Interim Report and Accounts 2021

RNS Number : 9894G

Jupiter Fund Management PLC

30 July 2021

 

Highlights

30 July 2021

n Consistent strong investment performance with 69% of mutual fund assets under management (AUM) above median over three years

n AUM ended the period at a record high of £60.3bn

n Strong gross flows of £9.6bn, net outflows of £2.3bn

n Underlying profit before tax increased 38% to £78.2m (2020 H1: £56.6m). Statutory profits rose 40% to £57.0m (2020 H1: £40.8m)

n Underlying earnings per share grew 15% to 11.5p

n Interim dividend unchanged at 7.9p per share

	Six months ended   30 June 2021	Six months ended   30 June 20202	Year ended 31 December 2020
Assets under management (£bn)	60.3	39.2	58.7
Net outflows (£bn)	(2.3)	(2.0)	(4.0)
Net management fees1 (£m)	224.1	161.4	384.0
Statutory profit before tax (£m)	57.0	40.8	132.6
Basic earnings per share (p)	8.7	6.5	21.3
Underlying profit before tax1 (£m)	78.2	56.6	179.0
Underlying earnings per share1 (p)	11.5	10.0	28.7
Interim dividend per share (p)	7.9	7.9	7.9
Operating margin (before exceptional items)1	36%	36%	41%

¹ The Group's use of alternative performance measures is explained on pages 10 and 11.

² The acquisition of Merian Global Investors Limited (Merian) completed on 1 July 2020.

Andrew Formica, Chief Executive, commented:

"I am pleased to report a resilient set of results and strong investment performance for our clients, which is central to everything we do.

We have reported record gross inflows for the period, with a number of strategically important products performing very well, which highlights our positive momentum going into the second half of the year. That said, it is disappointing to see net outflows for the half year, which were concentrated in a small number of strategies and have been driven primarily by a shift in asset allocations. The medium to long term investment performance of these funds remains strong. 

With Merian now fully integrated, cost synergies have been achieved and significantly exceeded our original expectations. We also have a number of key funds reaching their three-year track record which, along with our successful focus on cost management, mean we continue to be well positioned to return to growth." 

Analyst presentation

There will be an analyst presentation at 10:15am on 30 July 2021.

The audio presentation will be held virtually. The presentation may be joined by either telephone https://secure.emincote.com/client/jupiter/jfm025/vip_connect or by webcast at https://secure.emincote.com/client/jupiter/jfm025.

Please note that questions will be taken from the phone lines only and that registration is required to receive unique joining details. 

The interim report and accounts will be available on the Group's website at: https://www.jupiteram.com/investor-relations/.

For further information please contact:
	Investors	Media
Jupiter	Alex James [phone]	Despina Constantinides [phone]
Powerscourt	Justin Griffiths [phone]	Gilly Lock [phone]

LEI Number: 5493003DJ1G01IMQ7S28

Forward-looking statements

This announcement contains forward-looking statements with respect to the financial condition, results of operations and businesses of the Group. Such statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by forward-looking statements and forecasts. Forward-looking statements and forecasts are based on the Directors' current view and information known to them at the date of this announcement. The Directors do not make any undertaking to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Nothing in this announcement should be construed as a profit forecast.

 

Chief Executive's statement

Following a year of significant upheaval and volatility in 2020, the first half of 2021 has been relatively stable. As much of the world has seen encouraging progress against the Covid-19 pandemic, global markets performed strongly as sentiment has continued to improve.

As local restrictions have eased, we have begun to welcome our colleagues as they return to our global offices.

Despite this improving picture, the well-publicised headwinds facing the asset management industry remain. We generated strong gross flows in the period of almost £10bn but saw total net outflows of £2.3bn.

With Merian now fully integrated into the wider business, we have delivered resilient financial performance compared to the second half of 2020. With the acquisition of the Merian business completing on 1 July 2020, this has driven strong growth in our financial performance and AUM compared with H1 2020. Underlying profit before tax¹ was up 38% to £78.2m (2020 H1: £56.6m) and underlying earnings per share rose 15% to 11.5p (2020 H1: 10.0p). In accordance with our dividend policy, we will pay an unchanged interim dividend of 7.9p per share on 1 September 2021. Statutory profit before tax increased by 40% to £57.0m (2020 H1: £40.8m).

As a high conviction active asset manager, delivering positive investment performance for our clients is key to our ongoing success. We will retain our focus on specialist strategies where we believe we can really add value for our clients and differentiate ourselves from our peers. We maintained strong performance in the first half of the year, with 69% of our mutual fund assets outperforming their peer group over three years, net of all fees (31 December 2020: 70%). Over a five-year period, 72% of our assets outperformed (31 December 2020: 69%).

Assets under management

AUM rose to a record £60.3bn, a 54% increase from 30 June 2020 (2020 H1: £39.2bn) and 3% from 31 December 2020 (£58.7bn).

Gross flows remained strong and grew to a record £9.6bn. Despite this, we saw total net outflows in the first half of 2021 of £2.3bn (2020 H1: net outflows of £2.0bn). This comprised net outflows from mutual funds of £1.7bn and from segregated mandates of £0.6bn.

Outflows were concentrated in a few areas, often where performance has been robust but the asset class has not been in client demand. European Growth and UK equities remained out of favour and both saw further redemptions. Systematic strategies, excluding the Global Equity Absolute Return fund (GEAR) also saw outflows, along with the Merlin range.

At the full year, we highlighted a number of funds which, through strong performance in areas of good client demand, had the potential to drive future growth. I am pleased to report that in the first half, these funds' performance remained strong and most generated positive net inflows.

Our partnership with NZS continues to perform strongly. AUM has increased to £800m, driven by net inflows of over £300m. As short term performance has improved, GEAR has also returned to positive inflows, with over £200m in the first half. The fund is now much closer to its high water mark compared with the year end.

In addition, other areas of growth saw good momentum. Global Sustainable Equities and Strategic Absolute Return Bond have generated positive inflows and have seen their AUM double in the last six months. Gold & Silver has also had a strong first half, generating almost £200m in net inflows and reaching over £800m in AUM.

The Chrysalis Investment Trust continued to perform strongly and saw a successful capital raise in the first quarter that generated net inflows of £257m. AUM has increased to £1.4bn.

We remain confident that our strategy and focus is right and in time will deliver a return to net inflows.

Ongoing commitment to sustainability

As a high conviction active asset manager and stewards of our clients' capital, we have a responsibility to both actively engage with our investee companies and to ensure that we hold ourselves to the same high standards.

We have made strategic progress in both of these areas in the first half of the year. We have made key hires in both our Stewardship and Sustainable Investing team, and have restructured the latter under new leadership.

We remain committed towards a Net Zero emissions target and are working towards including ESG considerations in all of our supplier selection processes.

We continue to see significant client interest in our range of Sustainable strategies. We generated around £100m of net inflows in the first half of 2021 and total AUM in Sustainable strategies has now grown to over £1bn.

Financial results

We have delivered resilient results in the first half of the year, benefiting from the acquisition and full integration of the Merian business. Statutory profit before tax increased by 40% to £57.0m (2020 H1: £40.8m) and underlying profit before tax rose 38% to £78.2m (2020 H1: £56.6m) as we benefited from fully integrating the Merian business last year.

Net revenue¹ also increased by 38% to £224.0m (2020 H1: £161.9m). Revenue was down 22% from H2 2020 as no performance fees crystallised in the first half of the year (2020 H1: £nil, 2020 H2: £63.6m), although Chrysalis have reported just under £50m of potential performance fees based on their NAV at 31 March. The net management fee margin¹ at 30 June 2021 was 77 basis points, an increase on the 76 basis points run rate at the beginning of the year.

Total underlying expenses increased by 41% to £139.0m (2020 H1: £98.6m), mainly as a result of a larger business following the acquisition and through strategic investments for future growth. Exceptional items of £21.2m (2020 H1: £15.8m) primarily comprise the amortisation of intangible assets and restructuring costs.

Our operating margin remains unchanged from the first half of last year at 36%.

Robust and growing capital base

The Board remains focused on maintaining the Group's capital strength, including a robust surplus over regulatory capital requirements, while balancing making investments for long-term growth with distribution to Jupiter shareholders.

We have continued to grow the Group's expected surplus over regulatory requirements, which at 30 June 2021 was £134m (2020 H1: £90m) and is sufficient to absorb the estimated £44m reduction in our capital surplus resulting from the implementation of the prudential regulatory regime (IFPR), which is expected to come into effect from 1 January 2022.

In accordance with our policy of a progressive dividend in line with the trend in profitability, the Board has proposed an unchanged interim ordinary dividend of 7.9p per share payable on 1 September 2021 to shareholders on the register on 13 August 2021.

Positioned to return to growth

Despite the headwinds facing the business, we have delivered a robust set of results. Investment performance remains strong and we continue to deliver increasing levels of gross flows. Although we saw net outflows in the first half, we have a number of key products with strong investment performance and we are hopeful given performance and compelling market valuations that sentiment will change.

With Merian now fully integrated, cost synergies have been achieved and significantly exceeded our original expectations. We also have a number of key funds reaching their three-year track record which, along with our successful focus on cost management, mean we continue to be well positioned to return to growth.

Andrew Formica

Chief Executive Officer
 

29 July 2021

¹The Group's use of alternative performance measures is explained on pages 10 and 11.

Business review

Assets under management and flows

	31 December 2020 £bn	Q1 net flows £bn	Q2 net flows £bn	H1 net flows £bn	Market returns £bn	30 June 2021 £bn
Mutual funds	49.9	(0.9)	(0.8)	(1.7)	2.6	50.8
Segregated mandates	7.9	(0.1)	(0.5)	(0.6)	1.0	8.3
Investment trusts	0.9	0.2	(0.2)	-	0.3	1.2
Total	58.7	(0.8)	(1.5)	(2.3)	3.9	60.3

AUM increased by 3% to £60.3bn as at 30 June 2021 (31 December 2020: £58.7bn) as a result of positive market-related movements of £3.9bn in H1, partially offset by net outflows of £2.3bn.

Net mutual fund outflows were £1.7bn during the period. This was driven by outflows in Equities (£1.9bn) and Multi-asset strategies (£0.4bn), partially offset by net inflows in Alternatives (£0.5bn) and Fixed Income (£0.1bn).

Along with the increase in AUM through Merian, average AUM increased in H1 2021 due to strong market performance which was partially offset by net outflows, principally in our mutual funds, where client demand for UK and European-focused equity strategies remained subdued. However, the Group gained traction in Alternatives, with net inflows of more than £0.7bn across all product lines, as investors looked to diversify their portfolios. The Chrysalis fund in particular benefited from client demand for exposure to high-growth technological stocks, completing a funding round in March 2021 and raising gross proceeds of £0.3bn.

Investment performance

At 30 June 2021, 69% of our mutual fund AUM had delivered above-median performance against peer group funds over three years (31 December 2020: 70% of mutual fund AUM), of which 23% of mutual fund AUM had delivered first quartile performance (31 December 2020: 42% of mutual fund AUM). Measured over one year, 38% of mutual fund AUM (31 December 2020: 63% of mutual fund AUM) delivered above-median performance. Measured over five years, 72% of mutual fund AUM (31 December 2020: 69% of mutual fund AUM) had delivered above-median performance.

 

Financial review

Results for the period

Net revenue

	Six months ended   30 June 2021 £m		Six months ended   30 June 2020 £m		Year ended 31 December 2020 £m
Net management fees	224.1		161.4		384.0
Net initial charges	(0.1)		0.5		0.2
Performance fees	-		-		73.6
Net revenue1	224.0		161.9		457.8
Reclassified revenue	-		-		(10.0)
Adjusted net revenue1	224.0		161.9		447.8
Revenue	247.7		182.0		500.5

¹The Group's use of alternative performance measures is explained on pages 10 and 11.

Revenue for the period was £247.7m (2020 H1: £182.0m), with net revenue of £224.0m (2020 H1: £161.9m), up 38% on H1 2020 principally as a result of higher average AUM following the completion of the acquisition of the Merian business on 1 July 2020 and fund performance as financial markets recovered from the lows of the first quarter of 2020, partially offset by net outflows across the period.

Against the second half of 2020, net revenues, excluding performance fees, were up marginally, as the revenue impact of positive market movements more than offset the impact of net outflows from clients.

As contractual rights to performance fees normally crystallise in September or December, dependent on the mandate, no performance fees were earned in the period (2020 H1: £nil).

	Six months ended   30 June 2021		Six months ended   30 June 2020		Year ended 31 December 2020
Net management fees (£m)	224.1		161.4		384.0
Average AUM (£bn)	59.0		39.4		47.8
Net management fee margin (bps)	77		82		79

Net management fees were up 39% to £224.1m (2020 H1: £161.4m), benefiting from the additional average AUM but partially offset by lower revenue margins compared with H1 2020, driven by the change in business mix principally due to the Merian business acquired, which has a lower average net management fee margin.

 

Administrative expenses

	Six months ended   30 June 2021 £m		Six months ended   30 June 2020 £m		Year ended 31 December 2020 £m
Fixed staff costs	35.4		31.3		76.1
Variable staff costs	41.7		24.3		85.8
Other expenses before exceptional items	61.9		43.0		103.2
Administrative expenses before exceptional items	139.0		98.6		265.1
Exceptional items	11.8		15.8		47.0
Administrative expenses after exceptional items	150.8		114.4		312.1
Variable compensation ratio1	33%		28%		31%
Total compensation ratio1	34%		34%		35%
Operating margin1	36%		36%		41%

¹Stated before exceptional items (see APMs on page 10).

Administrative expenses (before exceptional items) of £139.0m (2020 H1: £98.6m) were 41% higher than in H1 2020, principally driven by costs related to the Merian business and certain other cost increases relating to the Group. Compared with H2 2020, which reflects the first six month period following acquisition, total staff costs were considerably lower, mainly due to performance fee related variable compensation in H2 2020 and net cost savings in 2021. Other expenses before exceptional items were broadly unchanged but savings arising from the completion of the integration of the Merian business in 2020 were offset by certain other cost increases.

Fixed staff costs increased by 13%, due to the increase in the average headcount for the Group from 533 in H1 2020 to 590 for the current period. Against the second half of 2020, fixed staff costs decreased by £9.4m, or 21%, of which £2.9m was through integrating Merian and a further £6.5m to restructuring programmes and support that was provided to staff last year, including remote working allowances for all our people.

At the half year, variable staff costs before exceptional items were £41.7m (2020 H1: £24.3m). The key drivers of the increase were higher post-acquisition headcount and revenues, net of operating expenses (before exceptional items). The increase also included variable staff costs on deferred bonus awards relating to performance fees recorded in H2 2020. These performance fee related costs also increased the variable compensation ratio, which was 33% (2020 H1: 28%), and also held the total compensation ratio at 34% (2020 H1: 34%), which would otherwise have been lower. Although there is the possibility of performance fees in H2 2021, these are not able to be recorded at the half year and therefore no related compensation costs on those potential fees are included in these results.

Other expenses increased by 44% to £61.9m (2020 H1: £43.0m), or 3% compared to the second half of 2020, largely driven by administrative costs increasing in line with the growth in average AUM, as well as investments made in growth areas, such as data and research. The Group also incurred £2.9m of costs in H1 2021, principally relating to FX and the settlement of historical indirect tax issues. The Group's operating margin (before exceptional items), including investment losses on the seed capital portfolio, remained at 36% (2020 H1: 36%).

The Group recognised £11.8m of exceptional administrative expenses (2020 H1: £15.8m) which related to redundancy and other compensation costs incurred as part of the restructuring programme that started in the final quarter of 2020 and continued into H1 2021 as well as long-term compensation costs relating to the acquisition. Exceptional items in 2020 additionally included costs incurred in the acquisition and integration of the Merian business. A further £9.4m (2020 H1: £nil) of exceptional costs, bringing the total to £21.2m (2020 H1: £15.8m), were in respect of acquired intangible assets, which were part of the purchase consideration of the Merian business and which represent the value attributable to the client book excluding gross inflows. This intangible asset of £75.0m on acquisition is being amortised over four years.

Statutory profit before tax (PBT) and underlying PBT

Statutory PBT for the period increased by 40% to £57.0m (2020 H1: £40.8m). Underlying PBT, excluding exceptional items, increased by 38% to £78.2m (2020 H1: £56.6m) and exceptional items increased by 34% to £21.2m (2020 H1: £15.8m).

Tax

The effective tax rate was 16.8% (2020 H1: 28.7%, 2020 FY: 20.6%) against a headline corporation tax rate of 19.0% (2020 H1 and 2020 FY: 19.0%). The majority of the decrease in this rate was due to the future increase in the UK Corporation Tax rate to 25.0% from April 2023 being substantively enacted at the balance sheet date. This has resulted in a lower effective tax rate as the Group currently has a net deferred tax asset position and will be able to attract future tax relief at a higher rate than previously accounted for.

Earnings per share (EPS) and underlying EPS

EPS was up 34% on 2020 H1 at 8.7p (2020 H1: 6.5p). Underlying EPS was up 15% at 11.5p (2020 H1: 10.0p). The increase in statutory and underlying PBT was partially offset by the increase in weighted average issued share capital issued in connection with the acquisition on Merian. EPS also benefited from the reduction in the effective tax rate as referred to above.

	Six months ended   30 June 2021 £m		Six months ended   30 June 2020 £m		Year ended 31 December 2020 £m
Statutory profit before tax	57.0		40.8		132.6
Exceptional items	21.2		15.8		46.4
Underlying profit before tax	78.2		56.6		179.0
Tax at average statutory rate of 19%	(14.8)		(10.8)		(34.0)
Underlying profit after tax1	63.4		45.8		145.0
Weighted average issued share capital	553.1m		457.7m		505.4m
Underlying EPS	11.5p		10.0p		28.7p
Basic EPS	8.7p		6.5p		21.3p

¹The Group's use of alternative performance measures is explained on pages 10 and 11. 

Cash Flow

The Group generated positive operating cash flows after tax in H1 2021 of £102.2m (2020 H1: £43.9m) as the cash generated from profits in the period were offset by £66.9m spent on final ordinary and special dividend payments to shareholders in respect of the previous year's profit, variable compensation and related tax costs. The net decrease in cash in the period was £39.6m and, as at 30 June 2021, the Group held cash of £148.5m (31 December 2020: £188.1m).

Assets and liabilities

Balance sheet

At 30 June 2021, the Group's net assets decreased to £867.7m from £886.1m at 31 December 2020, principally due to dividend payments more than offsetting profits after tax. The revolving credit facility of £80m was not drawn in the period. 

Seed investments

We continue to use our strong capital position to deploy seed into funds to ensure an effective launch and/or to accelerate the timescale over which the funds can pass through critical size thresholds. Once these have been reached, the Group will usually seek to reinvest its capital in other new or maturing funds. As at 30 June 2021, we had a total investment at fair value of £159.4m in our own funds (31 December 2020: £138.3m).

Capital management

The Group maintains a robust surplus over its regulatory requirements. It assesses its capital position and requirements on a regular basis. The Group's indicative capital surplus at 30 June 2021 was £134.0m (31 December 2020 actual capital surplus: £111.0m). We expect the implementation of the new regulatory regime (the Investment Firms Prudential Regime (IFPR)) on 1 January 2022 to reduce the Group's admissible capital, but that the Group will continue to operate with a significant surplus capital at this date. It is estimated that, if IFPR had been implemented at 30 June 2021, the Group's indicative capital surplus would have been around £44.0m lower at £90.0m, which is the same as the capital surplus at 30 June 2020.

Dividends

Jupiter has a progressive ordinary dividend policy, with our intention for the ordinary dividend pay-out ratio to be 50% of underlying EPS across the cycle. In the event that the current year profits are lower than in previous years, the Group has maintained the ordinary dividend at the previous high water mark pence per share level, subject to the Group's financial strength and future outlook. The Board normally makes additional returns of capital to shareholders after retaining sufficient earnings for capital and growth and investments. These additional returns have previously been made through a special dividend.

The Group's dividend policy is unchanged in 2021. At the half year, the Board has considered the resilience of the balance sheet and the outlook for the remainder of the year. Consistent with the Group's dividend policy the Board has maintained the interim dividend at 7.9p (2020 H1: 7.9p). The Board has previously reported its intention to continue to make additional returns of capital but on a less frequent basis than in the past. The Board's intention continues to be that the next additional return will be made no earlier than for the year ending 31 December 2022.

 

The use of alternative performance measures (APMs)

The Group uses APMs alongside statutory reporting measures as part of its financial reporting. The following measures are used, principally within the Chief Executive's statement and the Financial review, where they are cross-referenced to this page in the first instance that they appear:

APM	Definition	Reconciliation	Reason for use
Adjusted net revenue	Net revenue after the deduction of net revenue classified as exceptional items	Page 6	A
Exceptional items	Items of income or expenditure that are significant in size and which are not expected to repeat over the short to medium term	Pages 7 and 8	B
Fixed staff costs before exceptional items	Staff costs (excluding variable items such as bonus awards, LTIP, SAYE and SIP) before redundancy costs	Page 7	B
Net management fee margin	Net management fees divided by average AUM	Page 6	A
Net management fees	Management fees less fee expenses	Page 6	A
Net revenue	Revenue less fee and commission expenses	Page 6	A
Operating expenses (before exceptional items)	Administrative expenses (before exceptional items) less Variable staff costs before exceptional items	Page 7	B
Operating margin (before exceptional items)	Operating profit (before exceptional items) divided by Adjusted net revenue	Page 7	B, C
Operating profit (before exceptional items)	Underlying profit before tax before Finance costs	Pages 8 and 12	B
Ordinary dividends per share	Interim and full-year dividends (does not include any special dividends)	N/A	B
Total compensation ratio	Fixed staff costs before exceptional items plus Variable staff costs before exceptional items as a proportion of Net revenue	Page 7	C
Underlying EPS	Underlying profit after tax divided by issued share capital	Page 8	B, D
Underlying profit after tax	Underlying profit before tax less tax at the weighted average UK corporation tax rate	Page 8	B
Underlying profit before tax	Profit before tax less Exceptional items	Page 8	B
Variable compensation ratio	Variable staff costs before exceptional items as a proportion of Net revenue less Operating expenses before exceptional items	Page 7	B, C
Variable staff costs before exceptional items	Variable staff costs, excluding Exceptional items	Page 7	B

Changes in the use of APMs

1.   In 2020, exceptional items included an item of revenue. As a result, in order to show revenue both before and after this item, a new APM for Adjusted net revenue was introduced. Two financial ratios use this measure (Total and Variable compensation ratios), and we amended their definitions accordingly. This is not a change from the Group's 2020 year-end use of APMs, but is a change from the Group's presentation of its 2020 half-year results.

Our reasons for using APMs

A. To draw out meaningful subtotals of revenues and earnings, together with ratios derived from such measures, commonly used by asset managers after taking into account items such as fee expenses, including commissions payable, without which a proportion of the revenues would not have been earned, and administrative expenses which often have a direct link to revenues through the use of compensation ratios to set remuneration.

B. To present users of the accounts with a clear view of what the Group considers to be the results of/distributions from its underlying operations, enabling consistent period-on-period comparisons and making it easier for users of the accounts to identify trends.

C. To provide additional information not required for disclosure under accounting standards. The information is given to assist users of the accounts in gauging the level of operational gearing and efficiency in the Group.

D.  Used by the Board to determine the Group's ordinary dividend and as a consistent measure of profitability. Also used in the measurement of one of the criteria for share-based awards to senior staff with performance conditions.

All APMs relate to past performance.

Section 1: Results for the period

Consolidated income statement for the six months ended 30 June 2021

	Notes	Six months ended   30 June 2021 £m		Six months ended   30 June 2020 £m		Year ended 31 December 2020 £m
Revenue	1.1	247.7		182.0		500.5
Fee and commission expenses	1.1	(23.7)		(20.1)		(42.7)
Net revenue	1.1	224.0		161.9		457.8
Administrative expenses	1.3	(150.8)		(114.4)		(312.1)
Other (losses)/gains	1.4	(2.6)		(4.0)		3.3
Amortisation of intangible assets	3.2	(10.3)		(1.0)		(11.3)
Operating profit		60.3		42.5		137.7
Finance costs	1.5	(3.3)		(1.7)		(5.1)
Profit before taxation		57.0		40.8		132.6
Income tax expense	1.6	(9.6)		(11.7)		(27.3)
Profit for the period1		47.4		29.1		105.3
Earnings per share
Basic	1.7	8.7p		6.5p		21.3p
Diluted	1.7	8.5p		6.4p		20.8p

Consolidated statement of comprehensive income for the six months ended 30 June 2021

	Notes	Six months ended   30 June 2021 £m		Six months ended   30 June 2020 £m		Year ended 31 December 2020 £m
Profit for the period		47.4		29.1		105.3
Items that may be reclassified subsequently to profit or loss
Exchange movement on translation of subsidiary undertakings	4.2	(1.3)		1.7		0.7
Other comprehensive (loss)/income for the period net of tax		(1.3)		1.7		0.7
Total comprehensive income for the period net of tax		46.1		30.8		106.0

¹ Non-controlling interests are presented in the Consolidated statement of changes in equity.
 

Notes to the Group financial statements - Income statement

Introduction

Jupiter Fund Management plc (the Company) and its subsidiaries (together, the Group) offer a range of asset management products. Through its subsidiaries, the Group acts as an investment manager to authorised unit trusts, SICAVs, ICAVs, ICVCs, OEICs, investment trust companies, segregated mandates, pension funds and other specialist funds. At 30 June 2021, the Group had offices in the United Kingdom, Ireland, Austria, Germany, Hong Kong, Italy, Luxembourg, Singapore, Spain, Sweden, Switzerland and the United States of America.

The Group's interim financial statements have been split into sections to assist with their navigation and align with the Financial review. The basis of preparation, accounting policies and principal risks and mitigations are within Section 5 and Section 7.

The impact of exceptional items on the financial statements

The Group has presented certain items as exceptional in 2020 and in the first half of 2021. In 2021, these items principally relate to charges arising from the Merian acquisition of 1 July 2020 which are required to be recorded across multiple accounting periods, together with redundancy and other compensation costs incurred as part of the restructuring programme the Group embarked on in a post-integration review of its structures, systems and processes. In 2020, exceptional items principally related to the Merian acquisition. Further details of all items that are deemed exceptional are explained below, as well as within the relevant notes to the accounts and in the Financial review.

The use of exceptional items and underlying profit measures

In the Financial review of this document, the Group makes use of a number of APMs, including 'Underlying profit before tax'. The use of such measures means that financial results referred to in that section of this document may not be equal to the statutory results reported in the financial statements. Guidelines issued by the European Securities and Markets Authority require such differences to be reconciled.

'Underlying profit before tax', which is defined on page 10, is equal to the statutory profit before tax less exceptional items. Exceptional items are also defined on page 10. The financial statements do not refer to or use such measures, but the table below provides a reconciliation, indicating in which notes the exceptional items are recorded.

	Notes	Six months ended   30 June 2021 £m		Six months ended   30 June 2020 £m		Year ended 31 December 2020 £m
Underlying profit before tax (page 8)		78.2		56.6		179.0
Net revenue	1.1	-		-		10.0
Administrative expenses	1.3	(11.8)		(15.8)		(47.0)
Amortisation of intangible assets	3.2	(9.4)		-		(9.4)
Statutory profit before tax		57.0		40.8		132.6

1.1  Revenue

The Group's primary source of revenue is management fees. Management fees are charged for investment management or administrative services and are normally based on an agreed percentage of the assets under management (AUM). Initial charges and commissions are for additional administrative services at the beginning of a client relationship, as well as ongoing administrative costs. Performance fees may be earned from some funds when agreed performance conditions are met. Net revenue is stated after fee and commission expenses to intermediaries for ongoing services under distribution agreements.

 

	Six months ended   30 June 2021 £m		Six months ended   30 June 2020 £m		Year ended 31 December 2020 £m
Management fees	247.6		181.4		426.6
Initial charges and commissions	0.1		0.6		0.3
Performance fees	-		-		73.6
Revenue	247.7		182.0		500.5
Fee and commission expenses relating to management fees	(23.5)		(20.0)		(42.6)
Fees and commission expenses relating to initial charges and commissions	(0.2)		(0.1)		(0.1)
Net revenue	224.0		161.9		457.8

Disaggregation of revenue

The Group disaggregates revenue from contracts with customers on the basis of product type as this best depicts how the nature, amount, timing and uncertainty of the Group's revenue and cash flows are affected by economic factors.

The Group's product types can be broadly categorised into pooled funds and segregated mandates. Segregated mandates are generally established in accordance with the requirements of a specific investor. In contrast, pooled funds, which include both mutual funds and investment trusts, are established by the Group, with the risks, exposures and investment approach defined via a prospectus which is provided to potential investors.

	Six months ended   30 June 2021 £m		Six months ended   30 June 2020 £m		Year ended 31 December 2020 £m
Revenue by product type
Pooled funds	235.1		174.1		462.2
Segregated mandates	12.6		7.9		38.3
Revenue	247.7		182.0		500.5

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.

 

1.3  Administrative expenses

	Six months ended   30 June 2021 £m		Six months ended   30 June 2020 £m		Year ended 31 December 2020 £m
Staff costs	94.8		54.8		182.8
Depreciation of property, plant and equipment	2.8		3.0		6.0
Other administrative expenses	59.2		54.0		124.2
Administrative expenses before (gains)/losses arising from economic hedging of fund awards	156.8		111.8		313.0
Net (gains)/losses on instruments held to provide an economic hedge for fund awards	(6.0)		2.6		(0.9)
Total administrative expenses	150.8		114.4		312.1

1.4  Other (losses)/gains

Other (losses)/gains relate principally to (losses)/gains made on a hedging instrument purchased to mitigate the Group's exposure to pricing movements in its own shares in respect of share-based awards it has granted and on the Group's seed investment portfolio and derivative instruments held to provide economic hedges against that portfolio. The portfolio and derivatives are held at fair value through profit or loss (see Note 3.4). Gains and losses on these investments comprise both realised and unrealised amounts.

	Six months ended   30 June 2021 £m		Six months ended   30 June 2020 £m		Year ended 31 December 2020 £m
Dividend income	0.5		0.4		0.8
Gains on financial instruments designated at fair value through profit or loss upon initial recognition	4.9		1.2		14.3
Losses on financial instruments at fair value through profit and loss	(8.0)		(5.6)		(11.8)
Other (losses)/gains	(2.6)		(4.0)		3.3

1.5  Finance costs

Finance costs principally relate to interest payable on Tier 2 subordinated debt notes (see Note 3.6 for further details) and the unwinding of the discount applied to lease liabilities. Finance costs also include ancillary charges for commitment fees and arrangement fees associated with the revolving credit facility. Interest payable is charged on an accruals basis using the effective interest method.   

	Six months ended   30 June 2021 £m		Six months ended   30 June 2020 £m		Year ended 31 December 2020 £m
Interest on subordinated debt	2.2		0.7		3.1
Interest on lease liabilities	0.8		0.9		1.8
Finance costs on the revolving credit facility	0.1		0.1		0.2
Other finance costs	0.2		-		-
Total finance costs	3.3		1.7		5.1

1.6  Income tax expense

Analysis of charge in the period:

	Six months ended   30 June 2021 £m		Six months ended   30 June 2020 £m		Year ended 31 December 2020 £m
Current tax
Tax on profits for the period	12.9		8.3		27.7
Adjustments in respect of prior periods	0.5		-		(0.3)
	13.4		8.3		27.4
Deferred tax
Originating and reversal of temporary differences	(3.8)		3.4		(0.5)
Adjustments in respect of prior periods	-		-		0.4
	(3.8)		3.4		(0.1)
Total income tax expense	9.6		11.7		27.3

The weighted average UK corporation tax rate for the period ended 30 June 2021 was 19.0% (2020 H1 and 2020 FY: 19.0%). The estimated average annual tax rate used for the period to 30 June 2021 is 16.8%, compared to 28.7% for the six months ended 30 June 2020.

The majority of the decrease in this rate was due to the announcement on 3 March 2021 that the corporation tax rate will increase to 25.0% from 1 April 2023. This rate was substantively enacted at the balance sheet date and, as such, deferred tax assets and liabilities have been recognised at this rate where they are expected to unwind after this date. This has resulted in an overall increase in deferred tax assets on deferred compensation unwinding in future years. This is partially offset by an increase in the deferred tax liability on intangibles recognised on the acquisition of the Merian Group.

 

1.7  Earnings per share 

Basic EPS is calculated by dividing the profit for the period by the weighted average number of ordinary shares outstanding during the period, 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 period by the weighted average number of ordinary shares outstanding during the period for the purpose of basic EPS, plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

For the purposes of calculating EPS, the share capital of the parent is calculated as the weighted average number of ordinary shares in issue.

The weighted average number of ordinary shares used in the calculation of EPS is as follows:

Weighted average number of shares	Six months ended   30 June 2021 Number million		Six months ended   30 June 2020 Number million		Year ended 31 December 2020 Number million
Issued share capital	553.1		457.7		505.4
Less: own shares held	(7.8)		(12.5)		(10.5)
Weighted average number of ordinary shares for the purpose of basic EPS	545.3		445.2		494.9
Add back: weighted average number of dilutive potential shares	11.4		11.2		10.6
Weighted average number of ordinary shares for the purpose of diluted EPS	556.7		456.4		505.5

Earnings per share	Six months ended   30 June 2021 Pence		Six months ended   30 June 2020 Pence		Year ended 31 December 2020 Pence
Basic	8.7p		6.5		21.3
Diluted	8.5p		6.4		20.8

 

Section 2: Consolidated statement of cash flows

Consolidated statement of cash flows for the six months ended 30 June 2021

	Notes	Six months ended 30 June 2021 £m		Six months ended 30 June 2020 £m		Year ended 31 December 2020 £m
Cash flows from operating activities
Cash generated from operations	2.1	123.2		60.2		131.8
Income tax paid		(21.0)		(16.3)		(27.2)
Net cash inflows from operating activities		102.2		43.9		104.6
Cash flows from investing activities
Purchase of property, plant and equipment	3.3	(0.8)		(0.7)		(1.3)
Purchase of intangible assets	3.2	(0.7)		(0.7)		(1.3)
Purchase of financial assets at fair value through profit or loss (FVTPL)		(126.1)		(194.9)		(251.5)
Proceeds from disposal of financial assets at FVTPL		83.8		170.4		249.0
Cash movement from funds no longer consolidated		(3.9)		-		-
Net cash received from acquisitions		-		-		68.2
Dividend income received		0.5		0.4		0.8
Net cash (outflows)/inflows from investing activities		(47.2)		(25.5)		63.9
Cash flows from financing activities
Dividends paid	4.3	(66.9)		(40.8)		(83.9)
Purchase of shares by EBT		(13.2)		(6.3)		(10.7)
Proceeds from debt issued		-		49.0		49.0
Repayment of borrowings		-		-		(111.0)
Finance costs paid		(4.7)		(0.9)		(0.6)
Cash paid in respect of lease arrangements		(2.8)		(2.8)		(6.7)
Third-party subscriptions into consolidated funds		16.6		32.8		53.2
Third-party redemptions from consolidated funds		(22.4)		(13.5)		(47.5)
Distributions paid by consolidated funds		(1.2)		(1.8)		(1.6)
Net cash (outflows)/inflows from financing activities		(94.6)		15.7		(159.8)
Net (decrease)/increase in cash and cash equivalents		(39.6)		34.1		8.7
Cash and cash equivalents at beginning of period		188.1		179.4		179.4
Cash and cash equivalents at end of period	3.5	148.5		213.5		188.1

Notes to the Group financial statements - Consolidated statement of cash flows

2.1  Cash flows generated from operating activities

	Six months ended 30 June 2021 £m		Six months ended   30 June 2020 £m		Year ended 31 December 2020 £m
Operating profit	60.3		42.5		137.7
Adjustments for:
Amortisation of intangible assets	10.3		1.0		11.3
Depreciation of property, plant and equipment	2.8		3.0		6.0
Other (gains)/losses	(7.2)		3.3		(7.0)
Fund unit hedges	(6.0)		2.6		(0.9)
Share-based payments	15.2		10.0		19.8
Cash inflows from exercise of share options	0.1		0.3		0.2
Decrease/(increase) in trade and other receivables	52.1		(39.8)		(53.2)
(Decrease)/increase in trade and other payables	(4.4)		37.3		17.9
Cash generated from operations	123.2		60.2		131.8

2.2  Changes in liabilities arising from financing activities

	Six months ended 30 June 2021 £m		Six months ended   30 June 2020 £m		Year ended 31 December 2020 £m
Financial liabilities as a result of financing activities brought forward at 1 January	89.2		74.9		74.9
Changes from financing cash flows	(5.8)		19.3		5.7
Changes arising from obtaining or losing control of consolidated funds	(47.0)		-		-
Changes in fair values	5.0		0.6		8.6
Financial liabilities at FVTPL as a result of financing activities carried forward	41.4		94.8		89.2
Subordinated debt in issue	49.2		49.1		49.2
Liabilities arising from financing activities	90.6		143.9		138.4

 

Section 3: Assets and liabilities

Consolidated balance sheet at 30 June 2021

	Notes	30 June 2021 £m		30 June 2020 £m		31 December 2020 £m
Assets
Non-current assets
Goodwill	3.1	570.6		341.2		570.6
Intangible assets	3.2	61.2		5.5		70.8
Property, plant and equipment	3.3	45.6		49.6		47.4
Deferred tax assets		23.8		12.2		20.0
Trade and other receivables		0.4		0.5		0.5
		701.6		409.0		709.3
Current assets
Investments in associates	3.4	32.5		-		-
Financial assets at FVTPL	3.4	244.4		244.8		261.1
Trade and other receivables		135.3		150.5		187.3
Current income tax assets		-		1.3		-
Cash and cash equivalents	3.5	148.5		213.5		188.1
		560.7		610.1		636.5
Total assets		1,262.3		1,019.1		1,345.8
Total equity attributable to shareholders		867.7		604.4		886.1
Liabilities
Non-current liabilities
Loans and borrowings	3.6	49.2		49.1		49.2
Trade and other payables		88.7		72.6		87.4
Deferred tax liabilities		12.1		-		12.5
		150.0		121.7		149.1
Current liabilities
Financial liabilities at FVTPL	3.4	41.7		95.1		89.4
Trade and other payables		201.8		197.9		212.8
Current income tax liability		1.1		-		8.4
		244.6		293.0		310.6
Total liabilities		394.6		414.7		459.7
Total equity and liabilities		1,262.3		1,019.1		1,345.8

 

Notes to the Group financial statements - Assets and liabilities

3.1  Goodwill

Goodwill relates to the 2007 acquisition of Knightsbridge Asset Management Limited (£341.2m) and the 2020 acquisition of Merian Global Investors Limited (£229.4m).

	30 June 2021 £m		30 June 2020 £m		31 December 2020 £m
Goodwill	570.6		341.2		570.6
	570.6		341.2		570.6

The Group has determined that it is a single cash generating unit for the purpose of assessing the carrying value of goodwill. No additional goodwill was recognised in the period (2020 H1: £nil, 2020 FY: £229.4m).

The carrying value of goodwill is not amortised but is tested annually for impairment or more frequently if any indicators of impairment arise. No impairment losses have been recognised in the current or preceding periods.

3.2  Intangible assets

Intangible assets consist of investment management contracts acquired in the business combination with Merian in 2020 and computer software.

	30 June 2021 £m		30 June 2020 £m		31 December 2020 £m
Intangible assets	61.2		5.5		70.8
	61.2		5.5		70.8

The amortisation charge for the period was £10.3m (2020 H1: £1.0m, 2020 FY: £11.3m) of which £9.4m (2020 H1: £nil, 2020 FY: £9.4m) relates to the investment management contracts and has been recorded as an exceptional item in the Financial review. The Group acquired £nil (2020 H1: £nil, 2020 FY: £75.0m) investment management contracts during the period and software with a value of £0.7m (2020 H1: £0.7m, 2020 FY: £1.3m).

The Directors have reviewed intangible assets as at 30 June 2021 and have concluded there are no indicators of impairment (2020 H1 and 2020 FY: same).

3.3  Property, plant and equipment

The net book value of property, plant and equipment at 30 June 2021 was £45.6m (2020 H1: £49.6m, 2020 FY: £47.4m). During the period, the Group acquired items of property, plant and equipment (excluding right-to-use leased assets) with a value of £0.8m (2020 H1: £0.7m, 2020 FY: £1.3m). Additions to the right-of-use leased assets during the period were £0.2m (2020 H1: £nil, 2020 FY: £15.9m). The Group disposed of right-of-use leased assets with a value of £nil (2020 H1: £nil, 2020 FY: £nil).

3.4  Financial instruments held at fair value

As at 30 June 2021, the Group held the following classes of financial instruments measured at fair value, which principally arise from the Group's investments in seed investments (see Note 5.3):

	30 June 2021 £m		30 June 2020 £m		31 December 2020 £m
Investments in associates	32.5		-		-
Financial assets at FVTPL	244.4		244.8		261.1
Financial liabilities at FVTPL	(41.4)		(94.8)		(89.2)
Other financial liabilities at FVTPL	(0.3)		(0.3)		(0.2)
	235.2		149.7		171.7

3.5  Cash and cash equivalents

	30 June 2021 £m		30 June 2020 £m		31 December 2020 £m
Cash at bank and in hand	145.0		204.7		179.7
Cash held by the EBT and seed investment subsidiaries	3.5		8.8		8.4
Total cash and cash equivalents	148.5		213.5		188.1

3.6  Loans and borrowings

On 27 April 2020, the Group issued £50.0m of Tier 2 subordinated debt notes at a discount of £0.5m. Issue costs were £0.5m. These notes will mature on 27 July 2030 and bear interest at a rate of 8.875% per annum to 27 July 2025, and at a reset rate thereafter. The Group has the option to redeem all of the notes from 27 April 2025 onwards. The movements in the balance in the six month period to 31 December 2020 represent the unwinding of the discount applied to the liability.

	30 June 2021 £m		30 June 2020 £m		31 December 2020 £m
Non-current subordinated debt in issue	49.2		49.1		49.2
	49.2		49.1		49.2

 

Section 4: Equity

Consolidated statement of changes in equity for the six months ended 30 June 2021

	Share capital	Share premium	Own share reserve	Other reserve	Foreign currency translation reserve	Retained earnings	Total	Non-controlling interests	Total equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 1 January 2020	9.2	-	(0.3)	8.0	2.1	592.7	611.7	-	611.7
Profit for the period	-	-	-	-	-	29.1	29.1	-	29.1
Exchange movements on translation of subsidiary undertakings	-	-	-	-	1.7	-	1.7	-	1.7
Other comprehensive income	-	-	-	-	1.7	-	1.7	-	1.7
Total comprehensive income	-	-	-	-	1.7	29.1	30.8	-	30.8
Vesting of ordinary shares and options	-	-	0.1	-	-	0.2	0.3	-	0.3
Dividends paid	-	-	-	-	-	(40.8)	(40.8)	-	(40.8)
Purchase of shares by the EBT	-	-	-	-	-	(6.3)	(6.3)	-	(6.3)
Share-based payments	-	-	-	-	-	9.9	9.9	-	9.9
Current tax	-	-	-	-	-	0.1	0.1	-	0.1
Deferred tax	-	-	-	-	-	(1.3)	(1.3)	-	(1.3)
Total transactions with owners	-	-	0.1	-	-	(38.2)	(38.1)	-	(38.1)
Balance at 30 June 2020	9.2	-	(0.2)	8.0	3.8	583.6	604.4	-	604.4
Profit for the period	-	-	-	-	-	76.4	76.4	(0.2)	76.2
Exchange movements on translation of subsidiary undertakings	-	-	-	-	(1.0)	-	(1.0)	-	(1.0)
Other comprehensive loss	-	-	-	-	(1.0)	-	(1.0)	-	(1.0)
Total comprehensive (loss)/income	-	-	-	-	(1.0)	76.4	75.4	(0.2)	75.2
Issuance of ordinary shares as consideration for a business consideration, net of transaction costs and tax	1.9	242.1	-	-	-	-	244.0	-	244.0
Vesting of ordinary shares and options	-	-	0.1	-	-	(0.2)	(0.1)	-	(0.1)
Dividends paid	-	-	-	-	-	(43.1)	(43.1)	-	(43.1)
Purchase of shares by the EBT	-	-	(0.1)	-	-	(4.3)	(4.4)	-	(4.4)
Share-based payments	-	-	-	-	-	9.9	9.9	-	9.9
Current tax	-	-	-	-	-	(0.1)	(0.1)	-	(0.1)
Deferred tax	-	-	-	-	-	0.3	0.3	-	0.3
Total transactions with owners	1.9	242.1	-	-	-	(37.5)	206.5	-	206.5
Balance at 31 December 2020	11.1	242.1	(0.2)	8.0	2.8	622.5	886.3	(0.2)	886.1
Profit for the period	-	-	-	-	-	47.3	47.3	0.1	47.4
Exchange movements on translation of subsidiary undertakings	-	-	-	-	(1.3)	-	(1.3)	-	(1.3)
Other comprehensive loss	-	-	-	-	(1.3)	-	(1.3)	-	(1.3)
Total comprehensive (loss)/income	-	-	-	-	(1.3)	47.3	46.0	0.1	46.1
Vesting of ordinary shares and options	-	-	0.1	-	-	-	0.1	-	0.1
Dividends paid	-	-	-	-	-	(66.9)	(66.9)	-	(66.9)
Purchase of shares by the EBT	-	-	(0.1)	-	-	(13.1)	(13.2)	-	(13.2)
Share-based payments	-	-	-	-	-	15.2	15.2	-	15.2
Current tax	-	-	-	-	-	(0.1)	(0.1)	-	(0.1)
Deferred tax	-	-	-	-	-	0.4	0.4	-	0.4
Total transactions with owners	-	-	-	-	-	(64.5)	(64.5)	-	(64.5)
Balance at 30 June 2021	11.1	242.1	(0.2)	8.0	1.5	605.3	867.8	(0.1)	867.7
Notes	4.1	4.1	4.2	4.2	4.2	4.2

Notes to the Group financial statements - Equity

4.1  Share capital and share premium

Share capital and share premium	30 June 2021 Shares m		30 June 2020 Shares m		31 December 2020 Shares m		30 June 2021 £m		30 June 2020 £m		31 December 2020 £m
Ordinary shares of 2p each	553.1		457.7		553.1		253.2		9.2		253.2
	553.1		457.7		553.1		253.2		9.2		253.2

Movements in ordinary shares	Number of ordinary shares m		Par value £m		Share premium £m
At 30 June 2020	457.7		9.2		-
Shares issued relating to acquisition of subsidiary	95.4		1.9		242.1
At 31 December 2020	553.1		11.1		242.1
At 30 June 2021	553.1		11.1		242.1

4.2  Reserves

(i)  Own share reserve

The Group operates an EBT for the purpose of satisfying certain retention awards to employees. The holdings of this trust, which is funded by the Group, include shares that have not vested unconditionally to employees of the Group. These shares are recorded at cost and are classified as own shares. The shares are used to settle obligations that arise from the granting of share-based awards.

At 30 June 2021, 10.2m ordinary shares (2020 H1: 8.3m, 2020 FY: 7.2m), with a par value of £0.2m (2020 H1: £0.2m, 2020 FY: £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 (2020 H1: £8.0m, 2020 FY: £8.0m) relates to the conversion of Tier 2 preference shares in 2010.

(iii)   Foreign currency translation reserve

The foreign currency translation reserve of £1.5m (2020 H1: £3.8m, 2020 FY: £2.8m) is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

(iv)  Retained earnings

Retained earnings of £605.3m (2020 H1: £583.6m, 2020 FY: £622.5m) are the amount of earnings that are retained within the Group after dividend payments and other transactions with owners.

4.3  Dividends

On 14 May 2021 the Group paid a full-year dividend for 2020 of 9.2p per ordinary share and a special dividend of 3.0p per share. This amounted to a total payment of £66.9m after taking into account the £0.6m dividends waived on shares held in the EBT.

The Board has declared an interim dividend for the period of 7.9p per ordinary share. This dividend will be paid on 1 September 2021 to ordinary shareholders on the register at close of business on 13 August 2021. This dividend amounts to £43.7m (before adjusting for any dividends waived on shares in the EBT).

 

Section 5: Other Notes

Notes to the Group financial statements - Other notes

Within this Interim Report and Accounts, all current and comparative data covering periods to (or as at) 30 June are unaudited. Data given in respect of the year ended 31 December 2020 is audited. Information which is the required content of the Interim Management Report can be found on pages 1 to 11 and 28.

5.1  Basis of preparation

These condensed financial statements for the six months ended 30 June 2021 have been prepared in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the Financial Conduct Authority and with IAS 34 Interim Financial Reporting, as adopted by the United Kingdom. The condensed interim financial statements should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2020, which were prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.

The condensed financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2020 were approved by the Board on 25 February 2021 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. The condensed interim financial statements have been reviewed, not audited.

The Group has access to the financial resources required to run the business efficiently and a strong gross cash position. The Group's forecasts and projections, which are subject to rigorous sensitivity analysis, show that the Group will be able to operate within its available resources even given the uncertainty inherent within future market levels and investment performance. The Directors have not identified any material uncertainties to the Group's ability to continue to adopt the going concern basis. As a consequence, the Directors have a reasonable expectation that the Group has adequate resources to continue operating for a period of at least 12 months from the balance sheet date. Accordingly, they continue to adopt the going concern basis of accounting in preparing these financial statements.

Changes in the composition of the Group

The Group is required to consolidate seed capital investments where it is deemed to control them. The following changes have been made to the consolidation of the Group since 31 December 2020:

Excluded from consolidation (as a result of other investors diluting control) and included as an associate as at 30 June 2021

Jupiter Global Sustainable Equities

Changes in accounting policies

The International Accounting Standards Board and IFRS Interpretations Committee (IC) have issued a number of new accounting standards and interpretations and amendments to existing standards and interpretations. There are no IFRSs or IFRS IC interpretations that are not yet effective that would be expected to have a material impact on the Group.

5.2  Accounting policies

The accounting policies applied are consistent with those applied in the Group's annual financial statements for the year ended 31 December 2020.

 

5.3  Financial instruments

Financial instruments held at fair value are carried at a value which represents the price to exit the instruments at the balance sheet date. The fair value of financial instruments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance sheet date. Where a quoted market price is not available, the Group establishes fair value using valuation techniques such as recent arm's length market transactions, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis or other valuation models.

The Group used the following hierarchy for determining and disclosing the fair value of financial instruments:

n Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

n Level 2: other techniques, for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

n Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data (unobservable inputs).

As at 30 June 2021, the Group held the following financial instruments measured at fair value:

	Level 1		Level 2		Level 3		Total
Investments in associates	32.5		-		-		32.5
Financial assets at FVTPL - funds	179.8		60.9		-		240.7
Financial assets at FVTPL - derivatives	3.7		-		-		3.7
Financial liabilities at FVTPL	(41.4)		-		-		(41.4)
Other financial liabilities at FVTPL - derivatives	-		(0.3)		-		(0.3)
	174.6		60.6		-		235.2

As at 30 June 2020, the Group held the following financial instruments measured at fair value:

	Level 1		Level 2		Level 3		Total
Financial assets at FVTPL - funds	160.2		84.6		-		244.8
Financial liabilities at FVTPL	(94.8)		-		-		(94.8)
Other financial liabilities at FVTPL - derivatives	-		(0.3)		-		(0.3)
	65.4		84.3		-		149.7

As at 31 December 2020, the Group held the following financial instruments measured at fair value:

	Level 1		Level 2		Level 3		Total
Financial assets at FVTPL - funds	183.2		74.2		-		257.4
Financial assets at FVTPL - derivatives	-		3.7		-		3.7
Financial liabilities at FVTPL	(89.2)		-		-		(89.2)
Other financial liabilities at FVTPL - derivatives	-		(0.2)		-		(0.2)
	94.0		77.7		-		171.7

 

5.4  Related party transactions

All related party transactions during the period are consistent with those disclosed in the Annual Report and Accounts for the year ended 31 December 2020 and have taken place on an arm's length basis.

The Group made a capital contribution of £0.7m to NZS Capital LLC in the period. This entity is accounted for as a subsidiary undertaking. The Group excluded Jupiter Global Sustainable Equities from consolidation in the period due to a reduction in the Group's holding meaning it no longer exercises control.  

Other than the above, no new related parties or related party transactions that materially affect the financial position or performance of the Group existed or occurred during the period.

 

Section 6: Directors' responsibility statement

We confirm that to the best of our knowledge:

n The condensed interim set of financial statements has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting' as required by the Companies Act 2006 and International Financial Reporting Standards as adopted by the United Kingdom and gives a true and fair view of the assets, liabilities, financial position and profits of the Group for the period ended 30 June 2021.

n The interim report includes a fair review of the information required by:

a) DTR 4.2.7R of the Guidance, being an indication of important events that have occurred during the first six months of the current financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

b) DTR 4.2.8R of the Guidance, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Group during that period; and any changes in the related party transactions described in the last Annual Report and Accounts that could have a material effect on the financial position or performance of the Group in the past six months of the current financial year.

n A list of the Directors of Jupiter Fund Management plc can be found in the Annual Report and Accounts for the year ended 31 December 2020. A current list of Directors is maintained on the website at www.jupiteram.com.

On behalf of the Board

Wayne Mepham

Chief Financial Officer

29 July 2021

 

Section 7: Principal risks and mitigations

The Group is exposed to various risk types in pursuing its business objectives which can be driven by internal and external factors. Understanding and managing these risks is both a business imperative and a regulatory requirement.  As an asset management firm, Jupiter's most material exposures are in the strategic, investment, and operational (including regulatory risk) risk categories. Our exposure to capital adequacy, liquidity, market and credit/counterparty risks are also monitored to ensure they are managed on a prudent basis and remain within regulatory requirements and Group risk appetite.  We have reviewed our principal risks as disclosed in the Group's 2020 Annual Report and Accounts and, despite the ongoing challenges presented by Covid-19, there have been no material changes to the Group's risk profile or specific risk exposures in H1 2021.  We continue to maintain a close focus on monitoring our control environment including the impact of Covid-19, Brexit, market volatility and the evolving regulatory and cyber risk landscapes. We remain well positioned with regard to the ongoing oversight and proactive management of our risk profile.
 

Independent Review Report to Jupiter Fund Management plc

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed Jupiter Fund Management plc's condensed consolidated interim financial statements (the "interim financial statements") in the Interim Report and Accounts of Jupiter Fund Management plc for the six month period ended 30 June 2021 (the "period").

Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

What we have reviewed

The interim financial statements comprise:

n the Consolidated balance sheet as at 30 June 2021;

n the Consolidated income statement and Consolidated statement of comprehensive income for the period then ended;

n the Consolidated statement of cash flows for the period then ended;

n the Consolidated statement of changes in equity for the period then ended; and

n the explanatory notes to the interim financial statements.

The interim financial statements included in the Interim Report and Accounts of Jupiter Fund Management plc have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The Interim Report and Accounts, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the Interim Report and Accounts in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express a conclusion on the interim financial statements in the Interim Report and Accounts based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What a review of interim financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the Interim Report and Accounts and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

PricewaterhouseCoopers LLP

Chartered Accountants

London

29 July 2021

 

END

 

 

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