Jupiter Fund Management Plc · LSE:JUP
Jupiter Fund Management — H1 2020 Earnings Presentation
36 slides from Jupiter Fund Management's earnings presentation, 2020
Slide 1: Interim Results 2020
I N T E R I M R E S U LT S 2020
Slide 2: Financial results reflect difficult conditions
Financial results reflect difficult conditions Net sales Outflows of £2.0bn (2019: outflows of £4.5bn) £39.2bn AUM (Dec 2019: £42.8bn) Net management Down 12% to £161.4m (H1 2019: £182.9m) 7.9p fees Underlying earnings per Down 36% to 10.0p Ordinary dividend (H1 2019: 15.7p) (H1 2019: 7.9p) share 1
Slide 3: Strategic highlights
Strategic highlights Delivering growth through investment excellence 80% of mutual funds outperformed1 over 3 years • 76% first quartile Positive flows in Q2 2020 • First quarter of positive flows since 2017 • NZS wins first two investment mandates Merian completed on time despite challenging operat
Slide 4: Our purpose is to deliver outperformance after fees for clients
Our purpose is to deliver outperformance after fees for clients High-conviction active management Three-year mutual fund performance Active management delivers in difficult conditions 18% ● 76% of AUM 1 (Dec 2019: 38%) in mutual funds in first quartile Long-term performance record maintained over fi
Slide 5: Largest funds performing well
Largest funds performing well 61% of invested assets 1 represented in the below funds AUM at AUM at 4th 3rd 2nd 1st Jun 2020 Dec 2019 Quartile Quartile Quartile Quartile Dynamic Bond2 £7.3bn £7.0bn European £4.6bn £4.9bn Strategic Bond £4.3bn £4.2bn Merlin Income £2.1bn £2.2bn Merlin Balanced £1.8bn
Slide 6: Largest funds performing well
Largest funds performing well 58% of invested assets 1 represented in the below funds AUM at AUM at 4th 3rd 2nd 1st Jun 2020 Dec 2019 Quartile Quartile Quartile Quartile Dynamic Bond2 £7.3bn £7.0bn European £4.6bn £4.9bn Strategic Bond £4.3bn £4.2bn Merlin Income £2.1bn £2.2bn Merlin Balanced £1.8bn
Slide 7: Interim Results - Wayne Mepham
Interim Results WAY N E M E P H A M 2020
Slide 8: Financial results
Financial results H1 20 H1 19 Change Net management fees £161.4m £182.9m -12% Net revenue £161.9m £190.8m -15% Underlying profit before tax £56.6m £88.8m -36% Underlying EPS 10.0p 15.7p -36% Statutory profit before tax £40.8m £81.4m -50% Statutory basic EPS 6.5p 15.1p -57% Interim dividend 7.9p 7.9p
Slide 9: H1 2020 AUM progression
H1 2020 AUM progression AUM at £39.2bn Movement in AUM (£bn) (2.3) Net flows Markets 0.3 (5.5) 3.9 42.8 39.2 35.0 Dec-19 Q1 Mar-20 Q2 Jun-20 ● Mutual fund net outflows of £2.7bn, this includes a one-off transfer of assets to a segregated mandate of £0.4bn ● Segregated mandate net inflows of £0.7bn,
Slide 10: Net flows by asset class
Net flows by asset class (£bn) 8 ● Net outflows for the first half of 2020 were £2.0bn ● Despite strong performance, Fixed 6 Income saw net outflows as clients reduced exposure to bonds globally 4 ● Equity outflows stabilised towards the end of the period as the reaction to the change in fund manage
Slide 11: Earnings
Earnings Underlying profit before tax down 36% to £57m (21) (1) (7) 5 (8) (16) 89 57 41 H1 19 Net management Performance Costs Finance costs Other 1 H1 20 Exceptional H1 20 Underlying PBT fees fees Underlying PBT items Statutory PBT ● Despite difficult markets, our continued focus on an efficient op
Slide 12: Net revenues
Net revenues Lower average AUM the primary driver of reduced revenues Net revenue (£m) Net management fees H1 20 161.4 H1 19 182.9 % +/- -12% £39.4bn Average AUM1 Performance fees - 7.3 161.4 190.2 -15% Net initial charges 0.5 0.6 Net revenue 161.9 190.8 -15% 82.3bps Net management fee margin ● Decr
Slide 13: Administrative expenses
Administrative expenses Cost management in a challenging market environment Expenses Expenses (£m) and total compensation ratio (%) (£m) H1 20 H1 19 % +/- 140 35% 34% 34% 35% Fixed staff costs 31.3 29.6 120 30% Variable staff costs 24.3 34.4 100 25% Compensation costs 55.6 64.0 80 66 Non-compensatio
Slide 14: Non-compensation costs
Non-compensation costs Focus on disciplined cost management Non-compensation costs development from H2 19 to H1 20 (£m) (2.5) (0.9) 47.1 (1.0) 0.3 43.0 H2 19 Covid-19 related Reduced admin fees Other Increased FSCS Levy H1 20 savings linked to AUM 13
Slide 15: Expenses
Expenses Cost focus in a challenging market environment Expenses Expenses (£m) and total compensation ratio (%) (£m) H1 20 H1 19 % +/- 140 35% 34% 34% 35% Fixed staff costs 31.3 29.6 120 30% Variable staff costs 24.3 34.4 100 25% Compensation costs 55.6 64.0 80 66 20% Non-compensation costs 43.0 39.
Slide 16: Capital allocation framework
Capital allocation framework Supporting the future growth of the business alongside returns to shareholders CAPITAL ALLOCATION FRAMEWORK Opportunities Additional Organic Ordinary for accelerated returns to growth dividends growth shareholders ● Prioritise allocation of ● Team hires, bolt-on ● Progre
Slide 17: Proactive seeding portfolio
Proactive seeding portfolio Focused use of our balance sheet to support organic growth Seed size and length of investment GEM short duration bond (£151m external holding) 120% 100% 80% Global High Yield SD Bond 60% 100% Eurozone Equity 40% Jupiter Flexible Macro 20% 80% 0% Sep-17 Dec-17 Jun-18 Dec-1
Slide 18: Maintain strong capital position
Maintain strong capital position Our overall capital management policy remains unchanged Regulatory capital Ordinary dividend maintained (pence per share) (£m) Dec 19 1 Jul 201 Ordinary shareholder funds 612 852 Add: Subordinated debt - 49 9.2 9.2 Less: Goodwill and intangible assets (347) (644) Tan
Slide 19: H1 2020 Merian AUM progression
H1 2020 Merian AUM progression AUM at £16.7bn Movement in AUM (£bn) (1.7) (1.6) (0.5) (0.5) (1.4) 22.4 Net outflows of £4.3bn 16.7 Dec-19 GEAR Systemic Desk FM Change Other Markets Jun-20 ● Mutual fund net outflows of £4.3bn ● £1.4bn of losses from underlying markets, investment performance and fore
Slide 20: Combined financial metrics
Combined financial metrics Net revenue drivers Merian Merian Jupiter Combined 2019 H1 2020 H1 2020 H1 2020 Assets under management £22bn £17bn £39bn £56bn - Of which GEAR £2.9bn £1.2bn - £1.2bn Exit run-rate net 1 management fee margin 66bps 66bps 82bps 77bps 1 Increased from 62bps due to revenue re
Slide 21: Merian costs excluding exceptional items
Merian costs excluding exceptional items Delivering cost synergies Merian Merian Merian Annualised H2 20 Projected run rate as 2019 take on costs at 31/12/2020 Fixed staff costs £31m £18m £13m Variable staff costs £37m £20m £18m Compensation costs £68m £38m £31m Non-compensation costs £47m £28m £26m
Slide 22: Interim Results - Andrew Formica
Interim Results ANDREW FORMICA 2020
Slide 23: Jupiter – an independent, active fund manager
Jupiter – an independent, active fund manager Clear and consistent investment identity for 35 years Active funds management is in our DNA Provide an optimum environment for talented, high conviction managers Client centred approach embedded in all we do Our long standing success in UK retail channel
Slide 24: COVID-19 Pandemic – Jupiter responses
COVID-19 Pandemic – Jupiter responses Health and wellbeing of staff and their families is paramount Our stakeholders Support for working from home, pastoral care with emphasis on mental health, no furloughing or People government support, phased re-opening of offices in London and some overseas loca
Slide 25: Strategic priorities
Strategic priorities ● Consistently deliver strong investment performance and outcomes for clients ● Continue diversifying the business by client type, investment strategy and geography ● Attract, develop and retain high-quality talent aligned with our culture ● Expand the range of active investment
Slide 26: Priorities for H2 2020
Priorities for H2 2020 Embed resilience and agility for future Prioritise Successfully Focus on Identify Maintain Build upon and existing integrate cultural additional excellent broaden investments in Merian into integration of savings and investment momentum in the business Jupiter new colleagues f
Slide 27: Q&A
Q&A te NEUE AR CORONAVIRUS UPDATES = View the latest insights from our fund managers Ertrag Tall Sheen Fernie JUPITER ‘Asset Management JUPITER
Slide 28: Forward looking statements
Forward looking statements This presentation may contain certain “forward-looking timing, impact and other uncertainties of future acquisitions or statements” with respect to certain plans of Jupiter Fund combinations within relevant industries; and the impact of Management plc (Jupiter) and its cur
Slide 29: Appendix
Appendix
Slide 30: AUM by distribution partner
AUM by distribution partner Our assets reach us through a number of different channels AUM (£bn) ● The majority of our assets come through our distribution partners and their associated intermediary channels rather than directly from our clients 45.9 ● The line between advisory and discretionary con
Slide 31: Successful diversification
Successful diversification Changing asset base over the last five years Split of AUM by asset class (£bn) Split of AUM by client geography (£bn) 39.2 39.2 34.3 34.3 H1 2015 H1 2020 H1 2015 H1 2020 UK Europe Asia RoW Equities Fixed Income Multi Asset Alternatives 30
Slide 32: Net flows by region
Net flows by region Net flows (£bn) 1 ● H1 20 has seen positive flows in Segregated Mandates in the US following a new strategic partnership with NZS Capital ● In the UK, outflows in H1 20 are due to Absolute Return and European - ● Outflows in Asia in H1 20 are concentrated across Dynamic Bond (1)
Slide 33: Jupiter investment identity
Jupiter investment identity Reasons for an active high-conviction approach Client demand for Active Specialties remains healthy ● Client demand trends remain encouraging $106tn AUM ● Long-term performance potential $88tn AUM Solutions: 15% ● Passive guarantee 100% of the downside Alternatives: 17% ●
Slide 34: Overview of Jupiter
Overview of Jupiter A leading, high-conviction, active asset management business Assets under management Employees Product and performance UK brand £39bn 530 17 #8 AUM as at Jun-20, with FTEs as at Jun-20, of which investment strategies, with Position against UK peers 3 87% 68 80% Top 10 in mutual f
Slide 35: Overview of the combined business at 1st July 2020
Overview of the combined business at 1st July 2020 Assets under management Employees Product and performance £56bn 690 21 AUM as at 1 Jul-20, with FTEs as at 1 Jul-20, of which investment strategies, with 86% 109 77% in mutual funds are investment professionals 1 of AUM above median over 3 years 2 A
Slide 36: Jupiter Asset Management Limited
Jupiter Asset Management Limited The Zig Zag Building, 70 Victoria Street London, SW1E 6SQ, United Kingdom T: +44 (0)20 3817 1000 F: +44 (0)20 3817 1820 @jupiterAM_UK Jupiter Asset Management Jupiteram.com
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