Jupiter Fund Management plc. Preliminary Results: 7 March 2012

Transcription

1 Jupiter Fund Management plc Preliminary Results: 7 March 2012

2 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 forwardlooking statements it may make. Nothing in this presentation should be considered as a profit forecast.

3 Highlights 3 Strong investment performance in a difficult year Improved financial performance Resilient balance sheet Increased dividends Delivering value to clients and shareholders

4 Financials

5 Profit and loss highlights 5 Measure Change Net revenues 230.5m 248.5m 8% EBITDA 124.6m 134.9m 8% EBITDA margin 54% 54% Profit before tax 42.4m 70.3m 66% Underlying EPS 17.6p 19.1p 9%

6 Revenues 6 Net revenues ( million) % +/- Net management fees Net initial charges and commissions Performance fees Net revenues Net management fees continue to dominate group net revenues Reduced net initial charges and commissions due to lower box profits Performance fees largely in H1; attributable to Jupiter European Opportunities investment trust Net management fee margin % +/- Average FTSE 5,465 5, Average AUM ( billion) Net management fee margin (bps) (1) Average AUM stated on a 13-month basis.

7 Net management fee margins (technical impact) 7 Theoretical margin over time : Series of helpful months throughout the year Both halves of 2011 Series of unhelpful months; exacerbated impact in H c. 2.5bps negative impact on net management fee margin H1 10 H2 10 H1 11 H2 11 Theoretical margin Written margin Source: Jupiter Finance

8 Modest underlying margin decline 8 Net management fee margins (bps) Adjusted margin shows modest decline over the mediumterm, primarily from new business growth and international expansion Adjusted calculation excludes: Private equity business fees and AUM Market shape timing on unit trust fees and rebates Disclosed net management fee margin Adjusted margin Source: Jupiter Finance

9 Administrative expenses (fixed) 9 Fixed costs Underlying fixed costs ( million) ( million) % +/- Fixed staff costs Non-staff costs Fixed staff costs Non-staff costs Fixed costs % 77.4 Deduct: Kent office provision (2.0) - Underlying fixed costs Scalability of operating model maintained 21.3 million increase in net management fees 4.6 million rise in underlying fixed costs Outsource of unit trust administration switched cost from staff to nonstaff line

10 Administrative expenses (variable) 10 Variable costs 1 Variable costs and compensation ratio 1 ( million) Cash bonus Deferred bonus LTIP and SAYE Pre-IPO deferral scheme Variable costs Variable compensation ratio 1 21% 22% Variable costs increasing in line with increased profitability of business and introduction of new incentive schemes Ratio expected to rise to mid to high twenty per cents over mediumterm Variable costs ( million) Compensation ratio (per cent.) 1) Incentive costs excluding non-cash, non-dilutive charge over pre-listing options (2011: 9.6m; 2010: 7.8m) 2) Ratio defined as variable costs adjusted by operating earnings before variable staff costs and charge over pre-listing options

11 Strong financial delivery 11 Outperforming markets + scalable operating model = increased EBITDA Net management fees ( million) Average FTSE Net management fees ( million) Underlying fixed costs ( million) EBITDA ( million) EBITDA margin (per cent.)

12 Balance sheet and dividend 12 Measure Dec-10 Dec-11 Change Net (debt) / cash 1 ( 63m) 7m 70m Outstanding debt facility 283m 143m 140m Final dividend 4.7p 5.3p 13% Total dividend 4.7p 7.8p Debt facility paid down by 140 million from operational cash flow and existing resources during 2011 Covenant-lite facility does not require repayment until June 2015 Investment Firm Consolidation Waiver extended to June 2015 (1) Gross cash less outstanding bank facility

13 Market backdrop and flows

14 UK net mutual fund flows 14 UK net retail sales by month ( billion) H1 average H2 average Jan-08 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-09 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-10 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-11 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-12 Source: IMA

15 Market net flows by asset class 15 UK: net retail sales by asset class ( billion) Europe: net UCITS sales by asset class ( billion) 12 Equities Balanced Absolute return Bonds Property Other 120 Equities Balanced Bonds Other Q1 10 Q2 Q3 Q4 Q1 11 Q2 Q3 Q4-90 Q1 10 Q2 Q3 Q4 Q1 11 Q2 Q3 Q4 Source: IMA (UK); EFAMA (Europe), excludes money market funds

16 Jupiter net flows 16 Net new business by product ( m) Highlights Private clients Segregated mandates Mutual funds Hedge funds Mutual funds remain predominant flow contributor Platform position maintained Ranked #2 on Cofunds by gross sales, #3 by net Remain #4 on FundsNetwork by gross sales Risk-off behaviour hurt towards end of period Extreme flow concentration towards limited number of firms within each sector 528 Notified 2012 lower margin outflows: St James Place ( 560m in Q2 disclosed within segregated mandates) Segregated ( 50m in Q1) (140) Private clients ( 60m in Q1)

17 Strategy

18 Strategy 18 A distinct investment culture, focused on generating value for our clients Selling our expertise through products suited to our distribution strengths Delivering attractive returns to shareholders

19 Generating value for our clients 19 Three year mutual fund investment performance 1 st quartile 2 nd quartile 3 rd quartile 4 th quartile Three year performance numbers key for our distribution channels Short-term performance improved considerably in second half of % of funds (by AUM) above median over one year as at 31 December This statistic will be volatile Source: Financial Express as at ; pie chart in centre = performance weighted by number of funds; ring around pie chart = performance weighted by AUM

20 The active management challenge 20 Jupiter Merlin Income % Growth Apr 97 Apr 99 Apr 01 Apr 03 Apr 05 Apr 07 Apr 09 Apr 11 Jupiter - Merlin Income Portfolio Acc in GB FTSE APCIMS Income Portfolio Net TR in GB IMA Mixed Investment 20%-60% Shrs Net TR in GB (1) Source: FE, bid to bid; net income reinvested from to The Jupiter Merlin Income portfolio was managed by John Chatfeild- Roberts and his team at Lazard from 1 May 1997 until March In March 2002, the management of the funds were fully transferred to Jupiter Unit Trust Managers Limited, under the same management team;

21 Depth of talent across the front office 21 Returns against sector 1 Cédric de Fonclare European desk Philip Matthews UK desk Jupiter European Special Situations IMA Europe Excluding UK Jupiter Growth & Income IMA UK All Companies Relative performance % Relative performance % Jul 05 Jul 06 Jul 07 Jul 08 Jul 09 Jul 10 Jul 11 Ariel Bezalel Fixed Income desk -5 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Ben Whitmore UK desk Jupiter Strategic Bond 25 IMA Sterling Strategic Bond Jupiter UK Special Situations 25 IMA UK All Companies Relative performance % Jun 08 Jun 09 Jun 10 Jun 11 Relative performance % Oct 06 Oct 07 Oct 08 Oct 09 Oct 10 Oct 11 (1) Source: FE, bid to bid, net income reinvested to

22 Selling our expertise 22 Focus on intermediaries in the UK Focus on wealth managers in Europe and Asia Enhance distribution capabilities Support key IFA relationships Maintain competitive position on platforms Remain at forefront of investment outsourcing trends (Merlin, private clients) Improve wealth management penetration via I-classes Maintain top 5 brand ranking in UK Address DC pensions opportunity Enhance distribution capabilities Extra distribution resource added into Germany and Zurich French distributor extended over Geneva Hiring additional resource in Asia Broaden offshore fixed income range Launch Strategic Bond SICAV Capture institutional interest in specialist equity products Launch onshore strategic total return fund Selectively expand investment team

23 RDR and retail asset management 23 Some thoughts on implications High-level Long-term industry growth drivers are unaffected Wealth managers well placed Distribution IFA distribution consolidates but remains crucial Platforms and execution-only channels will grow share Low-value investors may become unserved Pricing Paying intermediaries becomes more complex Who pays for platforms is still unclear Asset management fees unbundled; factory gate clean fees Manufacturers Importance of branding increases Challenge from ETF / passive products will rise Demand for active alpha-generation will continue What s next? Delays likely before full implementation? RDR 2 focusing on back book? Impact of MIFID 2 in Europe

24 UK savings market opportunity 24 Investible wealth by bracket (bn) 2,100 1, : # of individuals 1, ,000 1, million e 2012e 2013e 2014e K K K K K K 750K-1M 1-2M 2-5M 5M + Source: Datamonitor, Oliver Wyman

25 Private clients 25 Why do we like the market? Wealth management benefiting from long-term structural growth Slower but steady flow profile; stickier assets Limited RDR impact and less margin pressure Why are we in private clients? Extends distribution reach into higher value clients ( 500k to 5m), but not UHNW ( 20m+) Synergies from being within successful mutual fund business Good recent investment performance and AUM growth What is our strategy? Fund-based investment proposition, branded as Jupiter Capitalise on links to rest of Jupiter s business Distribution focus on referrals and RDR-related discretionary fund management opportunity Develop scalable platform

26 Private clients AUM and investment performance 26 AUM growth 1 Investment performance 2 2,500 Jupiter AUM: 25% p.a. APCIMS Balanced: 3 % p.a. FTSE 100: 1% p.a Cumulative three year returns (per cent.) 2,000 1,500 1,000 1,788m Jupiter Benchmark Quartile Cautious st Balanced st Steady growth nd Equity risk st 855m Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Private clients FTSE 100 Total return (1) Source: FTSE, Datastream, APCIMS Balanced Total Return index (2) Source: ARC; all returns net of fees

27 Delivering attractive returns to shareholders 27 Increased profits + improved balance sheet = rising dividends EBITDA ( m) EBITDA margin (%) Net (debt) / cash Interim Final (36) (63) (105) Jun 10 Dec 10 Jun 11 Dec

28 Highlights 28 Strong investment performance in a difficult year Improved financial performance Resilient balance sheet Increased dividends Delivering value to clients and shareholders

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