Final Results

RNS Number : 0470B

Jupiter Fund Management PLC

27 February 2014

 

Jupiter Fund Management plc

Highlights

Results for the year ended 31 December 2013

27 February 2014

Increased returns to shareholders supported by a sustainable balance sheet.

·      Strong investment performance with 69 per cent. of our mutual fund assets above median over three years.

·      Net mutual fund inflows of £1.2bn.

·      Record assets under management of £31.7bn

·      Underlying EPS up 33 per cent.

·      A sustainable balance sheet with £160m net cash at year end.

·      Dividends per share up 43 per cent. to 12.6p.

			Year ended 31 December 2013	Year ended 31 December 2012
	Assets under management (AUM) (£bn)		31.7	26.3
	Net inflows (£bn)		1.2	1.0
	EBITDA1 2 (£m)		151.5	124.2
	EBITDA margin2 (per cent.)		53	51
	Profit before tax (£m)		114.1	73.6
	Underlying earnings per share2 (p)		25.2	19.0
	Cash flows from operating activities (£m)		122.1	110.6
	Dividends per share (p)		12.6	8.8

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

Edward Bonham Carter, Chief Executive, commented:

"2013 was a year of strong delivery against our strategic goals. We achieved investment outperformance across our product range, extended our distribution capabilities and completed the deleverage process begun at Listing. Underlying EPS were up 33 per cent to 25.2 pence and this, combined with our sustainable balance sheet, has allowed the Board to increase the total dividend for 2013 by 43 per cent to 12.6 pence."

Analyst presentation

There will be an analyst presentation at 9.00am on 27 February 2014.

The presentation will be held at FTI Consulting, Holborn Gate, 26 Southampton Buildings, London WC2A 1PB.  The presentation will be accessible via a conference call for those unable to attend in person.  To attend the presentation or dial in to the conference call, please contact Laura Ewart at FTI Consulting on [phone] or at [e-mail]. Alternatively, sign up online using the following link: http://mediazone.brighttalk.com/event/Jupiter/e2a08f2ebe-8291-intro.

.

The Results Announcement will be available at www.jupiteronline.com and copies may also be obtained from the registered office of the Company at 1 Grosvenor Place, London SW1X 7JJ. The Annual Report will be published in March 2014 and will be available at www.jupiteronline.com.

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

Forward-looking statements

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

Chief Executive's review

2013 has been a busy and successful year for Jupiter and our development plans for 2014 and beyond will seek to deliver further on our strategic goals, to the benefit of both our clients and shareholders.

Achieving investment outperformance over the medium term is critical to our strategy and Jupiter's fund management team has continued to outperform over the key three year time period. As at 31 December 2013, 69 per cent. of mutual fund AUM was above median and, including segregated mandates and investment trusts, we have added value to 73 per cent. of our clients by AUM over the last three years.

Our position in international markets has continued to strengthen, with a growing proportion of fund sales being sourced from our distribution networks across Europe and Asia. During 2013, we actively built this local presence, adding strength to our capabilities in Germany and Hong Kong and hiring sales resource for the Nordics. We now have offices in Frankfurt, Munich, Zurich, Singapore, Sweden and Hong Kong, with additional markets, such as France, covered by third party relationships.

This growing distribution network, supported by our investment outperformance and strong brand, drove inflows of £1.2bn during the year. Mutual funds remained the key driver of these flows, with particularly high demand for our bond funds and top-performing equity products such as UK Special Situations and our European funds. By the end of 2013, assets under management had reached a record £31.7bn.

Growth in AUM directly benefits revenues and, combined with our disciplined approach to investing for growth, EBITDA grew 22 per cent. to £151.5m and EBITDA margins increased to 53 per cent. This generated £122.1m of operating cash flow, improving net cash to £159.5m and reducing our outstanding debt to £11.0m at the end of the year. This remaining debt was repaid in February 2014, providing the potential for increased returns to shareholders going forward as part of our policy of sharing the rewards of growth within a sustainable balance sheet structure.

The opportunity for Jupiter to build on this strong performance in the coming years is significant. Structurally, savings markets around the world are undergoing great change. Ageing populations in many countries are being encouraged to save more for longer retirements governments can no longer afford to fund, while rising wealth in the world's emerging markets is creating further new, attractive opportunities for fund managers to build assets under management. Jupiter is increasingly well-positioned to build its share of the growing market for savings across the world.

We are well-established as a market leader in the UK and it is a market that remains attractive to us, both due to the growing requirement for individuals to save for retirement and as global financial institutions channel assets through London. We also have plans over the coming years to develop additional local presence in countries where we believe significant assets can be raised. Our international distribution efforts have already lifted our SICAV AUM to £3bn by the end of 2013 and we would expect this to grow significantly as we extend our relationships with key distributors on a global basis.

In addition to building our distribution network, we will continue to build our investment capabilities, developing existing talent and hiring new managers as the business evolves. In addition, we have been working to build the support structures around fund managers to ensure that the growing demands of an international sales network do not reduce the time spent running their portfolios, appointing, for example, a product specialist to support the multi-asset and fixed interest team.

In the 14 years I have been Chief Executive, Jupiter has delivered consistent investment outperformance, increased its distribution capabilities and, since the IPO in June 2010, created significant value for shareholders. The next stage of our growth will be led by Maarten Slendebroek, who will take over from me as Chief Executive on 17 March 2014. Maarten has been a key architect of the strategic direction outlined above and this is the right time for him to take over as Chief Executive. I am delighted to be able to continue serving the business in the newly-created role of Vice Chairman and helping Maarten grow Jupiter further in the future.

Edward Bonham Carter

Chief Executive

26 February 2014

Operational review

Net inflows/(outflows) by product	2013 £m		2012 £m
Mutual funds	1,162		1,550
Segregated mandates	(129)		(568)
Private clients	135		(16)
Investment trusts	31		-
Total	1,199		966

Net flows strengthened during 2013, totalling £1.2bn for the year (2012: £966m) with an increased contribution from our international business. Funds at the cautious end of the spectrum, particularly our Strategic Bond unit trust and Dynamic Bond SICAV, together with the Merlin Income fund and Jupiter Global Convertibles SICAV, attracted significant inflows, as did top-performing equity funds such as the UK Special Situations and European unit trusts and the Jupiter European Growth SICAV.

Assets under management by product	31 December 2013 £bn		31 December 2012 £bn
Mutual funds	24.8		20.6
Segregated mandates	3.9		3.2
Private clients	2.3		1.9
Investment trusts	0.7		0.6
Total	31.7		26.3

Assets under management increased to a record £31.7bn at 31 December 2013 (31 December 2012: £26.3bn) due to net inflows and market appreciation across the year. The majority of those assets continue to be in mutual funds, at 78 per cent. (31 December 2012: 79 per cent.).

Investment performance

Delivering investment outperformance remains key to successful growth for our business and during 2013 investment performance remained strong over the key three year period used by many fund buyers to select funds. At 31 December 2013, 30 mutual funds representing 69 per cent. of mutual funds by AUM had delivered above average investment performance (2012: 33 mutual funds representing 79 per cent. of mutual funds by AUM). Over one year, 32 mutual funds were above average, representing 45 per cent. of mutual fund AUM (2012: 28 mutual funds representing 56 per cent. of mutual fund AUM).

Financial review

RESULTS FOR THE YEAR

The Group saw healthy growth across all key metrics in 2013 and consequent cash generation has seen continued balance sheet strengthening and dividend increases.

Net revenue

	2013 £m		2012 £m
Net management fees	267.1		225.7
Net initial charges	15.7		14.3
Net performance fees	5.7		4.5
Total	288.5		244.5

Net revenues for the year were £288.5m (2012: £244.5m), 18 per cent. ahead of 2012. This was driven by a rise in net management fees to £267.1m (2012: £225.7m), as strong flows and investment outperformance resulted in average assets increasing by 22 per cent., an increase ahead of underlying market levels (the FTSE 100 averaged 6,429 in 2013 compared to 5,742 in 2012).

	2013		2012
Net management fees (£m)	267.1		225.7
Average AUM (£bn)	29.5		24.2
Net management fee margin (bps)	90		93

Net management fees remain the main component of net revenue (2013 : 93 per cent., 2012: 92 per cent.). The Group's net management fee margin for the period was 90 basis points, below the 2012 margin of 93 basis points. This reduction is due to a higher proportion of SICAV and fixed income assets in the mutual fund book and is in line with both our expectations and previous market guidance.

We continue to expect net management fee margins to decline slowly over time, although the rate and angle of any such decline continues to be uncertain.

Net revenue

Net initial charges of £15.7m (2012: £14.3m) were higher due to a more favourable pattern of sales versus redemption activity across individual funds, partially offset by the expected reduction in net amortised front end fees. Front end fees will continue to decline, and the unpredictable nature of box profits means there is no guarantee that the improvement in initial charges will be repeated in future years. Performance fees grew slightly to £5.7m (2012: £4.5m), although these continue to represent a small percentage of net revenue.

Administrative expenses

	2013 £m		2012 £m
Fixed staff costs	43.0		39.5
Other expenses	43.9		41.5
Total fixed costs	86.9		81.0
Variable staff costs	51.0		40.1
Charge for options over pre-Listing shares	4.2		7.3
Administrative expenses	142.1		128.4

Administrative expenses of £142.1m (2012: £128.4m) rose by 11 per cent., predominantly due to an increase in variable staff costs in line

with higher profitability and the continued roll out of our post- Listing compensation structure.

Fixed staff costs of £43.0m (2012: £39.5m) increased by nine per cent. as headcount grew as a result of continued steady investment in our people, platform and distribution capabilities. Other expenses rose to £43.9m (2012: £41.5m) as higher IT and legal and professional costs were partially offset by lower occupancy costs as a result of a temporary reduction in our rent ahead of our lease expiring in 2016. We continue to manage our fixed cost base according to prevailing market conditions at the time, mindful of our desire to grow the business over time whilst preserving our scalable operating model.

	2013 £m		2012 £m
Cash bonus	33.9		30.0
Deferred bonus	8.5		5.4
LTIP and SAYE	8.6		4.5
Pre-IPO deferral scheme	-		0.2
Total	51.0		40.1
Variable compensation ratio	25%		25%

Variable staff costs of £51.0m (2012: £40.1m) increased by 27 per cent. The cash bonus of £33.9m (2012: £30.0m) rose in line with earnings and higher profitability of the Group. The additional increase in variable costs was due to the continuing roll-out of the post-Listing compensation structure, driven by the addition of an extra year of awards under the LTIP scheme and Deferred Bonus Plan. This roll-out is now largely complete with the first tranches due to vest in April 2014. Variable compensation as a proportion of pre-variable compensation operating earnings was 25 per cent. (2012: 25 per cent.). This excludes a £4.2m charge (2012: £7.3m) in respect of options granted prior to the Listing over the remaining shares in the pool established for employees at the time of the MBO in June 2007. We expect the variable compensation ratio to remain in the mid to high 20 per cent. range over the medium-term, as the incentive schemes put in place as part of our Listing are now close to maturity. However, the equity-settled nature of previously awarded deferred bonus and LTIP schemes means that their costs are fixed at the time of grant and subsequently do not change if future earnings rise or fall. As a result, the variable compensation ratio remained at 25 per cent., at the lower end of our range, in line with our expectations for an environment in which earnings have risen strongly.

EBITDA

EBITDA was £151.5m (2012: £124.2m), a 22 per cent. increase on the previous year. This was driven by an increase in net revenue from strong flows, investment outperformance and higher average market levels, partially offset as expected by higher variable staff costs. The Group's EBITDA margin increased to 53 per cent. (2012: 51 per cent.), as revenue growth filtered through to profits as a result of our scalable business model.

Other gains/(losses)

During the year, the Group sold its entire holding in Cofunds to a co-investor, Legal & General Group plc, resulting in a gain of £6.7m which has been included within the other gains/(losses) line on the income statement. Of this, £6.6m was previously held within the available for sale reserve and transferred to the income statement, and a further gain of £0.1m was recognised in the year.

Amortisation of intangible assets

Amortisation of £39.7m (2012: £39.7m) included £38.7m (2012: £38.7m) relating to intangible assets acquired as part of the MBO on 19 June 2007. These assets relate to investment management contracts (acquired for £258.0m) and the Jupiter brand name (acquired for £18.7m), amortised on a straight line basis through to June 2014 and June 2017 respectively. Amortisation is expected to decrease significantly in 2014 when the amortisation on the investment management contracts fully unwinds. The remaining £1.0m relates to the amortisation of acquired computer software and is included in underlying earnings.

Finance costs

Finance costs of £3.1m (2012: £7.4m) decreased by 58 per cent., primarily due to a decrease in interest payable on the bank loan from £5.6m in 2012 to £1.8m in 2013. This was due to the outstanding bank loan being paid down from £143.0m at the start of 2012 to £11.0m at the end of 2013. Finance costs were further reduced due to an increase in the fair value of the swaps in 2013 as they neared maturity. During the year, both interest rate swaps were closed out.

Profit before tax ("PBT")

PBT for the year was £114.1m (2012: £73.6m). This increase of 55 per cent. was driven by the rise in operating earnings, reduced finance costs and the gain made from the sale of the holding in Cofunds.

Tax expense

The effective tax rate for 2013 was 22.3 per cent (2012: 23.6 per cent.). This is lower than the standard rate of 23.25 per cent., primarily due to the Cofunds disposal which generated a historic loss for tax purposes owing to the previous tax disallowance of write downs in the investment pre-Listing.

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

Underlying profit before tax 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. The Group's basic and diluted EPS measures were 21.1p and 20.0p respectively in 2013, compared with 14.9p and 14.2p in 2012.

Underlying EPS	2013		2012
Profit before tax (£m)	114.1		73.6
Adjustments:
Amortisation of acquired investment management contracts and trade name (£m)	38.7		38.7
Charge for options over pre-Listing shares (£m)	4.2		7.3
(Gain)/loss taken to the income statement on available for sale investments (£m)	(6.7)		0.7
FSCS levy exceptional income (£m)	-		(5.0)
	36.2		41.7
Underlying profit before tax (£m)	150.3		115.3
Tax at statutory rate of 23.25 per cent (2012: 24.5 per cent.) (£m)	(34.9)		(28.2)
Underlying profit after tax (£m)	115.4		87.1
Issued share capital (m)	457.7		457.7
Underlying EPS	25.2p		19.0p

The 2013 underlying EPS was 25.2p (2012: 19.0p). This 33 per cent. increase reflects the Group's improved trading performance, reduced finance costs following debt repayments and the lower statutory tax rate.

CASH FLOW

The Group has a high conversion rate of operating earnings to cash, generating positive operating cash flows after tax in 2013 of £122.1m (2012: £110.6m). Together with the £16.6m received from the sale of Cofunds, this cash was primarily used for payments of £42.8m in respect of the interim and final dividends to shareholders and net repayments of £67.0m of bank debt. A small amount has been retained for investment and to fund the higher 2013 compensation round. As a result of these movements, overall cash held increased by £23.5m to £170.5m (2012: £147.0m).

ASSETS AND LIABILITIES

Balance sheet

Helped by reduced financing costs from the deleveraging of the balance sheet during 2012 and 2013 alongside the generation of significant cash amounts through trading, the Group strengthened its net cash position at 31 December 2013 to £159.5m (2012: £69.0m). During the year, a net £67.0m of bank debt was repaid, reducing the outstanding loan balance to £11.0m as at 31 December (2012: £78.0m). Subsequent to the year end, the remaining £11.0m was repaid, leaving the Group with no outstanding debt. In July 2013, we rolled our existing loan facility into a new three year revolving credit facility. The facility extends to July 2016 and will provide the Group with greater liquidity and flexibility for a longer period at more attractive rates. It is our intention to leave the facility intact, but undrawn, in case of need, supporting our intention to run a sustainable balance sheet with net cash across the cycle.

Seed capital investments

We deploy seed capital into funds to assist us in building a track record from launch or to give small but strongly performing funds sufficient scale to attract external money. As at 31 December 2013, we had a total investment of £50.1m in our own funds (2012: £53.8m) as we maintained seed capital at targeted levels. 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 into liquid funds and chooses to hedge market and currency risk on the majority of its holdings of seed capital investments, with 99 per cent. of seed capital either hedged or invested in absolute return products. As a result, the value of these investments is stable and available to improve the Group's cash balances and liquidity if required.

EQUITY AND CAPITAL MANAGEMENT

Shareholders' equity

Total shareholders' equity increased by £54.7m to £513.7m (2012: £459.0m) as a result of the Group's continued profitability, partially offset by the final and interim dividends.

Dividend and capital management

The Board considers the dividend on a total basis, whilst looking to maintain an appropriate balance between interim and final dividends. Reflecting our strong trading and robust balance sheet, as well as our confidence in the prospects for the business, the Board has declared an increased final dividend for the year of 9.1p (2012: 6.3p) per share to ordinary shareholders, making a total payment for the year of 12.6p (2012: 8.8p).

This payment is subject to shareholders' approval at the Annual General Meeting and, if approved, will be paid on 27 May 2014 to shareholders on the register on 11 April 2014.

The Group currently has a three year investment firm consolidatiaiver which runs to June 2015. The waiver remains valid under the new CRD IV regime which is effective from 1 January 2014. Having completed the deleverage process begun at Listing, the Group has traded out of its need to rely on the waiver.

Looking forward, the Board's intention is to use profits and cash flow to pay shareholder dividends, to re-invest selectively for future growth and to look to return excess cash according to market conditions at the time. This provides Jupiter with two opportunities to grow shareholder returns over time. First from executing our strategy to grow profits to the benefit of all our stakeholders and secondly from shareholders receiving a greater share of marginal profit growth in the future

Financial Statements (audited)

Section 1: Results for the year

Consolidated income statement

For the year ended 31 December 2013

			Notes		2013		2012
					£m		£m
	Revenue		1.1		388.8		346.4
	Fee and commission expenses		1.1		(100.3)		(101.9)
	Net revenue		1.1,1.2		288.5		244.5
	Administrative expenses		1.3		(142.1)		(128.4)
	Operating earnings				146.4		116.1
	Other gains/(losses)		1.4		9.5		(0.9)
	Amortisation of intangible assets				(39.7)		(39.7)
	Operating profit before exceptional items				116.2		75.5
	Exceptional income		1.5		-		5.0
	Operating profit				116.2		80.5
	Finance income				1.0		0.5
	Finance costs		1.6		(3.1)		(7.4)
	Profit before taxation				114.1		73.6
	Income tax expense		1.7		(25.5)		(17.4)
	Profit for the year				88.6		56.2
	Earnings per share
	Basic		1.8		21.1p		14.9p
	Diluted		1.8		20.0p		14.2p

Consolidated statement of comprehensive income

For the year ended 31 December 2013

			Notes	2013		2012
				£m		£m
	Profit for the year			88.6		56.2
	Items that may be reclassified subsequently to profit or loss
	Exchange movements on translation of subsidiary undertakings		4.2	-		(0.3)
	Net change in fair value of available for sale investments		4.2	-		(5.5)
	Net change in fair value of available for sale investments reclassified to profit or loss		4.2	(6.6)		0.7
	Other comprehensive expense for the year net of tax			(6.6)		(5.1)
	Total comprehensive income for the year net of tax			82.0		51.1

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.

			2013 £m			2012 £m
	Management fees	360.7			320.4
	Initial charges and commissions	22.4			21.5
	Performance fees	5.7			4.5
	Fee and commission expenses	(100.3)			(101.9)
	Total net revenue	288.5			244.5

1.2 SEGMENTAL REPORTING

The Group offers a range of products and services through different distribution channels. All financial, business and strategic decisions are made centrally by the Board of Directors (the "Board"), which determines the key performance indicators of the Group. Information is reported to the chief operating decision maker, the Board, on a single segment basis. While the Group has the ability to analyse its underlying information in different ways, for example by product type, this information is only used to allocate resources and assess performance for the Group as a whole. On this basis, the Group considers itself to be a single-segment investment management business.

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

Geographical information

		2013 £m		2012 £m
	Net revenue by location of clients
	UK	261.1		225.0
	Continental Europe	21.7		14.7
	Rest of the world	5.7		4.8
	Total net revenue by location	288.5		244.5

1.3 ADMINISTRATIVE EXPENSES

Administrative expenses of £142.1m (2012: £128.4m) include staff costs of £98.2m (2012: £86.9m). Staff costs consist of:

		2013 £m		2012 £m
	Wages and salaries	66.8		58.6
	Share-based payments	13.8		13.7
	Social security costs	13.3		10.6
	Pension costs	4.0		3.7
	Redundancy costs	0.3		0.3
		98.2		86.9

1.4 OTHER GAINS/(LOSSES)

Other gains total a £9.5m gain (2012: £0.9m loss), of which £6.7m was due to the gain on the sale of the holding in Cofunds.

1.5 EXCEPTIONAL INCOME

During 2010, a charge of £5.2m was recognised in relation to the contribution made to the Financial Services Compensation Scheme (FSCS) second interim levy for 2010/11. In 2012, £5.0m of this levy was refunded and recognised as exceptional income.

There were no items arising in 2013 which the Group considers to be exceptional.

1.6 FINANCE COSTS

		2013 £m		2012 £m
	Interest payable on bank borrowings	1.8		5.6
	Amortisation of debt issue costs (Note 3.6)	0.7		0.9
	Debt issue cost expense	0.3		-
	Interest payable on interest rate swaps	0.2		0.4
	Fair value movement on interest rate swaps	-		0.3
	Other finance costs	0.1		0.2
	Total finance expense	3.1		7.4

During the year, the remaining £78.0m (2012: £65.0m) of senior debt under the previous facility was repaid. This resulted in an acceleration of £0.4m (2012: £0.5m) in the amortisation of the debt issue costs.

Interest rate swaps

During the year, the Group terminated two interest rate swaps, both with a notional value of £35.0m with interest settling quarterly.

One was for a period of three years which was due to mature in November 2013, paying a fixed interest rate of 1.33 per cent.and the other was for a period of four years, due to mature in November 2014, paying a fixed interest rate of 1.6175 per cent.

The Group held both swaps as at 31 December 2012.

1.7 INCOME TAX EXPENSE

Analysis of charge in the year:

	2013 £m		2012 £m
Current taxation - UK corporation tax
Tax on profits for the year	34.5		30.1
Adjustment in respect of prior years	(0.8)		(0.1)
	33.7		30.0
Deferred taxation
Origination and reversal of temporary differences	(8.9)		(12.5)
Impact of changes in corporation tax rate	0.7		(0.1)
	(8.2)		(12.6)
Total tax expense	25.5		17.4

With effect from 1 April 2013, the UK corporation tax rate changed from 24 per cent. to 23 per cent. The weighted average UK corporation tax rate for the year ended 31 December 2013 was therefore 23.25 per cent. (2012: 24.5 per cent.). The tax charge in the year is lower (2012: lower) than the standard rate of corporation tax in the UK and the differences are explained below:

Factors affecting tax expense for the year	2013 £m		2012 £m
Profit before taxation	114.1		73.6
Taxation at the standard corporation tax rate (2013:23.25 per cent.; 2012: 24.5 per cent.)	26.5		18.0
Non-taxable income	(1.2)		(1.3)
Disallowable expenses	0.1		1.0
Other permanent differences	0.2		(0.1)
Adjustment to current tax charge in respect of prior years	(0.8)		(0.1)
Impact of tax rate change on deferred tax balances	0.7		(0.1)
Total tax expense	25.5		17.4

1.8 EARNINGS PER SHARE

Basic earnings per share ("EPS") is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year, less the weighted average number of own shares held. Own shares are shares held in an Employee Benefit Trust ("EBT") for the benefit of employees under the vesting, lock-in and other incentive arrangements in place.

Diluted EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year for the purpose of basic EPS, plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

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

1.8 EARNINGS PER SHARE

	Weighted average numbers of shares	2013 Number m		2012  Number m
	Issued share capital	457.7		457.7
	Less own shares held	(38.6)		(80.0)
	Weighted average number of ordinary shares for the purpose of basic EPS	419.1		377.7
	Add back weighted average number of dilutive shares	22.9		18.1
	Weighted average number of ordinary shares for the purpose of diluted EPS	442.0		395.8

	Earnings per share	2013 p		2012 p
	Basic	21.1		14.9
	Diluted	20.0		14.2
	Section 2: Statement of cash flows

Statement of cash flows

For the year ended 31 December 2013

		Notes		2013		2012
				£m		£m
	Cash flows from operating activities
	Cash generated from operations	2.1		155.4		141.2
	Income tax paid			(33.3)		(30.6)
	Net cash inflows from operating activities			122.1		110.6
	Cash flows from investing activities
	Purchase of property, plant and equipment	3.3		(0.5)		(0.8)
	Purchase of intangible assets			(2.5)		(0.7)
	Purchase of financial assets at FVTPL			(2.8)		(26.6)
	Proceeds from disposal of financial assets at FVTPL			6.8		19.8
	Proceeds from disposal of available for sale investments			16.6		-
	Finance income received			0.7		0.5
	Net cash inflows/(outflows) from investing activities			18.3		(7.8)
	Cash flow from financing activities
	Dividends paid	4.3		(42.8)		(33.9)
	Purchase of shares by EBT			(3.8)		-
	Finance costs paid			(3.3)		(7.3)
	Proceeds from bank loan			40.0		-
	Repayment of bank loan			(107.0)		(65.0)
	Net cash outflows from financing activities			(116.9)		(106.2)
	Net increase/(decrease)  in cash and cash equivalents			23.5		(3.4)
	Cash and cash equivalents at beginning of year			147.0		150.4
	Cash and cash equivalents at end of year	3.5		170.5		147.0

Notes to the financial statements - Statement of cash flows

2.1   CASH GENERATED FROM OPERATIONS

	Cash generated from operations	2013 £m		2012 £m
	Operating profit	116.2		80.5
	Adjustments for:
	Amortisation of intangible assets	39.7		39.7
	Depreciation of property, plant and equipment	0.9		0.8
	Other non-cash gains	(9.0)		(4.8)
	Share-based payments	13.8		13.7
	Cash inflows on exercise of share options	0.5		-
	Increase in trade and other receivables	(0.8)		(8.7)
	(Decrease)/increase in trade and other payables	(5.9)		20.0
	Cash generated from operations	155.4		141.2

Section 3: Assets and liabilities

Consolidated balance sheet

As at 31 December 2013

			Notes		2013		2012
					£m		£m
	ASSETS
	NON-CURRENT ASSETS
	Goodwill		3.1		341.2		341.2
	Intangible assets		3.2		27.3		64.5
	Property, plant and equipment		3.3		1.2		1.6
	Available for sale investments		3.4		2.6		19.1
	Deferred tax assets				18.4		15.3
	Trade and other receivables		3.4		9.0		13.9
	Total non-current assets				399.7		455.6
	CURRENT ASSETS
	Investments in associates		3.4		19.3		19.2
	Financial assets at fair value through profit or loss		3.4		41.3		34.2
	Trade and other receivables		3.4		96.5		90.6
	Cash and cash equivalents		3.5		170.5		147.0
	Total current assets				327.6		291.0
	TOTAL ASSETS				727.3		746.6
	EQUITY ATTRIBUTABLE TO THE OWNERS OF THE PARENT
	Share capital		4.1		9.2		9.2
	Own share reserve		4.2		(0.4)		(1.3)
	Other reserve		4.2		8.0		8.0
	Available for sale reserve		4.2		-		6.6
	Foreign currency translation reserve		4.2		7.1		7.1
	Retained earnings		4.2		489.8		429.4
	TOTAL EQUITY				513.7		459.0
	LIABILITIES
	NON-CURRENT LIABILITES
	Loans and borrowings		3.6		11.0		77.3
	Trade and other payables		3.4		16.8		22.3
	Deferred tax liabilities				5.6		14.5
	Total non-current liabilities				33.4		114.1
	CURRENT LIABILITIES
	Financial liabilities at fair value through profit or loss		3.4		10.2		3.1
	Trade and other payables		3.4		154.9		154.8
	Current income tax liabilities				15.1		15.6
	Total current liabilities				180.2		173.5
	TOTAL LIABILITIES				213.6		287.6
	TOTAL EQUITY AND LIABILITIES				727.3		746.6

Notes to the financial statements - Balance sheet

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.

		2013 £m		2012 £m
	Goodwill	341.2		341.2
		341.2		341.2

No additional goodwill was recognised in the year (2012: £nil).

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

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

3.2 INTANGIBLE ASSETS

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

	2013 £m		2012 £m
Investment management contracts	17.3		54.1
Trade name	6.4		8.3
Computer software	3.6		2.1
	27.3		64.5

The amortisation charge for the year was £39.7m (2012: £39.7m). No additional investment management contracts were acquired in the year (2012: £nil).

3.3 PROPERTY, PLANT AND EQUIPMENT

The net book value of property, plant and equipment at 31 December 2013 was £1.2m (2012: £1.6m). During the year, the Group acquired property, plant and equipment with a value of £0.5m (2012: £0.8m).

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 2013	Available for sale	Financial assets designated at FVTPL	Loans and receivables	Financial liabilities designated at FVTPL	Other financial liabilities	Total financial instruments	Non- financial instruments	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Goodwill	-	-	-	-	-	-	341.2	341.2
Intangible assets	-	-	-	-	-	-	27.3	27.3
Property, plant and equipment	-	-	-	-	-	-	1.2	1.2
Available for sale investments	2.6	-	-	-	-	2.6	-	2.6
Deferred tax assets	-	-	-	-	-	-	18.4	18.4
Non-current trade and other receivables	-	-	-	-	-	-	9.0	9.0
Investments in associates	-	19.3	-	-	-	19.3	-	19.3
Financial assets at fair value through profit or loss ("FVTPL")	-	41.3	-	-	-	41.3	-	41.3
Current trade and other receivables	-	-	86.8	-	-	86.8	9.7	96.5
Cash and cash equivalents	-	-	170.5	-	-	170.5	-	170.5
Loans and borrowings	-	-	-	-	(11.0)	(11.0)	-	(11.0)
Non-current trade and other payables	-	-	-	-	(2.0)	(2.0)	(14.8)	(16.8)
Deferred tax liabilities	-	-	-	-	-	-	(5.6)	(5.6)
Current trade and other payables	-	-	-	-	(130.5)	(130.5)	(24.4)	(154.9)
Current income tax liability	-	-	-	-	-	-	(15.1)	(15.1)
Financial liabilities at FVTPL	-	-	-	(10.2)	-	(10.2)	-	(10.2)
Total	2.6	60.6	257.3	(10.2)	(143.5)	166.8	346.9	513.7

3.4 FINANCIAL INSTRUMENTS

As at 31 December 2012	Available for sale	Financial assets designated at FVTPL	Loans and receivables	Financial liabilities designated at FVTPL	Other financial liabilities	Total financial instruments	Non- financial instruments	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Goodwill	-	-	-	-	-	-	341.2	341.2
Intangible assets	-	-	-	-	-	-	64.5	64.5
Property, plant and equipment	-	-	-	-	-	-	1.6	1.6
Available for sale investments	19.1	-	-	-	-	19.1	-	19.1
Deferred tax assets	-	-	-	-	-	-	15.3	15.3
Non-current trade and other receivables	-	-	-	-	-	-	13.9	13.9
Investments in associates	-	19.2	-	-	-	19.2	-	19.2
Financial assets at fair value through profit or loss ("FVTPL")	-	34.2	-	-	-	34.2	-	34.2
Current trade and other receivables	-	-	80.8	-	-	80.8	9.8	90.6
Cash and cash equivalents	-	-	147.0	-	-	147.0	-	147.0
Loans and borrowings	-	-	-	-	(78.0)	(78.0)	0.7	(77.3)
Non-current trade and other payables	-	-	-	-	(0.8)	(0.8)	(21.5)	(22.3)
Deferred tax liabilities	-	-	-	-	-	-	(14.5)	(14.5)
Current trade and other payables	-	-	-	-	(132.6)	(132.6)	(22.2)	(154.8)
Current income tax liability	-	-	-	-	-	-	(15.6)	(15.6)
Financial liabilities at FVTPL	-	-	-	(3.1)	-	(3.1)	-	(3.1)
Total	19.1	53.4	227.8	(3.1)	(211.4)	85.8	373.2	459.0

3.5  CASH AND CASH EQUIVALENTS

			2013 £m		2012 £m
	Cash at bank and in hand	88.7			35.2
	Short-term deposits	77.5			108.5
	Cash held by EBT and seed capital subsidiaries	4.3			3.3
	Total cash and cash equivalents	170.5			147.0

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

3.6   LOANS AND BORROWINGS

		2013 £m		2012 £m
	Bank loan	11.0		78.0
	Unamortised debt issue costs	-		(0.7)
	Total carrying value of bank loan	11.0		77.3

At 31 December 2012, the Group had a syndicated loan which was repayable on or before 19 June 2015. The loan was issued to a subsidiary company, Jupiter Asset Management Group Limited, and was secured by a charge over their assets. In July 2013, the outstanding loan balance of £42m was repaid. At the same time, a new three year revolving credit facility of £50m was entered into by Jupiter Fund Management plc, of which £40m was immediately drawn.

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

		2013 £m		2012 £m
	At 1 January	77.3		141.4
	Voluntary prepayments made in the year	(107.0)		(65.0)
	Proceeds from new loan	40.0		-
	Amortisation of debt issue costs (Note 1.6)	0.7		0.9
	Total carrying value of bank loan	11.0		77.3

Interest on the new facility is payable at a rate per annum of LIBOR plus a margin of 1.00 per cent. Interest was payable on the old facility at a rate per annum of LIBOR plus a margin of 3.75 per cent. A non-utilisation fee is payable on the new facility at a rate of 0.35 per cent. per annum on the undrawn balance. A utilisation fee is also payable at a rate of 0.5 per cent. per annum when more than 66 per cent. of the facility is drawn, and 0.25 per cent. per annum when 33 per cent. to 66 per cent. of the facility is drawn. No utilisation fee is payable when less than 33 per cent. of the facility is drawn. The Group had two interest rate swaps in place to hedge its floating rate exposure and they were both closed out during the year. Details of these are given in Note 1.6.

Section 4: Equity

Consolidated statement of changes in equity

For the year ended 31 December 2013

		Share  capital	Own  share  reserve	Other  reserve	Available  for sale   reserve	Foreign  currency  translation  reserve	Retained  earnings	Total
		£m	£m	£m	£m	£m	£m	£m
At 1 January 2012		9.2	(2.1)	8.0	11.4	7.4	390.7	424.6
Profit for the year		-	-	-	-	-	56.2	56.2
Exchange movements on translation of subsidiary undertakings		-	-	-	-	(0.3)	-	(0.3)
Net change in fair value of available for sale investments		-	-	-	(5.5)	-	-	(5.5)
Net change in fair value of available for sale investments reclassified to profit or loss		-	-	-	0.7	-	-	0.7
Other comprehensive expense		-	-	-	(4.8)	(0.3)	-	(5.1)
Total comprehensive (expense)/income		-	-	-	(4.8)	(0.3)	56.2	51.1
Vesting of ordinary shares and options		-	0.8	-	-	-	-	0.8
Dividends paid		-	-	-	-	-	(33.9)	(33.9)
Share-based payments		-	-	-	-	-	13.7	13.7
Deferred tax		-	-	-	-	-	2.7	2.7
Total transactions with owners		-	0.8	-	-	-	(17.5)	(16.7)
At 31 December 2012		9.2	(1.3)	8.0	6.6	7.1	429.4	459.0
Profit for the year		-	-	-	-	-	88.6	88.6
Net change in fair value of available for sale investments reclassified to profit or loss		-	-	-	(6.6)	-	-	(6.6)
Other comprehensive expense		-	-	-	(6.6)	-	-	(6.6)
Total comprehensive (expense)/income		-	-	-	(6.6)	-	88.6	82.0
Vesting of ordinary shares and options		-	0.9	-	-	-	0.5	1.4
Dividends paid		-	-	-	-	-	(42.8)	(42.8)
Purchase of shares by EBT		-	-	-	-	-	(4.4)	(4.4)
Share-based payments		-	-	-	-	-	13.8	13.8
Current tax		-	-	-	-	-	0.9	0.9
Deferred tax		-	-	-	-	-	3.8	3.8
Total transactions with owners		-	0.9	-	-	-	(28.2)	(27.3)
At 31 December 2013		9.2	(0.4)	8.0	-	7.1	489.8	513.7

Notes to the financial statements - Statement of changes in equity

4.1   SHARE CAPITAL

		2013 £m		2012 £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 2013, 3.5m (2012: 42.5m) ordinary shares beneficially owned by senior employees were subject to restrictions which, in some circumstances, require the Group to repurchase the shares at their nominal value, and this liability is shown within current trade and other payables. These restrictions are released over the next two years. The shares are held within the Group's EBT and, together with a further 17.4m (2012: 20.9m) shares held for the purpose of satisfying share option obligations to employees, are treated as own shares with a cost of £0.4m (2012: £1.3m).

(ii) Other reserve

The other reserve of £8.0m (2012: £8.0m) relates to the conversion of Tier 2 preference shares in 2010.

(iii) Available for sale reserve

The available for sale reserve is £nil (2012: £6.6m). It relates to the uplift in the fair value of the Group's holdings in investments classified as available for sale.

(iv) Foreign currency translation reserve

The foreign currency translation reserve of £7.1m (2012: £7.1m) is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

(v) Retained earnings

Retained earnings of £489.8m (2012: £429.4m) are the amount of earnings that is retained within the Company after dividend payments and other transactions with owners.

4.3   DIVIDENDS

		2013 £m		2012 £m
	Final dividend 2012 (6.3p per ordinary share) (2011: 5.3p per ordinary share)	27.5		24.3
	Interim dividend 2013 (3.5p per ordinary share) (2012: 2.5p per ordinary share)	15.3		11.4
		42.8		35.7

In April 2013, the EBT waived its right to receive future dividends on shares held in the trust. There were no dividends paid on shares held in the EBT in 2013 (2012: £1.8m). Net dividends paid in 2012 were therefore £33.9m.

A final dividend for 2013 of 9.1p per share (2012: 6.3p) amounting to £41.7m (before adjusting for any dividends waived on shares in the EBT) will be proposed at the Annual General Meeting on 21 May 2014 and will be accounted for in 2014.

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 2013 or 2012, but is derived from those accounts. The Auditors have reported on the 2013 and 2012 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 2012 have been delivered to the Registrar of Companies and those for 2013 will be delivered in due course.

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

5.2.  RELATED PARTIES

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

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

The Group acts as manager for 39 (2012: 38) 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 £2,799.6m (2012: £2,831.2m) for unit trust creations and £2,596.1m (2012: £1,819.4m) 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 £15.2m (2012: £11.5m). The amount received in respect of gross management and registration charges was £349.6m (2012: £301.3m). At the end of the year, there was £9.1m (2012: £8.4m) accrued for annual management fees and £1.5m (2012: £1.3m) in respect of registration fees.

Investment management and performance fees are disclosed in Note 1.1.

Included within the financial instruments note are seed capital investments in funds managed by the Group. At 31 December 2013, the Group had a total net investment in collective investment vehicles of £52.9m (2012: £53.8m) and received distributions of £0.2m (2012: £0.1m). During 2013, it invested £2.8m (2012: £29.1m) in seed capital investments and received £6.8m (2012: £19.8m) on disposal of them.

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

Key management compensation

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

	2013 £m		2012 £m
Short-term employee benefits	5.3		7.8
Share-based payments	2.9		2.3
Post-employment benefits	0.1		0.1
Other long-term benefits	0.3		0.1
	8.6		10.3

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 parent Company financial statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union.

Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:

·      select suitable accounting policies and then apply them consistently;

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

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

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

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

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors consider that the Annual Report & Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

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

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

·      the Directors' report contained in the Annual Report and Accounts includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

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

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

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

On behalf of the Board

Philip Johnson

Chief Financial Officer

26 February 2014

Section 7: Principal risks and mitigations

INVESTMENT OUTPERFORMANCE

Sustained under performance

Risk

There is a risk that our clients will not meet their investment objectives due to weaknesses in the financial markets or from poor performance.

Potential Impact

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

Mitigation/Controls

Jupiter maintains a range of flexible investment products that is designed to deliver value to our clients irrespective of market conditions. Our investment process seeks to meet investment targets within clearly stated risk parameters. We use tools and governance principles within our investment risk framework and we review performance that lies outside expectations. Fund performance is monitored as part of the investment performance risk management process and is formally overseen by a Portfolio Review Committee which meets quarterly.

Failure to retain key staff

Risk

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

Potential Impact

The departure of a high profile fund manager or member of our management team could lead to a significant level of redemptions from our funds or a failure to run our business in an effective manner, having 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 and we strive to ensure we have an attractive working environment. We maintain a competitive remuneration structure and make use of deferred remuneration and share-based payment arrangements in order to align staff long-term interests with those of the Group. We also develop, monitor and maintain succession planning for all key roles.

Significant mandate breach

Risk

Our funds are managed in accordance with investment mandates and restrictions agreed with our clients. Failure to adhere to these mandates would reflect a poor level of client service and may jeopardise relationships with our clients.

Potential Impact

If investments are made or managed in breach of an investment mandate, we may be required to unwind the relevant transactions and could be liable for any losses suffered by an affected party in doing so.

Mitigation/Controls

Functionality is coded onto the order management system to allow the pre and post-trade monitoring of investment activity, including system warnings being raised to alert fund managers prior to any investments being made. In addition, client portfolios are subject to a comprehensive programme of monitoring by our Compliance and Portfolio Analytics teams in order to allow swift remediation in the event of any breaches being identified.

Regulatory non-compliance

Risk

A significant regulatory investigation or action against the Group could have a detrimental effect on our reputation and business.

Potential Impact

Regulatory censure and the related adverse publicity may lead to a loss of confidence by our clients as well as having a negative reputational effect which could impinge on our ability to generate new business.

Mitigation/Controls

We maintain a robust compliance culture and all employees including fund managers and distribution staff are required to undertake training with regards to regulatory matters. Our Compliance department conducts a programme of internal monitoring to ensure that regulatory controls are adhered to. Our risk governance structure and whistleblowing policy are designed to ensure that any regulatory issues can be escalated to senior management in an open and timely way, ensuring the maximum appropriate amount of regulatory protection for clients.

EFFECTIVE DISTRIBUTION

Distribution and product trends

Risk

The risks reflect potential future changes in our fee structures, in the terms we are able to agree with third party distributors, or in the appetite of clients to invest in our products.

Potential Impact

Our ability to generate flows may be jeopardised by fundamental changes in distribution patterns or by a sustained market appetite for products Jupiter does not offer.

Mitigation/Controls

We undertake ongoing analysis of the markets in which we operate in order to ensure that we maintain a diverse suite of products that continue to appeal to our existing and potential future clients. A well-defined product development process enables us to deliver new products or enhancements to target client groups in a timely and efficient manner.

EFFICIENT OPERATIONS

Operational error or fraud

Risk

A material error in the execution of a key business process, or a fraud being successfully carried out against us or our clients.

Potential Impact

A significant error or successful fraud may lead to negative financial impact on the Group due to the cost of redressing any issues.

Mitigation/Controls

We rely on efficient and well-controlled processes. The potential impact and likelihood of processes failing and operational risks (including fraud) materialising is assessed by each operational area on a regular basis. Where these likelihoods are felt to be outside our appetite for risk, management actions and/or control improvements are identified in order to bring each potential risk back to within acceptable levels. Jupiter maintains a comprehensive level of insurance cover and we assess our capital resources to ensure that these are appropriate in the context of our potential risk exposures.

Failure of third party supplier

Risk

provider on which we rely for the provision of key business processing activities may lead to our failing to deliver the required level of service to our clients or shareholders or fulfilling our regulatory obligations.

Potential Impact

Our relationships with key stakeholders may be jeopardised in the event of our providing an inadequate level of service, resulting in the loss of clients or regulatory/financial censure.

Mitigation/Controls

All third parties who provide critical services to our business are subject to a high level of ongoing oversight, providing assurance that they are of the required standard. Jupiter has established formal guidelines for the management and oversight of all third party relationships to ensure that they are subject to a level of scrutiny commensurate with the potential risk they may pose to our business.

Business continuity incident

Risk

Business operations, systems and processes are liable to disruption from fire, power loss, systems failure or external events.

Potential Impact

Inability to carry out our business activities.

Mitigation/Controls

Continuity and business resumption planning is in place across our business in support of all of our key activities. We support remote working, including core system access for all of our key staff in the event that they are unable to travel to Jupiter's offices, and maintain alternative premises, including a dedicated office suite equipped with all key portfolio management and support systems, should our normal business systems or premises become unavailable.

Counterparty failure

Risk

The failure of a trading or depositary counterparty with which we have a relationship.

Potential Impact

The loss of or inability to access material amounts of our or our clients' funds.

Mitigation/Controls

The security of our clients' assets is Jupiter's primary consideration when evaluating potential counterparties. We seek to diversify our exposures across different institutions and actively monitor their creditworthiness using a suite of key risk indicators, including market data and credit agency ratings. Any deposits are placed according to agreed limits which may be amended in the context of any relevant changes.

 

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