Jupiter Fund Management cancels special dividend as earnings slide
By Josh White
Date: Friday 28 Feb 2020
(Sharecast News) - Jupiter Fund Management reported "strong" investment performance in its final results on Friday, with 72% of mutual fund assets under management above the median over three years.
The FTSE 250 company said 14% of its segregated mandates and investment trusts were above their benchmarks over three years.
It reported an increase of ?0.1bn in assets under management for the 12 months ended 31 December, after net outflows of ?4.5bn.
Net management fees decreased by 6% to ?370m, while its statutory profit before tax decreased 16% to ?151.0m.
Basic earnings per share were down 14% to 27.5p, while the firm's underlying profit before tax decreased 11% to ?162.7m.
Jupiter's underlying earnings per share were down 11% to 28.8p, and the board said total dividends per share were 17.1p, which was 40% lower than what was paid in 2018.
"Jupiter delivered a resilient performance in 2019 despite a challenging backdrop," said chief executive Andrew Formica.
"It was another year of strong investment performance, with 72% of mutual fund assets under management outperforming over three years.
"It was pleasing to see a strong return to net inflows for our fixed income strategy, with the overall net outflows in 2019 being almost entirely the result of the planned departure of a key manager in our European growth strategy."
Formica said its assets under management and net management fee margin remained stable year-on-year, although a lower average assets under management resulted in a drop in net management fees and also the firm's profitability.
"We announced earlier this month that we are proposing to acquire Merian Global Investors.
"We believe this acquisition will both strengthen our existing business and support our future growth, which in turn will improve client outcomes and ultimately deliver stronger returns to shareholders."
In light of the proposed acquisition of Merian, and in line with Jupiter's policy of balancing investment for long-term growth with distribution to shareholders, Formica said the board had decided not to pay a special dividend for 2019.
"We remain committed to returning surplus capital in excess of needs to shareholders, aligned to our capital allocation framework.
"I would like to thank shareholders for their continued support, and look forward to engaging with them in 2020 as the business moves into the next phase of its development."
"Segmental revenue reporting by location of clients shows 4.6% coming from Asia," commented finnCap research analyst Nik Lysiuk.
"If these investors pull funds out due to being spooked by Covid-19, there could be further near-term pressure on earnings."
Lysiuk said that paying for Merian was "probably a better move" than paying a special dividend, but income investors would not be liking it.
"Not one to own if you do want exposure to the sector."
At 0847 GMT, shares in Jupiter Fund Management were down 5.33% at 307.7p.
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