Jupiter shakes off £4bn outflows as Merian deal drives AuM to record high

Mike Sheen
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Jupiter shakes off £4bn outflows as Merian deal drives AuM to record high

Jupiter Fund Management saw its second consecutive year of net outflows in 2020, but the acquisition of Merian Global Investors in July helped push total AUM to a record high of £58.7bn.

The firm's full-year results, published today (26 February), shows that £16.6bn of Merian assets offset net outflows of £4bn for year as "market volatility weighed heavily on investor sentiment", following net outflows of £4.5bn in the previous year.

Jupiter's profit before tax increased by 10% to £179m in the 12 months to 31 December, as statutory profits before tax decreased by 12% to £132.6m as a result of "exceptional costs mainly relating to the acquisition".

Against a backdrop of strengthening investor sentiment and improved momentum as we turn the corner in the battle against covid-19, I am confident that Jupiter is strongly positioned for future growth."

The firm's report said the "transformational deal" had "exceeded our expectations" financially, "delivering greater than expected synergies and already making a significant contribution to group profits".

"While more time is needed to stabilise flows from certain products, these near-term challenges were well-anticipated and factored into the terms of the deal, giving substantial protection to our shareholders," it added.

Underlying earnings per share fell marginally to 28.7p, while statutory earnings per share was down from 27.5p pence per share in the previous year to 21.3p per share.

The firm also reported that 70% of mutual fund AUM outperformed the median over three years to the end of December 2020, collecting performance fees of £74m for the year. 

Jupiter's board proposed an unchanged full-year ordinary dividend for the year of 9.2p per share, resulting in an unchanged total ordinary dividend for the year of 17.1p pence and representing an ordinary dividend pay-out ratio of 60% of underlying EPS. A special dividend of 3p per share was also proposed.

In accordance with our policy of a progressive dividend in line with the trend in profitability, the Board has proposed an unchanged full-year ordinary dividend for the year of 9.2 pence per share.

The total dividend for the year was 20.1 pence per share, representing 70% of underlying EPS and an 18% increase on the previous year.

Jupiter's operating margin before exceptional items fell marginally from 43% to 41%. Its share price was down roughly 26% for 2020 after suffering a heavy fall in the worst of the coronavirus-related volatility of Q1.

Chief executive Andrew Formica said: "This is a year where we made significant progress against our strategic objectives and laid strong foundations for future growth, despite the disruptive impact on financial markets and businesses brought by Covid-19.

"For clients we delivered strong investment performance with 70% of our mutual fund AuM outperforming the median over three years to 31 December 2020."

He added that while Jupiter saw net outflows overall, the firm said "robust" gross inflows of £16.5bn, while Jupiter branded strategies recorded "three consecutive quarters of positive net flows".

"Against a backdrop of strengthening investor sentiment and improved momentum as we turn the corner in the battle against Covid-19, I am confident that Jupiter is strongly positioned for future growth," he said.

Elsewhere, the firm confirmed that senior independent director Jonathon Bond will not seek re-election at the company's 2021 AGM, and will retire from the board at the conclusion of the meeting. Roger Yates, a non-executive director and chairman of the remuneration committee, will be appointed senior independent director with effect from the same date.

Jupiter chair Nichola Pease said Bond "has made a significant contribution to the company and I have greatly appreciated his support and counsel since my appointment".

"On behalf of the Board and all of our stakeholders I would like to extend our thanks and very best wishes," she added.

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