D E L I V E R I N G G R O W T H 2017 Half Year Results
2017 HALF YEAR RESULTS 1 2017 so far Delivering growth through investment outperformance Client focus: delivering value through investment performance and transparency Delivered outperformance after fees Performance Improved 3 year investment performance to 81% (YE 2016: 75%) Strong business momentum Inflows Net flows of 3.6bn 19% increase in net management fees Financial delivery Diversification strategy Continued development of new products and geographies Consistent flow through of earnings to shareholder returns
2017 HALF YEAR RESULTS 2 Financial highlights Strong financial performance from successful asset gathering Measure H1 2016 H1 2017 Change Net management fees 156.5m 186.5m +19% Net revenue 170.0m 195.4m +15% Net management fees margin 88bps 86bps Underlying profit before tax* 82.5m 94.8m +15% Underlying EPS 14.4p 16.7p +16% Interim dividend 4.5p 6.8p +51% Adjusted cost / income ratio** 55% 54% * Underlying profit before tax = profit before tax excluding amortisation arising from acquisitions and non-recurring items **Adjusted cost / income ratio = administrative expenses / net management fees
2017 HALF YEAR RESULTS 3 Revenues Organic growth in net management fees of 19% Net revenue Net revenue ( million) million H1 16 H1 17 % +/- Net management fees 156.5 186.5 +19% Net initial charges 7.8 8.1 Of which box profits 6.6 7.2 Performance fees 5.7 0.8 Net revenue 170.0 195.4 +15% Net management fees Performance fees 169 170 160 6 13 8 7 7 Net initial charges 195 8 181 7 Strong growth in management fees Box profits will cease during 2018 149 152 156 174 186 Performance fees of 0.8m crystallised during the period. The equivalent in H1 2016 was 5.7m H1 15 H2 15 H1 16 H2 16 H1 17
2017 HALF YEAR RESULTS 4 Net management fee margins Key driver remains growth of fixed income business Business mix bps H1 14 H2 14 H1 15 H2 15 H1 16 H2 16 H1 17 Margin* 87.2 88.4 88.1 87.0 87.6 87.3 85.9 Net management fee margin in the first half of the year is in line with guidance H1 17 decrease is as a result of continued positive business momentum in the lower margin fixed income strategy Limited decline in net management fee margin in 2016 due to the introduction of the SICAV Aggregate Operating Fee Guidance that ongoing margins are to decline by 1-2 bps per annum over the longer term remains in place * Based on average assets in each period using a 7 point basis, adjusted for the number of days in the period
35% 30% 25% 20% 15% 10% 5% - 2017 HALF YEAR RESULTS 5 Fixed costs Investing alongside growth Fixed costs Fixed costs ( million) and % of net management fees million H1 16 H1 17 % +/- H2 16 Fixed staff costs 23.3 26.9 25.0 33% 35% 35% 34% Other expenses 31.1 36.4 36.0 Fixed costs 54.4 63.3 +16% 61.0 Increase in fixed costs from H1 2016: Higher transaction costs directly linked to increased AUM and dealing volumes ( 3.1m) 31% 6 18 10 6 22 21 11 13 25 23 Investment across the business in people to drive and support growth ( 3.6m) 21 22 23 25 27 Fixed costs as a proportion of revenues are stable in a period of investment Research costs to be added in 2018 (2016: 5m) H1 15 H2 15 H1 16 H2 16 H1 17 Transaction costs Non-staff costs Fixed staff costs % of net management fees
2017 HALF YEAR RESULTS 6 Fixed costs Progression in fixed costs driven by business activity; continued focus on cost discipline Fixed cost progression from H2 2016 to H1 2017 ( million) 65.0 62.5 1.5 0.7 0.1 60.0 57.5 55.0 61.0 63.3 52.5 50.0 H2 2016 Transaction costs linked to higher AUM Investment for growth Other H1 2017
2017 HALF YEAR RESULTS 7 Variable staff costs In line with guidance Variable staff costs Variable staff costs ( million) and comp ratio* million H1 16 H1 17 30 29 29 Cash bonus 21.1 22.7 Deferred bonus 5.2 7.5 LTIP, SAYE and SIP 5.7 7.8 Variable staff costs 32.0 38.0 11 26 10 28 11 13 15 Variable compensation ratio * 28% 29% Total compensation ratio ** 33% 33% Consistent underlying compensation ratios 27 19 21 21 23 The introduction of the Apprenticeship Levy in H1 2017 has added 0.4m to variable costs H1 15 H2 15 H1 16 H2 16 H1 17 Other variable compensation*** Cash bonus Comp ratio (%) * Variable staff costs as a proportion of operating earnings plus variable staff costs ** Total staff costs as a proportion of net revenue *** Other variable compensation = Apprenticeship Levy + deferred bonus costs + LTIP costs + SIP costs + SAYE costs
2017 HALF YEAR RESULTS 8 Earnings Operating margins maintained and healthy returns to shareholders Growth in earnings Dividend progression (pence per share) Underlying PBT ( million) 95 Return of private client proceeds Special 85 86 Final Interim 4.9 10.9 12.5 82 83 6.6 9.1 9.5 10.6 10.2 3.5 3.7 4.0 4.5 6.8 H1 15 H2 15 H1 16 H2 16 H1 17 2013 2014 2015 2016 H1 17 Further rebalancing of ordinary dividends towards interim
2017 HALF YEAR RESULTS 9 Resilient balance sheet Robust post-dividend liquidity and regulatory capital positions Liquidity ( million) Regulatory capital ( million) Dividends Compensation round 'Core' cash million H1 17 98 104 57 55 26 46 21 38 64 22 Ordinary shareholder funds 583 Less: goodwill and illiquid assets * (372) Tangible capital 211 Less: provision for dividend (64) Qualifying capital 147 Estimated requirement (55) Indicative surplus 92 127 115 126 117 134 Consistent cash generation supports our liquidity management model H1 15 H2 15 H1 16 H2 16 H1 17 Maintaining a comfortable surplus over regulatory requirements *Including adjustments for deferred tax, prepayments and fixed assets
2017 HALF YEAR RESULTS 10 Delivering growth through investment excellence 1 2 3 Deliver outperformance after fees to our clients Sell this expertise through products suited to our distribution strengths Deliver attractive returns to shareholders
2017 HALF YEAR RESULTS 11 Highlights Delivering growth through investment excellence Investment Performance 3 year mutual fund performance Net Sales Net Management Fees Underlying Earnings per Share Up 6% to 81% Up 3.0bn to 3.6bn Up 19% to 186.5m Up 16% to 16.7p (Dec 2016: 75%*) (2016 H1: 0.6bn) (2016 H1: 156.5m) (2016 H1: 14.4p) AUM up 16% to 46.9bn *See footnote on page 12 regarding restated prior year performance measure
2017 HALF YEAR RESULTS 12 Performance numbers Delivering performance after fees for our clients is at the core of what we do Three year mutual fund performance Commentary 13% 6% Long-term track record maintained 81% of AUM in mutual funds above median over three years (YE 2016: 75%*) 16% 17% 39% 22% 22% 65% Excellent segregated mandate and investment trust performance 79% of AUM in segregated mandates are above benchmark 70% of AUM in investment trusts are above benchmark 1st quartile 2nd quartile 3rd quartile 4th quartile Source: Jupiter Portfolio Analytics as at 30 June 2017: pie chart in centre = performance weighted by number of funds; ring around pie chart = performance weighted by AUM *Prior year comparative has been restated from 66% to reflect an update in our internal investment performance methodology which has also increased our AUM coverage of the measure
2017 HALF YEAR RESULTS 13 Two more funds exceeding the 1bn mark Three year investment performance in key funds AUM at Jun 16 AUM at Dec 16 AUM at Jun 17 4 th quartile 3 rd quartile 2 nd quartile 1 st quartile Dynamic Bond* 4,957m 6,209m 9,090m European 3,726m 3,780m 4,306m Strategic Bond 2,910m 3,407m 3,708m Merlin Income 3,554m 3,169m 3,049m Income Trust 1,921m 2,283m 2,395m Merlin Growth 1,836m 1,961m 1,944m European Growth* 1,957m 1,655m 1,891m UK Special Sits 1,299m 1,525m 1,716m Merlin Balanced 1,544m 1,655m 1,704m UK Growth 1,370m 1,446m 1,400m Absolute Return + 361m 763m 1,212m India + 450m 634m 1,029m Source: Jupiter Portfolio Analytics as at 30 June 2017 Equities Fixed income Multi-asset Graph shows position within the sector on a percentile basis, performance stated after all fees The bars in the graph show our current quartile ranking and the clear bars show our position as at 31 December 2016 * SICAV products + Funds reaching over 1bn in H1 2017
2017 HALF YEAR RESULTS 14 Further growth opportunities Developing products to drive future growth Distribution unit trust (AUM in million) UK Smaller Companies (AUM in million) 1,000 750 500 250 0 Jun 14 Jun 15 Jun 16 Jun 17 150 125 100 75 50 25 0 Jun 14 Jun 15 Jun 16 Jun 17 GEM Equity Strategy (AUM in million) India Select SICAV (AUM in million) 3,000 2,500 2,000 1,500 1,000 500 0 Jun 14 Jun 15 Jun 16 Jun 17 400 300 200 100 0 Jun 14 Jun 15 Jun 16 Jun 17 Note: The GEM strategy is comprised of the following funds: Asian Pacific Income/Asian Income, Asian, China/China Select, Emerging European Opportunities/New Europe, Global Emerging Markets/ Global Emerging Markets Equity Unconstrained, India/India Select, Emirates Emerging Markets Equity Fund, Omnis Portfolio Investments ICVC, Taishin IT and Emerging & Frontier Income Trust PLC.
2017 HALF YEAR RESULTS 15 Diversification by client and geography International diversification into Italy and Iberia already delivering growth Italy office Iberia office Milan Opened June 2016 3 local employees AUM: 1.3bn Madrid Opened September 2016 3 local employees AUM: 1.3bn
2017 HALF YEAR RESULTS 16 Key fund progression over the past 5 years (funds over 1bn AUM) Successful strategy of diversification June 2012 6 funds over 1bn 11.0bn gross AUM 43% of total AUM June 2017 12 funds over 1bn 33.4bn gross AUM 68% of total AUM
2017 HALF YEAR RESULTS 17 Mutual fund focus Consistent organic flow growth Cumulative net mutual fund flows ( bn) 11.0 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 Focused mutual fund provider, with a track record of generating consistent net inflows across the cycle 10.2bn cumulative mutual fund inflows over past five years Organic growth of 6% p.a. over the past five years Targeted diversification by product, client type and geography 1.0 0.0 Q3 12 Q4 Q1 13 Q2 Q3 Q4 Q1 14 Q2 Q3 Q4 Q1 15 Q2 Q3 Q4 Q1 16 Q2 Q3 Q4 Q1 17 Q2
2017 HALF YEAR RESULTS 18 Growth in AUM since 2012 Benefits of our focus on outperformance Movement in AUM ( billion) 50 AUM up 78% to 46.9bn, with healthy underlying organic flow growth 40 30 20 9.4 (0.4) 0.2 (2.1) 13.5 46.9 Mutual fund net inflows of 9.4bn across a range of markets; significant international contribution 10 26.3 Dec-12 Mutual Funds Segregated Mandates Investment Trusts Private Clients Markets / Investment Alpha Jun-17 13.5bn driven by investment outperformance, underlying market growth and foreign exchange movements on nonsterling assets
2017 HALF YEAR RESULTS 19 Diversification of our product range Increase in fixed income and European equities within our broader growth Split of AUM by asset class 24.4bn 46.9bn Over 5 years, evolution and diversification are constant themes as we continually adapt to investor needs Demand for unconstrained fixed income and the performance of our European equities has helped create a more diversified business AUM in the GEM Equity strategy has grown to over 2.6bn During H1 2017: Asian Income funds reached over 0.5bn of AUM Dec-12 Jun-17 Multi-asset UK equities European equities Fixed income Other Absolute Return SICAV ( 0.1bn) complementing the success in the UT (2017 net flows of 0.6bn). Total AUM in the Absolute Return strategy is now 1.3bn Continued investment in increasing the breadth and depth of our talent pool Numbers exclude private clients AUM throughout
2017 HALF YEAR RESULTS 20 Continued diversification across our capabilities Maximise our future growth potential Managing our capabilities Build and develop our capability in multi-asset, alternatives, equity and fixed income Build & develop Outcomeoriented multi-asset Alternatives Equity specialties Fixed income specialties Maximise the additional prospects of prior investments which are core to our near term growth Continue to grow Absolute return Fixed income unconstrained Manage the further success of our longer standing capabilities to help mitigate their redemption risk to our growth Sustain success Key Multi-asset products Equity products Active equity Multimanager Alternative products Fixed income products
2017 HALF YEAR RESULTS 21 Change in the regulatory and political landscape Navigating our way through continuous change Current list of drivers FCA Market Study UCITS V MiFID II SM&CR Brexit Our response Removal of box profits in 2018 Bringing research costs onto the P&L MiFID II implementation on track Focus on data governance Continued platform investment
2017 HALF YEAR RESULTS 22 In summary Delivering growth through investment excellence Both our scale and our breadth of capabilities have increased substantially in the last five years Increased business resilience from continued diversification through product, client type and geography Clear organic growth strategy leaves us well equipped for the future Creating value for clients through the delivery of excellent active returns Maintaining a culture of accountability, high performance and independent thinking Delivering earnings growth and progressive shareholder returns
2017 HALF YEAR RESULTS 23 Q&A
Forward-looking statements This presentation may contain certain forward-looking statements with respect to certain plans of Jupiter Fund Management plc (Jupiter) and its current goals and expectations relating to its future financial condition, performance, results, strategy and objectives. Statements containing the words believes, intends, expects, plans, seeks and anticipates, and words of similar meaning, are forward looking. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond Jupiter s control including, among other things, UK domestic and global economic and business conditions; market-related risks such as fluctuations in interest rates and exchange rates, and the performance of financial markets generally; the policies and actions of regulatory authorities; the impact of competition, inflation and deflation; the timing, impact and other uncertainties of future acquisitions or combinations within relevant industries; and the impact of changes in capital, solvency or accounting standards, and tax and other legislation and regulations in the jurisdictions in which Jupiter and its affiliates operate. As a result, Jupiter s actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in Jupiter s forward-looking statements. Jupiter undertakes no obligation to update the forward-looking statements contained in this presentation or any other forward-looking statements it may make. Nothing in this presentation should be considered as a profit forecast.