Results for the year ended 31 December
2023
|
22 February 2024
A year of progress in a challenging
environment
n Despite continued macroeconomic uncertainty
throughout most of the year, we delivered a robust set of financial
results with underlying profit before tax up 36% to £105.2m (2022:
£77.6m).
n We also made significant progress against
our four key strategic objectives.
n Assets under management (AUM) increased 4%
to £52.2bn (31 December 2022: £50.2bn).
n Total net outflows moderated to £2.2bn
(2022: net outflows of £3.5bn), with modest inflows in the first
half and the timing of institutional funding resulting in net
outflows in the second half of the year.
n Statutory profit before tax was £9.4m (2022:
£58.0m), as a result of a £76.2m impairment on goodwill.
n In line with our capital allocation policy,
final dividend of 3.4p per share, bringing total dividend for the
year to 9.8p per share (2022: 8.4p per share), comprising an
ordinary dividend of 6.9p per share and a special dividend of 2.9p
per share.
|
|
Year ended
31 December 2023
|
Year ended
31 December 2022
|
% change
|
AUM
(£bn)
|
|
52.2
|
50.2
|
4%
|
Net
flows (£bn)
|
|
(2.2)
|
(3.5)
|
|
Net
revenue1 (£m)
|
|
368.8
|
397.3
|
(7)%
|
Statutory profit before tax2
(£m)
|
|
9.4
|
58.0
|
(84)%
|
Basic
earnings per share (EPS)2 (p)
|
|
(2.5)
|
8.9
|
(128)%
|
Underlying profit before tax1
(£m)
|
|
105.2
|
77.6
|
36%
|
Underlying EPS1 (p)
|
|
14.8
|
11.3
|
31%
|
Total
dividends per share (p)
|
|
9.8
|
8.4
|
17%
|
Cost:income ratio1
|
|
73%
|
69%
|
|
1 The Group's use of alternative performance
measures (APMs) is explained on pages 32 to 34.
2 IFRS measures.
Matthew Beesley, Chief Executive,
commented:
"We have delivered robust performance this
year, despite the challenges faced by our industry. Investment
performance improved over all time periods, and our AUM increased
by 4%, with positive market and other movements offsetting net
outflows, which continued to moderate in the
year."
"This time last year, we announced
four key strategic objectives and I'm pleased to report that we
have made significant progress in each of these areas. Notably, we
have built scale in our institutional and international businesses,
while driving efficiencies through a focus on reducing undue
complexity. We have broadened our appeal to clients by launching
our Client Group and are investing in technology, which is designed
to modernise and enhance our client experience. We've continued to
invest in our people and have recently announced new, high-quality
additions to our UK equity investment expertise."
"Our strong capital position means
that we are well-placed to invest for the future. The market
outlook continues to be uncertain but I am confident that we have a
strong underlying business and a strategy that can deliver growth
over the medium term."
Analyst
presentation
There
will be an analyst presentation at 9:00am GMT on 22 February
2024.
The
presentation will be held at The Zig Zag Building, 70 Victoria Street,
London, SW1E 6SQ and will also be accessible via a live webcast.
The webcast is available at https://secure.emincote.com/client/jupiter/jfm037.
Please note that questions can be asked either in-person at the
presentation or via the webcast.
The
results announcement and the presentation will be available
at https://www.jupiteram.com/investor-relations.
Copies may also be obtained from the registered office of the
Company at The Zig Zag Building, 70 Victoria Street, London, SW1E
6SQ.
The
Annual Report will be published in March 2024 and will be available
at https://www.jupiteram.com/investor-relations.
For
further information please contact:
|
|
|
|
Investors
|
Media
|
|
|
|
Jupiter
|
Alex
James
+44
(0)20 3817 1636
|
Despina Constantinides
+44
(0)20 3817 1278
|
|
|
|
Edelman Smithfield
|
Latika Shah
+44
(0)7950 671 948
|
Andrew Wilde
+44
(0)7786 022 022
|
LEI
Number: 5493003DJ1G01IMQ7S28
Forward-looking statements
This
announcement contains forward-looking statements with respect to
the financial condition, results of operations and businesses of
the Group. Such statements and forecasts involve risk and
uncertainty because they relate to events and depend upon
circumstances in the future. There are a number of factors that
could cause actual results or developments to differ materially
from those expressed or implied by forward-looking statements and
forecasts. Forward-looking statements and forecasts are based on
the Directors' current view and information known to them at the
date of this announcement. The Directors do not make any
undertaking to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
Nothing in this announcement should be construed as a profit
forecast.
We are
pleased to report a robust set of financial results for 2023,
despite the ongoing industry challenges and macroeconomic
uncertainty. Net outflows have continued to moderate, driven by
institutional client funding, and we have made progress against our
four key strategic objectives.
2023
was unquestionably a challenging environment for active asset
managers. Clients maintained a prevailing sense of caution
throughout the year and, given high inflation, rising interest
rates and geopolitical uncertainty, in many cases shunned 'risk
assets' in favour of the relatively high yields available on cash
and cash-like instruments.
This
has been a challenging backdrop for all asset managers, but
inevitably more so for active, high-conviction firms such as
Jupiter where our investment teams focus on identifying
inefficiently valued assets for the long-term benefits of our
clients. While these headwinds were present throughout the year,
they were particularly acute in the retail channel in the second
half.
Although macroeconomic impacts and market
movements are, of course, outside of our influence, we have
remained resolutely focused on the factors within our control and
on delivering against our strategy of increasing scale, decreasing
undue complexity, broadening our appeal to clients and deepening
relationships with all stakeholders.
Despite the challenging environment, net
outflows moderated to £2.2bn (2022: net outflows of £3.5bn), driven
by positive net inflows from Institutional clients for the second
consecutive year.
AUM
increased by 4% during the year to £52.2bn (31 December 2022:
£50.2bn) with positive market and other movements offsetting net
outflows. Lower average AUM and a decrease in the net management
fee margin, as we built scale in the Institutional channel, led to
a 7% decline in net revenue to £368.8m (2022: £397.3m). However, a
disciplined approach to cost control resulted in a 12% decrease in
operating costs to £264.6m (2022: £301.5m), or 4% excluding
performance fee costs.
Underlying profit before tax increased by
36% to £105.2m (2022: £77.6m). Underlying earnings per share
increased to 14.8p (2022: 11.3p per share), broadly in line with
the increase in underlying profits.
In
line with our capital allocation policy, the Board has proposed a
final ordinary dividend of 3.4p, taking total full year dividends
to 9.8p, including a special dividend of 2.9p per share announced
at the interim results.
Continued focus on our strategic
objectives
Twelve
months ago, we detailed four key strategic objectives that would be
key in driving Jupiter's future success, which are:
n Increase scale in select geographies and
channels;
n Decrease undue complexity
with costs managed
carefully through a relentless pursuit of efficiency;
n Broaden our appeal to clients
with new and
existing investment strategies, while also exploring additional
methods of delivery; and
n Deepen relationships with all
stakeholders with purpose and sustainability embedded in
all we do.
All the decisions taken by our management team
are focused on delivering progress against these aims and we are
pleased to report considerable progress against each through
2023.
Of
these four objectives, increasing scale remains the most important.
In order to consistently and sustainably grow our business over the
medium term, it is imperative that we achieve top line
growth.
One of
our key areas of focus has been on growing scale within our
Institutional business, where we have continued to see strong
momentum this year. We generated net inflows from Institutional
clients of £1.8bn, which totals £3.8bn over the last two years.
Institutional clients now entrust us to manage £10bn of their
assets, which represents 19% of Group AUM, up from only 10% five
years ago. We continue to work with larger and ever more
sophisticated clients, with the average size of our mandates now
five times larger than two years ago. Our late-stage pipeline
remains strong, with opportunities across six investment desks from
both new and existing clients based in 9 countries.
We
have also continued to build scale in our international businesses
outside of the UK. We saw £1.1bn of net inflows from clients based
overseas and international clients now account for 34% of Group
AUM, up from 25% five years ago. We will continue to incrementally
invest in markets where we see the most significant, near-term
opportunities and to prioritise the allocation of central resources
towards these markets, whilst maintaining our longer-term focus on
opportunities in other areas.
Against the backdrop of falling fee margins
and rising operating and regulatory costs, it is crucial that we
remove undue complexity from our day-to-day operations and identify
opportunities to introduce greater efficiency. This focus on cost
discipline has been evident in the 6% decrease in non-compensation
costs. The fund rationalisation programme which we announced last
year is now largely complete, with a 25% reduction in the number of
funds on our platform and an attrition rate of only 0.7% of total
Group AUM as we managed through this process.
As
part of our strategic focus, we relentlessly pursue efficiency and
have managed the cost base appropriately lower. This is also
affording us the space to invest in areas of future growth and, as
of now, 19% of our total cost base is allocated to strategic growth
opportunities.
Our
clients' needs are fundamentally changing and their expectations
are growing and as such we need to evolve and adapt how we engage
with them to meet those needs. One of the biggest changes to the
business this year, and as part of broadening our appeal to
clients, is the formation of our Client Group, replacing our
previous Distribution function. Success will be driven not through selling
individual products to our clients, but rather through engaging in
deeper relationships, becoming trusted partners and engaging in an
ongoing, highly technical conversation, while leveraging technology
to automate and personalise much of our reporting.
The
fund rationalisation programme has also provided us with the space
to develop new products, including the launch of our thematic
range, managed by our successful systematic equities
team.
Finally, we have continued to deepen
relationships with all of our stakeholders. We regularly conduct
employee opinion surveys and we are delighted to report that our
overall people engagement score is at 78%, a seven percentage point
increase over the year and ahead of the financial services
benchmark. For clients, as well as delivering improved investment
performance after fees, we have introduced a tiered pricing
structure on our UK-domiciled fund ranges, allowing them to share
the benefits of economies of scale as funds' assets grow. For our
shareholders, we have continued to return capital on a clear,
sustainable basis while retaining optionality for investment in
both organic and inorganic growth opportunities.
Moderating outflows, driven by
continued success in the Institutional channel
After
generating small net positive inflows in the first half of the
year, client sentiment across the industry weakened materially
towards the end of the year. As a result, and due to timing of some
institutional mandates funding, this resulted in total net outflows
in the year of £2.2bn, an improvement on the net outflows of £3.5bn
in 2022.
Gross
flows continued to be strong at £13.2bn, although were again weaker
in the second half as retail demand for risk assets
declined.
The
Institutional channel generated £1.8bn of net inflows and now
accounts for 19% of Group AUM. Both the existing book and the late
stage pipeline are well diversified by client region and investment
strategy. We continue to be optimistic around the ongoing growth
opportunities in this channel and expect to see further mandates
being funded through 2024 and beyond.
In
common with much of the active asset management industry, retail
demand for risk assets was again weak during 2023, resulting in
£4.0bn of net outflows which, whilst disappointing, is an
improvement on the £5.5bn of net outflows in the prior
year.
We saw
redemptions from Unconstrained Fixed Income strategies, despite
improving investment performance. UK and European equities
continued to be out of demand. Conversely, value and income
strategies saw good net flows, particularly those focused on
investing in Asia. Asian Income, Japan Income and our Indian Equity
funds all saw net inflows. Global Equity Absolute Return also had
another positive year, in terms of both performance and net
inflows.
In
January, it was announced that Ben Whitmore, who has been with
Jupiter since 2006, would leave the Group later in the year to
set up his own value investment boutique. Whilst it is too early to
confidently predict how clients will react, we can reasonably
expect to lose some assets as a result, most probably from the
Institutional client channel. We are naturally sad to see Ben
depart but we are, however, delighted to have been able
to announce the hirings of Alex Savvides, Adrian Gosden and
Chris Morrison. All three are high-quality investors with
excellent performance track records. These hirings demonstrate
Jupiter's ability to attract market-leading investment talent and
our UK equity client offering has never been stronger. We
are hopeful that the strength of the investment expertise, which
has been bolstered by these new hires, will give us the
opportunity for growth in the medium term.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Movement in AUM by client channel
|
|
|
|
|
|
|
31 December
2022
£bn
|
Q1 net
flows
£bn
|
Q2 net
flows
£bn
|
Q3 net
flows
£bn
|
Q4 net
flows
£bn
|
Full-year
net flows
£bn
|
Market returns
£bn
|
31 December
2023
£bn
|
Retail, wholesale & investment
trusts
|
43.4
|
(1.0)
|
(0.7)
|
(1.0)
|
(1.3)
|
(4.0)
|
2.8
|
42.2
|
Institutional
|
6.8
|
0.1
|
1.6
|
-
|
0.1
|
1.8
|
1.4
|
10.0
|
Total
|
50.2
|
(0.9)
|
0.9
|
(1.0)
|
(1.2)
|
(2.2)
|
4.2
|
52.2
|
Of which is invested in mutual
funds
|
39.3
|
(1.1)
|
(0.6)
|
(1.1)
|
(1.1)
|
(3.9)
|
2.7
|
38.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robust financial results
Despite the challenging backdrop,
we have delivered robust financial performance through 2023. We
have continued to invest in areas of strategic growth, helped by
the strength of our balance sheet, while actively pursuing
efficiencies across the Group.
Underlying profit before tax for
the year was up 36% to £105.2m (2022: £77.6m). Underlying EPS was
up 3.5p, to 14.8p per share (2022: 11.3p), broadly in line with the
increase in underlying profits.
Excluding the impact of performance
fees, there was a small decrease in profits of £2.8m to £98.4m
(2022: £101.2m), reflecting lower management fee revenues, offset
by cost savings, net gains on seed and interest earned on
cash invested in money market
funds.
Although closing AUM ended higher
at £52.2bn, average AUM fell from £52.4bn to £50.9bn. Net revenue
fell by 7% to £368.8m (2022: £397.3m), as a result of this lower
average AUM and lower net management fee margins due to changes in
the business mix.
Our average net management fee
margin reduced from 73.5bps in 2022 to 69.5bps in 2023. This was in
line with expectations as the business mix shifted more towards
lower margin Institutional business. Our focus remains on growing
absolute revenues and we recognise
that the average margin will decline as we build
scale within the Institutional channel.
This year, we have also published
our average net management fee margin by client channel. Within the
Retail, wholesale and investment trust channel, the average margin
was 78bps and for the Institutional channel it was
29bps.
We remain resolutely focused on
controlling costs wherever possible and we have delivered
efficiencies through this year. Overall administrative expenses
were 12% lower than last year at £265.4m (2022: £302.3m). £6.4m of
these costs related to performance fees (2022: £33.9m).
Non-compensation costs were 6%
lower at £107.3m as a result of both direct management actions and
costs linked to AUM levels. Despite inflationary pressures, fixed
staff costs fell by 5% to £78.1m (2022: £82.4m), as a result of the
restructuring programme we implemented in 2022. Variable staff
costs fell by 24% to £79.2m (2022: £104.5m), although the prior
year included £33.9m of performance-fee related costs. Excluding
the impact of performance fee related costs, which we now consider
to be at more normalised levels, variable staff costs grew 3% to
£72.8m (2022: £70.6m). Excluding the impact of performance fees,
our total compensation ratio was 42% (2022: 40%).
This rigorous focus on cost
discipline has not only delivered efficiencies, but also allowed us
space to invest for growth. 19% of our cost base is in
strategically important areas of future growth.
Other gains of £3.2m (2022: losses
of £9.7m) relate to gains on our seed capital investments, net of
hedging. We also generated finance income of £5.8m (2022: £0.3m) as
we delivered improved returns on the Group's cash balances. This
was offset by finance costs of £6.2m (2022: £6.6m), primarily
comprising the interest charge on subordinated debt.
Exceptional items of £95.8m
principally comprise an impairment of goodwill of £76.2m along with
the amortisation of intangible assets, both relating to previous
acquisitions. We are required to perform impairment tests on
goodwill acquired as part of business combinations. As a result of
the challenging economic environment, including higher costs of
capital and lower levels of retail demand, the Group's judgement
was that the value of the goodwill asset at 31 December 2023 had
fallen below that of its carrying value and, as a result, an
impairment charge was recognised. This has no impact on the Group's
underlying profit before tax, surplus capital position or ability
to pay dividends. Total exceptional items were £95.8m (2022:
£19.6m).
Principally as a result of this
goodwill impairment charge, statutory profit before tax decreased
to £9.4m (2022: £58.0m).
|
|
2023
|
2022
|
£m
|
|
Before performance
fees
|
Performance fee
profits
|
Total
|
Before performance fees
|
Performance fee losses
|
Total
|
Net revenue
|
|
355.6
|
13.2
|
368.8
|
387.0
|
10.3
|
397.3
|
Fixed staff costs
|
|
(78.1)
|
-
|
(78.1)
|
(82.4)
|
-
|
(82.4)
|
Variable staff costs1,
2
|
|
(72.8)
|
(6.4)
|
(79.2)
|
(70.6)
|
(33.9)
|
(104.5)
|
Non-compensation costs
|
|
(107.3)
|
-
|
(107.3)
|
(114.6)
|
-
|
(114.6)
|
Administrative expenses2
|
|
(258.2)
|
(6.4)
|
(264.6)
|
(267.6)
|
(33.9)
|
(301.5)
|
Other gains/(losses)
|
|
3.2
|
-
|
3.2
|
(9.7)
|
-
|
(9.7)
|
Amortisation of intangible
assets3
|
|
(1.8)
|
-
|
(1.8)
|
(2.2)
|
-
|
(2.2)
|
Operating profit before exceptional items
|
|
98.8
|
6.8
|
105.6
|
107.5
|
(23.6)
|
83.9
|
Net finance costs
|
|
(0.4)
|
-
|
(0.4)
|
(6.3)
|
-
|
(6.3)
|
Profit before taxation and exceptional
items
|
|
98.4
|
6.8
|
105.2
|
101.2
|
(23.6)
|
77.6
|
Exceptional items
|
|
(95.8)
|
-
|
(95.8)
|
(19.6)
|
-
|
(19.6)
|
Statutory profit before tax
|
|
2.6
|
6.8
|
9.4
|
81.6
|
(23.6)
|
58.0
|
|
|
|
|
|
|
|
|
|
1 Variable costs in respect of performance fee profits/losses
in 2023 mainly relate to the accounting charge for deferred bonus
awards made in respect of 2023 performance fee revenues (2022:
mainly in respect of 2021 performance fee revenues).
2
Variable staff costs and Administrative expenses
exclude £0.8m classified as exceptional (2022: £0.8m).
3
Amortisation of intangible assets excludes £18.8m classified
as exceptional (2022: £18.8m).
Improving investment performance
As a high-conviction active asset
manager, delivering investment for our clients is key to our
ongoing success. We are pleased to report that, despite the
challenging market backdrop, we have seen an improvement in
investment outperformance across the one, three and five-year
periods.
At 31 December 2023, 59% of our
mutual fund AUM had delivered above-median performance against
their peer group over three years (31 December 2022: 51% of mutual
fund AUM), and 41% of mutual fund AUM had delivered first quartile
performance.
The most significant drivers of the
improvement in the aggregate performance figure were the European
Growth fund and Income Trust, both of which moved above their peer
group median during the period.
Measured over one year, 65% of
mutual fund AUM (31 December 2022: 49% of mutual fund AUM)
delivered above-median performance, and over five years this was
66% of mutual fund AUM (31 December 2022: 53% of mutual fund
AUM).
The growth in the one year figure
was primarily driven by three of our largest funds moving above
their median, which were the European fund and the two vehicles in
our flagship unconstrained fixed income strategy, Dynamic Bond and
Strategic Bond. After a period of relative underperformance through
2022 having taken a non-consensus view on inflation expectations,
it is encouraging to see the funds return to stronger
performance.
Our larger funds also continue to
deliver strong investment performance. We manage 12 funds with over
£1bn of AUM. Of these, nine have outperformed their median over the
key three-year time period with seven in the top quartile of their
peer group. The three largest funds which have not outperformed
their median over three years are now all above median over one
year.
The overall aggregate
outperformance figure is still not where we would want it to be,
but we are pleased to observe the improving trend over all time
periods, which is often seen as a lead indicator of
potential flows.
A
strong capital base
The Group continues to maintain a
strong capital base.
Our expected surplus over
regulatory requirements has grown to £177.1m (31 December 2022:
£114.2m), which amounts to 3.5 times coverage of our regulatory
requirements of £71.8m. Seed capital invested to support the growth
of our funds was £79m at cost at 31 December 2023 and has grown by
a further £53m following year end as a result of catalyst funding
into Global High Yield and Asian Income.
The Group's capital allocation
policy is to return 50% of underlying EPS before performance fees.
In line with this, the Board have proposed a final dividend of 3.4p
per share, bringing the total dividend for the year to 9.8p per
share, including a 3.5p per share interim dividend and a 2.9p per
share special dividend announced at the interim results.
The dividends will be paid on 20 May 2024 to
shareholders on the register at the close of business on 19 April
2024.
We continue to actively explore the
most effective ways in which to deploy our capital and we are
committed to making additional returns to shareholders of capital
surplus to business requirements on a periodic basis.
Progress moving forward
Despite the ongoing industry
challenges, we have delivered a robust set of numbers this year.
Profits have grown compared to the prior year, investment
performance has improved over all time periods and net outflows
have continued to moderate.
We have made progress against each
of our strategic objectives, most notably in building scale in our
institutional and international businesses while driving
efficiencies through a focus on reducing undue
complexity.
Our capital base remains very
strong and we are actively looking for opportunities to further
develop the business, both organically and
inorganically.
There are many unknowns as we head
into 2024 but we are confident that we have a strong underlying
business and a strategy that can deliver growth. We are hopeful
2024 will be a better environment for active asset managers to
demonstrate their value proposition and deliver the outperformance
our clients rightly expect from us. Certainly, as a business, we
are better placed to capture any of this upside that may come to
pass because of our efforts and strategic focus over the
last 12 months.
Matthew Beesley
Chief Executive Officer
21 February 2024
Consolidated income
statement
for the year ended 31 December
2023
|
|
|
Notes
|
|
2023
|
|
2022
|
|
|
|
|
£m
|
|
£m
|
Revenue
|
|
1, 2
|
|
405.6
|
|
443.5
|
Fee and commission
expenses
|
|
1
|
|
(36.8)
|
|
(46.2)
|
Net revenue
|
|
1
|
|
368.8
|
|
397.3
|
|
|
|
|
|
|
|
Administrative expenses
|
|
3
|
|
(265.4)
|
|
(302.3)
|
Other gains/(losses)
|
|
4
|
|
3.2
|
|
(9.7)
|
Amortisation of intangible
assets
|
|
9
|
|
(20.6)
|
|
(21.0)
|
Operating profit
|
|
|
|
86.0
|
|
64.3
|
|
|
|
|
|
|
|
Impairment of goodwill
|
|
8
|
|
(76.2)
|
|
-
|
Finance
income1
|
|
5
|
|
5.8
|
|
0.3
|
Finance
costs1
|
|
5
|
|
(6.2)
|
|
(6.6)
|
Profit before taxation
|
|
|
|
9.4
|
|
58.0
|
|
|
|
|
|
|
|
Income tax expense
|
|
6
|
|
(22.3)
|
|
(10.1)
|
(Loss)/profit for the year2
|
|
|
|
(12.9)
|
|
47.9
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
Basic
|
|
7
|
|
(2.5)p
|
|
8.9p
|
Diluted
|
|
7
|
|
(2.5)p
|
|
8.8p
|
1In the Group's 2022 Annual Report and Accounts, these lines
were aggregated as 'Net finance costs'.
2Non-controlling interests are presented in the Consolidated
statement of changes of equity.
Consolidated statement of comprehensive
income
for the year ended 31 December
2023
|
|
2023
|
|
2022
|
|
|
£m
|
|
£m
|
|
|
|
|
|
(Loss)/profit for the year net of tax
|
|
(12.9)
|
|
47.9
|
|
|
|
|
|
Items that may be reclassified subsequently to profit or
loss
|
|
|
|
|
Exchange movements on translation
of subsidiary undertakings
|
|
(1.7)
|
|
3.4
|
Other comprehensive (loss)/income for the year net of
tax
|
|
(1.7)
|
|
3.4
|
|
|
|
|
|
Total comprehensive (loss)/income for the year net of
tax
|
|
(14.6)
|
|
51.3
|
|
|
|
|
|
|
Consolidated balance
sheet
at 31 December 2023
|
|
|
Notes
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
£m
|
|
£m
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
8
|
|
|
|
494.4
|
|
570.6
|
|
Intangible assets
|
|
9
|
|
|
|
17.5
|
|
35.2
|
|
Property, plant and
equipment
|
|
10
|
|
|
|
37.5
|
|
40.9
|
|
Investment in
associates
|
|
|
|
|
|
1.8
|
|
-
|
|
Deferred tax assets
|
|
|
|
|
|
16.1
|
|
19.4
|
|
Trade and other
receivables
|
|
|
|
|
|
0.4
|
|
0.4
|
|
|
|
|
|
|
|
567.7
|
|
666.5
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
232.8
|
|
167.8
|
|
Trade and other
receivables
|
|
|
|
|
|
137.6
|
|
124.1
|
|
Cash and cash
equivalents
Current tax asset
|
|
12
|
|
|
|
268.2
1.3
|
|
280.3
3.3
|
|
|
|
|
|
|
|
639.9
|
|
575.5
|
|
Total assets
|
|
|
|
|
|
1,207.6
|
|
1,242.0
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to shareholders
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
14
|
|
|
|
10.9
|
|
10.9
|
|
Own share reserve
|
|
15
|
|
|
|
(0.7)
|
|
(0.5)
|
|
Other reserves
|
|
15
|
|
|
|
250.3
|
|
250.3
|
|
Foreign currency translation
reserve
|
|
15
|
|
|
|
2.0
|
|
3.7
|
|
Retained earnings
|
|
15
|
|
|
|
527.0
|
|
578.9
|
|
Equity attributable to owners of Jupiter Fund Management
plc
|
|
|
|
|
|
789.5
|
|
843.3
|
|
Non-controlling
interests
|
|
|
|
|
|
-
|
|
0.6
|
|
TOTAL EQUITY
|
|
|
|
|
|
789.5
|
|
843.9
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
Loans and borrowings
|
|
13
|
|
|
|
49.7
|
|
49.5
|
|
Trade and other
payables
|
|
|
|
|
|
59.7
|
|
87.5
|
|
Deferred tax
liabilities
|
|
|
|
|
|
2.3
|
|
6.7
|
|
|
|
|
|
|
|
111.7
|
|
143.7
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Financial liabilities at fair
value through profit or loss (FVTPL)
|
|
|
|
|
|
80.3
|
|
49.2
|
|
Trade and other
payables
|
|
|
|
|
|
221.4
|
|
202.4
|
|
Provisions
|
|
|
|
|
|
4.7
|
|
2.8
|
|
|
|
|
|
|
|
306.4
|
|
254.4
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
418.1
|
|
398.1
|
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities
|
|
|
|
|
|
1,207.6
|
|
1,242.0
|
|
Consolidated statement of changes in
equity
for the year ended 31 December
2023
|
|
|
Share
capital
|
Own
share
reserve
|
Other
reserves
|
Foreign
currency
translation
reserve
|
Retained
earnings
|
Total
|
Non-controlling
interests
|
Total
equity
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 1 January 2022
|
|
11.1
|
(0.4)
|
250.1
|
0.3
|
639.7
|
900.8
|
-
|
900.8
|
Profit for the year after tax
|
|
-
|
-
|
-
|
-
|
47.3
|
47.3
|
0.6
|
47.9
|
Exchange movements on translation
of subsidiary undertakings
|
|
-
|
-
|
-
|
3.4
|
-
|
3.4
|
-
|
3.4
|
Other comprehensive income
|
|
-
|
-
|
-
|
3.4
|
-
|
3.4
|
-
|
3.4
|
Total comprehensive income
|
|
-
|
-
|
-
|
3.4
|
47.3
|
50.7
|
0.6
|
51.3
|
Vesting of ordinary shares and
options
|
|
-
|
0.1
|
-
|
-
|
(0.1)
|
-
|
-
|
-
|
Share repurchases and
cancellations
|
|
(0.2)
|
-
|
0.2
|
-
|
(10.0)
|
(10.0)
|
-
|
(10.0)
|
Dividends paid
|
|
-
|
-
|
-
|
-
|
(90.2)
|
(90.2)
|
-
|
(90.2)
|
Purchase of shares by employee
benefit trust (EBT)
|
|
-
|
(0.2)
|
-
|
-
|
(21.2)
|
(21.4)
|
-
|
(21.4)
|
Share-based payments
|
|
-
|
-
|
-
|
-
|
13.6
|
13.6
|
-
|
13.6
|
Deferred tax
|
|
-
|
-
|
-
|
-
|
(0.2)
|
(0.2)
|
-
|
(0.2)
|
Total transactions with owners
|
|
(0.2)
|
(0.1)
|
0.2
|
-
|
(108.1)
|
(108.2)
|
-
|
(108.2)
|
At 31 December 2022
|
|
10.9
|
(0.5)
|
250.3
|
3.7
|
578.9
|
843.3
|
0.6
|
843.9
|
Loss for the year after tax
|
|
-
|
-
|
-
|
-
|
(12.9)
|
(12.9)
|
-
|
(12.9)
|
Exchange movements on translation
of subsidiary undertakings
|
|
-
|
-
|
-
|
(1.7)
|
-
|
(1.7)
|
-
|
(1.7)
|
Other comprehensive loss
|
|
-
|
-
|
-
|
(1.7)
|
-
|
(1.7)
|
-
|
(1.7)
|
Total comprehensive loss
|
|
-
|
-
|
-
|
(1.7)
|
(12.9)
|
(14.6)
|
-
|
(14.6)
|
Vesting of ordinary shares and
options
|
|
-
|
0.2
|
-
|
-
|
(0.2)
|
-
|
-
|
-
|
Dividends paid
|
|
-
|
-
|
-
|
-
|
(35.2)
|
(35.2)
|
-
|
(35.2)
|
Purchase of shares by
EBT
|
|
-
|
(0.4)
|
-
|
-
|
(24.1)
|
(24.5)
|
-
|
(24.5)
|
Share-based payments
|
|
-
|
-
|
-
|
-
|
18.5
|
18.5
|
-
|
18.5
|
Other movements
|
|
-
|
-
|
-
|
-
|
2.0
|
2.0
|
-
|
2.0
|
Disposal of non-controlling
interests
|
|
-
|
-
|
-
|
-
|
-
|
-
|
(0.6)
|
(0.6)
|
Total transactions with owners
|
|
-
|
(0.2)
|
-
|
-
|
(39.0)
|
(39.2)
|
(0.6)
|
(39.8)
|
At 31 December 2023
|
|
10.9
|
(0.7)
|
250.3
|
2.0
|
527.0
|
789.5
|
-
|
789.5
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
14
|
15
|
15
|
15
|
15
|
|
|
|
Consolidated statement of cash
flows
for the year ended 31 December
2023
|
|
Notes
|
|
2023
|
|
2022
|
|
|
|
|
£m
|
|
£m
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from
operations
|
17
|
|
109.1
|
|
175.1
|
|
Income tax paid
|
|
|
(21.1)
|
|
(12.8)
|
|
Net cash inflows from operating activities
|
|
|
88.0
|
|
162.3
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
Purchase of intangible
assets
|
9
|
|
(2.9)
|
|
(4.1)
|
|
Purchase of property, plant and
equipment
|
10
|
|
(0.6)
|
|
(1.2)
|
|
Purchase of financial assets at
FVTPL1
|
|
|
(187.0)
|
|
(188.2)
|
|
Proceeds from disposals of
financial assets at FVTPL2
|
|
|
131.1
|
|
233.3
|
|
Cash movement from funds no longer
consolidated3
|
|
|
(3.1)
|
|
(6.0)
|
|
Cash movement from funds
consolidated4
|
|
|
0.5
|
|
0.3
|
|
Interest and dividend income
received
|
|
|
5.4
|
|
1.0
|
|
Net cash (outflows)/inflows from investing
activities
|
|
|
(56.6)
|
|
35.1
|
|
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
|
|
|
|
Dividends paid
|
16
|
|
(35.2)
|
|
(90.2)
|
|
Purchase of shares by
EBT
|
15
|
|
(24.5)
|
|
(21.4)
|
|
Purchase of shares for
cancellation
|
14
|
|
(2.0)
|
|
(8.0)
|
|
Finance costs paid
|
|
|
(4.6)
|
|
(4.5)
|
|
Cash paid in respect of lease
arrangements
|
|
|
(4.9)
|
|
(7.8)
|
|
Third-party subscriptions into
consolidated funds
|
|
|
63.0
|
|
31.7
|
|
Third-party redemptions from
consolidated funds
|
|
|
(34.1)
|
|
(13.0)
|
|
Distributions paid by consolidated
funds
|
|
|
(0.1)
|
|
(3.8)
|
|
Net cash outflows from financing activities
|
|
|
(42.4)
|
|
(117.0)
|
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash
equivalents
|
|
|
(11.0)
|
|
80.4
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at
beginning of year
|
|
|
280.3
|
|
197.3
|
|
Effects of exchange rates on cash
and cash equivalents
|
|
|
(1.1)
|
|
2.6
|
|
Cash and cash equivalents at end of year
|
12
|
|
268.2
|
|
280.3
|
|
|
|
|
|
|
|
|
|
1Includes purchases of seed investments and fund units used as
a hedge against compensation awards linked to the value of those
funds and, where the Group's investment in seed is judged to give
it control of a fund, purchases of financial assets by that
fund.
2Includes proceeds from disposals of seed investments and,
where the Group's investment in seed is judged to give it control
of a fund, disposals of financial assets by that fund.
3Comprises cash and cash equivalents held by a fund at the
point that the Group ceases to control the fund and it is no longer
consolidated.
4Comprises cash and cash equivalents held by a fund at the
point that control passes to the Group and the fund is
consolidated.
Notes to the Group financial
statements
|
Introduction
Jupiter Fund Management plc (the
Company) and its subsidiaries (together, the Group) offer a range
of asset management products. Through its subsidiaries, the Group
acts as an investment manager to authorised unit trusts, SICAVs,
ICVCs, OEICs, investment trust companies, pension funds and other
specialist funds. At 31 December 2023, the Group had offices in the
United Kingdom, Ireland, Germany, Hong Kong, Italy, Luxembourg,
Singapore, Spain, Sweden, Switzerland and the United
States.
Basis of preparation and other accounting
policies
The financial information set out
does not constitute the Company's statutory accounts for the years
ended 31 December 2023 or 2022, but is derived from those accounts.
The Auditors have reported on the 2023 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 2022 have been delivered to the Registrar of Companies
and those for 2023 will be delivered in due course.
The Group financial statements have
been prepared in accordance with UK-adopted International
Accounting Standards (IAS) and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those
standards.
The financial statements have been
prepared on a going concern basis using the historical cost
convention modified by the revaluation of certain financial assets
and financial liabilities (including derivatives) that have been
measured at fair value. After reviewing the Group's current plans
and forecasts and financing arrangements, as well as the current
trading activities of the Group, the Directors consider that the
Group has adequate resources to continue operating for a period of
at least 12 months from the date of signing.
In preparing the financial
statements, we have considered the impact of climate change. There
has not been a material impact on the financial reporting
judgements and estimates arising from our
considerations.
Changes in the composition of the Group
The Group is required to
consolidate seed capital investments if it is deemed to control
them. The following changes have been made to the consolidation of
the Group since 31 December 2022:
Included in consolidation (as a result of
investments)
|
Excluded from consolidation
|
Jupiter Global Emerging Markets
Focus ex China Fund
Jupiter Merlin Moderate
Select
Jupiter Systematic Consumer Trends
Fund
Jupiter Systematic Demographic
Opportunities Fund
Jupiter Disruptive Technology
Fund
Jupiter Healthcare Innovation
Fund
Jupiter Systematic Physical World
Fund
|
Jupiter Global Emerging Markets
Focus Fund
Jupiter Global Fund SICAV: Global
Ecology Bond
Jupiter Global Sustainable
Equities Fund
Jupiter Merlin Real
Return
|
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.
1. Revenue
The Group's primary source of
recurring revenue is management fees. Management fees are charged
for investment management or administrative
services and are normally based on an agreed percentage of AUM.
Initial charges and commissions are for additional administrative
services at the beginning of a client relationship, as well as
ongoing administrative costs. Performance fees may be earned from
some funds when agreed performance conditions are met. Net revenue
is stated after fee and commission expenses to intermediaries for
ongoing services under distribution agreements.
|
2023
£m
|
|
2022
£m
|
|
|
|
|
Management fees
|
389.9
|
|
430.1
|
Initial charges and
commissions
|
2.5
|
|
3.1
|
Performance fees
|
13.2
|
|
10.3
|
Revenue
|
405.6
|
|
443.5
|
Fee and commission expenses
relating to management fees
|
(35.9)
|
|
(45.3)
|
Fee and commission expenses
relating to initial charges and commissions
|
(0.9)
|
|
(0.9)
|
Net revenue
|
368.8
|
|
397.3
|
Disaggregation of revenue
The Group disaggregates revenue
from contracts with customers on the basis of product type and
geographical region, 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.
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. In contrast, segregated mandates are generally
established in accordance with the requirements of a specific
institutional investor.
|
2023
£m
|
|
2022
£m
|
Revenue by product type
|
|
|
|
Pooled funds
|
373.7
|
|
417.2
|
Segregated mandates
|
31.9
|
|
26.3
|
Revenue
|
405.6
|
|
443.5
|
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, collectively the Executive
Directors, 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
profit for the purpose of making decisions about resource
allocation and performance assessment.
Geographical information
|
2023
£m
|
|
2022
£m
|
Revenue by location of clients
|
|
|
|
UK
|
299.6
|
|
334.4
|
EMEA
|
72.3
|
|
77.7
|
Asia
|
15.0
|
|
18.2
|
Rest of the world
|
18.7
|
|
13.2
|
Revenue by location
|
405.6
|
|
443.5
|
The location of clients is based on
management information received from distribution partners. Where
management information is not available, the location of the
distribution partner is used as a proxy for the location of the
client.
Non-current assets for the Group
(excluding financial instruments and deferred tax assets) are
domiciled as set out below:
|
2023
£m
|
|
2022
£m
|
Non-current assets for the Group
|
|
|
|
UK
|
547.1
|
|
644.3
|
EMEA
|
1.1
|
|
1.1
|
Asia
|
1.1
|
|
1.0
|
Rest of the world
|
0.1
|
|
0.3
|
Non-current assets by location
|
549.4
|
|
646.7
|
3. Administrative
expenses
Administrative expenses of £265.4m
(2022: £302.3m) include staff costs of £158.1m (2022: £187.7m).
Staff costs consist of:
|
2023
£m
|
|
2022
£m
|
|
|
|
|
Wages and salaries
|
116.8
|
|
98.3
|
Share-based payments
|
18.5
|
|
13.6
|
Social security costs
|
15.8
|
|
11.1
|
Pension costs
|
6.3
|
|
6.2
|
Redundancy costs
|
2.2
|
|
3.4
|
Staff costs before (gains)/losses arising from the economic
hedging of fund units
|
159.6
|
|
132.6
|
Net (gains)/losses on instruments
held to provide an economic hedge for fund awards
|
(1.5)
|
|
55.1
|
Staff costs
|
158.1
|
|
187.7
|
The Management statement refers to
£0.8m (2022: £0.8m) of staff costs that are described as
exceptional items. These costs relate to the acquisition of Merian
Global Investors Limited (Merian) in 2020 and chiefly comprise
cash-based (2022: cash and share-based) deferred earn out awards
which vested in July 2023.
4. Other
gains/(losses)
Other gains/(losses) relate
principally to net gains/(losses) made on the Group's seed
investment portfolio and derivative instruments held to provide
economic hedges against that portfolio. The portfolio and
derivatives are held at FVTPL (see Note 11). Gain and losses on
these investments comprise both realised and unrealised
amounts.
|
2023
£m
|
|
2022
£m
|
|
|
|
|
Dividend income
|
0.6
|
|
1.0
|
Gains/(losses) on financial
instruments designated at FVTPL upon initial recognition
|
8.2
|
|
(24.7)
|
(Losses)/gains on financial
instruments at FVTPL
|
(5.6)
|
|
14.0
|
Other gains/(losses)
|
3.2
|
|
(9.7)
|
5. Finance income and finance
costs
Finance income comprises income
earned on the Group's cash and cash equivalents, being bank
deposits and investments in short-term money market funds. Interest
on cash and cash equivalents is recognised on an accrual basis
using the effective interest method.
|
2023
£m
|
|
2022
£m
|
|
|
|
|
Interest on bank
deposits
|
3.5
|
|
0.3
|
Interest on short-term money
market fund investments
|
2.3
|
|
-
|
|
5.8
|
|
0.3
|
Finance costs principally relate to
interest payable on Tier 2 subordinated debt notes (see Note 13)
and the unwinding of the discount applied to lease liabilities.
Finance costs also include ancillary charges for commitment fees
and arrangement fees associated with the revolving credit facility.
Interest payable is charged on an accrual basis using the effective
interest method.
|
2023
£m
|
|
2022
£m
|
|
|
|
|
Interest on subordinated
debt
|
4.5
|
|
4.7
|
Interest on lease
liabilities
|
1.5
|
|
1.6
|
Finance cost on the revolving
credit facility
|
0.2
|
|
0.3
|
|
6.2
|
|
6.6
|
6. Income tax
expense
Analysis of charge in the year
|
2023
£m
|
|
2022
£m
|
|
|
|
|
Current tax
|
|
|
|
Tax on profits for the
year
|
24.1
|
|
9.5
|
Adjustments in respect of prior
years
|
(0.7)
|
|
(3.8)
|
Total current tax
|
23.4
|
|
5.7
|
Deferred tax
|
|
|
|
Origination and reversal of
temporary differences
|
0.1
|
|
3.8
|
Adjustments in respect of prior
years
|
(1.2)
|
|
0.6
|
Total deferred tax
|
(1.1)
|
|
4.4
|
Income tax expense
|
22.3
|
|
10.1
|
The corporation tax rate for 2023
increased to 25% on 1 April 2023, giving a hybrid rate for the year
of 23.5% (2022: 19%). The tax charge in the year is higher (2022:
lower) than the standard rate of corporation tax in the UK and the
differences are explained below:
Factors affecting tax expense for the year
|
2023
£m
|
|
2022
£m
|
|
|
|
|
Profit before taxation
|
9.4
|
|
58.0
|
|
|
|
|
Taxation at the standard
corporation tax rate (23.5%; 2023: 19%)
|
2.2
|
|
11.0
|
Non-taxable
expenditure1
|
17.9
|
|
0.4
|
Other permanent
differences
|
4.3
|
|
1.6
|
Adjustments in respect of prior
years
|
(1.9)
|
|
(3.2)
|
Effect of differences in overseas
tax rates
|
(0.2)
|
|
0.3
|
Total tax expense
|
22.3
|
|
10.1
|
1 Principally relating to the impairment of goodwill (see Note
8).
7. Earnings per
share
Basic earnings per share (EPS) is
calculated by dividing the profit or loss attributable to equity
holders of Jupiter Fund Management plc (the parent company of the
Group) by the weighted average number of ordinary shares
outstanding and contingently issuable during the year, less the
weighted average number of own shares held. Own shares are shares
held in an EBT for the benefit of employees.
Diluted EPS is calculated by
dividing the profit or loss for the year (as used in the
calculation of basic EPS) 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 arising from the award of share options into
ordinary shares. In 2023, as a result of the loss for the year,
both basic and diluted EPS are calculated using the same weighted
average number of ordinary shares as potential ordinary shares
cannot be treated as dilutive if their inclusion in the calculation
reduces the Group's loss per share.
The weighted average number of
ordinary shares used in the calculation of EPS is as
follows:
Weighted average number of shares
|
2023
Number
m
|
|
2022
Number
m
|
|
|
|
|
Issued share
capital1
|
545.0
|
|
552.4
|
Add contingently issuable
shares2
|
6.2
|
|
1.7
|
Less time apportioned own shares
held
|
(31.9)
|
|
(24.5)
|
|
|
|
|
Weighted average number of ordinary shares for the purpose of
basic EPS
|
519.3
|
|
529.6
|
Add back weighted average number
of dilutive potential shares
|
-3
|
|
9.3
|
Weighted average number of ordinary shares for the purpose of
diluted EPS
|
519.3
|
|
538.9
|
Earnings per share
|
2023
p
|
|
2022
p
|
|
|
|
|
Basic
|
(2.5)
|
|
8.9
|
Diluted
|
(2.5)
|
|
8.8
|
1The Group purchased and cancelled 1.4m ordinary shares during
2023 and 6.7m ordinary shares during 2022 (see Note 14).
2Contingently issuable shares relate to vested but unexercised
share-based payment awards at the balance sheet date.
3Potential shares can only be treated as dilutive if their
conversion to ordinary shares increases the loss per share. As the
impact of including potential shares in the calculation of 2023 EPS
would be to decrease the loss per share, they have been excluded
from the calculation.
8. Goodwill
Goodwill arising on acquisitions,
being the excess of the cost of a business combination over the
fair value of the identifiable assets, liabilities and contingent
liabilities acquired, is capitalised in the consolidated balance
sheet. Goodwill is carried at cost less provision for impairment.
The carrying value of goodwill is not amortised but is tested
annually for impairment or more frequently if any indicators of
impairment arise. Goodwill is allocated to cash-generating units
(CGUs) for the purpose of impairment testing, with the allocation
to those CGUs or groups of CGUs that are expected to benefit from
the business combination in which the goodwill arose. Impairment
losses on goodwill are not reversed.
Goodwill relates to the 2007
acquisition of Knightsbridge Asset Management Limited (KAML)
(£341.2m) and the 2020 acquisition of Merian (£229.4m).
|
2023
£m
|
|
2022
£m
|
Cost
At 1 January and at 31 December
|
570.6
|
|
570.6
|
|
|
|
|
Accumulated impairment
At 1 January
|
-
|
|
-
|
Charge for the year
|
(76.2)
|
|
-
|
At 31 December
|
(76.2)
|
|
-
|
|
|
|
|
Net book value
At 31 December
|
494.4
|
|
570.6
|
The Group operates as a single
asset management business segment and does not allocate costs
between investment strategies or individual funds. The Group's
goodwill originally arose in 2007 through KAML and was increased in
2020 through the acquisition of Merian. The Merian acquisition
largely comprised revenues and incremental costs and therefore
increased the scale of the existing business, improving at the time
the headroom over goodwill arising on acquisitions. Both businesses
are fully integrated and are not separately measured or monitored.
It is not possible to assign any reduction in the Group's
profitability between KAML and Merian, and therefore we adopt a
single CGU and consider our impairment test based on Group-wide
cash generation to calculate the recoverable amount of the
goodwill, using the higher of the value in use (VIU) and fair value
less costs of disposal of the CGU, and comparing this to the
carrying value of the CGU.
For the impairment test, the
recoverable amount for the goodwill asset was calculated using a
VIU approach, based on the net present value of the Group's future
earnings. The net present value was calculated using a discounted
cash flow model, with the following key assumptions:
n The
Group's projected base case forecast cash flows over a period
of five years, which included an assumption of annual revenue
growth based on our expectations of AUM growth, client fee rates
and performance fees. The data was taken from the five-year plan,
which was approved by the Board in February 2024 and is aligned
with the strategic focus set out in the Management
statement;
n Long-term growth rates of 2% (2022: 2%) were used to
calculate terminal value; and
n A
post-tax discount rate of 13.2% (2022: 12.8%) was calculated using
the capital asset pricing model. Using a pre-tax discount rate of
17.0% (2022: 15.8%) on pre-tax profitability and cash flows does
not produce a materially different result.
The impairment test indicated that
the VIU of the CGU of £549.4m (2022: £859.2m) was less than its
carrying value of £625.6m (2022: £646.7m). As a result, our
conclusion is that the Group's goodwill asset is impaired and,
accordingly, an impairment charge of £76.2m has been recognised.
This charge is recorded as a separate line item in the consolidated
income statement.
The year-on-year movement in the
headroom was as follows:
|
|
£m
|
Headroom at 1 January 20231
|
|
212.5
|
Decrease in VIU of CGU in
2023
|
|
(309.8)
|
Decrease in carrying value of CGU
in 2023
|
|
21.1
|
Impairment at 31 December 2023
|
|
(76.2)
|
1Headroom (i.e. the surplus of the VIU over the carrying
value of the CGU) calculated in the Group's impairment testing as
at 31 December 2022.
The reduction in the value in use
of the CGU year-on-year was £309.8m, arising from lower demand from
retail clients in the short term, lower market valuations, and an
increase in the cost of capital used by the Group in its testing.
The impact of these factors is particularly significant in
calculating the terminal value (i.e. the value of the Group beyond
the period when future cash flows can be estimated), which
contributes the majority of the reduction in VIU. The decrease in
the carrying value of the CGU was largely due to the amortisation
of intangible assets.
As at the end of 2023, the Group
has no headroom in respect of the VIU of its goodwill. The
sensitivity of any possible re-establishment of headroom, or
further impairment charges, to changes in key metrics and
assumptions is shown in the table below which sets out the impacts
of reasonably possible changes in key assumptions used in the VIU
calculation:
Key variable
|
Reasonably possible adverse
movement
|
|
Decrease in
valuation
£m
|
|
|
|
|
Discount rate
|
+1%
|
|
48
|
Terminal growth rate
movement
|
-1%
|
|
34
|
Decrease in revenue
|
-10%
|
|
1831
|
1The decrease in revenue represents a modelled
percentage reduction in each year projected in the Group's base
case forecast cashflows.
The sensitivities modelled above
represent the estimated impact on each metric in isolation and make
no allowance for actions management would take to reduce costs
should the Group experience future reductions in AUM or
profitability.
Neither the Group's regulatory
capital or liquidity resources nor its regulatory requirements
would be directly impacted by impairment charges relating to the
Group's goodwill asset.
The Group continues to monitor its
market capitalisation against implied internal valuations and
adjust its internal models on a regular basis to reflect the
impacts of market information and its own profitability
levels.
9. Intangible assets
Intangible assets principally
comprise investment management contracts acquired in the 2020
acquisition of Merian. The useful lives of these contracts were
assessed as being finite and are amortised over their useful
economic lives. The useful economic lives of the contracts acquired
were assessed as a maximum of four years. The amortisation expense
on intangible assets with finite lives has been recognised in the
consolidated income statement on a straight-line basis.
The other intangible assets
recognised are computer software. During the year, the Group
acquired computer software of £2.9m (2022: £4.1m) and disposed of
£nil (2022: £nil).
The amortisation charge for
intangible assets was £20.6m (2022: £21.0m).
The Directors have reviewed the
intangible assets as at 31 December 2023 and have concluded there
are no indicators of impairment (2022: same).
|
2023
£m
|
|
2022
£m
|
|
|
|
|
Intangible assets
|
17.5
|
|
35.2
|
|
17.5
|
|
35.2
|
10. Property, plant and equipment
The net book value of property,
plant and equipment at 31 December 2023 was £37.5m (2022: £40.9m).
Additions to the right-of-use assets in 2023 were £0.6m (2022:
£1.4m). The Group purchased other items of property, plant and
equipment of £0.6m during the year (2022: £1.2m). The depreciation
charge was £5.2m (2022: £5.8m).
11. 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 2023
|
|
Financial assets at
FVTPL
|
Financial assets at
amortised cost and other2
|
Financial liabilities at
FVTPL
|
Other financial
liabilities
|
Non-financial
instruments
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
Goodwill
|
|
-
|
-
|
-
|
-
|
494.4
|
494.4
|
Intangible assets
|
|
-
|
-
|
-
|
-
|
17.5
|
17.5
|
Property, plant and
equipment
|
|
-
|
-
|
-
|
-
|
37.5
|
37.5
|
Investment in associates
|
|
-
|
1.8
|
-
|
-
|
-
|
1.8
|
Deferred tax assets
|
|
-
|
-
|
-
|
-
|
16.1
|
16.1
|
Non-current trade and other
receivables1
|
|
-
|
0.4
|
-
|
-
|
-
|
0.4
|
Financial assets
|
|
219.4
|
13.4
|
-
|
-
|
-
|
232.8
|
Current trade and other
receivables1
|
|
-
|
127.1
|
-
|
-
|
10.5
|
137.6
|
Cash and cash
equivalents
|
|
-
|
268.2
|
-
|
-
|
-
|
268.2
|
Current tax
asset1
|
|
-
|
-
|
-
|
-
|
1.3
|
1.3
|
Non-current loans and
borrowings
|
|
-
|
-
|
-
|
(49.7)
|
-
|
(49.7)
|
Non-current trade and other
payables1
|
|
-
|
-
|
-
|
(55.8)
|
(3.9)
|
(59.7)
|
Deferred tax liabilities
|
|
-
|
-
|
-
|
-
|
(2.3)
|
(2.3)
|
Financial liabilities at
FVTPL
|
|
-
|
-
|
(80.3)
|
-
|
-
|
(80.3)
|
Current trade and other
payables1
|
|
-
|
-
|
-
|
(208.9)
|
(12.5)
|
(221.4)
|
Provisions
|
|
-
|
-
|
-
|
(4.7)
|
-
|
(4.7)
|
Total
|
|
219.4
|
410.9
|
(80.3)
|
(319.1)
|
558.6
|
789.5
|
|
|
|
|
|
|
|
|
1 Prepayments, contract assets, contract liabilities, current
income tax assets and social security and other taxes do not meet
the definition of financial instruments.
2 Includes investments in associates, which are initially
recognised at cost and are adjusted subsequently to reflect any
changes to the Group's share of the investee's net
assets.
As at 31 December 2022
|
|
Financial assets at
FVTPL
|
Financial assets at
amortised cost
|
Financial liabilities at
FVTPL
|
Other financial
liabilities
|
Non-financial
instruments
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
Goodwill
|
|
-
|
-
|
-
|
-
|
570.6
|
570.6
|
Intangible assets
|
|
-
|
-
|
-
|
-
|
35.2
|
35.2
|
Property, plant and
equipment
|
|
-
|
-
|
-
|
-
|
40.9
|
40.9
|
Deferred tax assets
|
|
-
|
-
|
-
|
-
|
19.4
|
19.4
|
Non-current trade and other
receivables1
|
|
-
|
0.4
|
-
|
-
|
-
|
0.4
|
Financial assets at
FVTPL
|
|
167.8
|
-
|
-
|
-
|
-
|
167.8
|
Current trade and other
receivables1
|
|
-
|
113.9
|
-
|
-
|
10.2
|
124.1
|
Cash and cash
equivalents
|
|
-
|
280.3
|
-
|
-
|
-
|
280.3
|
Current tax
asset1
|
|
-
|
-
|
-
|
-
|
3.3
|
3.3
|
Non-current loans and
borrowings
|
|
-
|
-
|
-
|
(49.5)
|
-
|
(49.5)
|
Non-current trade and other
payables1
|
|
-
|
-
|
-
|
(77.2)
|
(10.3)
|
(87.5)
|
Deferred tax liabilities
|
|
-
|
-
|
-
|
-
|
(6.7)
|
(6.7)
|
Financial liabilities at
FVTPL
|
|
-
|
-
|
(49.2)
|
-
|
-
|
(49.2)
|
Current trade and other
payables1
|
|
-
|
-
|
-
|
(185.6)
|
(16.8)
|
(202.4)
|
Provisions
|
|
-
|
-
|
-
|
(2.8)
|
-
|
(2.8)
|
Total
|
|
167.8
|
394.6
|
(49.2)
|
(315.1)
|
645.8
|
843.9
|
1 Prepayments, contract assets, contract liabilities and social
security and other taxes do not meet the definition of financial
instruments.
For financial instruments held at
31 December 2023, issued subordinated debt, recorded within
non-current loans and borrowings above, had a fair value of £50.2m
(2022: £51.0m), less unamortised expenses of £0.1m (2022: £0.2m)
and financial assets at amortised cost had a fair value of £13.7m
(2022: N/A).
12. Cash and cash equivalents
|
2023
£m
|
|
2022
£m
|
|
|
|
|
Cash at bank and in
hand
|
137.5
|
|
276.8
|
Cash equivalents
|
128.4
|
|
-
|
Cash held by the EBT and seed
investment subsidiaries
|
2.3
|
|
3.5
|
Total cash and cash equivalents
|
268.2
|
|
280.3
|
Cash and cash equivalents have an
original maturity of three months or less. Cash at bank earns
interest at the current prevailing daily bank rates. Cash
equivalents comprises units in short-term money market funds that
can readily be converted into known amounts of cash and which are
subject to an insignificant risk of changes in value.
Cash held by the EBT and seed
investment subsidiaries is not available for use by the
Group.
13. Loans and borrowings
On 27 April 2020 the Group issued
£50.0m of Tier 2 subordinated debt notes at a discount of £0.5m.
Issue costs were £0.5m and the net proceeds were therefore £49.0m.
These notes will mature on 27 July 2030 and bear interest at a rate
of 8.875% per annum to 27 July 2025, and at a reset rate
thereafter. The Group has the option to redeem all of the notes
from 27 April 2025 onwards.
|
|
2023
|
|
2022
|
|
|
£m
|
|
£m
|
|
|
|
|
|
Non-current subordinated debt in issue
|
|
49.7
|
|
49.5
|
14. Share capital
In 2022 and early 2023, the Group
carried out a £10.0m share buyback and cancellation programme,
purchasing and cancelling 6.7m ordinary shares at a cost of £8.0m
in 2022, with a further purchase and cancellation of 1.4m shares in
2023 at a cost of £2.0m. On cancellation of the shares, an amount
equal to their nominal value was transferred to a capital
redemption reserve which forms part of 'Other reserves', as
detailed in Note 15. Shares cancelled represented 1.5% of the
previously issued share capital.
Share capital
|
2023
Number of
shares
m
|
2022
Number of
shares
m
|
2023
£m
|
2022
£m
|
|
|
|
|
|
Ordinary shares of 2p
each
|
545.0
|
546.4
|
10.9
|
10.9
|
|
545.0
|
546.4
|
10.9
|
10.9
|
|
|
|
|
|
|
Number of
shares
|
Par value
|
|
2023
m
|
2022
m
|
2023
£m
|
2022
£m
|
Movement in ordinary shares
|
|
|
|
|
At 1 January
|
546.4
|
553.1
|
10.9
|
11.1
|
Shares cancelled
|
(1.4)
|
(6.7)
|
-
|
(0.2)
|
At 31 December
|
545.0
|
546.4
|
10.9
|
10.9
|
15. Reserves
(i) Own share
reserve
The Group operates an EBT for the
purpose of satisfying certain retention awards to employees. The
holdings of this trust, which is funded by the Group, include
shares in Jupiter Fund Management plc that have not vested
unconditionally to employees of the Group. These shares are
recorded at cost and are classified as own shares. The shares are
used to settle obligations that arise from the granting of
share-based awards.
During the year, the Group
purchased 18.7m (2022: 10.4m) ordinary shares with a par value of
£0.4m (2022: £0.2m) for the purpose of satisfying share option
obligations to employees. The full cost of the purchases was £24.5m
(2022: £21.4m). The Group disposed of 7.7m (2022: 7.2m) own shares
to employees in satisfaction of share-based awards with a nominal
value of £0.2m (2022: £0.1m). At 31 December 2023, 33.9m (2022:
22.9m) ordinary shares, with a par value of £0.7m (2022: £0.5m),
were held as own shares within the Group's EBT.
(ii) Other reserves
Other reserves comprise the merger
relief reserve of £242.1m (2022: £242.1m) formed on the acquisition
of Merian in 2020, £8.0m (2022: £8.0m) that relates to the
conversion of Tier 2 preference shares in 2010 and £0.2m (2022:
£0.2m) of capital redemption reserve that was transferred from
share capital on the cancellation of shares that had been
repurchased in 2022 and 2023 (see Note 14).
(iii) Foreign currency translation
reserve
The foreign currency translation
reserve of £2.0m (2022: £3.7m) is used to record exchange
differences arising from the translation of the financial
statements of foreign subsidiaries.
(iv) Retained earnings
Retained earnings of £527.0m
(2022: £578.9m) are the amount of earnings that are retained within
the Group after dividend payments and other transactions with
owners.
16. Dividends
|
2023
£m
|
|
2022
£m
|
|
|
|
|
Prior year final dividend (0.5p
per ordinary share) (2022: 9.2p per ordinary share)
|
2.6
|
|
48.6
|
Interim dividend (3.5p per
ordinary share) (2022: 7.9p per ordinary share)
|
17.8
|
|
41.6
|
Special dividend (2.9p per
ordinary share) (2022: nil per ordinary share)
|
14.8
|
|
-
|
|
35.2
|
|
90.2
|
Final and special dividends are
paid out of profits recognised in the year prior to the year in
which the dividends are proposed, declared and reported.
The EBT has waived its right to
receive future dividends on shares held in the trust. Dividends
waived on shares held in the EBT in 2023 were £2.4m (2022:
£4.3m).
A final dividend for 2023 of 3.4p
per share (2022: 0.5p) has been proposed by the Directors. This
dividend amounts to £18.5m (before adjusting for any dividends
waived on shares in the EBT) and will be accounted for in 2024.
Including the interim and special dividends for 2023 of 6.4p per
share (2022: 7.9p), this gives a total dividend per share of 9.8p
(2022: 8.4p).
17. Cash flows from operating
activities
|
Notes
|
|
2023
£m
|
|
2022
£m
|
|
|
|
|
|
|
Operating profit
|
|
|
86.0
|
|
64.3
|
|
|
|
|
|
|
Adjustments for:
|
|
|
|
|
|
Amortisation of intangible
assets
|
9
|
|
20.6
|
|
21.0
|
Depreciation of property, plant and
equipment
|
10
|
|
5.2
|
|
5.8
|
Other net
(gains)/losses1
|
|
|
(5.0)
|
|
28.2
|
(Gains)/losses on fund unit
hedges2
|
|
|
(1.5)
|
|
55.1
|
Share-based payments
|
|
|
18.5
|
|
13.6
|
(Increase)/decrease in trade and
other receivables3
|
|
|
(14.4)
|
|
12.2
|
Decrease in trade and other
payables3
|
|
|
(0.3)
|
|
(25.1)
|
Cash generated from operations
|
|
|
109.1
|
|
175.1
|
1Comprises the reversal of items included in 'Other
gains/(losses)' in the income statement that relate either to
unrealised gains or losses, or to cash flows relating to the
disposal of financial assets other than derivative contracts. Cash
flows relating to disposals are included in the Cash flow statement
within 'Proceeds from disposals of financial assets at
FVTPL'.
2Comprises the reversal of net (gains)/losses on financial
instruments held to provide an economic hedge for funds awards that
are recognised within Administrative expenses (Note 3). Cash flows
arising from the disposals of such instruments are included in the
Cash flow statement, in line with footnote 1 above.
3Amounts reported in these lines can differ from the movement
in the balance sheet where cash flows that form part of that
movement are separately reported in a different line of the Cash
flow statement or its notes. In 2022 and 2023, these differences
are principally in respect of cash flow movements relating to
consolidated funds. For trade and other payables, additionally,
cash flows arising from movements in lease liabilities are
presented on the face of the Cash flow statement.
18. Changes in liabilities arising from financing
activities
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
Financial liabilities at
FVTPL
|
Loans and
borrowings1
|
Leases
|
Total
|
|
Financial liabilities at
FVTPL
|
Loans and
borrowings1
|
Leases
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
Brought forward at 1
January
|
48.6
|
49.5
|
46.3
|
144.4
|
|
52.3
|
49.3
|
51.1
|
152.7
|
New leases
|
-
|
-
|
0.6
|
0.6
|
|
-
|
-
|
1.4
|
1.4
|
Changes from financing cash
flows
|
28.92
|
-
|
(4.9)
|
24.0
|
|
18.72
|
-
|
(7.8)
|
10.9
|
Changes arising from obtaining or
losing control of consolidated funds
|
(1.2)
|
-
|
-
|
(1.2)
|
|
(14.4)
|
-
|
-
|
(14.4)
|
Changes in fair value
|
3.9
|
-
|
-
|
3.9
|
|
(8.0)
|
-
|
-
|
(8.0)
|
Interest expense
|
-
|
0.2
|
1.5
|
1.7
|
|
-
|
0.2
|
1.6
|
1.8
|
Lease reassignment and
modifications
|
-
|
-
|
0.6
|
0.6
|
|
-
|
-
|
-
|
-
|
Liabilities arising from financing activities carried forward
at 31 December
|
80.2
|
49.7
|
44.1
|
174.0
|
|
48.6
|
49.5
|
46.3
|
144.4
|
|
|
|
|
|
|
|
|
|
|
Notes
|
19
|
13
|
|
|
|
19
|
13
|
|
|
1Accrued interest on loans and borrowings is recorded within
'Trade and other payables' and is therefore not included in this
analysis. The interest expense above comprises the charge arising
from unwinding the discount applied in calculating the amortised
cost of the subordinated debt.
|
2Comprises cash flows from third-party subscriptions
redemptions into consolidated funds, net of redemptions (see Cash
flow statement).
|
19. Financial instruments
The fair value of financial
instruments that are actively traded in organised financial markets
is determined by reference to quoted market bid prices on the
balance sheet date. Derivatives held at fair value are carried at a
value which represents the price to exit the instruments at the
balance sheet date.
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).
Where funds are consolidated, we
look through to the underlying instruments and assign a level in
accordance with the definitions above. Where funds are not
consolidated, we do not apply a look through and these funds are
classified as level 1 as the prices of these funds are quoted in
active markets.
As at 31 December 2023, the Group
held the following financial instruments measured at fair
value:
|
|
Level 1
|
|
Level
2
|
|
Level 3
|
|
Total
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
Financial assets at FVTPL -
funds
|
|
141.7
|
|
77.7
|
|
-
|
|
219.4
|
Financial liabilities at
FVTPL
|
|
(80.2)
|
|
-
|
|
-
|
|
(80.2)
|
Other financial liabilities at
FVTPL - derivatives
|
|
-
|
|
(0.1)
|
|
-
|
|
(0.1)
|
|
|
61.5
|
|
77.6
|
|
-
|
|
139.1
|
As at 31 December 2022, the Group
held the following financial instruments measured at fair
value:
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
Financial assets at FVTPL -
funds
|
|
116.5
|
|
51.0
|
|
0.3
|
|
167.8
|
Financial liabilities at
FVTPL
|
|
(48.6)
|
|
-
|
|
-
|
|
(48.6)
|
Other financial liabilities at
FVTPL - derivatives
|
|
-
|
|
(0.6)
|
|
-
|
|
(0.6)
|
|
|
67.9
|
|
50.4
|
|
0.3
|
|
118.6
|
|
|
|
|
|
|
|
|
|
|
20. Related parties
During the year, the Group
consolidated Jupiter Global Emerging Markets Focus ex China Fund,
Jupiter Merlin Moderate Select, Jupiter Systematic Consumer Trends
Fund, Jupiter Systematic Demographic Opportunities Fund, Jupiter
Disruptive Technology Fund, Jupiter Healthcare Innovation Fund and
Jupiter Systematic Physical World Fund (as set out the 'Changes in
the composition of the Group' section on page 13). Jupiter Global
Emerging Markets Focus Fund, Jupiter Global Fund SICAV: Global
Ecology Bond, Jupiter Global Sustainable Equities Fund and Jupiter
Merlin Real Return have been removed as the funds were
closed.
The Group manages a number of
investment trusts, unit trusts, OEICs, SICAVs, ICVCs, a hedge fund
(closed in 2022) and Delaware LPs and receives management and, in
some instances, registration (Aggregate Operating Fee) and
performance fees for providing this service. The
precise fee arrangements are disclosed within the financial
statements of each investment management subsidiary of the Group or
within other publicly available information. By virtue of the
investment management agreements in place between the Group and the
collective investment vehicles it manages, such funds may be
considered to be related parties. Investment management and
performance fees are disclosed in Note 1.
The Group acts as investment
manager for 30 (2022: 34) authorised unit trusts and 9 (2022: 12)
OEICs. Each unit trust is jointly administered with the trustees,
Northern Trust Global Services SE. The aggregate total value of
transactions for the year was £2,223m (2022: £2,714m) for unit
trust creations and £4,052m (2022: £3,570m) for unit trust
redemptions/liquidations. The actual aggregate amount due to (2022:
from) the trustees at the end of the accounting year in respect of
transactions awaiting settlement was £7.5m (2022: £24.0m). The
Group also acts as the management company for the Jupiter Global
Fund and Jupiter Investment Fund SICAVs, made up of 17 sub-funds
(2022: 20) and 3 sub-funds (2022: 4) respectively as well as the
Jupiter Investment Management Series II and the Jupiter Asset
Management Series plc, made up of 9 (2022: 12) and 23 (2022: 18)
sub-funds respectively. The administrator is Citibank Europe plc,
Luxembourg Branch.
The amounts received in respect of
gross management, registration and performance fee charges
were £237.1m
(2022: £254.8m) for unit trusts, £43.2m (2022: £60.9m) for
OEICs, £89.7m
(2022: £100.8m) for SICAVs, £46.5m (2022: £49.9m) for
ICVCs, £4.3m
(2022: £6.4m) for investment trusts and £31.9m (2022: £27.0m) for segregated
mandates. At the end of the year, there was £23.4m (2022: £28.9m) accrued for
annual management fees, £1.2m (2022: £1.4m) in respect of
registration fees and £12.7m (2022: £9.7m) in respect of
performance fees.
Included within financial
instruments (see Note 11) are seed investments, hedges of awards in
fund units in mutual funds and investment trusts, and proprietary
investments in an investment trust, all managed, but not
controlled, by the Group. At 31 December 2023, the Group had a
total net investment in such funds of £56.5m (2022: £53.1m) and received
distributions of £0.5m (2022: £1.0m). During 2023, it invested £36.4m (2022: £24.1m) in these funds
and made disposals of £0.3m (2022: £86.6m).
Key management compensation
Transactions with key management
personnel also constitute related party transactions. Key
management personnel are defined as the Directors, together with
other members of the Executive Committee, and the Strategy and
Management Committee. The aggregate compensation paid or payable to
key management for employee services is shown below:
|
2023
£m
|
|
2022
£m
|
|
|
|
|
Short-term employee
benefits
|
3.7
|
|
3.8
|
Share-based payments
|
1.3
|
|
1.6
|
Other long-term
benefits
|
1.2
|
|
1.7
|
|
6.2
|
|
7.1
|
Statement of Directors'
responsibilities
|
Statements relating to the preparation of the Financial
Statements
The Directors are responsible for
preparing the Annual Report, the Remuneration Report and the
Financial Statements in accordance with applicable law and
regulations. Company law requires the Directors to prepare
Financial Statements for each financial year. Under that law the
Directors have prepared the Group and Company Financial Statements
in accordance with UK-adopted International Accounting Standards
(IAS) and in conformity with the requirements of the Companies Act
2006. Additionally, the Financial Conduct Authority's Disclosure
Guidance and Transparency Rules require the Directors to prepare
the Group Financial Statements in accordance with UK-adopted IAS
and with the requirements of the Companies Act 2006 as applicable
to companies reporting under those standards.
The Directors' review of the Financial
Statements
The Directors undertook a detailed
review of the Financial Statements in February 2024. Following this
examination, the Board was satisfied that the Financial Statements
for 2023 give a true and fair view of the state of affairs of the
Group and the Company and of the profit or loss of the Group for
that period. Before approving the Financial Statements, the Board
satisfied itself that in preparing the statements:
n suitable
accounting policies had been selected in accordance with IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors and
consistently applied;
n the
judgements and accounting estimates that have been made were
reasonable and prudent; and
n where
applicable UK-adopted IAS in conformity with the requirements of
the Companies Act 2006 have been adopted and, for the Group,
UK-adopted IAS have been followed and that there were no material
departures.
The Directors' review of going concern
The Financial Statements have been
prepared on the going concern basis, the Directors having
determined that the Company is likely to continue in business for
at least 12 months from the date of this report.
The Directors' review of current position, prospects and
principal risks
Supported by the Audit and Risk
Committee, the Directors have completed a robust review and
assessment of the principal and emerging risks in the business,
making use of the Enterprise Risk Management Framework which
operates in all areas of the Company. The framework ensures that
the relevant risks are identified and managed and that information
is shared at an appropriate level. Full details of these risks are
provided in the Risk management section of the Strategic report.
The Enterprise Risk Management Framework was reviewed by the Board
in December. The Directors found it was an effective mechanism
through which the principal risks and the Company's risk appetite
and tolerances could be tested and challenged.
The Directors' responsibility for accounting
records
The Directors are responsible for
keeping adequate accounting records that are sufficient to show and
explain the Group's and Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Group
and Company and enable them to ensure that the Financial Statements
and the Directors' Remuneration Report comply with the Companies
Act 2006.
The Directors' responsibility for the safekeeping of
assets
The Directors have examined the
steps in place for ensuring the prevention and detection of fraud
and other irregularities. The procedure is examined and tested on a
regular basis. The Board is satisfied it is understood and is
operated well, and accordingly that the assets of the Company are
safeguarded and protected from fraud and other
irregularities.
The Directors' responsibility for
information
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.
Statement of Directors' responsibilities
The Directors consider that the
Annual Report and Accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group's and Company's position and
performance, business model and strategy.
Each of the Directors confirm that,
to the best of their knowledge:
n the
Group and Company Financial Statements, which have been prepared in
accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006, give a true and
fair view of the assets, liabilities, financial position and profit
of the Group and profit of the Company; and
n 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 and Company, together with a
description of the principal risks and uncertainties that it
faces.
In the case of each Director in
office at the date the Directors' report is approved:
n so far
as the Director is aware, there is no relevant audit information of
which the Group's and Company's auditors are unaware;
and
n they
have taken all the steps that they ought to have taken as a
Director in order to make themselves aware of any relevant audit
information and to establish that the Group's and Company's
auditors are aware of that information.
On behalf of the Board
Wayne Mepham
Chief Financial Officer
21 February 2024
Principal risks and
mitigations
|
The Board and executive management
are responsible for establishing and maintaining a strong risk
management culture that embeds and supports a high level of risk
awareness and a sound control environment across the
firm.
This is achieved through leadership
behaviours setting the 'tone from the top', governance structures,
a clear definition of roles and responsibilities, and regular
communication reinforcing appropriate behaviours.
The Group has a robust enterprise
risk management framework (ERMF) to provide a comprehensive
approach to identifying, assessing, monitoring, mitigating and
reporting risk.
Risk governance and responsibilities
The Group operates a three-tier
risk governance framework, known as the 'three lines of defence'
model, which distinguishes between risk management and risk
oversight. This approach provides a clear and concise separation of
duties, roles and responsibilities.
The Board has ultimate
responsibility for oversight of the risks of the Group and for
determining the risk appetite limits within which the Group must
operate. It delegates day-to-day responsibility for risk management
and control activities to the Chief Executive Officer, supported by
the Risk and Compliance Committee, with oversight from the Audit
and Risk Committee.
The ERMF clearly defines the roles
and responsibilities for risk management and provides a process for
escalation through our governance structure, which enables ongoing
and robust oversight.
Risk appetite
The Group's risk appetite defines
the level and type of risk that the Group is prepared to accept in
pursuit of its strategic objectives and business plan, taking into
account the interests of its clients, shareholders and other
stakeholders, as well as capital and other regulatory requirements.
An important part of the Board's remit is to determine the Group's
risk appetite, taking into account the business environment, and
the current and likely future condition of our business and
operations.
Top-down risk assessment (TDRA)
The top-down risk assessment (TDRA)
identifies the Group's material risks and monitors their profile.
The TDRA is used to provide a firm-wide view to help identify
cross-functional and strategic risks. The risks identified through
the TDRA are continuously monitored and reported to the appropriate
committees and boards.
Risk and control self-assessment (RCSA)
The bottom-up identification and
assessment of risks is performed by teams across the business
through a risk and control self-assessment (RCSA). The assessment
identifies and monitors risks and associated key controls by
considering the operating environment, processes, roles and
responsibilities, as well as incidents. Risks are assessed on both
an inherent and a residual basis, with ratings determined for
potential impact and likelihood. Where processes or controls are
identified as insufficient, management is required to take
appropriate action to ensure they are improved to meet an
acceptable level of risk to the Group.
Key risk indicators (KRIs)
Key risk indicators (KRIs) are used
by the Group to provide an early sign of changing key risk
exposures, enabling management to identify potentially
crystallising risks which are used to inform and support management
decision making.
Incidents
An incident is an event due to a
lack of or failure of the control environment. These events likely
lead to negative impacts for clients and/or the firm. An incident
can be incurred due to inadequate or failed internal processes,
people and systems, or from external events. Incidents are
reported, recorded and investigated to determine the root cause,
impact and trends and to ensure that appropriate remediation work
is completed as required. Incidents are monitored and captured
across the business and independently reviewed to ensure
completeness and accuracy. Analysis of incidents is used to support
our TDRA, RCSA and operational risk scenario analysis (ORSA)
processes.
Operational risk scenario analysis (ORSA)
The ORSA is a forward-looking
assessment of exposures to severe but plausible operational risk
events. It is used by the Group to identify and quantify the
material risks that have the potential to impact Jupiter, based on
the experience and opinions of internal subject matter experts. A
variety of scenarios are used to estimate the impact of events on
capital requirements. The Group also uses scenario analysis to
ensure that we understand our exposure to high-severity events and
implement mitigating actions, in line with our risk
appetite.
Emerging risks
Emerging risks are risks that could
significantly affect the Group's risk
profile outside of the risk assessment period. They are
raised by the business through the TDRA
and RCSA process. Each one is challenged to
consider when the risk could impact the Group and
any action required to ensure we are fully
prepared should they begin to
crystallise.
Operational resilience
Operational resilience addresses
how the continuity of the services that the Group provides is
maintained regardless of the cause of disruption and helps to
ensure that it is prepared for the inevitability of disruption,
rather than only trying to minimise the probability of disruption
occurring.
Risk profile
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 imperative to the business to reduce potential harms to
clients, the firm and the market. Some risks are pursued to support
the business plan, such as the risks relating to investment
performance. Other risks are inherent in routine business
activities, such as the risk of financial crime. The differing
risks faced by the Group are documented within the risk taxonomy
and managed through the Group's ERMF in line with risk appetite.
The type and severity of the risks the Group faces can change
quickly in a complex and competitive environment, therefore the
framework for managing these risks is dynamic and forward-looking
to ensure it considers both current and emerging risks which could
potentially impact the Group.
The Group conducts an annual
internal capital adequacy and risk assessment (ICARA) to understand
its exposure to risks including operational, capital adequacy,
liquidity and credit/counterparties. These risks are also monitored
to ensure they are managed on a prudent basis and remain within
regulatory requirements and the Group's risk appetite.
Risk taxonomy
The risk taxonomy defines and
describes the different risk types the Group is exposed to,
providing a consistent methodology for assessment and reporting.
The Group has exposure to strategic, investment, financial and
operational risks. These are, where applicable, further broken down
into subcategories within the Group's enterprise risk taxonomy to
provide consistency of reporting across the different components of
the framework.
Risk appetite
The Group's risk appetite defines
the level and type of risk that the Group is prepared to accept in
pursuit of its strategic objectives and business plan, taking into
account the interests of its clients and shareholders, as well as
capital and other regulatory requirements.
An important part of the Board's
remit is to determine the Group's risk appetite, considering its
strategic plans, the business environment and the current and
likely future condition of its business and operations.
Operational resilience
The Group defines operational
resilience as the Group's ability to prevent, adapt, respond to,
recover and learn from operational disruption. This forward-looking
approach allows the Group to assess and understand its
vulnerabilities with the intention of undertaking mitigating
actions to prevent harm to clients, the firm and the
market.
Operational resilience addresses
how the continuity of the services that the Group provides is
maintained regardless of the cause of disruption and helps to
ensure that it is prepared for the inevitability of disruption,
rather than only trying to minimise the probability of disruption
occurring. It includes preventative measures and the capabilities
in terms of people, processes and organisational culture to adapt
and recover when things go wrong.
The effective oversight and
management of the Group's operational resilience requires it to
identify the services which, if disrupted, could cause intolerable
harm to clients, the firm or the market. These are described as
important business services (IBS). Each IBS is required to have
been mapped (i.e. underlying people, systems, suppliers and
processes) to identify the key dependencies and have an appropriate
impact tolerance set at the first point at which a disruption would
pose an intolerable level of harm. End-to-end testing of severe yet
plausible scenarios are used to gauge the extent to which the Group
is able to stay within the set impact tolerances and agree remedial
action where those tolerances are exceeded.
Reputational risk
The Group defines reputational risk
as the risk of loss or other adverse impact arising from
unfavourable perception of the firm on the part of consumers,
counterparties, employees, regulators, shareholders, other
stakeholders, the media or the general public. Managing
reputational risk is fundamental to the strategic objectives of the
firm and is managed across the various risk categories to which the
firm is exposed. For example, reputational risk can arise as a
result of operational incidents, strategic decisions, or generally
as a result of inappropriate behaviour within the Group, as
perceived by various stakeholder groups. The impact on the Group's
reputation is considered when assessing risks within the
ERMF.
Emerging risks
The Group defines emerging risks as
risks that will not or are deemed implausible to crystallise within
the current risk assessment period. Emerging risks have many
unknowns in terms of cause, impact and likelihood and the Group
looks to understand these risks on the horizon to plan mitigation
where possible.
Emerging risks are captured through
the RCSA, the TDRA and utilising the 'PESTLE' methodology for
horizon scanning which focuses on political, economic,
socio-cultural, technological, legal and environmental
risks.
Emerging risks are assessed,
monitored and reported via the ERMF.
Key risks
The table below lists the key risks
to the firm on a residual basis, which is considered to be the risk
exposure after the application of existing mitigating controls,
assessing the risks on the potential impact and likelihood of them
crystallising.
Key
risk
|
Description
|
Geopolitical risk
|
The risk we fail to adequately
respond to changes and/or disruption within the geopolitical
environment.
|
Investment performance risk
|
The risk that portfolios do not
meet their investment objectives including against our peers and
benchmarks.
|
Outsourcing and supplier risk
|
The risks arising from incidents or
failure of providers of services to deliver on their obligations,
or inadequate selection or oversight of providers.
|
People risk
|
The risk of failures or poor
practices relating to people management.
|
Regulatory risk
|
The risk of failing to comply with
our regulatory obligations including failures to implement changes
required to meet new regulatory requirements.
|
Sustainability risk
|
Sustainability risk is the failure
to identify, assess, manage and report on ESG issues that could
cause actual or potential material negative impacts on our core
business activities.
|
Technology and information security risk
|
The risk of deliberate attacks or
accidental events that have a disruptive effect on interconnected
technologies.
|
Overall, the evolution of the
Group's risk profile during 2023 has been driven by external
challenges such as regulatory and investor demands on
sustainability. Geopolitical events across the globe have also
prompted increased market volatility and operational
risks.
Further details on the assessment
of our most material risks are included below.
Description
|
Management actions
|
Geopolitical risk
Geopolitical events such as the
invasion of Ukraine and conflicts across the globe disrupt markets,
which increases volatility and operational risk. The corresponding
changing global sanctions regimes increase our financial crime
risk.
|
n We
continue efforts to diversify across both regions and asset
classes. Our strategy is to defend our existing UK positions where
prudent to do so, while also increasing the scale of our
international and Institutional businesses.
n The Board
and the Strategy and Management Committee regularly review the
strategic plan, opportunities and threats, budgets and
targets.
n Our
financial crime framework continuously evolves to ensure the
ever-changing landscape of financial crime is mitigated through
robust monitoring and testing.
|
Investment performance risk
Delivering positive outcomes to our
clients through active management is at the core of the
organisation and failure to deliver against our commitments leads
to poor client outcomes and loss of AUM.
|
n All
performance is monitored closely and challenged on a regular basis
through senior management engagement.
n The
investment risk team provides detailed analysis of market-related
risks facing Jupiter's funds and corporate balance sheet, ensuring
that these are communicated accurately and used to challenge and
inform various stakeholders, enhancing the investment management
process.
n Performance is overseen and assessed through active value
assessments to ensure that clients are receiving the best possible
product outcome.
|
Outsourcing and supplier risk
The firm is reliant on suppliers to
which we have outsourced certain services and any failure from our
third parties can lead to a negative impact on our clients, our
staff and the firm.
|
n We
continue to review and assess our appetite for outsourcing to
ensure that it remains effective in relation to the size and scale
of our business.
n We
continue to work closely with our critical third-party suppliers to
ensure that the services they provide remain resilient.
n Our
framework for the oversight of activities delegated to third
parties is continually reviewed in line with our risk appetite and
regulatory requirements to ensure effectiveness.
|
Description
|
Management actions
|
People risk
People are at the core of the
business, however, ensuring management of performance, conflicts of
interest and conduct is imperative to minimise poor culture, loss
of key staff, poor outcomes for our clients and harm to
markets.
The Group recognises that conduct
risk can crystallise across various parts of the business and can
be strategic, financial, infrastructural or behavioural in nature.
Conduct risks can arise on both an individual and Group
basis.
|
n Focused
recruitment, talent and learning programmes are in place, supported
by robust HR policies and procedures which comply with all relevant
rules, regulations and guidelines.
n We respect
and celebrate different perspectives and experiences.
n We
actively manage succession and succession plans are in place for
critical staff.
n Conduct
risk is monitored through the conduct risk dashboard which is
designed to provide a lens into conduct risk from which the Culture
and Conduct Committee and boards can review and investigate both
potential and actual conduct risk issues within the
Group.
n We have
also continued to focus on educating employees on the importance of
good conduct, with a specific training programme rolled out to all
employees.
|
Regulatory risk
The risk of not complying with
regulatory changes remains significant as we continue to see a high
volume of regulatory activity, for example, related to
sustainability, Consumer Duty and operational resilience. Our
strategic focus of growing the scale in our international business
further increases our regulatory footprint.
|
n To ensure
we remain well placed to meet all regulatory challenges, we
continue to proactively engage with our regulators in an open and
transparent manner while investing in education, training and a
robust second line function.
n We have a
cohesive and holistic approach to managing the evolving landscape
of regulatory risk across jurisdictions and utilise industry
insight and specialist expertise as required to respond to
regulatory change, for example, the EU Digital Operational
Resilience Act.
|
Sustainability risk
Sustainability risks can impact and
manifest in many ways including financial under-performance,
reputational damage and operational risks, such as greenwashing,
linked to climate change.
|
n Sustainability risks are captured and managed within Jupiter's
ERMF and control environment.
n In 2023 we
further enhanced automated monitoring of ESG risks within our
portfolios and increased resourcing in our control
teams.
|
Technology and information security risk
Our dependency on technology and
data is significant and therefore it is imperative that we protect
our clients, staff and the firms against technology failure, loss
of data and system corruption.
|
n Jupiter is
certified in accordance with the UK government-backed 'Cyber
Essentials Plus' scheme, demonstrating our ongoing commitment to
reducing the likelihood of a successful cyber event, despite the
rising number of external attacks seen across the
industry.
n We
continue to make investments in our security systems to identify
and reduce vulnerabilities as quickly as possible.
n We have
invested in ongoing training and awareness on the risks of phishing
and similar attacks, and we continue to work with our third-party
suppliers to ensure that they are able to demonstrate compliance
with Group standards and internationally recognised good
practice.
|
Alternative performance
measures
|
The use of alternative
performance measures (APMs)
The Group uses APMs for two
principal reasons:
n We use
ratios to provide metrics for users of the accounts; and
n We use
revenue, expense and profitability based APMs to explain the
Group's underlying profitability.
Ratios
The Group calculates ratios to
provide comparable metrics for users of the accounts. These ratios
are derived from other APMs that measure underlying revenue and
expenditure data.
In this document, we have used the
following ratios:
|
APM
|
2023
|
2022
|
Definition
|
Reconciliation
|
1
|
Cost:income ratio
|
73%
|
69%
|
Administrative expenses before
exceptional items and performance fees divided by Net revenue
before exceptional items and performance fees
|
See table 1 below
|
2
|
Net management fee
margin
|
69.5 bps
|
73.5
bps
|
Net management fees divided by
average AUM
|
3
|
Total compensation ratio before
performance fees
|
42%
|
40%
|
Fixed staff costs before
exceptional items plus Variable staff costs before exceptional
items and performance fees as a proportion of Net revenue before
performance fees
|
4
|
Underlying EPS
|
14.8p
|
11.3p
|
Underlying profit after tax
attributable to equity holders of the parent divided by average
issued share capital
|
Reconciliations and calculations: table 1
|
APM
|
2023
£m
|
2022
£m
|
|
|
|
|
Administrative expenses (page
8)
|
|
265.4
|
302.3
|
Less: Performance fee variable
staff costs (page 6)
|
|
(6.4)
|
(33.9)
|
Less: Exceptional items included
in administrative expenses (page 15)
|
|
(0.8)
|
(0.8)
|
Administrative expenses before exceptional items and
performance fee-related costs
|
|
258.2
|
267.6
|
|
|
|
|
Net revenue (page 8)
|
|
368.8
|
397.3
|
Less: Performance fees (page
14)
|
|
(13.2)
|
(10.3)
|
Net revenue before performance fees
|
|
355.6
|
387.0
|
|
|
|
|
Cost:income
ratio
|
1
|
73%
|
69%
|
|
|
|
|
Management fees (page
14)
|
|
389.9
|
430.1
|
Less: Fees and commissions
relating to management fees (page 14)
|
|
(35.9)
|
(45.3)
|
Net management fees
|
|
354.0
|
384.8
|
Average AUM (£bn) (page 5)
|
|
50.9
|
52.4
|
Net management fee
margin
|
2
|
69.5 bps
|
73.5 bps
|
|
|
|
|
Fixed staff costs before
exceptional items (page 6)
|
|
78.1
|
82.4
|
Variable staff costs before
exceptional items and performance fees (page 6)
|
|
72.8
|
70.6
|
Total
|
|
150.9
|
153.0
|
Net revenue before performance fees (see
above)
|
|
355.6
|
387.0
|
Total compensation ratio
before net performance fees
|
3
|
42%
|
40%
|
|
|
|
|
Statutory profit before tax (page
8)
|
|
9.4
|
58.0
|
Exceptional items (page
6)
|
|
95.8
|
19.6
|
Underlying profit before tax (page 6)
|
|
105.2
|
77.6
|
Tax at average statutory rate of
23.5% (2022: 19%)1
|
|
(24.7)
|
(14.7)
|
Underlying profit after tax
|
|
80.5
|
62.9
|
Profit attributable to
non-controlling interests (page 11)
|
|
-
|
(0.6)
|
Underlying profit after tax attributable to equity
shareholders of the parent
|
|
80.5
|
62.3
|
Average issued share capital (m) (page 17)
|
|
545.0
|
552.4
|
Underlying
EPS
|
4
|
14.8p
|
11.3p
|
|
|
|
|
1Actual effective tax rates applicable to underlying profit
before tax were 25.6% in 2023 and 17.0% in 2022.
|
|
|
|
|
Revenue, expense and profit-related measures
1.
Asset managers commonly draw out subtotals of revenues less cost of
sales, taking into account items such as fee expenses, including
commissions payable, without which a proportion of the revenues
would not have been earned. Such net subtotals can also be
presented after deducting non-recurring exceptional
items.
2.
The Group uses expense-based APMs to identify and separate out
non-recurring exceptional items or recurring items that are of
significant size in order to provide useful information for users
of the accounts who wish to determine the underlying cost base of
the Group. To further assist in this, we also provide breakdowns of
administrative expenses below the level required to be disclosed in
the statutory accounts, for example, distinguishing between
variable and fixed compensation, as well as non-compensation
expenditure. These subdivisions of expenditure are also presented
before and after exceptional items and after accounting for the
impact of performance fee pay-aways to fund managers.
3.
Profitability-based APMs are effectively the sum of the above
revenue and expense-based APMs and are provided for the same
purpose - to separate out non-recurring exceptional items or
recurring items that are of significant size in order to provide
useful information for users of the accounts who wish to determine
the underlying profitability of the Group.
4.
Underlying profit after tax is, in addition, used to calculate
underlying EPS which determines the Group's ordinary dividend per
share and is used in one of the criteria for measuring the vesting
rates of share-based awards that have performance conditions
attached.
In this document, we have used the
following measures which are reconciled or cross-referenced in
table 1:
Measure
|
Rationale for use of
measure
|
Net management fees
|
1
|
Exceptional
items1
|
2
|
Net revenue
|
1
|
Performance fee costs
|
2
|
Fixed staff costs before
exceptional items
|
2
|
Variable staff costs before
exceptional items
|
2
|
Underlying profit before
tax
|
3
|
Underlying profit after
tax
|
3, 4
|
1 Defined as items of income or expenditure that are
significant in size and which are not expected to repeat over the
short to medium term.
As stated in 2 above, the Group
presents a breakdown of administrative expenses below the level
required to be disclosed in the statutory accounts, distinguishing
between variable and fixed compensation, as well as
non-compensation expenditure. The relevant amounts are set out in
the table on page 6.
Changes in use of APMs since 2022
There have been no changes in the
Group's APMs compared to those used in 2022.