REG - Jupiter Fund Mgmt - Half-year Report
26/07/2024 07:00
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RNS Number : 9229X Jupiter Fund Management PLC 26 July 2024
Jupiter Fund Management plc - Interim Report and Accounts 2024
Results for the six months ended 30 June 2024
26 July 2024
A solid first half with reasons for cautious optimism
§ We have delivered a solid set of financial results for H1 2024 that are in
line with our expectations, and we are continuing to make progress against
each of our strategic objectives
§ Underlying profit before tax increased 3% to £47.9m (H1 2023: £46.4m) and
statutory profit before tax grew 11% to £38.7m (H1 2023: £34.8m)
§ We remain committed to careful and deliberate capital allocation and cost
management. Total operating costs decreased by 2% to £129.1m (H1 2023:
£132.2m)
§ We saw an increase in gross flows from retail clients, with total gross
flows of £7.5bn (H2 2023: £5.5bn)
§ There were total net outflows of £3.4bn, driven by the expected impact of
changes to the Value equity team and the management of the Chrysalis
Investment Trust. Underlying net outflows, excluding these impacts, were
£0.2bn
§ In line with our capital allocation policy, we announce an ordinary
dividend of 3.2p per share
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
AUM (£bn) 51.3 51.4 52.2
Net flows (£bn) (3.4) - (2.2)
Net revenue(1) (£m) 173.7 181.0 368.8
Statutory profit before tax(2) (£m) 38.7 34.8 9.4
Basic earnings per share (EPS)(2) (p) 5.4 4.6 (2.5)
Underlying profit before tax(1) (£m) 47.9 46.4 105.2
Underlying EPS(1) (p) 6.6 6.7 14.8
Total dividends per share 3.2 6.4 9.8
Cost:income ratio(1) 74% 71% 73%
1 The Group's use of alternative performance measures (APMs) is explained on
pages 25 to 28.
2 IFRS measures.
Matthew Beesley, Chief Executive Officer, commented:
"Jupiter delivered a solid financial performance during the first half of the
year consistent with our expectations despite experiencing outflows, which
were nearly all associated with changes in the Value team and to the
management of the Chrysalis Investment Trust. Our underlying profit before tax
increased by 3%, supported by a continuous focus on cost management which saw
total operating costs continue to fall. I believe we have a business and a
structure which positions us well for success given our work to date to
right-size our business, invest in strategic growth drivers, and bring in
highly regarded investment talent.
There are reasons to be cautiously optimistic. Our underlying outflows were
small at just £0.2bn and we saw an increase in gross flows to £7.5bn, driven
by an improvement in demand from retail clients. These positive flows were
spread across a number of our capabilities, including Systematic equities and
Asian & Emerging Market equities.
As we look forward, like other market participants, we are beginning to see
early signs of client sentiment shifting more favourably in the UK where we
have deep client relationships and leading investment capabilities. Markets
have responded positively to the increased political stability in the UK that
comes with the incoming Government and if this improvement in sentiment is
sustained, Jupiter is likely to be a strong beneficiary."
Analyst presentation
There will be a virtual analyst presentation at 10:00am BST on 26 July 2024.
The presentation will be accessible via a live webcast, which will be
available at: https://secure.emincote.com/client/jupiter/jfm039
(https://secure.emincote.com/client/jupiter/jfm039) . Please note that
questions can be asked via the webcast.
The results announcement and the presentation will be available at
https://www.jupiteram.com/investor-relations. Copies may also be obtained from
the registered office of the Company at The Zig Zag Building, 70 Victoria
Street, London, SW1E 6SQ.
The interim report and accounts will be available on the Group's website at:
https://www.jupiteram.com/investor-relations
(https://www.jupiteram.com/investor-relations/) .
For further information please contact:
Investors Media
Jupiter Alex James Victoria Howley
+44 (0)20 3817 1636 +44 (0)20 3817 1657
Edelman Smithfield Andrew Wilde
+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 solid start to 2024, with continued progress
against our strategic objectives and financial results that are in line with
or, in some cases, ahead of our expectations.
We saw total net outflows of £3.4bn, with £0.8bn due to the change in
management of the Chrysalis Investment Trust and £2.4bn from strategies
managed by the Value desk. There were total underlying net outflows (i.e.
excluding the impact of these two changes) of £0.2bn, broadly in line with
our expectation of flat underlying flows for the full year.
On this underlying basis, we saw small net positive flows in the retail,
wholesale and investment trust channel, driven by demand for Indian equities,
Asian Income and both equity and fixed income absolute return strategies.
Although underlying flows from the Institutional channsefel were net negative
in terms of AUM, they were net positive in terms of revenue contribution on a
run-rate basis, with gross inflows into higher margin areas.
Although interest rates remain high and valuations of UK-listed companies are
low relative to both their own history and other developed markets, there are
reasons to be cautiously optimistic and there are early signs of an
improvement in UK investor sentiment, particularly in the retail and wholesale
channel.
We remain resolutely focused on the aspects of the business that we can
control and employ a thoughtful, strategic approach to our resource
allocation. As a result of this discipline, and not withstanding some
seasonality, total operating costs in the first half were lower than market
expectations, leading to a 3% increase in underlying profit before tax of
£47.9m (H1 2023: £46.4m).
Our capital base remains very strong and we have today announced an ordinary
dividend of 3.2p per share, in line with our capital allocation policy of
returning 50% of pre-performance fee earnings per share.
Progress against our strategic objectives
We continue to manage our business with focus on our four key objectives of
increasing scale, decreasing undue complexity, broadening our appeal to
clients and deepening relationships with all stakeholders.
Although there were short-term specific challenges, we continue to see strong
momentum as we look to increase scale in the Institutional channel. The
majority of the £1.6bn of net outflows in this channel were from strategies
managed by the Value team. Although there were £0.3bn of underlying outflows
from institutional clients, these movements resulted in net positive revenue
contribution on a run-rate basis. Our international business remains strong
and well-diversified, with inflows from clients based in Asia and Latin
America almost offsetting outflows from unconstrained fixed income strategies
from clients based in continental Europe.
We have continued to remove undue complexity from the business, through both
careful and disciplined management of our cost base and direct management
actions. Although the discrete programme of fund rationalisation is largely
complete, ongoing curation of the product range will see a net reduction in
the total number of funds by the year end. Our focus remains on ensuring we
have differentiated investment capabilities and considering whether evolving
client needs present us with an opportunity to allow them to access these
capabilities through different structures or constructs. We have also
continued to invest in data and technology, most notably around enhancing our
scalable platform, with the aim of delivering on that operational leverage
opportunity.
This focus will allow us to remove undue complexity, automating formerly
manual processes and delivering increasingly bespoke, personalised levels of
client service and reporting. In turn, along with strengthening our ability to
provide customised solutions, this approach will enable us to broaden our
appeal to clients.
Finally, we continue to deepen relationships with all our stakeholders,
including our clients, with whom we will continue to actively engage to ensure
that we understand their evolving needs. Our people are another key
stakeholder and I am pleased to report that our latest opinion survey showed
an engagement score of 76%, higher, once more, than the financial services
benchmark(1). With regards to our shareholders, our ordinary dividend
announced today is in line with our capital allocation policy and we will
continue to build a business that delivers consistent shareholder value.
1. Engagement score of 76% is based upon our most recent employee
'pulse' opinion survey, conducted in May 2024. The benchmark of 74% is
provided by People Insight and comprises engagement scores of all financial
services who provide data to them.
Improving gross flows and underlying net flows
Following market weakness in the second half of last year, gross flows saw an
improvement in the first half of 2024 to £7.5bn (H2 2023: £5.5bn), driven by
an increase in demand from retail clients.
We saw total net outflows of £3.4bn in the first half of 2024. This was
driven by £2.4bn of net outflows from strategies managed by the Value team
and £0.8bn following the change in arrangements of the management of the
Chrysalis Investment Trust. Excluding the impact of these two factors, we saw
total underlying net outflows of £0.2bn.
The net redemptions from strategies managed by the Value team included £1.3bn
from institutional clients and £1.1bn from retail and wholesale clients. The
team now manage £6.3bn of externally managed assets, £1.7bn of which is on
behalf of institutional clients and £4.6bn for retail clients. £3.4bn of the
managed assets are held in segregated mandates.
Encouragingly, we generated slightly net positive underlying flows in the
retail, wholesale and investment trust channel. This was driven by strong
demand for our Asian and Emerging Market equities capability, most notably our
Indian equity and wider Asian Income strategies. Our Systematic equities
capability also saw inflows, driven by strong investment performance and
ongoing client demand for the Global Equity Absolute Return Fund.
Institutional flows, which are always more lumpy in nature, were more muted in
the first half and saw small net outflows, which was almost all due to the
expected redemption of a lower margin mandate. On an underlying basis,
although Institutional flows were net negative in terms of AUM, they were net
positive in terms of revenue contribution on a run-rate basis.
Although these net outflows were partially offset by positive market and other
movements of £2.5bn, total closing AUM decreased by 2% to £51.3bn (31
December 2023: £52.2bn).
31 December 2023 Q1 net flows Q2 net flows H1 net flows Market and other movements 30 June 2024
£bn £bn £bn £bn £bn £bn
Retail, wholesale & investment trusts 42.2 (0.8) (1.0) (1.8) 2.0 42.4
Institutional 10.0 (0.8) (0.8) (1.6) 0.5 8.9
Total 52.2 (1.6) (1.8) (3.4) 2.5 51.3
of which is invested in mutual funds 38.1 (0.3) (0.6) (0.9) 1.7 38.9
Solid financial performance
Despite the well-known headwinds and an ongoing uncertain market backdrop, we
delivered solid financial performance in the first half of 2024.
Underlying profit before tax and exceptional items increased by 3% to £47.9m
(H1 2023: £46.4m), with statutory profit before tax up 11% to £38.7m (H1
2023: £34.8m). Excluding the impact of net performance fees, underlying
profit before tax and exceptional items was £46.6m (H1 2023: £49.5m).
Including net performance fees, underlying EPS was 6.6p (H1 2023: 6.7p) and
basic statutory EPS was 5.4p (H1 2023: 4.6p). Underlying EPS, excluding the
impact of net performance fees, was 6.4p (H1 2023: 7.1p).
Driven by market gains, average AUM increased to £52.1bn (H1 2023: £50.9bn).
However, with the strategic introduction of tiered pricing on our UK-domiciled
fund ranges and the evolution of the business towards institutional clients,
the average fee margin in the first half was 65bps (FY 2023: 70bps). This is
slightly lower than guidance for the full year, but is a result of the timing
of flows, which we expect to drive up net revenue margins in the second half.
The guidance of 66bps for the full-year 2024 net revenue margin remains
unchanged.
As a result of these changes, net revenue was 4% lower at £173.7m (H1 2023:
£181.0m), including £3.9m of performance fees (H1 2023: £0.4m).
Thoughtful and strategic allocation of costs remains a key focus at Jupiter.
Although there is some seasonality in our cost base, with a greater weighting
towards the second half, costs are largely as we expected for the period.
Fixed staff costs of £38.8m (H1 2023: £37.0m) were in line with guidance.
Variable staff costs of £41.0m (H1 2023: £41.4m) reflect a 45% total
compensation ratio (excluding the net impact of performance fees), which is
two percentage points lower than our guidance for the full year. Although
there is some seasonality in these costs, it is possible that we will now be
able to deliver a full-year compensation ratio in the region of 46%.
Non-compensation costs also continue to be carefully managed at £49.3m (H1
2023: £53.8m). Again, there is some seasonality here and we would expect
non-compensation costs to be higher in the second half. Nonetheless, through
direct management actions we now reasonably expect full-year non-compensation
costs to be £109m, £2m lower than previous guidance.
Our disciplined approach towards our cost base remains unchanged. Our
investments are focused on areas which will either realise growth
opportunities which will add scale to the revenue base, build further
efficiencies in our scalable platform that will deliver operational leverage
or drive value for money from existing mandatory spend.
Total expenses before exceptional items were 2% lower than the first half of
2023 at £129.1m (H1 2023: £132.2m). Excluding the impact of performance
fee-related pay and exceptional items, the Group's total administrative
expenses were £126.5m (H1 2023: £128.7m).
There were exceptional items of £9.2m (H1 2023: £11.6m), which solely
comprised amortisation of intangible assets relating to the 2020 Merian
acquisition. No further exceptional items are expected in the second half of
the year.
Six months ended 30 June 2024 Six months ended 30 June 2023
£m Before net Net performance fees Total Before net performance fees Net performance fees Total
performance
fees
Net revenue 169.8 3.9 173.7 180.6 0.4 181.0
Compensation costs (77.2) (2.6) (79.8) (74.9) (3.5) (78.4)
Non-compensation costs (49.3) - (49.3) (53.8) - (53.8)
Administrative expenses(1) (126.5) (2.6) (129.1) (128.7) (3.5) (132.2)
Other gains 3.5 - 3.5 0.4 - 0.4
Amortisation of intangible assets(2) (1.2) - (1.2) (1.0) - (1.0)
Operating profit before exceptional items 45.6 1.3 46.9 51.3 (3.1) 48.2
Net finance income/(costs) 1.0 - 1.0 (1.8) - (1.8)
Profit before taxation and exceptional items 46.6 1.3 47.9 49.5 (3.1) 46.4
Exceptional items (9.2) - (9.2) (11.6) - (11.6)
Statutory profit before tax 37.4 1.3 38.7 37.9 (3.1) 34.8
1 Administrative expenses in H1 2023 excluded £2.2m of variable staff costs
classified as exceptional.
2 Amortisation of intangible assets excludes £9.2m classified as exceptional
(2023 H1: £9.4m).
Active, high-conviction investment
Market dynamics have continued to create a challenging backdrop for our range
of investment capabilities and, as a result, our aggregate investment
performance measures are lower than we would typically expect.
At 30 June 2024, 55% of our mutual fund AUM had delivered above-median
performance against their peer group over three years (31 December 2023: 59%
of mutual fund AUM), of which 43% of mutual fund AUM had delivered first
quartile performance (31 December 2023: 41% of mutual fund AUM).
Measured over five years, 57% of mutual fund AUM (31 December 2023: 66% of
mutual fund AUM) delivered above-median performance, whereas over one year,
this was 43% of mutual fund AUM (31 December 2023: 65% of mutual fund AUM).
The decline over our key three-year metric was driven by a small number of
larger funds moving below their median, including the European Growth fund,
Japanese equity and some of our Merlin fund of fund strategies.
However, of our 13 funds that have over £1bn of AUM, nine are above their
median over three and five years. We have also seen some exceptionally strong
performance in smaller funds that are in areas of strong client demand. Of the
21 funds which are in the top quartile over three years, over half of these
are also top decile, including Strategic Absolute Return Bond fund, Indian
equity strategies, Global High Yield and Asian Income.
Segregated mandates and investment trusts now make up £12.4bn, or 24% of our
AUM (31 December 2023: £10.9bn, or 21% of our AUM). At the period end, 64% of
AUM in this category were above their benchmarks over three years (31 December
2023: 59%).
A strong capital base
The Group continues to maintain a strong capital base.
Our expected capital surplus has increased to £198.5m at end June 2024, which
is around 3.75 times coverage of our regulatory surplus requirement of £72m.
Our capital allocation policy is to pay out 50% of underlying EPS before
performance fees. In line with this, the Board have proposed an interim
ordinary dividend of 3.2p per share. The dividend will be paid on 4 September
2024 to shareholders on the register at the close of business on 9 August
2024.
Our policy, as part of our overall capital allocation framework, allows us to
return capital to shareholders on a clear, sustainable basis and, if there are
no capital needs, we expect to make further returns of additional capital to
shareholders at the appropriate time.
Looking forward through 2024
Whilst the backdrop remains uncertain and there are well-publicised challenges
to the industry, our underlying business is performing well and we have
delivered a solid set of financial results.
Our approach to human and capital resource allocation remains considered and
we are focused on building scale and top-line revenue growth, while driving
efficiencies and removing any undue complexity.
Market sentiment is still far from buoyant, but there are early signs of
cautious optimism for an improvement in clients' views towards risk assets.
With a period of forthcoming political stability and falling interest rates,
and the possibility of more bold action from the new government, it is not
unreasonable to be hopeful around a potential turnaround in sentiment in both
the UK and in companies who are listed in the UK. Should this take place,
Jupiter remains well-positioned to capitalise over the medium term.
Matthew Beesley
Chief Executive Officer
25 July 2024
Consolidated income statement
for the six months ended 30 June 2024
Notes Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Revenue 1 192.6 200.2 405.6
Fee and commission expenses 1 (18.9) (19.2) (36.8)
Net revenue 1 173.7 181.0 368.8
Administrative expenses 3 (129.1) (134.4) (265.4)
Other gains 4 3.5 0.4 3.2
Amortisation of intangible assets 9 (10.4) (10.4) (20.6)
Operating profit 37.7 36.6 86.0
Impairment of goodwill 8 - - (76.2)
Finance income(1) 5 4.1 1.3 5.8
Finance costs(1) 5 (3.1) (3.1) (6.2)
Profit before taxation 38.7 34.8 9.4
Income tax expense 6 (10.5) (10.6) (22.3)
Profit/(loss) for the period(1) 28.2 24.2 (12.9)
Earnings per share
Basic 7 5.4p 4.6p (2.5)p
Diluted 7 5.3p 4.6p (2.5)p
(1)In the Group's 2023 Interim Report and Accounts, these lines were
aggregated as 'Net finance costs'.
Consolidated statement of comprehensive income
for the six months ended 30 June 2024
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Profit/(loss) for the period 28.2 24.2 (12.9)
Items that may be reclassified subsequently to profit or loss
Exchange movements on translation of subsidiary undertakings (0.8) (2.1) (1.7)
Other comprehensive loss for the year net of tax (0.8) (2.1) (1.7)
Total comprehensive income/(loss) for the period net of tax 27.4 22.1 (14.6)
Consolidated balance sheet
at 30 June 2024
Notes 30 June 2024 30 June 2023
31 December 2023
£m £m £m
Non-current assets
Goodwill 8 494.4 570.6 494.4
Intangible assets 9 10.2 26.7 17.5
Property, plant and equipment 10 35.8 38.9 37.5
Investment in associates 1.8 - 1.8
Deferred tax assets 16.9 19.4 16.1
Trade and other receivables 0.4 0.3 0.4
559.5 655.9 567.7
Current assets
Financial assets 11 469.9 166.8 232.8
Trade and other receivables 166.7 205.7 137.6
Cash and cash equivalents 12 206.9 284.0 268.2
Current tax asset 3.7 3.1 1.3
847.2 659.6 639.9
Total assets 1,406.7 1,315.5 1,207.6
Equity attributable to shareholders
Share capital 14 10.9 10.9 10.9
Own share reserve 15 (0.6) (0.8) (0.7)
Other reserves 15 250.3 250.3 250.3
Foreign currency translation reserve 15 1.2 1.6 2.0
Retained earnings 15 543.8 586.7 527.0
Capital and reserves attributable to owners of Jupiter Fund Management plc 805.6 848.7 789.5
Non-controlling interests - 0.5 -
Total equity 805.6 849.2 789.5
Non-current liabilities
Loans and borrowings 13 49.8 49.6 49.7
Trade and other payables 52.3 81.8 59.7
Deferred tax liabilities - 4.5 2.3
102.1 135.9 111.7
Current liabilities
Financial liabilities at fair value through profit or loss 11 250.9 48.5 80.3
(FVTPL)
Trade and other payables(1) 243.9 280.2 221.4
Provisions(1) 3.4 1.7 4.7
Current tax liability 0.8 - -
499.0 330.4 306.4
Total liabilities 601.1 466.3 418.1
Total equity and liabilities 1,406.7 1,315.5 1,207.6
( )
(1)In the Group's 2023 Interim Report and Accounts, these lines were
aggregated as 'Trade and other payables'.
Consolidated statement of changes in equity
for the six months ended 30 June 2024
Share Total Non-controlling interests Total equity
capital Foreign
Own currency
share Other translation Retained earnings
reserve reserves reserve
£m £m £m £m £m £m £m £m
At 1 January 2023 10.9 (0.5) 250.3 3.7 578.9 843.3 0.6 843.9
Profit/(loss) for the period - - - - 24.3 24.3 (0.1) 24.2
Exchange movements on translation of subsidiary undertakings - - - (2.1) - (2.1) - (2.1)
Other comprehensive loss - - - (2.1) - (2.1) - (2.1)
Total comprehensive (loss)/income - - - (2.1) 24.3 22.2 (0.1) 22.1
Vesting of ordinary shares and options - 0.1 - - (0.1) - - -
Dividends paid - - - - (2.6) (2.6) - (2.6)
Purchase of shares by EBT - (0.4) - - (24.0) (24.4) - (24.4)
Share-based payments - - - - 10.2 10.2 - 10.2
Total transactions with owners - (0.3) - - (16.5) (16.8) - (16.8)
At 30 June 2023 10.9 (0.8) 250.3 1.6 586.7 848.7 0.5 849.2
(Loss)/profit for the period - - - - (37.2) (37.2) 0.1 (37.1)
Exchange movements on translation of subsidiary undertakings - - - 0.4 - 0.4 - 0.4
Other comprehensive income - - - 0.4 - 0.4 - 0.4
Total comprehensive income/(loss) - - - 0.4 (37.2) (36.8) 0.1 (36.7)
Vesting of ordinary shares and options - 0.1 - - (0.1) - - -
Dividends paid - - - - (32.6) (32.6) - (32.6)
Purchase of shares by EBT - - - - (0.1) (0.1) - (0.1)
Share-based payments - - - - 8.3 8.3 - 8.3
Other movements - - - - 2.0 2.0 - 2.0
Disposal of non-controlling interests - - - - - - (0.6) (0.6)
Total transactions with owners - 0.1 - - (22.5) (22.4) (0.6) (23.0)
At 31 December 2023 10.9 (0.7) 250.3 2.0 527.0 789.5 - 789.5
Profit for the period - - - - 28.2 28.2 - 28.2
Exchange movements on translation of subsidiary undertakings - - - (0.8) - (0.8) - (0.8)
Other comprehensive loss - - - (0.8) - (0.8) - (0.8)
Total comprehensive (loss)/income - - - (0.8) 28.2 27.4 - 27.4
Vesting of ordinary shares and options - 0.1 - - (0.1) - - -
Dividends paid - - - - (17.6) (17.6) - (17.6)
Purchase of shares by EBT - - - - (0.9) (0.9) - (0.9)
Share-based payments - - - - 7.2 7.2 - 7.2
Total transactions with owners - 0.1 - - (11.4) (11.3) - (11.3)
At 30 June 2024 10.9 (0.6) 250.3 1.2 543.8 805.6 - 805.6
Notes 14 15 15 15 15
Consolidated statement of cash flows
for the six months ended 30 June 2024
Notes Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Cash flows from operating activities
Cash generated from operations 17 53.1 55.8 109.1
Income tax paid (15.2) (12.6) (21.1)
Net cash inflows from operating activities 37.9 43.2 88.0
Cash flows from investing activities
Purchase of intangible assets 9 (3.1) (1.9) (2.9)
Purchase of property, plant and equipment 10 (1.1) (0.3) (0.6)
Purchase of financial assets at FVTPL(1) (329.2) (61.3) (187.0)
Proceeds from disposal of financial assets at FVTPL(2) 154.1 62.1 131.1
Cash movement from funds no longer consolidated(3) (0.1) (1.5) (3.1)
Dividend income received 0.5 0.3 0.5
Interest income received(4) 3.6 1.3 5.4
Net cash outflows from investing activities (175.3) (1.3) (56.6)
Cash flows from financing activities
Dividends paid 16 (17.6) (2.6) (35.2)
Purchase of shares by EBT 15 (0.9) (24.4) (24.5)
Purchase of shares for cancellation 14 - (2.0) (2.0)
Finance costs paid(4) (4.5) (4.5) (4.6)
Cash paid in respect of lease arrangements (4.1) (3.0) (4.9)
Third-party subscriptions into consolidated funds 116.9 29.9 63.0
Third-party redemptions from consolidated funds (15.3) (30.0) (34.1)
Distributions paid by consolidated funds - (0.5) (0.1)
Net cash inflows/(outflows) from financing activities 74.5 (37.1) (42.4)
[]
Net (decrease)/increase in cash and cash equivalents (62.9) 4.8 (11.0)
[]
Cash and cash equivalents at beginning of period 268.2 280.3 280.3
Effects of exchange rates on cash and cash equivalents 1.6 (1.1) (1.1)
Cash and cash equivalents at end of period 12 206.9 284.0 268.2
(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) In the Group's 2023 Interim Report and Accounts, these lines were
aggregated as 'Net finance costs paid'.
Notes to the Group financial statements
Introduction
Jupiter Fund Management plc (the Company) and its subsidiaries (together, the
Group) offer a range of asset management products. Through its subsidiaries,
the Group acts as an investment manager to authorised unit trusts, SICAVs,
ICVCs, OEICs, investment trust companies, pension funds and other specialist
funds. At 30 June 2024, the Group had offices in the United Kingdom, Ireland,
Germany, Hong Kong, Italy, Luxembourg, Singapore, Spain, Sweden and
Switzerland.
Basis of preparation and other accounting policies
Within this Interim Report and Accounts, all current and comparative data
covering periods to (or as at) 30 June are unaudited. Data given in respect of
the year ended 31 December 2023 is audited. Information which is the required
content of the Interim Management Report can be found on pages 1 to 6, 23, and
25 to 28.
These condensed financial statements for the six months ended 30 June 2024
have been prepared in accordance with the Disclosure Guidance and Transparency
Rules sourcebook of the Financial Conduct Authority and with UK-adopted
International Accounting Standard IAS 34 Interim Financial Reporting. The
condensed financial statements should be read in conjunction with the Group's
annual financial statements for the year ended 31 December 2023, which were
prepared in accordance with UK-adopted International Accounting Standards and
with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards.
The condensed financial statements do not comprise statutory accounts within
the meaning of section 434 of the Companies Act 2006. Statutory accounts for
the year ended 31 December 2023 were approved by the Board on 22 February 2024
and delivered to the Registrar of Companies. The report of the auditors on
those accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under section 498 of the Companies
Act 2006. The condensed financial statements have been reviewed, not audited.
The Group is able to operate within its available resources even in a stressed
scenario. The Directors have not identified any material uncertainties to the
Group's ability to continue to adopt the going concern basis. As a
consequence, the Directors have a reasonable expectation that the Group has
adequate resources to continue operating for a period of at least 12 months
from the date of approval of the condensed financial statements. Accordingly,
they continue to adopt the going concern basis of accounting in preparing
these financial statements.
New accounting standards
The International Accounting Standards Board (IASB) and IFRS Interpretations
Committee (IC) have issued a number of new accounting standards and
interpretations and amendments to existing standards and interpretations.
Other than IFRS 18, 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.
The IASB issued IFRS 18 Presentation and Disclosure in Financial Statements on
9 April 2024. The standard, which is effective for periods beginning on or
after 1 January 2027, aims to improve comparability and transparency of
communication in financial statements, and replaces IAS 1 Presentation of
Financial Statements. The Group has not applied IFRS 18 in these financial
statements.
IFRS 18 introduces new presentational requirements within the income
statement, including specified totals and sub-totals. It also requires
disclosure of management-defined performance measures and requirements for
aggregation and disaggregation of financial information based on the
identified roles of the primary financial statements and notes to the
accounts. The new requirements are expected to impact the presentation, but
not the recognition or measurement, of items in the income statement, the cash
flow statement and relevant notes to the accounts, including what the Group
currently reports as its 'Operating profit'.
Accounting policies
The accounting policies applied are consistent with those applied in the
Group's annual financial statements for the year ended 31 December 2023.
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 or clients when agreed performance conditions are met.
Net revenue is stated after fee and commission expenses to intermediaries for
ongoing services under distribution agreements.
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Management fees 187.5 198.5 389.9
Initial charges and commissions 1.2 1.3 2.5
Performance fees 3.9 0.4 13.2
Revenue 192.6 200.2 405.6
Fee and commission expenses relating to management fees (18.5) (18.7) (35.9)
Fees and commission expenses relating to initial charges and commissions (0.4) (0.5) (0.9)
Net revenue 173.7 181.0 368.8
2. Segmental reporting
The Group offers a range of products and services through different
distribution channels. All financial, business and strategic decisions are
made centrally by the Board of Directors (the Board), which determines the key
performance indicators of the Group. Information is reported to the chief
operating decision maker, the Board, on a single segment basis. While the
Group has the ability to analyse its underlying information in different ways,
for example by product type, this information is only used to allocate
resources and assess performance for the Group as a whole. On this basis, the
Group considers itself to be a single-segment investment management business.
3. Administrative expenses
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Staff costs 81.2 79.3 159.6
Depreciation of property, plant and equipment 2.8 2.6 5.2
Other administrative expenses 46.5 51.2 102.1
Administrative expenses before net (gains)/losses arising from economic 130.5 133.1 266.9
hedging of fund awards
Net (gains)/losses on instruments held to provide an economic hedge for fund (1.4) 1.3 (1.5)
awards
Total administrative expenses 129.1 134.4 265.4
4. Other gains
Other gains relate principally to net gains made on the Group's seed
investment portfolio and derivative instruments held to provide economic
hedges against that portfolio. The portfolio and derivatives are held at FVTPL
(see Note 11). Gains and losses on these investments comprise both realised
and unrealised amounts.
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Dividend income 0.5 0.3 0.6
Net gains on financial instruments designated at FVTPL upon initial 9.6 2.5 8.2
recognition
Net losses on financial instruments at FVTPL (6.6) (2.4) (5.6)
Other gains 3.5 0.4 3.2
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.
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Interest on bank deposits 1.9 1.3 3.5
Interest on short-term money market fund investments 2.2 - 2.3
4.1 1.3 5.8
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.
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Interest on subordinated debt 2.3 2.3 4.5
Interest on lease liabilities 0.7 0.7 1.5
Finance cost on the revolving credit facility 0.1 0.1 0.2
3.1 3.1 6.2
6. Income tax expense
Analysis of charge in the period:
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Current tax
Tax on profits for the period 13.7 12.7 24.1
Adjustments in respect of prior periods (0.1) - (0.7)
Total current tax 13.6 12.7 23.4
Deferred tax
Origination and reversal of temporary differences (3.1) (2.1) 0.1
Adjustments in respect of prior periods - - (1.2)
Total deferred tax (3.1) (2.1) (1.1)
22.3
Income tax expense 10.5 10.6 22.3
The weighted average UK corporate tax rate for 2024 FY is 25% (2023 FY:
23.5%). The UK corporation tax rate increased from 19% to 25% on 1 April 2023.
The effective tax rate used for the period to 30 June 2024 is 27.1%, compared
to 30.5% for the six months ended 30 June 2023.
The decrease in the effective tax rate is primarily due to an increase in fund
unit share prices in 2024 compared to 2023. This benefit is slightly offset by
a smaller adverse movement in the share price of share-based payments in 2024
compared to 2023. In addition, there was a greater level of disallowable
expenditure in 2024 compared to 2023. Combined, these factors give rise to an
effective tax rate of 27.1% which is slightly higher than the UK statutory
rate of 25%.
7. Earnings per share (EPS)
Basic EPS is calculated by dividing the profit for the period attributable to
equity holders of Jupiter Fund Management plc (the parent company of the
Group) by the weighted average number of ordinary shares outstanding and
contingently issuable during the period, less the weighted average number of
own shares held. Own shares are shares held in an EBT for the benefit of
employees under the vesting, lock-in and other incentive arrangements in
place.
Diluted EPS is calculated by dividing the profit for the period (as used in
the calculation of basic EPS) by the weighted average number of ordinary
shares outstanding during the period for the purpose of basic EPS, plus the
weighted average number of ordinary shares that would be issued on the
conversion of all the dilutive potential ordinary shares into ordinary shares.
The weighted average number of ordinary shares used in the calculation of EPS
is as follows:
Weighted average number of shares Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
Number Number Number
million million million
Issued share capital(1) 545.0 545.1 545.0
Add: Contingently issuable shares(2) 8.2 5.9 6.2
Less: Time-apportioned own shares held (31.8) (28.1) (31.9)
Weighted average number of ordinary shares for the purpose of basic EPS 521.4 522.9 519.3
Add: Weighted average number of dilutive potential shares 7.2 8.8 -(3)
Weighted average number of ordinary shares for the purpose of diluted EPS 528.6 531.7 519.3
(1)The Group purchased and cancelled 1.4m ordinary shares during the first
half of 2023 (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.
EPS Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
Pence Pence Pence
Basic 5.4 4.6 (2.5)
Diluted 5.3 4.6 (2.5)
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) and the 2020 acquisition of Merian Global Investors Limited
(Merian).
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Goodwill 494.4 5 570.6 494.4
494.4 570.6 494.4
The Group operates as a single asset management business segment and does not
allocate costs between investment strategies or individual funds. The
businesses acquired to which the goodwill relates are fully integrated and are
not separately measured or monitored. It is not possible to assign any
reduction in the Group's profitability between the acquired businesses, 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 is
calculated using a value in use approach, based on the net present value of
the Group's future earnings. The net present value is calculated using a
discounted cash flow model, with the following key assumptions:
§ The Group's projected base case forecast cash flows over a period of four
and a half years to the end of 2028, which includes an assumption of annual
revenue growth based on our expectations of AUM growth, client fee rates and
performance fees. The data has been taken from the five-year plan, which was
approved by the Board in February 2024, updated for actual results to 30 June
2024;
§ Long-term growth rates of 2% (2023 FY: 2%) were used to calculate terminal
value; and
§ A post-tax discount rate of 14.8% (2023 FY: 13.2%) was calculated using the
capital asset pricing model. Using a pre-tax discount rate of 19.1% (2023 FY:
17.0%) on pre-tax profitability and cash flows does not produce a materially
different result.
The impairment test performed indicates positive headroom of recoverable
amount over carrying value of £45m at 30 June 2024. The value in use of the
asset is higher than its fair value less costs of disposal. Our conclusion
therefore is that the Group's goodwill asset is not currently impaired.
The sensitivity of the Group's current headroom position to reasonably
possible changes in key assumptions used in the value in use calculation is
shown in the table below.
Key variable Reasonably possible adverse movement Reduction in headroom
£m
Discount rate +1% 43
Terminal growth rate movement -1% 27
Decrease in revenue -10% 188(1)
(1)The decrease in revenue represents a modelled percentage reduction in each
year projected in the Group's base case forecast cash flows.
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.
9. Intangible assets
At 30 June 2024, intangible assets comprise computer software. In prior
periods, intangible assets principally comprised investment management
contracts acquired as part of the Merian transaction. These contract assets
are now fully amortised.
During the period, the Group acquired computer software of £3.1m (2023 H1:
£1.9m, 2023 FY: £2.9m). There were no disposals (2023 H1 and 2023 FY: same).
These assets are amortised on a straight-line basis over their estimated
useful lives, which are estimated as being between five and ten years.
The amortisation charge for the period was £10.4m (2023 H1: £10.4m, 2023 FY:
£20.6m).
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Intangible assets 10.2 26.7 17.5
10.2 26.7 17.5
The management statement of this document refers to exceptional items of
£9.2m (2023 H1: £9.4m, 2023 FY: £18.8m) relating to amortisation of
intangible assets. This charge is in respect of the Merian acquisition in
2020.
10. Property, plant and equipment
The net book value of property, plant and equipment at 30 June 2024 was
£35.8m (2023 H1: £38.9m, 2023 FY: £37.5m). During the period, the Group
acquired items of property, plant and equipment (excluding right-to-use leased
assets) with a value of £1.1m (2023 H1: £0.3m, 2023 FY: £0.6m). Additions
to the right-of-use leased assets during the period were £nil (2023 H1:
£0.3m, 2023 FY: £0.6m).
11. Financial instruments
As at 30 June 2023, the Group held the following classes of financial
instruments, which principally comprise seed investments and assets held to
hedge compensation awards:
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Financial assets
Investments in associates 1.2 - -
Direct seed investment at fair value 145.0 65.2 87.5
Financial assets due to consolidation of funds 244.3 44.6 76.8
Derivatives and fund unit hedges 63.5 57.0 55.1
Financial assets at FVTPL 454.0 166.8 219.4
Financial assets at amortised cost 15.9 - 13.4
469.9 166.8 232.8
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Financial liabilities at FVTPL
Financial liabilities due to consolidation of funds (250.8) (48.5) (80.2)
Derivatives (0.1) - (0.1)
(250.9) (48.5) (80.3)
12. Cash and cash equivalents
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Cash at bank and in hand 100.9 281.1 137.5
Cash equivalents 102.2 - 128.4
Cash held by the EBT and seed investment subsidiaries 3.8 2.9 2.3
Total cash and cash equivalents 206.9 284.0 268.2
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 comprise 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.
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Subordinated debt in issue 49.8 49.6 49.7
49.8 49.6 49.7
14. Share capital
In early 2023, the Group purchased and cancelled 1.4m shares 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.
Number of ordinary shares
30 June 2024 30 June 2023 31 December 2023
million million million
Ordinary shares of 2p each 545.0 545.0 545.0
545.0 545.0 545.0
Number of ordinary shares Par value
30 June 2024 30 June 2023 31 December 2023 30 June 2024 30 June 2023 31 December 2023
m m m £m £m £m
Movement in ordinary shares
At 1 January 545.0 546.4 546.4 10.9 10.9 10.9
Shares cancelled - (1.4) (1.4) - - -
At the end of the period 545.0 545.0 545.0 10.9 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 and are used to settle obligations that arise
from the vesting of share-based awards.
During the period, the Group purchased 1.2m (2023 H1: 18.4m, 2023 FY: 18.7m)
ordinary shares with a par value of £0.1m (2023 H1: £0.4m, 2023 FY: £0.4m)
for the purpose of satisfying share option obligations to employees. The full
cost of the purchases was £0.9m (2023 H1: £24.4m, 2023 FY: £24.5m). The
Group disposed of 4.4m (2023 H1: 3.4m, 2023 FY: 7.7m) own shares to employees
in satisfaction of share-based awards with a nominal value of £0.1m (2023 H1:
£0.1m, 2023 FY: £0.2m). At 30 June 2024, 30.7m (2023 H1: 37.9m, 2023 FY:
33.9m) ordinary shares, with a par value of £0.6m (2023 H1: £0.8m, 2023 FY:
£0.7m), were held as own shares within the Group's EBT.
(ii) Other reserves
Other reserves comprise the merger relief reserve of £242.1m (2023 H1 and
2023 FY: £242.1m) formed on the acquisition of Merian in 2020, £8.0m (2023
H1 and 2023 FY: £8.0m) that relates to the conversion of Tier 2 preference
shares in 2010, and £0.2m (2023 H1: £0.2m, 2023 FY: £0.2m) of capital
redemption reserve that was transferred from share capital on the cancellation
of shares repurchased in 2022 and 2023 (see Note 14).
(iii) Foreign currency translation reserve
The foreign currency translation reserve of £1.2m (2023 H1: £1.6m, 2023 FY:
£2.0m) is used to record exchange differences arising from the translation of
the financial statements of foreign subsidiaries.
(iv) Retained earnings
Retained earnings of £543.8m (2023 H1: £586.7m, 2023 FY: £527.0m) are the
amount of earnings that are retained within the Group after dividend payments
and other transactions with owners.
16. Dividends
On 20 May 2024 the Group paid a final dividend for 2023 of 3.4p per ordinary
share. This amounted to a total payment of £17.6m after taking into account
the £0.9m dividends waived on shares held in the EBT.
The Board has declared an interim dividend for the period of 3.2p per ordinary
share. This dividend will be paid on 4 September 2024 to ordinary shareholders
on the register at close of business on 9 August 2024 and amounts to £17.4m
before adjusting for any dividends waived on shares in the EBT.
17. Cash flows generated from operating activities
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Operating profit 37.7 36.6 86.0
Adjustments for:
Amortisation of intangible assets 10.4 10.4 20.6
Depreciation of property, plant and equipment 2.8 2.6 5.2
Other net (gains)/losses(1) (7.8) 0.3 (5.0)
(Gains)/losses on fund unit hedges(2) (1.4) 1.3 (1.5)
Share-based payments 7.2 10.2 18.5
Increase in trade and other receivables(3) (14.8) (80.9) (14.4)
Increase/(decrease) in trade and other payables(3) 19.0 75.3 (0.3)
Cash generated from operations 53.1 55.8 109.1
(1)Comprises the reversal of items included in 'Other gains' in the income
statement that relate either to unrealised gains or losses, or to cash flows
relating to the disposal of financial assets other than derivative contracts.
Cash flows relating to disposals are included in the Cash flow statement
within 'Proceeds from disposals of financial assets at FVTPL'.
(2)Comprises the reversal of net losses on instruments held to provide an
economic hedge for funds awards that are recognised within Administrative
expenses (Note 3). Cash flows arising from the disposals of such instruments
are included in the Cash flow statement, in line with footnote 1 above.
(3)Amounts reported in these lines can differ from the movement in the balance
sheet where cash flows that form part of that movement are separately reported
in a different line of the Cash flow statement or its notes. In 2023 and 2024,
these differences are principally in respect of cash flow movements relating
to consolidated funds. For trade and other payables, additionally, cash flows
arising from movements in lease liabilities are presented on the face of the
Cash flow statement.
18. Changes in liabilities arising from financing activities
Financial liabilities at FVTPL Loans and borrowings(1) Leases Total
£m £m £m £m
Brought forward at 1 January 2023 48.6 49.5 46.3 144.4
New leases - - 0.3 0.3
Changes from financing cash flows (0.1)(2) - (3.0) (3.1)
Changes arising from obtaining or losing control of consolidated funds (0.4) - - (0.4)
Changes in fair value 0.4 - - 0.4
Interest expense - 0.1 0.7 0.8
Lease reassignment and modifications - - 0.6 0.6
Liabilities arising from financing activities carried forward at 30 June 2023 48.5 49.6 44.9 143.0
New leases - - 0.3 0.3
Changes from financing cash flows 29.0(2) - (1.9) 27.1
Changes arising from obtaining or losing control of consolidated funds (0.8) - - (0.8)
Changes in fair value 3.5 - - 3.5
Interest expense - 0.1 0.8 0.9
Liabilities arising from financing activities carried forward at 31 December 80.2 49.7 44.1 174.0
2023
Changes from financing cash flows 101.6(2) - (4.1) 97.5
Changes arising from obtaining or losing control of consolidated funds 68.9 - - 68.9
Changes in fair value 0.1 - - 0.1
Interest expense - 0.1 0.7 0.8
Liabilities arising from financing activities carried forward at 30 June 2024 250.8 49.8 40.7 341.3
Notes 13
(1) Accrued interest on loans and borrowings is recorded within 'Trade and
other payables' and is therefore not included in this analysis. The interest
expense above comprises the charge arising from unwinding the discount applied
in calculating the amortised cost of the subordinated debt.
(2) Comprises cash flows from third-party subscriptions into consolidated
funds, net of redemptions (see Cash flow statement).
19. Financial instruments
Financial instruments held at fair value are carried at a value which
represents the price to exit the instruments at the balance sheet date. The
fair value of financial instruments that are actively traded in organised
financial markets is determined by reference to quoted market bid prices at
the close of business on the balance sheet date. Where a quoted market price
is not available, the Group establishes the fair value using valuation
techniques such as recent arm's length market transactions, reference to the
current fair value of another instrument that is substantially the same,
discounted cash flow analysis or other valuation models. For financial
instruments not held at fair value, their carrying amount is a reasonable
approximation of their fair value.
The Group used the following hierarchy for determining and disclosing the fair
value of financial instruments:
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2: other techniques, for which all inputs which have a significant
effect on the recorded fair value are observable, either directly or
indirectly.
Level 3: techniques which use inputs which have a significant effect on the
recorded fair value that are not based on observable market data (unobservable
inputs).
As at 30 June 2024, the Group held the following financial instruments
measured at fair value:
Level 1 Level 2 Level 3 Total
£m £m £m £m
Financial assets - investments in funds 257.0 197.0 - 454.0
-
Financial liabilities - non-controlling interests in consolidated funds (250.8) - - (250.8)
Financial liabilities - derivatives - (0.1) - (0.1)
6.2 196.9 - 203.1
As at 30 June 2023, the Group held the following financial instruments
measured at fair value:
Level 1 Level 2 Level 3 Total
£m £m £m £m
Financial assets - investments in funds 122.0 44.6 - 166.6
Financial assets - derivatives - 0.2 - 0.2
Financial liabilities - non-controlling interests in consolidated funds (48.5) - - (48.5)
73.5 44.8 - 118.3
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 - investments in funds 141.7 77.7 - 219.4
Financial liabilities - non-controlling interests in consolidated funds (80.2) - - (80.2)
Financial liabilities - derivatives - (0.1) - (0.1)
61.5 77.6 - 139.1
20. Related party transactions
All related party transactions during the period are consistent with those
disclosed in the Annual Report and Accounts for the year ended 31 December
2023 and have taken place on an arm's length basis.
No new related parties or related party transactions that materially affect
the financial position or performance of the Group existed or occurred during
the period.
Statement of Directors' responsibilities
Statements relating to the preparation of the Financial Statements
We confirm that to the best of our knowledge:
The condensed set of financial statements has been prepared in accordance with
UK-adopted International Accounting Standard 34, 'Interim Financial Reporting'
as required by the Companies Act 2006 and gives a true and fair view of the
assets, liabilities, financial position and profits of the Group for the
period ended 30 June 2024.
The interim report includes a fair review of the information required by:
a) DTR 4.2.7R of the Guidance, being an indication of important events
that have occurred during the first six months of the current financial year
and their impact on the condensed set of financial statements; and a
description of the principal risks and uncertainties for the remaining six
months of the year; and
b) DTR 4.2.8R of the Guidance, being related party transactions that have
taken place in the first six months of the current financial year and that
have materially affected the financial position or performance of the Group
during that period; and any changes in the related party transactions
described in the last Annual Report and Accounts that could have a material
effect on the financial position or performance of the Group in the past six
months of the current financial year.
A list of the Directors of Jupiter Fund Management plc can be found in the
Annual Report and Accounts for the year ended 31 December 2023. A current list
of Directors is maintained on the website at www.jupiteram.com.
On behalf of the Board
Wayne Mepham
Chief Financial & Operating Officer
25 July 2024
Principal risks and mitigations
The Group is exposed to various risk types in pursuing its business
objectives, which can be driven by both internal and external
factors. Understanding and managing these risks is a regulatory requirement
but also imperative to the success of the business. Our principal risks, as
disclosed in the Group's 2023 Annual Report and Accounts, remain unchanged and
our risk profile has remained stable during the first half of 2024.
Jupiter's regulatory engagement remains a key area of focus and we continue to
engage with our Regulators in an open and transparent manner, appropriately
managing changes to our regulatory landscape and any resulting regulatory
divergence.
Technology and Information Security risk remains a key area of focus due to
the risk posed from a successful cyber-attack and we continue to maintain a
robust control environment in this area of the business, reducing
vulnerabilities where possible.
Outsourcing is a key component of our business strategy and Jupiter relies on
third-party relationships to deliver our business services. In addition,
understanding and managing our People risk is essential to the success of our
business to ensure we meet our evolving operational and regulatory needs.
We believe that the Group remains well positioned and equipped to respond to
any further volatility in the markets in a way that continues to mitigate risk
and protect our client interests. Looking forward to the second half of 2024
and beyond we continue to leverage the Group's Enterprise Risk Management
framework to identify any key emerging risks which may further impact our
overall risk profile to ensure we are well positioned to understand and manage
them in line with the Group's risk appetite.
Alternative performance measures
The use of alternative performance measures (APMs)
The Group uses APMs for two principal reasons:
§ We use ratios to provide metrics for users of the accounts; and
§ We use revenue, expense and profitability-based APMs to explain the Group's
underlying profitability.
Ratios
The Group calculates ratios to provide comparable metrics for users of the
accounts. These ratios are derived from other APMs that measure underlying
revenue and expenditure data.
In this document, we have used the following ratios:
APM Six months ended Six months ended Year ended Definition Reconciliation
30 June 2024 30 June 2023 31 December 2023
1 Cost: income ratio 74% 71% 73% Administrative expenses before exceptional items and performance fee costs
divided by net revenue before performance fees
See table 1 below
2 Net management fee margin 65bps 71bps 70bps Net management fees divided by average AUM
3 Total compensation ratio 46% 43% 43% Compensation costs before exceptional items as a proportion of net revenue
4 Total compensation ratio before performance fees 45% 41% 42% Compensation costs before exceptional items and performance fee costs as a
proportion of net revenue before performance fees
5 Underlying EPS 6.6p 6.7p 14.8p Underlying profit after tax attributable to equity holders of the parent
divided by average issued share capital
6 Underlying EPS before performance fee profits/losses 6.4p 7.1p 13.8p Underlying profit after tax before performance fee profits/losses attributable
to equity holders of the parent divided by average issued share capital
Reconciliation of reported IFRS numbers to APMs: table 1
APM Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Administrative expenses (page 7) 129.1 134.4 265.4
Less: Performance fee costs (page 5) (2.6) (3.5) (6.4)
Less: Exceptional items included in administrative expenses (page 5) - (2.2) (0.8)
Administrative expenses before exceptional items and performance fee costs 126.5 128.7 258.2
Net revenue (page 7) 173.7 181.0 368.8
Less: Performance fees (page 12) (3.9) (0.4) (13.2)
Net revenue before performance fees 169.8 180.6 355.6
Cost: income ratio 1 74% 71% 73%
Management fees (page 12) 187.5 198.5 389.9
Less: Fees and commissions relating to management fees (page 12) (18.5) (18.7) (35.9)
Net management fees 169.0 179.8 354.0
Average AUM (£bn) (page 4) 52.1 50.9 50.9
Net management fee margin 2 65bps 71bps 70bps
Compensation costs before exceptional items (page 5) 79.8 78.4 157.3
Net revenue (see above) 173.7 181.0 368.8
Total compensation ratio 3 46% 43% 43%
Compensation costs before exceptional items and performance fee costs (page 5) 77.2 74.9 150.9
Net revenue before performance fees (see above) 169.8 180.6 355.6
Total compensation ratio before performance fees 4 45% 41% 42%
Statutory profit before tax (page 7) 38.7 34.8 9.4
Exceptional items (page 5) 9.2 11.6 95.8
Underlying profit before tax 47.9 46.4 105.2
Tax at average statutory rate of 25.0% (2023 H1: 22.0% and 2023 FY: 23.5%)(1) (12.0) (10.2) (24.7)
Underlying profit after tax 35.9 36.2 80.5
Loss attributable to non-controlling interests (page 9) - 0.1 -
Underlying profit after tax attributable to equity shareholders of the parent 35.9 36.3 80.5
Average issued share capital (m) (page 15) 545.0 545.1 545.0
Underlying EPS 5 6.6p 6.7p 14.8p
(1)Actual effective tax rates applicable to underlying profit before tax were
26.7% in 2024 H1, 29.9% in 2023 H1 and 25.6% in 2023 FY.
Underlying profit before tax (see above) 47.9 46.4 105.2
Less: Performance fee (profits)/losses (page 5) (1.3) 3.1 (6.8)
Tax at average statutory rate of 25.0% (2023 H1: 22.0% and 2023 FY: 23.5%)(2) (11.7) (10.9) (23.1)
Underlying profit after tax before performance fees 34.9 38.6 75.3
Loss attributable to non-controlling interests (see above) - 0.1 -
Underlying profit after tax attributable to equity shareholders of the parent 34.9 38.7 75.3
before performance fees
Average issued share capital (m) (see above) 545.0 545.1 545.0
Underlying EPS before performance fee (profits)/losses 6 6.4p 7.1p 13.8p
(2)Actual effective tax rates applicable to underlying profit before tax were
26.6% in 2024 H1, 29.5% in 2023 H1 and 25.7% in 2023 FY.
( )
( )
( )
( )
(
)
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
compensation and non-compensation expenditure. These subdivisions of
expenditure are also presented before and after exceptional items and after
accounting for the impact of performance fee pay-aways to fund managers.
3) Profitability-based APMs are effectively the sum of the above revenue
and expense-based APMs and are provided for the same purpose - to separate out
non-recurring exceptional items or recurring items that are of significant
size in order to provide useful information for users of the accounts who wish
to determine the underlying profitability of the Group.
4) Underlying profit after tax is, in addition, used to calculate
underlying EPS which determines the Group's ordinary dividend per share and is
used in one of the criteria for measuring the vesting rates of share-based
awards that have performance conditions attached.
In this document, we have used the following measures which are reconciled or
cross-referenced in table 1:
Measure Rationale for use of measure
Net management fees 1
Exceptional items(1) 2
Net revenue 1
Performance fees 2
Compensation costs before exceptional items 2
Underlying profit before tax(2) 3
Underlying profit after tax(2) 3, 4
(1 )Defined as items of income or expenditure that are significant in size
and which are not expected to repeat over the short to medium term.
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 compensation and non-compensation expenditure. The
relevant amounts are set out in the table on page 5.
The impact of exceptional items on the financial statements
The Group has presented certain items as exceptional across all periods.
Exceptional items are defined above. These items principally relate to the
Merian Global Investors Limited (Merian) acquisition in 2020. Further details
of all items that are deemed exceptional are explained below, as well as
within the relevant notes to the accounts and in the Management Statement.
The use of exceptional items and underlying profit measures
In the Management Statement of this document, the Group makes use of a number
of APMs, including 'Underlying profit before tax'. The use of such measures
means that financial results referred to in that section of this document may
not be equal to the statutory results reported in the financial statements.
Guidelines issued by the Financial Reporting Council require such differences
to be reconciled.
'Underlying profit before tax' is equal to the statutory profit before tax
after exceptional items. The financial statements do not refer to or use such
measures, but the table below provides a reconciliation, indicating in which
notes the exceptional items are recorded.
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
Notes £m £m £m
Underlying profit before tax (page 1) 47.9 46.4 105.2
Administrative expenses 3 - (2.2) (0.8)
Impairment of goodwill 8 - - (76.2)
Amortisation of intangible assets 9 (9.2) (9.4) (18.8)
Statutory profit before tax 38.7 34.8 9.4
Changes in the use of APMs
In previous periods, the Group had disclosed fixed staff costs and variable
staff costs as separate line items within the management statement. Within
this document, we have presented these two amounts as a single line item on
page 5 as 'Compensation costs' and consequently on page 26, where it is used
before and after performance fee costs as part of the Group's reconciliation
of APMs. This change has been made in order to simplify the presentation.
Independent Review Report to Jupiter Fund Management plc
Report on the condensed consolidated interim financial statements
Conclusion
We have been engaged by Jupiter Fund Management plc (the 'Company') to review
the condensed consolidated financial statements in the Interim Report and
Accounts for the six months ended 30 June 2024 which comprise the Consolidated
income statement, Consolidated statement of comprehensive income, Consolidated
balance sheet, Consolidated statement of changes in equity, Consolidated
statement of cash flows and explanatory notes 1 to 20. We have read the other
information contained in the Interim Report and Accounts and considered
whether it contains any apparent misstatements or material inconsistencies
with the information in the condensed consolidated set of financial
statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed consolidated set of financial statements in the
Interim Report and Accounts for the six months ended 30 June 2024 is not
prepared, in all material respects, in accordance with UK-adopted
International Accounting Standard 34, "Interim Financial Reporting", and the
Disclosure Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not enable us
to obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in the Statement of Directors' responsibilities for the Interim
Report and Accounts, the annual financial statements of the Company are
prepared in accordance with UK-adopted international accounting standards. The
condensed consolidated set of financial statements included in the Interim
Report and Accounts has been prepared in accordance with UK-adopted
International Accounting Standard 34, "Interim Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the Interim Report and Accounts in
accordance with the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
In preparing the Interim Report and Accounts, the directors are responsible
for assessing the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed consolidated set of financial statements
in the half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the Company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
25 July 2024
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