REG - Jupiter Fund Mgmt - Interim Report and Accounts 2023
27/07/2023 07:15
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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 £46.4m (2022 H1: £29.7m)
and statutory profit before tax grew 85% to £34.8m (2022 H1: £18.8m)
§ Gross flows remained strong at £7.7bn, 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 £51.4bn (31 December 2022: £50.2bn)
§ 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 (£bn) 51.4 48.8 50.2
Net flows (£bn) - (3.6) (3.5)
Net revenue(1) (£m) 181.0 202.4 397.3
Statutory profit before tax(2) (£m) 34.8 18.8 58.0
Basic earnings per share (EPS)(2) (p) 4.6 2.6 8.9
Underlying profit before tax(1) (£m) 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
(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
(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 £51.4bn (2022 H2: £50.2bn), predominantly
driven by positive market movements. Lower average AUM compared to H1 22 led
to net revenues of £181.0m (2022 H1: £202.4m) and our continued rigorous
focus on cost control resulted in underlying profit before tax of £46.4m
(2022 H1: £29.7m).
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 £1.7bn in the first six months. AUM from
institutional clients is now at a record level of over £9bn, 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
£2bn 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 £18bn, 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 £7.7bn from clients in the
first half (2022 H1: £6.9bn).
The institutional channel was again the driver behind these positive flows,
with £1.7bn of net inflows in the first half, and a total of £3.5bn 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 £1.7bn 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 £600m 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 £51.4bn (31 December 2022: £50.2bn) as a result
of these slightly positive net flows and positive market and other movements
of £1.2bn.
31 December 2022 Q1 net flows Q2 net flows H1 net flows Market and other movements 30 June 2023
£bn £bn £bn £bn £bn £bn
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 £23m.
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 £50.9bn (2022 H1: £54.8bn).
This decrease in average AUM and change in business mix led to net revenue
being 11% lower at £181.0m (2022 H1: £202.4m). Total net revenue included
£0.4m of performance fees (2022 H1: £0.7m).
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 £37.0m (2022 H1: £37.9m) while variable staff
costs decreased to £41.4m (2022 H1: £63.9m), 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 £53.8m (2022 H1: £58.4m) 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 £132.2m (2022 H1: £160.2m). Excluding the impact of performance
fee-related pay and exceptional items, the Group's total administrative
expenses were £128.7m (2022 H1: £135.3m).
There were exceptional items of £11.6m (2022 H1: £10.9m), 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 £49.5m (2022 H1: £53.9m). With the impact of deferred
performance-fee related compensation costs, underlying profit before tax was
£46.4m (2022 H1: £29.7m), with statutory profit before tax of £34.8m (2022
H1: £18.8m).
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 2023 Six months ended 30 June 2022
£m Before net Net performance fees Total Before net performance fees Net performance fees Total
performance
fees
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 £2.2m of variable staff costs classified as
exceptional (2022 H1: £1.5m).
2 Amortisation of intangible assets excludes £9.4m classified as exceptional
(2022 H1: £9.4m).
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 £13.3bn, or 26% of our
AUM (31 December 2022: £10.9bn, 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
£147m, with total regulatory capital representing three times coverage of our
regulatory requirements of £72m.
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
Notes Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
£m £m £m
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 ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
£m £m £m
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
Notes 30 June 2023 30 June 2022
31 December 2022
£m £m £m
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
Share Total Non-controlling interests Total equity
capital Foreign
Own currency
share Other translation Retained earnings
reserve reserves reserve
£m £m £m £m £m £m £m £m
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 with owners - (0.2) - - (61.2) (61.4) - (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 with owners (0.2) 0.1 0.2 - (46.9) (46.8) - (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
Notes Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
£m £m £m
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
£m £m £m
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
£m £m £m
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 133.1 113.7 247.2
awards
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 £2.2m (2022 H1: £1.5m, 2022 FY: £0.8m) 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
£m £m £m
Dividend income 0.3 0.6 1.0
Net gains/(losses) on financial instruments designated at FVTPL upon initial 2.5 (24.8) (24.7)
recognition
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
£m £m £m
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
£m £m £m
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:
Weighted average number of shares Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
Number Number Number
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.
EPS Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
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) (£341.2m) and the 2020 acquisition of Merian Global Investors
Limited (Merian) (£229.4m).
30 June 2023 30 June 2022 31 December 2022
£m £m £m
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 £230m at 30 June 2023, up from £212m 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 used Movement required
Measure in base case to remove all headroom
Compound average annualised revenue Updated five-year strategic plan(1) Decrease by 3.5%(2)
growth over a five-year period
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:
Key variable Reasonably possible adverse movement Reduction in headroom
£m
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
£87m 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 £168m.
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 £1.9m (2022 H1: £1.9m, 2022
FY: £4.1m), and disposed of £nil (2022 H1: £nil, 2022 FY £nil). 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 £10.4m (2022 H1: £10.4m, 2022 FY:
£21.0m).
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
£m £m £m
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
£9.4m (2022 H1: £9.4m, 2022 FY: £18.8m) 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
£38.9m (2022 H1: £42.5m, 2022 FY: £40.9m). During the period, the Group
acquired items of property, plant and equipment (excluding right-to-use leased
assets) with a value of £0.3m (2022 H1: £0.9m, 2022 FY: £1.2m). Additions
to the right-of-use leased assets during the period were £0.3m (2022 H1:
£0.4m, 2022 FY: £1.4m).
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
£m £m £m
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
£m £m £m
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 £50.0m of Tier 2 subordinated debt notes
at a discount of £0.5m. Issue costs were £0.5m. 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
£m £m £m
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 £40m (2022:
£80m). 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 £10.0m share buyback and
cancellation programme, purchasing and cancelling 6.7m ordinary shares at a
cost of £8.0m in 2022, with a further purchase and cancellation of 1.4m
shares in 2023 at a cost of £2.0m. 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 2023 30 June 2022 31 December 2022 30 June 2023 30 June 2022 31 December 2022
m m £m £m £m £m
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 £0.4m (2022 H1: £0.2m, 2022 FY: £0.2m)
for the purpose of satisfying share option obligations to employees. The full
cost of the purchases was £24.4m (2022 H1: £21.4m, 2022 FY: £21.4m). 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 £0.1m (2022 H1:
£0.1m, 2022 FY: £0.1m). At 31 June 2023, 37.9m (2022 H1: 28.0m, 2022 FY:
22.9m) ordinary shares, with a par value of £0.8m (2022 H1: £0.6m, 2022 FY:
£0.5m), were held as own shares within the Group's EBT.
(ii) Other reserves
Other reserves comprise the merger relief reserve of £242.1m (2022 H1 and
2022 FY: £242.1m) formed on the acquisition of Merian in 2020, £8.0m (2022
H1 and 2022 FY: £8.0m) that relates to the conversion of Tier 2 preference
shares in 2010, and £0.2m (2022 H1: £nil, 2022 FY: £0.2m) 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 £1.6m (2022 H1: £3.2m, 2022 FY:
£3.7m) is used to record exchange differences arising from the translation of
the financial statements of foreign subsidiaries.
(iv) Retained earnings
Retained earnings of £586.7m (2022 H1: £592.3m, 2022 FY: £578.9m) 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 £2.0m on the repurchase of 1.4m shares (2022 H1:
£nil, 2022 FY: £8.0m 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 £2.6m after taking into account
the £0.1m 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 £19.1m and £15.8m
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
£m £m £m
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
£m £m £m £m
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 48.6 49.5 46.3 144.4
2022
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
£m £m £m £m
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
£m £m £m £m
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
£m £m £m £m
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 ended Six months ended Year ended Definition Reconciliation
30 June 2023 30 June 2022 31 December 2022
1 Cost: income ratio 71% 67% 69% Administrative expenses before exceptional items and performance fees divided
by net revenue before exceptional items and performance fees
See table 1 below
2 Net management fee margin 71bps 74bps 74bps Net management fees divided by average AUM
3 Total compensation ratio before net performance fees 41% 38% 40% Fixed staff costs before exceptional items plus Variable staff costs before
exceptional items and performance fee-related costs as a proportion of net
revenue before performance fees
4 Underlying EPS 6.7p 4.2p 11.3p Underlying profit after tax attributable to equity holders of the parent
divided by average issued share capital
5 Underlying EPS before performance fees 7.1p 7.8p 14.7p Underlying profit after tax before performance fees attributable to equity
holders of the parent divided by average issued share capital
Reconciliation of reported IFRS numbers to APMs: table 1
APM Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
£m £m £m
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 128.7 135.3 267.6
costs
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 (£bn) (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 36.3 23.4 62.3
(see above)
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: (0.7) (4.6) (4.5)
19%)(2)
Underlying profit after tax attributable to equity holders of the parent 38.7 43.0 81.4
before performance fees
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.
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
Notes £m £m £m
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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