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Edited Transcript of JUP.L earnings conference call or presentation 28-Feb-20 9:00am GMT

Full Year 2019 Jupiter Fund Management PLC Earnings Presentation

London Mar 23, 2020 (Thomson StreetEvents) -- Edited Transcript of Jupiter Fund Management PLC earnings conference call or presentation Friday, February 28, 2020 at 9:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Andrew James Formica

Jupiter Fund Management Plc - CEO, Chairman of the Executive Committee & Director

* Wayne Mepham

Jupiter Fund Management Plc - Executive Director & CFO

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Conference Call Participants

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* Hubert Lam

BofA Merrill Lynch, Research Division - VP

* Paul McGinnis

Shore Capital Group Ltd., Research Division - Research Analyst

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Presentation

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Andrew James Formica, Jupiter Fund Management Plc - CEO, Chairman of the Executive Committee & Director [1]

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Well, good morning, everyone. It feels very [precedent] standing up here today. Last time when I was Chief Executive -- producing my first set of full year results, it was in a declining market. The world was coming to an end, and that was in February 2009. So been here before, and actually, everything worked out all right in the end. So I'm hoping and expecting the same. But keeping away from my Chairman, who's about to head off to Italy, but not northern Italy. Well, look, it is a pleasure to welcome you today to my first full year results presentation as CEO of Jupiter. It's actually not quite a year. I think we're one day short of being a year as CEO of Jupiter. So there's been a lot going on in that year, and hopefully, we'll touch on some of that, and pick up more in your questions, I'm sure.

Many of you will be familiar with the headline numbers, as we announced them last week. Though today is an opportunity for us to provide a more comprehensive overview of our financial performance in 2019. Shortly, I'll hand you over to Wayne Mepham, our Chief Financial Officer, who will cover the results in a lot more detail. Once Wayne's finished, I'll wrap up with some brief remarks, including some comments on the Merian deal and how it fits into our priorities for the business.

But before we get to Wayne, I'd just like to touch on a few highlights from our results. You can see Jupiter delivered a resilient performance in 2019 despite volatile markets, difficult industry conditions and internal challenges caused by the succession on our European Growth strategy. It was another year of strong investment performance with 72% of mutual fund assets under management outperforming over 3 years, and I'll touch on this more in the coming slides. Overall, assets under management held steady at GBP 42.8 billion, impacted by the departure of Alexander Darwall in our European Growth strategy. Wayne will cover the other key highlights shortly. However, I did want to emphasize that our ordinary dividend policy for full year 2019 remains the same as prior years. For 2019, we'll be declaring a final dividend of 9.2p, taking the full year dividend to 17.1p a share, in line with our distribution in 2018. To make available funds to successfully complete our acquisition of Merian, we will not be paying a special dividend in respect of our results for 2019. At the end, I will talk more about the acquisition of Merian, and why I believe it will deliver higher sustainable returns to our shareholders.

I've said it many times. At Jupiter, our single purpose has always been our clients, and we aim to deliver the best investment outcome for them through truly high-conviction, active management. Our performance record over 3 years confirms that. Over 1 year, however, our fund managers delivered a softer result, given the challenging market conditions and the impact of the strong performance growth as a style has impacted our value franchise.

If we turn now and look at our top 10 largest funds with assets over GBP 1 billion, which -- between these, account for 64% of our invested assets, performance has been good. 7 of those 10 funds are first or second quartile over 3 years. It was pleasing to see client appetite return for our fixed income strategies as the macroeconomic views of the team were proven correct and the portfolio has delivered strong returns. That has continued so far this year.

Jupiter bond funds have enjoyed a great start, and we expect to continue this positive momentum in performance as the year unfolds. It was a more challenging year for our value managers with both the Income Trust and U.K. Special Situations underperforming on a relative basis driven by their value style. Value as a style is at a multi-decade low relative to growth with the spread between growth and value at its widest in 30 years. Several of our clients are looking at this as an opportunity to increase rate weightings toward value stocks in 2020. Our Absolute Return fund also suffered from the poor performance of value stocks relative to growth and also a country allocation that proved unhelpful as U.S. stocks outperformed international markets.

I'll hand you now over to Wayne Mepham, who will provide a more detailed analysis of our full year results.

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Wayne Mepham, Jupiter Fund Management Plc - Executive Director & CFO [2]

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Thank you, Andrew. Good morning, everyone. This is now my first presentation and I'm approaching my first 6 months at Jupiter and also my first in respect to the annual results. Looking out at the audience today, it's good to see some familiar faces. Andrew provided a trading update for 2019 at the presentation last week when we announced the proposed acquisition of Merian. Nothing has changed since those draft results, and today, I'll take you through some of the detail behind those numbers. In summary, we have delivered solid results in 2019 against the continuing backdrop of challenging conditions in the industry and specific challenges for Jupiter in the year.

Starting with the overall scorecard. Running through the main points briefly. Underlying profit before tax was GBP 162.7 million, 11% below 2018. That's mainly due to an 8% reduction in net revenue as well as a smaller reduction in costs. Our tax rate for 2019 was a little under 19%, largely consistent with the U.K. headline rate. And underlying EPS was 28.8p, also down 11%. As Andrew just mentioned, the year-end ordinary dividend is 9.2p. That's been set in line with our progressive dividend policy, and is the same dividend as last year and results in a total dividend for the year of 17.1p. Andrew also reported there will be no special dividend for 2019 as we will use that capital to deliver the acquisition of Merian and the related financial benefits to shareholders. Finally, I will come back to our operating margin later. But as you can see, this was 43%.

Given it's the main driver of our business and these results, let's now take a look at assets under management. What this slide shows is that AUM started and ended the year at the same level. But I want to comment on a number of key movements which have had an effect on average AUM. You'll remember, Q4 2018 saw significant falls in market levels and combined with outflows across that year, resulted in opening AUM for 2019 of GBP 42.7 billion. That meant we had a headwind as we went into 2019. This was partially offset by market gains across the first half with AUM at 30 June 2019 of GBP 45.9 billion.

Moving on to the second half of the year, we had outflows, principally from the European Growth strategy with market levels, overall, largely unchanged. The increase in AUM, in H1 2019, was offset by outflows in the second half of the year, which resulted in the same opening and closing position, but average AUM was down 7% at GBP 44.3 billion compared with GBP 47.5 billion in 2018. Looking to 2020, given the average AUM for 2019 was higher than the closing, we start 2020 with the same headwind as last year in terms of AUM.

Let's now look at the flows in a little more detail. As you know, at Jupiter, we typically look at flows over a 5-year period. This timescale gives you a deeper understanding of how the business is developing and the trends that are emerging. In a nutshell, what you see over the first 3 years is a pleasing trend driven by flows into fixed income as we diversified our product offering. The next 2 years have been more challenging and for different reasons. In 2018, there are outflows in fixed income as the fund was positioned for rate changes, which subsequently emerged but impacted short-term performance. In 2019, we announced the change of fund manager for the European Growth strategy and that has led to GBP 4.3 billion of net outflows. In relation to fixed income, we have seen a return to inflows in 2019 totaling GBP 2 billion.

Turning to the European Growth strategy. Mark Nichols and Mark Heslop joined us in 2019 as the lead fund managers. They both have strong track records. Their performance since taking over the funds to January is strong, and we anticipate net flows back into their products in the future. Mark Heslop will also lead the 2 European smaller company products, which we launched on Wednesday this week. Putting this all together, inflows into fixed income as well as U.K. value were offset by outflows in European Growth and other strategies, with net outflows of GBP 4.5 billion for the year. If you remove the impact of the fund manager change in 2019, the net outflows for other strategies were GBP 200 million.

Let's now look at how that change in average AUM and other factors have impacted our earnings in 2019. I'd like to highlight the following items on this slide: The largest change year-on-year is the reduction in management fees due to lower average AUM. The next area is performance fees, which were GBP 8 million, down GBP 7 million compared with 2018. Performance fees have been unusually high for both 2018 and 2019, mainly coming from the investment trust within the European Growth strategy. As a result of the change of asset manager for the trust, we do not expect to see any material performance fees going forward from our current book. This excludes the Merian acquisition. Costs were down GBP 4 million as a result of our focus on reducing noncompensation costs.

Finally, other items, which comprise investment returns, interest and amortization of intangible assets. The change here was driven by investment returns, gaining GBP 4 million this year against a loss of GBP 6 million in 2018. It also includes higher interest charges, which are purely due to the impact of IFRS 16 on the way we are required to recognize lease costs. Pre-exceptional profits were therefore GBP 163 million. We are showing exceptional items separately this year and they were GBP 12 million, and the profit before tax was GBP 151 million.

I'd now like to take you through some of these components in a little more detail, starting with revenue. I've already explained the change in performance fees and the impact of average AUM on our management fees for 2019. Those were the main drivers of our reduction in revenues with the average management fee margin remaining broadly the same as 2018. The timing of market movements and flows into fixed income and out of European growth, along with other changes, have meant that the average fee margin for 2019 is unchanged. But the opening run rate for 2020 is a little lower. On a stand-alone basis, we are currently forecasting that our fee margin will be around 82.5 basis points for the year as a whole. That's a little less than a 1 basis point decline and is due principally to the change in mix from flows and market movements. As I reported last week, the Merian acquisition would lead to a reduction in our run rate management fee margins, but on over or around a 50% increase in AUM. And I will provide guidance on that at the half year.

I'd now like to take you through our operating expenses and how they have changed in 2019. Over the next 4 slides, I'm explaining our costs, and how I will talk about them going forward. Starting with this slide that shows cost as we have previously presented them. It shows operating expenses, which combines our fixed costs and noncompensation costs. Our operating expenses were GBP 146 million for 2019, down GBP 6 million from 2018. Fixed staff costs were down GBP 2 million, mainly due to the restructuring we carried out in 2019, obtaining cost benefits from operational efficiency. We also directed some investment into areas of growth in distribution and fund management.

Now turning to the other components of operating expenses, noncompensation costs. Here, you see the change in our noncompensation costs, down GBP 4 million. This is mainly due to more targeted marketing spend and lower professional fees. Cost increases came mainly from FX on our overseas operations. Looking forward, our noncompensation costs for 2019 excluding Merian are expected to be around the 2018 level as we invest in important areas, such as additional data aligned to our focus on data science to support our fund managers in their investment processes and marketing costs.

Now let's look at variable compensation expenses. Variable staff costs for 2019 was GBP 71 million compared with GBP 69 million in 2018 due to an increase in other variable compensation costs. Within that movement, the Jupiter share price changes across the 2 years created a difference of GBP 8 million. This was the result of a fall in the 2018 share price, reducing national insurance costs on prior year awards, followed by a rise in 2019 creating an additional cost. These costs have been partially offset by the lower overall level of awards in 2019, leading to both lower cash and noncash compensation. Changes in our business in the past year have led us to evaluate carefully the need to balance returns to shareholders alongside the need to attract and retain talent. As a result and along with the national insurance effect I mentioned a moment ago, the variable compensation ratio has increased from 26% to 30%. We believe that we are now looking at more normal compensation ratios, excluding 2018.

Let's now turn back to the overall costs, and I would be talking about how I will be talking about them going forward. For me, what is important is to look at our cost base from a compensation and noncompensation cost perspective. And this is how I will be talking about them going forward. I've talked you through our noncompensation costs and how they are expected to change in 2020 excluding any impact of Merian. From a total compensation perspective, you can see that our costs are the same year-on-year due to lower fixed staff costs and higher variable compensation. Together, the total compensation ratio was 34%, in line with 2017. This is within a range of where I expect them to be in the short to medium term, but could be up to 35% in 2020. The difference in the 2018 total compensation ratio is mainly due to the share price movement I explained a moment ago. Overall, the results for 2019 delivered an operating margin of 43%. That's 1 percentage point lower than 2018.

Finally on costs. And as we reported at the half year, we are separately report -- disclosing exceptional items this year of just under GBP 12 million. The exceptional costs mainly relate to accelerated accounting charges for deferred compensation, principally in connection with changes in the senior team, including the change of fund manager. These charges have moved forward instead of being incurred in future years. During 2019, we also incurred restructuring costs, which I referred to earlier. By including these costs as exceptional and not ongoing costs, it's easier to assess the underlying performance of the business. We will treat the acquisition and related costs of Merian in the same way, and I'll provide more information on this at the half year.

My last section this morning looks at capital allocation framework. I want to talk a little bit about our seed capital, and I'll wrap up with our overall capital position. Here is the slide we showed you in December. It sets out our capital allocation framework, how we firstly consider opportunities for investment, both in terms of organic growth, but also opportunities to accelerate that growth through team hires and acquisitions. We then consider the ordinary and special dividend in line with our policy. In 2019, we announced the partnership with NZS Capital, which I'm pleased to confirm completed today. And last week, we announced the proposed acquisition of Merian. Both examples show how we are investing for accelerated growth alongside the organic investments in people, data and technology. As a result of the proposed acquisition of Merian, in the short term, we expect our investment will mainly come through targeted organic growth.

And let me spend a few moments looking at one of those areas, our investment in seed capital. We see developing track records for new funds as an important investment for future growth of the business. In December, we explained our new approach to managing our product suite. And in 2019, we launched 2 new funds with a further launch earlier this week and closed 5 funds. The new approach to developing products is expected to deliver good growth in AUM going forward. At the year-end, we held investments in seed capital with a market value of GBP 129 million. This chart sets out where we are invested and how long that money has been held. Importantly, the majority of our investment is in funds that are only seeded within the past 2 years, and we are now reducing our investment in GEM short duration as the level of client investment has reached a suitable level. You can also see that our largest holding in flexible income is attracting investments from our clients, and we will again redirect our investment at the appropriate time to seed other opportunities that we have identified. So I think you can see, whilst our seed capital holdings are relatively new, there are good examples of where they are both delivering growth in AUM and enabling us to recycle our investment into new opportunities.

And lastly, our capital position. Our estimated regulatory capital surplus at the end of 2019 is high at GBP 147 million compared with GBP 118 million last year and GBP 91 million in 2017. That increase is mainly due to our decision not to declare a special dividend this year, which would have become an immediate reduction in our regulatory capital surplus as a foreseeable dividend. As reported at the half year, our capital requirement increased in 2019, in line with the balance sheet development, business changes and our current view on the overall risk profile. Last week, I reported that I expect our regulatory capital surplus to be around GBP 70 million to GBP 100 million on completion of the acquisition of Merian. At this level, we will have a robust capital position with similar levels to 2017 and earlier. We remain focused on holding the -- this robust capital and liquidity position and managing our resources within the capital allocation framework I set out earlier.

That concludes my run-through of the 2019 full year numbers. I'm now going to pass you back to Andrew. Thank you.

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Andrew James Formica, Jupiter Fund Management Plc - CEO, Chairman of the Executive Committee & Director [3]

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Thank you, Wayne. Before I wrap up, I just wanted to spend a few minutes with you explaining what it means for us at Jupiter as an independent active fund manager. You will have seen this slide before as I've used it at the half year's result. At Jupiter, active fund management is in our DNA and has been since we were founded 35 years ago. It runs through the entire business. Too many firms talk about being active, but you're not sure they're actually committed to the approach. I'm pleased to say that's not the case here. And because we're known for our active stance, it means we have created an optimum environment that acts as a magnet to talented, high-conviction managers, people like the caliber of Mark Nichols, Mark Heslop and Matt Cable, all hires to Jupiter in 2019, all with excellent track records, and they've made a great start already for our clients.

Jupiter, as I've already said, is very much a client-centric business. It's embedded in all we do. That doesn't mean there aren't ways we can improve, but the client focus is another important strand of our DNA. In my years in the industry, I know a clear purpose and a focus on the client are vital ingredients for success. Importantly, Jupiter has both of these ingredients. Meanwhile, our long-standing success in the U.K. retail channel has been the spring board for our diversification into new products, geographies and channels, offering shareholders attractive growth opportunities. It's an impressive list of core strengths on which to build on.

One question I'm constantly asked is, are clients still looking for active, high-conviction approach, given demand for passive products is an all-time high? To me, the answer is a definite yes. And you can see here, client demand for active specialties is expected to grow by over 30% between 2018 and 2023. In equities, we see demand for global, emerging market and small and mid-cap products, in fixed income for emerging market debt and global, but also high-yield products and convertibles. In my view, the case for active management remains as strong as ever. When markets are falling, passive products are guaranteed 100% of the downside. They also guarantee to underperform after fees relative to their benchmark. Only an active manager has the ability, through their knowledge of their markets, through their stock picking expertise, to offer clients a more positive outcome. And active management is also the solution in an area where environmental, social and governance concerns increasingly play a key role in where clients choose to invest their money. This is an area where Jupiter has a proud record. The Jupiter Ecology Fund was the first green unit trust when it launched in 1988. Since then, we've expanded our range of sustainable and environmental funds. And only this week, Jupiter Ecology growth was recognized as one of the top 5 global environmental funds. And more broadly, active managers, by the very nature of their work, engage with companies to a degree very few passive houses could match. We call companies to account more often, challenging company strategy if it's failing and call out poor governance. We are the allocator of capital to businesses, which ultimately drives innovation and fuels economic growth, benefiting all. As an industry, we need to get better at communicating those messages to clients. Active managers delivers in so many areas for both clients and society.

I thought I'd also remind you of the strategic priorities we set out for the business at our Capital Markets Day at the end of last year. These are especially important in the context of the proposed acquisition of Merian as the deal will accelerate our strategic plans, especially about our recommitment to the core U.K. market and will extend the high-quality active investment capabilities we offer to clients. I won't talk in detail on every point, but you can see the acquisition of Merian would go a long way towards addressing several of the goals we set out for you in December.

Let's take a moment now to look at our proposed deal to acquire Merian Global Investors. On becoming Jupiter's CEO, I knew I inherited a strong business that simply needed new energy to take it to the next phase of its development. With the board's support, I refreshed the senior leadership team, addressed legacy issues and renewed our strategic priorities. I emphasized the importance of organic growth, but I also said I would consider team buyouts or strategic bolt-on acquisitions to help us achieve our goals more quickly. When the opportunity rose to acquire Merian, the strategic benefit of doing so were clear. The 2 companies share the same culture and investment philosophy and Merian's fund range would both complement and add to our client offering. In fact, it was precisely because of our shared culture that Jupiter and in particular, our CIO, Stephen Pearson, quickly established an excellent rapport with Merian's key fund managers. And remember, they account for nearly 90% of Merian's asset under management. It made us very comfortable about the cultural fit. As for broadening our capabilities, the deal would reinforce our core U.K. franchise. In the U.K. equity space, Jupiter's strength in the U.K. value and income sector is complemented by Merian's capabilities in U.K. all cap space and would considerably strengthen our fund offering in the U.K. small and mid-cap sector, given Merian's industry-leading investment teams. It's not just me who says that, you can see from some of the quotes here. Our clients recognize that themselves.

Merian has a highly regarded alternative business, an area we had targeted for growth. But the deal would equally take us into new areas, such as global systematic equities. Merian will also help us build scale in areas such as global emerging markets, equities and in debt. And internationally, the deal would expand our presence in key markets, such as Middle East, Latin America and the Asia Pacific region. The Merian deal, in effect, takes us significantly further and faster along a route that we had signaled last year with the announcement of our strategic partnership with NZS Capital in the U.S. The NZS deal, which closed this morning, broadens our global capability and expands our presence in the U.S. institutional market. Merian will further diversify our offering, but across a broader range of our investment strategies. We may have only announced the deal 10 days ago, but it was the culmination of months of talks that began at the back end of 2019. With Merian, we established a relationship of trust from the start. The firm was very generous in giving us comprehensive access, enabling us to have a thorough understanding of their business. And of course, with that information, we were able to draw up detailed integration plans with a bottom-up view of where the synergies and cost efficiencies could be achieved. For our shareholders, this means the acquisition should deliver a significant boost to underlying earnings from 2021, increasing from 2022 onwards.

Acquisitions can be disruptive, but Jupiter is in a good place to integrate Merian. We have a well-developed plan to migrate the firm's business onto our systems. Our recent investment in our operational platform mean we have the scale and ability to comfortably handle the significant increase in assets. And the integration of the 2 businesses will be overseen by Jupiter's experienced executive committee, led by Paula Moore, our COO. Jupiter's management team, meanwhile, stays in place, providing continuity. And you can see the quotes here from our clients. We've been pleased to see how they see the cultural and strategic fit, and how it strengthens and reinforces our existing businesses. In my time, I've worked on a number of these types of deals, as many of you know. This truly stacks up as the best strategic and cultural fit. In our discussions with Merian, early on, we agreed on how the enlarged group would operate, whether that was agreement on the adoption of the Jupiter brand, the shape of the management team or the location of the business. Having that shared vision and clarity of key decisions upfront, together with the strong client support we have seen will ensure a successful outcome of the combination of the 2 firms. This acquisition, though, is not only about what it does for us today, but what it enables us to do tomorrow. This is perhaps the most important outcome of the deal, so important in the fact that I almost forgot to talk on this slide when I presented the Merian deal to you last week. So how does this deal free us up for the future? In investment management, for instance, it will boost our position as an attractive home for leading investment talent. Our greater scale means we'll be able to invest more of our resources in tools such as data science to help our managers deliver alpha. With our U.K. retail base bolstered by this acquisition, we can focus more on our diversification strategy, supported by greater brand and marketing spend across the enlarged organization. Merian also accelerates our entry in the U.S. and other markets such as the Middle East, Asia Pacific and Latin America. It sends out a strong message to clients in these markets that we're committed to building business in their region. We also have greater capacity to develop and seed new funds. It means we react more quickly to client needs by accelerating fund launches. On the operations side, it provides scale. It leverages the investment we've made here at Jupiter over the last few years. The enlarged company allows us for further investment in technology that should lead to more automation of our processes and faster delivery to our clients. In the competitive market we operate in, the client experience is critical. When they engage with Jupiter, I want them to come away thinking Jupiter's client service is second to none. Part of that client experience is knowing they're engaging with a firm they can trust, that their money is safe with us. The enlarged firm will continue to have a strong balance sheet and hold ourselves to the highest standards regarding the rules that regulate our industry. Jupiter, with Merian integrated, will have a stronger voice in the industry debate.

Now when thinking about the acceleration of future investment, data science, which we've got up here as an example, is a good example of the areas that we feel we can invest more in through the acquisition than we may have been able to do on our own. The financial benefit of the deal enabled us to devote more resources to this initiative than otherwise may have been the case. At the end of 2018, we hired a Head of Data Science to examine how we could use data to help managers in their investment process and ultimately, give them an edge over their peers. Over the last 12 months, he has built up a team of 6 data scientists and engineers, who are already proving an invaluable source of proprietary information for our managers. Our aim is to extend and develop his team further and provide greater embedded support to our fund management teams. Now this is only one example of where we see technology driving improvement in our business and ultimately, our results.

There is no doubt 2019 marked a new phase in Jupiter's development since listing 10 years ago. There was a renewed focus on strategy, supported by fresh leadership. This included the appointment of Nichola Pease, who joins us as Chairman next week. She takes over from Liz Airey, and I'd like to take this opportunity here to extend my warmest thanks to Liz for her support and leadership. Jupiter has benefited enormously from her experience and she leaves Jupiter a stronger, better diversified company than one she joined in 2010. Thank you, Liz.

As we turn the page on 2019, and I want to remind you of the goals we've set out for the company last year, and that we've given ourselves 5 years to achieve. I said the Merian deal would take us more quickly along the route to achieving those goals. And why is that? Well, we're combining forces with a company which shares our goal of consistently achieving superior investment performance. If we deliver on that superior performance, we will meet our goal of achieving top quartile net new money growth. Our client reach, investment capabilities and client channels will be broader than they would be on our own. And these 3 goals will deliver the fourth, namely a significant increase in both our client assets and hence, profitability and returns for our shareholders.

I look forward to reporting in 2020 on the progress we've made on our strategic priorities. The year is already offering its own set of challenges with the coronavirus outbreak and later, we still have the U.S. presidential elections to navigate. I'm confident our high-conviction, active managers will take the right course through these choppy market waters and deliver the best outcome for our clients.

On that note, I'd like to thank you all taking the time to come and visit us today, and happy to take any questions to either me or Wayne.

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Questions and Answers

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Hubert Lam, BofA Merrill Lynch, Research Division - VP [1]

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It's Hubert Lam from Bank of America. A couple of questions. Firstly, on the European Growth strategy. You've had -- since Darwall's departure in October, you continue to see outflows from that. And I think outflows have continued this year. What's the -- how much of that is just due to a delayed reaction to his departure or clients staying on the sidelines, waiting for you to see how the new managers are performing? Or just general, just like for the asset class. I guess that's the first question.

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Andrew James Formica, Jupiter Fund Management Plc - CEO, Chairman of the Executive Committee & Director [2]

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Yes. Do you want us to answer that one or you've got 2 other questions?

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Hubert Lam, BofA Merrill Lynch, Research Division - VP [3]

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Well, I can go if you want.

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Andrew James Formica, Jupiter Fund Management Plc - CEO, Chairman of the Executive Committee & Director [4]

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In terms of European Growth, it's -- obviously, the heavy outflows you saw in the back end of last year was Alexander left in November. The biggest outflow of that was associated with the investment trust, which we already announced they would leave at the same time and several institutional accounts that were very much related to him. So as we look into 2020 and beyond, you'll see in an outflows in the strategy. It's still going to take a little while for the team to establish themselves, where you're getting strong inflows for it. So there is always a natural redemption profile. But there is nothing at all, I would say, on a going-forward basis that relates to the Alexander departure. You would have seen as well, just this week, we announced European smaller companies. It's the first ability for us to launch a fund under the new management team. I'm pleased in a number of areas. They're continuing to engage with some of the gatekeepers. One of our large clients are -- put their move in from a hold to a buy rating in their platform. So I don't see anything that you're seeing in 2020 as related to the transition anymore. It's really just about where people's view are around European equities and market in general. And it will take a little while for the general flow -- positive flow come back when you've got a natural redemption profile anyway in any book of business.

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Hubert Lam, BofA Merrill Lynch, Research Division - VP [5]

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Okay. So that -- my second question, again, is on flows, unfortunately. What's your outlook for 2020? I think, in last year, I guess, part -- a lot of the outflows was driven by the manager departure. Excluding that, you're saying outflows were about GBP 200 million, which is probably not that bad, assuming no other further extraordinary issues for this year. Also, how do you think about Merian? Do you expect a transition period in near term? Or maybe you see great outflows? Or just wondering what your outlook is for this year.

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Andrew James Formica, Jupiter Fund Management Plc - CEO, Chairman of the Executive Committee & Director [6]

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Look, it's very hard to predict flows, just generally. But you're right. You highlighted -- in 2018, we highlighted the extraordinary outflows associated with the fixed income funds, which actually saw a reversal in '19 and very strong performance in '19, which has continued and then navigating these markets incredibly well. They're very well positioned for that. So I think that we definitely see 2018 was a bit of a one-off related to that. And then similarly, in 2019, we got hit by the Alexander transition, which, again, we would see as something that's now passed. So as you look forward to 2020, absent any other one-offs, and we're not expecting or anticipating or there's nothing out there that sort of shows us that, we should start to see an improvement in terms of the overall flow picture. That's -- that would -- I would caveat that against given market conditions are incredibly difficult at the moment. We're not seeing, to the natural question people are saying, you've seen any client behavior in the last 2 days? We don't sort of able to see in that, but really, I think the market fall in the last week or so has been so sudden, we haven't really seen a shift in behavior. But it will have a knock-on impact, I think, for client sentiment. And what I'm talking about is in the absence of the Merian deal.

The Merian deal will, for a period of pause -- well, for a period, create a bit of pause for clients as they seek to understand what exactly is the lineup. We're not in a position today to be able to say what the business looks like. We haven't got through our AGM, and being able to position on the deal, doesn't close to June or July. So the caveats, I would say, is that we've obviously got a period where market conditions are incredibly challenging and will have an impact on client sentiment and client perspectives, and then clients are also waiting to see that. But in the absence of that, actually, I think the business is in pretty stable position and should be looking to make quite strong headway relative to where we've been for the last few years.

Other questions?

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Paul McGinnis, Shore Capital Group Ltd., Research Division - Research Analyst [7]

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It's Paul McGinnis from Shore Capital. Just before we had this week's market meltdown, it seemed -- just talking about the share price, that the reaction to the Merian deal wasn't entirely positive. I'm just wondering, obviously, you put up some quotes there from supportive clients. What have they been in the, in terms of some of those meetings, some of the challenges put to you? And what have you been sort of your counters to those challenges?

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Andrew James Formica, Jupiter Fund Management Plc - CEO, Chairman of the Executive Committee & Director [8]

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Actually, clients are being incredibly supportive, as we put up there. And that's one of the hardest things to actually achieve because when you do a disruption, it's very hard to actually show to clients how it's in their interest. But I think they look at the lineup, they look at the way that the key investment talent, who's been very supportive and very positive on it. So I think that side has been very well. Certainly, speaking on behalf of Jupiter and our employees, it's been very well taken as well. They can see what it does for the firm. I think outside of that, there's been very little commentary engagement with analysts or shareholders. Shareholders understand and appreciate it, and we're due to have more engagement with them given the results. So I think with our results coming out today, there is also a period of reflection. You had a relatively -- if you look at the actual trading volumes, it was actually relatively quiet over the last week as being half-term week. And then this week, I think it's been -- the narrative is being dominated by others. So actually, we're quite pleased with how the engagement we have had with people have been very positive, particularly coming from clients, which is critical. And then obviously, the stakeholders internally being important for us. And we're happy to go and see -- we'll be seeing much more of our shareholders and the analyst community post these results. Happy to discuss. But overall, I think people see the merits of it. If there is any talk, it's around what the level of outflows from a Jupiter perspective and for Merian last year and where that will change. And we're happy to engage on that with our shareholders. Are there any other questions?

Glad we've been able to answer all your questions so comprehensively in the presentation. I know some of you have to rush off to another firm's results. So I'll let you duck out, but thank you for your time. We will keep you updated as things progress. Obviously, the next big announcement for us will be the issuing of the circular ahead of the AGM, which will be back-end of probably March. So in about a months' time. And we look forward to engaging with many of you as we can in the intervening period. Thank you.