Jupiter Fund Management 2013 results. 43% increase in dividend, GBP 160m net cash. Further strong dividend growth to come!

28th Feb '13 by johnrosier

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Jupiter Fund Management (329.5p and 3.9% of JIC portfolio). Results this morning for the year ended 31st December 2012 came in pretty much in line with expectations with earnings flat on the prior year at 19.0p per share. Good news came in terms of the dividend which is being increased by 13% to 8.8p. We already knew the statistics on growth in funds from the 16th January trading statement; total net inflows of £966m compared to £746m the year before. Within this mutual funds were particularly strong with net inflows of £1.55bn. Assets under management grew by 15% to £26.3bn with mutual funds representing nearly 80% of the mix.

Conclusion: The shares are up 50% since bought for the JIC portfolio last August with further progress in the share price being, to a great extent, dependent on the markets. It would be hoped that if we are truly in a bull market that revenue growth keeps up with growth in assets under management. However, there are pressures on fees which is likely to see a further drop in net management fees over time. On consensus forecasts the shares are valued at 14.2x 2013 earnings for 22% growth and 12.6x 2014 earnings for 12% growth. the 2012 dividend yield on the 8.8p declared dividend is 2.7%. This seems to me to be fair value. No longer compellingly cheap.

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johnrosier

1st Mar '13

Jupiter Fund Management (327p and 2.4% of JIC portfolio); Following on from yesterday's results statement I have sold roughly 40% of my holding. I re-read my blog from last August when I bought the holding at 223.5p. I concluded then that on a 2013 PE Ratio of c.10x and a prospective yield of 3.6% it looked good value. As I said yesterday, it is no longer compellingly cheap on 14.2x 2013 earnings forecasts and a prospective yield of 2.6%, therefore I have freed up some cash for some other buy ideas that I am considering. (See transactions)

27th Feb '14

Jupiter Fund Management (market capitalisation; £1.84bn, 402p and 3.2% of JIC Portfolio). Results for the year ended 31st December 2013 were published this morning. We already knew from its trading update in mid-January that 2013 was a good year with funds under management growing to £31.7bn. Earnings per share have come in pretty much in line with expectations, up 33% at 25.2p and cash flow was strong at £122.1m v 110.6m the year before. Operating margins increased by two percentage points to 53%. As a result it has net cash on the balance sheet of £160m at the year-end which has allowed it to be generous with the dividend; it is increasing it by 43% to 12.6p for the whole year compared to expectations of 11.3p. In the statement the Chief Executive talks about “the potential for increased returns to shareholders going forward as part of our policy of sharing the rewards of growth within a sustainable balance sheet structure”. Given that it paid off its remaining debt of £11m in February and now has considerable cash, growing revenues and a firm control of costs, further strong growth in dividends should be expected.

Conclusion; A good set of results from Jupiter Fund Management with its mutual fund business growing apace, helped by its investment in new distribution channels in Continental Europe and the Far East. The 43% increase in the dividend was a pleasant surprise and with it generating so much cash, further generous returns to shareholders should in my opinion be anticipated. After all the directors, management and employees are substantial shareholders in the business. On the dividend just announced the shares yield 3.1% and on current consensus earnings forecasts the shares are valued at 14.0 x 2014 earnings for 14% earnings growth. These numbers are likely to be revised upwards, especially the dividend, where I suspect a further 20% growth might be expected this year, putting the shares on a 2014 yield of around 3.8%. Very Happy Holder!

Jupiter Fund Management 2013 results. 43% increase in dividend, GBP 160m net cash. Further strong dividend growth to come!

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Johnrosier

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