 15 (0.8) (0.6) (0.5)
Other reserves 15 250.3 250.1 250.3
Foreign currency translation
reserve 15 1.6 3.2 3.7
Retained earnings 15 586.7 592.3 578.9
-------- -------- -------------
Capital and reserves attributable
to owners of Jupiter Fund
Management plc 848.7 856.1 843.3
Non-controlling interests 0.5 0.7 0.6
-------- -------- -------------
TOTAL EQUITY 849.2 856.8 843.9
======== ======== =============
NON-CURRENT LIABILITIES
Loans and borrowings 13 49.6 49.4 49.5
Trade and other payables 81.8 103.1 87.5
Deferred tax liabilities 4.5 8.5 6.7
-------- -------- -------------
135.9 161.0 143.7
CURRENT LIABILITIES
Financial liabilities
at fair value through
profit or loss 11 48.5 50.3 49.2
Trade and other payables 281.9 374.3 205.2
-------------
330.4 424.6 254.4
TOTAL LIABILITIES 466.3 585.6 398.1
======== ======== =============
TOTAL EQUITY AND LIABILITIES 1,315.5 1,442.4 1,242.0
======== ======== =============
Consolidated statement of changes in equity
for the six months ended 30 June 2023
Foreign
Own currency
Share share Other translation Retained Non-controlling Total
capital reserve reserves reserve earnings Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January
2022 11.1 (0.4) 250.1 0.3 639.7 900.8 - 900.8
Profit for the
period - - - - 13.8 13.8 0.7 14.5
Exchange
movements on
translation of
subsidiary
undertakings - - - 2.9 - 2.9 - 2.9
--------- --------- ---------- ------------ ---------- ------- ---------------- --------
Other
comprehensive
income - - - 2.9 - 2.9 - 2.9
--------- --------- ---------- ------------ ---------- ------- ---------------- --------
Total
comprehensive
income - - - 2.9 13.8 16.7 0.7 17.4
--------- --------- ---------- ------------ ---------- ------- ---------------- --------
Dividends paid - - - - (48.6) (48.6) - (48.6)
Purchase of
shares by
Employee
Benefit Trust
(EBT) - (0.2) - - (21.2) (21.4) - (21.4)
Share-based
payments - - - - 8.7 8.7 - 8.7
Deferred tax - - - - (0.1) (0.1) - (0.1)
--------- --------- ---------- ------------ ---------- ------- ---------------- --------
Total
transactions (61.4
with owners - (0.2) - - (61.2) (61.4) - )
--------- --------- ---------- ------------ ---------- ------- ---------------- --------
At 30 June 2022 11.1 (0.6) 250.1 3.2 592.3 856.1 0.7 856.8
========= ========= ========== ============ ========== ======= ================ ========
Profit for the
period - - - - 33.5 33.5 (0.1) 33.4
Exchange
movements on
translation of
subsidiary
undertakings - - - 0.5 - 0.5 - 0.5
--------- --------- ---------- ------------ ---------- ------- ---------------- --------
Other
comprehensive
income - - - 0.5 - 0.5 - 0.5
--------- --------- ---------- ------------ ---------- ------- ---------------- --------
Total
comprehensive
income/(loss) - - - 0.5 33.5 34.0 (0.1) 33.9
--------- --------- ---------- ------------ ---------- ------- ---------------- --------
Vesting of
ordinary
shares and
options - 0.1 - - (0.1) - - -
Share
repurchases
and
cancellations (0.2) - 0.2 - (10.0) (10.0) - (10.0)
Dividends paid - - - - (41.6) (41.6) - (41.6)
Share-based
payments - - - - 4.9 4.9 - 4.9
Deferred tax - - - - (0.1) (0.1) - (0.1)
--------- --------- ---------- ------------ ---------- ------- ---------------- --------
Total
transactions (46.8
with owners (0.2) 0.1 0.2 - (46.9) (46.8) - )
--------- --------- ---------- ------------ ---------- ------- ---------------- --------
At 31 December
2022 10.9 (0.5) 250.3 3.7 578.9 843.3 0.6 843.9
========= ========= ========== ============ ========== ======= ================ ========
Profit for the
period - - - - 24.3 24.3 (0.1) 24.2
Exchange
movements on
translation of
subsidiary
undertakings - - - (2.1) - (2.1) - (2.1)
--------- --------- ---------- ------------ ---------- ------- ---------------- --------
Other
comprehensive
loss - - - (2.1) - (2.1) - (2.1)
--------- --------- ---------- ------------ ---------- ------- ---------------- --------
Total
comprehensive
(loss)/income - - - (2.1) 24.3 22.2 (0.1) 22.1
--------- --------- ---------- ------------ ---------- ------- ---------------- --------
Vesting of
ordinary
shares and
options - 0.1 - - (0.1) - - -
Dividends paid - - - - (2.6) (2.6) - (2.6)
Purchase of
shares by
EBT - (0.4) - - (24.0) (24.4) - (24.4)
Share-based
payments - - - - 10.2 10.2 - 10.2
Total
transactions
with owners - (0.3) - - (16.5) (16.8) - (16.8)
--------- --------- ---------- ------------ ---------- ------- ---------------- --------
At 30 June 2023 10.9 (0.8) 250.3 1.6 586.7 848.7 0.5 849.2
========= ========= ========== ============ ========== ======= ================ ========
Notes 14 15 15 15 15
Consolidated statement of cash flows
for the six months ended 30 June 2023
Six months Six months Year ended
ended ended 31 December
30 June 2023 30 June 2022 2022
Notes GBPm GBPm GBPm
Cash flows from operating activities
Cash generated from operations 17 55.8 121.4 175.1
Income tax paid (12.6) (10.5) (12.8)
-------------
Net cash inflows from operating
activities 43.2 110.9 162.3
Cash flows from investing activities
Purchase of property, plant
and equipment 10 (0.3) (0.9) (1.2)
Purchase of intangible assets 9 (1.9) (1.9) (4.1)
Purchase of financial assets
at fair value through profit
or loss (FVTPL)(1) (61.3) (130.6) (188.2)
Proceeds from disposal of financial
assets at FVTPL(2) 62.1 100.1 233.3
Cash movement from funds no
longer consolidated(3) (1.5) - (6.0)
Cash movement from funds consolidated(4) - - 0.3
Dividend income received 4 0.3 0.6 1.0
------------- ------------- ------------
Net cash (outflows)/inflows
from investing activities (2.6) (32.7) 35.1
Cash flows from financing activities
Dividends paid 16 (2.6) (48.6) (90.2)
Purchase of shares by EBT (24.4) (21.4) (21.4)
Purchase of shares for cancellation (2.0) - (8.0)
Net finance costs paid (3.2) (4.7) (4.5)
Cash paid in respect of lease
arrangements (3.0) (2.9) (7.8)
Third-party subscriptions into
consolidated funds 29.9 26.3 31.7
Third-party redemptions from
consolidated funds (30.0) (10.2) (13.0)
Distributions paid by consolidated
funds (0.5) (2.0) (3.8)
------------- ------------- ------------
Net cash outflows from financing
activities (35.8) (63.5) (117.0)
[]
------------- ------------- ------------
Net increase in cash and cash
equivalents 4.8 14.7 80.4
[] 1
Cash and cash equivalents at
beginning of period 280.3 197.3 197.3
Effects of exchange rates on
cash and cash equivalents (1.1) 1.9 2.6
------------- ------------- ------------
Cash and cash equivalents at
end of period 12 284.0 213.9 280.3
============= ============= ============
(1) Includes purchases of seed investments and fund units used
as a hedge against compensation awards linked to the value of those
funds and, where the Group's investment in seed is judged to give
it control of a fund, purchases of financial assets by that
fund.
(2) Includes proceeds from disposals of seed investments and,
where the Group's investment in seed is judged to give it control
of a fund, disposals of financial assets by that fund.
(3) Comprises cash and cash equivalents held by a fund at the
point that the Group ceases to control the fund and it is no longer
consolidated.
(4) Comprises cash and cash equivalents held by a fund at the
point that control passes to the Group and the fund is
consolidated.
Notes to the Group financial statements
Introduction
Jupiter Fund Management plc (the Company) and its subsidiaries
(together, the Group) offer a range of asset management products.
Through its subsidiaries, the Group acts as an investment manager
to authorised unit trusts, SICAVs, ICVCs, OEICs, investment trust
companies, pension funds and other specialist funds. At 30 June
2023, the Group had offices in the United Kingdom, Ireland,
Germany, Hong Kong, Italy, Luxembourg, Singapore, Spain, Sweden,
Switzerland and the United States.
Basis of preparation and other accounting policies
Within this Interim Report and Accounts, all current and
comparative data covering periods to (or as at) 30 June are
unaudited. Data given in respect of the year ended 31 December 2022
is audited. Information which is the required content of the
Interim Management Report can be found on pages 1 to 6, 23, and 25
to 28.
These condensed financial statements for the six months ended 30
June 2023 have been prepared in accordance with the Disclosure
Guidance and Transparency Rules sourcebook of the Financial Conduct
Authority and with UK-adopted International Accounting Standard IAS
34 'Interim Financial Reporting'. The condensed financial
statements should be read in conjunction with the Group's annual
financial statements for the year ended 31 December 2022, which
were prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act
2006 as applicable to companies reporting under those
standards.
The condensed financial statements do not comprise statutory
accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2022 were
approved by the Board on 23 February 2023 and delivered to the
Registrar of Companies. The report of the auditors on those
accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under section 498 of
the Companies Act 2006. The condensed financial statements have
been reviewed, not audited.
The Group is able to operate within its available resources even
in a stressed scenario. The Directors have not identified any
material uncertainties to the Group's ability to continue to adopt
the going concern basis. As a consequence, the Directors have a
reasonable expectation that the Group has adequate resources to
continue operating for a period of at least 12 months from the date
of approval of the condensed financial statements. Accordingly,
they continue to adopt the going concern basis of accounting in
preparing these financial statements.
Changes in accounting policies
The International Accounting Standards Board and IFRS
Interpretations Committee (IC) have issued a number of new
accounting standards and interpretations and amendments to existing
standards and interpretations. There are no IFRSs or IFRS IC
interpretations that are not yet effective that would be expected
to have a material impact on the Group.
Accounting policies
The accounting policies applied are consistent with those
applied in the Group's annual financial statements for the year
ended 31 December 2022.
1. Revenue
The Group's primary source of recurring revenue is management
fees. Management fees are charged for investment management or
administrative services and are normally based on an agreed
percentage of AUM. Initial charges and commissions are for
additional administrative services at the beginning of a client
relationship, as well as ongoing administrative costs. Performance
fees may be earned from some funds when agreed performance
conditions are met. Net revenue is stated after fee and commission
expenses to intermediaries for ongoing services under distribution
agreements.
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
GBPm GBPm GBPm
Management fees 198.5 224.1 430.1
Initial charges and commissions 1.3 1.7 3.1
Performance fees 0.4 0.7 10.3
---------------- ---------------- -----------------
Revenue 200.2 226.5 443.5
Fee and commission expenses
relating to management
fees (18.7) (23.6) (45.3)
Fees and commission expenses
relating to initial charges
and commissions (0.5) (0.5) (0.9)
---------------- ---------------- -----------------
Net revenue 181.0 202.4 397.3
================ ================ =================
2. Segmental reporting
The Group offers a range of products and services through
different distribution channels. All financial, business and
strategic decisions are made centrally by the Board of Directors
(the Board), which determines the key performance indicators of the
Group. Information is reported to the chief operating decision
maker, the Board, on a single segment basis. While the Group has
the ability to analyse its underlying information in different
ways, for example by product type, this information is only used to
allocate resources and assess performance for the Group as a whole.
On this basis, the Group considers itself to be a single-segment
investment management business.
3. Administrative expenses
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
GBPm GBPm GBPm
Staff costs 79.3 55.3 132.6
Depreciation of property,
plant and equipment 2.6 2.9 5.8
Other administrative
expenses 51.2 55.5 108.8
---------------- ---------------- -----------------
Administrative expenses
before losses arising
from economic hedging
of fund awards 133.1 113.7 247.2
Net losses on instruments
held to provide an economic
hedge for fund awards 1.3 48.0 55.1
Total administrative
expenses 134.4 161 .7 302.3
================ ================ =================
The management statement of this document provides details of
exceptional items of GBP2.2m (2022 H1: GBP1.5m, 2022 FY: GBP0.8m)
within administrative expenses. All of this expense is included
within staff costs, and relates to cash and share-based deferred
earn out (DEO) awards. No further significant charges are expected
in respect of these awards.
4. Other gains/(losses)
Other gains/(losses) relate principally to net gains or losses
made on the Group's seed investment portfolio and derivative
instruments held to provide economic hedges against that portfolio.
The portfolio and derivatives are held at FVTPL (see Note 11).
Gains and losses on these investments comprise both realised and
unrealised amounts.
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
GBPm GBPm GBPm
Dividend income 0.3 0.6 1.0
Net gains/(losses) on
financial instruments
designated at FVTPL upon
initial recognition 2.5 (24.8) (24.7)
Net (losses)/gains on
financial instruments
at FVTPL (2.4) 16.0 14.0
---------------- ---------------- -----------------
Other gains/(losses) 0.4 (8.2) (9.7)
================ ================ =================
5. Net finance costs
Net finance costs principally relate to interest payable on Tier
2 subordinated debt notes (see Note 13) and the unwinding of the
discount applied to lease liabilities. Net finance costs also
include ancillary charges for commitment fees and arrangement fees
associated with the revolving credit facility (RCF) (see Note 13).
Interest (receivable)/payable on bank deposits is recognised on an
accrual basis using the effective interest method.
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
GBPm GBPm GBPm
Interest on subordinated
debt 2.3 2.3 4.7
Interest on lease liabilities 0.7 0.8 1.6
Finance costs on the
RCF 0.1 0.1 0.3
Interest (receivable)/payable
on bank deposits (1.3) 0.1 (0.3)
Net finance costs 1.8 3.3 6.3
================ ================ =================
6. Income tax expense
Analysis of charge in the period:
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
GBPm GBPm GBPm
Current tax
Tax on profits for the
period 12.7 3.1 9.5
Adjustments in respect
of prior periods - - (3.8)
---------------- ---------------- -----------------
Total current tax 12.7 3.1 5.7
Deferred tax
Origination and reversal
of temporary differences (2.1) 1.2 3.8
Adjustments in respect
of prior periods - - 0.6
---------------- ---------------- -----------------
Total deferred tax (2.1) 1.2 4.4
10.1
Income tax expense 10.6 4.3 10.1
================ ================ =================
The weighted average UK corporate tax rate for 2023 FY is 23.5%
(2022 H1 and 2022 FY: 19%). The UK corporation tax rate increased
from 19% to 25% on 1 April 2023. The effective tax rate used for
the period to 30 June 2023 is 30.5%, compared to 22.9% for the six
months ended 30 June 2022.
The increase in this rate is largely driven by a reduction in
deferred compensation awards charges due to the movement in the
share price.
7. Earnings per share (EPS)
Basic EPS is calculated by dividing the profit for the period
attributable to equity holders of Jupiter Fund Management plc (the
parent company of the Group) by the weighted average number of
ordinary shares outstanding and contingently issuable during the
period, less the weighted average number of own shares held. Own
shares are shares held in an EBT for the benefit of employees under
the vesting, lock-in and other incentive arrangements in place.
Diluted EPS is calculated by dividing the profit for the period
(as used in the calculation of basic EPS) by the weighted average
number of ordinary shares outstanding during the period for the
purpose of basic EPS, plus the weighted average number of ordinary
shares that would be issued on the conversion of all the dilutive
potential ordinary shares into ordinary shares.
The weighted average number of ordinary shares used in the
calculation of EPS is as follows:
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
Weighted average number Number Number Number
of shares million million million
Issued share capital(1) 545.1 553.1 552.4
Add: Contingently issuable
shares(2) 5.9 -(3) 1.7
Less: Time-apportioned
own shares held (28.1) (23.5) (24.5)
----------------- ----------------- ------------------
Weighted average number
of ordinary shares for
the purpose of basic
EPS 522.9 529.6 529.6
Add: Weighted average
number of dilutive potential
shares 8.8 13.5 9.3
Weighted average number
of ordinary shares for
the purpose of diluted
EPS 531.7 543.1 538.9
================= ================= ==================
(1) The Group purchased and cancelled 1.4m ordinary shares
during the first half of 2023 and 6.7m ordinary shares during 2022
(see Note 14).
(2) Contingently issuable shares relate to vested but
unexercised share-based payment awards at the balance sheet
date.
(3) The Group did not disclose an amount of contingently
issuable shares in June 2022, although 5.0m such shares were held.
Including this amount in the calculation would not have changed
either basic or diluted EPS.
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
EPS Pence Pence Pence
Basic 4.6 2.6 8.9
Diluted 4.6 2.5 8.8
8. Goodwill
Goodwill relates to the 2007 acquisition of Knightsbridge Asset
Management Limited (KAML) (GBP341.2m) and the 2020 acquisition of
Merian Global Investors Limited (Merian) (GBP229.4m).
30 June 2023 30 June 2022 31 December 2022
GBPm GBPm GBPm
Goodwill 570.6 570.6 570.6
570.6 570.6 570.6
============ ============ ================
The Group operates as a single asset management business segment
and does not allocate costs between investment strategies or
individual funds. The Group's goodwill originally arose in 2007
through KAML and was increased in 2020 through the acquisition of
Merian. The Merian acquisition largely comprised revenues and
incremental costs and therefore increased the scale of the existing
business, improving the headroom over goodwill arising on
acquisitions. Both businesses are fully integrated and are not
separately measured or monitored. It is not possible to assign any
reduction in the Group's profitability between KAML and Merian, and
therefore we adopt a single CGU and consider our impairment test
based on Group-wide cash generation to calculate the recoverable
amount of the goodwill, using the higher of the value in use and
fair value less costs of disposal, and comparing this to the
carrying value of the asset.
For the impairment test, the recoverable amount for the goodwill
asset was calculated using a value in use approach, based on the
net present value of the Group's future earnings. The net present
value was calculated using a discounted cash flow model, with the
following key assumptions:
-- The Group's projected base case forecast cash flows over a
period of four and a half years to the end of 2027, which includes
an assumption of annual revenue growth based on our expectations of
AUM growth, client fee rates and performance fees. The data has
been approved by the Board in June 2023, and is aligned with the
strategic focus set out in the Management Statement;
-- Long-term growth rates of 2% (2022 FY: 2%) were used to
calculate terminal value; and
-- A cost of capital of 12.2% (2022 FY: 12.8%) was calculated
using the capital asset pricing model, weighted to take into
account the Group's subordinated debt.
The impairment test performed indicates positive headroom of
recoverable amount over carrying value of GBP230m at 30 June 2023,
up from GBP212m at 31 December 2022. The value in use of the asset
is higher than its fair value less costs of disposal. Our
conclusion therefore is that the Group's goodwill asset is not
currently impaired.
The sensitivity of the Group's current headroom position to
changes in key metrics and assumptions is shown in the tables
below. The first table discloses the stresses that would have to be
applied to the value in use calculation in order for the headroom
to be completely removed. The second table sets out the impacts of
reasonably possible changes in key assumptions used in the value in
use calculation.
The adverse movement on key inputs to the Group's impairment
testing required to remove all headroom is as follows:
Assumption Movement required
Measure used to remove all
in base case headroom
------------------------------------- ------------------- ------------------
Compound average annualised revenue Updated five-year Decrease by
growth over a five-year period strategic plan(1) 3.5%(2)
Discount rate movement (post tax)(3) 12.2% Increase to
15.6%
Terminal growth rate movement 2.0% Decrease to
-3.3%
------------------------------------- ------------------- ------------------
1Updated to include the impact of H1 2023 actuals and the
Board's latest approved forecast.
2This amount is a reduction in average annual revenue growth
over a four and a half year period; it does not imply a linear
year-on-year reduction.
3Using pre-tax discount rates on pre-tax profitability and cash
flows does not produce a materially different result.
The impact on headroom of reasonably possible adverse movements
in key inputs to the Group's impairment testing is as follows:
Reasonably Reduction in
possible adverse headroom
Key variable movement GBPm
------------------------------- ------------------ -------------
Discount rate +1% 82
Terminal growth rate movement -1% 60
Decrease in revenue -10% 164(1)
------------------------------- ------------------ -------------
(1) The decrease in revenue represents a modelled percentage
reduction in each year projected in the Group's base case forecast
cashflows. In the Group's Annual Report and Accounts for 2022, this
sensitivity was disclosed as being GBP87m in respect of a 10%
decrease in revenue. In the current period, we have revised our
modelling and assumed a smaller correlation between decreases in
revenue and corresponding decreases in costs. If we had prepared
the 2022 year-end disclosure on the same basis, the reduction in
headroom would have been GBP168m.
The sensitivities modelled make no allowance for actions
management would take to reduce costs should the Group experience
future reductions in AUM or profitability.
Neither the Group's regulatory capital or liquidity resources
nor its regulatory requirements would be directly impacted by
impairment charges relating to the Group's goodwill asset.
As set out in the tables above, if forecasts are not met,
impairment of the asset could result. The Group continues to
monitor its market capitalisation against implied internal
valuations and adjust its internal models on a regular basis to
reflect the impacts of market information and its own profitability
levels.
9. Intangible assets
Intangible assets principally comprise investment management
contracts acquired as part of the Merian transaction. These
contract assets are amortised on a straight-line basis over their
useful economic lives, which have been assessed to be a maximum of
four years.
The other intangible assets recognised are computer software.
During the period, the Group acquired computer software of GBP1.9m
(2022 H1: GBP1.9m, 2022 FY: GBP4.1m), and disposed of GBPnil (2022
H1: GBPnil, 2022 FY GBPnil). These assets are amortised on a
straight-line basis over their estimated useful lives, which are
estimated as being between five and ten years.
The amortisation charge for the period was GBP10.4m (2022 H1:
GBP10.4m, 2022 FY: GBP21.0m) .
The Directors have considered whether there were any indicators
of potential impairment of the intangible assets as at 30 June 2023
and concluded there were none (2022 H1 and 2022 FY: same).
30 June 2023 30 June 2022 31 December 2022
GBPm GBPm GBPm
Intangible assets 26.7 43.6 35.2
26.7 43.6 35.2
============= ============ ================
The management statement of this document refers to exceptional
items of GBP9.4m (2022 H1: GBP9.4m, 2022 FY: GBP18.8m) relating to
amortisation of intangible assets. This charge is in respect of the
Merian acquisition in 2020.
10. Property, plant and equipment
The net book value of property, plant and equipment at 30 June
2023 was GBP38.9m (2022 H1: GBP42.5m, 2022 FY: GBP40.9m). During
the period, the Group acquired items of property, plant and
equipment (excluding right-to-use leased assets) with a value of
GBP0.3m (2022 H1: GBP0.9m, 2022 FY: GBP1.2m). Additions to the
right-of-use leased assets during the period were GBP0.3m (2022 H1:
GBP0.4m, 2022 FY: GBP1.4m).
11. Financial instruments held at fair value
As at 30 June 2023, the Group held the following classes of
financial instruments measured at fair value, which principally
comprise seed investments and assets held to hedge compensation
awards:
30 June 2023 30 June 2022 31 December 2022
GBPm GBPm GBPm
Financial assets at FVTPL 166.6 247.5 167.8
Other financial assets
at FVTPL (derivatives) 0.2 - -
Financial liabilities
at FVTPL (48.5) (50.3) (48.6)
Other financial liabilities
at FVTPL (derivatives) - - (0.6)
118.3 197.2 118.6
============= ============ ================
12. Cash and cash equivalents
30 June 2023 30 June 2022 31 December 2022
GBPm GBPm GBPm
Cash at bank and in hand 281.1 209.2 276.8
Cash held by the EBT
and seed investment subsidiaries 2.9 4.7 3.5
Total cash and cash
equivalents 284.0 213.9 280.3
============= ============ ================
Cash held by the EBT and seed investment subsidiaries is not
available for use by the Group.
13. Loans and borrowings
On 27 April 2020, the Group issued GBP50.0m of Tier 2
subordinated debt notes at a discount of GBP0.5m. Issue costs were
GBP0.5m. These notes will mature on 27 July 2030 and bear interest
at a rate of 8.875% per annum to 27 July 2025, and at a reset rate
thereafter. The Group has the option to redeem all of the notes
from 27 April 2025 onwards. The movements in the balance in the
six-month period to 30 June 2023 represent the unwinding of the
discount applied to the liability.
30 June 2023 30 June 2022 31 December 2022
GBPm GBPm GBPm
Non-current subordinated
debt in issue 49.6 49.4 49.5
49.6 49.4 49.5
============= ============ ================
The Group's revolving credit facility enables it to borrow up to
GBP40m (2022: GBP80m). The facility renewed in April 2023 and
remains undrawn. The facility expires in April 2026. Interest on
the RCF is payable at a rate per annum of a compounded reference
rate plus a margin of 0.6%. A commitment fee is payable on the RCF
at a rate of 0.21% per annum on the undrawn balance. A utilisation
fee is also payable at a rate of 0.1% per annum when up to 33% of
the facility is drawn, 0.2% per annum when 33% to 66% of the
facility is drawn, and 0.4% per annum when more than 66% of the
facility is drawn.
14. Share capital
In 2022 and early 2023, the Group carried out a GBP10.0m share
buyback and cancellation programme, purchasing and cancelling 6.7m
ordinary shares at a cost of GBP8.0m in 2022, with a further
purchase and cancellation of 1.4m shares in 2023 at a cost of
GBP2.0m. On cancellation of the shares, an amount equal to their
nominal value was transferred to a capital redemption reserve which
forms part of 'Other reserves', as detailed in Note 15. Shares
cancelled represented 1.5% of the previously issued share
capital.
Number of ordinary shares
30 June 2023 30 June 2022 31 December 2022
m m m
Ordinary shares of 2p
each 545.0 553.1 546.4
545.0 553.1 546.4
============= ============ ================
Number of ordinary shares Par value
30 June 30 June 31 December 30 June 30 June 31 December
2023 2022 2022 2023 2022 2022
m m GBPm GBPm GBPm GBPm
Movement in ordinary shares
At 1 January 546.4 553.1 553.1 10.9 11.1 11.1
Shares cancelled (1.4) - (6.7) - - (0.2)
At period ended 545.0 553.1 546.4 10.9 11.1 10.9
======== ======== ============ ======== ======== ============
15. Reserves
(i) Own share reserve
The Group operates an EBT for the purpose of satisfying certain
retention awards to employees. The holdings of this trust, which is
funded by the Group, include shares in Jupiter Fund Management plc
that have not vested unconditionally to employees of the Group.
These shares are recorded at cost and are classified as own shares
and are used to settle obligations that arise from the vesting of
share-based awards.
During the period, the Group purchased 18.4m (2022 H1: 10.4m,
2022 FY: 10.4m) ordinary shares with a par value of GBP0.4m (2022
H1: GBP0.2m, 2022 FY: GBP0.2m) for the purpose of satisfying share
option obligations to employees. The full cost of the purchases was
GBP24.4m (2022 H1: GBP21.4m, 2022 FY: GBP21.4m). The Group disposed
of 3.4m (2022 H1: 2.1m, 2022 FY: 7.2m) own shares to employees in
satisfaction of share-based awards with a nominal value of GBP0.1m
(2022 H1: GBP0.1m, 2022 FY: GBP0.1m). At 31 June 2023, 37.9m (2022
H1: 28.0m, 2022 FY: 22.9m) ordinary shares, with a par value of
GBP0.8m (2022 H1: GBP0.6m, 2022 FY: GBP0.5m), were held as own
shares within the Group's EBT.
(ii) Other reserves
Other reserves comprise the merger relief reserve of GBP242.1m
(2022 H1 and 2022 FY: GBP242.1m) formed on the acquisition of
Merian in 2020, GBP8.0m (2022 H1 and 2022 FY: GBP8.0m) that relates
to the conversion of Tier 2 preference shares in 2010, and GBP0.2m
(2022 H1: GBPnil, 2022 FY: GBP0.2m) of capital redemption reserve
that was transferred from share capital on the cancellation of
shares repurchased in 2022 and 2023 (see Note 14).
(iii) Foreign currency translation reserve
The foreign currency translation reserve of GBP1.6m (2022 H1:
GBP3.2m, 2022 FY: GBP3.7m) is used to record exchange differences
arising from the translation of the financial statements of foreign
subsidiaries.
(iv) Retained earnings
Retained earnings of GBP586.7m (2022 H1: GBP592.3m, 2022 FY:
GBP578.9m) are the amount of earnings that are retained within the
Group after dividend payments and other transactions with owners,
including share repurchases. During the period, the Group spent
GBP2.0m on the repurchase of 1.4m shares (2022 H1: GBPnil, 2022 FY:
GBP8.0m on the purchase of 6.7m shares) at an average price of 143p
per share (2022 H1: nil, 2022 FY: 119p per share).
16. Dividends
On 19 May 2023 the Group paid a final dividend for 2022 of 0.5p
per ordinary share. This amounted to a total payment of GBP2.6m
after taking into account the GBP0.1m dividends waived on shares
held in the EBT.
The Board has declared an interim dividend for the period of
3.5p per ordinary share and a special dividend of 2.9p per ordinary
share. These dividends will be paid on 1 September 2023 to ordinary
shareholders on the register at close of business on 4 August 2023.
These dividends amount to GBP19.1m and GBP15.8m respectively
(before adjusting for any dividends waived on shares in the
EBT).
17. Cash flows generated from operating activities
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
GBPm GBPm GBPm
Operating profit 36.6 22.1 64.3
Adjustments for:
Amortisation of intangible
assets 10.4 10.4 21.0
Depreciation of property,
plant and equipment 2.6 2.9 5.8
Other losses(1) 0.3 29.7 28.2
Losses on fund unit hedges(2) 1.3 48.0 55.1
Share-based payments 10.2 8.7 13.6
(Increase)/decrease in
trade and other receivables(3) (80.9) (158.3) 12.2
Increase/(decrease) in
trade and other payables(3) 75.3 157.9 (25.1)
---------------- ---------------- -----------------
Cash generated from operations 55.8 121.4 175.1
================ ================ =================
(1) Comprises the reversal of items included in 'Other
gains/(losses)' in the income statement that relate either to
unrealised gains or losses, or to cash flows relating to the
disposal of financial assets other than derivative contracts. Cash
flows relating to disposals are included in the Cash flow statement
within 'Proceeds from disposals of financial assets at FVTPL'.
(2) Comprises the reversal of net losses on instruments held to
provide an economic hedge for funds awards that are recognised
within Administrative expenses (Note 3). Cash flows arising from
the disposals of such instruments are included in the Cash flow
statement, in line with footnote 1 above.
(3) Amounts reported in these lines can differ from the movement
in the balance sheet where cash flows that form part of that
movement are separately reported in a different line of the Cash
flow statement or its notes. In 2022 and 2023, these differences
are principally in respect of cash flow movements relating to
consolidated funds. For trade and other payables, additionally,
cash flows arising from movements in lease liabilities are
presented on the face of the Cash flow statement.
18. Changes in liabilities arising from financing activities
Financial liabilities at FVTPL Loans and borrowings(1) Leases Total
GBPm GBPm GBPm GBPm
Brought forward at 1 January 2022 52.3 49.3 51.1 152.7
New leases - - 0.4 0.4
Changes from financing cash flows 16.1(2) - (2.9) 13.2
Changes arising from obtaining or
losing control of consolidated funds (10.4) - - (10.4)
Changes in fair value (7.7) - - (7.7)
Interest expense - 0.1 0.8 0.9
Lease reassignment and modifications - - (0.2) (0.2)
------------------------------- ------------------------ ------- -------
Liabilities arising from financing
activities carried forward at 30 June
2022 50.3 49.4 49.2 148.9
=============================== ======================== ======= =======
New leases - - 1.0 1.0
Changes from financing cash flows 2.6(2) - (4.9) (2.3)
Changes arising from obtaining or
losing control of consolidated funds (4.0) - - (4.0)
Changes in fair value (0.3) - - (0.3)
Interest expense - 0.1 0.8 0.9
Lease reassignment and modifications - - 0.2 0.2
------------------------------- ------------------------ ------- -------
Liabilities arising from financing
activities carried forward at 31
December 2022 48.6 49.5 46.3 144.4
New leases - - 0.3 0.3
Changes from financing cash flows (0.1)(2) - (3.0) (3.1)
Changes arising from obtaining or
losing control of consolidated funds (0.4) - - (0.4)
Changes in fair value 0.4 - - 0.4
Interest expense - 0.1 0.7 0.8
Lease reassignment and modifications - - 0.6 0.6
------------------------------- ------------------------ ------- -------
Liabilities arising from financing
activities carried forward at 30 June
2023 48.5 49.6 44.9 143.0
=============================== ======================== ======= =======
Notes 13
1 Accrued interest on loans and borrowings is recorded within
'Trade and other payables' and is therefore not included in this
analysis. The interest expense above comprises the charge arising
from unwinding the discount applied in calculating the amortised
cost of the subordinated debt.
2 Comprises net cash flows from third-party
subscriptions/redemptions into/from consolidated funds (see Cash
flow statement).
19. Financial instruments
Financial instruments held at fair value are carried at a value
which represents the price to exit the instruments at the balance
sheet date. The fair value of financial instruments that are
actively traded in organised financial markets is determined by
reference to quoted market bid prices at the close of business on
the balance sheet date. Where a quoted market price is not
available, the Group establishes the fair value using valuation
techniques such as recent arm's length market transactions,
reference to the current fair value of another instrument that is
substantially the same, discounted cash flow analysis or other
valuation models.
The Group used the following hierarchy for determining and
disclosing the fair value of financial instruments:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2: other techniques, for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly.
Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on observable
market data (unobservable inputs).
As at 30 June 2023, the Group held the following financial
instruments measured at fair value:
Level 1 Level 2 Level 3 Total
GBPm GBPm GBPm GBPm
Financial assets at FVTPL
- funds 122.0 44.6 - 166.6
Financial assets at FVTPL
- derivatives - 0.2 - 0.2
Financial liabilities
at FVTPL (48.5) - - (48.5)
73.5 44.8 - 118.3
======= ======= ======= ======
As at 30 June 2022, the Group held the following financial
instruments measured at fair value:
Level 1 Level 2 Level 3 Total
GBPm GBPm GBPm GBPm
Financial assets at FVTPL
- funds 162.5 85.0 - 247.5
Financial assets at FVTPL - - - -
- derivatives
Financial liabilities
at FVTPL (50.3) - - (50.3)
112.2 85.0 - 197 .2
======= ======= ======= ======
As at 31 December 2022, the Group held the following financial
instruments measured at fair value:
Level 1 Level 2 Level 3 Total
GBPm GBPm GBPm GBPm
Financial assets at FVTPL
- funds 116.5 51.0 0.3 167.8
Financial liabilities
at FVTPL (48.6) - - (48.6)
Other financial liabilities
at FVTPL (derivatives) - (0.6) - (0.6)
67.9 50.4 0.3 118.6
======= ======= ======= ======
20. Related party transactions
All related party transactions during the period are consistent
with those disclosed in the Annual Report and Accounts for the year
ended 31 December 2022 and have taken place on an arm's length
basis.
No new related parties or related party transactions that
materially affect the financial position or performance of the
Group existed or occurred during the period.
Statement of Directors' responsibilities
Statements relating to the preparation of the Financial
Statements
We confirm that to the best of our knowledge:
The condensed set of financial statements has been prepared in
accordance with UK-adopted International Accounting Standard 34,
'Interim Financial Reporting' as required by the Companies Act 2006
and gives a true and fair view of the assets, liabilities,
financial position and profits of the Group for the period ended 30
June 2023.
The interim report includes a fair review of the information
required by:
a) DTR 4.2.7R of the Guidance, being an indication of important
events that have occurred during the first six months of the
current financial year and their impact on the condensed set of
financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R of the Guidance, being related party transactions
that have taken place in the first six months of the current
financial year and that have materially affected the financial
position or performance of the Group during that period; and any
changes in the related party transactions described in the last
Annual Report and Accounts that could have a material effect on the
financial position or performance of the Group in the past six
months of the current financial year.
A list of the Directors of Jupiter Fund Management plc can be
found in the Annual Report and Accounts for the year ended 31
December 2022. A current list of Directors is maintained on the
website at www.jupiteram.com.
On behalf of the Board
Wayne Mepham
Chief Financial Officer
26 July 2023
Principal risks and mitigations
The Group is exposed to various risk types in pursuing its
business objectives, which can be driven by both internal and
external factors. Understanding and managing these risks is a
regulatory requirement but also imperative to the success of the
business. Our principal risks, as disclosed in the Group's 2022
Annual Report and Accounts, remain unchanged and our risk profile
has remained stable during the first half of 2023.
Jupiter's regulatory engagement remains a key area of focus and
we continue to engage with our Regulators in an open and
transparent manner, appropriately managing changes to our
regulatory landscape and any resulting regulatory divergence.
Technology and Information Security risk remains a key area of
focus due to the risk posed from a successful cyber-attack and we
continue to maintain a robust control environment in this area of
the business, reducing vulnerabilities where possible.
Outsourcing is a key component of our business strategy and we
rely on third-party relationships to deliver our business services.
In addition, understanding and managing our People risk is
essential to the success of our business to ensure we meet our
evolving operational and regulatory needs.
We believe that the Group remains well positioned and equipped
to respond to any further volatility in the markets in a way that
continues to mitigate risk and protect our client interests.
Looking forward to the second half of 2023 and beyond we continue
to leverage the Group's Enterprise Risk Management framework to
identify any key emerging risks which may further impact our
overall risk profile to ensure we are well positioned to understand
and manage them in line with the Group's risk appetite.
Alternative performance measures
The use of alternative performance measures (APMs)
The Group uses APMs for two principal reasons:
-- We use ratios to provide metrics for users of the accounts;
and
-- We use revenue, expense and profitability-based APMs to
explain the Group's underlying profitability.
Ratios
The Group calculates ratios to provide comparable metrics for
users of the accounts. These ratios are derived from other APMs
that measure underlying revenue and expenditure data.
In this document, we have used the following ratios:
APM Six months Six months Year ended Definition Reconciliation
ended ended 31 December
30 June 30 June 2022
2023 2022
Administrative expenses
before exceptional items
and performance fees
divided by net revenue
before exceptional items
1 Cost: income ratio 71% 67% 69% and performance fees
----------------------------- ---------- ---------- ------------ ---------------------------- --------------
2 Net management fee 71bps 74bps 74bps Net management fees divided
margin by average AUM
----------------------------- ---------- ---------- ------------ ----------------------------
Fixed staff costs before
exceptional items plus
Variable staff costs
before exceptional items
and performance fee-related
Total compensation costs as a proportion
ratio before net performance of net revenue before
3 fees 41% 38% 40% performance fees
----------------------------- ---------- ---------- ------------ ----------------------------
Underlying profit after
tax attributable to equity
holders of the parent
divided by average issued
4 Underlying EPS 6.7p 4.2p 11.3p share capital
----------------------------- ---------- ---------- ------------ ----------------------------
Underlying profit after
tax before performance
fees attributable to
equity holders of the
Underlying EPS before parent divided by average See table
5 performance fees 7.1p 7.8p 14.7p issued share capital 1 below
----------------------------- ---------- ---------- ------------ ---------------------------- --------------
Reconciliation of reported IFRS numbers to APMs: table 1
Six months Six months Year ended
ended ended 31 December
30 June 2023 30 June 2022 2022
APM GBPm GBPm GBPm
Administrative expenses (page 7) 134.4 161.7 302.3
Less: Performance fee costs (page 5) (3.5) (24.9) (33.9)
Less: Exceptional items included in
administrative expenses (page 12) (2.2) (1.5) (0.8)
Administrative expenses before exceptional
items and performance fee-related costs 128.7 135.3 267.6
Net revenue (page 7) 181.0 202.4 397.3
Less: Performance fees (page 12) (0.4) (0.7) (10.3)
Net revenue before performance fees 180.6 201.7 387.0
Cost: income ratio 1 71% 67% 69%
Management fees (page 12) 198.5 224.1 430.1
Less: Fees and commissions relating
to management fees (page 12) (18.7) (23.6) (45.3)
Net management fees 179.8 200.5 384.8
Average AUM (GBPbn) (page 4) 50.9 54.8 52.4
Net management fee margin 2 71bps 74bps 74bps
Fixed staff costs before exceptional
items (page 5) 37.0 37.9 82.4
Variable staff costs before exceptional
items and performance fees (page 5) 37.9 39.0 70.6
Total 74.9 76.9 153.0
Net revenue before performance fees
(see above) 180.6 201.7 387.0
Total compensation ratio before net
performance fees 3 41% 38% 40%
Statutory profit before tax (page 7) 34.8 18.8 58.0
Exceptional items (page 5) 11.6 10.9 19.6
Underlying profit before tax 46.4 29.7 77.6
Tax at average statutory rate of 22%
(2022 H1 and 2022 FY: 19%)(1) (10.2) (5.6) (14.7)
Underlying profit after tax 36.2 24.1 62.9
Loss/(profit) attributable to non-controlling
interests (page 9) 0.1 (0.7) (0.6)
Underlying profit after tax attributable
to equity shareholders of the parent 36.3 23.4 62.3
Average issued share capital (m) (page
15) 545.1 553.1 552.4
Underlying EPS 4 6.7p 4.2p 11.3p
Underlying profit after tax attributable
to equity shareholders of the parent
(see above) 36.3 23.4 62.3
Net performance fees (page 5) 3.1 24.2 23.6
Tax on performance fees at average
statutory rate of 22% (2022 H1 and
2022 FY: 19%)(2) (0.7) (4.6) (4.5)
Underlying profit after tax attributable
to equity holders of the parent before
performance fees 38.7 43.0 81.4
Average issued share capital (m) (see
above) 545.1 553.1 552.4
Underlying EPS before performance
fees 5 7.1p 7.8p 14.7p
(1) Actual effective tax rates applicable to underlying profit
before tax were 29.9% in 2023 H1, 19.9% in 2022 H1 and 17.0% in
2022
Revenue, expense and profit-related measures
1) Asset managers commonly draw out subtotals of revenues less
cost of sales, taking into account items such as fee expenses,
including commissions payable, without which a proportion of the
revenues would not have been earned. Such net subtotals can also be
presented after deducting non-recurring exceptional items.
2) The Group uses expense-based APMs to identify and separate
out non-recurring exceptional items or recurring items that are of
significant size in order to provide useful information for users
of the accounts who wish to determine the underlying cost base of
the Group. To further assist in this, we also provide breakdowns of
administrative expenses below the level required to be disclosed in
the statutory accounts, for example, distinguishing between
variable and fixed compensation, as well as non-compensation
expenditure. These subdivisions of expenditure are also presented
before and after exceptional items and after accounting for the
impact of performance fee pay-aways to fund managers.
3) Profitability-based APMs are effectively the sum of the above
revenue and expense-based APMs and are provided for the same
purpose - to separate out non-recurring exceptional items or
recurring items that are of significant size in order to provide
useful information for users of the accounts who wish to determine
the underlying profitability of the Group.
4) Underlying profit after tax is, in addition, used to
calculate underlying EPS which determines the Group's ordinary
dividend per share and is used in one of the criteria for measuring
the vesting rates of share-based awards that have performance
conditions attached.
In this document, we have used the following measures which are
reconciled or cross-referenced in table 1:
Measure Rationale for use of measure
Net management fees 1
----------------------------
Exceptional items(1) 2
----------------------------
Net revenue 1
----------------------------
Performance fees 2
----------------------------
Fixed staff costs before exceptional items 2
----------------------------
Variable staff costs before exceptional
items(2) 2
----------------------------
Underlying profit before tax(2) 3
----------------------------
Underlying profit after tax(2) 3, 4
----------------------------
(1) Defined as items of income or expenditure that are
significant in size and which are not expected to repeat over the
short to medium term.
(2) We also use these measures excluding performance fees (see
page 5).
As stated in 2 above, the Group presents a breakdown of
administrative expenses below the level required to be disclosed in
the statutory accounts, distinguishing between variable and fixed
compensation, as well as non-compensation expenditure. The relevant
amounts are set out in the table on page 5.
The impact of exceptional items on the financial statements
The Group has presented certain items as exceptional across all
periods. Exceptional items are defined above. These items
principally relate to the Merian Global Investors Limited (Merian)
acquisition in 2020. Further details of all items that are deemed
exceptional are explained below, as well as within the relevant
notes to the accounts and in the Management Statement.
The use of exceptional items and underlying profit measures
In the Management Statement of this document, the Group makes
use of a number of APMs, including 'Underlying profit before tax'.
The use of such measures means that financial results referred to
in that section of this document may not be equal to the statutory
results reported in the financial statements. Guidelines issued by
the Financial Reporting Council require such differences to be
reconciled.
'Underlying profit before tax' is equal to the statutory profit
before tax after exceptional items. The financial statements do not
refer to or use such measures, but the table below provides a
reconciliation, indicating in which notes the exceptional items are
recorded. Further detail on these items can be found in the
relevant notes.
Year ended
Six months ended Six months ended 31 December
30 June 2023 30 June 2022 2022
Notes GBPm GBPm GBPm
Underlying profit before
tax (page 1) 46.4 29.7 77.6
Administrative expenses 3 (2.2) (1.5) (0.8)
Amortisation of intangible
assets 9 (9.4) (9.4) (18.8)
Statutory profit before
tax 34.8 18.8 58.0
================ ================ ============
Changes in the use of APMs
The Group has not used the following APM which was used in the
Group's Annual Report and Accounts for 2022:
-- Total compensation ratio. The Group uses 'Total compensation
ratio before net performance fees' as its principal measure of the
relationship between revenues and staff costs due to the
variability of performance fees and associated costs (see page
26).
Independent Review Report to Jupiter Fund Management plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have been engaged by Jupiter Fund Management plc (the
'Company') to review the condensed consolidated financial
statements in the Interim Report and Accounts for the six months
ended 30 June 2023 which comprise the Consolidated income
statement, Consolidated statement of comprehensive income,
Consolidated balance sheet, Consolidated statement of changes in
equity, Consolidated statement of cash flows, Introduction to the
Notes to the Group financial statements, Basis of preparation and
other accounting policies and explanatory notes 1 to 20.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Interim Report and Accounts for the six months ended 30 June
2023 is not prepared, in all material respects, in accordance with
UK-adopted International Accounting Standard 34, "Interim Financial
Reporting", and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK) "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" ('ISRE 2410'), issued by the Financial Reporting Council. A
review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in the Statement of Directors' Responsibilities of
the Interim Report and Accounts, the financial statements of the
Company are prepared in accordance with UK-adopted International
Accounting Standards. The condensed set of financial statements
included in this Interim Report and Accounts has been prepared in
accordance with UK-adopted International Accounting Standard 34,
"Interim Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that management have inappropriately adopted
the going concern basis of accounting or that management have
identified material uncertainties relating to going concern that
are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE, however future events or conditions may
cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the Interim Report
and Accounts in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the Interim Report and Accounts, the directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of financial
information
In reviewing the Interim Report and Accounts, we are responsible
for expressing to the Company a conclusion on the condensed set of
financial statements in the Interim Report and Accounts. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
26 July 2023
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