Jupiter Fund Management Plc · LSE:JUP
Jupiter Fund Management — FY2020 Earnings Presentation
53 slides from Jupiter Fund Management's earnings presentation, 2020
Slide 1: Full Year Results 2020
Full Year Results 2020 For professional and institutional investors only. Not for retail investors.
Slide 2: Andrew Formica
2020 Andrew Formica Full year results For professional and institutional investors only. Not for retail investors.
Slide 3: Jupiter full year results 2020 - agenda
Jupiter full year results 2020 - agenda Overview – Andrew Formica, Chief Executive Officer Investment Management – Stephen Pearson, Chief Investment Officer Product & Distribution – Phil Wagstaff, Global Head of Distribution 2020 financial results – Wayne Mepham, Chief Financial Officer Strategy upd
Slide 4: A year of strengthening the foundations
A year of strengthening the foundations Resilient results and significant strategic progress £384.0m 28.7p 70% Net management fees Underlying EPS Mutual fund performance (2019: £370.0m) (2019: 28.8p) (2019: 72%) £58.7bn 17.1p / 3.0p £(4.0)bn Ordinary Special AUM dividend dividend Net outflows (Dec 2
Slide 5: A year of strengthening the foundations
A year of strengthening the foundations Resilient results and significant strategic progress 1 Maintained strong investment performance 2 Acquired and integrated Merian 3 Accelerated investment in ESG and technology 4 Broadened investment capabilities 5 Commitment to diversifying product range and D
Slide 6: Providing support through Covid-19
Providing support through Covid-19 Focus on supporting our people, delivering for our clients and helping our communities - Primary focus on our people’s well-being People - Focused on mental health through transition to remote working - Extended annual leave entitlement and technology allowance - M
Slide 7: Stephen Pearson
2020 Stephen Pearson Full year results For professional and institutional investors only. Not for retail investors.
Slide 8: A high conviction active asset manager
A high conviction active asset manager Active management delivering in difficult market conditions Three-year mutual fund performance 63% 14% over 1 year (Jupiter: 57%, Merian: 78%) 16% 42% 70% over 3 years (Jupiter: 79%, Merian: 48%) 28% 69% over 5 years 1st quartile 2nd quartile 3rd quartile 4th q
Slide 9: Largest funds performing well
Largest funds performing well A more diversified, less concentrated business AUM at AUM at 4th 3rd 2nd 1st Dec 20201 Dec 20191 Quartile Quartile Quartile Quartile Dynamic Bond £8.6bn £7.0bn European £4.6bn £4.9bn Strategic Bond £4.4bn £4.2bn UK Mid Cap £3.5bn £3.4bn Merlin Income £2.1bn £2.2bn North
Slide 10: Diversifying our investment capabilities
Diversifying our investment capabilities Building out franchises with strong track records Equities Fixed Income Multi-Asset Alternatives 1,200 1,155 1,000 978 800 736 755 600 663 614 548 400 200 184 73 0 Global European Absolute EMD Corporate Gold & Silver Chrysalis Japan Multi-Asset Sustainable Sm
Slide 11: Phil Wagstaff
2020 Phil Wagstaff Full year results For professional and institutional investors only. Not for retail investors.
Slide 12: Flows in 2020 (1/2)
Flows in 2020 (1/2) ● Jupiter strategies saw net positive flows in final Quarterly net flows in 2020 (£bn) three quarters 0.5 ● First quarter outflows led by demand for liquidity 0.0 ● Redemptions in second half due to: (0.5) ● Outflows from Merian long-only Systematic (1.0) strategies (1.5) ● Low m
Slide 13: Flows in 2020 (2/2)
Flows in 2020 (2/2) Monthly flows in 2020 (£bn) ● Gross inflows robust at £16.5bn 2.5 ● Top 10 UK asset manager for gross retail sales1 2.0 ● Equity outflows continued themes from 2019: European Growth, Systematic and Absolute Return 1.5 1.0 ● Fixed Income generated £650m of net flows, diversified a
Slide 14: Developing opportunities for growth
Developing opportunities for growth Strong performance across funds approaching three to four year track records ● Disciplined approach to product development ● Increased focus through 2020 on fund range rationalisation (more closures in 2020 than in previous 5 years) ● Brand refresh for the combine
Slide 15: Strong performance will provide a platform for growth
Strong performance will provide a platform for growth Equities Fixed Income Multi-Asset Alternatives 10,000 9,000 8,634 8,000 7,000 6,000 6,294 5,000 4,674 4,000 3,688 3,000 3,450 2,000 1,000 663 755 0 Corporate Bond Chrysalis UK Mid Cap Value Strategic Bond European Equities Dynamic Bond UK Special
Slide 16: Wayne Mepham
2020 Wayne Mepham Full year results For professional and institutional investors only. Not for retail investors.
Slide 17: Resilient performance in a challenging environment
Resilient performance in a challenging environment Net revenue1 Up 18% to £447.8m (2019: £379.1m) 28.7p Underlying EPS (2019: 28.8p) Underlying profit Up 10% to £179.0m 17.1p before tax (2019: £162.7m) Ordinary dividend Exceptional items Up to £46.4m (2019: 17.1p) (2019: £11.7m) Statutory profit Dow
Slide 18: Underlying profit before tax up 10% to £179m
Underlying profit before tax up 10% to £179m Operating margin of 41% (46) 59 (44) (6) (1) - 8 - 179 163 133 120 2019 Net Net Costs Other1 Jupiter Merian 2020 Exceptional 2020 Underlying PBT management performance underlying underlying Underlying PBT items Statutory PBT fees fees PBT PBT 41% £179m £3
Slide 19: 2020 AUM progression
2020 AUM progression AUM closed the year at a new high of £58.7bn Movement in AUM (£bn) 58.7 16.6 17.0 Merian 42.8 (4.0) 3.3 - 41.7 Jupiter Dec-19 Net flows Markets Merian acquisition Dec-20 £16.6bn £47.8bn1 through Merian acquisition Average AUM (2019: £44.3bn) 1Average AUM is calculated using a 13
Slide 20: Net revenues
Net revenues Performance fees and higher average AUM driving revenue growth (10) 72 (41) 57 (2) (7) 129 448 379 329 2019 Net flows Markets Other 2020 Jupiter Merian ex- Merian DEO allocation 2020 Revenue revenue performance fees performance fees Revenue 79.1bps £73.6m 77.5bps FY 2020 Net man. fee To
Slide 21: Significant performance fees generated in 2020
Significant performance fees generated in 2020 Driven by strong investment performance £32.7m Chrysalis £15.7m UK Dynamic £13.1m Equity UK Specialist £6.6m £4.1m Equity Segregated UK Smaller £1.4m mandates Co. Focus Others £73.6m Total performance fees 20
Slide 22: Investing for growth while maintaining cost discipline
Investing for growth while maintaining cost discipline Cost management in a challenging market environment Expenses Expenses (£m) and total compensation ratio (%) £m 2020 2019 % +/- Non-compensation Compensation costs Total compensation ratio Compensation costs 161.9 130.1 +24% 34% 35% 300 Non-compe
Slide 23: Compensation costs
Compensation costs Focus on disciplined cost management Compensation costs development from 2019 to 2020 (£m) 26.0 Fixed comp costs 2.5 9.0 2.3 2.9 (20.0) 9.1 161.9 Variable comp costs 130.1 117.8 2019 Additional staff Investment for Other Variable comp Jupiter Merian Merian perf fee 2020 benefits g
Slide 24: Positioning resources for future growth
Positioning resources for future growth Targeted compensation cost management Expenses Expenses (£m) and total compensation ratio (%) £m 2020 2019 % +/- Non-compensation Compensation costs Total compensation ratio Fixed staff costs 76.1 59.4 +28% 34% 35% 300 Variable staff costs 85.8 70.7 +21% 35% 3
Slide 25: Non-compensation costs
Non-compensation costs Focus on disciplined cost management Non-compensation costs development from 2019 to 2020 (£m) 12.5 2.1 103.2 1.6 (2.5) 2.8 - 90.7 86.7 2019 Covid related Data & research Regulatory fees Other Jupiter 2020 Merian 2020 savings All costs before exceptional items 24
Slide 26: Exceptional items
Exceptional items Primarily incurred through acquisition and integration Non Merian- Merian-related Total related £m Transaction costs 12.7 - 12.7 Integration-related costs 26.6 - 26.6 Transaction and integration costs 39.3 - 39.3 Amortisation of intangible assets 9.4 - 9.4 Deferred compensation cos
Slide 27: Maintaining a strong capital position
Maintaining a strong capital position Adapting our capital allocation framework Regulatory capital Increased dividends to 70% payout ratio 31 Dec 1 Jul 31 Dec £m Ordinary Interim Ordinary Year End Special 2020 2020 2019 restated Ordinary shareholder funds 886 848 612 Add: Subordinated debt 49 49 - L
Slide 28: Financial benefits of Merian acquisition
Financial benefits of Merian acquisition • Attractive value creation for shareholders underpinned by significant cost saving potential • Returns to Jupiter significantly in excess of its cost of capital • New enhanced growth options through acquired teams Acquisition announcement (February 2020) Cir
Slide 29: Merian contribution to 2020 results
Merian contribution to 2020 results £59m contribution to underlying PBT - - (56.6) 119.1 - (3.3) (46.4) 179.0 119.8 132.6 2020 Jupiter PBT Merian revenue Merian costs Merian finance costs 2020 Acquisition & 2020 Combined PBT integration costs 1 Statutory PBT 52% 35% c.50% Op margin perf fees Underly
Slide 30: Merian excluding exceptional items
Merian excluding exceptional items Delivering strong financial performance - excluding performance fees Merian Merian Merian Projected run rate as at £m 2019 Annualised H2 20 31/12/2020 Revenue 1 174 113 115 Fixed staff costs 31 18 11 Variable staff costs 1 30 18 18 Non-compensation costs 47 25 23 A
Slide 31: Deal terms on highly attractive valuations
Deal terms on highly attractive valuations With additional returns from performance fees Announcement Circular Fully synergised run rate based on Dec AUM Feb 20 Apr 20 AUM (£bn) 22.5 15.7 17.0 Operating margin 50% to 60% at least 40% 58% EV/EBITDA multiple1 5.2x 6.0x 4.4x 1Valuation multiples are ca
Slide 32: Resilient performance in a challenging environment
Resilient performance in a challenging environment Strong foundations for future growth 1 Strong performance driving 10% increase in profits1 2 Significant contribution from Merian acquisition 3 Focused cost management – pivoting to growth 4 Capital allocation framework confirmed 1 Underlying profit
Slide 33: Andrew Formica
2020 Andrew Formica Full year results For professional and institutional investors only. Not for retail investors.
Slide 34: Significant progress against strategic priorities
Significant progress against strategic priorities 1 2 Expand the range of active 3 4 Consistently deliver investment strategies Attract, develop and retain Deliver consistent strong investment through recruitment of high-quality talent total returns performance and investment talent and aligned with
Slide 35: One of UK's leading independent active asset managers
One of UK’s leading independent active asset managers 5 Merian acquisition brought scale and new investment expertise ● Acquisition reinforced our core UK ● Broader, complementary investment franchise expertise ● Aligned cultures and investment ● Enhances position with market-leading philosophy offe
Slide 36: One of UK's leading independent active asset managers
One of UK’s leading independent active asset managers 6 A broad range of newly added complementary investment expertise Equities: Alternatives: China Ping An Chrysalis Equities: Fixed Income: Alternatives: Financials Contingent Global Equity UK Mid Cap Capital Absolute Return NZS Capital: Alternativ
Slide 37: Targeting key overseas markets and Institutional
Targeting key overseas markets and Institutional 7 Opportunities in largest and fastest growing markets and channels ● Opened first office in US ● Institutional AUM now £5.3bn, or 9% of the Group ● Expanded footprint in Asia Pacific through ● Successful start to partnership with NZS Merian Capital ●
Slide 38: Strengthened commitment to Sustainability
Strengthened commitment to Sustainability 7 Focused on both our investee companies and ourselves ESG incorporated into both business and investment activities Strong foundations Progress in 2020 Looking ahead • Commitment to achieving net • Long history of sustainable • Restructured sustainable zero
Slide 39: Supported by investments in technology and data science
Supported by investments in technology and data science 8 • Investments in technology allowed for seamless transition to remote working • Launched data science team in 2019, further investment through 2021 • Provides analysis and insight to fund managers from non-traditional data sets • Created ‘Jup
Slide 40: Well positioned for future growth
Well positioned for future growth Strong investment performance Culture centered around clients; improved agility and collaboration Merian acquisition integrated and delivering significant value Exciting new range of investment and product capabilities Focus pivoting towards external opportunities 3
Slide 41: Q&A Full year results
2020 Q&A Full year results For professional and institutional investors only. Not for retail investors.
Slide 42: Forward looking statements
Forward looking statements This presentation may contain certain “forward-looking statements” with As a result, Jupiter’s actual future financial condition, performance and respect to certain plans of Jupiter Fund Management plc (Jupiter) and its results may differ materially from the plans, goals a
Slide 43: Appendix
2020 Appendix Full year results For professional and institutional investors only. Not for retail investors.
Slide 44: Significant progress against strategic priorities
Significant progress against strategic priorities 1 2 Expand the range of active 3 4 Consistently deliver investment strategies Attract, develop and retain Deliver consistent strong investment through recruitment of high-quality talent total returns performance and investment talent and aligned with
Slide 45: Deal terms on highly attractive valuations
Deal terms on highly attractive valuations Including acquisition and integration costs Announcement Circular Fully synergised run rate Feb 20 Apr 20 based on Dec AUM AUM (£bn) 22.5 15.7 17.0 Operating margin 50% to 60% at least 40% 58% EV/EBITDA multiple1 5.8x Incl. exceptionals 7.0x Incl. exception
Slide 46: Funds with performance fees
Funds with performance fees Driven by strong investment performance Illustrative example AUM of all share classes Performance fee High Funds with performance with performance fee Share class Performance at 5% out- Share class Water Benchmark fee potential potential NAV fee rate performance Mark (£m)
Slide 47: Long-term incentive compensation
Long-term incentive compensation Estimated future long-term incentive compensation amortisation Amount remaining 2021 2022 2023 2024 to expense 2017 annual grant £0.7m £0.7m - - - 2018 annual grant £5.4m £4.5m £0.9m - - 2019 annual grant £14.7m £8.8m £4.9m £1.0m - 2020 annual grant £29.5m £13.5m £9.
Slide 48: Non-compensation costs
Non-compensation costs Disciplined cost management 2019 2020 Merian £m Jupiter Jupiter Combined H2 annualised AUM related costs 42 47 16 63 Infrastructure 29 30 7 37 Other 16 14 2 16 Total non-comp costs 87 91 25 116 47
Slide 49: 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 (£177m external holding) 120% 100% Global High Yield SD 80% Bond 100% 60% Eurozone Equity 40% Jupiter Flexible 80% Macro 20% Merlin Real Return 0% Flexibl
Slide 50: AUM by distribution channel
AUM by distribution channel Our assets reach us through a number of different channels ● The majority of our assets come through our distribution AUM (£bn) partners and their associated intermediary channels rather Advisory Discretionary Institutional than directly from our clients Direct Investment
Slide 51: 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) Equities Fixed Income Multi Asset Alternatives UK EMEA Asia RoW 58.7 58.7 34.3 34.3 2015 2020 2015 2020 50
Slide 52: Net flows by region
Net flows by region ● 2020 has seen positive flows in the US following a new Net flows (£bn) strategic partnership with NZS Capital UK EMEA Asia RoW ● In the UK, outflows in 2020 are due to Absolute Return and 7 European 6 ● Outflows in Asia are driven predominantly by H1 20 5 outflows in Dynamic Bo
Slide 53: 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 52
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