Jupiter Fund Management plc. Interim Results: 1 August 2013

Transcription

1 Jupiter Fund Management plc Interim Results: 1 August 2013

2 Forward-looking statements 2 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 Consistent investment outperformance Capturing commercial alpha via flows Scalable operating model Sharing the rewards of growth Delivering value to clients and shareholders

4 Financials

5 Highlights 5 Measure H1 12 H1 13 Change Net revenues 117.7m 140.3m 19% EBITDA 60.3m 75.3m 25% EBITDA margin 51% 54% Underlying EPS 9.0p 12.4p 38% Net cash 1m 113m 112m Interim dividend 2.5p 3.5p 40%

6 Revenues 6 Net revenues Net management fees ( million) ( million) H1 12 H1 13 % +/- Net management fees % CAGR 10% p.a. 131 Net initial charge Performance fees Net revenues % Net management fee margin H1 12 H1 13 % +/- Average FTSE % Average AUM ( billion) % Net management fee margin (bps) H1 10 H1 11 H1 12 H1 13 (1) Average AUM stated on a 7 point month end basis.

7 Administrative expenses (fixed) 7 Fixed costs Fixed costs ( million) ( million) H1 12 H1 13 % +/- Fixed staff costs Other expenses Fixed costs % CAGR 5% p.a Continued investment in our talent, platform and distribution capabilities Exercising cost discipline across the cycle Maintaining our scalable operating model H1 10 H1 11 H1 12 H1 13 Fixed staff costs Non-staff costs

8 Administrative expenses (variable) 8 Variable costs Variable costs ( million) and compensation ratio 1 ( million) H1 12 H1 13 Cash bonus Deferred bonus LTIP, SAYE and SIP Pre-IPO deferral scheme Variable costs Variable compensation ratio 1 23% 24% Cash bonus increased due to higher profits Post-Listing deferred bonus and LTIP costs up as they continue to build to maturity H1 11 H1 12 H1 13 Cash bonus DBP, LTIP, SIP & SAYE Comp ratio (per cent.) 1) Variable costs divided by operating earnings before variable staff costs and charge over pre-listing options (2013: 2.4m; 2012: 4.0m)

9 2012 Net mgt fees Box profits Front end fees Fixed costs Variable comp Other 2013 EBITDA 1 9 High margin operating model Progression ( million) EBITDA ( million) EBITDA margin (per cent) H1 10 H1 11 H1 12 H1 13 1) Earnings before Interest, Tax, Depreciation and Amortisation is a non-statutory measure which the Group uses to asses its performance

10 Underlying EPS 1 10 Calculation Progression (p) million H1 12 H1 13 % +/- Statutory profit before tax Amortisation of acquired contracts and brand CAGR 14% p.a Charge for options over pre-listing shares P&L movement in value of AFS 2 assets - (6.7) Underlying profit before tax % Tax at statutory rate 3 (13.4) (17.3) Underlying profit after tax Actual shares (million) Underlying EPS 9.0p 12.4p +38% H1 10 H1 11 H1 12 H1 13 1) Underlying Earnings Per Share (EPS) is a non-statutory measure which the Group uses to asses its performance 2) AFS = Available For Sale 3) 2012: 24.5%; 2013: 23.25%

11 Balance sheet 11 Progression ( million) Highlights Gross cash Gross bank loan Net (debt) / cash Dec-12 Jun-13 Net cash 69m 113m 44m Bank loan outstanding 78m 42m 36m 111 Debt facility paid down by a further 36 million during H1 from cash arising from operations and Cofunds sale (42) Position flattered by 9m of client balances held over the 30 June weekend (110) Refinancing MBO debt with new three year revolving credit facility (203) Improved balance sheet flexibility for extended period (283) H1 10 H1 11 H1 12 H1 13

12 Dividends 12 Progression (p) Highlights Interim Final Interim dividend 2.5p 3.5p +40% Board consider the dividend on a total basis, while looking to maintain an appropriate balance between interim and final Progressive dividend policy sharing the rewards of growth within a sustainable balance sheet structure

13 Sharing the rewards of growth 13 Illustrative model 9% Available profit to stakeholders Net revenues less fixed costs 27% Staff incentives Variable compensation ratio; mid-to-high 20% s guidance 21% Available profit to stakeholders Corporation tax Current UK statutory rate of 23.25% Paid out to shareholders 2012 dividend payout ratio of 46% 17% Paid out to debtholders Actual H1 13 debt paydown and interest payments 1 26% Retained for investment and growth 1) Excluding Cofunds sale receipt

14 Strategy, performance and flows

15 Strategy 15 A distinct investment culture, focused on generating value for our clients Sell our expertise through products suited to our distribution strengths Deliver attractive returns to shareholders

16 Generating value for our clients 16 Three year mutual fund investment performance Distribution channels focused on three year performance numbers 20% 32% Strong long-term track record maintained 23% 25% Excellent institutional performance with 13% 25% 27% 90% of segregated mandates above benchmark over three years 35% 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile Source: Financial Express as at ; pie chart in centre = performance weighted by number of funds; ring around pie chart = performance weighted by AUM

17 Talent management; a continual process 17 Promoting from the bench Launching appropriate products Managing under performance > 6bn of mutual fund AUM* Hiring new talent Attractive culture to minimise leavers Succession planning * Assets under management as at 30 June 2013 in mutual funds either launched or where the named manager has changed since Listing

18 Market net flows by asset class 18 UK: net retail sales by asset class ( billion) Europe: net UCITS sales by asset class ( billion) 3 Equities Balanced Bonds Absolute return Other 60 Equities Balanced Bonds Jan-12 Mar May Jul Sep Nov Jan-13 Mar May -40 Jan-12 Mar May Jul Sep Nov Jan-13 Mar May Source: IMA (UK); EFAMA (Europe), excludes money market funds, June flash data from Lipper for Luxembourg and Irish domiciled funds

19 Jupiter net flows 19 Net new business by product ( m) Highlights Segregated mandates Investment trusts Private clients Mutual funds 130 Healthy net mutual fund inflows of 426m Good contribution from fixed income, Merlin and top-performing equity funds UK quieter due to RDR effects International expansion allowed continued progress overall Private clients boosted by 85m of staff vesting of Jupiter shares 426 Continued losses of UK equity segregated mandates; renewed focus on specialist high alpha opportunities AUM up 11% to 29.0bn (156) H1

20 Commercial alpha AUM and net flows ( billion) Outperformance versus markets Underlying EPS Net mgt fees Average FTSE % p.a % p.a % p.a H1 10 H1 11 H1 12 H1 13 Source: Jupiter; Yahoo Finance

21 Strategic growth opportunity 21 Key trends Conclusions Population (m) 1 Dependency ratio UK France UK is attractive home market with positive growth dynamics Significant market opportunity with AUM of $17.5tn 4 already in Europe as a whole Germany Italy Spain Poland Attractive demographics Move from DB to DC Increased need for self-provision (only 45% in the UK are saving enough 3 ) Shift towards transparent products Generous tax wrappers Need for income and inflation protection Sources: (1) Population Reference Bureau; (2) World Bank; (3) YouGov, Scottish Widows; (4) BCG

22 UK distribution 22 Unit trust AUM since the peak of the FTSE Approach CAGR 13% p.a. Scale player in domestic market High quality UK distribution franchise built around a long-term performance culture Jupiter s UK strategy: Deliver investment outperformance Maintain brand strength Focus on intermediary relationships Capture the DC opportunity; and Increase our high net worth presence Q2 13 Source: Jupiter, includes internal cross-holdings; = 6930, = 6216

23 International distribution 23 SICAV AUM ( billion) Approach 2.5 AUM* (LHS) % age of overall mutual fund assets (RHS) 10% Strong growth in AUM and increasingly important contributor to Group s distribution capabilities 2.0 9% 8% Key hires made in Hong Kong and Germany 7% Jupiter s international strategy: 1.5 6% Leverage global wealth manager relationships 5% Expand local presence in major financial centres 1.0 4% Maintain / enhance product and platform scalability 3% NB: benefits of above will also be captured in UK 0.5 2% 1% Q2 13 0% * Jupiter Global Fund and Merlin SICAV

24 UK: regulatory change 24 As expected Too early to say Independent Financial Adviser (IFA) flows steady, but not spectacular given the otherwise positive market environment Limited take-up of restricted advice status to date Adviser numbers down, although skewed by retrenchments from branch-based advice services Good IFAs have stayed in the market and continue to do well Platforms continue to gain market share Increased use of outsourced investment solutions Funds with good performance from reputable houses continue to attract majority of net flows Who will be the distributor and platform winners What level total client charges will settle at (or how this value chain will be divided) IFAs clinging to asset-based charging; evidence that many are trying to push fees up to 1% Platform price war accelerated by FCA paper but remains in its skirmishing stages: Wraps have cut fees and are making greater progress Traditional platforms competing to offer cheapest funds, rather than on all-in client costs or value proposition Fund manager fees remain under pressure but: Limited evidence of super-clean fees to date (unclear which houses are giving them and on what funds) Most saying they are giving the same share classes to all open architecture platforms

25 Delivering value to clients and shareholders 25 1 st quartile investment performance Net mutual fund inflows 32% + 426m Dividends to shareholders +40% Net cash balance sheet High margin operating model 113m 54%

26 Strategic priorities 26 Develop and enhance our talent Deliver outperformance after fees Extend distribution capabilities Invest in the platform Increase cash returns Deliver value to clients and shareholders

27 Q&A 27