REG - Jupiter Fund Mgmt - Annual Financial Report
22/02/2024 07:00
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RNS Number : 0095E Jupiter Fund Management PLC 22 February 2024
Results for the year ended 31 December 2023
22 February 2024
A year of progress in a challenging environment
n Despite continued macroeconomic uncertainty throughout most of the year, we
delivered a robust set of financial results with underlying profit before tax
up 36% to £105.2m (2022: £77.6m).
n We also made significant progress against our four key strategic objectives.
n Assets under management (AUM) increased 4% to £52.2bn (31 December 2022:
£50.2bn).
n Total net outflows moderated to £2.2bn (2022: net outflows of £3.5bn),
with modest inflows in the first half and the timing of institutional funding
resulting in net outflows in the second half of the year.
n Statutory profit before tax was £9.4m (2022: £58.0m), as a result of a
£76.2m impairment on goodwill.
n In line with our capital allocation policy, final dividend of 3.4p per
share, bringing total dividend for the year to 9.8p per share (2022: 8.4p per
share), comprising an ordinary dividend of 6.9p per share and a special
dividend of 2.9p per share.
Year ended Year ended % change
31 December 2023 31 December 2022
AUM (£bn) 52.2 50.2 4%
Net flows (£bn) (2.2) (3.5)
Net revenue(1) (£m) 368.8 397.3 (7)%
Statutory profit before tax(2) (£m) 9.4 58.0 (84)%
Basic earnings per share (EPS)(2) (p) (2.5) 8.9 (128)%
Underlying profit before tax(1) (£m) 105.2 77.6 36%
Underlying EPS(1) (p) 14.8 11.3 31%
Total dividends per share (p) 9.8 8.4 17%
Cost:income ratio(1) 73% 69%
( )
(1) The Group's use of alternative performance measures (APMs) is explained on
pages 32 to 34.
(2) IFRS measures.
Matthew Beesley, Chief Executive, commented:
"We have delivered robust performance this year, despite the challenges faced
by our industry. Investment performance improved over all time periods, and
our AUM increased by 4%, with positive market and other movements offsetting
net outflows, which continued to moderate in the year."
"This time last year, we announced four key strategic objectives and I'm
pleased to report that we have made significant progress in each of these
areas. Notably, we have built scale in our institutional and international
businesses, while driving efficiencies through a focus on reducing undue
complexity. We have broadened our appeal to clients by launching our Client
Group and are investing in technology, which is designed to modernise and
enhance our client experience. We've continued to invest in our people and
have recently announced new, high-quality additions to our UK equity
investment expertise."
"Our strong capital position means that we are well-placed to invest for the
future. The market outlook continues to be uncertain but I am confident that
we have a strong underlying business and a strategy that can deliver growth
over the medium term."
Analyst presentation
There will be an analyst presentation at 9:00am GMT on 22 February 2024.
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/jfm037
(https://secure.emincote.com/client/jupiter/jfm037) . 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
(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 Annual Report will be published in March 2024 and will be available at
https://www.jupiteram.com/investor-relations
(https://www.jupiteram.com/investor-relations) .
For further information please contact:
Investors Media
Jupiter Alex James Despina Constantinides
+44 (0)20 3817 1636 +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 robust set of financial results for 2023, despite
the ongoing industry challenges and macroeconomic uncertainty. Net outflows
have continued to moderate, driven by institutional client funding, and we
have made progress against our four key strategic objectives.
2023 was unquestionably a challenging environment for active asset managers.
Clients maintained a prevailing sense of caution throughout the year and,
given high inflation, rising interest rates and geopolitical uncertainty, in
many cases shunned 'risk assets' in favour of the relatively high yields
available on cash and cash-like instruments.
This has been a challenging backdrop for all asset managers, but inevitably
more so for active, high-conviction firms such as Jupiter where our investment
teams focus on identifying inefficiently valued assets for the long-term
benefits of our clients. While these headwinds were present throughout the
year, they were particularly acute in the retail channel in the second half.
Although macroeconomic impacts and market movements are, of course, outside of
our influence, we have remained resolutely focused on the factors within our
control and on delivering against our strategy of increasing scale, decreasing
undue complexity, broadening our appeal to clients and deepening relationships
with all stakeholders.
Despite the challenging environment, net outflows moderated to £2.2bn (2022:
net outflows of £3.5bn), driven by positive net inflows from Institutional
clients for the second consecutive year.
AUM increased by 4% during the year to £52.2bn (31 December 2022: £50.2bn)
with positive market and other movements offsetting net outflows. Lower
average AUM and a decrease in the net management fee margin, as we built scale
in the Institutional channel, led to a 7% decline in net revenue to £368.8m
(2022: £397.3m). However, a disciplined approach to cost control resulted in
a 12% decrease in operating costs to £264.6m (2022: £301.5m), or 4%
excluding performance fee costs.
Underlying profit before tax increased by 36% to £105.2m (2022: £77.6m).
Underlying earnings per share increased to 14.8p (2022: 11.3p per share),
broadly in line with the increase in underlying profits.
In line with our capital allocation policy, the Board has proposed a final
ordinary dividend of 3.4p, taking total full year dividends to 9.8p, including
a special dividend of 2.9p per share announced at the interim results.
Continued focus on our strategic objectives
Twelve months ago, we detailed four key strategic objectives that would be key
in driving Jupiter's future success, which are:
n Increase scale in select geographies and channels;
n Decrease undue complexity with costs managed carefully through a relentless
pursuit of efficiency;
n Broaden our appeal to clients with new and existing investment strategies,
while also exploring additional methods of delivery; and
n Deepen relationships with all stakeholders with purpose and sustainability
embedded in all we do.
All the decisions taken by our management team are focused on delivering
progress against these aims and we are pleased to report considerable progress
against each through 2023.
Of these four objectives, increasing scale remains the most important. In
order to consistently and sustainably grow our business over the medium term,
it is imperative that we achieve top line growth.
One of our key areas of focus has been on growing scale within our
Institutional business, where we have continued to see strong momentum this
year. We generated net inflows from Institutional clients of £1.8bn, which
totals £3.8bn over the last two years. Institutional clients now entrust us
to manage £10bn of their assets, which represents 19% of Group AUM, up from
only 10% five years ago. We continue to work with larger and ever more
sophisticated clients, with the average size of our mandates now five times
larger than two years ago. Our late-stage pipeline remains strong, with
opportunities across six investment desks from both new and existing clients
based in 9 countries.
We have also continued to build scale in our international businesses outside
of the UK. We saw £1.1bn of net inflows from clients based overseas and
international clients now account for 34% of Group AUM, up from 25% five years
ago. We will continue to incrementally invest in markets where we see the most
significant, near-term opportunities and to prioritise the allocation of
central resources towards these markets, whilst maintaining our longer-term
focus on opportunities in other areas.
Against the backdrop of falling fee margins and rising operating and
regulatory costs, it is crucial that we remove undue complexity from our
day-to-day operations and identify opportunities to introduce greater
efficiency. This focus on cost discipline has been evident in the 6% decrease
in non-compensation costs. The fund rationalisation programme which we
announced last year is now largely complete, with a 25% reduction in the
number of funds on our platform and an attrition rate of only 0.7% of total
Group AUM as we managed through this process.
As part of our strategic focus, we relentlessly pursue efficiency and have
managed the cost base appropriately lower. This is also affording us the space
to invest in areas of future growth and, as of now, 19% of our total cost base
is allocated to strategic growth opportunities.
Our clients' needs are fundamentally changing and their expectations are
growing and as such we need to evolve and adapt how we engage with them to
meet those needs. One of the biggest changes to the business this year, and as
part of broadening our appeal to clients, is the formation of our Client
Group, replacing our previous Distribution function. Success will be driven
not through selling individual products to our clients, but rather through
engaging in deeper relationships, becoming trusted partners and engaging in an
ongoing, highly technical conversation, while leveraging technology to
automate and personalise much of our reporting.
The fund rationalisation programme has also provided us with the space to
develop new products, including the launch of our thematic range, managed by
our successful systematic equities team.
Finally, we have continued to deepen relationships with all of our
stakeholders. We regularly conduct employee opinion surveys and we are
delighted to report that our overall people engagement score is at 78%, a
seven percentage point increase over the year and ahead of the financial
services benchmark. For clients, as well as delivering improved investment
performance after fees, we have introduced a tiered pricing structure on our
UK-domiciled fund ranges, allowing them to share the benefits of economies of
scale as funds' assets grow. For our shareholders, we have continued to return
capital on a clear, sustainable basis while retaining optionality for
investment in both organic and inorganic growth opportunities.
Moderating outflows, driven by continued success in the Institutional channel
After generating small net positive inflows in the first half of the year,
client sentiment across the industry weakened materially towards the end of
the year. As a result, and due to timing of some institutional mandates
funding, this resulted in total net outflows in the year of £2.2bn, an
improvement on the net outflows of £3.5bn in 2022.
Gross flows continued to be strong at £13.2bn, although were again weaker in
the second half as retail demand for risk assets declined.
The Institutional channel generated £1.8bn of net inflows and now accounts
for 19% of Group AUM. Both the existing book and the late stage pipeline are
well diversified by client region and investment strategy. We continue to be
optimistic around the ongoing growth opportunities in this channel and expect
to see further mandates being funded through 2024 and beyond.
In common with much of the active asset management industry, retail demand for
risk assets was again weak during 2023, resulting in £4.0bn of net outflows
which, whilst disappointing, is an improvement on the £5.5bn of net outflows
in the prior year.
We saw redemptions from Unconstrained Fixed Income strategies, despite
improving investment performance. UK and European equities continued to be out
of demand. Conversely, value and income strategies saw good net flows,
particularly those focused on investing in Asia. Asian Income, Japan Income
and our Indian Equity funds all saw net inflows. Global Equity Absolute Return
also had another positive year, in terms of both performance and net inflows.
In January, it was announced that Ben Whitmore, who has been with Jupiter
since 2006, would leave the Group later in the year to set up his own value
investment boutique. Whilst it is too early to confidently predict how clients
will react, we can reasonably expect to lose some assets as a result, most
probably from the Institutional client channel. We are naturally sad to see
Ben depart but we are, however, delighted to have been able to announce the
hirings of Alex Savvides, Adrian Gosden and Chris Morrison. All three are
high-quality investors with excellent performance track records. These hirings
demonstrate Jupiter's ability to attract market-leading investment talent and
our UK equity client offering has never been stronger. We are hopeful that
the strength of the investment expertise, which has been bolstered
by these new hires, will give us the opportunity for growth in the medium
term.
Movement in AUM by client channel
31 December Market returns 31 December
2022 Q1 net Q2 net Q3 net Q4 net Full-year net flows £bn 2023
£bn flows flows flows flows £bn £bn
£bn £bn £bn £bn
Retail, wholesale & investment trusts 43.4 (1.0) (0.7) (1.0) (1.3) (4.0) 2.8 42.2
Institutional 6.8 0.1 1.6 - 0.1 1.8 1.4 10.0
Total 50.2 (0.9) 0.9 (1.0) (1.2) (2.2) 4.2 52.2
Of which is invested in mutual funds 39.3 (1.1) (0.6) (1.1) (1.1) (3.9) 2.7 38.1
Robust financial results
Despite the challenging backdrop, we have delivered robust financial
performance through 2023. We have continued to invest in areas of strategic
growth, helped by the strength of our balance sheet, while actively pursuing
efficiencies across the Group.
Underlying profit before tax for the year was up 36% to £105.2m (2022:
£77.6m). Underlying EPS was up 3.5p, to 14.8p per share (2022: 11.3p),
broadly in line with the increase in underlying profits.
Excluding the impact of performance fees, there was a small decrease in
profits of £2.8m to £98.4m (2022: £101.2m), reflecting lower management fee
revenues, offset by cost savings, net gains on seed and interest earned on
cash invested in money market funds.
Although closing AUM ended higher at £52.2bn, average AUM fell from £52.4bn
to £50.9bn. Net revenue fell by 7% to £368.8m (2022: £397.3m), as a result
of this lower average AUM and lower net management fee margins due to changes
in the business mix.
Our average net management fee margin reduced from 73.5bps in 2022 to 69.5bps
in 2023. This was in line with expectations as the business mix shifted more
towards lower margin Institutional business. Our focus remains on growing
absolute revenues and we recognise that the average margin will decline as we
build scale within the Institutional channel.
This year, we have also published our average net management fee margin by
client channel. Within the Retail, wholesale and investment trust channel, the
average margin was 78bps and for the Institutional channel it was 29bps.
We remain resolutely focused on controlling costs wherever possible and we
have delivered efficiencies through this year. Overall administrative expenses
were 12% lower than last year at £265.4m (2022: £302.3m). £6.4m of these
costs related to performance fees (2022: £33.9m).
Non-compensation costs were 6% lower at £107.3m as a result of both direct
management actions and costs linked to AUM levels. Despite inflationary
pressures, fixed staff costs fell by 5% to £78.1m (2022: £82.4m), as a
result of the restructuring programme we implemented in 2022. Variable staff
costs fell by 24% to £79.2m (2022: £104.5m), although the prior year
included £33.9m of performance-fee related costs. Excluding the impact of
performance fee related costs, which we now consider to be at more normalised
levels, variable staff costs grew 3% to £72.8m (2022: £70.6m). Excluding the
impact of performance fees, our total compensation ratio was 42% (2022: 40%).
This rigorous focus on cost discipline has not only delivered efficiencies,
but also allowed us space to invest for growth. 19% of our cost base is in
strategically important areas of future growth.
Other gains of £3.2m (2022: losses of £9.7m) relate to gains on our seed
capital investments, net of hedging. We also generated finance income of
£5.8m (2022: £0.3m) as we delivered improved returns on the Group's cash
balances. This was offset by finance costs of £6.2m (2022: £6.6m), primarily
comprising the interest charge on subordinated debt.
Exceptional items of £95.8m principally comprise an impairment of goodwill of
£76.2m along with the amortisation of intangible assets, both relating to
previous acquisitions. We are required to perform impairment tests on goodwill
acquired as part of business combinations. As a result of the challenging
economic environment, including higher costs of capital and lower levels of
retail demand, the Group's judgement was that the value of the goodwill asset
at 31 December 2023 had fallen below that of its carrying value and, as a
result, an impairment charge was recognised. This has no impact on the Group's
underlying profit before tax, surplus capital position or ability to pay
dividends. Total exceptional items were £95.8m (2022: £19.6m).
Principally as a result of this goodwill impairment charge, statutory profit
before tax decreased to £9.4m (2022: £58.0m).
2023 2022
£m Before performance fees Performance fee profits Total Before performance fees Performance Total
fee losses
Net revenue 355.6 13.2 368.8 387.0 10.3 397.3
Fixed staff costs (78.1) - (78.1) (82.4) - (82.4)
Variable staff costs(1, 2) (72.8) (6.4) (79.2) (70.6) (33.9) (104.5)
Non-compensation costs (107.3) - (107.3) (114.6) - (114.6)
Administrative expenses(2) (258.2) (6.4) (264.6) (267.6) (33.9) (301.5)
Other gains/(losses) 3.2 - 3.2 (9.7) - (9.7)
Amortisation of intangible assets(3) (1.8) - (1.8) (2.2) - (2.2)
Operating profit before exceptional items 98.8 6.8 105.6 107.5 (23.6) 83.9
Net finance costs (0.4) - (0.4) (6.3) - (6.3)
Profit before taxation and exceptional items 98.4 6.8 105.2 101.2 (23.6) 77.6
Exceptional items (95.8) - (95.8) (19.6) - (19.6)
Statutory profit before tax 2.6 6.8 9.4 81.6 (23.6) 58.0
(1) Variable costs in respect of performance fee profits/losses in 2023 mainly
relate to the accounting charge for deferred bonus awards made in respect of
2023 performance fee revenues (2022: mainly in respect of 2021 performance fee
revenues).
(2)( ) Variable staff costs and Administrative expenses exclude £0.8m
classified as exceptional (2022: £0.8m).
(3) ( )Amortisation of intangible assets excludes £18.8m classified as
exceptional (2022: £18.8m).
Improving investment performance
As a high-conviction active asset manager, delivering investment for our
clients is key to our ongoing success. We are pleased to report that, despite
the challenging market backdrop, we have seen an improvement in investment
outperformance across the one, three and five-year periods.
At 31 December 2023, 59% 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), and 41% of mutual fund AUM had delivered first quartile
performance.
The most significant drivers of the improvement in the aggregate performance
figure were the European Growth fund and Income Trust, both of which moved
above their peer group median during the period.
Measured over one year, 65% of mutual fund AUM (31 December 2022: 49% of
mutual fund AUM) delivered above-median performance, and over five years this
was 66% of mutual fund AUM (31 December 2022: 53% of mutual fund AUM).
The growth in the one year figure was primarily driven by three of our largest
funds moving above their median, which were the European fund and the two
vehicles in our flagship unconstrained fixed income strategy, Dynamic Bond and
Strategic Bond. After a period of relative underperformance through 2022
having taken a non-consensus view on inflation expectations, it is encouraging
to see the funds return to stronger performance.
Our larger funds also continue to deliver strong investment performance. We
manage 12 funds with over £1bn of AUM. Of these, nine have outperformed their
median over the key three-year time period with seven in the top quartile of
their peer group. The three largest funds which have not outperformed their
median over three years are now all above median over one year.
The overall aggregate outperformance figure is still not where we would want
it to be, but we are pleased to observe the improving trend over all time
periods, which is often seen as a lead indicator of potential flows.
A strong capital base
The Group continues to maintain a strong capital base.
Our expected surplus over regulatory requirements has grown to £177.1m (31
December 2022: £114.2m), which amounts to 3.5 times coverage of our
regulatory requirements of £71.8m. Seed capital invested to support the
growth of our funds was £79m at cost at 31 December 2023 and has grown by a
further £53m following year end as a result of catalyst funding into Global
High Yield and Asian Income.
The Group's capital allocation policy is to return 50% of underlying EPS
before performance fees. In line with this, the Board have proposed a final
dividend of 3.4p per share, bringing the total dividend for the year to 9.8p
per share, including a 3.5p per share interim dividend and a 2.9p per share
special dividend announced at the interim results. The dividends will be paid
on 20 May 2024 to shareholders on the register at the close of business on 19
April 2024.
We continue to actively explore the most effective ways in which to deploy our
capital and we are committed to making additional returns to shareholders of
capital surplus to business requirements on a periodic basis.
Progress moving forward
Despite the ongoing industry challenges, we have delivered a robust set of
numbers this year. Profits have grown compared to the prior year, investment
performance has improved over all time periods and net outflows have continued
to moderate.
We have made progress against each of our strategic objectives, most notably
in building scale in our institutional and international businesses while
driving efficiencies through a focus on reducing undue complexity.
Our capital base remains very strong and we are actively looking for
opportunities to further develop the business, both organically and
inorganically.
There are many unknowns as we head into 2024 but we are confident that we have
a strong underlying business and a strategy that can deliver growth. We are
hopeful 2024 will be a better environment for active asset managers to
demonstrate their value proposition and deliver the outperformance our clients
rightly expect from us. Certainly, as a business, we are better placed to
capture any of this upside that may come to pass because of our efforts and
strategic focus over the last 12 months.
Matthew Beesley
Chief Executive Officer
21 February 2024
Consolidated income statement
for the year ended 31 December 2023
Notes 2023 2022
£m £m
Revenue 1, 2 405.6 443.5
Fee and commission expenses 1 (36.8) (46.2)
Net revenue 1 368.8 397.3
Administrative expenses 3 (265.4) (302.3)
Other gains/(losses) 4 3.2 (9.7)
Amortisation of intangible assets 9 (20.6) (21.0)
Operating profit 86.0 64.3
Impairment of goodwill 8 (76.2) -
Finance income(1) 5 5.8 0.3
Finance costs(1) 5 (6.2) (6.6)
Profit before taxation 9.4 58.0
Income tax expense 6 (22.3) (10.1)
(Loss)/profit for the year(2) (12.9) 47.9
Earnings per share
Basic 7 (2.5)p 8.9p
Diluted 7 (2.5)p 8.8p
( )
(1)In the Group's 2022 Annual Report and Accounts, these lines were aggregated
as 'Net finance costs'.
(2)Non-controlling interests are presented in the Consolidated statement of
changes of equity.
Consolidated statement of comprehensive income
for the year ended 31 December 2023
2023 2022
£m £m
(Loss)/profit for the year net of tax (12.9) 47.9
Items that may be reclassified subsequently to profit or loss
Exchange movements on translation of subsidiary undertakings (1.7) 3.4
Other comprehensive (loss)/income for the year net of tax (1.7) 3.4
Total comprehensive (loss)/income for the year net of tax (14.6) 51.3
Consolidated balance sheet
at 31 December 2023
Notes 2023 2022
£m £m
Non-current assets
Goodwill 8 494.4 570.6
Intangible assets 9 17.5 35.2
Property, plant and equipment 10 37.5 40.9
Investment in associates 1.8 -
Deferred tax assets 16.1 19.4
Trade and other receivables 0.4 0.4
567.7 666.5
Current assets
Financial assets 232.8 167.8
Trade and other receivables 137.6 124.1
Cash and cash equivalents 12 268.2 280.3
Current tax asset 1.3 3.3
639.9 575.5
Total assets 1,207.6 1,242.0
Equity attributable to shareholders
Share capital 14 10.9 10.9
Own share reserve 15 (0.7) (0.5)
Other reserves 15 250.3 250.3
Foreign currency translation reserve 15 2.0 3.7
Retained earnings 15 527.0 578.9
Equity attributable to owners of Jupiter Fund Management plc 789.5 843.3
Non-controlling interests - 0.6
TOTAL EQUITY 789.5 843.9
Non-current liabilities
Loans and borrowings 13 49.7 49.5
Trade and other payables 59.7 87.5
Deferred tax liabilities 2.3 6.7
111.7 143.7
Current liabilities
Financial liabilities at fair value through profit or loss (FVTPL) 80.3 49.2
Trade and other payables 221.4 202.4
Provisions 4.7 2.8
306.4 254.4
Total liabilities 418.1 398.1
Total equity and liabilities 1,207.6 1,242.0
( )
Consolidated statement of changes in equity
for the year ended 31 December 2023
Total Non-controlling interests Total equity
Foreign
Own currency
Share share Other translation Retained earnings
capital 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 year after tax - - - - 47.3 47.3 0.6 47.9
Exchange movements on translation of subsidiary undertakings - - - 3.4 - 3.4 - 3.4
Other comprehensive income - - - 3.4 - 3.4 - 3.4
Total comprehensive income - - - 3.4 47.3 50.7 0.6 51.3
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 - - - - (90.2) (90.2) - (90.2)
Purchase of shares by employee benefit trust (EBT) - (0.2) - - (21.2) (21.4) - (21.4)
Share-based payments - - - - 13.6 13.6 - 13.6
Deferred tax - - - - (0.2) (0.2) - (0.2)
Total transactions with owners (0.2) (0.1) 0.2 - (108.1) (108.2) - (108.2)
At 31 December 2022 10.9 (0.5) 250.3 3.7 578.9 843.3 0.6 843.9
Loss for the year after tax - - - - (12.9) (12.9) - (12.9)
Exchange movements on translation of subsidiary undertakings - (1.7) - (1.7) (1.7)
- - -
Other comprehensive loss - - - (1.7) - (1.7) - (1.7)
Total comprehensive loss - - - (1.7) (12.9) (14.6) - (14.6)
Vesting of ordinary shares and options - 0.2 - - (0.2) - - -
Dividends paid - - - - (35.2) (35.2) - (35.2)
Purchase of shares by EBT - (0.4) - - (24.1) (24.5) - (24.5)
Share-based payments - - - - 18.5 18.5 - 18.5
Other movements - - - - 2.0 2.0 - 2.0
Disposal of non-controlling interests - - - - - - (0.6) (0.6)
Total transactions with owners - (0.2) - - (39.0) (39.2) (0.6) (39.8)
At 31 December 2023 10.9 (0.7) 250.3 2.0 527.0 789.5 - 789.5
Notes 14 15 15 15 15
Consolidated statement of cash flows
for the year ended 31 December 2023
Notes 2023 2022
£m £m
Cash flows from operating activities
Cash generated from operations 17 109.1 175.1
Income tax paid (21.1) (12.8)
Net cash inflows from operating activities 88.0 162.3
Cash flows from investing activities
Purchase of intangible assets 9 (2.9) (4.1)
Purchase of property, plant and equipment 10 (0.6) (1.2)
Purchase of financial assets at FVTPL(1) (187.0) (188.2)
Proceeds from disposals of financial assets at FVTPL(2) 131.1 233.3
Cash movement from funds no longer consolidated(3) (3.1) (6.0)
Cash movement from funds consolidated(4) 0.5 0.3
Interest and dividend income received 5.4 1.0
Net cash (outflows)/inflows from investing activities (56.6) 35.1
Cash flow from financing activities
Dividends paid 16 (35.2) (90.2)
Purchase of shares by EBT 15 (24.5) (21.4)
Purchase of shares for cancellation 14 (2.0) (8.0)
Finance costs paid (4.6) (4.5)
Cash paid in respect of lease arrangements (4.9) (7.8)
Third-party subscriptions into consolidated funds 63.0 31.7
Third-party redemptions from consolidated funds (34.1) (13.0)
Distributions paid by consolidated funds (0.1) (3.8)
Net cash outflows from financing activities (42.4) (117.0)
Net (decrease)/increase in cash and cash equivalents (11.0) 80.4
Cash and cash equivalents at beginning of year 280.3 197.3
Effects of exchange rates on cash and cash equivalents (1.1) 2.6
Cash and cash equivalents at end of year 12 268.2 280.3
(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 31 December 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
The financial information set out does not constitute the Company's statutory
accounts for the years ended 31 December 2023 or 2022, but is derived from
those accounts. The Auditors have reported on the 2023 accounts; their report
was unqualified, unmodified and did not contain statements under section
498(2) or 498(3) of the Companies Act 2006. Statutory accounts for 2022 have
been delivered to the Registrar of Companies and those for 2023 will be
delivered in due course.
The Group financial statements have been prepared in accordance with
UK-adopted International Accounting Standards (IAS) and with the requirements
of the Companies Act 2006 as applicable to companies reporting under those
standards.
The financial statements have been prepared on a going concern basis using the
historical cost convention modified by the revaluation of certain financial
assets and financial liabilities (including derivatives) that have been
measured at fair value. After reviewing the Group's current plans and
forecasts and financing arrangements, as well as the current trading
activities of the Group, the Directors consider that the Group has adequate
resources to continue operating for a period of at least 12 months from the
date of signing.
In preparing the financial statements, we have considered the impact of
climate change. There has not been a material impact on the financial
reporting judgements and estimates arising from our considerations.
Changes in the composition of the Group
The Group is required to consolidate seed capital investments if it is deemed
to control them. The following changes have been made to the consolidation of
the Group since 31 December 2022:
Included in consolidation (as a result of investments) Excluded from consolidation
Jupiter Global Emerging Markets Focus ex China Fund Jupiter Global Emerging Markets Focus Fund
Jupiter Merlin Moderate Select Jupiter Global Fund SICAV: Global Ecology Bond
Jupiter Systematic Consumer Trends Fund Jupiter Global Sustainable Equities Fund
Jupiter Systematic Demographic Opportunities Fund Jupiter Merlin Real Return
Jupiter Disruptive Technology Fund
Jupiter Healthcare Innovation Fund
Jupiter Systematic Physical World Fund
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.
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.
2023 2022
£m £m
Management fees 389.9 430.1
Initial charges and commissions 2.5 3.1
Performance fees 13.2 10.3
Revenue 405.6 443.5
Fee and commission expenses relating to management fees (35.9) (45.3)
Fee and commission expenses relating to initial charges and commissions (0.9) (0.9)
Net revenue 368.8 397.3
Disaggregation of revenue
The Group disaggregates revenue from contracts with customers on the basis of
product type and geographical region, as this best depicts how the nature,
amount, timing and uncertainty of the Group's revenue and cash flows are
affected by economic factors.
The Group's product types can be broadly categorised into pooled funds and
segregated mandates. Pooled funds, which include both mutual funds and
investment trusts, are established by the Group, with the risks, exposures and
investment approach defined via a prospectus which is provided to potential
investors. In contrast, segregated mandates are generally established in
accordance with the requirements of a specific institutional investor.
2023 2022
£m £m
Revenue by product type
Pooled funds 373.7 417.2
Segregated mandates 31.9 26.3
Revenue 405.6 443.5
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, collectively the Executive Directors, 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.
Management monitors operating profit for the purpose of making decisions about
resource allocation and performance assessment.
Geographical information
2023 2022
£m £m
Revenue by location of clients
UK 299.6 334.4
EMEA 72.3 77.7
Asia 15.0 18.2
Rest of the world 18.7 13.2
Revenue by location 405.6 443.5
The location of clients is based on management information received from
distribution partners. Where management information is not available, the
location of the distribution partner is used as a proxy for the location of
the client.
Non-current assets for the Group (excluding financial instruments and deferred
tax assets) are domiciled as set out below:
2023 2022
£m £m
Non-current assets for the Group
UK 547.1 644.3
EMEA 1.1 1.1
Asia 1.1 1.0
Rest of the world 0.1 0.3
Non-current assets by location 549.4 646.7
3. Administrative expenses
Administrative expenses of £265.4m (2022: £302.3m) include staff costs of
£158.1m (2022: £187.7m). Staff costs consist of:
2023 2022
£m £m
Wages and salaries 116.8 98.3
Share-based payments 18.5 13.6
Social security costs 15.8 11.1
Pension costs 6.3 6.2
Redundancy costs 2.2 3.4
Staff costs before (gains)/losses arising from the economic hedging of fund 159.6 132.6
units
Net (gains)/losses on instruments held to provide an economic hedge for fund (1.5) 55.1
awards
Staff costs 158.1 187.7
The Management statement refers to £0.8m (2022: £0.8m) of staff costs that
are described as exceptional items. These costs relate to the acquisition of
Merian Global Investors Limited (Merian) in 2020 and chiefly comprise
cash-based (2022: cash and share-based) deferred earn out awards which vested
in July 2023.
4. Other gains/(losses)
Other gains/(losses) relate principally to net gains/(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). Gain and losses on these investments comprise both
realised and unrealised amounts.
2023 2022
£m £m
Dividend income 0.6 1.0
Gains/(losses) on financial instruments designated at FVTPL upon initial 8.2 (24.7)
recognition
(Losses)/gains on financial instruments at FVTPL (5.6) 14.0
Other gains/(losses) 3.2 (9.7)
5. Finance income and finance costs
Finance income comprises income earned on the Group's cash and cash
equivalents, being bank deposits and investments in short-term money market
funds. Interest on cash and cash equivalents is recognised on an accrual basis
using the effective interest method.
2023 2022
£m £m
Interest on bank deposits 3.5 0.3
Interest on short-term money market fund investments 2.3 -
5.8 0.3
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. Finance costs also include ancillary charges for commitment fees
and arrangement fees associated with the revolving credit facility. Interest
payable is charged on an accrual basis using the effective interest method.
2023 2022
£m £m
Interest on subordinated debt 4.5 4.7
Interest on lease liabilities 1.5 1.6
Finance cost on the revolving credit facility 0.2 0.3
6.2 6.6
6. Income tax expense
2023 2022
Analysis of charge in the year £m £m
Current tax
Tax on profits for the year 24.1 9.5
Adjustments in respect of prior years (0.7) (3.8)
Total current tax 23.4 5.7
Deferred tax
Origination and reversal of temporary differences 0.1 3.8
Adjustments in respect of prior years (1.2) 0.6
Total deferred tax (1.1) 4.4
Income tax expense 22.3 10.1
The corporation tax rate for 2023 increased to 25% on 1 April 2023, giving a
hybrid rate for the year of 23.5% (2022: 19%). The tax charge in the year is
higher (2022: lower) than the standard rate of corporation tax in the UK and
the differences are explained below:
2023 2022
Factors affecting tax expense for the year £m £m
Profit before taxation 9.4 58.0
Taxation at the standard corporation tax rate (23.5%; 2023: 19%) 2.2 11.0
Non-taxable expenditure(1) 17.9 0.4
Other permanent differences 4.3 1.6
Adjustments in respect of prior years (1.9) (3.2)
Effect of differences in overseas tax rates (0.2) 0.3
Total tax expense 22.3 10.1
( )
(1) Principally relating to the impairment of goodwill (see Note 8).
7. Earnings per share
Basic earnings per share (EPS) is calculated by dividing the profit or loss
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 year, less the weighted
average number of own shares held. Own shares are shares held in an EBT for
the benefit of employees.
Diluted EPS is calculated by dividing the profit or loss for the year (as used
in the calculation of basic EPS) by the weighted average number of ordinary
shares outstanding during the year 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 arising from the
award of share options into ordinary shares. In 2023, as a result of the loss
for the year, both basic and diluted EPS are calculated using the same
weighted average number of ordinary shares as potential ordinary shares cannot
be treated as dilutive if their inclusion in the calculation reduces the
Group's loss per share.
The weighted average number of ordinary shares used in the calculation of EPS
is as follows:
2023 2022
Number Number
Weighted average number of shares m m
Issued share capital(1) 545.0 552.4
Add contingently issuable shares(2) 6.2 1.7
Less time apportioned own shares held (31.9) (24.5)
Weighted average number of ordinary shares for the purpose of basic EPS 519.3 529.6
Add back weighted average number of dilutive potential shares -(3) 9.3
Weighted average number of ordinary shares for the purpose of diluted EPS 519.3 538.9
2023 2022
Earnings per share p p
Basic (2.5) 8.9
Diluted (2.5) 8.8
( )
(1)The Group purchased and cancelled 1.4m ordinary shares during 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)Potential shares can only be treated as dilutive if their conversion to
ordinary shares increases the loss per share. As the impact of including
potential shares in the calculation of 2023 EPS would be to decrease the loss
per share, they have been excluded from the calculation.
8. Goodwill
Goodwill arising on acquisitions, being the excess of the cost of a business
combination over the fair value of the identifiable assets, liabilities and
contingent liabilities acquired, is capitalised in the consolidated balance
sheet. Goodwill is carried at cost less provision for impairment. The carrying
value of goodwill is not amortised but is tested annually for impairment or
more frequently if any indicators of impairment arise. Goodwill is allocated
to cash-generating units (CGUs) for the purpose of impairment testing, with
the allocation to those CGUs or groups of CGUs that are expected to benefit
from the business combination in which the goodwill arose. Impairment losses
on goodwill are not reversed.
Goodwill relates to the 2007 acquisition of Knightsbridge Asset Management
Limited (KAML) (£341.2m) and the 2020 acquisition of Merian (£229.4m).
2023 2022
£m £m
Cost 570.6 570.6
At 1 January and at 31 December
Accumulated impairment - -
At 1 January
Charge for the year (76.2) -
At 31 December (76.2) -
Net book value 494.4 570.6
At 31 December
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 at the time 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 (VIU) and fair value less costs of disposal of the CGU, and
comparing this to the carrying value of the CGU.
For the impairment test, the recoverable amount for the goodwill asset was
calculated using a VIU 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:
n The Group's projected base case forecast cash flows over a period of five
years, which included an assumption of annual revenue growth based on our
expectations of AUM growth, client fee rates and performance fees. The data
was taken from the five-year plan, which was approved by the Board in February
2024 and is aligned with the strategic focus set out in the Management
statement;
n Long-term growth rates of 2% (2022: 2%) were used to calculate terminal
value; and
n A post-tax discount rate of 13.2% (2022: 12.8%) was calculated using the
capital asset pricing model. Using a pre-tax discount rate of 17.0% (2022:
15.8%) on pre-tax profitability and cash flows does not produce a materially
different result.
The impairment test indicated that the VIU of the CGU of £549.4m (2022:
£859.2m) was less than its carrying value of £625.6m (2022: £646.7m). As a
result, our conclusion is that the Group's goodwill asset is impaired and,
accordingly, an impairment charge of £76.2m has been recognised. This charge
is recorded as a separate line item in the consolidated income statement.
The year-on-year movement in the headroom was as follows:
£m
Headroom at 1 January 2023(1) 212.5
Decrease in VIU of CGU in 2023 (309.8)
Decrease in carrying value of CGU in 2023 21.1
Impairment at 31 December 2023 (76.2)
( )
(1)Headroom (i.e. the surplus of the VIU over the carrying value of the CGU)
calculated in the Group's impairment testing as at 31 December 2022.
The reduction in the value in use of the CGU year-on-year was £309.8m,
arising from lower demand from retail clients in the short term, lower market
valuations, and an increase in the cost of capital used by the Group in its
testing. The impact of these factors is particularly significant in
calculating the terminal value (i.e. the value of the Group beyond the period
when future cash flows can be estimated), which contributes the majority of
the reduction in VIU. The decrease in the carrying value of the CGU was
largely due to the amortisation of intangible assets.
As at the end of 2023, the Group has no headroom in respect of the VIU of its
goodwill. The sensitivity of any possible re-establishment of headroom, or
further impairment charges, to changes in key metrics and assumptions is shown
in the table below which sets out the impacts of reasonably possible changes
in key assumptions used in the VIU calculation:
Reasonably possible adverse movement Decrease in valuation
Key variable £m
Discount rate +1% 48
Terminal growth rate movement -1% 34
Decrease in revenue -10% 183(1)
( )
(1)The decrease in revenue represents a modelled percentage reduction in
each year projected in the Group's base case forecast cashflows.
The sensitivities modelled above represent the estimated impact on each metric
in isolation and 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.
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 in the 2020 acquisition of Merian. The useful lives of these
contracts were assessed as being finite and are amortised over their useful
economic lives. The useful economic lives of the contracts acquired were
assessed as a maximum of four years. The amortisation expense on intangible
assets with finite lives has been recognised in the consolidated income
statement on a straight-line basis.
The other intangible assets recognised are computer software. During the year,
the Group acquired computer software of £2.9m (2022: £4.1m) and disposed of
£nil (2022: £nil).
The amortisation charge for intangible assets was £20.6m (2022: £21.0m).
The Directors have reviewed the intangible assets as at 31 December 2023 and
have concluded there are no indicators of impairment (2022: same).
2023 2022
£m £m
Intangible assets 17.5 35.2
17.5 35.2
10. Property, plant and equipment
The net book value of property, plant and equipment at 31 December 2023 was
£37.5m (2022: £40.9m). Additions to the right-of-use assets in 2023 were
£0.6m (2022: £1.4m). The Group purchased other items of property, plant and
equipment of £0.6m during the year (2022: £1.2m). The depreciation charge
was £5.2m (2022: £5.8m).
11. Financial instruments
Financial instruments by category
The carrying value of the financial instruments of the Group at 31 December is
shown below:
As at 31 December 2023 Financial assets at FVTPL Financial assets at amortised cost and other(2) Financial liabilities at FVTPL Other financial liabilities Non-financial instruments Total
£m £m £m £m £m £m
Goodwill - - - - 494.4 494.4
Intangible assets - - - - 17.5 17.5
Property, plant and equipment - - - - 37.5 37.5
Investment in associates - 1.8 - - - 1.8
Deferred tax assets - - - - 16.1 16.1
Non-current trade and other receivables(1) - 0.4 - - - 0.4
Financial assets 219.4 13.4 - - - 232.8
Current trade and other receivables(1) - 127.1 - - 10.5 137.6
Cash and cash equivalents - 268.2 - - - 268.2
Current tax asset(1) - - - - 1.3 1.3
Non-current loans and borrowings - - - (49.7) - (49.7)
Non-current trade and other payables(1) - - - (55.8) (3.9) (59.7)
Deferred tax liabilities - - - - (2.3) (2.3)
Financial liabilities at FVTPL - - (80.3) - - (80.3)
Current trade and other payables(1) - - - (208.9) (12.5) (221.4)
Provisions - - - (4.7) - (4.7)
Total 219.4 410.9 (80.3) (319.1) 558.6 789.5
(1) Prepayments, contract assets, contract liabilities, current income tax
assets and social security and other taxes do not meet the definition of
financial instruments.
(2) Includes investments in associates, which are initially recognised at cost
and are adjusted subsequently to reflect any changes to the Group's share of
the investee's net assets.
Financial assets at FVTPL Financial assets at amortised cost Financial liabilities at FVTPL Other financial liabilities Non-financial instruments Total
As at 31 December 2022
£m £m £m £m £m £m
Goodwill - - - - 570.6 570.6
Intangible assets - - - - 35.2 35.2
Property, plant and equipment - - - - 40.9 40.9
Deferred tax assets - - - - 19.4 19.4
Non-current trade and other receivables(1) - - - -
0.4 0.4
Financial assets at FVTPL 167.8 - - - - 167.8
Current trade and other receivables(1) - 113.9 - - 10.2 124.1
Cash and cash equivalents - 280.3 - - - 280.3
Current tax asset(1) - - - - 3.3 3.3
Non-current loans and borrowings - - - (49.5) - (49.5)
Non-current trade and other payables(1) - - - (77.2) (10.3) (87.5)
Deferred tax liabilities - - - - (6.7) (6.7)
Financial liabilities at FVTPL - - (49.2) - - (49.2)
Current trade and other payables(1) - - - (185.6) (16.8) (202.4)
Provisions - - - (2.8) - (2.8)
Total 167.8 394.6 (49.2) (315.1) 645.8 843.9
( )
(1) Prepayments, contract assets, contract liabilities and social security and
other taxes do not meet the definition of financial instruments.
For financial instruments held at 31 December 2023, issued subordinated debt,
recorded within non-current loans and borrowings above, had a fair value of
£50.2m (2022: £51.0m), less unamortised expenses of £0.1m (2022: £0.2m)
and financial assets at amortised cost had a fair value of £13.7m (2022:
N/A).
12. Cash and cash equivalents
2023 2022
£m £m
Cash at bank and in hand 137.5 276.8
Cash equivalents 128.4 -
Cash held by the EBT and seed investment subsidiaries 2.3 3.5
Total cash and cash equivalents 268.2 280.3
Cash and cash equivalents have an original maturity of three months or less.
Cash at bank earns interest at the current prevailing daily bank rates. Cash
equivalents comprises units in short-term money market funds that can readily
be converted into known amounts of cash and which are subject to an
insignificant risk of changes in value.
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 and the net proceeds were
therefore £49.0m. 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.
2023 2022
£m £m
Non-current subordinated debt in issue 49.7 49.5
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.
Share capital 2023 2022 2023 2022
Number of shares Number of shares £m £m
m m
Ordinary shares of 2p each 545.0 546.4 10.9 10.9
545.0 546.4 10.9 10.9
Number of shares Par value
2023 2022 2023 2022
m m £m £m
Movement in ordinary shares
At 1 January 546.4 553.1 10.9 11.1
Shares cancelled (1.4) (6.7) - (0.2)
At 31 December 545.0 546.4 10.9 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. The shares are used to settle obligations
that arise from the granting of share-based awards.
During the year, the Group purchased 18.7m (2022: 10.4m) ordinary shares with
a par value of £0.4m (2022: £0.2m) for the purpose of satisfying share
option obligations to employees. The full cost of the purchases was £24.5m
(2022: £21.4m). The Group disposed of 7.7m (2022: 7.2m) own shares to
employees in satisfaction of share-based awards with a nominal value of £0.2m
(2022: £0.1m). At 31 December 2023, 33.9m (2022: 22.9m) ordinary shares, with
a par value of £0.7m (2022: £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: £242.1m)
formed on the acquisition of Merian in 2020, £8.0m (2022: £8.0m) that
relates to the conversion of Tier 2 preference shares in 2010 and £0.2m
(2022: £0.2m) of capital redemption reserve that was transferred from share
capital on the cancellation of shares that had been repurchased in 2022 and
2023 (see Note 14).
(iii) Foreign currency translation reserve
The foreign currency translation reserve of £2.0m (2022: £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 £527.0m (2022: £578.9m) are the amount of earnings that
are retained within the Group after dividend payments and other transactions
with owners.
16. Dividends
2023 2022
£m £m
Prior year final dividend (0.5p per ordinary share) (2022: 9.2p per ordinary 2.6 48.6
share)
Interim dividend (3.5p per ordinary share) (2022: 7.9p per ordinary share) 17.8 41.6
Special dividend (2.9p per ordinary share) (2022: nil per ordinary share) 14.8 -
35.2 90.2
Final and special dividends are paid out of profits recognised in the year
prior to the year in which the dividends are proposed, declared and reported.
The EBT has waived its right to receive future dividends on shares held in the
trust. Dividends waived on shares held in the EBT in 2023 were £2.4m (2022:
£4.3m).
A final dividend for 2023 of 3.4p per share (2022: 0.5p) has been proposed by
the Directors. This dividend amounts to £18.5m (before adjusting for any
dividends waived on shares in the EBT) and will be accounted for in 2024.
Including the interim and special dividends for 2023 of 6.4p per share (2022:
7.9p), this gives a total dividend per share of 9.8p (2022: 8.4p).
17. Cash flows from operating activities
Notes
2023 2022
£m £m
Operating profit 86.0 64.3
Adjustments for:
Amortisation of intangible assets 9 20.6 21.0
Depreciation of property, plant and equipment 10 5.2 5.8
Other net (gains)/losses(1) (5.0) 28.2
(Gains)/losses on fund unit hedges(2) (1.5) 55.1
Share-based payments 18.5 13.6
(Increase)/decrease in trade and other receivables(3) (14.4) 12.2
Decrease in trade and other payables(3) (0.3) (25.1)
Cash generated from operations 109.1 175.1
( )
(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 (gains)/losses on financial 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
2023 2022
Financial liabilities at FVTPL Loans and borrowings(1) Leases Total Financial liabilities at FVTPL Loans and borrowings(1) Leases Total
£m £m £m £m £m £m £m £m
Brought forward at 1 January 48.6 49.5 46.3 144.4 52.3 49.3 51.1 152.7
New leases - - 0.6 0.6 - - 1.4 1.4
Changes from financing cash flows 28.9(2) - (4.9) 24.0 18.7(2) - (7.8) 10.9
Changes arising from obtaining or losing control of consolidated funds (1.2) - - (1.2) (14.4) - - (14.4)
Changes in fair value 3.9 - - 3.9 (8.0) - - (8.0)
Interest expense - 0.2 1.5 1.7 - 0.2 1.6 1.8
Lease reassignment and modifications - - 0.6 0.6 - - - -
Liabilities arising from financing activities carried forward at 31 December 80.2 49.7 44.1 174.0 48.6 49.5 46.3 144.4
Notes 19 13 19 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 cash flows from third-party subscriptions redemptions into
consolidated funds, net of redemptions (see Cash flow statement).
19. Financial instruments
The fair value of financial instruments that are actively traded in organised
financial markets is determined by reference to quoted market bid prices on
the balance sheet date. Derivatives held at fair value are carried at a value
which represents the price to exit the instruments at the balance sheet date.
The Group used the following hierarchy for determining and disclosing the fair
value of financial instruments:
n Level 1: quoted prices (unadjusted) in active markets for identical assets
or liabilities.
n Level 2: other techniques, for which all inputs which have a significant
effect on the recorded fair value are observable, either directly or
indirectly.
n 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).
Where funds are consolidated, we look through to the underlying instruments
and assign a level in accordance with the definitions above. Where funds are
not consolidated, we do not apply a look through and these funds are
classified as level 1 as the prices of these funds are quoted in active
markets.
As at 31 December 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 141.7 77.7 - 219.4
Financial liabilities at FVTPL (80.2) - - (80.2)
Other financial liabilities at FVTPL - derivatives - (0.1) - (0.1)
61.5 77.6 - 139.1
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 parties
During the year, the Group consolidated Jupiter Global Emerging Markets Focus
ex China Fund, Jupiter Merlin Moderate Select, Jupiter Systematic Consumer
Trends Fund, Jupiter Systematic Demographic Opportunities Fund, Jupiter
Disruptive Technology Fund, Jupiter Healthcare Innovation Fund and Jupiter
Systematic Physical World Fund (as set out the 'Changes in the composition of
the Group' section on page 13). Jupiter Global Emerging Markets Focus Fund,
Jupiter Global Fund SICAV: Global Ecology Bond, Jupiter Global Sustainable
Equities Fund and Jupiter Merlin Real Return have been removed as the funds
were closed.
The Group manages a number of investment trusts, unit trusts, OEICs, SICAVs,
ICVCs, a hedge fund (closed in 2022) and Delaware LPs and receives management
and, in some instances, registration (Aggregate Operating Fee) and performance
fees for providing this service. The precise fee arrangements are disclosed
within the financial statements of each investment management subsidiary of
the Group or within other publicly available information. By virtue of the
investment management agreements in place between the Group and the collective
investment vehicles it manages, such funds may be considered to be related
parties. Investment management and performance fees are disclosed in Note 1.
The Group acts as investment manager for 30 (2022: 34) authorised unit trusts
and 9 (2022: 12) OEICs. Each unit trust is jointly administered with the
trustees, Northern Trust Global Services SE. The aggregate total value of
transactions for the year was £2,223m (2022: £2,714m) for unit trust
creations and £4,052m (2022: £3,570m) for unit trust
redemptions/liquidations. The actual aggregate amount due to (2022: from) the
trustees at the end of the accounting year in respect of transactions awaiting
settlement was £7.5m (2022: £24.0m). The Group also acts as the management
company for the Jupiter Global Fund and Jupiter Investment Fund SICAVs, made
up of 17 sub-funds (2022: 20) and 3 sub-funds (2022: 4) respectively as well
as the Jupiter Investment Management Series II and the Jupiter Asset
Management Series plc, made up of 9 (2022: 12) and 23 (2022: 18) sub-funds
respectively. The administrator is Citibank Europe plc, Luxembourg Branch.
The amounts received in respect of gross management, registration and
performance fee charges were £237.1m (2022: £254.8m) for unit trusts,
£43.2m (2022: £60.9m) for OEICs, £89.7m (2022: £100.8m) for SICAVs,
£46.5m (2022: £49.9m) for ICVCs, £4.3m (2022: £6.4m) for investment trusts
and £31.9m (2022: £27.0m) for segregated mandates. At the end of the year,
there was £23.4m (2022: £28.9m) accrued for annual management fees, £1.2m
(2022: £1.4m) in respect of registration fees and £12.7m (2022: £9.7m) in
respect of performance fees.
Included within financial instruments (see Note 11) are seed investments,
hedges of awards in fund units in mutual funds and investment trusts, and
proprietary investments in an investment trust, all managed, but not
controlled, by the Group. At 31 December 2023, the Group had a total net
investment in such funds of £56.5m (2022: £53.1m) and received distributions
of £0.5m (2022: £1.0m). During 2023, it invested £36.4m (2022: £24.1m) in
these funds and made disposals of £0.3m (2022: £86.6m).
Key management compensation
Transactions with key management personnel also constitute related party
transactions. Key management personnel are defined as the Directors, together
with other members of the Executive Committee, and the Strategy and Management
Committee. The aggregate compensation paid or payable to key management for
employee services is shown below:
2023 2022
£m £m
Short-term employee benefits 3.7 3.8
Share-based payments 1.3 1.6
Other long-term benefits 1.2 1.7
6.2 7.1
Statement of Directors' responsibilities
Statements relating to the preparation of the Financial Statements
The Directors are responsible for preparing the Annual Report, the
Remuneration Report and the Financial Statements in accordance with applicable
law and regulations. Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law the Directors have prepared
the Group and Company Financial Statements in accordance with UK-adopted
International Accounting Standards (IAS) and in conformity with the
requirements of the Companies Act 2006. Additionally, the Financial Conduct
Authority's Disclosure Guidance and Transparency Rules require the Directors
to prepare the Group Financial Statements in accordance with UK-adopted IAS
and with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards.
The Directors' review of the Financial Statements
The Directors undertook a detailed review of the Financial Statements in
February 2024. Following this examination, the Board was satisfied that the
Financial Statements for 2023 give a true and fair view of the state of
affairs of the Group and the Company and of the profit or loss of the Group
for that period. Before approving the Financial Statements, the Board
satisfied itself that in preparing the statements:
n suitable accounting policies had been selected in accordance with IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors and
consistently applied;
n the judgements and accounting estimates that have been made were reasonable
and prudent; and
n where applicable UK-adopted IAS in conformity with the requirements of the
Companies Act 2006 have been adopted and, for the Group, UK-adopted IAS have
been followed and that there were no material departures.
The Directors' review of going concern
The Financial Statements have been prepared on the going concern basis, the
Directors having determined that the Company is likely to continue in business
for at least 12 months from the date of this report.
The Directors' review of current position, prospects and principal risks
Supported by the Audit and Risk Committee, the Directors have completed a
robust review and assessment of the principal and emerging risks in the
business, making use of the Enterprise Risk Management Framework which
operates in all areas of the Company. The framework ensures that the relevant
risks are identified and managed and that information is shared at an
appropriate level. Full details of these risks are provided in the Risk
management section of the Strategic report. The Enterprise Risk Management
Framework was reviewed by the Board in December. The Directors found it was an
effective mechanism through which the principal risks and the Company's risk
appetite and tolerances could be tested and challenged.
The Directors' responsibility for accounting records
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's and Company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Group and Company and enable them to ensure that the Financial Statements and
the Directors' Remuneration Report comply with the Companies Act 2006.
The Directors' responsibility for the safekeeping of assets
The Directors have examined the steps in place for ensuring the prevention and
detection of fraud and other irregularities. The procedure is examined and
tested on a regular basis. The Board is satisfied it is understood and is
operated well, and accordingly that the assets of the Company are safeguarded
and protected from fraud and other irregularities.
The Directors' responsibility for information
The Directors are responsible for the maintenance and integrity of the
Company's website. Legislation in the United Kingdom governing the preparation
and dissemination of Financial Statements may differ from legislation in other
jurisdictions.
Statement of Directors' responsibilities
The Directors consider that the Annual Report and Accounts, taken as a whole,
is fair, balanced and understandable and provides the information necessary
for shareholders to assess the Group's and Company's position and performance,
business model and strategy.
Each of the Directors confirm that, to the best of their knowledge:
n the Group and Company Financial Statements, which have been prepared in
accordance with International Accounting Standards in conformity with the
requirements of the Companies Act 2006, give a true and fair view of the
assets, liabilities, financial position and profit of the Group and profit of
the Company; and
n the Directors' report contained in the Annual Report and Accounts includes a
fair review of the development and performance of the business and the
position of the Group and Company, together with a description of the
principal risks and uncertainties that it faces.
In the case of each Director in office at the date the Directors' report is
approved:
n so far as the Director is aware, there is no relevant audit information of
which the Group's and Company's auditors are unaware; and
n they have taken all the steps that they ought to have taken as a Director in
order to make themselves aware of any relevant audit information and to
establish that the Group's and Company's auditors are aware of that
information.
On behalf of the Board
Wayne Mepham
Chief Financial Officer
21 February 2024
Principal risks and mitigations
The Board and executive management are responsible for establishing and
maintaining a strong risk management culture that embeds and supports a high
level of risk awareness and a sound control environment across the firm.
This is achieved through leadership behaviours setting the 'tone from the
top', governance structures, a clear definition of roles and responsibilities,
and regular communication reinforcing appropriate behaviours.
The Group has a robust enterprise risk management framework (ERMF) to provide
a comprehensive approach to identifying, assessing, monitoring, mitigating and
reporting risk.
Risk governance and responsibilities
The Group operates a three-tier risk governance framework, known as the 'three
lines of defence' model, which distinguishes between risk management and risk
oversight. This approach provides a clear and concise separation of duties,
roles and responsibilities.
The Board has ultimate responsibility for oversight of the risks of the Group
and for determining the risk appetite limits within which the Group must
operate. It delegates day-to-day responsibility for risk management and
control activities to the Chief Executive Officer, supported by the Risk and
Compliance Committee, with oversight from the Audit and Risk Committee.
The ERMF clearly defines the roles and responsibilities for risk management
and provides a process for escalation through our governance structure, which
enables ongoing and robust oversight.
Risk appetite
The Group's risk appetite defines the level and type of risk that the Group is
prepared to accept in pursuit of its strategic objectives and business plan,
taking into account the interests of its clients, shareholders and other
stakeholders, as well as capital and other regulatory requirements. An
important part of the Board's remit is to determine the Group's risk appetite,
taking into account the business environment, and the current and likely
future condition of our business and operations.
Top-down risk assessment (TDRA)
The top-down risk assessment (TDRA) identifies the Group's material risks and
monitors their profile. The TDRA is used to provide a firm-wide view to help
identify cross-functional and strategic risks. The risks identified through
the TDRA are continuously monitored and reported to the appropriate committees
and boards.
Risk and control self-assessment (RCSA)
The bottom-up identification and assessment of risks is performed by teams
across the business through a risk and control self-assessment (RCSA). The
assessment identifies and monitors risks and associated key controls by
considering the operating environment, processes, roles and responsibilities,
as well as incidents. Risks are assessed on both an inherent and a residual
basis, with ratings determined for potential impact and likelihood. Where
processes or controls are identified as insufficient, management is required
to take appropriate action to ensure they are improved to meet an acceptable
level of risk to the Group.
Key risk indicators (KRIs)
Key risk indicators (KRIs) are used by the Group to provide an early sign of
changing key risk exposures, enabling management to identify potentially
crystallising risks which are used to inform and support management decision
making.
Incidents
An incident is an event due to a lack of or failure of the control
environment. These events likely lead to negative impacts for clients and/or
the firm. An incident can be incurred due to inadequate or failed internal
processes, people and systems, or from external events. Incidents are
reported, recorded and investigated to determine the root cause, impact and
trends and to ensure that appropriate remediation work is completed as
required. Incidents are monitored and captured across the business and
independently reviewed to ensure completeness and accuracy. Analysis of
incidents is used to support our TDRA, RCSA and operational risk scenario
analysis (ORSA) processes.
Operational risk scenario analysis (ORSA)
The ORSA is a forward-looking assessment of exposures to severe but plausible
operational risk events. It is used by the Group to identify and quantify the
material risks that have the potential to impact Jupiter, based on the
experience and opinions of internal subject matter experts. A variety of
scenarios are used to estimate the impact of events on capital requirements.
The Group also uses scenario analysis to ensure that we understand our
exposure to high-severity events and implement mitigating actions, in line
with our risk appetite.
Emerging risks
Emerging risks are risks that could significantly affect the Group's risk
profile outside of the risk assessment period. They are raised by the business
through the TDRA and RCSA process. Each one is challenged to consider when the
risk could impact the Group and any action required to ensure we are fully
prepared should they begin to crystallise.
Operational resilience
Operational resilience addresses how the continuity of the services that the
Group provides is maintained regardless of the cause of disruption and helps
to ensure that it is prepared for the inevitability of disruption, rather than
only trying to minimise the probability of disruption occurring.
Risk profile
The Group is exposed to various risk types in pursuing its business objectives
which can be driven by internal and external factors. Understanding and
managing these risks is imperative to the business to reduce potential harms
to clients, the firm and the market. Some risks are pursued to support the
business plan, such as the risks relating to investment performance. Other
risks are inherent in routine business activities, such as the risk of
financial crime. The differing risks faced by the Group are documented within
the risk taxonomy and managed through the Group's ERMF in line with risk
appetite. The type and severity of the risks the Group faces can change
quickly in a complex and competitive environment, therefore the framework for
managing these risks is dynamic and forward-looking to ensure it considers
both current and emerging risks which could potentially impact the Group.
The Group conducts an annual internal capital adequacy and risk assessment
(ICARA) to understand its exposure to risks including operational, capital
adequacy, liquidity and credit/counterparties. These risks are also monitored
to ensure they are managed on a prudent basis and remain within regulatory
requirements and the Group's risk appetite.
Risk taxonomy
The risk taxonomy defines and describes the different risk types the Group is
exposed to, providing a consistent methodology for assessment and reporting.
The Group has exposure to strategic, investment, financial and operational
risks. These are, where applicable, further broken down into subcategories
within the Group's enterprise risk taxonomy to provide consistency of
reporting across the different components of the framework.
Risk appetite
The Group's risk appetite defines the level and type of risk that the Group is
prepared to accept in pursuit of its strategic objectives and business plan,
taking into account the interests of its clients and shareholders, as well as
capital and other regulatory requirements.
An important part of the Board's remit is to determine the Group's risk
appetite, considering its strategic plans, the business environment and the
current and likely future condition of its business and operations.
Operational resilience
The Group defines operational resilience as the Group's ability to prevent,
adapt, respond to, recover and learn from operational disruption. This
forward-looking approach allows the Group to assess and understand its
vulnerabilities with the intention of undertaking mitigating actions to
prevent harm to clients, the firm and the market.
Operational resilience addresses how the continuity of the services that the
Group provides is maintained regardless of the cause of disruption and helps
to ensure that it is prepared for the inevitability of disruption, rather than
only trying to minimise the probability of disruption occurring. It includes
preventative measures and the capabilities in terms of people, processes and
organisational culture to adapt and recover when things go wrong.
The effective oversight and management of the Group's operational resilience
requires it to identify the services which, if disrupted, could cause
intolerable harm to clients, the firm or the market. These are described as
important business services (IBS). Each IBS is required to have been mapped
(i.e. underlying people, systems, suppliers and processes) to identify the key
dependencies and have an appropriate impact tolerance set at the first point
at which a disruption would pose an intolerable level of harm. End-to-end
testing of severe yet plausible scenarios are used to gauge the extent to
which the Group is able to stay within the set impact tolerances and agree
remedial action where those tolerances are exceeded.
Reputational risk
The Group defines reputational risk as the risk of loss or other adverse
impact arising from unfavourable perception of the firm on the part of
consumers, counterparties, employees, regulators, shareholders, other
stakeholders, the media or the general public. Managing reputational risk is
fundamental to the strategic objectives of the firm and is managed across the
various risk categories to which the firm is exposed. For example,
reputational risk can arise as a result of operational incidents, strategic
decisions, or generally as a result of inappropriate behaviour within the
Group, as perceived by various stakeholder groups. The impact on the Group's
reputation is considered when assessing risks within the ERMF.
Emerging risks
The Group defines emerging risks as risks that will not or are deemed
implausible to crystallise within the current risk assessment period. Emerging
risks have many unknowns in terms of cause, impact and likelihood and the
Group looks to understand these risks on the horizon to plan mitigation where
possible.
Emerging risks are captured through the RCSA, the TDRA and utilising the
'PESTLE' methodology for horizon scanning which focuses on political,
economic, socio-cultural, technological, legal and environmental risks.
Emerging risks are assessed, monitored and reported via the ERMF.
Key risks
The table below lists the key risks to the firm on a residual basis, which is
considered to be the risk exposure after the application of existing
mitigating controls, assessing the risks on the potential impact and
likelihood of them crystallising.
Key risk Description
Geopolitical risk The risk we fail to adequately respond to changes and/or disruption within the
geopolitical environment.
Investment performance risk The risk that portfolios do not meet their investment objectives including
against our peers and benchmarks.
Outsourcing and supplier risk The risks arising from incidents or failure of providers of services to
deliver on their obligations, or inadequate selection or oversight of
providers.
People risk The risk of failures or poor practices relating to people management.
Regulatory risk The risk of failing to comply with our regulatory obligations including
failures to implement changes required to meet new regulatory requirements.
Sustainability risk Sustainability risk is the failure to identify, assess, manage and report on
ESG issues that could cause actual or potential material negative impacts on
our core business activities.
Technology and information security risk The risk of deliberate attacks or accidental events that have a disruptive
effect on interconnected technologies.
Overall, the evolution of the Group's risk profile during 2023 has been driven
by external challenges such as regulatory and investor demands on
sustainability. Geopolitical events across the globe have also prompted
increased market volatility and operational risks.
Further details on the assessment of our most material risks are included
below.
Description Management actions
Geopolitical risk n We continue efforts to diversify across both regions and asset classes. Our
strategy is to defend our existing UK positions where prudent to do so, while
Geopolitical events such as the invasion of Ukraine and conflicts across the also increasing the scale of our international and Institutional businesses.
globe disrupt markets, which increases volatility and operational risk. The
corresponding changing global sanctions regimes increase our financial crime n The Board and the Strategy and Management Committee regularly review the
risk. strategic plan, opportunities and threats, budgets and targets.
n Our financial crime framework continuously evolves to ensure the
ever-changing landscape of financial crime is mitigated through robust
monitoring and testing.
Investment performance risk n All performance is monitored closely and challenged on a regular basis
through senior management engagement.
Delivering positive outcomes to our clients through active management is at
the core of the organisation and failure to deliver against our commitments n The investment risk team provides detailed analysis of market-related risks
leads to poor client outcomes and loss of AUM. facing Jupiter's funds and corporate balance sheet, ensuring that these are
communicated accurately and used to challenge and inform various stakeholders,
enhancing the investment management process.
n Performance is overseen and assessed through active value assessments to
ensure that clients are receiving the best possible product outcome.
Outsourcing and supplier risk n We continue to review and assess our appetite for outsourcing to ensure that
it remains effective in relation to the size and scale of our business.
The firm is reliant on suppliers to which we have outsourced certain services
and any failure from our third parties can lead to a negative impact on our n We continue to work closely with our critical third-party suppliers to
clients, our staff and the firm. ensure that the services they provide remain resilient.
n Our framework for the oversight of activities delegated to third parties is
continually reviewed in line with our risk appetite and regulatory
requirements to ensure effectiveness.
Description Management actions
People risk n Focused recruitment, talent and learning programmes are in place, supported
by robust HR policies and procedures which comply with all relevant rules,
People are at the core of the business, however, ensuring management of regulations and guidelines.
performance, conflicts of interest and conduct is imperative to minimise poor
culture, loss of key staff, poor outcomes for our clients and harm to markets. n We respect and celebrate different perspectives and experiences.
The Group recognises that conduct risk can crystallise across various parts of n We actively manage succession and succession plans are in place for critical
the business and can be strategic, financial, infrastructural or behavioural staff.
in nature. Conduct risks can arise on both an individual and Group basis.
n Conduct risk is monitored through the conduct risk dashboard which is
designed to provide a lens into conduct risk from which the Culture and
Conduct Committee and boards can review and investigate both potential and
actual conduct risk issues within the Group.
n We have also continued to focus on educating employees on the importance of
good conduct, with a specific training programme rolled out to all employees.
Regulatory risk n To ensure we remain well placed to meet all regulatory challenges, we
continue to proactively engage with our regulators in an open and transparent
The risk of not complying with regulatory changes remains significant as we manner while investing in education, training and a robust second line
continue to see a high volume of regulatory activity, for example, related to function.
sustainability, Consumer Duty and operational resilience. Our strategic focus
of growing the scale in our international business further increases our n We have a cohesive and holistic approach to managing the evolving landscape
regulatory footprint. of regulatory risk across jurisdictions and utilise industry insight and
specialist expertise as required to respond to regulatory change, for example,
the EU Digital Operational Resilience Act.
Sustainability risk n Sustainability risks are captured and managed within Jupiter's ERMF and
control environment.
Sustainability risks can impact and manifest in many ways including financial
under-performance, reputational damage and operational risks, such as n In 2023 we further enhanced automated monitoring of ESG risks within our
greenwashing, linked to climate change. portfolios and increased resourcing in our control teams.
Technology and information security risk n Jupiter is certified in accordance with the UK government-backed 'Cyber
Essentials Plus' scheme, demonstrating our ongoing commitment to reducing the
Our dependency on technology and data is significant and therefore it is likelihood of a successful cyber event, despite the rising number of external
imperative that we protect our clients, staff and the firms against technology attacks seen across the industry.
failure, loss of data and system corruption.
n We continue to make investments in our security systems to identify and
reduce vulnerabilities as quickly as possible.
n We have invested in ongoing training and awareness on the risks of phishing
and similar attacks, and we continue to work with our third-party suppliers to
ensure that they are able to demonstrate compliance with Group standards and
internationally recognised good practice.
Alternative performance measures
The use of alternative performance measures (APMs)
The Group uses APMs for two principal reasons:
n We use ratios to provide metrics for users of the accounts; and
n 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 2023 2022 Definition Reconciliation
1 Cost:income ratio 73% 69% Administrative expenses before exceptional items and performance fees divided See table 1 below
by Net revenue before exceptional items and performance fees
2 Net management fee margin 69.5 bps 73.5 bps Net management fees divided by average AUM
3 Total compensation ratio before performance fees 42% 40% Fixed staff costs before exceptional items plus Variable staff costs before
exceptional items and performance fees as a proportion of Net revenue before
performance fees
4 Underlying EPS 14.8p 11.3p Underlying profit after tax attributable to equity holders of the parent
divided by average issued share capital
Reconciliations and calculations: table 1
APM 2023 2022
£m £m
Administrative expenses (page 8) 265.4 302.3
Less: Performance fee variable staff costs (page 6) (6.4) (33.9)
Less: Exceptional items included in administrative expenses (page 15) (0.8) (0.8)
Administrative expenses before exceptional items and performance fee-related 258.2 267.6
costs
Net revenue (page 8) 368.8 397.3
Less: Performance fees (page 14) (13.2) (10.3)
Net revenue before performance fees 355.6 387.0
Cost:income ratio 1 73% 69%
Management fees (page 14) 389.9 430.1
Less: Fees and commissions relating to management fees (page 14) (35.9) (45.3)
Net management fees 354.0 384.8
Average AUM (£bn) (page 5) 50.9 52.4
Net management fee margin 2 69.5 bps 73.5 bps
Fixed staff costs before exceptional items (page 6) 78.1 82.4
Variable staff costs before exceptional items and performance fees (page 6) 72.8 70.6
Total 150.9 153.0
Net revenue before performance fees (see above) 355.6 387.0
Total compensation ratio before net performance fees 3 42% 40%
Statutory profit before tax (page 8) 9.4 58.0
Exceptional items (page 6) 95.8 19.6
Underlying profit before tax (page 6) 105.2 77.6
Tax at average statutory rate of 23.5% (2022: 19%)(1) (24.7) (14.7)
Underlying profit after tax 80.5 62.9
Profit attributable to non-controlling interests (page 11) - (0.6)
Underlying profit after tax attributable to equity shareholders of the parent 80.5 62.3
Average issued share capital (m) (page 17) 545.0 552.4
Underlying EPS 4 14.8p 11.3p
(1)Actual effective tax rates applicable to underlying profit before tax were
25.6% in 2023 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 fee costs 2
Fixed staff costs before exceptional items 2
Variable staff costs before exceptional items 2
Underlying profit before tax 3
Underlying profit after tax 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.
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 6.
Changes in use of APMs since 2022
There have been no changes in the Group's APMs compared to those used in 2022.
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