Final Results

RNS Number : 9064F

Jupiter Fund Management PLC

26 February 2015

 

	Jupiter Fund Management plc
Highlights

Results for the year ended 31 December 2014

26 February 2015

·      Continued organic flow growth from our core mutual fund franchise, with net mutual fund inflows of £1.4bn

·      Maintained EBITDA margins above 50 per cent. while enhancing our infrastructure and organisational capabilities

·      Successful completion of the private client contracts sale, with net proceeds after tax² of £22.4m distributed to shareholders

·      Underlying earnings per share increased by 5 per cent. to 26.4p

·      Total dividends per share doubled to 24.7p, including the declaration of our first special dividend

			Year ended 31 December 2014	Year ended 31 December 2013
	Assets under management (AUM) (£bn)		31.9	31.7
	Net inflows (£bn)		0.9	1.2
	EBITDA1 2 (£m)		155.6	151.5
	EBITDA margin2 (per cent.)		51	53
	Profit before tax (£m)		160.0	114.1
	Underlying earnings per share2 (p)		26.4	25.2
	Ordinary dividends per share (p)		13.2	12.6
	Total dividends per share (p)		24.7	12.6

¹ Earnings before interest, tax, depreciation and amortisation ("EBITDA") is a non-GAAP measure which the Group uses to assess its performance. It is defined as operating earnings excluding the effect of depreciation and the charge for options over pre-Listing shares.

² non-GAAP

Maarten Slendebroek, Chief Executive, commented:

"It has been another busy and successful year for Jupiter. We have made encouraging progress on diversifying and growing our core mutual fund franchise. Positive investment performance, healthy organic inflows and an efficient operating platform, combined with the sale of our private client contracts, has seen continued value creation for our clients and total dividends double to 24.7p".

Analyst presentation

There will be an analyst presentation at 9.00am on 26 February 2015.

The presentation will be held at FTI Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD. The presentation will be accessible via a conference call for those unable to attend in person.  To attend the presentation or dial in to the conference call, please contact Laura Ewart at FTI Consulting on [phone] or at [e-mail]. Alternatively, sign up online using the following link: http://mediazone.brighttalk.com/event/Jupiter/1fb36c4ccf-8669-intro.

The Results Announcement and the presentation will be available at www.jupiteram.com and copies may also be obtained from the registered office of the Company at 1 Grosvenor Place, London SW1X 7JJ. The Annual Report will be published in March 2015 and will be available at www.jupiteram.com.

For further information please contact:
	Investors	Media
Jupiter	Philip Johnson [phone]	Despina Constantinides [phone]
FTI Consulting	Laura Ewart [phone]	Andrew Walton [phone]

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.

Chief Executive's statement

We have made encouraging progress in diversifying and growing our core mutual fund franchise. Positive investment performance, healthy organic inflows and an efficient operating platform have ensured the continued creation of value for our clients and shareholders.

Focused mutual fund provider with attractive growth prospects

In 2014, we made substantial progress in executing our strategy of growing our core mutual fund franchise. This was achieved through deliberate diversification by product, client type and geography. Following the successful sale of our private client contracts to Rathbones, Jupiter is a more focused mutual fund manager, with a range of attractive growth prospects. By diversifying our capabilities in terms of product, client type and geography, we are building an increasingly resilient business which will offer growth opportunities across a broader range of market conditions.

Our business model is focused on organic growth on a scalable platform. During the year, as a part of our continued commitment to investing in the platform, we completed a multi-year IT virtualisation project, identified and signed terms on a new London office, continued our international build-out by adding Austria, Spain and the Nordic region to our distribution coverage, launched new global brand images and shaped our London organisation to match our growth ambitions. We maintained EBITDA margins above 50 per cent. and delivered five per cent. growth in underlying EPS to 26.4p. We have a high rate of operating profit to cash conversion, and completing our deleverage process has allowed us to demonstrate how all our stakeholders will share in the prospective rewards of Jupiter's success. In 2014, this has resulted in total dividends doubling to 24.7p.

Review of the year

Delivering investment outperformance after fees is central to our strategy. The crucial time period over which we and our clients measure performance is three years. At 31 December 2014, 51 per cent. of mutual fund AUM and 97 per cent. of segregated mandate and investment trust AUM was above median over a three-year period. However, the 51 per cent. headline figure masks very strong performance across our single strategy mutual fund range, where over two-thirds of the relevant AUM was above median. In addition, following a difficult 2013, the Merlin fund of fund range of products showed a return to form in the latter half of 2014.

Jupiter has a strong product range. We continually seek ways to improve our existing investment strategies and to add new opportunities. Our product development is focused on areas we believe have the most attractive long-term growth prospects, and especially those in which our managers have the ability to deliver meaningful outperformance and meet our clients' desired outcomes. To that end, we made a number of significant hires during the year, extending our investment capabilities in both global emerging markets equities and global equities. These investments in talent will enable us to deliver enhanced propositions for institutional and retail investors in both the UK and international markets. We are equally pleased to report that the internal fund management appointments made in 2013 have proved successful, with the relevant funds delivering good performance in 2014.

Over the past three years, we have carefully and deliberately extended our distribution reach across continental Europe and Asia. We have chosen to expand into markets where our existing global clients have a material presence. This strategy has seen us increase the number of staff outside the UK from seven to 20 since the start of 2013. We have reorganised our sales and marketing structure to support this expansion, and introduced local language materials, new brand images and a client service proposition differentiated by client type and size.

This growing distribution network has delivered another healthy year of organic flow growth for Jupiter, with net inflows of £1.4bn across our mutual fund range. This was a very good outcome, given conditions in Jupiter's chosen markets during 2014. International flows were particularly pleasing, lifting SICAV AUM by more than 40 per cent. to £4.3bn as at 31 December 2014. Net new business flows were increasingly diversified in terms of product, with strong contributions from our fast-growing fixed income strategies and the top-performing UK and European equity funds.

Behind the scenes, we also made considerable progress enhancing our operational and support capabilities. This process was helped by the simplification of our business following the sale of the private client contracts. Highlights include the transfer of our SICAV administration to JP Morgan, the closure of a number of unprofitable funds, completing the virtualisation of our IT infrastructure, and the introduction of a new communication system. These investments increase Jupiter's operational abilities and future scalability, support our increasingly international business and facilitate the move to our new London office at the end of the current year.

My thanks to our people

Jupiter is a business based on people and, as a part of our high performance culture, we are continually looking to broaden and develop our talent base across our investment, distribution and support functions. In 2014, the sheer volume of the change projects and growth initiatives demanded an enormous effort from my colleagues across Jupiter. In particular, the sale of the private client contracts triggered a period of relentless work outside of the normal business hours both for those who left the firm and for those who stayed at Jupiter. Our people are critical to our success. Their efforts, willingness to change and the results achieved have far exceeded my expectations. I would like to thank all my colleagues for their contribution to the successful execution of our plans in 2014.

Looking forward

Over the past two years, we have restructured and broadened our distribution efforts, strengthened our investment teams, simplified our operating model and diversified our growth prospects. These are significant steps along the road of delivering our strategy. We have achieved healthy profit growth and operating cash flows across this period which, combined with our sustainable balance sheet, have enabled us to nearly treble shareholder dividends since 2012.

We believe that investment performance after fees will never go out of fashion, and that our chosen savings markets offer the prospect of significant long-term growth. As we extend our relationships with key distributors on a global basis and deliver the performance our clients are looking for, we are confident that we can continue to deliver profitable growth at attractive margins. This, together with our sustainable balance sheet structure, should enable us to share the rewards of this growth with our stakeholders.

Maarten Slendebroek

Chief Executive Officer

25 February 2015

Operational review

Net inflows/(outflows) by product	2014 £m		2013 £m
Mutual funds	1,415		1,162
Segregated mandates	(488)		(129)
Private clients	(5)		135
Investment trusts	(62)		31
Total	860		1,199

Net flows during 2014 totalled £0.9bn for the year (2013: £1.2bn). Mutual funds contributed total net inflows of £1.4bn for the full year, an organic growth rate of six per cent. on opening assets. This was due to the continuing diversification of our capabilities by product, client type and geography.

Assets under management by product	31 December 2014 £bn		31 December 2013 £bn
Mutual funds	27.5		24.8
Segregated mandates	3.6		3.9
Private clients	-		2.3
Investment trusts	0.8		0.7
Total	31.9		31.7

Assets under management increased to £31.9bn at 31 December 2014 (31 December 2013: £31.7bn) due to net inflows and market appreciation across the year. This outcome is despite a number of conscious strategic decisions which reduced AUM but were taken to benefit Jupiter's future as a focused mutual fund provider, notably the sale of our private client contracts, closure of sub-economic funds and continued pricing discipline within segregated mandates.

Investment performance

At 31 December 2014, 25 mutual funds, representing 51 per cent. of our mutual fund AUM, had delivered above-median performance over the key three year period (2013: 30 mutual funds, representing 69 per cent. of mutual fund AUM). This was impacted by the relatively weaker performance of the Merlin fund strategy, which represents 27 per cent. of AUM. Performance across the rest of our fund range was strong, with 67 per cent. of mutual fund AUM above median over three years. Examining client outcomes, we continued to create value, with 96 per cent. of our clients by AUM receiving positive returns. Over one year, 20 mutual funds were above the median, representing 46 per cent. of mutual fund AUM (2013: 32 mutual funds, representing 45 per cent. of mutual fund AUM). A strong performance through the second half of the year, particularly in Merlin, has seen steady improvement in these statistics and, as at the end of January 2015, 73 per cent. of mutual fund AUM was above median over one year.

Financial review

RESULTS FOR THE YEAR

2014 saw increased revenues, continued profit growth and further strengthening of our liquidity and capital position. Combined with the sale proceeds from our private client contracts, these have allowed us to double dividends to shareholders during 2014 to 24.7p.

Net revenue

	2014 £m		2013 £m
Net management fees	285.0		267.1
Net initial charges	13.1		15.7
Net performance fees	4.9		5.7
Total	303.0		288.5

Net revenues for the year were £303.0m (2013: £288.5m), five per cent. ahead of 2013. This was driven by a rise in net management fees to £285.0m (2013: £267.1m), as organic mutual fund flows and market appreciation resulted in average assets increasing by nine per cent. This was despite the sale of the private client contracts and the loss of a large segregated mandate.

	2014		2013
Net management fees (£m)	285.0		267.1
Average AUM (£bn)	32.3		29.5
Net management fee margin (bps)	88		90

Net management fees remain the main component of net revenue (2014: 94 per cent., 2013: 93 per cent.). The Group's net management fee margin for the year fell to 88 basis points (2013: 90 basis points), caused by a higher proportion of SICAV and fixed income assets in the mutual fund book. However, the fee margin in Q4 was positively impacted by the segregated mandate loss, the sale of private client contracts, and the closure of several sub-economic funds. If these transactions had occurred at the beginning of the year, the net management fee margin for the entire business and the mutual fund component would have been around 90 and 97 bps respectively.

We continue to expect net management fee margins to decline slowly over time, due to the continued expansion of both our international presence and the fixed income component of our AUM. However, given the uncertainties inherent in these factors, the rate and angle of any such decline remains uncertain.

Net initial charges of £13.1m (2013: £15.7m) were lower due to a less favourable pattern of sales versus redemption activity across individual funds, the continued expected reduction in net amortised front end fees and lower dealing commissions following the sale of our private client contracts. Front end fees will continue to decline and dealing commission will no longer be generated following the private client contract sale. However, the nature of box profits means that they remain unpredictable. Performance fees fell to £4.9m (2013: £5.7m), although these continue to represent a small percentage of revenue. Looking forward, the loss of the large segregated mandate and closure of Second Split Investment Trust has reduced the AUM with performance fee potential to £1.3bn (2013: £2.1bn).

Administrative expenses

	2014 £m		2013 £m
Fixed staff costs	46.3		43.0
Other expenses	49.1		43.9
Total fixed costs	95.4		86.9
Variable staff costs	53.1		51.0
Underlying administrative expenses	148.5		137.9
Charge for options over pre-Listing shares	0.7		4.2
Administrative expenses	149.2		142.1

Underlying administrative expenses of £148.5m (2013: £137.9m) rose by eight per cent. Within this, fixed staff costs of £46.3m (2013: £43.0m) increased by eight per cent. as international headcount rose with the Group's overseas expansion, along with further investment in our platform and distribution capabilities.

Other expenses rose to £49.1m (2013: £43.9m) due to increased marketing spend to enhance the Group's profile and position in new channels, and further IT spend to build and improve on existing operational infrastructure.

As communicated in our 2013 Annual Report and Accounts, our current lease of No. 1 Grosvenor Place terminates in mid-2016. On 24 September 2014, Jupiter signed an agreement for a 20 year lease for 56,000 square feet in The Zig Zag Building in Victoria. This will result in administrative expenses increasing by £5m per annum from 2015 onwards.

We continue to manage our fixed cost base according to prevailing market conditions at the time, mindful of our desire to grow the business whilst preserving our scalable operating model. We exercised careful cost moderation in H2, and the additional fixed costs in 2014 were more than absorbed by the increase in net management fees.

	2014 £m		2013 £m
Cash bonus	36.2		33.9
Deferred bonus	8.9		8.5
LTIP, SAYE and SIP	8.0		8.6
Total	53.1		51.0
Variable compensation ratio	26%		25%

Variable staff costs of £53.1m (2013: £51.0m) increased by four per cent. as the cash bonus of £36.2m (2013: £33.9m) rose in line with the Group's higher profitability. The deferred bonus remained at similar levels as it is now at full run rate, and the LTIP charge, also at full run rate, decreased slightly as we trued up the charge for lapses in the year.

Variable compensation as a proportion of pre-variable compensation operating earnings was 26 per cent. (2013: 25 per cent.). This excludes a £0.7m (2013: £4.2m) charge in respect of options granted prior to the Listing over the remaining shares in the pool established for employees at the time of the MBO in June 2007.

We expect the variable compensation ratio to remain in the mid to high 20 per cent. range over the medium-term, as the incentive schemes put in place as part of our Listing have now reached maturity. However, the equity-settled nature of previously awarded deferred bonus and LTIP schemes means that their costs are fixed at the time of grant and subsequently do not change if future earnings rise or fall. As a result, in 2014 the variable compensation ratio remained towards the lower end of our range, in line with our expectations for an environment in which earnings have risen over the past three years.

EBITDA

EBITDA was £155.6m (2013: £151.5m), a three per cent. increase on the previous year, as higher net management fees were partly offset by an increase in underlying administrative expenses. The Group's EBITDA margin remained at an attractive 51 per cent. (2013: 53 per cent.) as our scalable operating model meant that we could continue our steady investment in our people, brand and platform while still maintaining attractive profitability levels.

Other gains

On 1 April 2014, the Group announced that it had reached an agreement to sell its private client contracts to Rathbone Investment Management Limited ("Rathbones"), a subsidiary of Rathbone Brothers plc. This transaction completed in the third quarter of 2014, with consideration received of £39.6m. As part of the transaction, the Group incurred costs of £11.1m, resulting in a pre-tax gain of £28.5m for the year. This has been included within the other gains line on the income statement. This amount has been excluded from underlying earnings, with only private client revenues and costs for the nine months of ownership included, as these represent the Group's ongoing trading results. As discussed in the Equity and Capital Management section, the post tax proceeds will be distributed as part of the special dividend.

During the first half of 2014, following a review of trading prospects, the Group wrote down its remaining available for sale ("AFS") investment in iO Adria Limited to nil. This historic, residual investment was held at £2.6m on the balance sheet as at 31 December 2013, and has therefore resulted in a £2.6m loss for the year, which has also been included within the other gains line on the income statement. Consistent with prior years, movements in the value of AFS assets have also been excluded from underlying earnings.

In the prior year, other gains included a gain of £6.7m, which was realised when the Group sold its entire holding in Cofunds Holdings Limited to a co-investor, Legal & General Group plc, in the first half of 2013.

Amortisation of intangible assets

Amortisation of £20.2m (2013: £39.7m) included £19.2m (2013: £38.7m) relating to intangible assets acquired as part of the MBO contracts (acquired for £258.0m) and the Jupiter brand name (acquired for £18.7m). Amortisation on the investment management contracts fully unwound in June 2014, and therefore the ongoing amortisation charge was significantly lower this year and will fall further in 2015 as only the Jupiter brand name continues to be amortised on a straight line basis through to June 2017.

Finance income

The Group had net finance income of £0.3m (2013: net finance costs of £2.1m) as interest costs decreased significantly following full repayment of the outstanding bank debt in February 2014.

Profit before tax ("PBT")

PBT for the year was £160.0m (2013: £114.1m). This increase of 40 per cent. was driven by the rise in operating earnings, lower amortisation of intangibles and the profit on sale of the private client contracts.

Tax expense

The effective tax rate for 2014 was 21.4 per cent. (2013: 22.3 per cent.). This is slightly lower than the standard rate of 21.5 per cent., primarily due to the utilisation of capital losses available from previous years.

Underlying profits and underlying earnings per share ("EPS")

Underlying PBT and underlying EPS are non-GAAP measures which the Board believes provide a more useful representation of the Group's trading performance than the statutory presentation.

Underlying EPS of 26.4p (2013: 25.2p) increased by five per cent., reflective of the Group's improved trading performance, reduced finance costs following the final debt repayment and the lower statutory tax rate.

Underlying EPS	2014		2013
Profit before tax (£m)	160.0		114.1
Adjustments:
Amortisation of acquired investment management contracts and trade name (£m)	19.2		38.7
Charge for options over pre-Listing shares (£m)	0.7		4.2
(Gain)/loss taken to the income statement on available for sale investments (£m)	2.6		(6.7)
Gain on sale of private client contracts (£m)	(28.5)		-
Underlying profit before tax (£m)	154.0		150.3
Tax at statutory rate of 21.5 per cent (2013: 23.25 per cent.) (£m)	(33.1)		(34.9)
Underlying profit after tax (£m)	120.9		115.4
Issued share capital (m)	457.7		457.7
Underlying EPS	26.4p		25.2p

The Group's basic and diluted EPS measures were 28.4p and 27.2p respectively in 2014, compared with 21.1p and 20.0p in 2013.

CASH FLOW

The Group has a high conversion rate of operating earnings to cash, generating positive operating cash flows after tax in 2014 of £122.8m (2013: £123.4m). Together with the proceeds received from the sale of the private client contracts, this cash was used to fund the interim dividend and will primarily be used to fund the final and special dividend to shareholders.

ASSETS AND LIABILITIES

Balance sheet

The Group further strengthened its net cash position to £251.0m (31 December 2013: £160.8m), as cash generated through trading and the proceeds received from the sale of the private client contracts offset the funding of the 2013 final and 2014 interim dividend payment and the 2013 compensation round. In June 2014, the Group revised its share repurchase programme from £0.6m to £1.2m a month, increasing the rate to a level where we now expect no dilution as our incentive plans mature.

During the year, £11.0m of bank debt was repaid, reducing the outstanding loan balance to £nil as at 31 December 2014 (2013: £11.0m). The revolving credit facility of £50m extends to July 2016 and it is our intention to leave the facility intact but undrawn, in case of need, supporting our intention to run a sustainable balance sheet with net cash across the cycle.

Following full repayment of outstanding debt in February 2014, the Group has been able to retain cash amounts that were previously used to pay down the loan balance. As outlined in the Equity and Capital Management section, and in line with the Group's liquidity management model, it is our intention to return a high proportion of surplus cash to shareholders as it arises.

Seed capital investments

We deploy seed capital into funds to help us build a track record from launch or to give small but strongly performing funds sufficient scale to attract external money. As at 31 December 2014, we had a total investment of £43.4m in our own funds (2013: £50.1m) as we maintained seed capital at targeted levels. This excludes £4.8m of investments in our own funds to hedge our obligation to settle amounts payable to employees in relation to Deferred Bonus Plan awards. These investments are shown on the Group's balance sheet under the appropriate heading for the relevant level of ownership in each fund. The Group only invests in liquid funds and chooses to hedge market and currency risk on the majority of its holdings of seed capital investments, with 99 per cent. of seed capital either hedged or invested in absolute return products. As a result, the value of these investments is stable and available to improve the Group's cash balances and liquidity if required.

EQUITY AND CAPITAL MANAGEMENT

Dividends

The Board considers the dividend on a total basis, whilst looking to maintain an appropriate balance between interim and final dividends. The Board's intention is to use profits and cash flow to pay shareholder dividends, to re-invest selectively for growth and to return excess cash to shareholders according to market conditions at the time.

During 2014, the Group completed its post-Listing deleverage process and saw its net cash balance increase to £251.0m (2013: £160.8m). The Board considers that Jupiter has adequate buffers over its capital and liquidity requirements and has therefore clarified how it expects to return excess cash from this point forward. Jupiter has a progressive ordinary dividend policy, and our intention is for the ordinary dividend payout ratio to be around 50 per cent. across the cycle. The Board then expects to retain up to 10 per cent. of pre-variable compensation earnings for investment and growth, for example to fund the new London office fit-out in 2015. The remaining balance, after taking account of any specific events, will be returned to shareholders. In 2014, these specific events were the last £11m debt paydown and the £22m net proceeds after tax from the sale of the private client contracts. In current market conditions, shareholders have indicated that their preferred method of capital return is a special dividend.

Reflecting this guidance the Board has declared an increased final dividend for the year of 9.5p (2013: 9.1p) per share. This results in a total ordinary dividend for the year of 13.2p (2013: 12.6p), an increase in line with underlying EPS and maintaining the ordinary dividend payout ratio at 50 per cent. The Board has also declared a special dividend of 11.5p per share. This represents 6.6p per share generated from earnings and 4.9p per share from the net proceeds received from the sale of private client contracts.

Dividend progression	2014 p per share				2013 p per share
Ordinary	13.2			12.6
Special	11.5			-
Total	24.7			12.6

The resultant total dividend of 24.7p (2013: 12.6p) has doubled since last year. We believe our growth prospects allied with the consequent yield potential make for an attractive model for shareholders.

The final dividend payment is subject to shareholders' approval at the AGM, and, if approved, will be paid alongside the special dividend on 21 April 2015 to shareholders on the register on 20 March 2015. The Board is proposing to change its approach to future final dividends to enable prompt payment alongside potential future special dividend declarations, with the expectation that these can then both be consistently paid in early April. This means that dividend approvals will not be sought at future Annual General Meetings.

Liquidity

The Group has a robust free cash position, supported by an undrawn RCF and hedged seed capital. The Group has maintained a consistent liquidity management model, with core cash (after earmarked needs) remaining stable and at levels sufficient for the needs of the business.

Capital

Total shareholders' equity increased by £72.5m to £586.2m (2013: £513.7m) as a result of the Group's continued profitability, coupled with the gain made from the sale of the private client contracts. This was partially offset by the payment of the final and interim dividends of £56.7m.

The Group currently has a three year investment firm consolidation waiver from the FCA which runs to June 2015, although during 2013, the Group traded out of its need to rely on the waiver. At present, the Group has a comfortable surplus over regulatory requirements post expiry of the waiver, with an indicative surplus in excess of £100m, after allowing for the final and special dividend.

Section 1: Results for the year

Consolidated income statement

For the year ended 31 December 2014

			Notes		2014		2013
					£m		£m
	Revenue		1.1		388.3		388.8
	Fee and commission expenses		1.1		(85.3)		(100.3)
	Net revenue		1.1,1.2		303.0		288.5
	Administrative expenses		1.3		(149.2)		(142.1)
	Operating earnings				153.8		146.4
	Other gains (including sale of private client contracts)		1.4		26.1		9.5
	Amortisation of intangible assets				(20.2)		(39.7)
	Operating profit				159.7		116.2
	Finance income				0.5		1.0
	Finance costs		1.5		(0.2)		(3.1)
	Profit before taxation				160.0		114.1
	Income tax expense		1.6		(34.2)		(25.5)
	Profit for the year				125.8		88.6
	Earnings per share
	Basic		1.7		28.4p		21.1p
	Diluted		1.7		27.2p		20.0p

Consolidated statement of comprehensive income

For the year ended 31 December 2014

			Notes	2014		2013
				£m		£m
	Profit for the year			125.8		88.6
	Items that may be reclassified subsequently to profit or loss
	Exchange movements on translation of subsidiary undertakings		4.2	0.1		-
	Net change in fair value of available for sale investments reclassified to the consolidated income statement		4.2	-		(6.6)
	Other comprehensive income for the year net of tax			0.1		(6.6)
	Total comprehensive income for the year net of tax			125.9		82.0

Notes to the financial statements - Income statement

1.1 NET REVENUE

The Group's primary source of revenue is management fees. Management fees are based on an agreed percentage of the assets

under management. Initial charges and commissions include fees based on a set percentage of certain flows into our funds,

commission earned on private client dealing charges and profits earned on dealing within the unit trust manager's box, known as box profits. Performance fees are 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.

			2014 £m			2013 £m
	Management fees	364.7			360.7
	Initial charges and commissions	18.7			22.4
	Performance fees	4.9			5.7
	Fee and commission expenses	(85.3)			(100.3)
	Total net revenue	303.0			288.5

1.2 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.

Management monitors operating earnings, a non-GAAP measure, for the purpose of making decisions about resource allocation and performance assessment.

Geographical information

		2014 £m		2013 £m
	Net revenue by location of clients
	UK	268.9		261.1
	Continental Europe	27.8		21.7
	Rest of the world	6.3		5.7
	Total net revenue by location	303.0		288.5

1.3 ADMINISTRATIVE EXPENSES

Administrative expenses of £149.2m (2013: £142.1m) include staff costs of £100.1m (2013: £98.2m). Staff costs consist of:

		2014 £m		2013 £m
	Wages and salaries	70.8		66.8
	Share-based payments	13.7		13.8
	Social security costs	10.9		13.3
	Pension costs	4.3		4.0
	Redundancy costs	0.4		0.3
		100.1		98.2

1.4 OTHER GAINS (INCLUDING SALE OF PRIVATE CLIENT CONTRACTS)

Other gains for the year were £26.1m (2013: £9.5m).

			2014 £m				2013 £m
	Gain on sale of private client contracts			28.5			-
	(Loss)/gain on available for sale (''AFS'') investments			(2.6)			6.7
	Dividend income			0.3			-
	Other			(0.1)			2.8
			26.1				9.5

On 1 April 2014, the Group announced that it had reached an agreement to sell its private client contracts to Rathbone Investment Management Limited ("Rathbones"), a subsidiary of Rathbone Brothers plc. This transaction completed in the third quarter of 2014, with consideration received of £39.6m. As part of the transaction, the Group incurred £11.1m of costs, which related to employee, professional and other costs of £8.1m, £2.2m and £0.8m respectively. Of these costs, the Group owed £3.2m at 31 December 2014. The net of the consideration received and costs incurred resulted in a pre-tax gain of £28.5m for the year.

1.5 FINANCE COSTS

		2014 £m		2013 £m
	Interest payable on bank borrowings	-		1.8
	Amortisation of debt issue costs (Note 3.6)	-		0.7
	Debt issue cost expense	-		0.3
	Interest payable on interest rate swaps	-		0.2
	Other finance costs	0.2		0.1
	Total finance expense	0.2		3.1

During 2013, the Group repaid the remaining £78.0m of senior debt under its previous loan facility. This resulted in an acceleration of £0.4m in the amortisation of the debt issue costs.

The Group subsequently entered into an RCF of £50.0m of which £11.0m was drawn at 31 December 2013. During 2014, the Group repaid the remaining £11.0m of the RCF, leaving an undrawn facility at 31 December 2014 of £50.0m.

Interest rate swaps

The Group terminated the last of its interest rate swaps in 2013, and therefore there were no interest rate swap contracts outstanding as at 31 December 2014 (2013: nil).

1.6 INCOME TAX EXPENSE

Analysis of charge in the year:

	2014 £m			2013 £m
Current taxation - UK corporation tax
Tax on profits for the year	35.6		34.5
Adjustments in respect of prior years	-		(0.8)
	35.6		33.7
Deferred taxation
Origination and reversal of temporary differences	(1.7)		(8.9)
Impact of changes in corporation tax rate	0.3		0.7
	(1.4)		(8.2)
Total tax expense	34.2		25.5

With effect from 1 April 2014, the UK corporation tax rate changed from 23 per cent. to 21 per cent. The weighted average UK corporation tax rate for the year ended 31 December 2014 was therefore 21.5 per cent. (2013: 23.25 per cent.). The tax charge in the year is lower (2013: lower) than the standard rate of corporation tax in the UK and the differences are explained below:

Factors affecting tax expense for the year	2014 £m			2013 £m
Profit before taxation	160.0		114.1
Taxation at the standard corporation tax rate (2014:21.5 per cent.; 2013: 23.25 per cent.)	34.4		26.5
Non-taxable expenditure/(income)	0.4		(1.2)
Disallowable expenses	0.2		0.1
Other permanent differences	(1.1)		0.2
Adjustments in respect of prior years	-		(0.8)
Impact of tax rate change on deferred tax balances	0.3		0.7
Total tax expense	34.2		25.5

1.7 EARNINGS PER SHARE

Basic earnings per share ("EPS") is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year, less the weighted average number of own shares held. Own shares are shares held in an Employee Benefit Trust ("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 year attributable to ordinary equity holders of the parent 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 into ordinary shares.

For the purposes of calculating EPS, the share capital of the parent is calculated as the weighted average number of ordinary shares in issue over the years reported. The weighted average number of ordinary shares during the year used for the purposes of calculating EPS is as follows:

	Weighted average numbers of shares	2014 Number m		2013  Number m
	Issued share capital	457.7		457.7
	Less own shares held	(14.1)		(38.6)
	Weighted average number of ordinary shares for the purpose of basic EPS	443.6		419.1
	Add back weighted average number of dilutive shares	19.5		22.9
	Weighted average number of ordinary shares for the purpose of diluted EPS	463.1		442.0

	Earnings per share	2014               p		2013 p
	Basic	28.4p		21.1
	Diluted	27.2p		20.0

Section 2: Consolidated statement of cash flows

Consolidated statement of cash flows

For the year ended 31 December 2014

		Notes		2014		Restated 2013
				£m		£m
	Cash flows from operating activities
	Cash generated from operations	2.1		154.0		156.7
	Income tax paid			(31.2)		(33.3)
	Net cash inflows from operating activities			122.8		123.4
	Cash flows from investing activities
	Purchase of property, plant and equipment	3.3		(1.6)		(0.5)
	Purchase of intangible assets			(1.0)		(2.5)
	Purchase of financial assets at FVTPL			(7.5)		(2.8)
	Proceeds from disposal of financial assets at FVTPL			14.2		6.8
	Proceeds from disposal of available for sale investments			-		16.6
	Proceeds on transfer of private client contracts			39.6		-
	Costs incurred on transfer of private client contracts			(7.9)		-
	Dividend income received			0.3		-
	Finance income received			0.5		0.7
	Net cash inflows from investing activities			36.6		18.3
	Cash flow from financing activities
	Dividends paid	4.3		(56.7)		(42.8)
	Purchase of shares by EBT			(12.3)		(3.8)
	Finance costs paid			(0.2)		(3.3)
	Proceeds from bank loan			-		40.0
	Repayment of bank loan			(11.0)		(107.0)
	Net cash outflows from financing activities			(80.2)		(116.9)
	Net increase  in cash and cash equivalents			79.2		24.8
	Cash and cash equivalents at beginning of year			171.8		147.0
	Cash and cash equivalents at end of year	3.5		251.0		171.8

Notes to the financial statements - Consolidated statement of cash flows

2.1   CASH GENERATED FROM OPERATIONS

	Cash generated from operations	2014 £m		Restated 2013 £m
	Operating profit	159.7		116.2
	Adjustments for:
	Amortisation of intangible assets	20.2		39.7
	Depreciation of property, plant and equipment	1.1		0.9
	Other gains	(27.8)		(7.7)
	Share-based payments	12.9		13.8
	Cash inflows on exercise of share options	0.8		0.5
	Decrease/(increase) in trade and other receivables	6.0		(0.8)
	Decrease in trade and other payables	(18.9)		(5.9)
	Cash generated from operations	154.0		156.7

Section 3: Assets and liabilities

Consolidated balance sheet

As at 31 December 2014

			Notes		2014		Restated 31 December 2013		Restated 1 January 2013
					£m		£m		£m
	ASSETS
	NON-CURRENT ASSETS
	Goodwill		3.1		341.2		341.2		341.2
	Intangible assets		3.2		8.1		27.3		64.5
	Property, plant and equipment		3.3		1.7		1.2		1.6
	Available for sale investments		3.4		-		2.6		19.1
	Deferred tax assets				12.4		18.4		15.3
	Trade and other receivables		3.4		5.0		9.0		13.9
	Total non-current assets				368.4		399.7		455.6
	CURRENT ASSETS
	Investments in associates		3.4		13.8		15.6		11.8
	Financial assets at fair value through profit or loss		3.4		37.1		47.5		51.9
	Trade and other receivables		3.4		94.7		96.5		90.6
	Cash and cash equivalents		3.5		251.0		171.8		147.0
	Total current assets				396.6		331.4		301.3
	TOTAL ASSETS				765.0		731.1		756.9
	EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT
	Share capital		4.1		9.2		9.2			9.2
	Own share reserve		4.2		(0.2)		(0.4)			(1.3)
	Other reserve		4.2		8.0		8.0			8.0
	Available for sale reserve		4.2		-		-			6.6
	Foreign currency translation reserve		4.2		7.2		7.1			7.1
	Retained earnings		4.2		562.0		489.8			429.4
	TOTAL EQUITY				586.2		513.7			459.0
	LIABILITIES
	NON-CURRENT LIABILITES
	Loans and borrowings		3.6		-		11.0		77.3
	Trade and other payables		3.4		12.3		16.8		22.3
	Deferred tax liabilities				2.3		5.6		14.5
	Total non-current liabilities				14.6		33.4		114.1
	CURRENT LIABILITIES
	Financial liabilities at fair value through profit or loss		3.4		3.0		14.0		13.4
	Trade and other payables		3.4		146.8		154.9		154.8
	Current income tax liability				14.4		15.1		15.6
	Total current liabilities				164.2		184.0		183.8
	TOTAL LIABILITIES				178.8		217.4		297.9
	TOTAL EQUITY AND LIABILITIES				765.0		731.1		756.9

Notes to the financial statements - Assets and liabilities

3.1 GOODWILL

On 19 June 2007, the Group acquired the entire share capital of Knightsbridge Asset Management Limited, giving rise to a goodwill asset being recognised.

		2014 £m		2013 £m
	Goodwill	341.2		341.2
		341.2		341.2

No additional goodwill was recognised in the year (2013: £nil).

The Group has determined that it has a single cash generating unit ("CGU") for the purpose of assessing the carrying value of goodwill. In performing the impairment test, management prepares a calculation of the recoverable amount of the goodwill and compares this to the carrying value.

The recoverable amount for the acquired share capital was based on a fair value less costs to sell calculation using the Company's year end share price. A significant headroom was noted, and therefore no impairment was implied. No impairment losses have been recognised in the current or preceding years.

3.2 INTANGIBLE ASSETS

In 2007, the Group acquired the entire share capital of Knightsbridge Asset Management Limited. This acquisition gave rise to the recognition of intangible assets relating to investment management contracts and trade name of the Group. The other intangible assets recognised are computer software.

	2014 £m		2013 £m
Investment management contracts	-		17.3
Trade name	4.5		6.4
Computer software	3.6		3.6
	8.1		27.3

The amortisation charge for the year was £20.2m (2013: £39.7m). No additional investment management contracts were acquired in the year (2013: £nil).

3.3 PROPERTY, PLANT AND EQUIPMENT

The net book value of property, plant and equipment at 31 December 2014 was £1.7m (2013: £1.2m). During the year, the Group acquired property, plant and equipment with a value of £1.6m (2013: £0.5m).

3.4 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 2014	Available for sale	Financial assets designated at FVTPL	Loans and receivables	Financial liabilities designated at FVTPL	Other financial liabilities	Total financial instruments	Non-financial instruments	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Goodwill	-	-	-	-	-	-	341.2	341.2
Intangible assets	-	-	-	-	-	-	8.1	8.1
Property, plant and equipment	-	-	-	-	-	-	1.7	1.7
Deferred tax assets	-	-	-	-	-	-	12.4	12.4
Non current trade and other receivables	-	-	-	-	-	-	5.0	5.0
Investments in associates	-	13.8	-	-	-	13.8	-	13.8
Financial assets at FVTPL	-	37.1	-	-	-	37.1	-	37.1
Current trade and other receivables	-	-	84.1	-	-	84.1	10.6	94.7
Cash and cash equivalents	-	-	251.0	-	-	251.0	-	251.0
Non current trade and other payables	-	-	-	-	(3.3)	(3.3)	(9.0)	(12.3)
Deferred tax liabilities	-	-	-	-	-	-	(2.3)	(2.3)
Current trade and other payables	-	-	-	-	(127.3)	(127.3)	(19.5)	(146.8)
Current income tax liability	-	-	-	-	-	-	(14.4)	(14.4)
Financial liabilities at FVTPL	-	-	-	(3.0)	-	(3.0)	-	(3.0)
Total	0.0	50.9	335.1	(3.0)	(130.6)	252.4	333.8	586.2

3.4 FINANCIAL INSTRUMENTS (continued)

As at 31 December 2013 (restated)	Available for sale		Financial assets designated at FVTPL			Loans and receivables		Financial liabilities designated at FVTPL	Other financial liabilities			Total financial instruments	Non- financial instruments		Total
	£m		£m			£m		£m	£m			£m	£m		£m
Goodwill		-		-	-		-			-	-		341.2	341.2
Intangible assets		-		-	-		-			-	-		27.3	27.3
Property, plant and equipment		-		-	-		-			-	-		1.2	1.2
Available for sale investments		2.6		-	-		-			-	2.6		-	2.6
Deferred tax assets		-		-	-		-			-	-		18.4	18.4
Non-current trade and other receivables		-		-	-		-			-	-		9.0	9.0
Investments in associates		-		15.6	-		-			-	15.6		-	15.6
Financial assets at fair value through profit or loss ("FVTPL")		-		47.5	-		-			-	47.5		-	47.5
Current trade and other receivables		-		-	86.8		-			-	86.8		9.7	96.5
Cash and cash equivalents		-		-	171.8		-			-	171.8		-	171.8
Loans and borrowings		-		-	-		-			(11.0)	(11.0)		-	(11.0)
Non-current trade and other payables		-		-	-		-			(2.0)	(2.0)		(14.8)	(16.8)
Deferred tax liabilities		-		-	-		-			-	-		(5.6)	(5.6)
Current trade and other payables		-		-	-		-			(130.5)	(130.5)		(24.4)	(154.9)
Current income tax liability		-		-	-		-			-	-		(15.1)	(15.1)
Financial liabilities at FVTPL		-		-	-		(14.0)			-	(14.0)		-	(14.0)
Total		2.6		63.1	258.6		(14.0)			(143.5)	166.8		346.9	513.7

3.5  CASH AND CASH EQUIVALENTS

			2014 £m		Restated 2013 £m
	Cash at bank and in hand	130.8			88.7
	Short-term deposits	117.0			77.5
	Cash held by EBT and seed capital subsidiaries	3.2			5.6
	Total cash and cash equivalents	251.0			171.8

Cash at bank earns interest based at the current prevailing daily bank rates. Short-term deposits are made for varying periods of between one day and three months, depending on the forecast cash requirements of the Group, and earn interest at the respective short-term deposit rates.

Cash held by seed capital subsidiaries of £0.3m (2013: £2.4m) was not available for use by the Group.

3.6   LOANS AND BORROWINGS

		2014 £m		2013 £m
	Bank loan	-		11.0
	Total carrying value of bank loan	-		11.0

At 1 January 2013, the Group had a syndicated loan which was repayable on or before 19 June 2015. The loan was issued to a subsidiary company, Jupiter Asset Management Group Limited, and was secured by a charge over their assets. In July 2013, the outstanding loan balance of £42m was repaid. At the same time, a new three year revolving credit facility ("RCF") of £50m was entered into by Jupiter Fund Management plc, of which £40m was immediately drawn. In 2013, the Group repaid £29m of the RCF. In 2014, it repaid the remaining £11m. The RCF remained undrawn at 31 December 2014.

The movement on the carrying value of the loan is shown below:

		2014 £m		2013 £m
	At 1 January	11.0		77.3
	Voluntary prepayments made in the year	(11.0)		(107.0)
	Proceeds from new loan	-		40.0
	Amortisation of debt issue costs (Note 1.5)	-		0.7
	Total carrying value of bank loan	-		11.0

Interest on the RCF is payable at a rate per annum of LIBOR plus a margin of 1.00 per cent. Interest was payable on the old facility at a rate per annum of LIBOR plus a margin of 3.75 per cent. A non-utilisation fee is payable on the RCF at a rate of 0.35 per cent. per annum on the undrawn balance. A utilisation fee is also payable at a rate of 0.5 per cent. per annum when more than 66 per cent. of the facility is drawn, and 0.25 per cent. per annum when 33 per cent. to 66 per cent. of the facility is drawn. No utilisation fee is payable when less than 33 per cent. of the facility is drawn.

Section 4: Equity

Consolidated statement of changes in equity

For the year ended 31 December 2014

		Share  capital	Own  share  reserve	Other  reserve	Available  for sale   reserve	Foreign  currency  translation  reserve	Retained  earnings	Total
		£m	£m	£m	£m	£m	£m	£m
At 1 January 2013		9.2	(1.3)	8.0	6.6	7.1	429.4	459.0
Profit for the year		-	-	-	-	-	88.6	88.6
Net change in fair value of available for sale investments reclassified to profit or loss		-	-	-	(6.6)	-	-	(6.6)
Other comprehensive expense		-	-	-	(6.6)	-	-	(6.6)
Total comprehensive (expense)/income		-	-	-	(6.6)	-	88.6	82.0
Vesting of ordinary shares and options		-	0.9	-	-	-	0.5	1.4
Dividends paid		-	-	-	-	-	(42.8)	(42.8)
Purchase of shares by EBT		-	-	-	-	-	(4.4)	(4.4)
Share-based payments		-	-	-	-	-	13.8	13.8
Current tax		-	-	-	-	-	0.9	0.9
Deferred tax		-	-	-	-	-	3.8	3.8
Total transactions with owners		-	0.9	-	-	-	(28.2)	(27.3)
At 31 December 2013		9.2	(0.4)	8.0	-	7.1	489.8	513.7
Profit for the year		-	-	-	-	-	125.8	125.8
Exchange movements on translation of subsidiary undertakings		-	-	-	-	0.1	-	0.1
Other comprehensive expense		-	-	-	-	0.1	-	0.1
Total comprehensive income		-	-	-	-	0.1	125.8	125.9
Vesting of ordinary shares and options		-	0.2	-	-	-	0.8	1.0
Dividends paid		-	-	-	-	-	(56.7)	(56.7)
Purchase of shares by EBT		-	-	-	-	-	(11.6)	(11.6)
Share-based payments		-	-	-	-	-	(12.9)	(12.9)
Current tax		-	-	-	-	-	5.1	5.1
Deferred tax		-	-	-	-	-	(4.1)	(4.1)
Total transactions with owners		-	0.2	-	-	-	(53.6)	(53.4)
At 31 December 2014		9.2	(0.2)	8.0	-	7.2	562.0	586.2

Notes to the financial statements - Equity

4.1   SHARE CAPITAL

		2014 £m		2013 £m
	457.7m ordinary shares of 2p each	9.2		9.2
		9.2		9.2

4.2   RESERVES

(i) Own share reserve

At 31 December 2014, 0.2m (2013: 3.5m) ordinary shares beneficially owned by senior employees or former employees were subject to restrictions which, in some circumstances, require the Group to repurchase the shares at their nominal value, and this liability is shown within current trade and other payables. These restrictions are released over the next year. The shares are held within the Group's EBT and, together with a further 10.4m (2013: 17.4m) shares held for the purpose of satisfying share option obligations to employees, are treated as own shares with a cost of £0.2m (2013: £0.4m).

(ii) Other reserve

The other reserve of £8.0m (2013: £8.0m) relates to the conversion of Tier 2 preference shares in 2010.

(iii) Available for sale reserve

The available for sale reserve is £nil (2013: £nil). At 1 January 2013, it related to the uplift in the fair value of the Group's holdings in investments classified as available for sale.

(iv) Foreign currency translation reserve

The foreign currency translation reserve of £7.2m (2013: £7.1m) is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

(v) Retained earnings

Retained earnings of £562.0m (2013: £489.8m) are the amount of earnings that are retained within the Company after dividend payments and other transactions with owners.

4.3   DIVIDENDS

		2014 £m		2013 £m
	Final dividend 2013 (9.1p per ordinary share) (2012: 6.3p per share)	40.2		27.5
	Interim dividend 2014 (3.7p per ordinary share) (2013: 3.5p per share)	16.5		15.3
		56.7		42.8

In April 2013, the EBT waived its right to receive future dividends on shares held in the trust. There were no dividends paid on shares held in the EBT in 2014 (2013: £nil).

A final dividend for 2014 of 9.5p per share (2013: 9.1p) will be proposed at the Annual General Meeting on 15 April 2015. A special dividend of 11.5p per share has been declared by the Directors. These dividends amount to £43.5m and £52.6m respectively (before adjusting for any dividends waived on shares in the EBT) and will be accounted for in 2015. Including the interim dividend for 2014 of 3.7p per share (2013: 3.5p), this gives a total dividend per share of 24.7p (2013: 12.6p).

Section 5: Other notes

Notes to the financial statements - Other

5.1.  BASIS OF PREPARATION

The financial information set out does not constitute the Company's statutory accounts for the years ended 31 December 2014 or 2013, but is derived from those accounts. The Auditors have reported on the 2014 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 2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered in due course.

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and IFRIC Interpretations ("IFRS as adopted by the EU") and with the provisions of the Companies Act 2006 applicable to companies reporting under IFRS.

5.2 RESTATEMENT DUE TO THE ADOPTION OF IFRS 10

From 1 January 2014, the Group adopted IFRS 10 Consolidated Financial Statements for the first time. This required retrospective application meaning that the impact of adoption was applied from 1 January 2013. This has resulted in a restatement of the comparative balance sheet as at 31 December 2013, and also a requirement to disclose the restated opening balance sheet as at 1 January 2013. The adoption of IFRS 10 has resulted in consolidation of certain funds which previously did not require consolidation. For 31 December 2013 this resulted in the Jupiter Global Fund SICAV: North American Equities being consolidated and at 1 January 2013 Jupiter Global Fund SICAV: Asia Pacific. These funds had not been consolidated under the previous rules as the Group held less than 50% of the voting interest. Under IFRS 10, ownership of less than 50% of the voting interests can constitute control, and therefore consolidation, if has the power, ability to direct, and exposure to variable returns.

The table below shows extracts of the consolidated statement of cash flows and consolidated balance sheet as at 31 December 2013 and 1 January 2013, including the amounts previously reported, the adjustment arising from the adoption of IFRS10 and the restated amounts. There was no impact on the income statement in any period.

		31 December 2013					1 January 2013
		As previously reported	Adjustment	As restated		As previously reported			Adjustment	As restated
		£m	£m	£m		£m			£m	£m
Consolidated statement of cash flows extract
Cash generated from operations		155.4	1.3	156.7		141.2			-	141.2
Consolidated balance sheet extract
Assets:
Investments in associates		19.3	(3.7)	15.6		19.2			(7.4)	11.8
Financial assets at FVTPL		41.3	6.2	47.5		34.2			17.7	51.9
Cash and cash equivalents		170.5	1.3	171.8		147.0			-	147.0
Liabilities:
Financial liabilities at FVTPL		(10.2)	(3.8)	(14.0)		(3.1)			(10.3)	(13.4)

5.3.  RELATED PARTIES

The Group manages, through its subsidiaries, a number of investment trusts, unit trusts and overseas funds. The subsidiary companies receive management fees from these entities for managing the assets, and in some instances, receive performance fees. The precise fee arrangements for the different entities are disclosed within the financial statements of each entity or within other information which is publicly available.

The Group manages a number of collective investment vehicles and, by virtue of the investment management agreements in place between the Group and these vehicles, they may be considered to be related parties.

The Group acts as manager for 37 (2013: 39) authorised unit trusts. Each unit trust is jointly administered with the trustees, National Westminster Bank plc. The aggregate total value of transactions for the year was £3,192.0m (2013: £2,799.6m) for unit trust creations and £3,320.0m (2013: £2,596.1m) for unit trust redemptions. The actual aggregate amount due to the trustees at the end of the accounting year in respect of transactions awaiting settlement was £2.8m (2013: £15.2m). The amount received in respect of gross management and registration charges was £343.0m (2013: £349.6m). At the end of the year, there was £7.9m (2013: £9.1m) accrued for annual management fees and £1.3m (2013: £1.5m) in respect of registration fees.

Investment management and performance fees are disclosed in Note 1.1.

Included within the financial instruments note are seed capital investments in funds managed by the Group. At 31 December 2014, the Group had a total net investment in collective investment vehicles of £48.2m (2013: £52.9m) and received distributions of £0.3m (2013: £0.2m). During 2014, it invested £7.5m (2013: £2.8m) in seed capital investments and received £14.2m (2013: £6.8m) on disposal of them.

TA Associates, L.P. is also considered a related party of the Group. There were no transactions with TA Associates, L.P. in the year.

Key management compensation

The Group also considers transactions with its key management personnel as related party transactions. Key management personnel is defined as the executive Directors together with other members of the Executive Committee. The aggregate compensation paid or payable to key management for employee services is shown below:

	2014 £m		2013 £m
Short-term employee benefits	5.2		5.3
Share-based payments	3.0		2.9
Post-employment benefits	0.1		0.1
Other long-term benefits	0.1		0.3
	8.4		8.6

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 International Financial Reporting Standards ("IFRSs") as adopted by the European Union ("EU").

Under company law, the Directors must not approve the financial statements unless they are satisfied that they 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. In preparing these financial statements, the Directors are required to:

·      select suitable accounting policies and then apply them consistently;

·      make judgements and accounting estimates that are reasonable and prudent;

·      state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements; and

·      prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements and the Directors' Remuneration report comply with the requirements of the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and, hence, for taking reasonable steps for the prevention and detection of fraud and other irregularities.  

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.

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 Company's performance, business model and strategy.

Each of the Directors, whose names and functions are listed in the Directors' profiles, confirms that, to the best of his or her knowledge:

·      the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

·      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, together with a description of the principal risks and uncertainties that it faces.

In accordance with Section 418 of the Companies Act 2006, the Directors' report includes a statement, in the case of each Director in office at the date the Directors' report is approved, that:

(a)   so far as the Director is aware, there is no relevant audit information (as defined in section 418 (3)) of which the Company's auditors are unaware; and

(b)   he/she has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

On behalf of the Board

Philip Johnson

Chief Financial Officer

25 February 2015

Section 7: Principal risks and mitigations

INVESTMENT OUTPERFORMANCE

Sustained underperformance

Risk

There is a risk that our clients will not meet their investment objectives, due to weak financial markets or poor performance by our fund managers.

Potential Impact

Weak financial markets or poor performance by our fund managers may lead to our products being uncompetitive or otherwise unattractive to new or existing clients, resulting in a decline in Group AUM and revenues.

Mitigation/Controls

Jupiter maintains a range of flexible investment products that is designed to deliver value to our clients irrespective of market conditions. Our investment process seeks to meet investment targets within clearly stated risk parameters.

We use tools and governance principles within our investment risk framework and review performance that lies outside expectations. We monitor fund performance as part of our investment performance risk management process. This is formally overseen by our Portfolio Review Committee, which meets quarterly.

2014 Impact

As described in the Operational Review, Jupiter has seen 51 per cent. of mutual fund AUM achieving above median returns over the key three-year investment performance period.

Failure to retain key staff

Risk

We are a people business and our staff are a significant component of successfully executing our strategy.

Potential Impact

The departure of a high-profile fund manager or member of our management team could lead to a significant level of redemptions from our funds or a failure to run our business effectively, resulting in a material impact on our revenues and/or corporate performance.

Mitigation/Controls

We believe that high levels of employee engagement and equity ownership drive business outperformance. We also strive to have an attractive working environment.

We maintain a competitive remuneration structure and use deferred remuneration and share-based payments to align our employees' long-term interests with the Group's. We also develop, monitor and maintain succession plans for all key roles.

2014 Impact

2014 saw the benefits of a number of changes we made to fund management responsibilities in 2013, when two of our senior fund managers retired. These changes included promoting several fund managers and recruiting new talent.

EFFECTIVE DISTRIBUTION

Regulatory non-compliance

Risk

A significant regulatory investigation or action against the Group could affect our reputation and business.

Potential Impact

Regulatory censure and the related bad publicity could damage our clients' confidence in us and affect our ability to generate new business.

Mitigation/Controls

We maintain a robust compliance culture and all relevant employees are required to undertake training on regulatory matters. Our Compliance department's monitoring programme ensures we adhere to regulatory controls.

Our risk governance structure and whistleblowing policy are designed to ensure that we escalate any regulatory issues to senior management in an open and timely way, ensuring the maximum appropriate amount of regulatory protection for clients.

2014 Impact

In 2014, we focused on developing Jupiter's conduct risk framework. In addition, the sale of our private client contracts means that a number of regulatory requirements relating to discretionary management of client assets will no longer apply.

Distribution and product trends

Risk

These risks reflect potential changes in our fee structures, in the terms we can agree with third-party distributors, or in clients' appetite for our products.

Potential Impact

Our ability to generate fund inflows may be jeopardised by fundamental changes in distribution patterns or by a sustained market appetite for products we do not offer.

Mitigation/Controls

We continually analyse our markets, to ensure we maintain a diverse product suite that appeals to existing and potential clients.

Our well-defined product development process enables us to deliver new products or enhancements, so we can target client groups in a timely and efficient way.

2014 Impact

In 2014, we continued to ensure that our products remain optimal for our markets and launched a number of new share classes for our funds, to ensure they remain suitable for our local markets. We also recruited new heads of strategy into areas where we felt there were gaps in our product range.

EFFICIENT OPERATIONS

Operational error, business continuity incident or fraud

Risk                                                          

We could suffer from a material error in executing a key business process, a lack of availability of our key systems or business premises, or a successful fraud against us or our clients.

Potential Impact

A significant error, successful fraud or breach of a client agreement may result in additional costs to redress the issue. The unavailability of our key systems or business premises could mean we are unable to act on behalf of our clients.

Mitigation/Controls

We have efficient and well controlled processes and maintain a comprehensive enterprise-wide risk management framework, as described in detail in the Governance review.

We have continuity and business resumption planning in place to support all of our key activities. We support remote working, including core system access for all our key staff if they cannot travel to our offices. If our normal business systems or premises become unavailable, we have alternative premises, including a dedicated office suite equipped with all of our key business systems.

2014 Impact

In 2014, we consolidated our risk functions under a new Head of Risk, to give us a holistic perspective of risks across the Group. During 2014, no items individually or collectively breached the Board's risk appetite.

Failure of third party supplier

Risk

The failure of a provider we rely on for key business processing may lead to our failing to deliver the required service to our clients or shareholders or not fulfilling our regulatory obligations.

Potential Impact

Our relationships with key stakeholders may be jeopardised if we provide inadequate service, resulting in the loss of clients, or regulatory or financial censure.

Mitigation/Controls

We subject all third parties who provide us with critical services to a high level of ongoing oversight, giving us assurance that they meet the required standard.

Jupiter has formal guidelines for managing and overseeing all third party relationships, ensuring that they receive a level of scrutiny that reflects their potential risk to our business.

2014 Impact

We have continued to work on implementing our supplier management policy during 2014, working closely with our key third parties to ensure ongoing quality of service, along with resilience planning in the event of provider failure.

Counterparty failure

Risk

The failure of a trading or depositary counterparty with which we have a relationship could have an adverse impact on our business.

Potential Impact

A counterparty failure could mean that we lose or cannot access material amounts of Jupiter's or our clients' funds.

Mitigation/Controls

When we evaluate potential counterparties, the security of our clients' assets is our primary consideration. We aim to diversify our exposures across different institutions and actively monitor their creditworthiness using key risk indicators.

These indicators include market data and credit agency ratings. We place deposits according to agreed limits, which we amend when necessary. Our counterparties are subject to the Basel capital rules, which means that obtaining satisfactory diversification remains a challenge for us and for the industry as whole. We continue to look for an optimum solution to this issue.

2014 Impact

In 2014 we implemented a new oversight process for our corporate cash, implementing controls over third party deposits.

 

END

 

 

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