But, the headline number covers over a continued growth in assets under management at the business and good dividends based on strong cashflows that should be enhanced in the second half of the year by the completion of the Rathbones transaction, which Jupiter expects to complete towards the end of Q3 and generate proceeds of between £20 and £25m after tax and deal costs.
According to , CEO Maarten Slendebroek, the completion of its deleveraging process in early 2014 means the group’s balance sheet is sustainable from both a cash and a capital perspective.
As a result, he said, the prospect of increased returns to shareholders has been raised.
“While no final decision has been taken, it is the Board's current intention to deliver these returns through progressive ordinary dividends, targeting a 50% payout ratio across the cycle, topped up by special dividends dependent on the size of residual earnings. In 2014, such returns will be considered after funding the remaining debt pay down earlier this year, retaining sufficient capital to invest for future growth and will include any one-off income, such as net proceeds from the private client transaction,” he said.
For the six months, Jupiter grew its interim dividend from 3.5p to 3.7p per share on the back of “healthy operating cash flows of £54.1m” which were marginally down on the past year’s comparable period, and the repayment of a bank loan which helped improve its balance sheet.
In a flash note on the results, David McCann of Numis Securities said, of the numbers: “Based on our FY14 estimates, the stock is yielding 6.3%, of which the ordinary dividend (50% payout ratio) is 3.2%, the normal special (30% payout ratio) is 1.9% and a one off special from the sale of the private client business (5p) is 1.2%. We think this, coupled with long term expected structural growth, is very attractive within a market where such attractive yields (with growth) are hard to find.
During the period, Jupiter reported net inflows of £1.3bn, bringing assets under management to a new high of £33.1bn. £900m of this increase said, came on the back of the group’s diversification into fixed income, which saw net management fee margins falling to 87 basis points.
“This is a business mix effect as pricing within our product range at the individual fund level has generally been stable. Flows are integral to growing our business over time, and I am pleased to report that net management fees rose by £10m to £141m during the period despite this lower fee margin,” he added.
Net revenues for the period rose 6% to £148.5m H1 done the back of higher net management fees, the group said, but added that the net management fee margin fell from 92 basis points to 87 basis points.
This it said was in line with expectations given the higher proportion of SICAV and fixed income assets in its mutual fund book.
“We continue to expect net management fee margins to decline slowly over time, although the rate and angle of any such decline continues to be uncertain,” Slendebroek said.
Looking ahead, however, Slendebroek said he was positive that Jupiter’s chosen savings markets continue to offer the prospect of significant long-term growth.
“As we extend our relationships with key distributors on a global basis, we are confident we can continue to deliver profitable growth at attractive margins and, within our sustainable balance sheet structure, share the rewards of this growth with our investors,” he added.
