Final Results

RNS Number : 3874Q

Jupiter Fund Management PLC

29 February 2016

 

Jupiter Fund Management plc Highlights

Results for the year ended 31 December 2015

29 February 2016

·      Strong investment performance, with 68 per cent. of mutual fund AUM above median over three years

·      Continued organic flow growth from our core mutual fund franchise, with net mutual fund inflows of £2.1bn

·      Maintained EBITDA margins above 50 per cent. while diversifying our product and distribution capabilities

·      Underlying earnings per share increased by 11 per cent. to 29.2p

·      Total dividends per share of 25.5p, an increase of 29 per cent. excluding the return of private client proceeds in 2014

			Year ended 31 December 2015	Year ended 31 December 2014
	Assets under management (AUM) (£bn)		35.7	31.9
	Net inflows (£bn)		1.9	0.9
	EBITDA1 2 (£m)		168.1	155.6
	EBITDA margin2 (per cent.)		51	51
	Profit before tax (£m)		164.6	160.0
	Underlying earnings per share2 (p)		29.2	26.4
	Ordinary dividends per share2 (p)		14.6	13.2
	Total dividends per share2 (p)		25.5	24.7
	Like-for-like total dividends per share2 3 (p)		25.5	19.8

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

³ Like-for-like total dividends per share exclude 4.9p relating to the sale of private client contracts in 2014. 

Maarten Slendebroek, Chief Executive, commented:

"It has been another successful year for Jupiter, as we made continued progress with delivering our organic growth strategy to the benefit of all our stakeholders. 2015 saw strong investment performance allied with increased revenues, continued profit growth and further strengthening of our liquidity and capital position. Despite more challenging market conditions in the second half, underlying earnings per share increased by 11 per cent. and our resilient business model supported a 29 per cent. increase in like-for-like dividends."

Analyst presentation

There will be an analyst presentation at 9.00am on 29 February 2016.

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, to sign up to the conference call online, please use the following link http://mediazone.brighttalk.com/event/Jupiter/f37c4630c7-8809-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 The Zig Zag Building, 70 Victoria Street, London SW1E 6SQ. The Annual Report will be published in March 2016 and will be available at www.jupiteram.com.

For further information please contact:
	Investors	Media
Jupiter	Philip Johnson [phone]	Alicia Wyllie [phone]
	Alex Sargent [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. Chairman's and Chief Executive's statement

2015 was another successful year for Jupiter, as we made continued progress with delivering our organic growth strategy. Our objective is to deliver investment outperformance after fees on behalf of our clients. Strong investment performance drives net inflows and allows us to capture the economies of growth via our scalable business model and share the rewards of growth with all our stakeholders.

As at the end of 2015, 68 per cent. of our mutual fund AUM had delivered above median performance over three years, the key period for assessing investment performance. This is an improvement from the position as at December 2014 and as a result we enter 2016 with a strong product line-up.

Our growth strategy is based primarily on organic growth through deliberate diversification by product, client type and geography. Over the past few years, Jupiter has been building out its international distribution by establishing a presence in countries where our key global clients are also represented. Successful penetration of these networks has allowed us to establish a distribution presence in Europe and Asia, resulting in net global mutual fund inflows of £2.1bn in the year and overall assets under management increasing by 12 per cent. to £35.7bn.

Our distribution build-out will continue in 2016, with planned office openings in Italy and Spain adding to the opportunities for our existing distribution network in the UK and internationally. We are also continuing our product diversification, through the targeted launch of new funds. In March we will launch an Asian Income Fund and later in the year we will launch an international version of our successful Absolute Return Fund. We also have plans to launch a diversified global environmental/ecology fund, building on Jupiter's long-established record in socially responsible investing.

Whilst we are continuing to expand our international footprint, the majority of our people remain based in London. This year, we have made key hires in our investment, distribution and support functions in London. Towards the end of 2015, we expanded the Executive Committee with colleagues from the areas of administration, operations and human resources. At the same time, we moved our London office from Hyde Park Corner to a new building on Victoria Street. The move went smoothly and we start 2016 with a highly motivated and strengthened team.

At Jupiter, we invest in our people through skills training, mentoring and coaching. Outside the world of sports there are not many jobs in which performance is published daily and performance league tables are continuously reviewed in the specialist media. This enormous attention on short-term performance is sometimes at odds with our focus on creating value over time, defined as investment outperformance after all fees over a minimum of three years. It takes mental strength and resilience to successfully bridge the gap between short-term expectations and long-term objectives. We understand this tension and actively manage and support our investment teams with meeting their long-term investment objectives.

Jupiter has an enormously supportive and loyal client base in the UK and increasingly in Europe and Asia. The Jupiter brand stands for investment outperformance after all fees. An investor in Jupiter funds does not expect an average outcome - our clients seek better than average returns. Beating the average means that we need to take investment risks within clear and pre-agreed parameters. We closely monitor risk and analyse its components, but do not shy away from risk when we see an investment opportunity. This high conviction style, sometimes labelled unconstrained, sets Jupiter apart from the average. From a financial perspective, 2015 saw strong performance with increased revenues, continued profit growth and further strengthening of our liquidity and capital position. Despite more challenging market conditions in the second half, underlying earnings per share increased by 11 per cent. and our resilient business model supported a 29 per cent. increase in like-for-like dividends.

In conclusion, 2015 was a year of delivery across all our key metrics. Strong investment outperformance and healthy inflows to our funds, combined with our continued cost discipline, enabled us to turn this growth into increased profits and attractive capital returns for our shareholders. We would like to take this opportunity to say thank you to our colleagues within Jupiter. The contribution they make is vital to our success.

In 2016, we will continue along the path of deliberate diversification via primarily organic growth. Although the markets did not get off to a good start in the New Year with a bout of volatility, our robust balance sheet and healthy operating margins mean we are well placed to continue investing in attractive growth opportunities, even in more volatile market conditions. Based on strong investment performance, new product launches and planned office openings, we are confident that we can deliver another year of progress, albeit against a backdrop of headwinds from the market and continued uncertainty on the regulatory front.

Liz Airey  Maarten Slendebroek

Chairman  Chief Executive Officer

26 February 2016

Operational review

Net inflows/(outflows) by product	2015 £m		2014 £m
Mutual funds	2,099		1,415
Segregated mandates	(230)		(488)
Private clients	-		(5)
Investment trusts	74		(62)
Total	1,943		860

Net flows during 2015 totalled £1.9bn (2014: £0.9bn). Our core mutual fund franchise achieved net flows of £2.1bn. The build-out of our international network meant that overseas clients provided half of our mutual fund gross inflows and the majority of our net flow growth, with our top-performing flexible fixed income and European equity strategies proving particularly attractive to clients.

Assets under management by product	31 December 2015 £bn		31 December 2014 £bn
Mutual funds	31.2		27.5
Segregated mandates	3.5		3.6
Investment trusts	1.0		0.8
Total	35.7		31.9

Assets under management increased to £35.7bn at 31 December 2015 (31 December 2014: £31.9bn) due to net inflows and market appreciation across the year. Our SICAV AUM increased to £6.9bn at 31 December 2015 (31 December 2014: £4.3bn), representing 22 per cent. of our mutual fund AUM. 

Investment performance

At 31 December 2015, 27 of our mutual funds, representing 68 per cent. of our mutual fund AUM, had delivered above-median performance over three years (2014: 25 mutual funds, representing 51 per cent. of mutual fund AUM). This was driven by continued strong performance across our key strategies, notably European equities, UK equities and Fixed Income, and better outcomes from previously weaker areas. The one year numbers reflect this strong result, with 31 mutual funds, representing 84 per cent. of mutual fund AUM (2014: 20 mutual funds, representing 46 per cent. of mutual fund AUM) delivering above median performance.

Financial review

RESULTS FOR THE YEAR

2015 saw increased revenues, continued profit growth and further strengthening of our liquidity and capital position.

Net revenue

	2015 £m		2014 £m
Net management fees	300.8		285.0
Net initial charges	14.1		13.1
Performance fees	14.6		4.9
Total	329.5		303.0

Net revenues for the year were £329.5m (2014: £303.0m), 9 per cent. ahead of 2014. This was driven by a rise in net management fees to £300.8m (2014: £285.0m), as organic mutual fund flows and first-half market appreciation resulted in average assets increasing by 7 per cent. This was despite the loss of £7.6m of revenues following the sale of private client contracts in 2014. Performance fees also increased by £9.7m to £14.6m, primarily due to excellent performance in a single fund.

	2015		2014
Net management fees (£m)	300.8		285.0
Average AUM (£bn)	34.4		32.3
Net management fee margin (bps)	88		88

Net management fees remain the main component of net revenue, comprising 91 per cent. (2014: 94 per cent.). The Group's net management fee margin for the year was in line with last year at 88 basis points (2014: 88 basis points) at a headline level. This was distorted by the loss of lower margin assets, the closure of several sub-economic funds, and the sale of private client contracts and a segregated mandate loss in 2014. Excluding these factors, the underlying progression was in line with management expectations and within our stated guidance.

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, although the introduction of the aggregated operating expense fee on the SICAVs will reduce the impact of the former. Given the uncertainties inherent in these factors, the rate and angle of any such decline remains

uncertain. Further information on the revenue and cost impact of introducing the SICAV aggregated operating expense fee is contained later in the section.

Net initial charges of £14.1m (2014: £13.1m) were ahead of the prior year, due to higher box profits resulting from increased crossing within unit trust share classes.

Performance fees increased to £14.6m (2014: £4.9m), nearly all earned by a single fund. The nature of performance fees and the modest amount of AUM with performance fee potential (2015: £1.5bn, 2014: £1.3bn) means it is unlikely that this level will be repeated in future periods unless there is again a period of outstanding performance on a single fund.

Administrative expenses

	2015 £m		2014 £m
Fixed staff costs	43.5		46.3
Other expenses	52.6		49.1
Total fixed costs	96.1		95.4
Variable staff costs	66.4		53.1
Underlying administrative expenses	162.5		148.5
Charge for options over pre-Listing shares	0.5		0.7
Office closure costs	0.8		-
Administrative expenses	163.8		149.2

Underlying administrative expenses of £162.5m (2014: £148.5m) rose by 9 per cent. Within this, fixed staff costs of £43.5m (2014: £46.3m) decreased by 6 per cent. as increases in international headcount, key front office hires and investment in our platform and distribution capabilities were more than offset by savings in headcount following the private client contracts sale.

Other expenses rose to £52.6m (2014: £49.1m) due to costs associated with supporting our continued organic growth, and double occupancy and move costs relating to the new London office. The relocation to the Zig Zag building will result in administrative expenses increasing by £5m per annum from 2016 versus the 2014 equivalents. Within 2015, £0.8m of costs were accrued relating to the remaining vacant period of our former London office. These have been separately identified above and excluded from both EBITDA and underlying earnings per share as they are not considered reflective of the ongoing trading performance of the business.

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 during the year and the additional fixed costs in 2015 were more than absorbed by the increase in net management fees.

Variable staff costs

	2015 £m		2014 £m
Cash bonus	45.5		36.2
Deferred bonus	10.1		8.9
LTIP, SAYE and SIP	10.8		8.0
Total	66.4		53.1
Variable compensation ratio	28%		26%

Variable staff costs of £66.4m (2014: £53.1m) increased by 25 per cent. as the cash bonus of £45.5m (2014: £36.2m) rose in line with the Group's higher profitability, including compensation directly linked to the performance fee. Both the deferred bonus and LTIP charges are now at full run rate and rose due to higher profits increasing grant sizes and due to the increase in the Jupiter share price in the year. As a result, variable compensation as a proportion of pre-variable compensation operating earnings rose to 28 per cent. (2014: 26 per cent.). This excludes a £0.5m (2014: £0.7m) 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. This charge has now ceased.

We expect the variable compensation ratio to remain at a high 20 per cent. level 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. Due to these factors and the unpredictability of performance fees, the ratio may differ from this level. In 2015, the variable compensation ratio rose towards the mid to higher end of our previously guided range due to slower earnings growth and the compensation linked to performance fees.

EBITDA

EBITDA was £168.1m (2014: £155.6m), an 8 per cent. increase on the previous year, as higher net management and performance fees were partly offset by an increase in underlying administrative expenses. The Group's EBITDA margin remained at an attractive 51 per cent. (2014: 51 per cent.) as our scalable operating model meant that we could continue our steady investment in our people, brand and platform while maintaining attractive profitability levels.

SICAV management company and fee structure changes

During December 2015, a subsidiary of the Group replaced a third party as the management company for The Jupiter Global Fund and Jupiter Merlin Funds SICAVs. As a result, the Group is able to simplify its SICAV funds' fee structure by introducing an aggregated operating expense fee, standardised across similar funds and share classes within our SICAV range. This replaces the previous arrangement, where investors were subject to variable operating expenses. This change is in line with Luxembourg industry market practice and further streamlines our business, as well as providing greater transparency in our pricing structure for clients.

The financial impact of introducing this fee structure is that, from the combination of this and the continued but more subdued mix effect, we expect 2016 net management fee margins to be similar to 2015. After 2016, we expect the management fee margin to decline by 1 to 2 basis points per annum, although the rate and angle of any such decline remains uncertain. Certain variable operating fund expenses will also now be borne by Jupiter as a result and, if the SICAVs were to remain at the same size as at 31 December 2015, we would expect fixed costs to increase by approximately £7m per annum.

Other income statement movements

Amortisation of £3.2m (2014: £20.2m) was significantly lower this year as a result of the investment management contracts acquired as part of the MBO becoming fully amortised in June 2014. The Jupiter brand name continues to be amortised on a straight line basis through to June 2017.

The Group had net finance income of £0.4m (2014: £0.3m) due to higher amounts of cash on deposit during the year, following the repayment of the outstanding bank debt in February 2014.

In the prior year, other gains included £28.5m relating to the net proceeds from the sale of the private client contracts to Rathbone

Investment Management Limited, and a £2.6m loss as the Group wrote down its available-for-sale ("AFS") investment in iO Adria Limited to nil.

Profit before tax ("PBT")

PBT for the year was £164.6m (2014: £160.0m). This increase of 3 per cent. was driven by a rise in operating earnings and lower amortisation of intangibles, which more than offset the decrease in other gains.

Tax expense

The effective tax rate for 2015 was 19.7 per cent. (2014: 21.4 per cent.), slightly lower than the standard rate of UK corporation tax.

Underlying PBT 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 29.2p (2014: 26.4p) increased by 11 per cent., reflecting the Group's improved trading performance and the lower statutory tax rate.

Underlying EPS	2015		2014
Profit before tax (£m)	164.6		160.0
Adjustments:
Amortisation of acquired investment management contracts and trade name (£m)	1.9		19.2
Charge for options over pre-Listing shares (£m)	0.5		0.7
Office closure costs (£m)	0.8		-
Loss taken to the income statement on available-for-sale investments (£m)	-		2.6
Gain on sale of private client contracts (£m)	-		(28.5)
Underlying profit before tax (£m)	167.8		154.0
Tax at statutory rate of 20.25 per cent. (2014: 21.5 per cent.) (£m)	(34.0)		(33.1)
Underlying profit after tax (£m)	133.8		120.9
Issued share capital (m)	457.7		457.7
Underlying EPS	29.2p		26.4p

The Group's basic and diluted EPS measures were 29.4p and 28.5p respectively in 2015, compared with 28.4p and 27.2p in 2014.

CASH FLOW

The Group has a high conversion rate of operating earnings to cash, generating positive operating cash flows after tax in 2015 of £156.3m (2014: £122.8m). This cash was used to fund the interim dividend and will primarily be used to fund the full year and special dividends to shareholders.

ASSETS AND LIABILITIES

Balance sheet

The Group further strengthened its net cash position to £259.4m (31 December 2014: £251.0m), as cash generated through trading offset the funding of the 2014 final and special dividend payments, the 2015 interim dividend payment, the 2014 compensation round and the new office fit-out and moving expenses. In October 2015, the share repurchase programme increased from £1.2m a month to £2.2m a month as a result of higher variable staff costs and the significant increase in the Group's share price during the year. This programme will avoid dilution arising from operating the Group's share-based compensation schemes.

During the year, the Group had no debt (2014: £nil). The revolving credit facility of £50m extends to July 2016 and it is our intention to leave this facility intact but undrawn, in case of need. This supports our intention to run a sustainable balance sheet with net cash across the cycle, and to roll over or replace the revolving credit facility when it expires.

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 2015, we had a total investment of £47.3m in our own funds (2014: £43.4m) as we maintained seed capital at targeted levels. This excludes £8.1m (2014: £4.8m) of investments in our own funds made 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 83 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 full year 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 during 2015 its net cash balance increased to £259.4m (2014: £251.0m). 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 to shareholders. 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. The remaining balance, after taking account of any specific events, will be returned to shareholders. 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 a total dividend of 25.5p (2014: 24.7p) per share, representing a 3 per cent. increase on last year. The 2014 special dividend included 4.9p per share from the net proceeds received from the sale of private client contracts. If this is excluded, then, on a like-for-like basis, the total dividend of 25.5p (2014: 19.8p) has increased by 29 per cent. We believe our growth prospects allied with the consequent yield potential make for an attractive model for shareholders.

Dividend progression	2015 p per share				2014 p per share
Ordinary	14.6			13.2
Special	10.9			11.5
Total	25.5			24.7

The Board has declared an increased full year dividend for the year of 10.6p (2014: final dividend of 9.5p) per share. This results in a total ordinary dividend for the year of 14.6p (2014 13.2p), an increase in line with underlying EPS and maintaining the ordinary dividend payout ratio at 50 per cent. Due to the strong earnings in the year, and our robust and well capitalised balance sheet, the Board has decided to retain slightly less than 10 per cent. of pre-variable compensation earnings, declaring a special dividend of 10.9p (2014: 11.5p) per share.

The full year dividend payment will be paid alongside the special dividend on 8 April 2016 to shareholders on the register on 11 March 2016. During the year, the Board changed its approach to final dividend payments by not seeking approval for them at the AGM. This means that the 2015 and future full year dividends will be paid alongside potential future special dividend declarations, with the expectation that these can then both consistently be paid in early April.

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) run at levels sufficient for the needs of the business.

Capital

Total shareholders' equity increased by £16.7m to £602.9m (2014: £586.2m) as a result of the Group's continued profitability. This was partially offset by the payment of the 2014 final and special dividends and the 2015 interim dividend, which totalled £112.1m.

The Group formally assesses its capital position and requirements annually through its Internal Capital Adequacy Assessment Process ("ICAAP"). The ICAAP document, which is approved by the Board, makes estimations and judgements to establish whether the

Group holds an appropriate level of regulatory capital to mitigate the impact of its key risks in the event of these crystallising.

The Group had a three-year investment firm consolidation waiver from the FCA which ran until June 2015, although during 2013 the Group had 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 full year and special dividends. Financial statements (audited) Section 1: Results for the year

Consolidated income statement

For the year ended 31 December 2015

			Notes		2015		2014
					£m		£m
	Revenue		1.1		403.5		388.3
	Fee and commission expenses		1.1		(74.0)		(85.3)
	Net revenue		1.1,1.2		329.5		303.0
	Administrative expenses		1.3		(163.8)		(149.2)
	Operating earnings				165.7		153.8
	Other gains (including sale of private client contracts)		1.4		1.7		26.1
	Amortisation of intangible assets				(3.2)		(20.2)
	Operating profit				164.2		159.7
	Finance income				0.6		0.5
	Finance costs				(0.2)		(0.2)
	Profit before taxation				164.6		160.0
	Income tax expense		1.5		(32.5)		(34.2)
	Profit for the year				132.1		125.8
	Earnings per share
	Basic		1.6		29.4p		28.4p
	Diluted		1.6		28.5p		27.2p

Consolidated statement of comprehensive income

For the year ended 31 December 2015

		Notes	2015		2014
			£m		£m
Profit for the year			132.1		125.8
Items that may be reclassified subsequently to profit or loss
Exchange movements on translation of subsidiary undertakings		4.2	0.1		0.1
Other comprehensive income for the year net of tax			0.1		0.1
Total comprehensive income for the year net of tax			132.2		125.9

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.

			2015 £m			2014 £m
	Management fees	370.1			364.7
	Initial charges and commissions	18.8			18.7
	Performance fees	14.6			4.9
	Fee and commission expenses	(74.0)			(85.3)
	Total net revenue	329.5			303.0

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

		2015 £m		2014 £m
	Net revenue by location of clients
	UK	285.8		268.9
	Continental Europe	36.1		27.8
	Rest of the world	7.6		6.3
	Total net revenue by location	329.5		303.0

1.3 ADMINISTRATIVE EXPENSES

Administrative expenses of £163.8m (2014: £149.2m) include staff costs of £110.4m (2014: £100.1m). Staff costs consist of:

		2015 £m		2014 £m
	Wages and salaries	78.1		70.8
	Share-based payments	13.9		13.7
	Social security costs	14.0		10.9
	Pension costs	4.3		4.3
	Redundancy costs	0.1		0.4
		110.4		100.1

1.4 OTHER GAINS (INCLUDING SALE OF PRIVATE CLIENT CONTRACTS)

			2015 £m				2014 £m
	Gain on sale of private client contracts			-			28.5
	Loss on available-for-sale (''AFS'') investments			-			(2.6)
	Dividend income			0.2			0.3
	Other			1.5			(0.1)
			1.7				26.1

Other gains for the year were £1.7m (2014: £26.1m). The prior year gain principally related to the sale of our private client contracts to Rathbone Investment Management Limited.

1.5 INCOME TAX EXPENSE

Analysis of charge in the year:

	2015 £m			2014 £m
Current tax - UK corporation tax
Tax on profits for the year	33.7		35.6
Adjustments in respect of prior years	(0.1)		-
	33.6		35.6
Deferred tax
Origination and reversal of temporary differences	(1.3)		(1.7)
Impact of changes in corporation tax rate	0.2		0.3
	(1.1)		(1.4)
Total tax expense	32.5		34.2

With effect from 1 April 2015, the UK corporation tax rate changed from 21 per cent. to 20 per cent. resulting in a weighted average UK corporation tax rate of 20.25 per cent. (2014: 21.5 per cent.). The tax charge in the year is lower (2014: lower) than the standard rate of corporation tax in the UK and the differences are explained below:

Factors affecting tax expense for the year	2015 £m			2014 £m
Profit before taxation	164.6		160.0
Taxation at the standard corporation tax rate (2015: 20.25 per cent.; 2014: 21.5 per cent.)	33.3		34.4
Non-taxable (income)/expenditure	(0.3)		0.6
Other permanent differences	(0.5)		(1.1)
Adjustments in respect of prior years	(0.2)		-
Impact of tax rate change on deferred tax balances	0.2		0.3
Total tax expense	32.5		34.2

1.6 EARNINGS PER SHARE

Basic earnings per share ("EPS") is calculated by dividing the profit for the year 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 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 used in the calculation of EPS is as follows:

	Weighted average number of shares	2015 Number m		2014  Number m
	Issued share capital	457.7		457.7
	Less own shares held	(7.7)		(14.1)
	Weighted average number of ordinary shares for the purpose of basic EPS	450.0		443.6
	Add back weighted average number of dilutive potential shares	12.9		19.5
	Weighted average number of ordinary shares for the purpose of diluted EPS	462.9		463.1

	Earnings per share	2015               p		2014 p
	Basic	29.4		28.4
	Diluted	28.5		27.2

Section 2: Consolidated statement of cash flows

Consolidated statement of cash flows

For the year ended 31 December 2015

		Notes		2015		2014
				£m		£m
	Cash flows from operating activities
	Cash generated from operations	2.1		186.5		154.0
	Income tax paid			(30.2)		(31.2)
	Net cash inflows from operating activities			156.3		122.8
	Cash flows from investing activities
	Purchase of property, plant and equipment	3.3		(7.7)		(1.6)
	Purchase of intangible assets			(1.4)		(1.0)
	Purchase of financial assets at fair value through profit or loss ("FVTPL")			(27.4)		(7.5)
	Proceeds from disposal of financial assets at FVTPL			21.0		14.2
	Proceeds on transfer of private client contracts			-		39.6
	Costs incurred on transfer of private client contracts			-		(7.9)
	Dividend income received			0.2		0.3
	Finance income received			0.6		0.5
	Net cash (outflows)/inflows from investing activities			(14.7)		36.6
	Cash flow from financing activities
	Dividends paid	4.3		(112.1)		(56.7)
	Purchase of shares by EBT			(20.9)		(12.3)
	Finance costs paid			(0.2)		(0.2)
	Repayment of bank loan			-		(11.0)
	Net cash outflows from financing activities			(133.2)		(80.2)
	Net increase  in cash and cash equivalents			8.4		79.2
	Cash and cash equivalents at beginning of year			251.0		171.8
	Cash and cash equivalents at end of year	3.5		259.4		251.0

Notes to the financial statements - Consolidated statement of cash flows

2.1   CASH FLOWS FROM OPERATING ACTIVITIES

		2015 £m		2014 £m
	Operating profit	164.2		159.7
	Adjustments for:
	Amortisation of intangible assets	3.2		20.2
	Depreciation of property, plant and equipment	1.1		1.1
	Other gains	0.6		(27.8)
	Share-based payments	13.7		12.9
	Cash inflows on exercise of share options	0.6		0.8
	Decrease in trade and other receivables	4.3		6.0
	Decrease in trade and other payables	(1.2)		(18.9)
	Cash generated from operations	186.5		154.0

Section 3: Assets and liabilities

Consolidated balance sheet

As at 31 December 2015

			Notes				2015		2014
							£m		£m
	ASSETS
	NON-CURRENT ASSETS
	Goodwill		3.1				341.2		341.2
	Intangible assets		3.2				6.4		8.1
	Property, plant and equipment		3.3				8.3		1.7
	Deferred tax assets						12.4		12.4
	Trade and other receivables		3.4				2.2		5.0
	Total non-current assets						370.5		368.4
	CURRENT ASSETS
	Investments in associates		3.4				5.3		13.8
	Financial assets at FVTPL		3.4				58.2		37.1
	Trade and other receivables		3.4				93.2		94.7
	Cash and cash equivalents		3.5				259.4		251.0
	Total current assets						416.1		396.6
	TOTAL ASSETS						786.6		765.0
	EQUITY ATTRIBUTABLE TO SHAREHOLDERS
	Share capital		4.1				9.2			9.2
	Own share reserve		4.2				(0.2)			(0.2)
	Other reserve		4.2				8.0			8.0
	Foreign currency translation reserve		4.2				7.3			7.2
	Retained earnings		4.2				578.6			562.0
	TOTAL EQUITY						602.9			586.2
	LIABILITIES
	NON-CURRENT LIABILITES
	Trade and other payables		3.4				8.9		12.3
	Deferred tax liabilities						1.0		2.3
	Total non-current liabilities						9.9		14.6
	CURRENT LIABILITIES
	Financial liabilities at FVTPL		3.4				9.9		3.0
	Trade and other payables		3.4				149.0		146.8
	Current income tax liability						14.9		14.4
	Total current liabilities						173.8		164.2
	TOTAL LIABILITIES						183.7		178.8
	TOTAL EQUITY AND LIABILITIES						786.6		765.0

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.

		2015 £m		2014 £m
	Goodwill	341.2		341.2
		341.2		341.2

No additional goodwill was recognised in the year (2014: £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 the net present value of the Group's future earnings. The net present value was calculated using a discounted cash flow model, with reference to the Group's projected cash flows and cost of capital. 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 the trade name of the Group. The other intangible assets recognised are computer software.

	2015 £m		2014 £m
Trade name	2.6		4.5
Computer software	3.8		3.6
	6.4		8.1

The amortisation charge for the year was £3.2m (2014: £20.2m). During the year, the Group acquired software with a value of £1.4m (2014: £1.0m).

3.3 PROPERTY, PLANT AND EQUIPMENT

The net book value of property, plant and equipment at 31 December 2015 was £8.3m (2014: £1.7m). During the year, the Group acquired property, plant and equipment with a value of £7.7m (2014: £1.6m).

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 2015		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
Goodwill		-	-	-	-	-	341.2	341.2
Intangible assets		-	-	-	-	-	6.4	6.4
Property, plant and equipment		-	-	-	-	-	8.3	8.3
Deferred tax assets		-	-	-	-	-	12.4	12.4
Non-current trade and other receivables		-	-	-	-	-	2.2	2.2
Investments in associates		5.3	-	-	-	5.3	-	5.3
Financial assets at FVTPL		58.2	-	-	-	58.2	-	58.2
Current trade and other receivables		-	84.7	-	-	84.7	8.5	93.2
Cash and cash equivalents		-	259.4	-	-	259.4	-	259.4
Non-current trade and other payables		-	-	-	(3.2)	(3.2)	(5.7)	(8.9)
Deferred tax liabilities		-	-	-	-	-	(1.0)	(1.0)
Current trade and other payables		-	-	-	(130.1)	(130.1)	(18.9)	(149.0)
Current income tax liability		-	-	-	-	-	(14.9)	(14.9)
Financial liabilities at FVTPL		-	-	(9.9)	-	(9.9)	-	(9.9)
Total		63.5	344.1	(9.9)	(133.3)	264.4	338.5	602.9
As at 31 December 2014		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
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		50.9	335.1	(3.0)	(130.6)	252.4	333.8	586.2

3.5  CASH AND CASH EQUIVALENTS

			2015 £m		2014 £m
	Cash at bank and in hand	103.2			130.8
	Short-term deposits	150.0			117.0
	Cash held by EBT and seed capital subsidiaries	6.2			3.2
	Total cash and cash equivalents	259.4			251.0

Cash at bank earns interest 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 £1.4m (2014: £0.3m) was not available for use by the Group.

Section 4: Equity

Consolidated statement of changes in equity

For the year ended 31 December 2015

		Share  capital	Own  share  reserve	Other  reserve	Foreign  currency  translation  reserve	Retained  earnings	Total equity
		£m	£m	£m	£m	£m	£m
At 1 January 2014		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 income		-	-	-	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
Profit for the year		-	-	-	-	132.1	132.1
Exchange movements on translation of subsidiary undertakings		-	-	-	0.1	-	0.1
Other comprehensive expense		-	-	-	0.1	-	0.1
Total comprehensive income		-	-	-	0.1	132.1	132.2
Vesting of ordinary shares and options		-	0.1	-	-	0.6	0.7
Dividends paid		-	-	-	-	(112.1)	(112.1)
Purchase of shares by EBT		-	(0.1)	-	-	(20.8)	(20.9)
Share-based payments		-	-	-	-	13.7	13.7
Current tax		-	-	-	-	2.9	2.9
Deferred tax		-	-	-	-	0.2	0.2
Total transactions with owners		-	-	-	-	(115.5)	(115.5)
At 31 December 2015		9.2	(0.2)	8.0	7.3	578.6	602.9

Notes to the financial statements - Equity

4.1   SHARE CAPITAL

		2015 £m		2014 £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 2015, 8.1m ordinary shares (2014: 10.4m), with a par value of £0.2m (2014: £0.2m), were held as own shares within the Group's EBT for the purpose of satisfying share option obligations to employees.

(ii) Other reserve

The other reserve of £8.0m (2014: £8.0m) relates to the conversion of Tier 2 preference shares in 2010.

 (iii) Foreign currency translation reserve

The foreign currency translation reserve of £7.3m (2014: £7.2m) is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

(iv) Retained earnings               

Retained earnings of £578.6m (2014: £562.0m) are the amount of earnings that are retained within the Group after dividend payments and other transactions with owners.

4.3   DIVIDENDS

		2015 £m		2014 £m
	Final dividend (9.5p per ordinary share) (2013: 9.1p per share)	42.5		40.2
	Interim dividend (4.0p per ordinary share) (2014: 3.7p per share)	18.1		16.5
	Special dividend (11.5p per ordinary share) (2013: none)	51.5		-
		112.1		56.7

The EBT has waived its right to receive future dividends on shares held in the trust. Dividends waived on shares held in the EBT in 2015 were £2.4m (2014: £1.8m).

A full year dividend for 2015 of 10.6p per share (2014: final dividend of 9.5p) and a special dividend of 10.9p per share (2014: 11.5p) have been declared by the Directors. These dividends amount to £48.5m and £49.9m respectively (before adjusting for any dividends waived on shares in the EBT) and will be accounted for in 2016. Including the interim dividend for 2015 of 4.0p per share (2014: 3.7p), this gives a total dividend per share of 25.5p (2014: 24.7p).

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 2015 or 2014, but is derived from those accounts. The Auditors have reported on the 2015 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 2014 have been delivered to the Registrar of Companies and those for 2015 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 related IFRS IC Interpretations ("IFRS as adopted by the EU") and with the provisions of the Companies Act 2006 applicable to companies reporting under IFRS.

5.2   RELATED PARTIES

The Group manages a number of investment trusts, unit trusts and overseas funds and receives management and, in some instances, performance fees for providing this service. The precise fee arrangements are disclosed within the financial statements of each investment management subsidiary of the Group or within other publicly available information. By virtue of the investment management agreements in place between the Group and the collective investment vehicles it manages, such funds may be considered to be related parties. Investment management and performance fees are disclosed in Note 1.1.

The Group acts as manager for 37 (2014: 37) 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 £2,481m (2014: £3,192m) for unit trust creations and £2,984m (2014: £3,320m) 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 £6.5m (2014: £2.8m). The amount received in respect of gross management and registration charges was £338.9m (2014: £343.0m). At the end of the year, there was £11.2m (2014: £7.9m) accrued for annual management fees and £2.1m (2014: £1.3m) in respect of registration fees.

Included within the financial instruments note are seed capital investments and hedges of fund awards in mutual funds managed by the Group. At 31 December 2015, the Group had a total net investment in such funds of £53.6m (2014: £47.9m) and received distributions of £0.2m (2014: £0.3m). During 2015, it invested £27.4m (2014: £7.5m) in these funds and received £21.0m (2014: £14.2m) from disposals.

Key management compensation

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

	2015 £m		2014 £m
Short-term employee benefits	6.8		5.2
Share-based payments	3.2		3.0
Post-employment benefits	0.2		0.1
Other long-term benefits	0.1		0.1
	10.3		8.4

Section 6: Statement of Directors' responsibilities

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), and related IFRS IC interpretations and with the provisions of the Companies Act 2006 (the Act) applicable to companies reporting under IFRS.

The Directors undertook a detailed review of the financial statements in January and February 2016. Following this examination, the Board was satisfied that the Financial Statements for 2015 give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. Before approving the financial statements, the Board satisfied itself that in preparing the statements:

·      suitable accounting policies had been selected and consistently applied;

·      the judgements and accounting estimates that have been made were reasonable, necessary and prudent; and

·      where applicable IFRSs as adopted by the EU have been adopted, they have been followed and that there were no material departures.

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 position and performance, business model and strategy.

The financial statements have been prepared on the going concern basis, the Directors having determined that the Company is likely to continue in business for at least 12 months from the date of this announcement.

During 2015, the Board implemented an Enterprise Risk Management (ERM) Framework encompassing all areas of risk to which the Group or its funds may be exposed, including those noted as having potential impact on Jupiter's business model, future performance, solvency or liquidity. With support from the Audit and Risk Committee, the Directors have completed a robust review and assessment of the principal risks in the business making use of this framework, which has ensured that the relevant risks are identified and managed and that information is shared at an appropriate level. The Board subjected the ERM Framework to a detailed review in December. The Directors found it was an effective mechanism through which the principal risks and the Company's risk appetite and tolerances could be tested and challenged.

The Directors have examined the accounting records kept in the business and have determined that they 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 Act and, as regards the Group financial statements, Article 4 of the IAS Regulation.

The Directors have examined the steps in place for ensuring the prevention and detection of fraud and other irregularities. The procedure is examined and tested on a regular basis. The Board is satisfied it is understood and is operated well, and accordingly that the assets of the Company are safeguarded and protected from fraud and other irregularities.

The Directors 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.

Each of the Directors 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 Act, 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 the Act 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

26 February 2016

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 both outflows (and the related decline in revenues) and a failure to attract new business in line with our strategy.

Mitigation/Controls

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

Our Investment Risk team works closely with portfolio managers to challenge fund risk profiles and to further develop our capabilities in this area. This challenge process is formally reported to and overseen by our Portfolio Review Committee, which meets quarterly.

2015 Impact

As described in the Strategic Performance section, 68 per cent. of our mutual fund AUM achieved 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 key to 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, failure to deliver our strategy effectively or failure to run our business efficiently, 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. Our corporate values encourage employees to take personal responsibility for their work and to strive to enhance our business. We also endeavour to provide an attractive working environment, which has been significantly enhanced with our move to new business premises in 2015.

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, to ensure we maintain the necessary strength in depth. We believe this environment increases our ability to attract and retain talent.

2015 Impact

Our 2015 employee survey showed an engagement level well ahead of the financial services industry benchmark. We also undertook a number of initiatives throughout the year, to ensure a healthy level of staff retention. These included launching a Mentoring and Learning Curriculum, introducing a Corporate Fitness programme to help staff work in a better, faster and more agile way, and establishing an employee representative group, to ensure strong communication between our leadership team and employees.

EFFECTIVE DISTRIBUTION

Regulatory non-compliance

Risk

A significant regulatory investigation or action against the Group could affect our reputation, our clients' trust in us and our ability to do business in our target markets.

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 require all relevant employees 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 escalate any regulatory issues to senior management in an open and timely way, ensuring the maximum appropriate regulatory protection for clients.

2015 Impact

2015 saw continued enhancements to our control framework, to support our management of conduct risk. We spent considerable time assessing the impact of changes to processes and controls from the pending introduction of the MiFID II, UCITS V and Solvency II Directives. We also took steps to reduce our regulatory risk by ceasing, where possible, to hold client money following the 2014 sale of our private client contracts.

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.

2015 Impact

Our strong position in the UK provides a stable and profitable base from which we can grow internationally. In recent years, we have increasingly complemented our UK business with overseas growth, as we exploit existing relationships with large fund distributors in new countries and create products that appeal to clients in multiple countries.

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.

2015 Impact

In 2015, we worked to enhance management oversight by developing our suite of key risk indicators and reports, which inform the status of our key risks and controls. During 2015, 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.

2015 Impact

Our outsourced fund administrator experienced a significant systems failure on one day in March 2015. Jupiter anticipated the consequences of the failure, and in most cases took action that reduced the impact to clients. We continue to maintain oversight of our key third parties through our established Supplier Management framework, engaging with them to ensure a high degree of resilience.

Counterparty failure

Risk

The failure of a trading or depositary counterparty with which we have a relationship could have an adverse effect 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

The security of our clients' assets is our primary consideration when we evaluate potential counterparties. We aim to diversify our exposures across different institutions and actively monitor their creditworthiness using key risk indicators, including market data and credit agency ratings.

We place deposits according to agreed limits, which we amend when necessary. We obtain diversification by using money market funds, which provide a high degree of liquidity as well as transparency of the credit quality of the underlying holdings in the funds.

2015 Impact

Our Counterparty Review Group oversees the robustness of all counterparties to which we or our funds may be exposed. We receive, and where appropriate respond to, detailed updates regarding the stability of relevant institutions from the Group's credit analysts.

 

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