Jupiter Fund Management PLC

Annual Report (ESEF) • Mar 17, 2022

5493003DJ1G01IMQ7S282021-01-012021-12-31iso4217:GBP5493003DJ1G01IMQ7S282020-01-012020-12-31iso4217:GBPxbrli:shares5493003DJ1G01IMQ7S282021-12-315493003DJ1G01IMQ7S282020-12-315493003DJ1G01IMQ7S282019-12-31ifrs-full:IssuedCapitalMember5493003DJ1G01IMQ7S282019-12-31ifrs-full:TreasurySharesMember5493003DJ1G01IMQ7S282019-12-31ifrs-full:OtherReservesMember5493003DJ1G01IMQ7S282019-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5493003DJ1G01IMQ7S282019-12-31ifrs-full:RetainedEarningsMember5493003DJ1G01IMQ7S282019-12-31ifrs-full:EquityAttributableToOwnersOfParentMember5493003DJ1G01IMQ7S282019-12-31ifrs-full:NoncontrollingInterestsMember5493003DJ1G01IMQ7S282019-12-315493003DJ1G01IMQ7S282020-01-012020-12-31ifrs-full:IssuedCapitalMember5493003DJ1G01IMQ7S282020-01-012020-12-31ifrs-full:TreasurySharesMember5493003DJ1G01IMQ7S282020-01-012020-12-31ifrs-full:OtherReservesMember5493003DJ1G01IMQ7S282020-01-012020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5493003DJ1G01IMQ7S282020-01-012020-12-31ifrs-full:RetainedEarningsMember5493003DJ1G01IMQ7S282020-01-012020-12-31ifrs-full:EquityAttributableToOwnersOfParentMember5493003DJ1G01IMQ7S282020-01-012020-12-31ifrs-full:NoncontrollingInterestsMember5493003DJ1G01IMQ7S282020-12-31ifrs-full:IssuedCapitalMember5493003DJ1G01IMQ7S282020-12-31ifrs-full:TreasurySharesMember5493003DJ1G01IMQ7S282020-12-31ifrs-full:OtherReservesMember5493003DJ1G01IMQ7S282020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5493003DJ1G01IMQ7S282020-12-31ifrs-full:RetainedEarningsMember5493003DJ1G01IMQ7S282020-12-31ifrs-full:EquityAttributableToOwnersOfParentMember5493003DJ1G01IMQ7S282020-12-31ifrs-full:NoncontrollingInterestsMember5493003DJ1G01IMQ7S282021-01-012021-12-31ifrs-full:IssuedCapitalMember5493003DJ1G01IMQ7S282021-01-012021-12-31ifrs-full:TreasurySharesMember5493003DJ1G01IMQ7S282021-01-012021-12-31ifrs-full:OtherReservesMember5493003DJ1G01IMQ7S282021-01-012021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5493003DJ1G01IMQ7S282021-01-012021-12-31ifrs-full:RetainedEarningsMember5493003DJ1G01IMQ7S282021-01-012021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember5493003DJ1G01IMQ7S282021-01-012021-12-31ifrs-full:NoncontrollingInterestsMember5493003DJ1G01IMQ7S282021-12-31ifrs-full:IssuedCapitalMember5493003DJ1G01IMQ7S282021-12-31ifrs-full:TreasurySharesMember5493003DJ1G01IMQ7S282021-12-31ifrs-full:OtherReservesMember5493003DJ1G01IMQ7S282021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5493003DJ1G01IMQ7S282021-12-31ifrs-full:RetainedEarningsMember5493003DJ1G01IMQ7S282021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember5493003DJ1G01IMQ7S282021-12-31ifrs-full:NoncontrollingInterestsMember SOWING THE SEEDS FOR A BRIGHTER OUTLOOK JUPITER FUND MANAGEMENT PLC Annual Report and Accounts 2021 STRATEGIC REPORT 2 Our purpose and cultural pillars 4 Our business 6 Our business model 8 Chairman’s statement 10 Chief Executive Officer’s review 13 Market trends 14 Forward thinking 16 Our strategic priorities 18 Our key performance indicators 20 Chief Financial Officer’s review 28 Focused conviction Strategic and operating review: 30 Investment management 32 Product and distribution 34 Diverse perspectives Active responsibility: 36 Our people and culture 40 ESG and stewardship 57 Non-financial information 58 Engaging with our stakeholders 60 Our approach to risk management GOVERNANCE 68 Chairman’s introduction to governance 71 Compliance statement 72 Board of Directors 74 Executive Committee 76 Our governance framework 83 Board effectiveness 86 Nomination Committee report 91 Audit and Risk Committee report 102 Remuneration Committee report 106 Annual report on remuneration 127 Directors’ report 131 Directors’ responsibility and compliance statements FINANCIAL STATEMENTS 132 Group financial statements 136 Notes to the Group financial statements 165 Company financial statements 167 Notes to the Company financial statements 172 Independent auditors’ report OTHER INFORMATION 180 Historical summary (unaudited) 181 The use of Alternative Performance Measures 184 Shareholder information 185 Glossary of terms CONTENTS FINANCIAL KPIs 1 OTHER KEY METRICS Net management fees £453.7m 2020: £384.0m Assets under management £60.5bn 2020: £58.7bn Dividends 17.1p 2020: 20.1p Surplus capital over regulatory requirements £117m 2020: £111m Underlying earnings per share 31.7p 2020: 28.7p Total shareholder return (2)% 2020: (27)% NON-FINANCIAL KPIs Investment performance 58% 2020: 70% Net flows £(3.8)bn 2020: £(4.0)bn Sowing the seeds for a brighter outlook Spring. It’s the time of regeneration and growth. It is also the opportunity to look ahead, and consider how we can incite positive change. But for the roots of our business to be both strong and flexible, we must put our heads together in collaboration. We call this advantage ‘the value of active minds’. It is something that permeates every aspect of Jupiter, helping us to remain resilient, to think and to debate, and to support a responsible and sustainable approach to investment. 1. More details on the Group’s use of Alternative Performance Measures (APMs) can be found on pages 181 to 183. The value of active minds is: Seeing tomorrow’s trends today. FORWARD THINKING > See page 14 Decisions that spark long-term opportunities. FOCUSED CONVICTION > See page 28 The ability to be agile, entrepreneurial and flexible. DIVERSE PERSPECTIVES > See page 34 1 Jupiter Fund Management plc | Annual Report and Accounts 2021 OUR PURPOSE AND CULTURAL PILLARS STRATEGIC REPORT Jupiter has a clear purpose and set of cultural pillars, underpinned by our belief in the value of active minds and the importance of our clients being at the centre of everything we do. OUR PURPOSE We exist to help our clients achieve their long-term investment objectives. CLIENTS At Jupiter, our clients are our focus and our priority. We are dedicated to serving our clients and put their interests at the centre of our business. We have deep relationships that enable us to understand what our clients want from us and we engage continuously with them to ensure we deliver to their expectations. Our commitment to active asset management is a driving force. Our fund managers have the freedom to pursue their own investment style within a collegiate environment with a shared commitment to sustainability. Our distinct, entrepreneurial culture encourages independence of thought and individual accountability. This enables our fund managers to follow their convictions and seek those investment opportunities that they believe will ensure the best outcome for our clients. SOCIETY Our value to society lies in being responsible stewards of our clients’ assets, carefully deploying capital and increasing the value of our clients’ savings. We understand that active fund management is not only about financial results, but also about successfully identifying sustainable businesses that create value for both society and shareholders. We believe these companies have better long-term growth prospects, which also delivers benefits for our clients. Our fund managers engage with our investee companies to help drive improvement in governance and encourage initiatives that could be beneficial for both the firm and broader society. Our fund manager-led approach to stewardship differs by strategy and asset class, but is always centred on improving client outcomes. As long-term investors, our fund managers create sustained and effective relationships with investee companies’ management, which enables more meaningful and relevant engagement. EMPLOYEES We believe that our value is in our people, whatever their role in the organisation. We encourage collaboration, debate and diversity. Our employees have the freedom and support they need to perform at their best, to challenge and be open to challenge. When we recruit, we look for talented people to build a diverse workforce. We consider diversity and inclusion at a Group-wide level and firmly believe that fostering a culture which embraces differences among people creates a stronger and more sustainable business. Through this commitment to improving diversity, we actively promote independence of thought. Jupiter is committed to developing its people through its talent and learning programmes. We strongly encourage employee share ownership and provided free Jupiter share awards to all staff in each of the last three years, aligning the interests of employees and shareholders, which will ultimately benefit our clients. SHAREHOLDERS Through our unwavering focus on meeting the needs of our clients and achieving superior investment performance, we strive to generate net inflows and drive the growth of the business. Combining growth through top quartile net new business with rigorous financial discipline will lead to strong financial performance. Along with a carefully managed capital base, this will deliver strong total returns for our shareholders. THE VALUE OF ACTIVE MINDS We believe that generating sustainable long-term outperformance for our clients, in a complex and challenging world, requires diversity of thought and mindset in all its aspects. The ability to be agile, entrepreneurial and adaptable to solve problems is a human quality. This is why our approach fosters real diversity of thinking, accountability, collaboration and a willingness to be challenged. We seek to be flexible and change as circumstances and our environment evolve around us. We believe that a combination of experience and creativity, as well as a commitment to keep listening and learning across all of our business, enables us to deliver for our clients and make a positive difference in the world. We call this advantage THE VALUE OF ACTIVE MINDS. 2 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT WE EXIST TO HELP OUR CLIENTS ACHIEVE THEIR LONG-TERM INVESTMENT OBJECTIVES OUR PURPOSE We exist to help our clients achieve their long-term investment objectives. CLIENTS At Jupiter, our clients are our focus and our priority. We are dedicated to serving our clients and put their interests at the centre of our business. We have deep relationships that enable us to understand what our clients want from us and we engage continuously with them to ensure we deliver to their expectations. Our commitment to active asset management is a driving force. Our fund managers have the freedom to pursue their own investment style within a collegiate environment with a shared commitment to sustainability. Our distinct, entrepreneurial culture encourages independence of thought and individual accountability. This enables our fund managers to follow their convictions and seek those investment opportunities that they believe will ensure the best outcome for our clients. SOCIETY Our value to society lies in being responsible stewards of our clients’ assets, carefully deploying capital and increasing the value of our clients’ savings. We understand that active fund management is not only about financial results, but also about successfully identifying sustainable businesses that create value for both society and shareholders. We believe these companies have better long-term growth prospects, which also delivers benefits for our clients. Our fund managers engage with our investee companies to help drive improvement in governance and encourage initiatives that could be beneficial for both the firm and broader society. Our fund manager-led approach to stewardship differs by strategy and asset class, but is always centred on improving client outcomes. As long-term investors, our fund managers create sustained and effective relationships with investee companies’ management, which enables more meaningful and relevant engagement. EMPLOYEES We believe that our value is in our people, whatever their role in the organisation. We encourage collaboration, debate and diversity. Our employees have the freedom and support they need to perform at their best, to challenge and be open to challenge. When we recruit, we look for talented people to build a diverse workforce. We consider diversity and inclusion at a Group-wide level and firmly believe that fostering a culture which embraces differences among people creates a stronger and more sustainable business. Through this commitment to improving diversity, we actively promote independence of thought. Jupiter is committed to developing its people through its talent and learning programmes. We strongly encourage employee share ownership and provided free Jupiter share awards to all staff in each of the last three years, aligning the interests of employees and shareholders, which will ultimately benefit our clients. SHAREHOLDERS Through our unwavering focus on meeting the needs of our clients and achieving superior investment performance, we strive to generate net inflows and drive the growth of the business. Combining growth through top quartile net new business with rigorous financial discipline will lead to strong financial performance. Along with a carefully managed capital base, this will deliver strong total returns for our shareholders. OUR CULTURAL PILLARS WE PUT CLIENTS FIRST A focus on serving our clients and a commitment to delivering superior performance after fees is central to why we exist as a business. WE VALUE OUR PEOPLE Independence of thought and individual accountability define us. We believe that diversity in people and freedom to think and act differently will set us apart. WE SUCCEED TOGETHER Only collectively, by working together as one team, can we meet our individual and business goals. WE CHALLENGE OURSELVES We encourage open debate, innovation and continuous improvement. 3 Jupiter Fund Management plc | Annual Report and Accounts 2021 WHO WE SERVE CLIENTS We exist to help our clients achieve their long-term investment objectives. SPLIT OF ASSETS UNDER MANAGEMENT (AUM) Investment management We offer a number of investment strategies within four core asset classes: • Equities • Fixed Income • Multi-Asset • Alternatives Our investment teams are unconstrained by a house view, and are supported by the CIO office and specialists in environmental, social and governance (ESG) issues and data science. By asset class Product We offer a range of actively managed investment products. Investments can be made through: • Mutual funds • Segregated mandates • Investment trusts We earn revenues by charging fees to our clients for the provision of investment management services, typically based on a percentage of the AUM. A number of funds and mandates also have the potential to earn performance fees. By vehicle type Distribution We primarily access our clients through a range of distribution partners. Our core partners include: • Funds of funds • Platforms • Global financial institutions • Advisers • Wealth managers • Life companies • Private banks • Institutional clients • Consultants By distribution partner type £58.7bn 2020 Equities Fixed Income Multi-Asset Alternatives 55% 14% 14% 55% 25% 6% 7% 24% £60.5bn 2021 £58.7bn 2020 £60.5bn 2021 84% 14% 85% 14% 1% 2% Mutual funds Segregated mandates Investment trusts £58.7bn 2020 50% 3% 8% 2% 50% 36% 2% 9% 1% 2% 1% 36% £60.5bn 2021 Advisory Discretionary Institutional Direct Investment Trust Other OUR BUSINESS At 31 December 2021, Jupiter actively managed £60.5bn of our clients’ assets. Delivering growth for clients through investment excellence is at the centre of what we do. STRATEGIC REPORT 4 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT HOW WE DO IT WHERE WE OPERATE Talented individuals delivering with conviction We enable talented individuals to pursue their own investment styles. Without the constraints of a house view, our fund managers can follow their convictions to deliver the best outcomes for clients. Meeting our clients’ needs through working together We work together to innovate and deliver the products that help our clients meet their objectives, providing the best outcomes for our clients, shareholders and all our stakeholders. An efficient operating model We have a single operating platform, which we continue to develop to minimise complexity and support growth. This means we remain agile and able to adapt as market conditions evolve. UK 71% AUM by geographical location of client 2020: 72% 516 Employees 2020: 555 Rest of World 3% AUM by geographical location of clients 2020: 3% 12 Employees 2020: 9 Asia 5% AUM by geographical location of client 2020: 4% 15 Employees 2020: 17 EMEA 21% AUM by geographical location of client 2020: 21% 42 Employees 2020: 40 Third party Remote access Client service via local licensed distributors UK Asia EMEA Rest of World 5 Jupiter Fund Management plc | Annual Report and Accounts 2021 OUR BUSINESS MODEL Jupiter has a clear, robust value creation model, which helps us to generate value for our clients, shareholders, people and society. INVESTMENT MANAGEMENT • We are a specialist, high-conviction, truly active asset manager • We do not have a house view, but allow our fund managers autonomy to follow their convictions • We seek investment outperformance after all fees for our clients • We actively engage with our investee companies, not only to drive financial results but also for societal benefits and a sustainable future > Read more on our investment capabilities on page 30 and our approach to stewardship on page 40. PRODUCT • Our product development and governance structure brings together our investment management and distribution teams, to ensure our product offering is aligned to client needs • Our product development strategy is focused on innovation to adapt to clients’ changing needs > Read more on product and distribution on page 32. DISTRIBUTION • Basing our distribution structure around client types and geographies gives us a clear understanding of our clients’ investment objectives, product and service needs • We build strong relationships with consultants, in line with our culture > Read more on product and distribution on page 32. WHAT WE DO – THE JUPITER DIFFERENCE D I S T R I B U T I O N P R O D U C T I N V E S T M E N T M A N A G E M E N T THE JUPITER DIFFERENCE SPECIALIST ACTIVE STRATEGIES HIGH CONVICTION THOUGHT LEADERS AGILE & FOCUSED HOW WE DO IT 6 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT FOR CLIENTS Investment performance after all fees We help our clients to meet their long-term investment goals, by delivering investment outperformance after all fees. FOR EMPLOYEES Individual development We have a culture that attracts and develops talent. We support and challenge our people to continuously develop. FOR SHAREHOLDERS Total returns We target capital and income returns. We pay a progressive ordinary dividend, supplemented by the distribution of any capital that is surplus to business needs. FOR SOCIETY Stewardship One of our biggest impacts comes from engaging with the companies we invest in. Each year, we hold more than 1,000 company meetings to obtain investor insight and, where relevant, challenge boards on issues affecting long-term value. We are focused on the sustainability of both investee companies and our own business. > Read more on our stakeholders on page 58. OPERATING AND RISK ENVIRONMENT • We have a single operating platform across the Group, minimising complexity and supporting growth • We drive efficiencies through a disciplined approach to investing in our platform • We identify, monitor, manage and mitigate risk through a robust and clearly defined risk framework > Read more on our approach to risk management on page 60. PEOPLE • We develop our people through a supportive culture, to prioritise and deliver for clients • We promote diversity and inclusion at all levels of the organisation • We engage our people with a clear strategy, purpose and set of guiding principles > Read more on our people and culture on page 36. CAPITAL MANAGEMENT • We maintain a robust capital surplus over our regulatory requirements • We balance investment for growth with returns to shareholders through a clear capital allocation framework > Read more on our capital management on page 26. WE EXIST TO HELP OUR CLIENTS ACHIEVE THEIR LONG-TERM INVESTMENT OBJECTIVES THE VALUE WE CREATEHOW WE DO IT 58% Mutual fund investment performance 76% Employee engagement 17.1p Total dividend 708 Engagements with companies on ESG matters 7 Jupiter Fund Management plc | Annual Report and Accounts 2021 CHAIRMAN’S STATEMENT “Jupiter’s agility has enabled us to adapt throughout the pandemic to ensure we continue to serve our clients’ best interests.” Dear Stakeholder 2021 has been a year of progress in challenging circumstances. We have continued to invest in key areas of our business, which we believe provide the best opportunity to accelerate our growth agenda. This has been achieved despite the difficult market context, with the global pandemic still creating much uncertainty across the world and continued outflows from the UK and European-focused asset classes. The pandemic has continued to impact our clients, our people and how we operate our business; however, Jupiter’s agility has enabled us to adapt throughout the pandemic, to ensure we continue to serve our clients’ best interests, progress our strategic initiatives and focus on the wellbeing of our people. Purpose and culture Our purpose is to help our clients achieve their long-term investment objectives. This is supported by our culture which puts our clients at the heart of everything we do, and drives a high-performing, collaborative and supportive environment for our people. Nichola Pease Chairman We believe having a diverse workforce supported by an inclusive culture is critical for the future success of our business. There have been a number of initiatives to help improve diversity across Jupiter and the wider industry, as detailed on page 39. We have also included diversity targets in our executive remuneration structures and our people manager objectives to drive progress in this important area. Further information on our culture and people can be found from page 36 and information on the Board’s oversight of these matters can be found on page 79. Helping our clients achieve their long-term investment objectives is wider than pure investment performance. Clients want to invest their capital in a sustainable way, through active stewardship, which helps to drive change and provides benefits for the world we live in. As an active fund manager, we are entrusted stewards of our clients’ capital and recognise the importance of this role to add value over and beyond delivering investment performance. This enables us to further differentiate ourselves from other asset managers whilst building on our long history of effective stewardship. Sustainability Investing sustainably and building ESG risk considerations into our processes have long been central to our investment philosophy. We launched our first sustainable investment product in 1988, recognising the benefits of deploying capital into companies that provide solutions to environmental and social problems. As described on page 40, our stewardship activities are embedded across all of our investment strategies and we engage with our investee companies on ESG matters to drive progress on these key issues. This focus on sustainability has continued and some key decisions made by the Board this year related to accelerating and strengthening our sustainable initiatives. We joined the Net Zero Asset Management (NZAM) initiative, under which we have committed to operate our business and manage all assets on a net zero emissions basis by 2050 at the latest. You can read more on our targets, plans to deliver this and how we measure our progress on page 45. We have also become a signatory to the UN Global Compact (UNGC), a corporate sustainability initiative which contains 2021 has been a year of progress in challenging circumstances. We have continued to invest in key areas of our business, which we believe provide the best opportunity to accelerate our growth agenda. 8 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT ten principles on human rights, labour, the environment and anti-corruption. Our inaugural communication on progress against these ten principles can be found on page 52. We were proud to be included in the list of signatories for the revised Stewardship Code, the first under the new Code, which was adopted in 2020. Only two thirds of applications were accepted by the Financial Reporting Council (FRC) and we believe our inclusion on the list demonstrates our active stewardship approach, which is focused on delivering positive outcomes for all stakeholders, through effective engagement and collaborative action. We have continued to develop our suite of sustainable products, as highlighted in our CEO’s Report. Further information on our ESG-related activities can be found within our Sustainability Report starting on page 40 and information on how we have incorporated ESG into our remuneration structures from page 102. Strategy and performance We have remained focused on delivering for our clients and our investment performance has remained strong, with 58% of our mutual fund AUM performing above median over three years and 80% above median over one year. Although our AUM has increased by 3% over the last twelve months to £60.5bn, we are disappointed to remain in a net outflow position. Net outflows for 2021 amounted to £3.8bn, despite continued strong gross sales of £16.5bn. This has mainly been due to outflows from the UK market where client demand has moved away from single country or regionally focused mandates. This net outflow position is the primary driver behind the decrease in share price and returning to net inflows is a key priority for the Board and management. We have made a number of investments across the business during the year to help accelerate our growth by diversifying our product range, client type and geography. We have invested in key areas such as our Sustainability and Fixed Income product ranges and our disciplined product strategy has seen significant growth in newly launched products. Growth of these strategies should accelerate as they continue to build their performance track records and AUM. We have continued to establish our US operations with the hiring of US Distribution and Credit Analyst teams and are executing our plans to expand into the Australian market. The growth of our institutional business has continued to be a strategic priority. I have been particularly pleased to see this area of our business developing through some senior hires, refining our investment offering to meet institutional client needs and evolving our infrastructure to support this type of client activity. The Group has generated strong financial performance, with underlying profit before tax increasing 21% from £179.0m in 2020 to £216.7m in 2021 and a growth in statutory profit to £183.7m (2020: £132.6m), largely driven by performance fees earned on a small number of funds. For further information on our financial performance please see our CFO’s Review starting on page 20. Capital allocation In-line with our previously disclosed capital allocation policy, we are proposing a final dividend of 9.2p per share, to be approved by shareholders at the forthcoming AGM. If approved, such dividend will be paid on 20 May 2022 to those shareholders on the register on 22 April 2022. This will result in total ordinary dividends for 2021 of 17.1p per share equating to 54% of our underlying EPS. The Board reiterates its policy to return excess capital after retaining sufficient earnings for capital and growth. As I reported last year, the Board intends to consider the next return of capital at the end of 2022. We expect to target a return of capital of at least 70% of underlying profit after tax, calculated as the cumulative underlying profit after tax for 2021 and 2022, less ordinary dividends. The Group maintains a robust capital position and has prepared for the transition to the new Internal Capital Adequacy and Risk Assessment which will replace the current process in 2022. It is our current expectation that investments in the business to drive growth will be through the Group’s income statement, with limited requirement to retain earnings for inorganic growth investments. Following a review, the Board expects that future, additional returns of capital will be through share buybacks, rather than special dividends. Board and senior management There have been a number of changes to the Board this year. As announced last year, Jonathon Bond and Edward Bonham Carter stepped down from the Board in May 2021. Both have played a significant part in Jupiter’s history, particularly Edward who served as Jupiter’s CEO between 2007 and 2014. David Cruickshank and Dale Murray were appointed to the Board as independent Non-Executive Directors on 1 June 2021 and 1 September 2021 respectively. We are delighted to have recruited two such high calibre Directors and we are already benefiting from their contribution to the Group. Polly Williams, the Chairman of our Audit and Risk Committee, has decided to step down from the Board and will not be seeking re-election at this year’s AGM. Polly has served on the Board for over seven years and throughout her tenure has provided excellent stewardship of the Audit and Risk Committee. She leaves the Board with our sincere gratitude for her substantial contribution to the Group. We were delighted to announce that Suzy Neubert will be joining the Board as an independent Non-Executive Director and member of the Nomination and Remuneration Committees with effect from 1 March 2022. David Cruickshank will succeed Polly Williams as Chairman of the Audit and Risk Committee with effect from the conclusion of the 2022 AGM. There have also been some changes to our Executive Committee as we have implemented our succession plans and looked to broaden and strengthen our leadership team. Whilst further information on the changes can be found on page 69, I would like to take the opportunity to extend the Board’s gratitude to Stephen Pearson, our former CIO. Stephen has played a key role in Jupiter’s development over the last 20 years, and has driven the development of our investment management capabilities since his appointment as CIO in 2015. The Board have overseen an orderly transition to our new CIO, Matthew Beesley, who has also joined the Executive Committee. We look forward to working together with our new Executive Committee members to drive Jupiter’s growth. Outlook As an active asset manager Jupiter is well placed to navigate the ongoing market volatility in order to continue to deliver for our clients. Whilst there are many headwinds across the industry still to navigate, we believe the investments we have made in the business will drive our future growth for the benefit of all our stakeholders. As ever, I would like to thank all of our stakeholders, particularly our clients, who have continued to invest with us; our people who deliver for our clients and have worked tirelessly to progress the Company’s objectives; and our shareholders for their continued support. Nichola Pease Chairman 24 February 2022 “ We have committed to operate our business and manage all assets on a net zero emissions basis by 2050.” 9 Jupiter Fund Management plc | Annual Report and Accounts 2021 CHIEF EXECUTIVE OFFICER’S REVIEW “Jupiter’s purpose is clear. We exist to help our clients achieve their long- term investment objectives. We have done this by sticking to what we do best: truly active, high- conviction asset management.” seeing our clients in person when restrictions have allowed. Despite challenging net flows, Jupiter’s success has been built on its ability to navigate the choppy waters of markets since its inception in 1985. Forward thinking is key in a highly competitive landscape, where the pace of change has accelerated with the global pandemic. Our investment in new areas over the last two years is starting to deliver and I am optimistic this momentum will carry forward in 2022 to the benefit of our clients, our people and our shareholders. Our purpose and performance Jupiter’s purpose is clear. We exist to help our clients achieve their long-term investment objectives. Our actions are guided this year, as in every year, by our unwavering focus on delivering value for our clients, who are at the heart of everything we do. We saw a material improvement in our annual Assessment of Value report, with 84% of our funds’ unit classes receiving positive ratings for delivering value. More details on this can be found on page 33. Andrew Formica Chief Executive Officer It is a challenge we embraced in 2021 as we broadened our product offering, invested in our talent, and adopted the processes, systems and technology to meet the evolving needs of our clients. Further details on how we are adapting to the challenges in the market can be found on page 13. It is also a year in which we prioritised our support and focus on our people as they continued to deliver under difficult circumstances. We enjoyed welcoming our colleagues back to the London office in September, some of them for the very first time. It was an opportunity to rebuild our cultural reserves, inevitably somewhat depleted after nearly 18 months of intermittent remote working. For some, it was their first face-to-face meetings with colleagues since joining Jupiter. The cultural benefits of being back in the office were immediately clear to all; being together under one roof in London proved an opportunity to build or rebuild relationships and reinforce a key cultural pillar of the firm – that only collectively, working together as one team, can we meet our individual and business goals. Equally, we have been delighted to get back to It was a challenging year for Jupiter despite some significant progress on our strategic objectives. The global pandemic remained a disruptive force, affecting the way we do business, buffeting economies and markets, and having a profound impact on how our clients allocate their capital. The UN Climate Change Conference in Glasgow kept climate change on the agenda and ESG considerations firmly in the spotlight. UK equities remained out of favour, despite the resolution on Brexit, and inflation concerns slowed the appeal for fixed income funds, two areas where Jupiter has a strong product line-up. Client demand remained concentrated in narrow areas such as global equities or multi-asset, with the knock-on effect that Jupiter saw an elevated level of redemptions across a number of its investment strategies. This challenging net flow picture, however, was offset by another strong year for gross sales. At an industry level, passive strategies meanwhile continued to attract client flows, putting the onus on us to demonstrate how an active, high-conviction approach to investment can be a differentiator, delivering value and outperformance to clients. It was a challenging year for Jupiter despite some significant progress on our strategic objectives. The global pandemic remained a disruptive force, affecting the way we do business, buffeting economies and markets, and having a profound impact on how our clients allocate their capital. 10 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT Our investment performance remains strong, with 58% of our mutual fund assets outperforming over three years, one of our KPIs. We have done this by sticking to what we do best: truly active, high-conviction asset management. We talk about the value of active minds because we have built a culture that encourages diversity of thought and intellectual challenge. Our talented managers and their teams have a high degree of autonomy, expressing their views in concentrated portfolios with high active shares. More broadly, this focused conviction also means we choose to centre our client offering in areas where we believe we can differentiate ourselves and consistently deliver for our clients. Our strong financial results this year reflect the ongoing resilience of our business and the strategy that underpins it. Underlying profit before tax was up 21% from £179.0m to £216.7m, as we saw the full-year benefit of the contribution from Merian. Full details of our financial results can be found in the CFO review on page 20. Our strong investment performance also generated £113m of performance fees this year, driven primarily by the Chrysalis Investment Trust. While this is excellent performance, we would not expect those elevated levels to be repeated through 2022 or every year going forward. We were disappointed to see net outflows of £3.8bn (2020: net outflows of £4.0bn), especially given it was another outstanding year of £16.5bn of gross sales. It was particularly pleasing to see strong flows directed towards some of our key growth strategies. Global Sustainable Equities, which invests in companies leading the transition to a more sustainable world, continued to build momentum and saw net flows of £200m. Our US strategic relationship with NZS Capital also hit its stride, boosted by the launch of a Luxembourg- domiciled SICAV version of their global equity growth strategy, which helped generate over £300m of net inflows, with total assets under management growing to over £1bn. Recently launched products have performed well. Strategies launched since 2018 have attracted £2.2bn of cumulative net inflows and now account for £3.6bn of our AUM. More details on our flows this year can be found in the CFO review on page 22. With clients showing real appetite for some of our new strategies, it has been painful to see this success overshadowed by elevated levels of redemptions for the reasons I have cited above. It has not, however, dented our ability to deliver a strong financial performance which has in turn allowed us to invest in the future growth of the business. We have a strong core business, built over more than three decades, that will continue to generate the bulk of our revenues over the short to medium term. Yet no company can stand still, and there are three key growth areas in which we will focus our investment, to ensure we continue to move forward. They are: • Expanding our sustainability capabilities; • Supporting our ambitions in the institutional market; and • Growing our international presence. A commitment to sustainability Sustainability at Jupiter can be viewed through three lenses: the integration of ESG principles in the investment process of our managers, our sustainable offering to clients, and a commitment to corporate engagement. Jupiter has a proud heritage as an active participant in helping find solutions to era- defining challenges. In 1988, we were the first asset manager to offer clients the opportunity to invest in a unit trust, the Jupiter Ecology Fund, entirely dedicated to companies seeking to address environmental issues. Over thirty years on, we continue to lead the conversation. In 2021, Jupiter became a signatory to the Institutional Investors Group on Climate Change’s (IIGCC) NZAM initiative, committing us to achieving net zero emissions by 2050 across our full range of investments and operations. At the same time, we agreed to align with the UNGC, committing us to meeting fundamental responsibilities in the areas of human rights, labour, the environment and anti-corruption. Our efforts have been recognised by the industry, with Morningstar awarding Jupiter an Advanced rating for our ESG commitment, one of only five asset managers to receive this accolade. We have also continued to add resource in key areas, including appointing a new Head of Sustainability, who will coordinate ESG activities and drive our sustainability strategy across the firm. To find out more about our corporate engagement on ESG matters, please see from page 40. We are not only high-conviction active managers but also stewards of our clients’ capital. We have a responsibility to actively engage with our investee companies and encourage sustainable practices that we believe drive better outcomes for our clients and, ultimately, all of our stakeholders. All our portfolio managers are required to build ESG risks into their investment processes. We understand our clients are at different stages on the ESG journey. While some clients may only be looking for their manager to handle financially material ESG risks on their behalf, there are others seeking to minimise the negative impacts of their investment, or who actively require a dedicated allocation strategy that delivers positive outcomes. We have evolved our product suite accordingly, restructuring our sustainable investing strategy in 2021 into two distinct channels – sustainable investing and environmental solutions. We are also making significant investments in ESG headcount across the business, increasing resource to the central stewardship team and appointing ESG investment directors to a number of our strategies. This investment in our ESG capability and resources started bearing fruit in 2021. Good flows and strong investment performance saw AUM in our Global Sustainable Equity strategy increase by almost four times over the year. The strategy has also attracted several positive consultant ratings over the year, helping attract institutional interest in the fund. To widen client access to the strategy, we launched a Luxembourg-domiciled vehicle. We have continued to build out our sustainability offering early in 2022 with the introduction of a Sustainable Finance Disclosure Regulation (SFDR) ‘Article 8’-compliant version of our Dynamic Bond fund and the launch of the Global Ecology Bond fund for international markets. Ambitions in the Institutional channel The institutional market represents a significant growth opportunity for Jupiter. Institutional clients currently only account for 8% of the Group’s AUM, but we have a strategic objective to extend this contribution over the medium term. Developing an institutional business is not just a case of targeting new clients, but requires investment in talent, products and platform. In 2021, we invested across all three. We appointed new institutional regional heads in the UK and Asia and grew our team in the US. We are in the process of recruiting a new head of institutional for continental Europe and we are developing an on-the-ground presence in Australia. We have a wide range of products which are ideally suited to the institutional market, from Global Sustainable Equities and NZS Capital’s global growth strategies, to our unconstrained global fixed income funds and emerging market products, both in fixed income and equity. Assets under management £60.5bn 2020: £58.7bn Gross sales £16.5bn 2020: £16.5bn 11 Jupiter Fund Management plc | Annual Report and Accounts 2021 CHIEF EXECUTIVE OFFICER’S REVIEW continued Global consultants, who are key to unlocking this market for us, are beginning to recognise the strength of our franchises. We now have 15 consultant ‘buy’ ratings across nine strategies – this has more than doubled over the last 12 months. To support our push into this market, we have developed our support and operational platform. Institutional clients, and increasingly our existing retail clients, expect a different level of service and reporting so we have added resource to support functions such as our RFP and client service teams. A growing overseas presence When I first joined Jupiter, I stated that reinforcing our market-leading position in UK retail had to be a priority after several years of focusing on expanding our international presence. The successful acquisition and integration of Merian has fulfilled this objective, allowing us to widen our perspectives and take a fresh look at our global footprint. At the end of December, 29% of our AUM came from clients based outside the UK. In 2020, Jupiter established its first presence in the US, opening an office in Denver initially to support our colleagues at NZS Capital. In the last 12 months, we have expanded the team there and opened an investment office in New York focusing on US credit. The institutional market is our sales focus in this region, and as our product set and pipeline grows, we expect North America to make a more significant contribution to the group going forward, with £1.2bn of client assets in the region today. We have taken steps to establish a foothold in Australia, where we are targeting the institutional market. We have already started to work with our first client and are in the process of adding on-the-ground resource. Finally, we continue to explore our growing relationship with Ping An, a Chinese financial services company, which we inherited through Merian. In 2021, Ping An began managing our China Equity fund, offering invaluable on-the- ground expertise and insight into Chinese companies. We will continue to work with our strategic partner, as we look to develop our presence in the Chinese market. People We could not have made the progress we did in 2021 without the commitment, resilience and hard work of our people. I would like to thank them for all their efforts over the last 12 months in what was another challenging year. The health and wellbeing of our people remained our top priority as the pandemic continued to disrupt our lives. We introduced a new flexible working model to better accommodate the competing needs of work and family. For a second year running, Jupiter offered a £1,000 contribution for home office improvements to ensure our people were able to work in optimal conditions. On the reopening of our London headquarters, employees returned to an office that had been redesigned with new collaborative spaces, blending both the formal and informal to help rebuild relationships and foster communication. The reopening was also an opportunity to celebrate our people, and we did so with a series of ‘welcome back’ events that were very well received. Despite these measures, and perhaps unsurprisingly after the last two turbulent years, the latest employee engagement survey recorded a drop in the engagement score from the previous year. Our people continued to tell us they cared deeply about the future of the Company and appreciated the efforts the firm had taken to support them during the pandemic, but they wanted to see greater visibility around the direction and future of the firm. The Executive Committee will be working hard to address this in 2022. As a firm, when we look to bring in talent, we believe that businesses with a diverse workforce and an inclusive culture are more sustainable. This is an approach I have championed for many years, having co-founded Investment20/20 with our Chairman, Nichola Pease. Investment20/20 is an initiative aimed at bringing more diverse talent into all aspects of investment management. Under the scheme, Jupiter this year chose to nearly triple the number of entry level opportunities for school leavers and graduates, recognising both that the last 12 months have been more challenging for young people to gain a foothold in the workplace and also the value that they can bring to Jupiter. Diversity only works when it goes hand in hand with inclusion. Jupiter’s Executive Committee has been a strong supporter of the Company’s employee networks, believing they can provide invaluable insight on helping create a workplace where people from under-represented backgrounds can feel comfortable and thrive. In 2021, the Jupiter Pride Network created a powerful video for Pride Month that was one of the Company’s most widely viewed and shared posts on social media. The end of the year also saw the successful launch of the Jupiter Gravity Network, a group aimed at raising awareness of cultural and ethnicity challenges and closing the gaps that have traditionally been barriers to advancement. On a personal level, I signed up to a reverse mentoring programme set up by Investment20/20 and #TalkaboutBlack, part of the Diversity Project. It was a wonderful opportunity to get a better understanding from a senior black professional of the challenges black men and women face when trying to develop and progress into senior roles. More broadly, in 2021, we set all our Executive Directors and Executive Committee members clear Diversity and Inclusion (D&I) goals, and our efforts in this space will continue as the Company seeks to draw inspiration and strength from the vibrant, diverse society in which it operates. More details on this can be found from page 36. We also announced this year the retirement of our Chief Investment Officer, Stephen Pearson. Stephen has been at Jupiter for over 20 years and in the fund management business for over 35. His contribution to the business cannot be overstated and I would like to thank him for his strong leadership, relentless commitment to clients and clear vision, which have led to a transformational change in our investment capabilities. Positioned for future growth It was a year of challenge and achievement in equal measure as we continued to build the foundations of our future prosperity. As we move into 2022, we will maintain our strategy of investing for growth, focusing our efforts in those areas where we can best serve our clients. The significant change the business has undergone over the last two years is beginning to pay off, and I am optimistic we will see an acceleration in the pace of delivery in 2022. I look forward to working with my colleagues to achieve our objectives and deliver on our future success. Andrew Formica Chief Executive Officer “ In 2021, Jupiter became a signatory to the IIGCC Net Zero Asset Managers initiative committing us to achieving net zero emissions by 2050 across our full range of investments and operations.” 12 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT 1. GROWTH IN PASSIVE PRODUCTS Context: As clients become more sensitive to fees and seek more stable returns, they are increasingly moving part of their portfolios into passive investments and away from active products. In 2021, two thirds of flows from UK clients went into passive products and now account for just under 20% of the total AUM across the industry. 1 Jupiter’s response: We are aware that, for some of our clients, passive products may form part of their portfolio. But as a high-conviction, truly active asset manager, our product range provides a complementary offering. We construct concentrated, high active share, benchmark-agnostic portfolios to deliver returns for our clients in all market environments. Delivering value is key to our ongoing success. After all fees, 58% of our mutual fund assets outperformed their peer group over three years, with 37% in the top quartile. > More on our investment performance can be found on page 30. We also actively engage with our investee companies, believing better run companies perform better. Whereas passive products are obliged to hold all of the stocks within their benchmark, we are highly selective in our investee companies and have the resources and commitment to actively engage with them across business and ESG issues. > More on our stewardship approach can be found on page 40. MARKET TRENDS Through 2021, we have seen a number of market trends impact our business and the wider industry. Four key trends are detailed below along with how Jupiter has responded. 2. AN INCREASED FOCUS ON SUSTAINABILITY Context: Over recent years, there has been a significant shift as clients are increasingly focused not just on the financial returns of their investments, but also on the impact of these investments on people and on the planet. Across the asset management industry, clients are investing in products that build environmental, social and governance factors into their investment processes. Jupiter’s response: Sustainability is at the core of what we do at Jupiter and is embedded throughout our culture. All our fund managers are required to consider ESG risks as part of their investment processes and ESG objectives are part of our Executive Committee’s and investment professionals’ appraisal process. We believe that companies that are managed in a sustainable way will outperform over time, driving better outcomes for our clients and ultimately all of our stakeholders. As an active manager, we engage with the companies in which we invest, including over 700 engagements on ESG issues this year. We also have a range of products which are explicitly focused on sustainable investing and environmental solutions. This includes Global Sustainable Equities, our Ecology range, and the newly launched Ecology Bond and Dynamic Bond ESG funds. > More on our approach to sustainable investing can be found on page 40. 3. A MOVE TO A MORE GLOBAL FOCUS Context: We have seen an industry-wide shift over recent years, in which clients have looked to invest in products with broader investment universes. Clients are increasingly investing in more globally-focused products and away from those with a more regional or single- country scope. Jupiter’s response: Over recent years, we have actively broadened our product range into more globally-focused products. The global growth strategies of NZS Capital have performed exceptionally well since the start of the strategic partnership with Jupiter in early 2020. Strong investment performance has supported net inflows in 2021 of over £300m. AUM for this capability now stands at over £1bn. Global Sustainable Equities, one of our flagship sustainable products, also generated inflows in 2021 of £200m. We have launched new vehicles for each of these strategies this year to make them available to a wider range of clients. Away from equities, we also have a significant and market-leading range of global unconstrained fixed income products. Dynamic and Strategic Bond collectively have AUM of almost £13bn. In early 2022, we also launched the Global Ecology Bond fund. > More on our product range can be found on page 32. 4. EVOLVING REGULATORY AND RISK LANDSCAPE Context: As we move through the global pandemic, regulators across the globe have evolved their approach. Traditional risk management and business continuity have evolved to focus on systemic risk. Regulators are also focused on stewardship, seeking to bring clarity and authenticity to an area which has not historically always used consistent taxonomy and labelling. Jupiter’s response: Jupiter works closely with our regulators to ensure that we have a strong, well-capitalised business. We have a robust risk framework that ensures our risks are managed in way which helps Jupiter achieve its strategic goals, while keeping our business and clients safe. More on our approach to risk management can be found on page 60. The most notable new piece of regulation around stewardship is the SFDR, which applies to products domiciled in the EU and defines products as those with ESG factors integrated or promoted, or with clearly defined sustainable outcomes. Jupiter’s approach has been one of authenticity. Rather than adjusting existing products’ processes or objectives, where necessary we generally prefer to launch new, ESG-focused vehicles for existing strategies, such as with Dynamic Bond ESG. > More details on our approach to SFDR can be found on page 49. 1. Data from the Investment Association, includes UK-based clients investing in UK and overseas domiciled funds 13 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT FORWARD As we come out of the second year of the Covid pandemic, a recurring theme to describe our collective experience of this global event is one of ‘change and reinvention.’ The world before Covid-19 is no longer the one we live in now. While it can be argued ‘change’ is an ever-present feature in our lives, we are living through a period that is profoundly altering the way we live, do business, and interact in society for generations to come. As a business, the challenge is to remain agile, anticipating and dealing with change while embracing the opportunities that present themselves in a rapidly altering landscape. Forward thinking is a pre-requisite for success in such a fast-paced and evolving environment, and Jupiter’s success has been built on its ability to navigate the unabated change since its inception in 1985. In common with many other industries, asset management faces a number of longer-term challenges. These include an evolving, competitive landscape facing consolidation through M&A, the ongoing passive versus active management debate which has brought about fee pressure and a focus on value, the impact of huge societal shifts in response to Covid-19, increased regulatory focus, technological advances and, most significantly, the impact of climate change on the planet and people. As we planned, 2021 has been another year of building for the future so that we can continue to deliver value for our stakeholders over the long term, while keeping clients at the centre of everything we do. A competitive landscape At Jupiter, delivering long-term investment outperformance after all fees to our clients through active investing informs all of our decisions. We look to identify the right markets and the most appropriate strategies for our differentiated client types. Our diversification strategy has been progressed through expanding the breadth of international markets in which we operate. This year, we have made significant inroads into the US market and developed our business in Latin America, and we are well advanced in our plans to make our product range available to Australian institutional investors. In addition, we have strengthened our team and developed our global consultant relationships with a view to increasing the institutional client strategic importance and Jupiter recognises the significant role which active managers can play in positively influencing companies’ behaviour and activities, for the benefit of our clients and wider society. This has been at the heart of our investment approach for many years and we have increased our focus in 2021. Strong governance and investing sustainably have long been defining features of Jupiter’s investment culture. We have been focused on meeting our goals in this area, which are to support the transition to a low-carbon economy and pursue a positive stakeholder agenda balancing the interest of our clients, shareholders, employees, and wider society. Our commitment this year has seen the Company continue to build out the team of client-facing investment share of our business, a key strategic priority for the business. As an independent, UK-listed business, we are well positioned to respond quickly and effectively as circumstances change. We are also held to the highest standards of conduct and accountability, which is overseen by our deeply experienced Board of Directors. For more details on the trends in our industry and how Jupiter is responding, please see page 13. Spotlight on sustainability Asset management has a crucial part to play in the allocation of capital to sustainable businesses and the critical nature of the climate crisis has pushed this issue to the top of corporate, as well as governmental, agendas. It is an area of huge Gross sales (£bn) £5.1bn of our AUM is from institutional clients 0 5 10 15 20 0.8 11.1 2 11.4 14.4 15.1 1.4 2.1 2018 2019 2020 2021 Mutual funds & investment trusts Segregated mandates 14 STRATEGIC REPORT Jupiter Fund Management plc | Annual Report and Accounts 2021 FORWARD THINKING “As an independent business, we are well positioned to respond quickly and effectively as circumstances change.” AUM by client domicile (£bn) directors who are solely focused on ESG allocated to key strategies. We have set a clear path towards achieving our net zero targets, for both our portfolio constituents and our business. And we have continued to develop our range of dedicated investment funds focused on sustainable investing and environmental solutions. We have also worked hard to meet the developing regulatory frameworks, some of which came into place at the start of 2022. For more on our approach to sustainability, please see page 40. Technological advances The trend for technological solutions shows no sign of abating and this has been a year for huge advancements in a broad range of sectors. Jupiter recognised the potential for data science to deliver improved outcomes for clients and we have grown our data science team over recent years both in size and scope. Today its targeted solutions are incorporated into the fabric of our fund management process. This year has seen investment in several new technological solutions and the continued development of the ESG Hub, a bespoke data centre built to increase our fund managers’ ability to view and analyse their portfolios in the context of their exposure to ESG risks. This investment has proven to be highly valuable as clients have moved their focus towards ESG. Generational change The societal shift which has taken place over the past two years has created an environment for innovation and flexibility on many levels. This opportunity for change is no less important in financial services, which has had a reputation for being more traditional in its approach, than in other potentially faster moving industries. The shift towards hybrid working is a case in point, challenging the established paradigm around exclusively office-based work in large cities. We believe that this flexibility could improve the diversity and resilience of the workforce in the industry, while retaining the benefits of personal connection, the glue with which we can build our culture. By being a part of this, we can better reflect the world in which we operate, as well as attracting and retaining talent and drawing on a broad range of experience to build a successful, sustainable future. While continuing to build on the strong foundations we have established for the business to flourish in the future, it is also important to reflect on an aspect of Jupiter’s identity that has remained constant, namely its purpose. Jupiter has always been committed to the belief that client outcomes are improved through a dynamic, collaborative, and consistent approach to active fund management. We believe that by focusing SEEING TOMORROW’S TRENDS TODAY IS THE VALUE OF ACTIVE MINDS 20 30 40 50 60 70 2018 2019 2020 2021 UK EMEA Asia Rest of World “Asset management has a crucial part to play through the allocation of capital to sustainable businesses.” on doing this as well as we possibly can, while looking after our people and our planet, we really are serving the best interests of our valued and diverse clients across our international markets. 15 Jupiter Fund Management plc | Annual Report and Accounts 2021 OUR STRATEGIC PRIORITIES We aim to meet the following goals by 2024 by successfully delivering on our strategic priorities and achieving our core objectives. WE WILL DELIVER SUPERIOR INVESTMENT PERFORMANCE AFTER FEES, ACROSS OUR STRATEGIES Investment performance is the lead indicator for our continued success and demonstrates our competitive advantage in delivering investment excellence to clients. Investment performance WE WILL BUILD OUT OUR CLIENT REACH, OUR INVESTMENT CAPABILITIES AND OUR CLIENT CHANNELS Diversification of assets by client and product lowers the unsystematic risk we face and leads to a less volatile shareholder return. Net flows WE WILL ACHIEVE TOP‑QUARTILE NET NEW MONEY GROWTH Net flows are a lagging indicator of investment success, reflecting our ability to deliver investment performance that attracts client funds, and to grow. Net flows AS A RESULT, WE WILL SIGNIFICANTLY INCREASE OUR CLIENT ASSETS AND PROFITABILITY Delivery of our goals will drive profitability, generating value for shareholders. Net management fees 1 Underlying earnings per share 1 Dividends 1. More details on the Group’s use of APMs can be found on page 181. OUR GOALS WHY IT’S IMPORTANT LINK TO KPIs 16 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT OUR STRATEGIC PRIORITIES AND PROGRESS IN 2021 Sustainability • Launched new vehicles and products for ESG and Sustainability-focused strategies including a Luxembourg-domiciled SICAV for Global Sustainable Equities, the Global Ecology Bond fund and Dynamic Bond ESG • Invested for growth with newly appointed ESG investment directors, broader resource in the stewardship team and a newly created Head of Sustainability role • Over £1bn of AUM in sustainability-labelled products • Set interim targets for net zero for both portfolio and corporate emissions Institutional • Key new hires including heads of institutional in the UK and Asia Pacific • Invested for growth with additional resource in the US, in client service and RFP teams • Developed strong relationships with global consultants – ‘buy’ ratings have increased to 15 ratings across nine strategies International • £17.5bn of AUM from clients based outside the UK • 60% growth in overseas AUM over the last three years, with net positive flows of £200m in 2021 • Investments made in key growth markets: • Key new distribution hires in the US and opened a credit analyst office in New York • Establishing presence in Australian institutional market • Continued to explore relationship with Ping An in China 1 Investment performance Consistently deliver strong investment performance and outcomes for clients in a responsible and sustainable manner OUR PROGRESS IN 2021 Financial resources Deploy financial resources with discipline to support growth and deliver consistent total returns to shareholders 6 Operating model Enhance the operating model and develop governance, risk and control processes that are purposeful, efficient, flexible and scalable 5 Talent and culture Attract, develop and retain high-quality and diverse talent aligned to a results-driven and inclusive culture 43 Investment offering Develop and deliver the best investment offering to meet the needs of our current and future clients 2 Client relationships Build deep, long-term client relationships based on trust, and consistently deliver an excellent client experience OUR CORE OBJECTIVES 17 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT OUR KEY PERFORMANCE INDICATORS How we performed in 2021. Our key performance indicators (KPIs) enable us to monitor our progress. FINANCIAL KPIs 1 NON‑FINANCIAL KPIs Net management fees (£m) Fees earned from managing our funds, net of payments to our distribution partners. Underlying earnings per share (p) Underlying profit after tax divided by issued share capital. Dividends (p) Ordinary and special dividends paid to shareholders in relation to the year. Investment performance (%) Percentage of our mutual fund AUM above the median over three years. Net flows (£bn) Net flows are the gross inflows to our funds less redemptions from our funds during the year. £453.7m 31.7p 17.1p 58% £(3.8)bn 395.7 392.4 370.0 384.0 453.7 17 18 19 20 21 34.2 32.4 28.8 28.7 31.7 17 18 19 20 21 15.5 17.1 11.4 3.0 17.1 17.1 17.1 17.1 17 18 19 20 21 Ordinary Special 43 38 33 28 21 44 38 34 42 37 1st quartile 2nd quartile 17 18 19 20 21 5.5 (4.6) (4.5) (4.0) (3.8) 17 18 19 20 21 Net management fees increased 18% to £453.7m. Average AUM increased by 25% to £59.7bn while net management revenue margins declined by 3 basis points (bps) to 76bps, both as a result of the full-year impact of the Merian acquisition. In addition, we generated £113.0m of gross performance fees (2020: £73.6m). Why this is important Net management fees are the largest component of our revenue and demonstrate our ability to earn attractive fees by designing and successfully distributing products that deliver value to clients. Underlying EPS increased by 3.0p in 2021 to 31.7p. Although underlying profit before tax increased by 21% to £216.7m, the increase in EPS was diluted by the full-year impact of shares issued as part of the Merian acquisition. Why this is important Measures the overall effectiveness of our business model and drives both our dividend policy and the value generated for shareholders. The total ordinary dividend for the year was unchanged from 2020 at 17.1p, representing a total underlying pay-out ratio of 54%. Why this is important Demonstrates our ability to pay a progressive dividend and return any surplus capital to shareholders, where it is in excess of our needs. Investment performance remained robust in 2021 with 58% of mutual fund AUM outperforming their peer group over a three-year period (2019: 70%), with 37% in the top quartile. The decline from the prior year was due to two funds which marginally moved into the third quartile at the very end of December 2021. Over one year, 80% of AUM outperformed and over five years the figure was 68%. Why this is important Investment performance is the lead indicator for our continued success and demonstrates our competitive advantage in delivering investment excellence for clients. Despite another year of record gross flows of £16.5bn, we saw total net outflows of £3.8bn (2020: net outflows of £4.0bn). Redemptions were primarily from areas where retail client demand was muted, such as UK and European equities, or where there were specific performance concerns. We generated net inflows into key growth areas such as Global Sustainable Equities, NZS Capital’s global equity strategies and a number of recently launched products. Why this is important Net flows are a lagging indicator of investment success, reflecting our ability to deliver investment performance that attracts client funds, and to grow our distribution. 1. More details on the Group’s use of APMs can be found on page 181. 18 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT FINANCIAL KPIs 1 NON‑FINANCIAL KPIs Net management fees (£m) Fees earned from managing our funds, net of payments to our distribution partners. Underlying earnings per share (p) Underlying profit after tax divided by issued share capital. Dividends (p) Ordinary and special dividends paid to shareholders in relation to the year. Investment performance (%) Percentage of our mutual fund AUM above the median over three years. Net flows (£bn) Net flows are the gross inflows to our funds less redemptions from our funds during the year. £453.7m 31.7p 17.1p 58% £(3.8)bn 395.7 392.4 370.0 384.0 453.7 17 18 19 20 21 34.2 32.4 28.8 28.7 31.7 17 18 19 20 21 15.5 17.1 11.4 3.0 17.1 17.1 17.1 17.1 17 18 19 20 21 Ordinary Special 43 38 33 28 21 44 38 34 42 37 1st quartile 2nd quartile 17 18 19 20 21 5.5 (4.6) (4.5) (4.0) (3.8) 17 18 19 20 21 Net management fees increased 18% to £453.7m. Average AUM increased by 25% to £59.7bn while net management revenue margins declined by 3 basis points (bps) to 76bps, both as a result of the full-year impact of the Merian acquisition. In addition, we generated £113.0m of gross performance fees (2020: £73.6m). Why this is important Net management fees are the largest component of our revenue and demonstrate our ability to earn attractive fees by designing and successfully distributing products that deliver value to clients. Underlying EPS increased by 3.0p in 2021 to 31.7p. Although underlying profit before tax increased by 21% to £216.7m, the increase in EPS was diluted by the full-year impact of shares issued as part of the Merian acquisition. Why this is important Measures the overall effectiveness of our business model and drives both our dividend policy and the value generated for shareholders. The total ordinary dividend for the year was unchanged from 2020 at 17.1p, representing a total underlying pay-out ratio of 54%. Why this is important Demonstrates our ability to pay a progressive dividend and return any surplus capital to shareholders, where it is in excess of our needs. Investment performance remained robust in 2021 with 58% of mutual fund AUM outperforming their peer group over a three-year period (2019: 70%), with 37% in the top quartile. The decline from the prior year was due to two funds which marginally moved into the third quartile at the very end of December 2021. Over one year, 80% of AUM outperformed and over five years the figure was 68%. Why this is important Investment performance is the lead indicator for our continued success and demonstrates our competitive advantage in delivering investment excellence for clients. Despite another year of record gross flows of £16.5bn, we saw total net outflows of £3.8bn (2020: net outflows of £4.0bn). Redemptions were primarily from areas where retail client demand was muted, such as UK and European equities, or where there were specific performance concerns. We generated net inflows into key growth areas such as Global Sustainable Equities, NZS Capital’s global equity strategies and a number of recently launched products. Why this is important Net flows are a lagging indicator of investment success, reflecting our ability to deliver investment performance that attracts client funds, and to grow our distribution. OTHER KEY METRICS Assets under management (£bn) £60.5bn 50 43 43 59 61 17 18 19 20 21 Total shareholder return (change in share price plus dividends paid) (%) (2)% 49 (48) 48 (27) (2) 17 18 19 20 21 Surplus capital over regulatory requirements (£m) 1 £117m 91 118 146 111 117 17 18 19 20 21 1. The 2021 surplus capital figure is under IFPR, which came into effect from 1 January 2022. The comparable figure under the previous regulatory regime would be £168m. The 2020 figure has been restated from £112m to £111m to match the final regulatory return. 19 Jupiter Fund Management plc | Annual Report and Accounts 2021 CHIEF FINANCIAL OFFICER’S REVIEW our business. Making these changes was an important step towards ensuring the business is well positioned to pivot to growth. Our resources have also been focused on ensuring we attract, retain and develop talent. At Jupiter, we pride ourselves on diversity and inclusion and our cultural pillars help drive the ability of our people, both individually and collectively, to be able to put our clients first. We have undergone significant change in the past two years and, combined with the disruption of Covid-19, our focus has remained on providing an attractive environment for our people in which they can thrive and deliver value for our clients. This year we introduced our leading flexible working arrangements, which balance the benefits of collective office-based work with added flexibility in remote working options. As we welcomed our people back to the office this year, many for the first time, we launched our new office environment, focused around working collaboratively. As set out in the Chief Executive Officer’s review on page 10, from an investment capability and distribution channel perspective, we have invested resources into areas such as I am pleased to report strong progress in our financial results, which now include a full-year contribution from the acquisition of Merian in 2020. “Our focus remains on delivering long- term growth for clients and shareholders through the strength of our investment capability and targeted investment to realise our potential.” Wayne Mepham Chief Financial Officer 28.7p), as the increase in profitability was partially offset by the impact of higher levels of share capital in 2021 due to the issuance of shares in July 2020 as part of the Merian acquisition. Basic statutory earnings per share increased by 30% to 27.6p (2020: 21.3p). 2021 has been another year of uncertainty and disruption caused by the Covid-19 pandemic. Although we are seeing early signs of a more stable environment, we are not yet in a post- Covid world. Undoubtedly, the experiences of the last two years will result in far-reaching changes – from the type of products our clients wish to invest in, to the flexibility of the working environment we provide for our people. We remain focused on ensuring that Jupiter is agile and that our client-centric approach continues to deliver strong investment performance in products that are relevant to our clients’ changing needs. Against this backdrop, we made significant progress towards delivering on our strategic goals, reinforced our strong foundations and invested in areas that are important for the delivery of long-term growth. Last year, we announced the restructuring of various parts of I am pleased to report strong progress in our financial results for 2021, which included the first full-year contribution from the acquisition of Merian. Despite net outflows, positive investment performance and the impact of Merian resulted in a 25% increase in our average AUM and an 18% increase in management fees. We have also recognised cost savings through reorganising the business, and synergies that are enabling us to invest for growth. We generated significant performance fees this year and there were continued exceptional costs through the Merian acquisition. We have provided additional disclosures to better illustrate the drivers and trends in our financial performance, and address the industry and Jupiter-specific headwinds. These include separate presentation of the contribution from performance fee profits, which are shown over the page. Overall, profit before tax and exceptional items increased 21% to £216.7m (2020: £179.0m). Statutory profit before tax rose 39% to £183.7m (2020: £132.6m) after the deduction of exceptional items of £33.0m (2020: £46.4m). Underlying earnings per share was up 10% at 31.7p (2020: 20 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT sustainability, the institutional channel and our international footprint, building on some of the foundations that we have made in the past. We are already seeing strong signs that these can meaningfully contribute growth for the Group. Nevertheless, in 2021 we continued to be impacted by net outflows in some of our established capabilities and, as a result, we have not yet moved to sustained growth in our net flows. Some of those established capabilities are being impacted by current investor trends. Sustainability has been an area where there has been an acceleration in interest recently. Jupiter has always been highly active in this space, and our policy of active engagement has meant that ESG has been an important part of our investment philosophy. Our focus on sustainability and social matters has developed over this time and we are well placed as investor demand has grown. In 2021, we reaffirmed our commitment to sustainability and concentrated efforts in this area in terms of both our offering and recruitment of talent. At an investment strategy level, we now hold more than £1bn of AUM in sustainable funds, and we saw net flows in the year of around £200m. With SFDR coming into force for EU-domiciled funds, we have launched new sustainability products early in 2022. From a regional perspective, we remain focused on our UK market while also developing clear opportunities for the Group internationally. In the US, we are building on our strategic partnership with NZS Capital and have enhanced our institutional client capabilities in Denver, as well as introducing an office in New York, focused on fixed income analysis. We also see opportunities across other international regions and we are establishing an on-the-ground presence in Australia. Our focus on growing our institutional business requires investment in the short term, with interesting client opportunities already starting to emerge. We continue to make investments in each of these areas as we see the opportunity for them to drive growth in the future. Our 2021 AUM ended the year at £60.5bn, a £1.8bn increase on the prior year despite £3.8bn of net outflows. This is a record level of year-end AUM for Jupiter, driven by strong investment performance. Our AUM, from segregated mandates and a broader institutional client base is largely unchanged over that period but we have a strong pipeline of well-progressed client demand that is expected to deliver growth. Although 2021 has been another challenging year from a net flows perspective, we continue to have strong client demand. We have worked hard towards returning the Group to a net inflow position and see strong signs from our growth areas. Against this backdrop, we delivered good financial results, demonstrating the benefit of the Merian acquisition and again bolstered by exceptional levels of performance fees earned this year. Our focus in 2021 has been on ensuring we are committing capital in the right areas to deliver on our strategic goals. This investment is principally through our income statement, with no current balance sheet demands. We have retained a robust capital position following the implementation of the new Investment Firms Prudential Regime (IFPR) in 2022. We will embed this process and consider additional returns of capital at the end of 2022, in line with our commitment to return capital to shareholders when it is not required in the business. We continue to face headwinds in a number of areas and it is important that we direct our resources to areas that will address these and support long-term growth. 2021 2020 Before exceptional items and net performance fees £m Performance fee profits £m Total £m Before exceptional items and net performance fees £m Performance fee profits 1 £m Total £m Net revenue 1 455.6 113.0 568.6 384.2 63.6 447.8 Fixed staff costs (73.0) – (73.0) (76.1) – (76.1) Variable staff costs (79.1) (60.9) (140.0) (58.1) (27.7) (85.8) Non–compensation costs (125.9) – (125.9) (103.2) – (103.2) Administrative expenses 2 (278.0) (60.9) (338.9) (237.4) (27.7) (265.1) Other (losses) /gains (4.4) – (4.4) 3.3 – 3.3 Amortisation of intangible assets 3 (1.8) – (1.8) (1.9) – (1.9) Operating profit before exceptional items 171.4 52.1 223.5 148.2 35.9 184.1 Finance costs (6.8) – (6.8) (5.1) – (5.1) Profit before taxation and exceptional items 164.6 52.1 216.7 143.1 35.9 179.0 £m Statutory profit before tax 131.6 52.1 183.7 86.7 45.9 132.6 1. 2020 net revenue is stated after £10.0m of revenue classified as exceptional 2. Administrative expenses exclude £14.2m classified as exceptional (2020: £47.0m) 3. Amortisation of intangible assets excludes £18.8m classified as exceptional (2020: £9.4m) 21 Jupiter Fund Management plc | Annual Report and Accounts 2021 CHIEF FINANCIAL OFFICER’S REVIEW continued Assets under management (AUM) AUM increased by 3% to end the year at £60.5bn (2020: £58.7bn). Average AUM was £59.7bn, an increase of 25% on 2020, driven by the inclusion of a full year of AUM acquired through Merian on 1 July 2020. We maintained gross flows at record levels of £16.5bn, but a combination of continued consumer preference for growth strategies and muted demand for equities, particularly in the UK and continental Europe, resulted in these flows being more than offset by redemptions, with total net outflows in the year of £3.8bn (2020: net outflows of £4.0bn). However, strong investment performance in rising markets enabled the Group and investors to benefit from market returns in excess of these flows at £5.6bn. Client redemptions predominantly came from those strategies which are in areas of weaker client demand. These included UK equities, which saw £1.6bn of net outflows, and European Growth, which saw £0.9bn of net outflows. The Merlin range continued to see outflows of £0.6bn and the Systematic range saw £1.3bn of net redemptions, predominantly from the North American fund. More positively, a number of our recently launched products have continued to grow and generate net inflows. Global Sustainable Equities has seen net inflows of £0.2bn and we have launched a Luxembourg-domiciled SICAV vehicle to make the strategy available to a wider range of clients. We now have over £1bn across our sustainability-labelled product ranges. Our partnership with NZS Capital continues to generate strong growth, with the global equity strategy generating over £0.3bn of net inflows this year with gross AUM of over £1bn. The Chrysalis Investment Trust grew to £1.4bn of AUM, following capital raises in March and December 2021 and strong investment performance. Elsewhere, the Gold & Silver fund generated almost £0.3bn of net inflows and the Strategic Absolute Return Bond saw clients invest net new business of over £130m. Net revenue Financial markets generally improved in the year, but demand for financial investments was spread unevenly between products, with investors understandably favouring defensive stocks and safe harbours for their savings. Revenue in the year was £617.8m (2020: £500.5m), with net revenues of £568.6m (2020: £457.8m), of which performance fees contributed £113.0m (2020: £73.6m). Net revenue (£m) 2021 2020 Net management fees 453.7 384.0 Net initial charges 1.9 0.2 Performance fees 1 113.0 73.6 Net revenue 568.6 457.8 Reclassified revenue – (10.0) Adjusted net revenue 568.6 447.8 Revenue 617.8 500.5 1. Includes performance fees of £10.0m in 2020 that have been used to reduce an exceptional cost (see APMs on pages 181 to 183) Net revenue increased by £110.8m to £568.6m. The majority of the increase in net revenue came through net management fees, which increased by £69.7m to £453.7m. This was driven by higher average AUM, which increased by £11.9bn to £59.7bn, reflecting a full year of AUM acquired through Merian along with the net increase in AUM in 2021 set out above. The impact of this increase in average AUM was partially offset by lower net management fee margins. Our average net management fee margin reduced from 79bps in 2020 to 76bps for 2021. This reduction was largely due to the full-year impact of the acquisition of the lower-margin Merian business, as well as other changes in business mix towards products and client mandates earning lower fee rates. In 2021 we earned substantial gross performance fees, increasing from £73.6m in 2020 to £113.0m. We have the potential to generate performance fees from nine funds, along with a number of segregated mandates. In 2020, performance fees were principally earned from four fund mandates as well as one segregated account. In 2021, these performance fees were mainly generated through the Chrysalis Investment Trust, along with a number of small fees from other funds. The Chrysalis performance fee reflects the strong investment performance generated in the financial results to 30 September 2021. Following the receipt of this performance fee, we have agreed to discuss potential fee structures for this investment trust which are expected to be announced later in 2022. Movement in AUM by product (£bn) 31 Dec 2020 Net flows Market returns 31 Dec 2021 Mutual funds 49.9 (3.1) 4.1 50.9 Segregated mandates 7.9 (0.8) 1.3 8.4 Investment trusts 0.9 0.1 0.2 1.2 58.7 (3.8) 5.6 60.5 22 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT Administrative expenses Despite some headwinds during the year, we remained focused on cost control, alongside targeted investment. We implemented changes to our operating model, restructuring to position resources in areas of growth. This resulted in some changes in how we operate and allocate resources, unfortunately including some redundancies within the Group. We also concentrated on ensuring we have an attractive incentive package and a balanced allocation between fixed and variable pay. As the variability of the significant performance fees we earned in 2020 and 2021 can distort the underlying trend, we have reported these separately in the tables that follow. We have maintained our focus on managing the efficiency of our operating model, undertaking a project during the year to streamline our service providers following the increase in suppliers that came with the Merian acquisition. Going forward, investment for growth and operational agility will continue to be at the centre of our approach to cost management, as well as ensuring we attract and retain talented people and have a robust control environment. In 2021, as in the previous year, we have separately presented certain items as exceptional. These principally comprise costs relating to the Merian acquisition that are required to be spread over multiple years and which are therefore a continuation of certain exceptional items we disclosed last year. In 2021, such costs comprise amortisation of intangible assets and accounting charges relating to the timing of expense recognition for deferred compensation awards linked to the acquisition and the restructuring referred to above. Costs by category (£m) 2021 2020 Fixed staff costs 1 73.0 76.1 Variable staff costs before performance fee-related costs 1 79.1 58.1 Other expenses 1 125.9 103.2 Administrative expenses before performance fee-related costs 1 278.0 237.4 Performance fee related variable staff costs 60.9 27.7 Administrative expenses 1 338.9 265.1 Exceptional items 14.2 47.0 Administrative expenses 353.1 312.1 Total compensation ratio before performance fees 1 33% 35% Total compensation ratio 1 37% 35% Operating margin before performance fees 1 38% 39% Operating margin 1 39% 41% 1. Stated before exceptional items (see APMs on pages 181 to 183). Before performance fee-related variable staff costs and exceptional items, administrative expenses were £278.0m (2020: £237.4m), 17% higher than in 2020. A significant part of this increase relates to the first full year of costs relating to the Merian business, which we acquired on 1 July 2020. We have delivered savings through integration and restructuring and have used these savings to make investments in areas where we see the potential for growth. We continue to pursue a disciplined approach to cost management which enables us to allocate resources effectively whilst managing ongoing cost headwinds. Fixed staff costs before exceptional items decreased by £3.1m as a result of restructuring programmes to remove duplicated roles after the Merian acquisition, and to reposition the Group by concentrating investment in areas of growth. We ended the year with 579 heads operating in the business, and a further six heads within our strategic partnership with NZS Capital. Average headcount for the Group in 2021 decreased from 593 to 584. In 2021 we continued to support the Investment20/20 programme, increasing our cohort to 17 heads. Following our focused review of strategic priorities, we targeted headcount increases into areas of growth, notably in sustainability, institutional and our international business. This has increased our costs in 2021, as we reinvested the savings identified above. Targeted headcount increases, and ensuring our reward packages are competitive and support the retention of existing talent, have resulted in some variable staff cost increases. The proportion of fixed to variable compensation has moved back to our historic trend of a greater weighting towards annual performance-related awards. Variable staff costs (£m) 2021 2020 Variable staff costs before performance fee related costs and exceptional items 1 79.1 58.1 Performance fee related variable staff costs 60.9 27.7 Variable staff cost before exceptional items 140.0 85.8 Exceptional items 7.7 4.1 Variable staff costs 147.7 89.9 1. Stated before exceptional items and performance fee pay-aways (see APMs on pages 181 to 183). 23 Jupiter Fund Management plc | Annual Report and Accounts 2021 CHIEF FINANCIAL OFFICER’S REVIEW continued Variable staff costs before performance fee-related costs and exceptional items increased from £58.1m to £79.1m. The increase was mainly due to a full-year of costs relating to the investment teams that joined us with the Merian acquisition. In addition, variable staff costs have increased as we align employees’ variable compensation with the financial performance of the Group, which we assess before performance fees and variable staff costs. A proportion of our variable compensation comprises deferred bonuses in the form of share-based and fund-linked awards. The accounting charge for fund-linked awards is linked to the fair value of the relevant funds. We hedge such movements in the value of these awards by purchasing units or shares in the underlying funds, although accounting timing mismatches occur between the recognition of gains or losses on the units or shares and the recognition of the corresponding gain or loss on the deferred variable compensation awards. In 2021, this mismatch, which resulted in a net increase in costs, arose principally on performance fee-related awards. Other factors driving the increase in the Group’s variable compensation were movements in Jupiter’s share price and the UK Government’s decision to increase the UK rate of national insurance contributions by 1.25% from April 2022, the net result of which was to increase social security costs on deferred awards. The performance fee-related variable staff costs include both cash and deferred elements. The charges for the deferred elements are required to be spread over a number of accounting years. We expect that charges arising from the 2020 and 2021 performance fee earnings will continue to be recognised until 2025. The Group’s total compensation ratio before performance fees and exceptional items decreased from 35% to 33%, reflecting the efficiency savings arising as a result of the completion of the Merian integration, partially offset by cost headwinds and investment expenditure. The Group’s total compensation ratio increased from 35% to 37%. This reflected both the deferred costs of prior year performance fees and the current year costs of performance fees earned in 2021. Charges for deferred variable staff costs are required to be spread over the relevant vesting period. Other expenses have increased due to a full year of Merian costs, but also include certain one-off costs relating to foreign exchange and historic tax-related charges. Other factors contributing towards the increase in costs included administrative costs largely linked to AUM levels and expenditure on specific investments in data, research and marketing, as we target areas that are expected to deliver long-term growth. The Group’s operating margin decreased from 41% to 39%. The 2020 operating margin benefited from the impact of performance fees and the requirement to charge deferred bonus awards over the vesting period, with no brought-forward charges. In 2021, the operating margin has been impacted by brought-forward charges, along with different cost tiering structures for the current-year performance fees. The operating margin excluding performance fee profits decreased by one percentage point from 39% to 38%. This is largely driven by gains on financial instruments in 2020 compared with losses in 2021, which are explained further below. Exceptional items Exceptional items are items of income or expenditure that are significant in size and which are not expected to repeat over the short to medium term. Such items have been separately presented to enable a better understanding of the Group’s financial performance. Where appropriate, such items may be recognised over multiple accounting periods. In 2021, exceptional items were £33.0m (2020: £46.4m) and were mainly accounting charges arising from the acquisition of Merian that, due to their nature, are required to be spread over more than one financial year. The charges in 2020 were primarily acquisition-related, including transaction and integration costs and certain other costs. 2021 £m 2020 £m Acquisition-related Transaction costs – 12.7 Integration and related costs – 26.6 – 39.3 Amortisation of acquired intangible assets 18.8 9.4 Deferred compensation costs related to the acquisition 7.7 3.7 Performance fees attributed to the seller’s obligation – (10.0) Total acquisition- related 26.5 42.4 Non-acquisition related Redundancy programme and other compensation costs 6.5 4.0 Exceptional items 33.0 46.4 The acquired intangible asset of £75.0m relating to the Merian acquisition in 2020 is being amortised over four years. An annualised charge of £18.8m (2020: £9.4m) is therefore expected to be recognised until June 2024. 24 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT The Group incurred acquisition costs in the form of deferred earn out awards to certain former Merian shareholders. These are required to be treated as compensation costs as they include employment criteria and are charged over a three-year period. Vesting of these awards is contingent on meeting certain performance conditions on 1 July 2023. Across both 2020 and 2021, the Group incurred redundancy and other compensation costs, recognising costs of £6.5m (2020: £4.0m) as part of a targeted post-integration restructuring programme, reviewing the structures, systems and processes of the Group. Following the completion of this programme, no further redundancy costs are expected to be reported as exceptional costs in the foreseeable future. Other income statement movements Other losses of £4.4m (2020: gains of £3.3m) principally comprised losses of £2.9m (2020: loss of £0.4m) on seed investments, net of hedges, and including dividend income, and a £1.5m loss (2020: £3.7m gain) on a forward contract taken out to hedge share-based compensation awards to staff. Seed investments are hedged for market beta risk, usually by taking a short position on a fund’s benchmark, where it is possible to do so, and foreign exchange risk through the purchase of forward currency contracts. Gains and losses therefore generally arise from under or overperformance against a fund’s benchmark, as well as the costs relating to the beta hedge. In 2021 we recognised gains after hedging and related costs across the majority of our seed portfolio, offset principally by losses from a single fund. Finance costs Finance costs of £6.8m (2020: £5.1m) have increased principally as a result of the recognition of a full year of interest charge on the £50m subordinated debt issued in April 2020. Profit before tax (PBT) Statutory PBT for the year increased by 39% to £183.7m (2020: £132.6m) mainly as a result of higher levels of management and performance fee income, partially offset by a higher cost base relating to performance fees, a full year’s worth of post-Merian costs and net cost increases in other areas, principally focused on areas of growth. Excluding exceptional items and net performance fees, PBT increased by 15% to £164.6m (2020: £143.1m). Tax expense The effective tax rate for 2021 was 18.6% (2020: 20.6%), marginally below the headline UK corporation tax rate of 19.0% (2020: 19.0%). The difference is due to net tax credits relating to future tax deductions on deferred compensation and additional tax credits available in respect of prior year tax submissions. Our published tax strategy is available from our website at www.jupiteram.com. Earnings per share (EPS) The Group’s basic and diluted statutory EPS measures were 27.6p and 26.9p respectively in 2021, compared with 21.3p and 20.8p in 2020. Underlying EPS, defined as underlying profit after tax divided by the weighted average number of shares in issue (see page 144), was up 3.0p at 31.7p (2020: 28.7p). Excluding performance fees, underlying EPS was up 1.2p at 24.1p (2020: 22.9p). 2021 2020 Statutory profit before tax 183.7 132.6 Exceptional items 33.0 46.4 Performance fee profits 1 (52.1) (35.9) Underlying profit before tax before performance fee profits 164.6 143.1 Tax at average statutory rate of 19% (31.3) (27.2) Underlying profit after tax before performance fee profits 133.3 115.9 Statutory profit before tax 183.7 132.6 Exceptional items 33.0 46.4 Underlying profit before tax 216.7 179.0 Tax at average statutory rate of 19% (41.2) (34.0) Underlying profit after tax 175.5 145.0 Weighted average issued share capital 553.1 505.4 Underlying EPS before net performance fees 24.1p 22.9p Underlying EPS 31.7p 28.7p Basic EPS 2 27.6p 21.3p 1. Excludes £10m of performance fees classified as exceptional items. 2. See Note 9 to the accounts. Cash flow The Group generated positive operating cash flows after tax in 2021 of £188.9m (2020: £104.6m), representing 126% (2020: 99%) of statutory profit after tax. Net outflows from investing activities of £12.0m (2020: inflows of £63.9m) principally constituted net investment into seed capital. Outflows from financing activities of £167.7m (2020: £159.8m) included dividend payments of £109.8m made to shareholders and £48.5m of shares purchased by the Employee Benefit Trust (EBT) to hedge deferred compensation awards to employees in the form of Jupiter shares. The net increase in cash in the period was £9.2m (2020: £8.7m increase). Assets and liabilities The Group’s cash position at the year-end date was £197.3m (31 December 2020: £188.1m), as net cash receipts from trading profits were offset by dividend payments to shareholders and payments to the EBT. Payment of the performance fees earned in the year was made in 2022, with 54% of the Chrysalis performance fees received in Chrysalis shares to match the deferred bonus awards and related employment taxes. The Group’s issued debt of £50m is repayable in July 2030 or, at the Group’s option, from April 2025. The revolving credit facility of £80m provides additional access to liquidity. The three-year facility, which expires in April 2023, was not drawn in the year. Underlying profit before tax £216.7m 2020: £179.0m Underlying earnings per share 31.7p 2020: 28.7p 25 Jupiter Fund Management plc | Annual Report and Accounts 2021 CHIEF FINANCIAL OFFICER’S REVIEW continued Seed investments We deploy seed capital into funds to support their growth, to ensure an effective launch and to accelerate the process of raising assets over critical size thresholds. As at 31 December 2021, we had a total investment in Jupiter funds of £142.3m (31 December 2020: £138.3m) at fair value. Capital management The Group remains profitable. Statutory profits after tax were partially offset by distributions made to shareholders, in line with our dividend policy. Funding of the EBT, net of credits relating to share-based payments, and tax movements in reserves reduced reserves by £22.7m in the year. The net movement in total shareholders’ equity was an increase of £14.7m to £900.8m. The parent company of the Group, Jupiter Fund Management plc, has distributable profits of £184.9m (2020: £221.3m). The payment of dividends by the Group is limited by its regulatory capital and liquidity requirements. The Group seeks to maintain a balance between providing returns to shareholders and maintaining sufficient capital and cash reserves to support its business activities. As well as providing sufficient liquidity to be able to meet all its liabilities as they fall due, the Group’s working capital provides funding for seed investments to support both new and existing fund products and strategies. Dividends and returns of capital Jupiter has a progressive ordinary dividend policy and our intention is for the ordinary dividend pay-out ratio to be 50% of underlying EPS across the cycle. In the event that current year profits are lower than in previous years, the Group maintains the ordinary dividend at the previous high-water mark pence per share level. The Board normally makes additional returns of capital to shareholders after retaining sufficient earnings for capital and growth. These additional returns of capital have previously been made through a special dividend. The Board considers the dividend on a total basis, taking into account our resilient balance sheet and long-term approach to running the business. The Board’s intention is to use profits and cash flow to pay ordinary dividends, to retain sufficient capital to maintain a strong balance sheet and meet regulatory requirements, and to return excess cash to shareholders according to market conditions at the time. The Board proposes an unchanged full-year ordinary dividend for the year of 9.2p per share. This results in a total ordinary dividend for the year of 17.1p, the same as 2020, representing an ordinary dividend underlying pay-out ratio of 54% of underlying earnings. The Jupiter Board’s priority continues to be to maintain its capital strength, including a robust surplus over regulatory capital requirements and it remains committed to returning surplus regulatory capital in excess of needs to shareholders, aligned to the Group’s capital allocation framework. As we continue to strategically invest in organic growth of the business, the Group’s strategic requirements for capital are more limited. We have committed to considering additional returns of capital for the year ending 31 December 2022. Our assessment of capital needs will take account of the end of the transition period under IFPR and the introduction of the new Internal Capital Adequacy and Risk Assessment regime (ICARA). We expect that our additional returns of capital to shareholders will, in the future, be through a share buyback programme, rather than as special dividends. As in 2020, to promote accountability to our shareholders, the Board has proposed the full-year dividend as a final dividend and seeks approval for this payment at the AGM on 11 May 2022. Liquidity The Group’s liquidity comprises cash available for use in the business, supported by an undrawn RCF of up to £80m. The Group maintains a consistent liquidity management model, with liquidity requirements monitored carefully against the existing and longer-term obligations of the Group. Statement of viability In accordance with provision 31 of the 2020 Corporate Governance Code, the Directors have assessed the prospects of the Group over a longer period than the 12 months required by the Going Concern provision. The Directors confirm that they have a reasonable expectation that the Group will continue to operate and meet its liabilities, as they fall due, at least until 31 December 2024. The Board’s viability assessment is based on information known today and with reference to the Group’s current position and strategy, the Board’s risk appetite, the Group’s financial plans and forecasts, and the Group’s principal risks and how these are managed, as detailed in the Strategic report. 26 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT The Group defines its long-term strategic planning objectives over five years and this is underpinned by a rolling five-year financial plan, the first year of which is the current year budget. The further into the future the planning horizon is, the greater the level of uncertainty in the financial projections. Therefore, the Group uses a three-year period in assessing viability in order to be consistent with the minimum period used in the Group’s Internal Capital Adequacy Assessment Process (ICAAP) and financial projections, and because it has a sharper focus than the full five-year rolling financial planning horizon. The rolling financial plan incorporates both the Group’s strategy and principal risks and is reviewed by the Board at least annually when the budget for the following year is approved. In exceptional circumstances, the Board reviews and approves structural changes to the budget intra-year. These formal approval processes are underpinned by regular Executive Committee and Board discussions of strategy and risks, in the normal course of business. Details of the principal risks faced by the Group, and the strategies in place to mitigate exposure to them can be found in Our Approach to Risk Management, beginning on page 60. Throughout the year the Board assesses progress by reviewing forecasts compared to the budget and longer-term projections compared to the financial plan. The current year forecast and longer-term financial projections are regularly updated as appropriate and consider the Group’s profitability, cash flows, dividend payments, share purchases, seed investments and other key internal and external variables. Scenario analysis is also performed as part of both the Group’s financial planning process and within the Group’s ICAAP, which is approved by the Board. These scenarios evaluate the potential impact of severe but plausible occurrences, which reflect the Group’s risk profile and identify and model appropriate and realistic management actions that could be taken to mitigate the impact of the scenarios on capital and liquidity. In the most recent ICAAP, approved by the Board in July 2021, scenarios included: • sustained market downturn, combined with an operational risk event and a significant loss in the seed portfolio; • the failure of internal policies, leading to a regulatory breach; and • a discrimination tribunal and dismissal of a key fund manager. Primary management actions to relieve stresses on the Group’s ability to operate during these scenarios are reductions in variable compensation costs, reducing returns to shareholders, and disposal, where possible, of seed investments to provide additional liquidity. The Group also considers the correlation between different levels of AUM and profitability, modelling the impact of and sensitivity to market movements which directly affect the value of AUM and therefore the Group’s revenues. We believe that the statement of viability continues to reflect our internal financial planning, budgeting, forecasting, review and challenge processes which assess profitability, as well as those through which we assess risk exposures arising from the implementation of the Group’s operational strategy. The Strategic report found on pages 1-67 has been duly approved by the Board and signed on its behalf by: Wayne Mepham Chief Financial Officer 24 February 2022 27 Jupiter Fund Management plc | Annual Report and Accounts 2021 FOCUSED At Jupiter, our clients are our focus and our priority. As a company, we exist to help our clients achieve their long-term investment objectives and to act as responsible stewards of their money. This fundamental purpose is embedded within our culture and is the basis of all our decisions. As a specialist, high-conviction, truly active asset manager, we don’t follow trends, or go with the crowd. We believe that our clients are best served by dedicated investment specialists who take a focused approach to investment. Since the Group was founded in 1985, investors have looked to Jupiter for actively-managed, high- conviction portfolios in differentiated, specialist strategies, and this is an approach which we continue to stick to today. Strength in conviction Conviction is at the heart of our investment culture. We have no house view when it comes to investing. Instead, we allow our talented fund managers the freedom and autonomy to form their own opinions and follow their convictions – always supported by a dedicated central CIO office. AUM and cumulative net flows from strategies launched since 2018 (£bn) “As a high-conviction, truly active asset manager, we have a unique opportunity to effect change by engaging with and influencing the companies in which we invest, encouraging them to adopt more sustainable business practices.” STRATEGIC REPORT £3.6bn AUM from strategies launched since 2018 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 0.0 0.5 1.0 1.5 2.0 2.5 FY18 FY19 FY20 FY21 2018 2019 2020 2021 Cumulative net flows Strategies launched in: 7 3 7 4 AUM (£bn) Number of newly launched vehicles Cumulative net flows (£bn) 28 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT CONVICTION “Taking an agile approach to investing, our talented fund management team is able to adapt to new environments quickly while never losing sight of the long-term drivers of performance and the importance of good stewardship.” We apply this same focused approach to the range of investment solutions on offer to our clients. At Jupiter we keep all of our products under constant review to ensure that the whole range is suitable and attractive to our clients at all times. There are a number of reasons why products might not be successful, including changing market appetite. Where this is the case, we take action. When we look to grow our product range, our focus is on selectively and strategically adding strength in key target strategies. Rather than looking to provide blanket coverage across all asset classes, we focus only on those areas in which we believe we can deliver real value for our clients. Focus in a changing world Focusing on our strengths does not mean standing still while the world around us changes. Climate change, and society’s response to it, means that investors are increasingly focused on how the companies in which they invest are positioned for a changing world. At Jupiter we believe that the future, and our clients, are better served by sustainable companies with strong environmental credentials. As a high-conviction, active asset manager, we have a unique opportunity to effect change by engaging with and influencing the companies in which we invest. This is true not just of the funds within our sustainability suite, but across our entire fund range. Over the course of 2021 we added meaningful strength to our ESG capabilities, both within our dedicated sustainable funds, and across our fund management team, adding ESG expertise into the heart of a number of our key strategies. We will continue to invest behind this success through 2022. Our fund manager-led approach to stewardship differs by strategy and asset class, but it is always centred on improving client outcomes. We believe that conviction in our ideas, a focus on our strengths and a thorough grounding in our role and responsibility to the world around us will result in sustainable, long-term gains for all of our stakeholders. More on our approach to sustainability can be found on page 40. DECISIONS THAT SPARK LONG-TERM OPPORTUNITIES SHOW THE VALUE OF ACTIVE MINDS 29 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC AND OPERATING REVIEW: INVESTMENT MANAGEMENT We have a diverse product range, covering both developed and emerging market equities, fixed income, multi-asset and alternatives strategies. However, we remain focused on specialist strategies where we believe we can deliver high-quality, sustainable performance to our clients, and differentiate ourselves from our peers. We do not have a house view, but rather empower our fund managers with a high degree of autonomy to follow their convictions. We pride ourselves on this approach and our culture which puts clients first and allows our talented fund managers the freedom and responsibility to pursue their own, clearly defined investment approach and philosophy. Following the acquisition of Merian last year, which significantly improved the depth of our investment expertise, we have been delighted this year to welcome our new colleagues back to the office. We have worked hard on reinforcing that strong culture after more than 18 months of remote working. Throughout the year, we have maintained our focus on sustainable investing, with new resource across the investment team and the launches of new SFDR Article 8 - and 9-compliant products. We continue to evolve our market-leading fixed income capabilities and have again invested in our data insights capabilities. A focus on sustainability and active engagement We believe that better run companies perform better. As an active manager that takes high-conviction positions in our investee companies, we believe that we have a key role to play in engaging with these companies and driving better, sustainable outcomes for our clients. To this end, all of our fund managers are required to embed ESG risks and considerations into their investment processes, helping our investee companies improve their ESG practices. We also have a range of products dedicated to investing in those companies leading the transition to a more sustainable economy. We have invested additional sustainability- focused resource across the group this year. As well as adding new headcount within the stewardship team, we have also put a number of ESG investment directors in place, who will drive the sustainability agenda across their product ranges. Early in 2021, we made a number of senior appointments within our sustainability team, ensuring that we had the correct suite of products to continue to offer clients a range of differentiated investment options with a shared goal of generating attractive returns through long-term sustainable investing. Through this team restructuring, Abbie Llewellyn- Waters became Head of Sustainable Investing, leading the firm’s sustainable investing capability. Concurrently, Rhys Petheram took on a new role as Head of Environmental Solutions, analysing and investing in companies that are focused on providing solutions to sustainability challenges across key environmental themes. More details on our stewardship activities and approach to sustainable investing can be found on page 40. Top 10 largest funds by AUM AUM (£bn) 3-year quartile ranking Dynamic Bond 8.4 1 European 4.6 2 Strategic Bond 4.4 3 UK Mid Cap 3.3 1 Merlin Income 2.1 1 UK Special Situations 2.0 4 Merlin Balanced 2.0 3 Merlin Growth 1.8 2 North American Equity 1.8 3 Income Trust 1.4 4 Broad fixed income capabilities We have continued to invest in our strong fixed income capabilities this year. We have significantly diversified this area over recent years and have a broad depth of investment expertise. We manage around £15bn of our clients’ AUM, across 12 strategies run by more than 30 investment professionals – ensuring that we have the right products for our clients regardless of the market or inflationary environment. Through 2021, we have deepened our investment expertise with the addition of credit analysts based in our newly-opened office in New York. We have reinforced the rapidly growing Strategic Absolute Return Bond fund team and repositioned our Emerging Market Debt range. We have also broadened our product range with new ESG-focused funds. Global Ecology Bond is an Article 9-compliant product from our environmental solutions team and Dynamic Bond ESG is an Article 8-compliant version of our flagship global unconstrained fixed income strategy. Both of these were launched in early 2022. At Jupiter, our clients are at the centre of everything we do. We are committed to managing truly active portfolios, taking high-conviction positions in the companies in which we invest, actively engaging with them to create better, more sustainable outcomes for our clients. 30 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT ACTIVE PERFORMANCE DRIVEN BY DATA INSIGHTS We have continued to invest this year in our data science capabilities. The function was founded in late 2018 as a team of one. The team has grown to 11 data scientists and engineers, with more key hires to be made in 2022. The team’s purpose remains unchanged – to integrate data science across the organisation and to provide data-driven insights to our investment professionals, which help them make better decisions for our clients’ benefit. The team does not manage money itself, but provides analysis and insights from often complex and large datasets, which our fund managers would otherwise not have access to. The additional datasets we have invested in this year include those on brand favourability, internet activity and employee feedback. The previous year saw the launch of the ESG Hub, an internal proprietary platform that gathers, cleanses and presents ESG data from both third-party providers and in-house holdings data. We have continued to invest in developing the platform this year, incorporating third-party carbon data and expanding our coverage to include fixed income holdings. The team have broadened their reach this year, working in collaboration with our investment teams. As we have expanded our capabilities, the team has been able to provide analysis and signals to our fund managers, whether to answer an individual stock question or across a wide sector or theme, often many months before it features in external research. DATA-DRIVEN INSIGHTS 58% Mutual fund outperformance 2020: 70% 14 funds with over £1bn in AUM 2020: 13 Link to core objectives: 1 3 4 > For more information see page 17 Link to principal risks: 1 2 > For more information see page 60 Focused on investment excellence As an active asset manager, our key priority is delivering high quality investment performance for our clients. Through 2021, we have again delivered strong performance. At 31 December 2021, 58% of our mutual fund AUM across the group delivered above median performance over three years (2020: 70%), with 37% achieving top-quartile performance. The decline from the prior year was due to very short-term performance declines in two funds in December 2021. Performance over other time periods remained strong, with 80% delivering above median performance over one year and 68% over five years. The table to the left shows the three-year investment performance of our ten largest funds. Our assets are more diversified across our product range than last year. We now have 14 funds with over £1bn of our clients’ AUM, up from 13 a year ago. 31 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC AND OPERATING REVIEW: PRODUCT AND DISTRIBUTION Broader expertise in the institutional channel Expanding our reach within the institutional channel remains a key focus for us and a significant opportunity for growth. Currently, 8% of our AUM are through the institutional channel, but we have targeted growing this to 20% in the medium term. A more direct client relationship, and typically greater longevity, means that we can build deeper relationships with our institutional clients and provide exceptional quality of client service. This is increasingly expected by all of our clients and seen as a differentiator, in addition to investment performance. Through 2021 we have continued to invest in this area. We have committed new resource, including new senior hires in the UK and Asia and a growing presence in the US. As we move into 2022, additional investment will take place including in the consultant database and RFP teams and hires in continental Europe. A number of our key products are ideally placed for institutional markets around the world, such as Global Sustainable Equities, unconstrained global fixed income and NZS Capital’s global equity strategies. While not a guarantee of future flows, gaining ‘buy’ recommendations from global consultants is often viewed as a key precursor. This year, we have greatly increased our standing amongst global consultants and we now have 15 ‘buy’ ratings across nine strategies, more than half of which were gained this year. A wider global footprint In 2020, the acquisition of Merian allowed us to consolidate and strengthen our leading position within our home market of UK retail. This year we were able to expand our outlook and focus specific investment into our overseas businesses. Our initial focus has been on the US, having opened our first presence in Denver in 2020, both supporting the NZS team and initiated our move into the US institutional market. Through this year, we have grown that resource with a greater distribution presence and a carefully selected product designed to appeal to the US institutional market. We have also established an investment office in New York with three credit analysts. The US market, with half of the world’s investible assets, remains a material opportunity for Jupiter and one in which we continue to invest. We are extending our global reach to the Australian market and are actively engaged in discussions on investment solutions we can offer to Australian-based institutional clients. The Australian market is one that is dominated by the institutional channel and, much like the US, one which is likely to favour our Global equity capabilities, such as Global Sustainable Equities and NZS Capital. We are also developing our relationship with Ping An in China, which we inherited through Merian. In 2021, Ping An took over management of our China Equity product and we are working with them to develop this relationship further through 2022. Overall, more than £17bn of our AUM is from clients based overseas, a near 70% increase since 2018. A high-conviction, genuinely active product range As a high-conviction asset manager, we focus our resources on the areas in which we believe we can help our clients achieve their financial goals. This client-led approach naturally leads us to a carefully designed product line-up focusing on our areas of specialist capabilities, with no desire to achieve ‘waterfront’ coverage. Over recent years, we have continued the process of rationalising our product range, to ensure we have the right products in the right jurisdictions. Over the last three years, we have closed some 18 products, resulting in a more focused, targeted product range. We will, however, always continue to evolve our product range, including with significant investment in new strategies through seed capital. Where we have launched new products, these have predominantly been ESG-focused, such as the Article 8-compliant Dynamic Bond ESG and the Article 9-compliant Global Ecology Bond, which have expanded our sustainability range into fixed income. Both of these products were launched in January 2022. We have also launched new vehicles in existing strategies, such as a Luxembourg-domiciled SICAV for Global Sustainable Equities and both Luxembourg and Delaware LP vehicles for NZS Capital’s global equity strategies. A focus on sustainability Jupiter has a long history of delivering investment performance for our clients through responsible investing. Our approach is based on active engagement with the companies in which we invest, something which we believe is best achieved on an active basis. More detail on our approach to stewardship and sustainable investing can be found on page 40. Throughout 2021, we have continued to invest for growth in the business. While delivering exemplary service to our existing clients, we have explored new opportunities, whether through sustainability-focused products, the institutional channel or a broader footprint overseas. £17.5bn assets from clients based outside the UK 12 products accredited as SFDR Article 8 or 9 £5.1bn client assets through the institutional channel 32 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT Throughout this year, we have continued to invest in this area, with additional resource added in key positions and new product and vehicle launches. We have restructured our sustainable investing and environmental solutions teams to better align our offering with client demand, more details on which can be found from page 40. A key industry focus this year has been on the approach to the classifying of European- domiciled funds under the SFDR. Our approach has been defined by listening to our clients’ preferences and their desire for authenticity. More details on our authenticity focused approach to SFDR are on page 49. We do not plan to change the investment objectives or limit the investment universe for any products in which our clients are invested. However, we appreciate that a number of clients will prefer to invest in Article 8- or 9-compliant funds. Therefore, in a select number of cases, we will look to launch Article 8 or 9 versions of existing strategies, that are designed to invest within those stricter criteria. As set out above, we have already launched the Article 8-compliant Dynamic Bond ESG and the Article 9-compliant Global Ecology Bond fund. Delivering value for money We remain committed to delivering value for money for our clients. This year, we published our second annual Assessment of Value report for our UK fund range. In this year’s report, 84% of our funds’ unit classes received a positive rating of either 4 stars (“has consistently delivered strong value”) or 3 stars (“has delivered value”). This is a material improvement on last year’s 70%, reflecting improved investment performance and the introduction of lower priced unit classes for some investors. For those funds which received a lower rating this year, we have been clear about the steps we have taken, or are taking, to improve the value we deliver. Producing the report once again allowed us to demonstrate to our investors that real client value derives from a host of different elements. We look forward to repeating this process in coming years, with a view to continually improving the value we deliver to our investors across the board. After more than a year away from meeting our clients face-to- face, we were delighted to once again be able to do so in the second half of this year. We held a number of safe, Covid-secure events as local measures allowed, including our successful London-based investment conference. Our distribution and fund management teams have also been back on the road in the second half of this year, and our ‘Meet the Manager’ roadshows connected with over 225 clients. RECONNECTING WITH OUR CLIENTS “The presenters were all excellent and the amount and relevance of the subject matter the best I’ve heard for some while.” Jupiter client “Excellent presentations. Great to be back at a live event.” Jupiter client “Insightful, informative and interesting.” Jupiter client Link to core objectives: 2 3 4 > For more information see page 17 Link to principal risks: 1 2 6 > For more information see page 60 33 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT DIVERSE Since we began, we have shaped our investment identity around a core belief that we can make a difference for clients by giving talented professionals freedom to pursue their own investment styles, in a collaborative and supportive environment. This diversity of thought means clients have access to a broad range of views on companies, markets and the global economy that inform the investment processes of our fund managers. It also delivers a diverse product range, giving clients access to different investment styles within the same strategy, and the option to select a fund that suits their risk appetite and investment objectives. At Jupiter we do not impose a house view on our managers, precisely because we know independent thinking delivers diverse perspectives that ultimately lead to the best outcomes for our clients. We balance this freedom with a strong team culture, where our managers can challenge each other and share ideas and information. They remain individually accountable for their performance, and subject to rigorous internal and external oversight. When we look to bring in talent, we believe that businesses with a diverse workforce and an inclusive culture are stronger and more sustainable. We know that the best people for our business do not all have the same backgrounds or look or sound the same, and that bringing in people with different ways of thinking is particularly important. Jupiter considers diversity and inclusion company-wide, by region, by function and by team, as well as at varying levels of seniority. We also take part in Investment20/20, an initiative started by our CEO Andrew Formica and Chairman Nichola Pease to bring more diverse talent into all aspects of investment management. In 2021, we chose to nearly triple the number of entry-level opportunities available for school leavers and graduates, recognising the last 12 months have been more challenging for young talent to gain work experience and get a start in their chosen career, as well as the value that this brings to Jupiter. Diversity goes hand in hand with inclusion, and Andrew Formica has led from the front in his passionate support to open up the investment industry to a wider pool of talent. In 2021, Andrew signed up to a reverse mentoring programme set up by Investment20/20 and #TalkaboutBlack. The organisation, which works under the umbrella of the Diversity Project, aims to create “a pipeline To mark Pride month, our Jupiter Pride Network joined together to recite a powerful poem, written by Kalaavathy, a gifted LGBT poet, inspired by Maya Angelou’s “Still, I rise”. Visit our website to view the video: www.jupiteram.com/jupiter-pride- month/ “Independent thinking delivers diverse perspectives that ultimately lead to better outcomes for our clients.” Matthew Beesley Chief Investment Officer “Having a truly diverse workforce leads to much greater and richer outcomes.” Andrew Formica, Chief Executive Officer Claire Mediene, Co-Chair, Jupiter Pride Network “It’s been a banner year for the Jupiter Pride Network! In June, we were overwhelmed by the warm response received on social media and from colleagues to a video we recorded for Pride Month. The video, a reading of a poem by a gifted LGBTQ+ poet, celebrated our community but also reminded us many LGBTQ+ people around the world continue to live in a climate of fear and discrimination. We also held a social event to introduce the network to new joiners over the last 12 months and encourage LGBTQ+ allies to sign up to our Allies Pledge. We look forward to building on this momentum in 2022, and working with our allies to develop their pledge into meaningful engagement.” 34 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT Jas Singh, Executive Sponsor, Jupiter Gravity Network “The Gravity Network is our group focused on addressing cultural and ethnicity aspects of diversity and inclusion. We chose the name ‘Gravity’ to acknowledge diversity and inclusion as a force that affects us all while recognising the advancement of some minority groups can be weighed down by entrenched views, stereotypes, and a lack of opportunity. As a network, we want to demonstrate how an ethnically and culturally diverse workforce is a source of competitive advantage for our business, and a benefit to our clients and stakeholders. In the short term, we seek to boost access for young people from ethnic minority backgrounds into the industry and to find ways to attract more candidates from under-represented groups to apply for roles at Jupiter. Longer term, we want to embed diversity and inclusion as an irrevocable part of the agenda and a business priority. The positive response to our launch at all levels of the business has been very encouraging.” PERSPECTIVES of black leaders in the asset management industry.” For Andrew, the initiative reinforced his long-held view that having a truly diverse workforce leads to much greater and richer outcomes. Everyone, whatever path they have taken to be where they are today, brings their own unique contribution to the debates being held in the company, and Jupiter is stronger for it. More broadly, Jupiter’s Executive Committee has been a strong supporter of the firm’s employee networks, believing they can provide invaluable insight on helping create a workplace where people from under-represented backgrounds can feel comfortable and thrive. The Jupiter Pride Network is a case in point. The network offers LGBTQ+ employees and their allies advice, support and camaraderie in a safe, judgement-free space, but also works to effect change in the business and raise awareness of LGBTQ+ specific issues. In 2021, a video filmed by the network to mark Pride Month successfully drew attention to the ongoing discrimination LGBTQ+ people face around the world. The video was one of Jupiter’s most widely viewed and shared posts on social media. The end of the year also saw the successful launch of Gravity, a network aimed at raising awareness of cultural and ethnicity challenges and closing the gaps that have traditionally been barriers to advancement. Our Faith Network, meanwhile, benefited this year from the opening of a multi-faith prayer room. When clients benefit from diversity of thinking, it is incumbent on us to ensure our corporate culture continues to value and promote diverse perspectives. At Jupiter, we choose to embed diversity by asking everyone to play their part. In 2021, we set all our Executive Directors and Executive Committee members clear D&I goals, and our efforts in this space will continue as the company seeks to draw inspiration and strength from the vibrant, diverse society in which it operates. For more on our approach to diversity and inclusion, please see page 39. “In a challenging year for young people to make a start in their careers, we have almost tripled the number of entry-level opportunities available for school leavers and graduates.” Tracey Kinsella HR Director “ At Jupiter we choose to embed diversity by asking everyone to play their part.” THE ABILITY TO BE AGILE, ENTREPRENEURIAL AND FLEXIBLE IS THE VALUE OF ACTIVE MINDS 35 Jupiter Fund Management plc | Annual Report and Accounts 2021 ACTIVE RESPONSIBILITY OUR PEOPLE AND CULTURE Diversity of thought is encouraged and valued, emerging talent is recognised and nurtured, and open debate and collaboration are core expectations. People and culture Our business is built upon the value of our people and the way in which we embrace our cultural pillars in all that we do. Putting clients first is central to our culture and at the heart of our business model. As we continue to navigate these turbulent times, working closely together and appreciating the contribution that each and every individual makes has become more pertinent than ever before. We follow a set of principles that guide and underpin the way we treat each other and how we do business. These help us to understand the behaviours that are important to delivering for our clients. At Jupiter we express these principles around four ‘cultural pillars’: • We put clients first • We value our people • We succeed together • We challenge ourselves We seek out new and improved ways to embed these principles in everything we do, from the way we communicate, to how our decisions are made. Given the headwind of Covid-19 and the inevitable potential cultural challenges that acquisitions can bring, we made people and culture a key priority in 2021. Back together, our opportunity to reunite and reconnect 2021 was a challenging year as the world began to reassert itself following the restrictions that prevailed for much of the previous year. Given the changeable environment, we wanted to provide our employees with early certainty about our future ways of working and, following a detailed analysis of its implications, we were in a strong position in early summer to confirm our future hybrid working model, which combines office-based days with the valued flexibility of working remotely. During 2021, we re-designed our London office space and set to work to create a truly welcoming, flexible working environment to foster greater collaboration. We also continued to develop our technology to fully enable the new working environment. Through a regular programme of internal communications that included a weekly newsletter ‘Zigzagging’, based on the name of our headquarters in London, in addition to our monthly digital staff magazine, we shared information about our plans for returning to the office and provided updates on the exciting developments to our office space. We were particularly cognisant that we had a number of new joiners, including those through the Merian acquisition, coming to the office for the first time, and were focused on creating a seamless transition to their new workplace. With the safety and wellbeing of our employees an ongoing focus, we were officially able to launch our hybrid working model once restrictions were eased and we were able to return to the London office. Through a comprehensive programme of events with employee health and wellness at the centre, we celebrated being back together and created time to allow people to reconnect with colleagues both old and new. Our employees abroad participated in their own programmes which reflected each different country’s own level of restrictions. OUR CULTURAL PILLARS WE PUT CLIENTS FIRST WE VALUE OUR PEOPLE WE SUCCEED TOGETHER WE CHALLENGE OURSELVES Link to core objectives: 4 > For more information see page 17 Link to principal risks: 1 3 > For more information see page 60 36 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT Health and wellbeing As employees transitioned back to the office, we provided a programme of hybrid working webinars aimed at offering practical tips and strategies to maximise productivity, improve collaboration and maintain a healthy work and life balance. Running alongside the webinars, we put together a series of facilitated ‘reconnection days’ to help people re-engage with their teams and the organisation, and Executive Committee engagement meetings for our people to discuss key issues with senior management. We supported employees to ensure that their home office remained as comfortable and effective as possible and once again offered a contribution of up to £1,000 per employee towards the purchase of office equipment and furniture to enhance their working environment. Whilst we very much encouraged our employees to take some time off over the summer to rest and recharge, we acknowledged that 2021 was not a normal year to take holiday, with a significant amount of time spent under government restrictions. We therefore adjusted our holiday rules so that employees had the opportunity to double the number of days that they were permitted to carry over. Rewarding our employees Our reward framework is designed to attract, motivate and retain talent. It creates a tangible link between performance and compensation, while ensuring that our people’s interests are aligned with those of our clients. Through a mix of fixed and variable components, we provide competitive total compensation that rewards success and the promotion of our culture and values. Enabling Company-wide share ownership is an important objective in promoting our cultural pillar of ‘We succeed together’. Compensation awards, particularly deferred bonus payments and regular Long-Term Incentive Plans, are designed to align the interests of our employees with those of the Company’s stakeholders, including its shareholders. We are pleased to have been able to once again grant a share award of £2,000 to each of our permanent employees. This is the third year in a row that we have done so, promoting the philosophy of allowing staff to share in Jupiter’s long-term success. We have also continued our ‘CEO Award’ programme which recognises a number of employees who have demonstrated an exceptional contribution to the Company’s success, in addition to excellent performance in their role. This award is granted in Jupiter shares. In addition, employees are invited each year to participate in schemes, which provide opportunities to purchase Jupiter shares in a tax efficient manner, in some schemes matched by Jupiter. Keep learning The development of our people is key to Jupiter’s success. Our cultural pillars inform the core curriculum we offer to all employees and drive our intention to help people fulfil their potential, whether that’s through individual development, team activities, management courses or professional qualifications. During 2021, we offered a virtual training programme focusing on a diverse range of topics. These included courses on current industry trends such as crypto-currency, and workshops on communication and management skills. Employees also had the opportunity to expand their understanding of programming through a course developed by Jupiter’s experienced data science team. ESG continues to be an important focus for Jupiter as well as for the industry. In support of our business objectives in this area, we offered all employees the chance to study for the CFA ESG Certificate, fully sponsored by the Company. Since the end of July 2021, more than 5% of our people have enrolled on the course. The Jupiter leadership conference took place in October which brought together senior leaders in the Company to discuss the strategy, explore new ideas and promote collaboration amongst the group. The presentations focused on our clients, our culture and diversity and inclusion, as well as exploring arguably the most important issue we are facing as a planet – that of climate change. We will build on the success of this event and the development of Jupiter leaders through a senior leadership programme which began in early 2022. 17 people joined Jupiter through Investment20/20 £2,000 free share award to all permanent employees 37 Jupiter Fund Management plc | Annual Report and Accounts 2021 PEOPLE AND CULTURE continued INVESTMENT20/20 Investment20/20 is an industry-wide initiative that aims to reduce barriers to entry into asset management and to recruit a more diverse pool of talent. Its mission is to achieve systemic change across the industry, so that all firms hire for potential, rather than academic background or experience alone. Investment20/20 was founded in 2013, with Nichola Pease (our Chairman) and Andrew Formica (our CEO) co-founding the initiative. Jupiter was one of a small number of firms who took part in its launch and we welcomed our first cohort of four trainees in its first year. Its scope has significantly grown since and, taking advantage of the Government’s apprenticeship scheme, we now hire both trainees and apprentices from a variety of backgrounds. In 2021 we nearly tripled our intake from previous years, welcoming 17 trainees and apprentices. Initially joining us on a temporary contract, we have offered permanent roles to over 80% of our Investment20/20 intakes. Gergana Kabakova joined Jupiter as part of the very first cohort, starting her career as a Marketing Information Executive Trainee. Eight years later, she remains at Jupiter, is now a Senior Performance Reporting Analyst and is CFA Level 2 qualified. Gergana grew up in Bulgaria, before moving to the UK to study economics and finance at the University of Brighton. Although Gergana always knew she wanted to work in finance, she was unsure in which area. Gergana tells us that, “Jupiter’s active approach goes beyond the investment concept and reaches to the spirit and mind-set of its employees. I really enjoy the fact that Jupiter maintains its proactive environment with employees – Jupiter is a company which recognises people’s potential and ideas.’’ Jupiter is keen to support employees in gaining qualifications and ensuring they are able to maintain a healthy work-life balance. Over the last eight years, Jupiter has sponsored Gergana in the CFA qualification and supported her during maternity leave and her subsequent return to the office. She says, “Jupiter offers a very supportive environment for working parents and I am really pleased to say that returning to work from my maternity leave was a very smooth process, throughout which I received continuous support from my managers and colleagues.” In 2018, when Gergana was a Senior Portfolio Analyst, she was involved in the process of recruiting the team’s next trainee, hiring Bartek Kapron. Bartek joined Jupiter as a trainee portfolio analyst in the investment risk team straight after college, having chosen not to go to University. He explains, “In my last few months at college I came across a few articles that explained why many university graduates struggle to find jobs in a role that they studied. I still applied to UCAS and went through with my university application; however, I thought that I might look into other ways to get into the asset management industry.” The majority of the applicants for the role had studied to either undergraduate or master’s level. Bartek’s application stood out as being different and it was clear to the interview panel that he had a keen desire to learn, as well as to work hard and prove that a degree isn’t required to work in asset management. At Jupiter, we look to promote internally where we can and support younger employees in gaining international experience as they develop their careers. In early 2021, Bartek successfully applied for an investment analyst role in Jupiter’s Luxembourg office. Bartek notes that, “When I started my trainee role, I didn’t dream that in three years’ time I’d get to move to Luxembourg. I’ve been given a lot of opportunities to learn and develop at Jupiter; after taking these I was given more responsibilities which led to my move to Luxembourg.” 38 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT Diversity and inclusion Achieving greater diversity amongst our people and creating a more inclusive culture continues to remain a key focus for Jupiter. We want our people to represent the clients we serve and the communities we operate in. We want a workforce that is diverse in all aspects, whether that is gender, ethnicity, disability, education, social and economic background, and other factors. At Jupiter, we consider diversity and inclusion Company-wide, by region, by function and by team, as well as at varying levels of seniority. Information is collated on a voluntary basis on disability, ethnicity, gender and sexual orientation for all employees. We have comprehensive data for gender and an 80% disclosure rate for ethnicity. Disability information is more limited, due to the number of employees who have chosen to disclose. In addition, we collect information on socio-economic and educational background through our entry level programmes. In 2022, we will be focused on how we can better understand how Jupiter performs against these characteristics so that we can drive actions to continue to improve our overall diversity and inclusivity. We believe that education and accountability are key in changing mindsets and achieving long-term change. Following the successful rollout of our diversity and inclusion webinars in 2020, we introduced ‘inclusion for managers’ training in 2021 which covered a broad range of topics such as the benefits of diversity and inclusion and how to understand and address unconscious bias. Over 100 of our people managers have now attended this training. To coincide with National Inclusion Week, we also ran a unique and interactive ‘inclusion escape room’ event to celebrate everyday inclusion which surprised and challenged employees into facing their unconscious biases. During 2021, Andrew Formica, our CEO, spearheaded a new developmental initiative which promotes our people incorporating D&I objectives within their annual performance review. Our Executive Committee continue to have their variable pay linked to a qualitative diversity and inclusion assessment and their delivery against diversity targets relating to gender, ethnicity, disability and socio-economic background. This is an area which, with the full support of the Executive Committee, we will continue to focus on and evolve over time. During this year, we continued to review and change our process policies and benefits in order to drive positive change. Through the introduction of our hybrid working policy, we have been able to offer further support to those with caring responsibilities and those with accessibility requirements. To support our goal in achieving greater representation of women at all levels at Jupiter, we removed the pro-rata of bonuses during the first six months for those on maternity or paternity leave. One of our main contributors to achieving greater diversity at Jupiter is in our continued involvement with Investment20/20. Investment20/20 is an industry initiative which aims to create a more inclusive recruitment process by removing the typical barriers of entry to the industry. More details on Investment20/20 can be found on the page opposite. We work with external, independent organisations that help us broaden our talent pipeline and raise awareness of Jupiter to groups typically underrepresented in the industry. This includes women, people from a broader socio-economic background, individuals with a disability, and those from ethnic minority backgrounds. We have several employee networks established to support underrepresented groups: Ethnicity (which was relaunched in 2021 as Gravity), Faith, Pride and Women in Technology. Each of these has a member of the Executive Committee as a sponsor to ensure that their voices are represented at the most senior level of the organisation. Engagement We believe that we can only succeed together if we listen to each other and are prepared to be challenged. At Jupiter, we achieve this through open debate, innovation and continuous improvement. Our employee representative forum, Connections, helps to drive engagement at all levels of the business and regularly communicates with our people to gather views on strategy, people, culture and facilities. The Chairman of the forum provides updates to Executive Committee and the Board and act as the Company’s formal workforce advisory panel. The annual employee survey is another important component of our overall employee engagement. This gives us the platform to identify and celebrate our successes, but also to work on any issues which are identified through the survey. In November 2021, we launched our annual staff survey and, as in previous years, many of our employees took the time to respond to the survey. With 451 individual responses, we achieved a strong response rate of 82%. A significant number of employees also provided responses to our open comment questions to share their perceptions and experiences of Jupiter as a place to work. At 76%, we have seen an 8% reduction in our overall engagement score compared to our previous survey in January 2021. Our employees responded favourably to the training and development, the quality of their line management and to the updated office space. These results strongly endorse the value that we continue to place on our people. However, there were some concerns expressed by our people. Connections has already started working with focus groups by department to dig deeper into the results and to engage with them on ideas for improvements in areas such as inter-departmental communication. The Board and the Executive Committee are fully committed both to listening to what our people are telling us, and to responding effectively to issues raised. “Achieving greater diversity amongst our people and creating a more inclusive culture is a key focus.” 2021 2020 At 31 December 2021 Female Male Female Male Board 3 6 2 7 Senior management 21 79 20 84 Other employees 195 288 203 302 Total 219 373 225 393 39Jupiter Fund Management plc | Annual Report and Accounts 2021 The world is undergoing an unprecedented period of change, with social and environmental issues defining the current era. We believe that active asset managers are among the groups most empowered to address these challenges. As a high-conviction active asset manager, we have an important role to play, both in the allocation of capital and in active engagement with the companies in which we invest. This is a role that is at the core of active management. This approach applies across all of our business, with ESG factors built into investment processes for all of our strategies. We have always believed in this approach and the heightened focus on sustainability is core to our beliefs. We believe that companies which are managed sustainably will create value over the long term for the benefit of our clients and all of our stakeholders, including society and the environment. We have a long and successful history of investing sustainably, launching the first green unit trust in the UK in 1988. We have continued this evolution, launching new ESG-focused products over recent years, including Global Sustainable Equities and an SFDR Article 8-compliant version of Dynamic Bond. We started assessing and reporting against the Task Force on Climate-Related Financial Disclosures (TCFD) requirements in 2017 and, as a member of the NZAM initiative, have committed to net zero across our investment portfolios and corporate operations by 2050. This year, we have evolved our approach and set interim targets to be achieved by 2030. Our full TCFD report can be found from page 45. This active responsibility also means a commitment to hold ourselves to the same high standards which we apply to our investee companies, for the benefits of our people, our local communities and the wider environment. Along with a commitment to net zero, we are this year reporting in line with the UNGC framework. ACTIVE RESPONSIBILITY ESG AND STEWARDSHIP Sustainability is a key focus for Jupiter, with the principles of acting responsibly embedded into our culture. Link to core objectives: 2 3 4 5 > For more information see page 17 1988 Investment First sustainable fund launched in UK – Jupiter Ecology Fund 2001 Industry EUROSIF (European SRI Transparency Code) 2010 Investment Signatory to the UK Stewardship Code 2013 Corporate Launch of Investment20/20 1998 Industry UKSIF (the UK Sustainable Investment and Finance Association) 2014 Investment Investor Forum Membership 2000 Corporate CDP. Jupiter founder signatory to the Carbon Disclosure Project 2012 Corporate Membership of the 30% Cub 2008 Investment PRI. Jupiter has been a signatory of the UN Principles for Responsible Investment (PRI) since 2008 A long history of active responsibility This principle of active responsibility, extends throughout the company, with focus on all of our stakeholders. We actively engage with the companies in which we invest. We help our diverse and talented people to drive a culture of collaboration, and we support and protect our local communities and the environment around us. Sustainability and the principles of active responsibility at Jupiter can be considered through three distinct but overlapping areas: 1. The integration of ESG principles in active investment 2. Our sustainability-focused product range 3. Our corporate commitments 2015 Industry Launch of TCFD Jupiter Industry 40 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT The principle of analysing ESG-related risks as we construct our high-conviction portfolios has long been a cornerstone of our investment philosophy. All of our fund managers are required to build ESG risk considerations into their investment processes, which are assessed as part of our annual appraisal process. Over recent years, we have seen a marked shift in client demand. Many clients are increasingly moving away from looking solely at the financial returns of their investments, and are now taking a keener interest in the wider impact these investments have on people and the planet. There are a wide variety of investment approaches available in the market, ranging from those solely focused on financial returns all the way through to impact investing. Our philosophy, and active engagement with our investee companies, mean that all of Jupiter’s products have ESG-risk considerations built into their investment processes. Client demand in recent years has moved towards those products with clearer sustainable investing objectives. Our product strategy has mirrored this, with recent launches being of strategies with a clear focus on sustainability. This year, we have launched an additional Luxembourg-domiciled SICAV vehicle for our 2019 Investment Member of the IIGCC Member of Climate Action 100+ Corporate Member of Workforce Disclosure Initiative 2017 Corporate Signatory to the Women in Finance Charter Founding member of the Diversity Project A4S – Accounting for Sustainability Empower mentoring scheme RE100 initiative 2021 Investment NZAM interim targets set for portfolio emissions Finance for Biodiversity pledge Corporate NZAM interim targets set for corporate operations UNGC – inaugural communication on progress Industry SFDR introduced 2018 Investment Signatory to the Japan Stewardship Code PLC annual report starts to disclose against TCFD recommendations Launch of Global Sustainable Equities Industry LGPS Investment Code of Transparency 2020 Investment Signatory to NZAM initiative Member of Farm Animal Investment Risk & Return (FAIRR) initiative Corporate Member of Good Work Coalition Forest Carbon Initiative Signatory to the UNGC 2016 Industry Green Bond Principles Hampton Alexander Review 1. THE INTEGRATION OF ESG PRINCIPLES IN ACTIVE INVESTMENT flagship Global Sustainable Equities strategy, which has seen net inflows this year of £200m. We have also broadened our range both with ESG-focused versions of existing strategies, such as Dynamic Bond ESG, and new products such as the Global Ecology Bond fund. More details on our sustainability-focused product range can be found on page 49. 2030 Investment Interim targets for NZAM across portfolios and corporate operations 2050 Investment Net zero targets for NZAM across portfolios and corporate operations 41Jupiter Fund Management plc | Annual Report and Accounts 2021 We engaged with various sustainability experts from the company as part of its investor outreach programme, discussing a wide array of ESG issues across governance, environmental supply chain and human capital. The company discussed its participation in the regenerative cotton initiative. The company has provided funds to this programme which supports long-term sustainable cotton production in the US with the aim of eliminating 1 million metric tons of carbon from the atmosphere by 2026. The programme looks to educate farmers to use regenerative practices. The dialogue also covered the company’s efforts to diversify its supply chain to reduce risk of disruption and apply lessons from the pandemic. Their sustainability initiatives, particularly around diversity and wellbeing, have meant they have achieved better staff retention than their peers. We had an initial engagement with the Chairman at the beginning of the year to discuss challenges around the product pipeline and perceived weaknesses associated with the company’s performance culture. This was acknowledged by the Chairman, who outlined the reforms and leadership changes implemented by the CEO. Having launched a public campaign citing the CEO’s lack of industry experience, Elliot Advisors approached Jupiter to discuss their activism. Our position remained unchanged – we are supportive of the CEO, have high regard for the Chairman and place our trust in the Nomination Committee to ensure that there is the right balance of skills on the Board. We also joined a collective engagement discussion with the Senior Independent Director and a wide range of shareholders. In October, the company announced the appointment of Dr Harry Dietz, a professor of genetic medicine, strengthening the Board’s industry experience. The company was at the centre of misconduct investigations during summer 2020 which led to the three senior executives stepping down. We had conducted various Board level engagements on these matters and our latest interaction was with the Lead Independent Director during December 2021. The fallout from this scandal suggested a deeper lying problem in terms of a toxic environment rooted in a lack of gender diversity. This meeting provided an opportunity for a progress report on deep lying cultural issues rooted in a lack of gender diversity. The company outlined its action plan to address the key issues, including hiring more female staff, diversity and inclusion training, the hiring of a new Chief People Officer and appointing Accenture to perform an external audit of its HR practices. The company is also reviewing how diversity is treated from a product perspective within the video game industry. GSK UBISOFT RALPH LAUREN active communication with our wider stakeholders, including regulators and government bodies. We engaged over 700 times with almost 500 companies on ESG matters in 2021. The box below describes a number of these key engagements. Where change is not forthcoming, one of our most powerful tools is to use our voting rights and influence, often in collaboration with other investors, to address any issues that are an impediment to change. In 2021, we voted at 388 meetings in the UK and 2,029 overseas. Although our preference is always to actively engage prior to these meetings, we voted against management on at least one resolution at 44 UK meetings and 772 overseas meetings. During the period Jupiter voted on 66 climate resolutions, including both management and shareholder proposals, supporting 70% of items. We also voted on 83 proposals that were classified as social resolutions, both management and shareholder proposals, and supported 61% of these items. A further breakdown and more detailed analysis will be provided in Jupiter’s Annual Stewardship Report to be published in April 2022. ESG AND STEWARDSHIP continued Investing for the future Throughout this year, we have continued to invest in growing our sustainability capabilities across the firm, with new products and key new hires. We have created a new role of Head of Sustainability, who joined us in early 2022. This group-wide role is responsible for co-ordinating our overall ESG strategy and ensuring best practice across the business. Within the investment function, we have also invested in a number of newly-created ESG investment directors. These product specialists are focused on integrating ESG factors into investment processes, communicating with our clients and acting as a link between the investment and stewardship teams. We have appointed ESG investment directors within fixed income, UK equities and multi-manager teams and we will continue to grow this function through 2022. We have also increased the dedicated resource within our stewardship team, who are focused on supporting our fund managers through active engagement with our investee companies. With new hires with backgrounds in fixed income, climate risk and advising corporates on sustainability, the team benefits from a broad range of experience. Having made these investments, we move into this year with over 20 people dedicated to questions of sustainability, in addition to an 11-strong data science function. We will continue to invest appropriately in this key area of growth through 2022. Active engagement As high-conviction, active investors, we have a duty to our clients to be effective and responsible stewards of the investments we make on their behalf. In this spirit, we seek to invest in well-managed companies with business models that are sustainable in the long term. A key part of this process is actively engaging with our investee companies across all asset classes, to drive more sustainable business practices, which results in better outcomes for our clients and, ultimately, all of our stakeholders. This active engagement directly with management is key to our investment philosophy. It allows us to glean a different kind of insight into managements’ view of their businesses’ progress on ESG matters than through data analysis alone. Our engagements also include 42 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT Engagement with our wider stakeholders, including regulators, governments and industry bodies, is a key part of our process and allows us the opportunity to contribute to shaping the sustainability agenda. The Stewardship report, which is available on our website at www.jupiteram.com/stewardship, provides comprehensive details on our engagements throughout the year, but the below examples demonstrate some of the topics covered. • Investment Association (IA) Sustainable Disclosures Implementation Forum – Peer-to- peer collective organised by the IA to discuss operational challenges and solutions around SDFR implementation. The Forum has also hosted industry, legal and data experts to help assist participants. • ShareAction, Healthy Markets Initiative and Good Work Coalition – Jupiter is a member of these separate ShareAction-led workstreams and they have helped to inform our engagement activity. The Healthy Markets Initiative is an investor collective which seeks to drive improvements in the long-term sustainability of food companies through collective engagement programmes and AGM action. The Good Work Coalition is a UK-focused investor movement that attempts to tackle income inequality and in-work poverty through the promotion of the Living Wage. • UK Listings Review (Hill Review): As part of HM Treasury’s plan to strengthen the UK’s position as a leading global financial centre, the Chancellor appointed Lord Hill to lead a review into the UK Listings regime. Jupiter’s UK SMID team has a significant track record in investing at IPOs and understanding the dynamics of the UK market and were approached by an intermediary to provide insight to the Hill Review. • Jupiter Sustainable Investment Academy: The academy was a summer programme of client engagement on ESG themes. Each week a different member of our Sustainable Investment strategy, Stewardship Team or Data Science would provide a tutorial outlining an aspect of their day-to-day work. Clients had the opportunity to ask questions and provide feedback on the session. A data-driven approach We believe that data and information flows will continue to play a crucial role in enabling active investors to address the challenges the world is facing. We have continued to invest in our data science team through 2021, which has now grown to a team of 11. The team continues to play a key role in our focus on Sustainability through the ongoing development of the ESG Hub and engagement with third-party data vendors to provide feedback on product and data quality, benefiting all participants. This internal, proprietary tool gathers, cleanses and presents ESG data from third-party providers together with our in-house holdings data. This helps enhance our fund managers’ consideration of the ESG risks of each of their investee companies, as well their portfolios as a whole, and drives better engagement with investee companies. Equally, this allows our CIO office to review the ESG risks across strategies, teams, and the group as a whole. The proprietary nature of the tool means the team is able to rapidly develop new features and integrate new datasets. Governance We believe that an authentic and committed approach to sustainability requires engagement from all of our people, from the Board down. The Board continues to regularly consider sustainability matters, more details of which can be found from page 68. Our Executive Directors have ESG-focused objectives included as part of their remuneration, more on which can be found from page 102. It is crucial that our investment and corporate activities are aligned in their philosophy and aims. In order to help achieve this, our two key committees, the Stewardship Committee and the Corporate and Social Responsibility (CSR) Committee, are both chaired by Edward Bonham Carter, our Stewardship and CSR Director. The full memberships of both committees are detailed above. The activities of the Stewardship Committee and selected notable outcomes can be found in the table overleaf. Those of the CSR Committee can be found on page 51. JUPITER FUND MANAGEMENT PLC BOARD Governance structure EXECUTIVE COMMITTEE CSR COMMITTEE Stewardship & CSR Director (Chair) CEO Non-Executive Director HR Director Head of Stewardship Head of Facilities Chair of employee representation forum STEWARDSHIP COMMITTEE Stewardship & CSR Director (Chair) Executive Director Chief Investment Officer Head of Strategy & Corporate Development Heads of Strategy Head of Stewardship Fund managers 43Jupiter Fund Management plc | Annual Report and Accounts 2021 Stewardship committee Activities Outcomes H1 2021 With UK Small & Mid Cap (SMID) and European Growth teams, discuss stewardship approach re: housebuilders and cladding suppliers following findings from the Grenfell Inquiry Engaged with CEO and Chair of Bellway Direct and collaborative engagement with Kier Group where we voted against the remuneration report, due to the remuneration outcome for one outgoing director responsible for the insulation business Discussion on implementation of EU SFDR regulation Ongoing development work for new Article 8 and 9 funds, leading to launch and transition of funds outlined on page 49 Proposal to build a communication to investee companies that proactively imparts stewardship expectations Initiative adopted by the UK SMID strategy and shaped communication to investee companies Internal project group (encompassing technology, operations, data science and stewardship teams) to drive solutions around ESG regulatory reporting Ongoing scoping exercise of client requests, fund manager feedback and regulatory developments Update on new engagement record-keeping database Testing undertaken and the new system launched in H2 Update on NZAM protocols and objectives including establishing interim target by October 2021 Analysis undertaken with consultant Carbon Intelligence and interim target publicly disclosed within the IIGCC’s progress report in November 2021 H2 2021 Update from fixed income team on launch of new SFDR Article 8 product Dynamic Bond ESG launched in early 2022 NZAM update including on interim targets and presentations from Carbon Intelligence Discussed consultation response to the (Department for Business, Energy & Industrial Strategy) entitled “Restoring trust in Audit and Corporate Governance” Jupiter responded to the consultation as both a listed company and an investor in UK companies Update from Global Sustainable Equities on FCA letter addressed to the chairs of authorised firms outlining sustainability expectations of financial products Ongoing review of process and approach in light of guidance and expectations Update from Chrysalis Investments on overall ESG approach and stewardship strategy ESG investment director appointed and revised ESG integration and engagement policy is being developed Discussed approach to FCA discussion paper on Sustainability Disclosure Requirements Jupiter responded to the FCA’s discussion paper in January 2022 and there is ongoing work to ensure we shape our approach through this development Approved decision to join collective letter to UK Government on mandatory reporting for healthy and sustainable food Collective communication returned to UK Government ESG AND STEWARDSHIP continued 44 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT Climate & Environment At Jupiter, an important part of our ESG objectives is to support the transition to a low-carbon economy. We strongly believe that this transition will involve concerted and co-ordinated efforts by many stakeholders, who have a collective responsibility to maintain momentum and urgency. Asset managers have a critical leadership role to play, making progress and ultimately delivering on commitments in relation to ESG factors (such as the NZAM initiative, UNPRI and TCFD) and harnessing market developments and new practices to act in the best interests of our clients. We believe that it is imperative that we work together as a company, an industry, and a society to tackle climate change and improve wider societal and governance standards, and we Aligning our portfolios with net zero By joining NZAM, we commit to increasing the proportion of assets in our portfolios which are aligned with the goals of the Paris Agreement over time. We believe this is the most effective way in which to protect our clients’ assets from a range of climate-related risks while also contributing as a financial institution to the mitigation of the systemic risks of climate change. IIGCC has led and coordinated the development of the Net Zero Investment Framework (NZIF), which provides a basis on which investors can make commitments to achieving net zero emissions and define strategies, measure alignment, and transition portfolios. NZIF is recognised by the NZAM initiative as a methodology which provides participating investors with guidance on best practice, robust and science-based approaches and standardised methodologies, and improved data, through which to deliver on these commitments. The investment strategies included in the scope of our initial net zero target will apply NZIF. NZIF sets out a number of key actions and methodologies that can be used to implement net zero targets in a portfolio context. Objectives and targets set the direction and ambition of a net zero investment strategy and act as a means to monitor the effectiveness of this strategy. As well as our group-wide target framework, we will disclose objectives and targets for individual investment strategies in Jupiter’s annual stewardship report. The key driver for achieving net zero targets and securing emissions reductions in the real economy is the increasing alignment of assets to net zero pathways within our portfolios. NZIF prioritises engagement and stewardship, particularly for existing portfolio companies, as the primary mechanism to drive alignment. Portfolio construction can also be a relevant tool to weight portfolios towards assets aligned with or transitioning towards net zero as an incentive for these companies to align. Selective divestment is recommended in specific circumstances as part of the toolbox for aligning a portfolio. Our assessment of investee company transition plans is aligned with IIGCC’s NZIF framework and includes the following: 1. Ambition: A long-term 2050 goal consistent with achieving global net zero 2. Targets: Short- and medium-term emissions reduction targets (scope 1, 2 and material scope 3) 3. Emissions performance: Current emissions intensity performance relative to targets 4. Disclosure: Disclosure of scope 1, 2 and material scope 3 emissions 5. Decarbonisation strategy: A quantified plan setting out the measures that will be deployed to deliver greenhouse gas (GHG) targets 6. Capital allocation alignment: A clear demonstration that the capital expenditures of the company are consistent with achieving net zero emissions by 2050 “By joining NZAM, we commit to increasing the proportion of assets in our portfolios which are aligned with the goals of the Paris Agreement over time.” recognise the need to be an active participant by adding our voice to this era-defining challenge. We are focused on all parts of the business to strengthen our ESG strategy and build on our activities in these areas. We are a signatory of the NZAM initiative, joining fellow asset management companies in making new, enhanced commitments to support the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5°C. This important step solidifies our commitment to play a leading role in supporting the transition to a more sustainable world economy. Last year, we reported the significant step we had taken of committing to achieve net zero emissions by 2050 across our full range of investments and operations. In 2021, we have provided more detail around the assets which are initially included as in scope, as well as setting interim targets. We have announced that 42% of our AUM at end 2021 is initially within scope, and to increase this to 100% by 2050. Further, we have committed to reducing the portfolio emissions intensity of the assets currently in scope by 50% by 2030. Jupiter began assessing and reporting in line with the recommendations of TCFD in 2017. We report how climate change is embedded across the four TCFD pillars of governance, strategy, risk management and metrics and targets below. Related disclosures and more detail are available in Jupiter’s annual stewardship report, our CSR report and via our participation in the CDP Climate Change programme. With the exception of recommendation “Strategy c”, as explained in more detail on page 46, this disclosure addresses all the recommendations of the TCFD framework. TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURE (TCFD) 45Jupiter Fund Management plc | Annual Report and Accounts 2021 Climate-related risks Risk Description Timeframe Impact Market risk Emerging regulation could negatively impact the financial performance of carbon-intensive companies in our portfolios. Long term Reduced revenue Policy and legal risk New climate regulations could impact client demand for our products. Long term Reduced revenue Physical risk Our portfolio companies could be impacted by physical climate risks. Long term Reduced revenue Policy and legal risk Climate and ESG reporting requirements could expose us to regulatory penalties. Short term Increased costs Climate-related opportunities Opportunities Description Timeframe Impact Product and services Increased demand for equity funds which employ sustainable investment strategies. Long term Increased revenue Product and services Increased demand for fixed income funds which employ sustainable investment strategies. Long term Increased revenue Product and services Emerging policies could positively impact investee companies which deliver renewable energy technologies. Short term Increased portfolio value Product and services Changing consumer preferences could create opportunities for investee companies which manufacture food with lower environmental and climate impact. Short term Increased portfolio value Governance The Board has ultimate responsibility for the Group’s risk strategy and for determining an appropriate risk appetite, as well as the tolerance levels within which the Group must operate. The CEO, the CIO and other senior management that make up the Executive Committee are responsible for managing the Group’s day-to-day business and for ensuring the implementation of strategy and, as such, have responsibility for climate change-related issues. Within the Board, overall responsibility for environmental and corporate responsibility, including the development and implementation of the company climate change strategy, resides with our CEO. The Board meets regularly throughout the year and discusses climate-related issues and how they impact Jupiter. In 2021, this included sessions at which the Board reviewed and approved Jupiter’s decision to join the NZAM initiative. The Board also received training on climate and net zero-related matters from an external consultancy in 2021. In October 2020, we announced that our Vice Chairman, Edward Bonham Carter would take on the role of Director of Stewardship and CSR. Edward reports to the CEO and supports the work of the CIO office and the Stewardship team. He also assumed the Chairmanship of both Jupiter’s Stewardship Committee and the CSR Committee. In 2022, we appointed a Head of Sustainability to oversee further progress in this area of our strategy. Identification of, and response to, systemic risks require co-ordination at organisational level and this reflects the complex nature of these issues and the long time horizons over which they manifest themselves. Under joint leadership, both the Stewardship Committee and the CSR Committee play a governance role in responding to these risks. The Stewardship Committee considers climate risks and opportunities within our investment strategies and reviews engagement across the different asset classes in which we invest. The CSR Committee considers the sustainability of Jupiter as a business and coordinates with the Stewardship Committee to ensure a consistent approach. The Chairman of the Audit and Risk Committee regularly attends both the Stewardship and CSR Committees. More details on the memberships and activities of both committees are on pages 43, 44 and 51. Strategy We have committed to achieve net zero emissions by 2050 across our full range of investments and operations. Within our annual CDP Climate Change response, we identified four risks and four opportunities related to climate change, which could impact our corporate strategy. These are summarised in the table below. The identification of these factors reflects internal discussions by the above Committees over several years. As part of our internal planning horizons in terms of TCFD, we consider short term to be up to three years, medium term to be three to five years and long term to be more than five years. We have assessed the resilience of our strategy under a range of scenarios. As a high-conviction active manager, the majority of our carbon footprint as a business relates to the emissions of our portfolio companies. Jupiter is not a significant producer of GHG emissions via our operations, but we have set out initiatives and targets to reduce these emissions, in line with our corporate responsibilities. We believe the principal risks and opportunities for our business relate to the investment strategies we employ on behalf of our clients. For example, in a scenario in which global governments undertake rapid action to mitigate climate change, the financial performance and future earnings capacity of carbon-intensive companies could be negatively affected, leading to declines in value of their securities. As stewards of our clients’ capital we have a role to play in the transition to a low-carbon economy. We believe we can mitigate these risks and capture opportunities most effectively through our security selection and portfolio construction, and by active engagement with the companies in which we invest, both directly and through partnerships with other institutions. These factors, along with engagement with our clients and stakeholders, have also informed our decision to establish a net zero target for our full range of investments and operations. We believe that targeting net zero, which we have expressed by joining NZAM, is the most effective way in which we can build resilience into our strategy across a range of climate scenarios. To date, we have not described the resilience of our strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario, in line with ‘Strategy c’. We continue to develop our approach to climate scenario analysis as described in more detail in the risk management section of our disclosures on page 47. However, data availability remains limited in certain geographies and asset classes beyond fundamental, long-only, developed market equity strategies and this means we have not been able to conduct scenario analysis across the entirety of our assets under management, although we have done so for the majority of the portfolios we manage. We continue to develop our approach over time with the goal of stating the resilience of our strategy across a range of scenarios in future. Engagement and partnerships and collective engagement We actively engage with investee companies to gain insights about their exposure to climate risks, to encourage them to align their businesses with net zero and successfully navigate the transition to a low-carbon economy. Core considerations in this dialogue include a company’s potential ESG AND STEWARDSHIP continued 46 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT exposure to stranded assets, transition risks and physical risks of climate change, and whether management has a credible strategy to adapt to the energy transition. Jupiter is a member of Climate Action 100+, an investor initiative which seeks to target collective action around a selection of the world’s highest emitting companies and coordinate shareholder engagement with this subset. Joining Climate Action 100+ allows us to play a lead role in collective engagement with investee companies on climate matters. We are also members of the IIGCC. A core consideration for becoming an IIGCC member was elevating our engagement on climate issues by acting collectively with other institutions. Risk management Potential material climate risks in our portfolios are identified by a variety of sources including the stewardship team, third-party ESG data, and the Stewardship and CSR Committees. Climate is included as a formal aspect of stewardship within the annual review process conducted by the CIO office. To provide integration within the overall risk management framework, ESG data, including climate risks where relevant, are monitored using third-party providers in the quarterly challenge meetings conducted by the investment risk teams. These processes enable the identification and potential escalation of investment-related climate risks or opportunities which may be deemed to impact the resilience of our overall strategy. We will continue to develop the integration of climate within our risk management processes in 2022. We have developed our understanding of, and capabilities for, climate scenario analysis to consider potential risks and opportunities for our portfolios beyond our investment time horizon. We have subscribed to MSCI’s climate model, Carbon Delta, which analyses climate change risks and opportunities, including both transition risks and physical climate risks which could impact the value of our portfolios over time. Scenario analysis can give an indication of whether investee companies are able to withstand rapid energy transition and the potential impact of other climate risks. We use scenario analysis to assess our portfolios and highlight possible exposure to climate risks, encouraging us to consider these issues. We have integrated data from the model into our ESG Hub to enable our fund managers to identify and manage potential climate risks within their portfolios, including an assessment of the sector allocations which are most exposed to both transition risks and physical risks from climate change. We have also conducted scenario analysis on the portfolios included within the scope of our initial net zero target framework. The model indicates that these portfolios contain companies which are exposed to material climate risks which could negatively affect their long-term value. The results support the decision to increase the alignment of these portfolios with net zero. However, the model makes a number of simplifying assumptions and its results relate to outcomes as far out as 2050. As such, its results should be used with a degree of caution in both the value and time horizon of potential risks and opportunities identified. We expect our practice in this area will continue to evolve as available methodologies develop. Metrics and targets We have set an interim target for the proportion of assets to be managed in line with the attainment of net zero emissions by 2050 or sooner. In line with the requirements of NZAM, we will review our interim target at least every five years, with a view to ratcheting up the proportion of AUM covered until 100% of assets are included. We have included our fundamental, long-only, developed market equities strategies within our initial target scope. For this proportion of our AUM, we have set an interim target for the emissions intensity to be reduced by 50% by 2030, against a December 2020 baseline. It should be noted that, due to more limited corporate activities as a result of Covid-19, 2020 is likely to represent a relatively low baseline for emissions. These investment strategies, which represent approximately 42% of Group AUM, as at the baseline year, make up the core of our franchise and this is also where the greatest GHG emission disclosures lie. We will also be including funds which are looking to be designated as Article 8 or 9 under SFDR classifications. The target scope will be reviewed and expanded over time as more GHG emission data becomes available and as net zero methodologies for other geographies and asset classes, such as fixed income, emerging markets and our fund of funds range, develop. In the meantime, we will continue to engage with our investee companies in all jurisdictions to encourage them to align their business models, set forward-looking targets and disclose their GHG emissions in readiness for a formal target framework. We have assessed our portfolios with input from Carbon Intelligence and determined a 2030 portfolio emissions reduction target of 50% which we believe constitutes a fair share of global reductions needed to attain net zero by 2050. Jupiter will look to reference the One Earth Climate Model, a rigorous climate and energy blueprint for keeping global warming to 1.5°C, used to establish sector-specific decarbonisation pathways that can be applied at the investment strategy level. We will report on our progress against these targets in our annual report and stewardship report. We have used MSCI’s Carbon Delta data to formulate our net zero target framework and to disclose the aggregate emissions profile of approximately 60% of our assets under management in our response to CDP’s annual climate questionnaire. Operational emissions As well as working towards reducing the intensity of carbon emissions in our portfolio companies, we also actively seek to reduce our corporate impact. We have an ongoing target to reduce overall Scope 1 and 2 emissions year-on-year by more than 1%, in addition to our commitment to achieving net zero emissions by 2050 across our full range of investments and operations. This year, we have set a target of reaching net zero across Scope 1 and 2 emissions by 2030, with a 1.5°C reduction pathway in place for Scope 3. For the last ten years we have worked with our sustainability partner, Carbon Intelligence, to measure and verify progress in improving our operational footprint. 2021 (tCO 2 e) 2020 (tCO 2 e) % change Direct emissions (Scope 1) 1 120.9 87.8 +38% Indirect emissions (Scope 2): location- based 264.7 346.4 -24% Indirect emissions (Scope 2): market- based 2 0.0 0.0 – Total Scope 1 and 2 385.6 434.2 -11% Other relevant indirect emissions (Scope 3) 3 156.2 235.8 -34% 1. Direct emissions (Scope 1) comprised of building gas combustion, fugitive emissions from refrigeration and air conditioning equipment and owned vehicles. 2. Direct emissions (Scope 2) is building electricity consumption. 3. Direct emissions (Scope 3) comprised of business travel, waste disposal and water consumption. Overall, our total Scope 1 and 2 emissions declined by 11% compared to 2020. This is due to a number of factors, including a lower headcount in our headquarters in London and more efficient power usage throughout the building. The increase in direct Scope 1 emissions compared to 2020 is due to our employees returning to the office after spending much of the prior year working remotely. 47Jupiter Fund Management plc | Annual Report and Accounts 2021 Our measured Scope 3 emissions reduced by 34% in 2021. This was partly due to a reduction in air travel due to the ongoing impact of Covid-19. Water usage in our London headquarters was also reduced by over 90% following the reintroduction of the greywater system. Our emissions have been verified to a limited level of assurance by Carbon Intelligence, an external third party, according to the ISO 14064-3 standard. Our chosen GHG methodology (Defra’s Environmental Reporting Guidelines) takes the operational control approach. We have applied a materiality threshold of 5% for the purposes of reporting GHG data, in line with market practice for similar firms. As a result, locations with six or more staff are defined as material and included in the disclosure. We remain committed to the continual reduction of our corporate emissions, including our move in 2015 to a new ‘BREEAM Excellent’-rated building, investment in a sustainable fit-out (SKA Gold rated) and our commitment to the RE100 initiative, committing us to sourcing 100% of the energy from renewable sources in our offices with over six employees. We have also partnered with Forest Carbon, a not-for-profit scheme providing woodland carbon capture projects in the UK, to plant more than 10,000 trees over seven hectares in the UK. By investing in woodland creation in the UK, we are not only removing carbon emissions but also facilitating flood alleviation, habitat creation, employment, public access and cleaner air, benefiting wider society in line with our corporate purpose. Jupiter’s environmental policy statement (www.jupiteram.com/environmental-policy) guides our approach to managing our carbon footprint, use of natural resources such as water and energy, and waste. 2030 portfolio reference target Proportion of AUM to be managed in line with net zero initially 41.6% (as at baseline year) Strategies included Fundamental, long-only, developed market equities strategies Target year 2030 Baseline date 31 December 2020 Quantified target to be achieved by target year Emissions intensity of AUM within target reduced by 50% by 2030 Baseline year performance 47.7 tCO2e/$m invested (Scope 1 & 2) Financed emission coverage Scope 1 and 2 portfolio emissions. Scope 3 will be incorporated in time as data availability improves, in line with the guidance provided by the IIGCC’s Net Zero Investment Framework Underlying science-based net zero scenario from which target is derived Jupiter’s portfolio reference target adopts the Intergovernmental Panel on Climate Change (IPCC) report’s (2018) modelled global pathways for reaching net zero by 2050. Jupiter will look to reference the One Earth Climate Model (2020) for determining sectors pathways at the investment strategy level Forward looking alignment methodology Strategies included in the initial target scope will apply the IIGCC’s Net Zero Investment Framework TCFD recommendations: progress and priorities FY2021 progress FY2022 priorities Governance ESG governance structures / responsibilities in place Group Head of Sustainability appointed and team expanded Strategy Board and Executive Committee approve strategy to achieve net zero emissions across our operations and investments by 2050 Third party-consultant appointed to advise on net zero implementation to investments and deliver net zero curriculum to employees Stewardship team & data science increase headcount Appointment of ESG investment directors Formulate and disclose net zero target framework for participating investment strategies Increase proportion of AUM participating in net zero target Set Group-wide target for investment in climate solutions Use stewardship to increase proportion of portfolio companies aligned with net zero Conduct scenario analysis and assess resilience of our strategy under a range of scenarios Risk Management Carbon data integrated within ESG Hub Scenario analysis conducted on selected portfolios Integrate net zero target framework within risk management processes Metrics & Targets Initial proportion of AUM participating in net zero target disclosed Interim target of 50% reduction in portfolio carbon intensity of targeted AUM by 2030 Participating investment strategies to apply IIGCC’s Net Zero Investment Framework (publicly available methodology) Carbon footprint of 60% of Group AUM disclosed in CDP climate questionnaire 2030 operational emissions target disclosed Operational Scope 3 emissions disclosure enhanced See strategy section above ESG AND STEWARDSHIP continued 48 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT A range of international products focused on Sustainability and ESG Article 6 Article 8 Article 9 All other Jupiter international funds Dynamic Bond ESG Global Sustainable Equities Global Ecology Growth Global Ecology Bond GEM Focus Emerging Market Corporate Bond Fund Global Ecology Diversified European Growth Emerging Market Short Duration Bond Fund Europe ex-UK Equity Pan European Smaller Companies Europe ex-UK Smaller Companies Although all of our product range has ESG risks considered as part of their investment processes, we also offer a range of products which are specifically focused on sustainable investing. Across our sustainable investing and environmental solutions teams, these products are focused on investing in companies that are leading the transition to a more sustainable world, while still seeking the best risk-adjusted returns for our clients. The first product in our environmental solutions range, the Ecology Fund, was launched to the market more than 30 years ago. This range seeks to invest in companies which are focused on providing solutions to the environmental challenges we are facing, whether that is clean energy, green mobility or more sustainable agriculture and oceans. We have broadened this product range with the launch of the Global Ecology Bond fund in early 2022. Our sustainable investments team invests in high-quality companies that are at the forefront of leading the transition to a more sustainable world. The team look to companies that address key societal needs such as gender and social inequality, decarbonisation and improving access to healthcare. In 2021, we launched a Luxembourg-domiciled SICAV vehicle for Global Sustainable Equities and the strategy saw inflows of over £200m in the year. A product range well placed for changing regulation As client demand has shifted towards products more focused on sustainability and ESG, this has been reflected in a changing regulatory focus. Regulators and industry bodies have sought to standardise approaches in an area with often inconsistent taxonomy. The most prominent example of this has been the launch of SFDR, which applies to funds domiciled within the EU or those marketed to EU-based clients. This regulation defines and labels funds which have ESG factors integrated (Article 6) and those which either promote environmental or social characteristics or have sustainable investment as their objective (Articles 8 and 9). Other regulators, including the FCA in our home market, are working towards comparable product definitions, and we are well placed to position our product range when these definitions are confirmed. Amid a significant increase in the intensity of debate around sustainable investments and evolving client expectations, we believe it is our responsibility to clearly articulate and differentiate our approach. Having engaged with our clients, our over-arching approach is one of authenticity. We have not amended investment processes or objectives for existing strategies in which our clients are already invested. However, we have in some cases looked to launch Article 8- or 9-compliant versions of existing strategies, such as with the Article 8 Dynamic Bond ESG. All of Jupiter’s EU-domiciled funds are defined at least as Article 6. Full details are in the table below, but Article 8 funds include a range of products investing in European and emerging market equities, emerging market debt, as well as Global Sustainable Equities and Dynamic Bond ESG. Article 9 products include the Global Ecology Growth and Diversified funds, as well as the newly launched Global Ecology Bond fund. 2. OUR SUSTAINABILITY-FOCUSED PRODUCT RANGE 49Jupiter Fund Management plc | Annual Report and Accounts 2021 The principle of active responsibility means that we must hold ourselves to the same high standards as we expect of our investee companies. This means acting responsibly for our people, for our communities and for the environment. This year, we are reporting in line with the UNGC framework, detailing how their ten principles are embedded throughout our activities and operations. Our inaugural communication on progress can be found from page 52. Our business is built on the value of our people. As we return to the office after almost two years of intermittent remote working, the importance of a strong culture led by inclusivity and collaboration cannot be overstated. Full details on how we are supporting our people, developing our culture and promoting diversity and inclusion can be found from page 36. Our CSR committee is dedicated to driving active responsibility across the Group. Full details of its membership can be found on page 43, with its key activities and outcomes in the table opposite. Protecting our environment Jupiter’s operations do not produce significant levels of GHG emissions. However, we are committed to operating on a net zero basis by 2050, including within our operations. Details on our current emissions and our targets can be found in the TCFD section from page 45. In addition to this, we have partnered with Forest Carbon, a not-for-profit scheme providing woodland carbon capture projects in the UK. By investing in woodland creation in the UK, we are not only removing carbon emissions but also facilitating flood alleviation, habitat creation, employment, public access and cleaner air, benefiting wider society. Supporting our communities We strongly believe that we have responsibility to positively contribute to the local communities in which we operate, both through direct activities and through empowering our people to provide support. In 2019, we introduced an employee volunteering scheme, allowing our people leave to support local charitable efforts, the allowance for which was doubled the following year. Although the pandemic made this more challenging, the scheme will be actively promoted through 2022 to help our people find and support causes. Jupiter has a well-established charity committee, sponsored by a member of the Executive Committee. Over the course of 2021, Jupiter gave over £200,000 to charity, the majority of which has been donated through Jupiter’s Give as You Earn scheme, operated by the Charities Aid Foundation. This scheme provides Jupiter employees with the opportunity to support the charities of their choice either by donating a nominated amount each month through payroll or through one-off donations for certain events or activities. Jupiter then double matches the employee contribution up to a maximum amount. The Company decided last year to increase the amount by 50% to £1,500 per employee per year. Each year, we also work closely with a charity partner, which is nominated and chosen by our employees. The criteria for selection asked that the charity should be small enough for Jupiter to have a meaningful impact and provide good opportunities to engage in volunteering and fund raising. This year, we have supported the Momentum Children’s Charity, which supports seriously ill children and their families. We are proud of the imaginative activities organised and the enthusiastic support they received from staff in terms of participation and giving. Walking challenges ‘Move for Momentum’ and ‘Miles for Momentum’ early in the year supported staff health and mental wellbeing during lockdown, while also providing a chance for lots of employee engagement. Later in the year, a staff quiz provided an excellent opportunity as part of our return to office reconnection plans. Jupiter has worked closely with the charity to maximise their profile within the business through another challenging year. Jupiter has also worked closely with two charities local to our headquarters in London, which are making a valuable contribution to our local community. We have donated plants, materials and planters to the ‘KSP Community Garden’, a voluntary project led by residents of the Westminster Cathedral Area. We have also donated gifts provided by our employees as part of the Jupiter Giving Tree initiative to ‘The Passage’, an organisation that has been caring for homeless people in London for over 40 years. Our work has continued with St Andrew’s Youth Club, a local community-based youth club which aims to enrich young lives and provide an informal education to help youths contribute to society. Acting with integrity The principle of acting with integrity is embedded within our values and applies to all aspects of how we conduct ourselves. Jupiter is a constituent part of the FTSE4Good Index, a group of companies adjudged to have scored highly in terms of transparency and quality of ESG policies, across environmental sustainability, relationships with stakeholders, attitudes to human rights, supply chain labour standards and the countering of bribery. We are a member of the Good Work Coalition. This is an initiative run by ShareAction, focusing on workforce issues such as the Living Wage, diversity and inclusion and insecure working practices. We are also an accredited London Living Wage employer. Throughout the Covid pandemic, we did not furlough any of our staff and we worked with our contracting companies to ensure that any furloughed staff received full pay and benefits. Recognition for our commitment to sustainability Our commitment and expertise across sustainability has been recognised externally this year. Jupiter was accepted as a signatory to the Stewardship Code. The FRC stated that the strongest areas of our submission were our overall quality of reporting on engagement, approach to systemic risk and our disclosures covering the promotion of a well-functioning market. In November, the FRC published a report into Effective Stewardship Reporting, which identified best practice in both activities and disclosure. We were pleased that Jupiter was cited twice in this report, concerning both a collective engagement case study on BP plc and the manner in which we outlined integration of stewardship across our asset classes. Our commitment in this area also continues to be recognised by the PRI. Jupiter has been awarded an A+ PRI rating for our overall strategy and governance, and either A+ or A for all but one of our rated investment strategies. We also saw an improvement in our third-party ESG rating agency scores this year. We were rated as “Advanced” by Morningstar in our ESG commitment level, one of only five asset managers to achieve that rating. We also earned a ratings upgrade from Sustainalytics, to put us among the top four asset managers which have achieved the most to reduce exposure to material ESG risk. 3. OUR CORPORATE COMMITMENTS ESG AND STEWARDSHIP continued 50 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT Memberships and signatories CSR committee Activities Outcomes H1 2021 Update on UNGC signatory process Creation of internal working group comprised of procurement, stewardship, finance, HR and facilities colleagues to align responsible business practice and share knowledge. Update on stewardship engagements concerning Boohoo (supply chain) and Kingspan and Bellway (Grenfell / cladding related) On Boohoo, engaged with the remuneration committee to reach agreement on changes to performance conditions for their long-term incentive plan. Engaged with CEO and Chair of Bellway to discuss cladding issues with respect to company and industry response. Direct and collaborative engagement with Kier Group, voted against remuneration report due to remuneration outcome concerning outgoing director responsible for the insulation business. Update on operational emissions and approach to business travel as we consider strategy and behavioural changes from the pandemic Jupiter has embraced the changes to both working and travel practices that have arisen out of the pandemic. Staff are encouraged to use technology instead of travel where appropriate. We have invested in establishing an in-depth appraisal of our Scope 3 emissions (cat 1-14) and are developing a 1.5°C aligned pathway. We are also aligning the reduction of our operational Scope 3 emissions with our commitment for our Scope 1 and 2 emissions to be net zero by 2030. Discussion centred on findings and guidance from Carbon Intelligence on measuring Jupiter’s Scope 3 emissions Update on ESG regulatory reporting under SFDR Internal Working Group established consisting of operations, distribution, stewardship, and data science teams to strengthen ESG reporting. H2 2021 Update on and approach positioned around corporate interim net zero target Analysis undertaken with consultant Carbon Intelligence to position interim target. Carbon Intelligence have also been engaged to carry out an in-depth assessment of our Scope 3 emissions from 2020 and 2021. Discussed further clarity on governance processes to oversee fund categorisation and oversight of EU SFDR products Creation of an internal Jupiter SFDR Article 8 framework which acts as a reference guide for investment strategies to establish positioning around the promotion of environmental and social characteristics. This framework also aids internal oversight functions to develop their monitoring approach. Update from legal department on industry issues of greenwashing and regulatory focus Update on HM Treasury Greening Finance Roadmap and FCA Sustainability Disclosure Regulation Jupiter responded to the FCA Discussion Paper in January 2022. In constructing this response, Jupiter engaged with the FCA as part of wider industry roundtables organised by the UK Sustainable Investment and Finance Association and Latham & Watkins. Sustainability Disclosure Regulation Update from product development team regarding progress around EU SFDR rules Although the SFDR timeline has been pushed back to 1 January 2023 work on our data infrastructure, product development and client reporting has continued. Charity committee update focusing on donation target for 2022 The charity committee is working towards expanding our charitable activities, to support both charities local to our headquarters in London and those close to our regional offices. 51Jupiter Fund Management plc | Annual Report and Accounts 2021 Jupiter became a signatory to the UNGC in February 2021. Below, we present our inaugural communication on progress, detailing how we incorporate the ten principles into our business operations and investment strategies. “Jupiter Fund Management plc remains committed to upholding and embedding the UNGC’s ten principles into our strategy, culture and day-to-day operations. We are pleased to present our inaugural communication on progress within the 2021 Annual Report.” Andrew Formica Chief Executive Officer February 2022 UN GLOBAL COMPACT – COMMUNICATION ON PROGRESS The following pages outline our ongoing support and commitment to upholding the ten principles of the UNGC in the areas of: HUMAN RIGHTS ENVIRONMENT LABOUR ANTI- CORRUPTION Human rights & modern slavery Upholding human rights across our business model is embedded in our culture. This includes both how we treat individuals and how we encourage individuals within the Group to interact with each other. We protect the rights of our employees through our employment policies and practices, which prohibit discrimination and promote inclusivity. At Jupiter, diversity and inclusion remains a key priority for our stakeholders and an area of focus for the Group. More details on Jupiter’s culture and the ways in which we are promoting diversity and inclusion can be found from page 36. Jupiter began participating in the Workforce Disclosure Initiative (WDI) in 2019. The WDI survey has been designed to gather information on the issues most crucial to decent work and human rights in the workplace, such as evidence of efforts to improve health and safety standards, policies and practices related to employee wellbeing, and actions relating to supply chain management. We have due diligence procedures in place to ensure our suppliers uphold human rights both in their own organisations and, in turn, in those of their suppliers. We have worked to enhance our ability to assess any emerging risks of modern slavery or potential human rights abuses anywhere within our supply chain. During 2021, we developed a new framework, policy and code of conduct for supplier relationships. Together, these require that ESG factors will be considered in the evaluation of all new providers, ensure that ESG due diligence will be undertaken on a regular basis and request that suppliers conform to our code of conduct. We have committed to further work during 2022 to embed ESG consideration deeper into our range of guiding frameworks. Working with regulators and state authorities Compliance with all relevant legal and regulatory requirements is of critical importance to our business. Our culture supports ethical behaviour and individual accountability. We encourage employees to raise any concerns through our confidential whistleblowing arrangements. All entities within the Jupiter Group deal with respective regulators and state authorities in an open and cooperative way. The Group discloses to its regulators and state authorities anything relating to the Group of which that regulator or state authority would reasonably expect notice. As an investment firm, our policies and procedures designed to combat financial crime are of material importance to our business. Financial crime includes money laundering, terrorist financing, bribery and corruption, tax evasion and fraud. We have numerous policies and procedures designed to reduce the extent to which Jupiter’s products could be used in connection with financial crime and a dedicated financial crime team within the compliance department. Taxation We do not tolerate tax evasion, nor do we tolerate the facilitation of tax evasion by any person acting on the Group’s behalf. We seek to manage our tax affairs in a straightforward way, which means that we comply with our tax filing, reporting and payment obligations in all jurisdictions in a timely manner. Our corporate structure and operating model ensure that our tax affairs are transparent to the tax authorities. Our approach is governed by a Board-approved tax strategy. We ensure this strategy, and the procedures and controls which underpin our approach, are appropriate, monitored and fully implemented. All of our employees are required to undergo training in preventing the facilitation of tax evasion. ESG AND STEWARDSHIP continued 52 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT Human Rights Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights Highlights • Please see Jupiter’s Modern Slavery Act and Human Trafficking Statement, published in accordance with Section 54 of the Modern Slavery Act 2015 (the ‘Act’), which sets out the actions that we have taken to understand all potential modern slavery risks related to our business, and to implement steps to ensure that slavery and human trafficking are not taking place in our business or supply chains. Information Source(s) Modern Slavery Act and Human Trafficking Statement. Principle 2: Make sure that they are not complicit in human rights abuses Procurement • During 2021, we developed a new framework, policy, and code of conduct, which together require: – ESG to be part of any evaluation of a new provider; – ESG due diligence to be undertaken for certain suppliers prior to onboarding; – Ongoing due diligence for certain suppliers on an annual basis; and – Suppliers to conform to the supplier code of conduct. • We have committed to further work during 2022 to embed ESG consideration deeper into our range of guiding frameworks. • Training: During the period, we rolled out targeted human rights-focused training across the business to those in regular contact with suppliers, to improve awareness and to provide employees with the tools needed to identify potential risks of modern slavery and human trafficking. • Modern slavery: We are seeking updates to disclose modern slavery in the employee handbook, provided to each employee and details our conduct rules framework and how employees can report unethical behaviour or practices, such as suspected modern slavery, through internal and external channels set out in our ‘whistleblowing policy’. Modern slavery is also part of our supplier risk assessment, creating a more targeted approach to due diligence for higher risk providers. HR • Employment policies: Our employment policies adhere to relevant employment laws and best practices, protect our employees’ human rights and ensure a modern employment proposition including fair terms and conditions and a comprehensive provision of employee benefits. The Employee Handbook sets out Jupiter’s employment policies, which is provided to all employees and includes details of our conduct rules framework and our expectation that each employee acts with integrity, due skill, care and diligence. • Whistleblowing: We have a whistleblowing policy and service, details of which can be found on our website, adopted to foster a culture of openness and transparency and to encourage employees to raise concerns about any suspected wrongdoing. Investment and stewardship • We systematically assess and monitor our investments against the human rights agenda. This utilises third-party datasets to consider investee company approaches and behaviours. During the year we have also increased data resource that is targeted at scrutinising companies for UNGC violations and other recognised global norms. • These protocols apply across strategies. However, during the period Jupiter has established its EU SFDR Framework. Our Article 8 and 9 products also reference company behaviours around the UNGC. • During the period, we sought to strengthen ESG integration in line with asset classes, with a particular focus on fixed income. We developed a proprietary Sovereign ESG Rating Framework as a tool for fund managers and analysts to use as part of their investment process. Over 15 different indicators linked to reputable global data sources span across ESG themes. Information Source(s) Modern Slavery Act and Human Trafficking Statement. 2020 CSR Report 2021 Stewardship Report Whistleblowing Policy Further information on Human Rights investment case studies will be available in the 2021 Stewardship Report 53Jupiter Fund Management plc | Annual Report and Accounts 2021 Labour Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining We support the principles of freedom of association and collective bargaining. The total percentage of employees covered by collective bargaining agreements can be found within Jupiter’s CSR Report. Jupiter also operates Connections, our collective consultation staff forum, which has its own terms of reference. Members of the forum are all employees and represent each department and business area and are directly elected by the relevant business area. Information Source(s) 2020 CSR Report Principle 4: The elimination of all forms of forced and compulsory labour As stated above, Jupiter’s modern slavery statement sets out the actions that we have taken to understand all potential modern slavery risks related to our business, and to implement steps to ensure that slavery and human trafficking are not taking place in our business or supply chains. Information Source(s) Modern Slavery and Human Trafficking Statement Principle 5: The effective abolition of child labour As stated above, Jupiter’s modern slavery statement sets out the actions that we have taken to understand all potential modern slavery risks related to our business, and to implement steps to ensure that slavery and human trafficking are not taking place in our business or supply chains. Information Source(s) Modern Slavery and Human Trafficking Statement Principle 6: The elimination of discrimination in respect of employment and occupation Investments / stewardship: • To address key labour risks associated with workforces, supply chains, human capital and diversity and inclusion, we actively work with industry stakeholders to promote continued improvement in these areas. We are an investor supporter of the WDI, an UK Investor Working Group member of the 30% Club, and joined the ShareAction Good Work Coalition in 2021. For further information on the roles we played in these industry initiatives and how they have informed our stewardship practices, please refer to the 2020 Stewardship Report and further information will be disclosed within our 2021 Stewardship Report. Procurement: • London Living Wage is paid to all supplier staff that provide services at our London Head Office. HR: • Jupiter operates an equal opportunities policy which includes a commitment to providing equal opportunities in employment and to not discriminating unlawfully against job applicants, employees, workers or contract workers on the grounds of their age, disability, gender reassignment, marriage or civil partnership, pregnancy or maternity, race (which includes colour, nationality and ethnic or national origins), religion or belief, sex or sexual orientation (any of the characteristics protected by law). Jupiter also operates policies in respect to victimisation and harassment and employees are encouraged to report any concerns to their line manager, head of department, or HR or use the Whistleblowing facilities available. Information Source(s) 2021 Stewardship Report 2020 Stewardship Report Whistleblowing policy Diversity & Inclusion statement ESG AND STEWARDSHIP continued 54 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT Environment Principle 7: Businesses should support a precautionary approach to environmental challenges Investments / stewardship: • Since joining the NZAM initiative in February 2021, we have disclosed that our fundamental, long-only, developed market equities strategies (42% of AUM) will be included in the initial target scope and disclosed an interim target of a 50% reduction in emissions by 2030, against a December 2020 baseline. We are currently working towards setting asset alignment targets for individual investment strategies, to be disclosed within Jupiter’s 2021 Stewardship Report (published in April 2022). • In addition to our robust risk management and governance process, details of which can be found within the 2021 Stewardship Report, during the year the stewardship team have been incorporated into the established quarterly Fund Management Challenge meetings to enhance ESG scrutiny. Information Source(s) 2021 Stewardship Report Principle 8: Undertake initiatives to promote greater environmental responsibility Investments / stewardship: • Collaborative initiatives: In 2021, we became signatories to the following environmental focused initiatives: Finance for Biodiversity Pledge, FAIRR initiative, NZAM Initiative and Forest Carbon Initiative. For a comprehensive list of market initiatives that we are involved with, please see Jupiter’s 2021 Stewardship Report. • Jupiter is represented in the Policy Committee of the UKSIF. This is a committee of policy and ESG experts from the asset owner and manager community that looks to promote the sustainable finance agenda across government and policy makers. • SFDR: As an approach to promoting the environmental and social agenda, Jupiter’s approach to Article 8 status under SFDR will feature the following ESG characteristics: 1. Transition to a low carbon economy 2. Promotion of a positive stakeholder agenda. • Regulation: In light of changing best practice and ESG regulation, to increase oversight and firm-wide connectivity on topics such as environment, our various internal governance forums will now include oversight of the sustainability performance and approach of our financial products. Operations: • We are a founding member of the RE100 initiative and purchase renewable electricity in all of our material offices with the exception of Hong Kong, where we purchase International Renewable Energy Certificates. • Waste initiatives – in our headquarters in London, waste volume is tracked through each waste stream and on average we are recycling 94.8% of waste. • The Board has committed that our operations will be net zero in Scope 1 and 2 emissions by 2050. • Please refer to Jupiter’s Environmental Policy Statement and CSR Report for further information on how we are managing the direct impacts of our activities on the environment and embedding ESG in our operations. • 2021 Scope 1, 2 and 3 GHG reporting can be found within our 2021 CSR Report. Suppliers: • Jupiter assesses the environmental performance of suppliers as part of its purchasing policy and suppliers are expected to abide by Jupiter’s Supplier Code of Conduct which includes adhering to our ESG values and efforts to reach net zero. Information Source(s) 2021 Stewardship Report 2020 Environmental Policy Statement 2021 CSR Report Principle 9: Encourage the development and diffusion of environmentally friendly technologies Investments / stewardship: Jupiter’s Environmental Solutions strategy seeks to generate long-term capital appreciation and income by investing in listed equity and fixed income securities that focus on making a positive impact towards environmental and sustainable objectives. We seek to do this through investment in organisations focused on solving one, or both, of the two main environmental challenges of our time: climate change and natural capital depletion. The starting point for the analysis methodology is to establish an investment universe of opportunities that align to one or more of our seven environmental solution themes: Circular Economy, Clean Energy, Energy Efficiency, Water, Sustainable Agriculture, Nutrition & Health, Environmental Services, and Sustainable Mobility. Five of our seven themes relate to climate mitigation and adaptation and are informed by the text of the Paris Climate Agreement data from the IPCC reports. Information Source(s) Transparency-Code_ UK_2021_Jupiter-Ecology- Fund-Global-Ecology- Growth-Global-Ecology- Diversified.pdf (eurosif.org) 55Jupiter Fund Management plc | Annual Report and Accounts 2021 Anti-Corruption Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery Compliance: • Jupiter has risk-based policies and procedures in place to combat financial crime. These include but are not limited to anti-money laundering (AML), sanctions, anti-bribery and corruption, fraud, market abuse and tax evasion. • Training: All Jupiter employees receive regular financial crime training, which includes but is not limited to AML, market abuse, sanctions, fraud, anti-bribery and corruption, and preventing the facilitation of tax evasion. • Governance: All policies are subject to at least an annual review by the Financial Crime Compliance Team and follow the Jupiter Policy Framework. All policies are owned and approved by a Senior Manager or applicable Board/Committee. However, Senior Managers may delegate certain responsibilities provided that adequate oversight is applied. • Other policies: As mentioned above, we also have a Modern Slavery Act and Human Trafficking Statement, Procurement Framework, Policy, and Code of Conduct. Whistleblowing: As mentioned above, Jupiter has a whistleblowing policy and independent service, details of which can be found on our website. Investments / stewardship: • Our investments are systematically assessed and monitored against corruption risks, utilising third-party datasets and company engagement opportunities. Our proprietary ESG data platform, ESG Hub, utilises data which assesses company risk for corruption and flags any material risk incidents. As mentioned above, we have increased our data resources to improve our scrutiny of companies. Where a company is accused of any form of corruption, we consult the available information and take appropriate action on a case-by-case basis. Information Source(s) 2020 CSR Report www.jupiteram.com/ board-and- governance/#statement- and-policies 2021 Stewardship Report. ESG AND STEWARDSHIP continued 56 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT The non-financial information required to be disclosed under the Companies Act is detailed below and certain information is included by reference to the following locations in the Annual Report and Accounts: Jupiter has a number of policies and statements which are in place to support the effective governance of the organisation. For the purpose of the non-financial reporting requirements these are included in the table below together with the impact and outcome for each policy. Clients Treating Customers Fairly This Policy is to ensure that the Group consistently embeds the principle of treating customers fairly, which includes commitment to dealing with investors in its products and its discretionary clients honestly, openly, competently and with integrity. Conflicts of Interest This policy is designed to ensure that we operate to high standards and take all appropriate steps to identify and prevent, or manage conflicts of interest that may occur between the interests of one client and another or between the interests of a Group company (or an employee) and clients. Our People Diversity and Inclusion There is a Diversity and Inclusion statement for both the Board and the wider Company which sets out our approach to promoting a culture of diversity and inclusion. Conduct Rules The Conduct Rules are high-level overarching requirements that apply to individuals on how they conduct themselves in relation to their activities at Jupiter and, where relevant, their personal conduct. They are designed to ensure our people act with integrity and uphold the highest standards of conduct. Health and Safety The policy is designed to protect the health, safety and welfare of our employees and to provide and maintain safe working conditions. Whistle Blowing The purpose of the policy is to outline the channels through which employees can raise issues or concerns about the activities of Jupiter or its employees. It has been adopted to foster a culture of openness and transparency and to encourage employees to raise concerns of suspected wrongdoing. Environment and Society Environmental This policy provides a commitment to mitigate the direct impacts of our activities on the environment wherever possible. Stewardship The stewardship policy details how we incorporate voting, governance and sustainability considerations into our investment management process to improve the outcomes for our clients. Tax Strategy This strategy ensures that we comply with our tax reporting and payment obligations in a timely manner and that we engage with tax authorities in a co-operative and transparent way. NON-FINANCIAL INFORMATION Human Rights Human Rights We strongly support the protection of individuals’ human rights and this is embedded in our corporate values. Our employment policies and practices are designed to protect our employees’ human rights. Modern Slavery Our modern slavery statement details the steps we have taken to manage the risk of instances of modern slavery in our workplace and throughout our supply chain. Data Protection This policy is designed to ensure we protect any personal information that the Group may hold related to individuals. Financial Crime Anti-Bribery and Corruption This policy ensures that the Group operates to high ethical standards and complies with all applicable anti-bribery and corruption laws. Anti-Money Laundering and terrorist financing The Group’s AML framework is designed to ensure that it complies with the requirements and obligations set out in relevant legislation, regulations, rules and industry guidance and mitigates the risk of the Group being used to facilitate financial crime. Anti-Tax Evasion The Group is committed to acting professionally, fairly and with integrity in all its business dealings and relationships wherever it operates and implementing and enforcing effective systems to counter the facilitation of tax evasion. Market Abuse The purpose of this policy is to ensure Jupiter staff observe the proper standards of market conduct, protect the integrity of the markets in which we operate and do not obtain an unfair advantage from the use of inside information to the detriment of third parties who are unaware of such information. Policy implementation We ensure the effective implementation of our policies by: • fostering a culture of integrity and accountability; • clear communication of our policies through our employee induction, training, management briefings and our intranet, through which we make our key policies available to our people; • our governance framework, including our Board, management and reporting committees, which provide us with a robust structure within which we oversee the implementation of the policies; • workforce training programmes, covering areas such as anti-bribery and corruption, money laundering, market abuse and tax evasion, which employees are required to complete each year; • our employee handbook, which assists with contractual terms, expected conduct and our policies; and • reviewing the majority of our policies at least annually to ensure they are in line with best practice, meet our regulatory requirements and are updated with any changes required for their effective implementation. The business is responsible for implementing these policies, principles and codes and their effectiveness is reviewed by our Risk and Compliance monitoring team (second line of defence) and our Internal Audit function (third line of defence). For further information on how our three lines of defence model operates, please see the Risk section on page 60. We operate an independent whistleblowing line enabling our employees to confidentially raise any concerns, including non-compliance with our policies and procedures. The Chairman of our Audit and Risk Committee is responsible for overseeing the investigation of any whistle-blowing reports. Non-financial information Section Page Business Model Our Business Model 6 Principal risks Our Approach to Risk Management 60 Key performance indicators Key Performance Indicators 18 TCFD Statement ESG and Stewardship 40 57Jupiter Fund Management plc | Annual Report and Accounts 2021 ENGAGING WITH OUR STAKEHOLDERS STRATEGIC REPORT Engagement with our stakeholders in order to understand their views and priorities is critical to our success and enables us to make better informed decisions. Why we engage, the key priorities of our stakeholders and the ways in which we engage with them can be found below. CLIENTS Why we engage Our clients are the people and firms that invest in our funds and segregated mandates. We engage to help us understand their needs, investment objectives and priorities, and how these will evolve. What is important to them • Investment capabilities. • Investment returns net of fees. • Our ESG approach and practices. • Client service and reporting. How we engage • Primarily through our Distribution and Investment Management teams, who are key to building relationships with current and potential clients. • We have held virtual and physical meetings, conferences and road shows. • We publish podcasts and articles to provide clients and potential clients with our insights into markets. STATE AND REGULATORS Why we engage State authorities set the legal, regulatory and tax frameworks within which we operate, and regulators are responsible for supervising their respective financial systems and the entities which operate in them. They have an interest in ensuring we act with integrity, comply with requirements and are effective stewards of our clients’ investments. We also engage with regulators and policy makers to help develop and understand evolving regulatory requirements. What is important to them • Protecting the interests of clients. • Maintaining the integrity of markets and ensuring their smooth operation. • How we run our business, including our governance, control environment and ESG approach and practices. How we engage • Primarily through our Risk and Compliance and Legal teams, overseen by the relevant boards of directors. • Meetings with senior managers and Directors, where appropriate. • Regular filings and submissions regarding investment and business activities and certain changes thereto. SHAREHOLDERS Why we engage Our shareholders are the people who own the business and we rely on their support and engagement to help us deliver our long-term strategy. Understanding their views and providing regular updates to them on the performance of the business is of key importance to the success of the Company. What is important to them • Long-term sustainable business. • Our ESG approach and practices. • Attractive returns. • High standards of governance and effective risk management. How we engage • Our results presentations and roadshows with investors, which are a critical part of our investor relations programme. • Meetings with Directors and senior management. • Our shareholder engagement webinar, which was held before our AGM, provided shareholders with the ability to engage with the Board of Directors before voting at the AGM. £117.0m Regulatory capital surplus 17.1p Dividends paid £16.5bn Gross sales > Details of how the Board has engaged with and considered stakeholders’ interests in key decisions can be found on pages 81 to 82. 58 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT BUSINESS PARTNERS Why we engage Our business partners include our distribution partners (fund of funds, platforms, global financial institutions, advisers, wealth managers, life companies, private banks and consultants) and our suppliers. They are critical to ensuring the effective distribution and servicing of our products and they supplement our operational infrastructure, which enables us to benefit from their expertise and scale. What is important to them • A product range which meets their clients’ requirements and delivers outperformance. • Development of beneficial and effective long-term business relationships. • Prompt payment for services and commissions. • Accurate and timely information, in order to fulfil their obligations. How we engage • Our Distribution and Investment teams engage regularly with our distribution partners through meetings and briefings. • Direct and regular contact with the relevant business areas to which the services/goods are supplied. • Our Procurement team who implement the governance framework for managing the relationships. • Direct meetings with senior managers and directors. SOCIETY Why we engage We have a responsibility to make a wider contribution to society. This includes the effective stewardship of the assets we invest on behalf of our clients, which we believe is the biggest potential impact we can have on society. What is important to them • The impact we and our investee companies have on the environment and wider society. • Our plans to improve and enhance the impact we have and achieve better outcomes for our stakeholders. • Our initiatives to support diversity and inclusion across the industry. How we engage • Our Investment managers, supported by our Stewardship team, regularly hold meetings with investee companies on ESG matters to help drive benefits for society. • We have direct engagement with our charitable partners, including through our volunteering partnership scheme. • The information we publish and our responses to direct queries. PEOPLE Why we engage It is our people who enable us to deliver for our clients and make a positive difference in the world. We engage with them to understand their priorities which helps us to retain, develop, motivate and recruit talented individuals who are aligned with our culture. What is important to them • Opportunities for career progression and development. • Working in a diverse and inclusive culture. • Fair reward and supportive benefits package. • Our ESG approach and practices. • Flexible working arrangements. How we engage • We have an employee forum, ‘Connections’, who feedback and discuss employee views and initiatives to support our employees. • All-employee townhalls and staff reconnection events. • Employee surveys. • Through our management structure including our Senior Leadership Group. • Our CEO holds ‘Meet the CEO session’ with staff from across all areas of the business. • Our all-employee magazine. 76% Employee engagement score 10 Critical supplier relationships £200k Charitable donations Section 172 Directors’ Duty The Directors have continued to discharge their duties in accordance with section 172 of the Companies Act, which includes the need to consider the interests of the Company’s wider stakeholders. Details of how the Directors have fulfilled their duties can be found throughout the Strategic and Governance reports. The content above on stakeholder engagement and further details on how the Directors’ duties are discharged, and the oversight of these duties, are included in the Governance section starting on page 68. 59 Jupiter Fund Management plc | Annual Report and Accounts 2021 RISK AND FINANCE COMMITTEE The Risk and Finance Committee is responsible for the oversight of the Group’s risk profile relative to its agreed risk appetite. It is accountable for overseeing the design and operating effectiveness of the Group’s risk management and capital management frameworks and policies, including compliance with relevant regulations. The Committee reports material findings, recommendations and escalations to the Executive Committee and, for certain matters, to the Audit and Risk Committee. EXECUTIVE COMMITTEE The Executive Committee is responsible for implementing the strategy and objectives set by the Board and communicated by the Chief Executive Officer, and ensuring the implementation of a sound system of internal governance, control and risk management. This includes monitoring compliance with the regulatory framework of the markets in which it operates. It is also responsible for implementing the Group’s culture, values and standards. AUDIT AND RISK COMMITTEE The Audit and Risk Committee is responsible for reviewing and monitoring the integrity of the Group’s financial statements. It is also accountable for reviewing the effectiveness of the Group’s risk management and its internal control systems, oversight of the Internal Audit function and the Group’s relationship with external auditors. STRATEGIC REPORT OUR APPROACH TO RISK MANAGEMENT Managing risk in a manner which helps Jupiter achieve its strategic goals whilst protecting our clients, business and stakeholders. The Board and executive management are responsible for establishing and maintaining a strong risk management and compliance culture that embeds and supports a high level of risk awareness and a strong internal control environment. This is achieved through leadership behaviours which establish the tone from the top, our governance structure, a clear definition of roles and responsibilities, and a robust risk management framework. The Group has a comprehensive approach to identifying, monitoring, managing and mitigating risk. Risk governance and responsibilities The Group operates a three-tier risk governance framework, generally known as the Lines of Defence model, which distinguishes between risk management and risk oversight. This approach provides a clear and concise separation of duties, roles and responsibilities. The Board has ultimate responsibility for oversight of the risks of the Group and for determining the risk appetite limits within which the Group must operate. It delegates day-to-day responsibility of risk management and control activities to the Chief Executive Officer assisted by the Executive Committee and the Risk and Finance Committee, with oversight from the Audit and Risk Committee. The Enterprise Risk Management Framework (ERMF) clearly defines the roles and responsibilities for risk management and provides a process for escalation through our governance structure, which enables ongoing and robust oversight. THREE LINES OF DEFENCE FIRST LINE RISK AND CONTROL MANAGEMENT The business functions and line managers across the Group are responsible and accountable for the identification, assessment and management of the individual risks and associated controls within their respective areas of responsibility. SECOND LINE RISK AND CONTROL OVERSIGHT Risk and Compliance, supported by additional control and oversight functions, provides independent oversight and challenge with respect to the first line’s management of their risks, and provides assurance that the Group’s regulated activities are undertaken in accordance with regulatory requirements. THIRD LINE INTERNAL AUDIT Internal Audit is an independent provider of assurance over the effectiveness of the Group’s processes and governance with regards to risk and internal control, assessing whether they are adequately controlled and challenging management to improve their effectiveness. 60 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT 1. Risk appetite The Group’s risk appetite defines the level and type of risk that the Group is prepared to accept in pursuit of its strategic objectives and business strategy, taking into account the interests of its clients, shareholders and other stakeholders, as well as capital and other regulatory requirements. An important part of the Board’s remit is to determine the Group’s risk appetite, taking into account its strategic plans, the business environment, and the current and likely future condition of our business and operations. 2. Top-down risk assessment (TDRA) The TDRA identifies the Group’s material risks and monitors the profile of these risks. It is informed by relevant data and information pertinent to the specific risk category, which is used to assess the residual risk impact and the likelihood of the residual risk crystalising. The individual residual ratings applied to each risk, and the qualitative rationale, are utilised to create a consolidated view of the Group’s risk profile which is presented to the Risk and Finance Committee for their oversight and approval, before being presented to the Audit and Risk Committee. 3. Risk and control self assessment (RCSA) The detailed, bottom-up identification and assessment of operational risk is performed by individual organisational units via an RCSA. The assessment identifies and monitors material risks and associated key controls by considering the operating environment, processes, roles and responsibilities, as well as risk incidents. Risks are assessed on both an inherent and a residual basis with ratings determined for potential impact and likelihood. Where processes or controls are seen to be insufficiently robust, line management is required to take appropriate action and define improvements to the operating environment to ensure they pose a minimal (or acceptable) level of risk to the Group. The ERMF enables Jupiter to identify and manage the material risks to which it is exposed. The ERMF supports the effective management of risks to ensure that the Group’s risk profile remains within its risk appetite; protects and enhances stakeholder value by contributing to the achievement of our objectives; and informs the Three Lines of Defence to ensure effective escalation of material risk issues. Enterprise Risk Management Framework 1. Risk Appetite 6. Key Risk Indicators 5. Risk Incidents 2. Top-Down Risk Assessment 4. Operational Risk Scenario Analysis 3. Risk and Control Self Assessment ENTERPRISE RISK MANAGEMENT FRAMEWORK (ERMF) 2021 enhancements During 2021, a number of initiatives were undertaken to enhance the way we monitor, assess and manage risk. These included: • Enhancement of our enterprise risk taxonomy to ensure a consistent methodology and approach for the assessment and reporting of risks; • Further development of the qualitative components of our risk appetite statement; • Redevelopment of our TDRA process; • Further enhancement of our framework for the management of liquidity risk; • Building our framework to support the assessment of ESG risks; and • Development of our processes to support operational resilience. 4. Operational risk scenario analysis Operational risk scenario analysis is a forward-looking assessment of exposures to severe but plausible operational risk events. It is used by the Group to identify and quantify the material risks that have the potential to impact Jupiter, based on the experience and opinions of internal subject matter experts. These are collated via a series of workshops and are further supported by internal and external event histories. A variety of scenarios (differing in nature, severity and duration) is used to estimate the impact of events on capital requirements. The Group also uses scenario analysis to ensure that we understand our exposure to high-severity events and implement mitigating actions, in line with our risk appetite. 5. Risk incidents A risk incident is a failure of process, people or systems which results in an actual or potential impact. Incidents are reported, recorded and investigated to determine root causes, impacts (e.g., financial losses, regulatory/legal breaches, etc.), themes and to ensure appropriate remediation work is completed to enhance the process, improve the control environment, and make good any negative outcomes that have resulted from the failure. Incidents are monitored and captured across the business and independently reviewed to ensure completeness and accuracy. Analysis of incidents is used to support our TDRA, RCSA and operational risk scenario analysis processes. 6. Key risk indicators (KRIs) KRIs are used by the Group to provide an early signal of changing risk exposure. We set thresholds and use them to monitor those exposures, which informs our overall assessment of the risk. Leading and lagging KRIs are employed to help identify trends and emerging risks which are used to inform and support management decision making. The Group’s suite of KRIs is a key input into the TDRA, as their performance helps in determining the view of the Group’s risk profile. Risk reporting Our view of the risk profile of the Group is reported regularly through our governance structure to ensure it receives an appropriately high level of senior management and Board attention. The Board takes action where a risk is deemed to be outside of appetite. Emerging risks Emerging risks are a condition, situation or trend that could significantly affect the Group’s financial strength, competitive position or reputation. These risks are raised by the business and challenged to consider likelihood, impact and action required. Emerging risks are captured through the quarterly TDRA process, as well as the RCSAs, to ensure that we are fully prepared should they begin to crystallise. 61 Jupiter Fund Management plc | Annual Report and Accounts 2021 OUR APPROACH TO RISK MANAGEMENT continued RISK PROFILE The Group is exposed to various risk types in pursuing its business objectives which can be driven by internal and external factors. Understanding and managing these risks is both a business imperative and a regulatory requirement. Our taxonomy defines and describes these risks, providing a consistent methodology for assessment and reporting. Some risks are pursued to support the business plan, such as the risks relating to investment performance. Other risks are inherent in routine business activities, such as the risk of financial crime. The differing risks faced by the Group are documented within our taxonomy and managed through the Group’s ERMF in line with risk appetite. The type and severity of the risks we face can change quickly in a complex and competitive environment, therefore the framework for managing these risks is dynamic and forward-looking to ensure it considers both current and emerging risks which could potentially impact the Group. Enterprise risk taxonomy As an asset management firm, Jupiter’s most material risk exposures are in the strategic, market and operational (including regulatory) risk categories. However, our exposure to capital adequacy, liquidity, and credit/counterparty risks is also monitored to ensure they are managed on a prudent basis and remain within regulatory requirements and the Group’s risk appetite. In addition, the Group is exposed to transversal risks, including ESG, operational resilience, reputational and conduct. These risks, and associated harm, can crystalise across multiple areas within our taxonomy. We assess these risks as part of the TDRA, RCSAs and risk incidents. ESG risk The Group defines ESG risk as the risk that we do not meet our ESG obligations. The Group is committed to managing the direct impacts of its activities on the environment and has sought to embed ESG considerations into the broader governance ethos and culture of the Group. Our wider approach to ESG and Stewardship is set out on page 40 and our approach to the management of potential material climate risk is described on page 47. Operational resilience risk The Group defines operational resilience as the Group’s ability to prevent, adapt, respond to, recover, and learn from operational disruption. Operational resilience addresses how the continuity of the services that the Group provides are maintained regardless of the cause of disruption and helps to ensure that it is prepared for the inevitability of disruption, rather than only trying to minimise the probability of disruption occurring. It includes preventative measures and the capabilities in terms of people, processes and organisational culture to adapt and recover when things go wrong. Reputational risk The Group defines reputational risk as the risk of loss or other adverse impact arising from unfavourable perception of the firm on the part of customers, counterparties, employees, regulators, shareholders, other stakeholders, the media or the general public. For example, reputational risk can arise as a result of operational risk incidents, strategic decisions, or generally as a result of inappropriate behaviour of the Group, as perceived by various stakeholder groups. Conduct risk The Group defines conduct risk as those which can arise from action, or inaction, which results in customer detriment, negative impact to market stability or restricts effective competition. The Group takes steps to mitigate the occurrence of conduct risks that could have a detrimental impact on our clients, markets or Jupiter itself. Harm The Group recognises that harm can be the result of the crystallisation of any of the risks to which it is exposed and takes steps to mitigate the impact on our clients, the markets in which we operate and on Jupiter itself. The ERMF considers both financial and non-financial impacts, which provide important insight when considering these three elements of harm. 62 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT Principal risks 2021 risk direction 1 Strategic Risk 2 Market Risk Operational Risk 3 People Risk 4 Client and Fiduciary Duty Risk 5 Execution, Processing and Reporting Risk 6 Product Risk 7 Model Risk 8 Data Management Risk 9 Technology and Information Security Risk 10 Outsourcing and Supplier Risk 11 Regulatory Risk 12 Legal Risk 13 Financial Crime Risk Increasing Impact Increasing Likelihood PRINCIPAL RISK HEAT MAP The heat map illustrates the relative impact and likelihood of a risk crystalising on a residual basis, which is considered to be the risk exposure after the application of existing, mitigating controls. 9 1 2 11 4 6 13 3 8 5 7 10 12 The heat map reflects the principal risk types to which the Group is exposed (as defined within our taxonomy) based on the potential impact and likelihood of them crystallising. We monitor all risks within the taxonomy, as well as additional transversal risks, through our regular TDRA of our risk profile. Overall, our risk profile remained stable during 2021, despite the ongoing headwinds from Covid-19 and we remain well-placed to adapt to further geo political challenges and the pace of global change. Technology and Information Security risk, and particularly the potential threat of a cyber-attack, remains one of our most material risks; however, the perceived likelihood of this risk has remained stable from 2020, as we continue to invest in our control environment and seek to reduce vulnerabilities where possible. Regulatory risk remains an area of focus, linked to continuing regulatory change, and has increased during the year. The Group’s regulatory footprint continues to evolve in line with our strategic activity, increasing in both complexity and geography, however this area remains well understood and managed. Our exposure to market risk remains stable, and arises on seed investments which are hedged for beta risk, where it is possible to do so. Gains and losses therefore generally arise from under or overperformance against a fund’s benchmark. Understanding and managing our People risk is essential to the success of our business. This risk remained broadly stable during the year as we moved from the relaxation of Covid-19 restrictions into our new hybrid working model. Further details on the assessment of each risk are included in the tables on the following pages. Increasing Decreasing Stable 63 Jupiter Fund Management plc | Annual Report and Accounts 2021 PRINCIPAL RISKS Strategic Risk Market Risk Operational Risk Risk • The risk to our business as a result of matters inherent in the nature of our business model or the financial and competitive markets in which we operate. • The risk of underperformance of funds managed by the Group relative to benchmarks, objectives or competition is included in this definition. • The risk of loss arising from market movements. This includes the risk that any market risk mitigation techniques prove less effective than expected. • Investment performance risk is included under strategic risk. • The risk of actual or potential loss and or client harm emanating from weaknesses or failures in our systems and controls, related to people, systems or processes, or from external events. These include risks arising from failing to properly manage key outsourced relationships and cyber-security. • Regulatory (failure to comply with regulatory obligations) and legal risk are included in this definition. Potential Impact • Failure to grow AUM. • Loss of client confidence. • Reputational damage. • Loss of revenue. • Unexpected losses from seed investments in funds, foreign currency exposures or interest rates on cash deposits. • Impact on the Group’s operating environment which in turn can lead to client dissatisfaction or harm. • Financial implications. • Reputational damage. • Increased regulatory scrutiny if a theme or systemic failure is identified. Mitigation • The Board sets the strategy and ensures the organisation has the right structure, leadership, culture and resources to execute it. • The Board and Executive Committee regularly review the strategic plan, opportunities and threats, budgets and targets. • Independent second line oversight of investment risks. • Progress is monitored and, where required, corrective action is taken. • Hedge investment to limit relative volatility across the seed capital portfolio. • Seed investments, redemptions and hedging are reviewed and approved by the seeding committee. • We continue to invest in our control environment and maintain efficient and well-controlled processes. We operate a comprehensive ERMF which enables the business to understand where risks lie and focus its efforts on key activities. • Regular review of control environment with corrective action taken where required. • We maintain a robust risk and compliance culture and require all employees to undertake training on relevant risk matters. 2021 Summary • Overall investment performance over three years has been positive with 58% of mutual fund AUM performing above the median peer group. We remain committed to delivering superior long-term investment performance and monitor this closely in order to ensure that we understand and challenge appropriately and are able to take prompt actions as necessary. We have seen continued uncertainty in markets during 2021, but believe we are well-placed to weather the increasing likelihood of further geo political events, as we have a diverse range of products, distribution channels and flexibility in our business model to respond to significant market disruption. Our Investment Risk team continued to work closely with fund managers to challenge fund risk profiles, and independently assess the portfolio risk. We continued to diversify the business in 2021 across regions and asset classes as we successfully implemented initiatives to enter new markets that provide further growth opportunities and reduce our reliance on individual markets, supported by enhanced monitoring of the related risks. • The Board continues to set aside an amount of seed capital to be used to invest in Jupiter funds to support and grow our investment offering. We monitor these positions regularly, and maintain appropriate hedges and limits, linked to our risk appetite, to ensure that our capital is not put at undue risk. • See pages 65 to 66 for summaries. 64 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT Operational Risk 3. People Risk 4. Client and Fiduciary Duty Risk 5. Execution Processing and Reporting Risk Risk • The risk of failures or poor practices relating to people management. • The risk of inadequate client management including sales misrepresentation, suitability assessments, on-boarding, client service obligations and Treating Customers Fairly. Ensuring that our products are both suitable and appropriately represented to clients is key to ensuring that they can make informed decisions on the funds they invest in. • The risk of failures related to transaction capture, execution, maintenance, and reporting. 2021 Summary • Jupiter prides itself on its culture, the quality of its workforce and ensuring that all staff feel valued and rewarded. Our culture is a key differentiator, enabling us to attract, motivate and retain talented individuals. We give autonomy, coupled with personal accountability, and encourage independence of thought and challenge. We actively manage succession and succession plans are in place for critical staff. • We have embedded diversity and inclusion goals and continue to invest in the development of our culture and staff. We remain committed to supporting our staff through the Covid-19 pandemic and have rolled out initiatives such as the hybrid working model to provide additional flexibility. • The Group undertakes market testing to ensure the products we are creating and distributing meet client needs and demand. We have a robust suite of policies and procedures to manage client and fiduciary duty risk, which must be followed by the business. Remote working continues to provide a challenging backdrop to maintaining client engagement. However, we have adapted our engagement model and developed our use of technology to ensure we remain connected to our clients and understand their needs. • We continue to invest in people, systems and processes to ensure that we are able to efficiently provide the quality of services our clients expect, as well as meet our ongoing regulatory requirements. Our operating model was strengthened during the year by consolidating a number of services and platforms, allowing us to better support future growth opportunities and to ensure that we are appropriately operationally resilient. 6. Product Risk 7. Model Risk 8. Data Management Risk Risk • The risk of product flaws or defects, or failure to adhere to specification. • The risk of poor design or implementation of models. • A data risk is a potential for business loss related to the governance, management and security of data. 2021 Summary • Throughout 2021 we continued to review our product offering to assess performance in line with client expectations. We have a strong product development and management framework and have developed a robust framework to support the implementation of SFDR and the new article classifications, including both existing funds and the launch of new SFDR-compliant funds. As the requirements of the UK Directive become clearer, we will further develop and enhance our framework, evolving where necessary. • Models are used throughout the organisation to help support decision making and oversight of key activities. Where investment models are used, we continually challenge the controls, governance oversight and resilience to ensure appropriate validation is performed and the output is consistent and accurate. • Ongoing work has been undertaken to ensure that we remain able to appropriately govern and manage our data and that of our clients. This has included projects to enhance our processes and systems across product types and clients, as well as a review of our enterprise-wide data warehouse and the development of the ESG Hub. We continue to invest in industry- leading tools and cloud-based data solutions, managed by a dedicated data governance team. 65 Jupiter Fund Management plc | Annual Report and Accounts 2021 OUR APPROACH TO RISK MANAGEMENT continued Operational Risk 9. Technology and Information Security Risk 10. Outsourcing and Supplier Risk 11. Regulatory Risk Risk • The risk of deliberate attacks or accidental events that have a disruptive effect on interconnected technologies (excluding third-party failures, which are covered under Outsourcing and Supplier). • The risk of incidents or failure of providers of services to deliver on their obligations, or inadequate selection or oversight of providers. • The risk of failing to comply with our regulatory obligations. This includes failures to implement changes required to meet new regulatory requirements. 2021 Summary • Our strategy for the management of information security and cyber security continues to evolve, to ensure that vulnerabilities are identified and remedied as quickly as possible. We have invested in ongoing training and awareness on the risks of phishing and similar attacks, and we continue to work with our third-party suppliers to ensure that they are able to demonstrate compliance with Group standards and internationally recognised good practice. Jupiter is certified in accordance with the UK government- backed Cyber Essentials Plus scheme, demonstrating our ongoing commitment to reducing the likelihood of a successful cyber security attack, despite the rising number of external attacks seen across the industry. • Work has continued to ensure that our overarching framework for the delegation of activities to third parties remains in line with regulatory requirements. Third-party outsourcing remains a key part of Jupiter’s business model, and we successfully completed two significant migrations during the year in order to consolidate support for our UK and European funds. During the year, we developed a new supplier management framework, incorporating an enhanced approach to third-party risk assessments, in order to ensure that we are able to identify, manage and monitor our outsourced arrangements in line with internal and external expectations. • Regulatory change remains significant as we continue to see a high volume of regulatory activity across the industry alongside our expansion into new markets, which further increases our regulatory footprint. To ensure we remain well placed to meet these challenges, we continue to invest in education, training and a robust second line function. We have a cohesive and holistic approach to managing the evolving landscape of regulatory risk across jurisdictions and utilise industry insight and specialist expertise as required. 12. Legal Risk 13. Financial Crime Risk Risk • The risk of failing to comply with our legal obligations. • The risk of financial crime such as money laundering and terrorist financing, bribery and corruption, fraud, market abuse or tax evasion. 2021 Summary • New funds, strategies and jurisdictions have increased the quantum and complexity of the legal risk Jupiter faces, specifically with our increasing presence in the US. Through our dedicated and experienced legal support team we are able to continue to support the business to navigate through these new challenges and strike a balance between maintaining a standardised business model whilst meeting both client and local geographic needs. • Regulatory change, delegation to third parties and geographical distribution continue to increase the complexity of the financial crime requirements with which we must comply. We continue to enhance our capabilities through changes to our operating model and greater use of technology where appropriate. 66 Jupiter Fund Management plc | Annual Report and Accounts 2021 STRATEGIC REPORT ESG risk Our ESG risk is increasing as a result of client focus, the uncertainty around regulatory requirements and industry challenges on data. Management of ESG risk is built on a combination of effective monitoring of significant holdings, application of expertise to identify risks and awareness of wider implications from a communication and client perspective. In the first line, individual fund managers are supported by experienced ESG Investment Directors, as well as the stewardship team. Oversight is conducted by the CIO office and Risk and Compliance to ensure the supporting framework remains relevant and robust. The Group completed several regulatory initiatives to ensure that we adapted to the evolving ESG-related regulatory and legal risk brought about by developments in local and overseas environments. Amongst these initiatives were developments to our SFDR product framework, transitioning of several products from SFDR Article 6 to Article 8, continuing development of our proprietary ESG data hub, and publicly disclosing the Group’s net zero target framework under the NZAM initiative. Conduct risk We have evolved our approach to managing conduct risk, linking it to individual and corporate behaviours, supported by monitoring by Internal Audit and Risk and Compliance. Our assessment of conduct risk has remained stable during 2021 and the Group continues to take steps to mitigate conduct risks that could have a detrimental impact on our risk profile. We have worked to ensure that risks related to the integration of staff into our corporate culture as part of the Merian acquisition were appropriately managed. We believe that all staff should act with integrity and have developed senior management accountabilities and a governance framework to promote appropriate behaviours. We have further developed our organisational visions and values to further these outcomes and reduce the potential for detrimental impact to our clients, the Group or the markets in which we operate. 67 Jupiter Fund Management plc | Annual Report and Accounts 2021 CHAIRMAN’S INTRODUCTION TO GOVERNANCE How these cultural pillars have been embedded across the organisation and the initiatives to help drive our culture has been an area of focus for the Board during the year. This has been particularly important in light of the remote working environment, which makes embedding culture across the organisation more challenging. Culture was a key part of our Board strategy off-site discussions and has been monitored throughout the year. The Group has a cultural dashboard which provides a qualitative and quantitative view of our culture linked to our cultural pillars. It includes consideration of a variety of metrics including employee survey results, employee turnover, appraisal processes, diversity and inclusion, incidents, staff training and development, control effectiveness, overdue actions from the business control forums and phishing test results. This helps the ongoing monitoring of the Group’s culture by both the Board and management. Nichola Pease Chairman “Our purpose has not changed; we exist to help our clients achieve their long-term investment objectives. This puts our clients at the centre of everything we do.” requirements to ensure we have a range of products and operate our business in a way which meets their investment objectives. At the 2021 Board strategy off-site held in June, we reviewed and refined our strategic priorities. Whilst this has not changed our overall strategy, it has sharpened our priorities. We believe that delivering on these key strategic priorities (as per page 16) will ensure the long-term sustainable success of our business. Details of the key Board activities during the year, how these link to our strategic priorities, principal risks and the key stakeholders impacted can be found on page 77 to page 80. Culture Ensuring we have a culture which supports our purpose and the delivery of our strategy, whilst enabling us to attract and retain the best talent, is a top priority for the Board. We have clear and defined cultural pillars which underpin how we do business; they put our clients first and ensure we recognise the value of our people who work collectively in order to succeed together, and that we challenge ourselves to ensure innovation and continuous improvement. Dear Stakeholder Good governance is critical to the development of a sustainable business and leads to better outcomes for all stakeholders. As part of our stewardship activities, we engage with the companies we invest in on governance matters, a key part of which is ensuring transparency over their governance arrangements. I am therefore pleased to present our corporate governance report for the year ended 31 December 2021. This report details how we have applied the provisions of the UK Corporate Governance Code and provides an overview of our governance framework and the work undertaken by the Board and its Committees during 2021. Purpose and strategy It is the Board’s responsibility to set the Company’s purpose and strategy. Our purpose has not changed; we exist to help our clients achieve their long-term investment objectives. This puts our clients at the centre of everything we do and ensures our business is focused on their long-term investment objectives which will evolve over time. In turn we have to evolve our business and strategy in line with their 68 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Board and Senior Executive changes There have been a number of changes to our Board and Senior Executive team during 2021. Edward Bonham Carter and Jonathon Bond did not seek re-election from shareholders at the 2021 AGM and therefore stepped down from the conclusion of the meeting in May. Edward has played a significant part in Jupiter’s development over the last 26 years, including seven years as CEO. Jonathon was our Senior Independent Director and had served on the Board for seven years before stepping down in 2021. On behalf of the Board, I would like to thank both Edward and Jonathon for their significant contribution to the Company and wish them all the very best for their future endeavours. We were delighted to welcome David Cruickshank and Dale Murray to the Board, effective 1 June 2021 and 1 September 2021 respectively. David was the former Chairman of Deloitte’s UK and then Global Boards and brings very broad experience and a detailed understanding of business transformation, people management and ESG matters. Dale is a technology entrepreneur who co-founded the British mobile telecoms software business Omega Logic. Dale brings technology expertise and a wider range of business expertise, primarily from outside financial services. Upon joining the Board, both David and Dale have also become members of our Nomination and Audit and Risk Committees. Polly Williams, having served on the Board for seven years, will not be seeking re-election at this year’s AGM and will therefore step down from the Board at the conclusion of the meeting. Polly was appointed to the Board and as Chairman of the Audit and Risk Committee in March 2015. She has made a significant contribution to the Company over her tenure and has been an excellent Chairman of the Audit and Risk Committee. I would like to extend our gratitude for her contribution to Jupiter’s development which has benefited all of our stakeholders. With effect from the conclusion of the AGM, David Cruickshank, who has served on the Audit and Risk Committee since 1 June 2021, will be appointed Chairman of the Audit and Risk Committee. We are delighted to confirm the appointment of Suzy Neubert with effect from 1 March 2022. Suzy has had a distinguished career within asset management, having started as an analyst she then moved into sales and marketing at Merrill Lynch and J O Hambro Capital Management, where she served as the Global Head of Distribution until 2020. Her detailed understanding of the sector and her expertise in distribution will be invaluable to the Company as we pursue our growth strategy. At the Executive Committee level our CIO Stephen Pearson and our HR Director Andy Robinson announced their retirement from the firm during the year. Both have made a significant contribution to Jupiter during their tenure, particularly Stephen who has been with the firm for over 21 years and has been our CIO since 2015. We have welcomed our new CIO, Matthew Beesley, and our new HR Director, Tracey Kinsella, and were delighted to appoint our Deputy CIO, Katharine Dryer, and Deputy Head of Distribution, Warren Tonkinson, to the Executive Committee. Diversity and inclusion Ensuring that we have an inclusive culture where every one of our employees feels included, able to be themselves and bring their own diversity and independence of thought is a key part of our business model. We believe that having a diverse workforce leads to better decision making, increased creativity, innovation and productivity. Diversity and inclusion has therefore remained a key area of focus across all levels of the organisation and more information on our initiatives to improve diversity within the Group and the industry can be found in our people section on page 39. At a Board level we have improved our gender diversity from last year with the appointment of Dale Murray and currently 33% of the Board are women. If Chris Parkin, who is a shareholder nominated Non-Executive Director, is excluded from the calculation the percentage of women on the Board increases to 38%. The appointment of Suzy Neubert will also improve the Boards diversity, with one Director on the Board from an ethnic minority. The gender diversity of the Board will not be impacted over the long term as Polly Williams will step down in May. The Board’s diversity and inclusion policy can be found on page 87. Compliance with the Code The Group is a strong supporter of the UK Corporate Governance (the Code), which is applied on a comply or explain basis. This year there are two provisions of the Code with which the Company did not fully comply throughout the year. These provisions relate to the composition of the Group’s Audit and Risk and Remuneration Committees, following Jonathon Bond’s decision to step down at the 2021 AGM in May. This resulted in the Committees not meeting the recommended minimum number of independent Directors, in accordance with provisions 24 and 32 of the Code, for part of the year. This is due to the timing of Board changes and the need to ensure that each Committee has the right balance of skills and experience. The Audit and Risk Committee comprised two independent Non-Executive Directors, rather than three, for the period 6 May 2021 to 1 June 2021. No meetings were held during this period and an additional independent Non-Executive Director, David Cruickshank, was appointed to the Committee on 1 June 2021. The Committee was further strengthened in September 2021 with the appointment of Dale Murray, who brings both financial and technology expertise which are core areas of the Audit and Risk Committee’s oversight. In relation to the Remuneration Committee, the Committee is comprised of two independent Non-Executive Directors and the Chairman of the Board, who was independent on appointment, rather than three independent Non-Executive Directors. Upon appointment to the Board on 1 March 2022 Suzy Neubert will be joining the Remuneration and Nomination Committees. This will mean the composition of the Committee complies with all provisions of the Code going forward. “We believe that having a diverse workforce leads to better decision making, increased creativity, innovation and productivity. Diversity and inclusion has therefore remained a key area of focus.” 69 Jupiter Fund Management plc | Annual Report and Accounts 2021 Subsidiary governance As a Group with multiple regulated entities in various jurisdictions, we have a corporate governance framework which applies across our organisation, including with respect to such regulated subsidiaries. The boards of our regulated management companies based in the UK, Luxembourg and Ireland all have independent Non-Executive Directors appointed, who bring valuable industry and governance experience, as well as supporting the broader oversight of our regulated activities, with a focus on serving our client’s best interests. These entities leverage our Group governance framework and receive regular reporting and recommendations from our governance committees, to enable them to discharge their legal and regulatory responsibilities with respect to Jupiter products and activities within their remit. We are holding a strategy day, for the independent Non-Executive Directors across all of Jupiter’s legal entities and our key fund Boards in March 2022. This will enable all of our Non-Executive Directors to further engage on the Group’s strategy and priorities whilst receiving updates from across the business. Legal and regulatory The legal and regulatory landscape in which we operate is becoming increasingly complex. This is in part as we expand our business internationally and are subject to new requirements, for instance our registration with the SEC in the US, but also due to the pace of regulatory change across all the jurisdictions in which we operate. Our Legal and Risk & Compliance teams help us to ensure that we comply with these evolving requirements and engage with regulators in an open and transparent manner. Stakeholder engagement Engaging with our stakeholders and understanding their views about all aspects of our business is critical to our success. We have had to continue to adapt our way of engaging due to the global pandemic and changing restrictions but further information on how Jupiter engages with stakeholders can be found on page 58 to page 59 and the Board’s engagement and how stakeholder interests have been considered in key decisions on page 81 and page 82. The Board has engaged with Connections, our employee forum, to hear directly from our people on their views of the firm’s culture, strategy and business operations. We have completed two employee surveys at the start and the end of 2021. We were disappointed that a number of metrics, particularly on engagement, had decreased between these surveys. The results of the survey are being discussed with the Connections forum and management are implementing action plans to address items raised in the survey. This is particularly focused on communication across the organisation, which has understandably been impacted by the remote working environment. Progress against these plans will continue to be a focus of the Board throughout the year. Due to the pandemic, we were once again not able to hold our AGM in person. In order to provide our shareholders with the opportunity to hear presentations and ask the Directors questions before they were required to submit their proxy votes, we held a shareholder engagement webinar in advance of the AGM. Andrew Formica and I, as CEO and Chairman, gave the presentations which would have been provided at the AGM and all Directors attended to answer any shareholder questions. The webinar was held two weeks before the formal AGM and details of the shareholder engagement webinar were contained within the Notice of AGM and were also available on the Company’s website. The formal AGM was then held as a closed meeting with the quorum requirements being met by the Chairman and Company Secretary. CHAIRMAN’S INTRODUCTION TO GOVERNANCE continued At the 2021 AGM we had one resolution which received less then 80% approval. Resolution 14, which provides Directors with the authority to allot shares in the Company, passed with almost 78% of votes in favour. This result was primarily driven by our largest single shareholder, who we have engaged with both pre- and post- the AGM, and we understand their views regarding potential dilution of their shareholding. However, the authority we seek is lower than the maximum recommended levels contained within the UK Investment Association’s share capital management guidelines and prevailing voting guidelines of leading corporate governance agencies. The majority of our shareholders are supportive of the authority sought which is in line with standard market practice in the UK. We believe that this authority is important to provide the Directors with flexibility in the capital management of the Company and would only exercise this authority if it were considered in the best interests of shareholders. We are therefore seeking approval for the Directors to have the authority to allot shares in line with previous years. We hope to hold an in-person AGM this year, but we will also arrange for a live audio-cast so shareholders have the opportunity to listen to the meeting and ask questions, without being physically present, should that be their preference. Due to the continued uncertainty we ask our shareholders to review our announcements and Company website, for any changes to the proposed arrangements. This will be my first in-person AGM since my appointment as Chairman and I hope to have the opportunity to meet with our shareholders and discuss our business. Nichola Pease Chairman 24 February 2022 70 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE COMPLIANCE STATEMENT Throughout the accounting year ended 31 December 2021, Jupiter complied with the provisions of the Code, with the exception of provisions 24 and 32 which relate to the composition of key Committees (please see page 69 for further information). Further information on how the Company has applied the principles of the Code is set out in this Governance section. Code principle Page reference Board Leadership and Company Purpose A successful company is led by an effective and entrepreneurial board, whose role is to promote the long-term sustainable success of the company, generating value for shareholders and contributing to wider society. 72 The board should establish the company’s purpose, values and strategy, and satisfy itself that these and its culture are aligned. All directors must act with integrity, lead by example and promote the desired culture. 68 The board should ensure that the necessary resources are in place for the company to meet its objectives and measure performance against them. The board should also establish a framework of prudent and effective controls, which enable risk to be assessed and managed. 77 In order for the company to meet its responsibilities to shareholders and stakeholders, the board should ensure effective engagement with, and encourage participation from, these parties. 58 81 The board should ensure that workforce policies and practices are consistent with the company’s values and support its long-term sustainable success. The workforce should be able to raise any matters of concern. 36 57 Division of Responsibilities The chair leads the board and is responsible for its overall effectiveness in directing the company. They should demonstrate objective judgement throughout their tenure and promote a culture of openness and debate. In addition, the chair facilitates constructive board relations and the effective contribution of all non-executive directors, and ensures that directors receive accurate, timely and clear information. 77 The board should include an appropriate combination of executive and non-executive (and, in particular, independent non-executive) directors, such that no one individual or small group of individuals dominates the board’s decision making. There should be a clear division of responsibilities between the leadership of the board and the executive leadership of the company’s business. 76 Non-executive directors should have sufficient time to meet their board responsibilities. They should provide constructive challenge, strategic guidance, offer specialist advice and hold management to account. 89 The board, supported by the company secretary, should ensure that it has the policies, processes, information, time and resources it needs in order to function effectively and efficiently. 77 Composition, Succession and Evaluation Appointments to the board should be subject to a formal, rigorous and transparent procedure, and an effective succession plan should be maintained for board and senior management. Both appointments and succession plans should be based on merit and objective criteria and, within this context, should promote diversity of gender, social and ethnic backgrounds, cognitive and personal strengths. 86 The board and its committees should have a combination of skills, experience and knowledge. Consideration should be given to the length of service of the board as a whole and membership regularly refreshed. 86 Annual evaluation of the board should consider its composition, diversity and how effectively members work together to achieve objectives. Individual evaluation should demonstrate whether each director continues to contribute effectively. 85 Audit, Risk and Internal Control The board should establish formal and transparent policies and procedures to ensure the independence and effectiveness of internal and external audit functions and satisfy itself as to the integrity of financial and narrative statements. 91 The board should present a fair, balanced and understandable assessment of the company’s position and prospects. 98 The board should establish procedures to manage risk, oversee the internal control framework, and determine the nature and extent of the principal risks the company is willing to take in order to achieve its long-term strategic objectives. 60 Remuneration Remuneration policies and practices should be designed to support strategy and promote long-term sustainable success. Executive remuneration should be aligned to company purpose and values, and be clearly linked to the successful delivery of the company’s long-term strategy. 102 A formal and transparent procedure for developing policy on executive remuneration and determining director and senior management remuneration should be established. No director should be involved in deciding their own remuneration outcome. 102 Directors should exercise independent judgement and discretion when authorising remuneration outcomes, taking account of company and individual performance, and wider circumstances. 102 Jupiter supports the principles of corporate governance as set out in the 2018 version of the UK Corporate Governance Code (the Code) issued by the Financial Reporting Council, which can be found on the FRC website at www.frc.org.uk. 71 Jupiter Fund Management plc | Annual Report and Accounts 2021 BOARD OF DIRECTORS As at 31 December 2021 GOVERNANCE 2. ANDREW FORMICA Chief Executive Officer 3. WAYNE MEPHAM Chief Financial Officer 6. CHRIS PARKIN Non-Executive Director 1 1. NICHOLA PEASE Non-Executive Chairman NC RM 4. DAVID CRUICKSHANK Independent Non-Executive Director AR NC 5. DALE MURRAY Independent Non-Executive Director AR NC 7. KARL STERNBERG Independent Non-Executive Director AR NC RM 8. POLLY WILLIAMS Independent Non-Executive Director AR NC 9. ROGER YATES Independent Non-Executive Director NC RM 1. Nominated representative of TA Associates 72 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE AR AR Member of Audit and Risk Committee RM Member of Remuneration Committee NC Member of Nomination Committee Denotes Chair of Committee 1. NICHOLA PEASE NC RM Appointed Non-Executive Chairman in March 2020 Skills and experience Nichola has over 35 years’ experience in asset management, including at Chief Executive level, and the wider financial sector. With her extensive experience, Nichola brings strong leadership skills and a deep understanding of investment management to the Board. Previous appointments Nichola’s most recent role was as an independent Non-Executive Director of Schroders plc from September 2012 to November 2019, where she was also Chairman of the Remuneration Committee. She was previously the Chief Executive of J O Hambro Capital Management Ltd from 1998, until her appointment as Deputy Chairman in 2008. Her previous experience includes Kleinwort Benson, Rowe Price-Fleming, Citibank and Smith New Court where she built the European broking business and subsequently joined the Board. Current external appointments Nichola is currently Chair of the Investment20/20 Apprenticeship Scheme and Jumo Ltd. 2. ANDREW FORMICA Appointed Chief Executive Officer in March 2019 Skills and experience Andrew has over 27 years’ experience in the investment management industry and is a qualified actuary, both in Australia and in the UK. He brings strong leadership skills and has a proven track record of implementing successful business strategies. Previous appointments Before joining Jupiter Andrew was CEO of Henderson Global Investors, becoming Co-Chief Executive of Janus Henderson on the merger with Janus Capital in 2017. During his time at Henderson and its predecessor businesses he held various roles including equity fund manager and head of equities. Current external appointments Andrew is currently a Non-Executive Director of Hammerson plc and of the Investment Association. 3. WAYNE MEPHAM Appointed Chief Financial Officer in September 2019 Skills and experience Wayne has over 26 years’ experience in the asset management and across the financial services sector gained in senior financial roles and as a chartered accountant. Previous appointments Wayne began his career at PricewaterhouseCoopers where he progressed to lead audits in the Insurance and Asset Management practice. Prior to joining Jupiter, he worked at Schroders for nine years and was responsible for the Global Finance function as well as Procurement and Investor Relations. Current external appointments Wayne has no external appointments. 4. DAVID CRUICKSHANK AR NC Appointed Independent Non-Executive Director in June 2021 Skills and experience David Cruickshank spent his executive career at Deloitte and retired from the firm in June 2020. He qualified as a Chartered Accountant in 1982 and specialised in advising on large international corporate transactions. He was appointed a partner in 1988 and led the UK Tax Practice from 1998 until 2006. He was elected Chair of Deloitte’s UK Board in 2007 and served two terms before being elected Chair of Deloitte’s Global Board in 2015. During this period David led the Boards through a period of major regulatory change and business transformation and has broad experience across different industry sectors and geographies. Previous appointments David is the former Chairman of Deloitte’s UK Board and then Deloitte’s Global Board and previously served as Co-Chair of the Partnering Against Corruption Initiative at the World Economic Forum. Current external appointments David is the current Chair of the Social Progress Imperative Inc and the Education and Employers charity. He is also a member of the Council of the Institute of Chartered Accountants of Scotland. 5. DALE MURRAY AR NC Appointed Independent Non-Executive Director in September 2021 Skills and experience Dale Murray is a qualified accountant and technology entrepreneur who co-founded the British mobile telecoms software business Omega Logic. Following Omega Logic’s sale to Eposs Ltd, then First Data Corporation, Dale served as CEO of the enlarged Group until 2005. She then made a number of investments in the digital sector and was awarded the British Angel Investor of the Year in 2011. Previous appointments Dale was previously a Non-Executive Director at Peter Jones Foundation, UK Trade & Investment, Sussex Place Ventures Ltd and the Department for Business, Innovation and Skills. Current external appointments Dale currently serves as a Non-Executive Director of Xero Limited, Lendinvest plc, The Cranemere Group Limited, Rated People Limited and Lightspeed Commerce Inc. 6. CHRIS PARKIN Appointed Non-Executive Director in July 2020 Skills and experience Chris Parkin has 15 years of experience in the private equity industry with a primary focus on financial services companies, particularly in fund management, wealth management and insurance, as well as on consumer facing business, including education services, consumer goods and retail. He brings detailed knowledge of the financial services sector with a strong client focus and significant experience of business transformation. Previous appointments Before joining TA Associates, Chris was an investment manager at Lazard Private Equity and prior to that he spent seven years with Bain & Company in London and New York. Chris’ previous Non-Executive Directorships include, amongst others, DNCA Finance, PhysIOL, Internationella Engelska Skolan and Hana Group. Chris also served on the Board of Jupiter Fund Management from 2007-2010 and Merian Global Investors until early 2021. Current external appointments Chris is co-head of TA Associates’ EMEA Services Group and is a Non-Executive Director of Inspired Education Holdings Limited, Biocomposites, Surfaces Group, Fairstone Group Ltd, Soderberg and Partners, and Nactarome. 7. KARL STERNBERG AR NC RM Appointed Independent Non-Executive Director in July 2016 Skills and experience Karl brings some 30 years’ international experience in the investment industry gained through both executive and non-executive roles. Previous appointments Karl was a founding partner of institutional asset manager Oxford Investment Partners, which was bought by Towers Watson in 2013. Prior to that, Karl held a number of positions at Morgan Grenfell/Deutsche Asset Management between 1992 and 2004 including Chief Investment Officer for London, Australia, Europe and the Asia Pacific. Since 2006 he has developed his Non-Executive Director career, with a focus on investment management and the investment trust sector in particular. From 2010 to 2015 he was a Non-Executive Director of Friends Life Group plc where he was Chairman of the Investment Oversight Committee. Karl was Chairman of JPMorgan Income & Growth Investment Trust plc until November 2016. Current external appointments Karl is Chairman of Monks Investment Trust plc and Clipstone Industrial Reit plc and a Non-Executive Director of Herald Investment Trust plc, JPMorgan Elect plc and Howard de Walden Estates. 8. POLLY WILLIAMS AR NC Appointed Independent Non-Executive Director in March 2015 Skills and experience Polly has a wealth of relevant experience, including roles with particular responsibility for audit and risk oversight, and is a chartered accountant. Previously, Polly was a partner at KPMG, with responsibility for the Group Audit of HSBC Group plc. Polly has significant, recent and relevant financial experience which is invaluable in her role as Chairman of the Audit and Risk Committee. She actively engages with senior management outside of the Board meeting cycle. Previous appointments Polly’s previous Non-Executive Directorships include TSB Banking Group plc, Worldspreads Group plc, APS Financial Limited, Z Group plc, National Counties Building Society (as Chairman), Scotiabank Ireland Limited and Daiwa Capital Markets Europe Limited. Current external appointments Polly is a Non-Executive Director of RBC Europe Limited, XP Power Limited and the Rugby Football Union, where she Chairs the Audit and Risk Committee. Polly also serves as a Trustee of the Guide Dogs for the Blind Association. 9. ROGER YATES NC RM Appointed Senior Independent Director in May 2021 Independent Non-Executive Director in October 2017 Skills and experience Roger has considerable knowledge of the asset management business with over 30 years’ experience in the industry having served as a fund manager, senior executive, Non-Executive Director and Chairman. Having led two global asset managers, Roger also brings significant understanding of international business management to the Board. Previous appointments Roger started his career at GT Management in 1981 and subsequently held positions at Morgan Grenfell and Invesco as Chief Investment Officer. He was appointed Chief Executive Officer of Henderson Group plc in 1999 and led the company for a decade. Most recently Roger was a Non-Executive Director of IG Group Ltd, Chairman of Electra Private Equity plc and Chairman of Pioneer Global Asset Management S.p.A. He was also a Non-Executive Director of JPMorgan Elect plc from 2008 – 2018. Current external appointments Roger is the Senior Independent Director of St James’s Place plc where he chairs the Remuneration Committee, Senior Independent Director at Mitie Group plc and Non-Executive Director of The Biotech Growth Trust plc. 73 Jupiter Fund Management plc | Annual Report and Accounts 2021 EXECUTIVE COMMITTEE As at 24 February 2021 1. ANDREW FORMICA Chief Executive Officer and Chairman of the Executive Committee Responsible for the strategic development of the Group and for the management of the overall business. See page 73 for Andrew’s full biography. 6. VERONICA LAZENBY Chief Risk Officer Veronica joined Jupiter in February 2020 and is the Group’s Chief Risk Officer. Before joining Jupiter she held senior risk management roles at Schroders, Royal Bank of Scotland, Barclays and BNY Mellon. She is responsible for the management of the Group’s risk profile and compliance function. 2. WAYNE MEPHAM Chief Financial Officer Responsible for financial management, capital management, tax, investor relations, financial regulatory reporting, HR, and strategy and corporate development. See page 73 for Wayne’s full biography. 5. TRACEY KINSELLA HR Director Tracey joined Jupiter in October 2021 as HR Director. Previously, Tracey was Head of HR and Internal Communications at Architas and also held senior HR positions at AXA UK and Ireland, Amazon and Nokia. Tracey is responsible for the global HR function at Jupiter, which includes reward and SMCR. 3. MATTHEW BEESLEY Chief Investment Officer Matthew joined Jupiter in January 2022 as Chief Investment Officer. He was previously Chief Investment Officer at Artemis and has held senior investment roles at GAM and Henderson Global Investors. Matthew is responsible for the oversight of all of Jupiter’s investment teams and key areas such as stewardship, data science and dealing. 4. KATHARINE DRYER Deputy Chief Investment Officer Katharine joined Jupiter in December 2013 as Head of Investments, Fixed Income and Multi-Asset and was appointed Deputy CIO in October 2018. Before Jupiter Katharine worked as a managing director in BlackRock’s Euro Fixed Income and Multi-Asset Client Solutions teams. Prior to this, she worked at Morgan Stanley and Deutsche Asset Management, where she was a fixed income specialist. 74 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE 7. PAULA MOORE Chief Operating Officer Paula joined Jupiter in 1997 and has held many senior roles within the Group. She is the Chief Operating Officer and is responsible for the Group’s day-to-day operations including operations, IT and the facilities teams. 8. MINESH PATEL Head of Strategy and Corporate Development Minesh joined Jupiter in July 2019 as the Head of Strategy and Corporate Development. Before joining Jupiter he was Head of Corporate Development at Janus Henderson and previously held roles at Man Group and Merrill Lynch. Minesh oversees strategic initiatives and corporate development across the Group. 11. PHIL WAGSTAFF Global Head of Distribution Phil joined Jupiter in June 2019 as the Global Head of Distribution. He was previously Global Head of Distribution at Janus Henderson and has held senior distribution roles at Gartmore, New Star and M&G. Phil is responsible for the distribution of all of Jupiter’s products, which includes management of the distribution, marketing and communication teams. 9. JASVEER SINGH General Counsel Jasveer joined Jupiter in November 2016 as General Counsel. Before joining Jupiter he was General Counsel and a member of the Executive Committee at Man Group. He is responsible for the legal, governance & secretariat, Luxembourg and Irish teams. 10. WARREN TONKINSON Deputy Global Head of Distribution Warren previously served as the Global Head of Distribution for Merian Global Investors and joined Jupiter upon the completion of the acquisition of Merian. He joined as Jupiter’s Distribution Managing Director and was appointed Deputy Global Head of Distribution in October 2021. Prior to his role at Merian, Warren was Managing Director at UBS Global Asset Management. 75 Jupiter Fund Management plc | Annual Report and Accounts 2021 OUR GOVERNANCE FRAMEWORK BOARD Chairman Chief Executive Officer Chief Financial Officer Senior Independent Director Independent Non- Executive Directors • Leads the Board, ensuring its effective discharge of duties • Supports the CEO in the execution of duties • Ensures effective governance • Engages with stakeholders and ensures their views are understood by the Board and decisions consider their interests • Proposes the strategy and ensures its execution • Runs the business within the delegated authorities, risk management and internal control frameworks • Builds and maintains an effective management team • All aspects of financial and capital reporting and the integrity thereof • Supports the CEO in the execution of the strategy • Responsible for Investor Relations, HR and Procurement teams • Sounding board for the Chairman • Leads the Chairman’s performance appraisal and succession • Available to shareholders, should they have concerns not resolved through normal channels • Contribute to and constructively challenge management on the development and implementation of the strategy • In conjunction with management, establish the Board’s risk appetite and monitor the control framework • Constitute the Board’s governance committees The Board delegates the day-to-day management of the Group to the CEO, with the exception of matters which it specifically reserves for its decision. There is an effective governance framework in place to support the operation of the Group. The chart below provides an overview of how our Board governance framework has operated during the year, which includes a summary of the matters reserved for Board decision together with the key roles and responsibilities. The roles of the Chairman, Chief Executive Officer and Senior Independent Director are clearly defined in writing, approved by the Board and available on our website at www.jupiteram.com. BOARD GOVERNANCE FRAMEWORK Schedule of matters reserved • Establishing the Group’s commercial objectives and strategy • Setting the Group’s purpose, culture and values • Approving significant capital projects, expenditure and borrowings • Overseeing the Group’s operations and management, and maintaining an effective system of internal controls and risk management • Setting the annual budget • Approving the dividend policy and dividend payments • Overseeing financial reporting, including approving the Annual Report and interim financial statements • Ensuring adequate succession planning, including agreeing Board and other senior appointments and the appointment or removal of the Company Secretary • Deciding major acquisitions, disposals and investments The full schedule of matters reserved for the Board can be found on our website at www.jupiteram.com. Executive Committee • Operates under the authority and direction of the Chief Executive Officer and comprises senior management from key functions • Responsible for the operational and financial performance of the Group • Formulates strategy and agrees business plans, budgets, policies and procedures for the day-to-day management of the Group • The Executive Committee has delegated certain authorities to a number of operating Committees under the Group’s governance framework Audit and Risk Committee • Board Committee comprises four independent Non- Executive Directors • Responsible for overseeing financial reporting, risk management and internal control framework, compliance and external and internal audit • Read how we are delivering our priorities from page 91 Remuneration Committee • Board Committee comprises two independent Non- Executive Directors and the Chairman of the Board, who was independent on appointment • Responsible for overseeing the remuneration of Executive Directors, senior management and Group-wide policies • Read how we are delivering our priorities from page 102 Nomination Committee • Board Committee comprises all independent Non-Executive Directors and is chaired by the Chairman of the Board • Recommends changes to the structure of the Board, oversees succession planning for the Board and senior management, and talent and diversity policies across Jupiter • Read how we are delivering our priorities from page 86 76 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE BOARD ACTIVITIES In addition to the five scheduled meetings the Board held two additional meetings which were convened to consider certain ESG-related and product development matters. Polly Williams was not able to attend one of the ad-hoc meetings due to prior commitments, but read all papers and provided input outside of the meeting. Director Meetings attended Nichola Pease 7/7 Jonathon Bond 3/3 Edward Bonham Carter 3/3 David Cruickshank 4/4 Andrew Formica 7/7 Wayne Mepham 7/7 Dale Murray Chris Parkin 3/3 7/7 Karl Sternberg 7/7 Polly Williams 6/7 Roger Yates 7/7 The following pages provide an overview of the Board’s activities during the year and detail the key items considered by the Board and, where appropriate, the outcomes of these discussions, together with the link to the relevant strategic priorities, principal risks and impacted stakeholder groups. The Board also held a two-day strategy off-site in June which provided the opportunity for a deep-dive review on key strategic items, industry trends and our culture. A Board briefing session is held in the day or so before a Board meeting and these sessions are designed to assist with Director training and knowledge of the business. Further information can be found within the Director training and induction section on page 83. The Chairman has held meetings with just the Non-Executive Directors, some of which included the CEO. Individual Non-Executive Directors have also met with senior members of management on an individual basis. This engagement has been supported by the Company’s Non-Executive Director pairing system, under which each Non-Executive Director is paired with a member of the Executive Committee. They hold between four and six meetings a year and the scheme is designed to give the Non-Executive Directors greater understanding of the relevant business unit and help the Executives to gain a better understanding of the Board and its objectives and views. The Senior Independent Director has also met with other Directors to evaluate the Chairman’s performance. At each meeting the Board receive an update from the CEO, CFO, CIO, Head of Distribution and COO, which considers the performance of the relevant business area and any key areas of focus. The CEO also provides fortnightly updates to the Board members on developments within the business and any matters to raise to the Board’s attention. Key Link to core objectives 1 Investment performance 2 Client relationships 3 Investment offering 4 Talent and Culture 5 Operating model 6 Financial resources Relevant stakeholder group 1 Clients 2 People 3 Shareholders 4 Business partners and suppliers 5 Society 6 State and regulators Link to principal risks 1 Strategic Risk 2 Market Risk Operational Risk 3 People Risk 4 Client and Fiduciary Duty Risk 5 Execution, Processing and Reporting Risk 6 Product Risk 7 Model Risk 8 Data Management Risk 9 Technology and Information Security Risk 10 Outsourcing and Supplier Risk 11 Regulatory Risk 12 Legal Risk 13 Financial Crime Risk 77 Jupiter Fund Management plc | Annual Report and Accounts 2021 Item Outcomes Link to core objectives and principal risks Stakeholders Strategy and Business Development Strategy development Agreed the agenda for the 2021 Board two-day offsite, which focused on the key opportunities for growth and risks facing the business. Discussed the current strategy in light of the wider market environment. ALL 1 1 2 3 6 ESG-related initiatives > See page 40 for further information Approved participation in the NZAM initiative, UNGC and Good Work Coalition. Agreed the initial targets for the net zero initiative and challenged management’s approach to ensuring the Company and its investments were net zero by 2050. Reviewed and challenged the Group’s approach to the implementation of the SFDR, including the classification of funds, disclosures and governance processes. Reviewed and discussed the Group’s sustainable fund range and potential developments thereof and received presentations from fund managers responsible for our sustainable investing range. Received updates on the Group’s stewardship activities and the implementation of the new UK Stewardship Code, including approving the 2020 Stewardship Report. Reviewed and challenged the work undertaken in order to prevent modern slavery within the Group’s operations, supply chain and investee companies and approved the Group’s modern slavery statement. 1 3 5 1 3 4 10 11 ALL Strategic growth initiatives Approved additional investments in key growth areas for the business including sustainability, fixed income and institutional business, and received regular updates on the implementation thereof. 1 2 3 4 6 1 1 2 3 4 5 Distribution Received regular reports from the Head of Distribution on sales activities and flows. Considered the re-brand of Jupiter and Merian under the refreshed Jupiter brand identity. Received presentations from regional distribution functions including the UK, US, Continental Europe and Asia, and tested plans to enter the Australian market. Agreed to establish in-house business development managers to better support smaller clients. Undertook various deep-dive reviews including top client reviews and analysis, institutional sales and team development, redemptions from funds, the featured fund list which drives greater focus on key funds, and fund pricing and charges. 2 3 1 4 1 3 4 6 Growth funds Received updates on business plans for funds identified as key to the Group’s growth plans and ensured suitable resources were deployed to support the teams. 1 3 6 1 3 4 1 2 3 NZS Capital business update Received an update on the NZS Capital strategic partnership and reviewed progress against the original business plan. 1 3 5 6 1 4 1 3 Institutional Global Equity Reviewed the Group’s global equity strategies, suitability for client types and potential thematic investing opportunities. 1 2 3 4 6 1 4 1 3 BOARD ACTIVITIES continued 78 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Item Outcomes Link to core objectives and principal risks Stakeholders Performance Monitored financial performance and capital position Ongoing monitoring of financial performance including revenue, profit and cost forecasts against budget and KPIs, and considered performance against market consensus. Monitored forecast liquidity and regulatory capital surplus to ensure it remained within the Board’s risk tolerance. Received updates on the Group’s seed capital portfolio and performance of associated hedging and forward contracts. 5 6 1 2 1 2 3 6 Investment performance Regularly reviewed investment performance across all fund ranges and investment trusts, and assessed funds against expected performance outcomes in light of the market environment. Received presentations from a range of fund managers. 1 3 1 2 4 13 1 3 4 6 Capital and dividend policy Considered, challenged and approved a revised capital and dividend policy which provided further clarity on additional returns of capital to shareholders and approved that future year-end dividends were subject to shareholder approval. Approved the interim and special dividends and recommended the final dividend to shareholders. 1 3 6 2022 Budget and five-year financial plan Challenged and approved the 2022 budget and five-year financial plan, having reviewed the underlying assumptions for net flows, revenue margins, investment performance, costs and various scenario analysis including consideration of the impact of growth initiatives. 3 4 5 6 1 2 3 4 2 3 Merian integration Oversaw the integration of Merian into the Jupiter Group, including product changes and the rationalisation of suppliers. ALL 1 3 4 5 1 2 3 4 6 People & Culture Culture Assessed and monitored culture through regular updates from the CEO, Connections Chairman, employee surveys and dedicated culture and people updates from the HR Director, which included an update on the structures implemented to support staff during the pandemic. ALL ALL ALL Employee engagement The Board engaged with the Chair of Connections, the Group’s employee forum, to discuss employee views and the Non-Executive Directors also met privately with the Connections Chair. 4 3 2 Diversity and inclusion The Board reviewed the plans to improve diversity across the business and ensure an inclusive culture for our people and other stakeholders. The Board considered the diversity targets and progress thereon. 2 4 3 ALL Covid related Reviewed and agreed the plans for staff to return to the office and approved the new ongoing hybrid working model. Discussed impacts to the operating model and the initiatives to support staff during the pandemic and approved a £1,000 allowance for 2021 to all staff for home office equipment. 4 3 1 2 4 6 Director appointments Approved the appointment of two new Non-Executive Directors. ALL ALL ALL Risk Management > For further information see the Audit and Risk Committee Report starting on page 91 79 Jupiter Fund Management plc | Annual Report and Accounts 2021 Item Outcomes Link to core objectives and principal risks Stakeholders Risk Appetite Statement Reviewed, challenged and approved the revised Risk Appetite Statement and associated metrics. ALL ALL ALL Enterprise Risk Management Framework Reviewed, challenged and approved the revised Enterprise Risk Management Framework which included a new risk taxonomy further aligned to the Group’s operations. ALL ALL ALL Principal and Emerging Risks Discussed the principal and emerging risks and reviewed and approved the risk management disclosures in the annual and interim reports as recommended by the Audit and Risk Committee. ALL ALL ALL Assessed effectiveness of internal controls Reviewed the effectiveness of the internal control environment including consideration of risk incidents, the output from the risk and control self-assessment, compliance and internal audit findings. There was specific consideration of the internal control operation in light of the remote working environment. 5 ALL 1 2 3 4 6 Governance Investment oversight Received an update on the governance processes in place to ensure appropriate oversight of investment management. This included consideration of the structure of the Group’s Unlisted Assets Valuation Committee (UAVC), which oversees the valuation of unlisted assets held by funds managed by the Group. The Board decided that an independent Chairman should be appointed to the UAVC. 1 2 3 4 5 1 4 6 13 1 2 3 6 Board Evaluation > For further information please see page 85 Reviewed and discussed the results from the annual Board evaluation and agreed action plans. ALL 1 ALL Health and Safety Received an update on health and safety across the Group, with a focus on steps taken to welcome our people back to the office safely. 4 3 2 Tax Strategy Reviewed and approved the Group’s tax strategy and the publication thereof. 6 13 ALL External Reporting > For further information see the Audit and Risk Committee Report starting on page 91 Annual Report & interim results Reviewed and approved the 2020 Annual Report and 2021 interim results. 1 2 3 5 6 Appointment of auditors Resolved to recommend to shareholders the appointment of EY as the Group’s external auditors with effect from the year ending 31 December 2023, as per the Audit and Risk Committee’s recommendation. 5 10 11 12 1 2 3 5 6 ICAAP Reviewed and approved the Group’s ICAAP. ALL 3 6 BOARD ACTIVITIES continued 80 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE CONSIDERING STAKEHOLDERS IN DECISION MAKING CLIENTS How does the Board engage? The Board has primarily delegated responsibility for client engagement to Senior Management and our Distribution and Fund Management teams. At each meeting the Board receives updates from our Global Head of Distribution and CIO which includes information on client engagement and views. The CEO meets with a variety of clients and provides updates to the Board on these engagements. We also receive updates directly from our clients, who attend and speak at Board briefings and internal governance committees and forums, where appropriate. PEOPLE How does the Board engage? Jupiter has an established employee forum ’Connections’, which is the primary method of workforce engagement. The Chairman of Connections meets with the Board, the Remuneration Committee and separately with only the Non-Executive Directors present. Our CEO regularly attends Connections meetings and the forum also engages directly with the Executive Committee. During the year, due to the ongoing challenges presented by the global pandemic, we undertook two employee surveys and the Board and Executive Committee have reviewed and discussed the results and proposed action plans to address identified issues. Section 172 of the Companies Act 2006 requires the directors to act in the way that they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to: • the likely consequences of any decision in the long term • the interests of the company’s employees • the need to foster the company’s business relationships with suppliers, customers and others • the impact of the company’s operations on the community and the environment • the desirability of the company maintaining a reputation for high standards of business conduct and the need to act fairly as between members of the company. The Company’s section 172 statement of compliance can be found on page 58, together with an overview of our key stakeholders, their key priorities and how, we as a Company, engage with them. Details of how the Directors have fulfilled their duties can be found throughout the Strategic and Governance reports on the following pages: • The likely consequences of any decision in the long term – pages 58 to 59, 77 and 82 • The interests of the company’s employees – pages 36 to 39, 58 to 59, 79 and 81 • The need to foster the company’s business relationships with suppliers, customers and others – pages 30 to 33, 40 to 56 and 58 to 59 • The impact of the company’s operations on the community and the environment – page 40 to 56, 58 to 59 and 77 to 82 • The desirability of the company maintaining a reputation for high standards of business conduct – pages 40 to 57 • The need to act fairly as between members of the company – pages 58 to 59 and 77 to 82 SHAREHOLDERS How does the Board engage? Jupiter has a dedicated Investor Relations department who are responsible for running a programme of shareholder events. Our CEO and CFO provide Board representation at the majority of shareholder meetings. We have engaged with shareholders to seek their views on the preferred method of returning capital to shareholders and it is our intention that future returns of capital will be through a share repurchase programme. Our Chairman engages with major shareholders on governance matters and the Chairman of the Committees meet with shareholders when appropriate or requested. All parties report back to the Board on any shareholder engagement. All of the Directors attend our AGM which has been disrupted over the last two years by the global pandemic. Rather than hold in-person meetings, the Board have held an interactive online shareholder webinar in the weeks prior to the AGM and before the voting proxy deadline. 81 Jupiter Fund Management plc | Annual Report and Accounts 2021 Growth strategy The Board approved additional investments in key areas of the business in order to drive the Group’s growth agenda. In reaching this decision the Board considered the following stakeholder groups: 1 2 3 These investments were a key decision taken by the Board to promote the success of the Company for the benefit of our shareholders, people and wider stakeholder groups. The decision to invest in organic growth does reduce the amount of profit available for distribution to our shareholders in the short term; however, over the longer term we believe the investments will deliver far greater growth and returns for shareholders. We have focused our investments in areas which are important to our clients, such as enhancing our clients’ servicing abilities and ESG matters. KEY BOARD DECISIONS BOARD ACTIVITIES continued Net zero The Board decided to join the NZAM initiative and have committed to achieving net zero emissions by 2050 across all of our investments and operations. The Board also reviewed and agreed the proposed initial targets under the NZAM initiative, further information on which can be found from page 45. In reaching this decision the Board considered the following stakeholder groups: 1 2 3 4 5 6 Environmental matters are an increasingly material issue for all of our stakeholders, from our clients who want to invest in a sustainable way, to our people who want to work for a company which has a positive impact on the world. This view is shared by our shareholders, business partners and regulators. In making this decision the Board carefully considered the views of our stakeholders and all potential implications for this complex area, including potential impacts to investment performance, the costs of implementation for our investee companies and any reputational risks. Aligning to net zero is important to all of our stakeholders. The Board considers that this will help mitigate climate related risks within our clients’ portfolios, will help to attract and retain talented people and aligns with the expectations of our shareholders, business partners, society and our regulators. Return to office The Board approved and oversaw the return to the office and the transition to a hybrid working model. In reaching this decision the Board considered the following stakeholder groups: 2 5 6 The Board primarily considered the views of our employees and the need to ensure their safety and well-being. We considered the impact to society, including the need to restrict the spread of Covid and the impact on local businesses from people working at home. We ensured our plans were aligned to government guidance and adaptable should such guidance change. We implemented rigorous Covid-19 safety measures across our offices and enhanced our working environment to provide a collaborative space for employees to reconnect. How are stakeholder interests considered? We believe that, in order to be managed and considered effectively, stakeholder interests need to be embedded across all levels of the organisation. This means that decisions taken below Board level also consider the interests of our stakeholders and help to ensure the appropriate escalation of stakeholder considerations through the Group’s governance framework. Our culture, values, governance framework, code of conduct and training all help to support this. At a Board level, the Board considers and discusses information from across the Group to understand the impact of its decisions. This includes regular reporting on the Group’s performance, key risks and legal and regulatory compliance. Where decisions are taken, the impacts to different stakeholders are clearly identified within Board papers and discussed by the Board. Stakeholders can have different and sometimes competing interests, priorities and views, and these need to be balanced with each other and within the wider duty of the Board to promote the long-term sustainable success of the Company. Not all decisions can deliver the desired outcomes for all stakeholders. We have included information on some of the key decisions taken by the Board during the year, and how stakeholder interests were considered. Relevant stakeholder Group 1 Clients 2 People 3 Shareholders 4 Business partners and suppliers 5 Society 6 State and regulators 82 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE BOARD EFFECTIVENESS INDUCTION, TRAINING AND PROCESS Q&A with Dale Murray, Non- Executive Director See induction summary overleaf for an overview of the key meetings held as part of the induction programme. What were the key components of your induction? I met with members of the Board, Executive Committee and their teams as well as key third parties. It was really interesting to meet people and develop a greater understanding of their teams, how they support Jupiter’s strategy and their views of the business, industry and markets. Very early in my tenure, I was invited to join a Board dinner with the Senior Leadership Group and it was fantastic to meet with a wider range of senior management. There was very useful pre-reading for each meeting, which helped to ensure meetings were focused on key areas and resulted in richer discussions and more focused questions. How did the induction prepare you to discharge your duties? In order to effectively discharge your duties you need a thorough understanding of the whole business and the induction programme has helped deliver this. This was particularly valuable to me, given my previous experience is outside asset management. I learnt about our investment strategies, our clients and product distribution, and how this is enabled by our operations and overseen within our governance and control frameworks. One of the biggest benefits was starting to develop relationships with people across the organisation, which is critical for a Non- Executive Director. Did you develop any insights into Jupiter’s culture during your induction? Yes, definitely, and I think this is one of the most valuable aspects of the induction. Throughout the process I was struck by how passionate people are about delivering for our clients, how generous people were with their time, and their very open and transparent approach. It really provided me with an opportunity to see Jupiter’s cultural pillars in action. From my conversations with senior management, it was clear to see the focus on our clients, on our people and the desire to innovate for the benefit of all of Jupiter’s stakeholders. Most of the induction meetings could be organised in Jupiter’s head office in London, where fortunately the majority of staff are based. Whilst we all adjusted to virtual meetings, you can better understand a company’s culture by meeting people in person and walking round the offices, so I was grateful to be able to do this. Induction A tailored induction programme is provided to all new Non-Executive Directors and is designed to provide a thorough understanding of the Group’s strategy, business, operations, key stakeholders, the governance structure and the regulatory environment. During the year, two Board induction programmes were run for David Cruickshank and Dale Murray. A Q&A session with Dale Murray, who undertook our most recent induction provides an insight into her induction experience. Under the induction programme each Director meets with members of the Board and senior management, to gain an understanding of their business areas and professional advisors, and has the opportunity to meet key stakeholders. Due to the nature of the business, specific site visits are not necessary and all meetings are undertaken at the Group’s headquarters in London. In addition, each Director is provided with key documents including the strategy, business plans and budgets, business performance reports, team overviews, information on the corporate structure and governance framework, key policies and governance documents, and is given access to previous Board and Committee papers and minutes. 83 Jupiter Fund Management plc | Annual Report and Accounts 2021 Training Last year we introduced a Board briefing session which is held prior to each Board meeting. These sessions are designed to provide ongoing training and education to the directors. The Board briefing is structured so that each briefing includes three sessions, which are a mixture of internal and external presenters. Subjects are organised in the context of the items to be considered at the Board meeting. For example, when the Board discussed the Group’s sustainable fund range, the briefing session included a briefing from external experts on ESG industry trends and competitor analysis, and a briefing from our Head of Sustainable Investing on the fund range. During 2021 the briefing sessions included subjects on: • Industry trends • The competitive landscape • The value assessment process • Investor Relations and sessions led by our brokers • Presentations from our fund managers on their funds and market developments • NZAM • Regulatory changes • The UK retail market Directors regularly attend external training and update programmes and the Board is able to obtain independent advice, at the Company’s expense, where this is necessary to discharge their duties effectively. Induction summary Meeting Summary Board members, including the Chairman, SID and Chairman of the Audit and Risk Committee Recent Board and Committee activities, key priorities, Board and Executive dynamics. Executive Directors CEO and CFO to discuss Jupiter’s strategy, performance, forecasts, stakeholders, recent developments and current priorities within the business. Chief Investment Officer Jupiter’s investment strategies, performance, approach to ESG and control framework. Introduction to central teams within the CIO’s office including Data Science and Stewardship teams. Chief Operating Officer Overview of the teams within the department, how they support the business and recent initiatives and key priorities going forward. Chief Risk Officer Group’s risk appetite statement, enterprise risk management framework, internal control environment, recent risk and compliance incidents and overview of team. Global Head of Distribution Overview of the Distribution team, our clients, distribution strategy and current priorities. General Counsel & Company Secretary Overview of respective teams, corporate structure, governance framework and Board processes. Head of Strategy & Corporate Development Details of recent strategic initiatives and key priorities going forward. HR Director Initiatives to support our people, increase diversity, employee engagement and key challenges and priorities. Audit Met with the Head of Internal Audit and the External Audit Lead Partner to discuss audit plans, recent findings and management actions and views of Jupiter more generally. Board process The Board all have access to the Company Secretary who advises on governance matters, board policies and processes and helps to ensure the timely flow of information. The Board have a rolling agenda in place which maps key topics for the next 12 months. This is developed by the Chairman, CEO and Company Secretary with input from the Board and Executive Committee. Key items for the Company’s financial year, Board evaluation priorities, matters arising and key strategic project updates are captured within the rolling agenda. It is then updated throughout the year to ensure consideration of new items. The Chairman, CEO and Company Secretary agree the final agenda for each meeting and papers are distributed one week before the meeting. 84 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE BOARD EVALUATION In line with the provisions of the Code the Board undertakes an annual evaluation every year and every third year this is facilitated by an external evaluator. The 2020 Board evaluation was facilitated externally by Clare Chalmers and therefore this year’s Board evaluation was undertaken internally. The diagram below provides details of the process followed for the 2021 evaluation. Design The Company Secretary prepared annual evaluation questionnaires for the Board, its Committees and individual directors, in consultation with relevant stakeholders. The questionnaires were developed in line with the FRC’s guidance on Board effectiveness and also asked specific questions on activities undertaken during the year, actions arising from previous evaluations and areas of suggested improvement or focus. Design Approval The Nomination Committee reviewed and agreed the final questionnaires and process for completion. Responses Questionnaires were circulated and completed by the Directors. Review Responses, comments and suggestions were collated, on an unattributed basis, by the Company Secretary. These were then discussed with the Chairman who provided feedback and final reports were drafted and submitted to the Board and each Committee. 1-2-1 meetings The Chairman met with Directors individually to discuss the evaluation and their individual contribution and performance. The SID met with the Chairman to discuss her performance. Reporting Reports on the outcome of the Board and Committees evaluations were discussed at the respective Board and Committee meetings in December. Areas of improvement and focus were agreed and approved. An update on the actions arising from the 2020 Board evaluation can be found below, together with an overview of the outcomes from the 2021 evaluation. 2020 priorities 2021 status Focus on the Group’s ESG offerings to clients and the framework for managing ESG risks. This has been a key area for the Board during the year, with several Board sessions on ESG matters, and a number of Directors noted the progress on this key issue during the year. Continue to monitor culture and ensure it remains embedded across the organisation; drive improvements to the appraisal process to reflect appropriate performance management. The firm’s culture was a deep-dive topic at the Board off-site and has been monitored closely by the Board throughout the year. Board responses highlighted the amount of change within the organisation and the remote working environment which had impacted Jupiter’s culture. Improvements to the appraisal process would also be facilitated through the new Finance and HR system which is due to be introduced in 2022. Give more focus to long-term strategic challenges and opportunities. The Board have focused on this in much greater depth throughout the year with an increasing focus on strategic challenges and opportunities, which was the primary focus of the Board off-site. The 2021 evaluation highlighted the good progress made in ensuring an appropriate balance between immediate business matters and long-term strategy. Review the operation of the current process for employee engagement now that it has been implemented for two years, especially in light of the remote working environment. The Chairman discussed this with the Connections Chairman who felt that, given the level of change in the organisation and in the Connections membership, together with the remote working environment, this should be undertaken in 2022. This will therefore be carried over as an action item into 2022. Non-Executive Directors and Executive management should instigate more one-to-one and informal sessions to continue to build relationships, especially while working remotely. Non-Executive Directors and Executive Committee members have held more informal meetings and calls during the last year, which has helped to build effective relationships, especially between new members. In addition, the Non-Executive Director and Executive Committee pairing arrangements have been in place throughout 2021 and will continue into 2022. Continue to enhance Board papers and make greater use of KPIs to facilitate reporting and accountability. Streamline the paper preparation process. The 2021 Board evaluation demonstrated that Board papers had continued to be enhanced, with clearer and more concise papers. In addition, the Board paper process had been streamlined with greater responsibility within the relevant teams. 2021 evaluation conclusions The 2021 evaluation demonstrated that the Board was working effectively and that: • There was an open and transparent culture with rigorous debate and challenge. • There is an appropriate split between strategic, performance, and governance matters with a well-balanced and thought-out agenda. • The Board felt very well informed on all aspects of the Group’s performance with the CEO’s regular updates being particularly welcomed. • There was a good understanding of stakeholder views and considerations of stakeholder interests in decision making. • Board meetings were operating well and the transition to and from virtual meetings had been well managed. • The induction programme was thorough and well organised (further details are set out on page 83). The following items were identified for further action during 2022: • Ensure rolling agendas have sufficient flexibility and that the objective and required outcome of the agenda item is clear. • Update fund manager presentations to include further information on the fund’s business plan and required resources. • Improve data being sent to the Board on peer and industry flows and risk management. • Ensure an appropriate delineation between Board briefings and meetings. • Increase the amount of external expertise brought into Board briefings and meetings. • Review process for employee engagement. 85 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE NOMINATION COMMITTEE REPORT COMMITTEE MEMBERS AND REGULAR ATTENDEES During the year, the Committee held six meetings, three of these were scheduled meetings and three further meetings were convened in order to consider matters relating to Board appointments. Meetings Meetings attended Nichola Pease (Chair) 6/6 Jonathon Bond 1 4/4 David Cruickshank 2 2/2 Dale Murray 3 1/1 Karl Sternberg 6/6 Polly Williams 5/6 Roger Yates 6/6 1. Jonathon Bond stepped down from the Board and Committee on 6 May 2021 2. David Cruickshank was appointed to the Board and Committee on 1 June 2021 3. Dale Murray was appointed to the Board and Committee on 1 September 2021 All of the independent Non-Executive Directors are members of the Nomination Committee and the Chairman of the Board also chairs the Nomination Committee, except where the Chairman’s succession is being considered. The CEO and the HR Director are invited to attend Committee meetings where appropriate and to facilitate informed debate. Polly Williams was unable to attend one meeting of the Nomination Committee in December. Polly reviewed all of the papers and provided input outside of the formal meeting. COMMITTEE’S KEY RESPONSIBILITIES • Keep the composition of the Board and its Committees under review to ensure a correct balance of skills, knowledge, experience and diversity is in place. • Lead the search and selection process for new Board appointments, including identifying the skills and experience required. • Oversee succession planning for Directors and Senior Executives. • Review the Company’s policies and practices for talent management, development and diversity. • Consider each Director’s performance and continuing contribution, including the review of their external time commitments and, when appropriate, recommending their re-election to shareholders. • Consider and, if appropriate, approve potential additional external appointments and conflicts of interest. A full copy of the Committee’s terms of reference, which are reviewed by the Committee and approved by the Board on an annual basis, can be found at www.jupiteram.com Nichola Pease Chairman 86 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Dear Stakeholder It has been another busy year for the Committee, with the key focus being the continued succession management for both the Board and the Executive Committee. Board changes We were delighted to welcome David Cruickshank and Dale Murray to the Board in June and September respectively. Our new Directors bring financial, technological and ESG-related experience and entrepreneurial skills to the Board, which were key attributes identified by the Committee at the start of the recruitment processes. Towards the end of the year we commenced a further search for an independent Non-Executive Director, as part of our succession planning for Polly Williams, who has served on the Board for seven years. We were pleased to conclude the search process in early 2022 and are delighted that Suzy Neubert will be joining the Board on 1 March 2022 as an independent Non-Executive Director. Further details of the search and recruitment process for these appointments can be found on page 90. The Committee has also kept under review the composition of the Board’s key committees and has recommended a number of changes in light of the Board changes during the year. The Committee recommended the appointment of David Cruickshank and Dale Murray, both of whom are qualified accountants, to the Audit and Risk Committee. In addition to their financial experience, David brings a detailed understanding of ESG-related risks and Dale of technology, both of which are key areas of focus for the Audit and Risk Committee. Both Dale and David have also joined the Nomination Committee. Suzy Neubert will join the Nomination and Remuneration Committees upon her appointment. Suzy has extensive experience in the asset management industry, having been an analyst before moving into sales and marketing roles at Merrill Lynch and most recently as Global Head of Sales & Marketing at J O Hambro Capital Management, a position she held until 2020. Senior management In addition to the formal meeting schedule, the Non-Executive Directors met with the CEO on a number of occasions to discuss changes to the composition of the Executive Committee and Board diversity Policy Statement A culture which is inclusive and supports diversity is essential to the long-term success of our business and better enables us to respond to our stakeholder needs. We understand that a diverse Board brings a broad range of perspectives, insights and challenge which supports sound decision making. The Board sets the tone for inclusion and diversity across the business and we believe in having a diverse leadership team and an open and inclusive culture. We believe a truly diverse Board will include and make good use of differences in the skills, experience, background, race, gender, disability, sexuality and other distinctions between Directors. These differences will be considered in determining the optimum composition of the Board and when possible should be balanced appropriately. All Board appointments are made on merit, in the context of the skills, experience, independence and knowledge which the Board as a whole requires to be effective. Implementation In reviewing Board composition, the Nomination Committee will consider the benefits of all aspects of diversity in order to enable the Board to discharge its duties and responsibilities effectively. In identifying suitable candidates for appointment to the Board, the Committee will consider candidates on merit against objective criteria and with due regard for the benefits of diversity on the Board. As part of the annual performance evaluation of the effectiveness of the Board, Board Committees and individual Directors, the Board will consider the balance of skills, experience and independence and the diversity representation of the Board, including gender, how the Board works together as a unit, and other factors relevant to its effectiveness. “At Jupiter we pride ourselves on having an inclusive culture and have always actively encouraged independent thinking by our people.” members of the Committee and wider Board met with candidates as appropriate. Following these changes, updating succession planning for senior management has been identified as a key priority for the Committee in 2022. We have continued to develop the depth of talent across the organisation and particularly below the Executive Committee. In 2020 we established the Senior Leadership Group, which consists of our senior leaders below the Executive Committee, and the first Senior Leadership Conference was held in 2021. We have also refreshed our Senior Leadership Programme and these initiatives are aimed at ensuring a strong pipeline of talent across the organisation. Diversity and inclusion We have continued to focus on diversity and inclusion and the Board and Committee have overseen the initiatives to improve diversity across the organisation. Further information on this can be found on pages 34, 35 and 39. At Jupiter we pride ourselves on having an inclusive culture and have always actively encouraged independent thinking by our people. We believe diversity encompasses all elements of cultural differences, in the belief this leads to more innovation and better decision making. The Board’s diversity policy can be found within the orange box. Following the appointment of Dale Murray, 33% of the Board is comprised of women, which is in accordance with our Board diversity target and the recommendations of the Hampton- Alexander Review. Following the appointment of Suzy Neubert, the Board’s gender diversity will remain at 33%, as Polly Williams will retire from the Board, and 11% of the Board will be from an ethnic minority. This report provides an overview of the current Board composition and provides insights into the work of the Committee during the year, together with a summary of the Committee’s evaluation. Nichola Pease Chairman of the Nomination Committee 87 Jupiter Fund Management plc | Annual Report and Accounts 2021 NOMINATION COMMITTEE REPORT continued Executive Committee composition as at 31 December 2021 Gender Ethnicity White Asian 9 2 Female Male 4 7 Risk Management Asset Management CEO/Chair Experience Accounting/ auditing Technology 9 7 6 4 1 Chris Parkin Dale Murray Nichola Pease Karl Sternberg Polly Williams Roger Yates David Cruickshank 0.3 0.5 1.5 1.8 4.8 5.5 6.8 Chris Parkin Dale Murray Nichola Pease Karl Sternberg Polly Williams Roger Yates David Cruickshank 0.3 0.5 1.5 1.8 4.8 5.5 6.8 BOARD COMPOSITION AS AT 31 DECEMBER 2021 Independent Non-Executive Directors Non-Executive Directors Executive Directors Chairman 5 2 1 1 White 9 Female Male 3 6 Independence EthnicityGender Board experience Chair and Non-Executive tenure 88 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Key activities during the year • Reviewed the Board skills, experience and knowledge, and assessed the composition of the Board and its Committees. • Led a recruitment process for two additional Non-Executive Directors and recommended to the Board the appointment of David Cruickshank and Dale Murray as Directors and members of the Nomination and Audit and Risk Committees. • Reviewed the performance, contribution and independence of Polly Williams who had completed six years on the Board. • Assessed the contribution, independence and performance of Directors and recommended to shareholders their election or re-election to the Board. • Engaged with the CEO on proposed changes to the Executive Committee and succession plans. • Oversaw the annual Board evaluation process. • Agreed the operation of the Non-Executive Director and Executive Committee pairing scheme for 2022. • Commenced a further Non-Executive Director search which concluded in early 2022, with the recommendation to appoint Suzy Neubert as an independent Non-Executive Director and member of the Remuneration and Nomination Committees. Board and committee composition The Committee reviewed the composition of the Board and its Committees during the year, taking into account all relevant best practice and the views of shareholders, together with the skills and experience of Board members. It was agreed that the size, composition and skills of the Board was appropriate. The Committee recommended the appointment of David Cruickshank and Dale Murray to the Audit and Risk Committee. David and Dale are both qualified accountants and David also brings ESG experience and Dale technology expertise which will be highly valuable to the Audit and Risk Committee. Whilst the composition of the Remuneration Committee was not fully compliant with the Code throughout the year, it was agreed an additional Non-Executive Director be appointed as part of the Board’s further succession planning. The Committee therefore recommended the appointment of Suzy Neubert to the Remuneration Committee with effect from 1 March 2022. Director re-election In line with governance requirements and the Company’s Articles of Association, all Directors stand for annual re-election at the Company’s AGM. Each Director’s performance, including the results of the annual Board evaluation, and independence is considered by the Committee, who recommend to the Board their re-election. In addition, a more detailed review of each Directors’ performance, contribution and independence is undertaken when they are considered for re-appointment after serving three and six-year terms. Directors’ external commitments A schedule of Directors’ external appointments, which includes details of the time commitments to those roles, is reviewed by the Committee to ensure all Directors can commit enough time to their duties. This includes consideration of the need for Directors to have sufficient capacity to be able to address non-standard business situations arising in different roles at the same time, which could increase the time requirements of the Director. Any significant new appointments are required to be approved by the Committee. The Committee is satisfied that all Directors have sufficient time to dedicate to their duties and have demonstrated this through their attendance record, responsiveness to Jupiter business and additional time dedicated to Jupiter outside the formal Board meeting structure. Conflicts of interest The Company’s Articles of Association permit the Board to consider and authorise situations where a Director has an actual or potential conflict of interest in relation to the Group. The Board has a formal system to record potential conflicts and, if appropriate, to authorise them. Conflicts of interest are included as a standing agenda item at each Board and Committee meeting. When authorising conflicts or potential conflicts of interest, the Director concerned may not take part in the decision making. Board and committee evaluation Details of the Board and Committee evaluation process can be found on page 85. The table below provides an update on the priorities identified in the Committee’s 2020 evaluation and also a summary of the conclusions from the 2021 evaluation. 2020 priorities 2021 status Continue to evolve the strategic approach to Executive succession planning, talent and development. There have been a number of changes to the Executive Committee during the year which has impacted succession planning for senior management. There has been increasing focus on talent and development, particularly at the level below the Executive Committee. This has included the inaugural Senior Leadership Group conference and the development of a refreshed Senior Leadership Programme. The Board’s strength of experience in the asset management sector was highlighted and focus should be given to increasing the breadth of backgrounds in future recruitment searches. The Committee recommended the appointment of two additional Non-Executive Directors during the year, both of which had experience outside the asset management sector (for further information please see page 90). Consider the frequency of Nomination Committee meetings and ensure appropriate balance of substantive discussion and governance. The Committee previously held four scheduled meetings per year and, following last years’ evaluation, a review of the key items considered at each meeting was undertaken. It was agreed that this process could be streamlined and that the frequency of Committee meetings be reduced to three scheduled meetings per year. Additional ad-hoc meetings to consider recruitment matters would be scheduled as and when required. 2021 evaluation conclusions The evaluation process demonstrated that the Committee was operating effectively and that recent Board and Executive Committee changes had been very well managed. The evaluation did highlight the amount of change at Board and Executive Committee level and, whilst the changes and their implementation were viewed positively, it was noted that effective relationships and dynamics needed to be built with new members. The Committee identified a number of priorities for 2022: • Succession planning at all levels and particular consideration to be given to developing a strong diverse pipeline of talent below the refreshed Executive Committee. • Keep under review Board and Executive Committee dynamics given the level of change across the organisation. • Initiatives to improve diversity and inclusion across all levels of the organisation and industry. 89 Jupiter Fund Management plc | Annual Report and Accounts 2021 NOMINATION COMMITTEE REPORT continued The Committee considered the composition and skillset of the Board and identified the skills and considerations for each role, which are summarised below. For each appointment Board diversity and dynamics were key considerations. New Director appointments The Committee has overseen the recruitment process for three additional Non-Executive Directors since the Committee’s last report to shareholders. An overview of the processes followed and key considerations for each appointment is detailed below: Role 2 • Technology and cyber experience • Experience of a disrupted sector • Experience outside asset management • ESG experience • Entrepreneurial or innovative approach Appointed RR as executive search firm Role 1 • Board or Committee Chairmanship experience • Qualified accountant and financial experience • Understanding of risk management • ESG experience Appointed Russell Reynolds (RR) as executive search firm Role 2 Dale Murray as an independent Non-Executive Director and member of the Audit and Risk and Nomination Committees. Role 1 David Cruickshank as an independent Non-Executive Director and member of the Audit and Risk and Nomination Committees. Role 3 • Sales, distribution or marketing background • Client engagement • Experience in an intermediated business • Current or recent executive management experience Appointed Heidrick & Struggles (HS) as executive search firm Role 3 Suzy Neubert as an independent Non-Executive Director and member of the Remuneration and Nomination Committees. With the exception of recruitment, neither RR or HS has any further connection with the Company or any individual director. For each recruitment process a role specification was prepared by the respective search firms using the above-mentioned criteria. A long-list of candidates was prepared and reviewed by the Committee following which a short-list was developed incorporating the Committee’s views. For each role a sub-committee of the Nomination Committee was established, which comprised the Chairman and two other Non-Executive Directors, who interviewed the short-listed candidates. The final candidates then met with other Committee and Board members. The Committee met to discuss feedback and review references obtained on the final candidates. The Committee recommended, and the Board approved the appointments as detailed below, which were then announced to the market. 90 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE COMMITTEE MEMBERS AND REGULAR ATTENDEES Members Meetings attended Polly Williams (Chair) 7/7 Jonathon Bond 1 2/2 David Cruickshank 2 3/3 Dale Murray 3 2/2 Karl Sternberg 7/7 1. Jonathon Bond stepped down from the Audit and Risk Committee on 6 May 2021 2. David Cruickshank was appointed to the Audit and Risk Committee on 1 June 2021 3. Dale Murray was appointed to the Audit and Risk Committee on 1 September 2021 The Committee is comprised solely of independent Non-Executive Directors in accordance with the UK Corporate Governance Code. As disclosed on page 69, the Committee’s membership was below the minimum requirement for a very brief period, during which no meetings were held. The Committee as a whole is considered to have the competence relevant to the asset management sector and Polly Williams and David Cruickshank, both of whom are qualified accountants, are considered to have recent and relevant financial experience. Karl Sternberg is also a member of the Remuneration Committee, which helps to ensure the identification of issues relevant to both Committees. During the year, the Committee held seven meetings; five of these were scheduled and held at key times in the audit and financial reporting schedule. Two other meetings were specifically arranged to review and challenge changes to the Group’s Risk Appetite Statement and Enterprise Risk Management Framework, and to receive, consider and discuss presentations from firms participating in the external audit tender. All members had 100% attendance at meetings. The Committee also met privately with each of the External Auditor, Internal Audit, the Chief Financial Officer and the Chief Risk Officer. AUDIT AND RISK COMMITTEE REPORT Polly Williams Chair of the Audit and Risk Committee COMMITTEE’S KEY RESPONSIBILITIES • Overseeing the Group’s financial reporting processes, including reviewing significant financial reporting issues, judgements, statements and announcements concerning its financial performance. • Assessing the material risks which could impact the Group’s business model, future performance, liquidity and solvency. • Reviewing and monitoring the effectiveness and adequacy of the risk management processes. • Reviewing the Group’s internal controls and risk management systems on an ongoing basis including the adequacy and effectiveness of the framework used to monitor the Group’s significant outsourced relationships. • Reviewing the Group’s whistleblowing arrangements and ensuring the proportionate and independent investigation of any matters reported. • Overseeing the appointment, performance, remuneration and independence of the External Auditors, including the provision of non-audit services to the Group. • Reviewing and approving the appointment of the Group’s Head of Internal Audit and oversight of the Group’s Internal Audit function. • Oversight of regulatory and compliance matters across the Group. A full copy of the Committee’s terms of reference, which are reviewed by the Committee and approved by the Board on an annual basis, can be found at www.jupiteram.com. 91 Jupiter Fund Management plc | Annual Report and Accounts 2021 “ The Committee provides independent oversight and challenge to ensure the integrity of financial reporting and the effectiveness of the Group’s risk management processes and internal control framework, in order to protect stakeholder interests and support the Group’s strategy.” Dear Stakeholder As Chairman of the Audit and Risk Committee, I am pleased to present my report on the activities of the Committee throughout 2021, which will be my last report to our stakeholders, before I step down in May. It has been a privilege to lead the Committee, especially through a period of such change across Jupiter and I would like to thank everyone who has supported me through my tenure. It has been a very busy year for the Committee. As the events and challenging circumstances experienced in 2020 continued into 2021, the Committee continued to focus on risks arising from the global pandemic and any resultant changes to the Group’s operations and internal control framework. In addition, there has been an increased focus on sustainability risks and how we manage and mitigate these. A key priority for the Committee has been the tender process for the external audit services, which has been overseen by the Committee and was conducted in accordance with the FRC’s Best Practice Guide to Audit Tendering. Further details of the process undertaken can be found on page 99. The Board have agreed the Committee’s recommendation to appoint EY as the Group’s External Auditors, subject to shareholder approval at the 2023 AGM. I would like to take the opportunity to thank all those firms who participated in the audit tender process and to all those across Jupiter, particularly our Finance and Procurement teams, who contributed to the process. Your hard work ensured a very thorough and well organised audit tender. As detailed within my report last year, the Committee has overseen the transition to a co-sourced Internal Audit model. A comprehensive tender process for the co-sourced provider was undertaken and the Committee approved the appointment of BDO LLP in this role. Our Head of Internal Audit has built out an internal team, which is supported by BDO LLP, and the new operating model is fully implemented. I would like to thank our previous internal audit partner and team at EY for their support, and also take the opportunity to welcome our new internal audit colleagues and partner. Further information on the work of our internal audit function can be found on page 100. At a dedicated meeting in June, the Committee reviewed and provided input on enhancements to the Group’s Risk Appetite Statement and Enterprise Risk Management Framework. There have been several changes to enhance our processes in line with emerging best practice, regulatory requirements and to further support our evolving business. The Risk and Compliance team have really driven the enhancements, with guidance and oversight from the Group’s Risk and Finance Committee and this Committee. I would like to thank them all for their efforts. We have continued to oversee the integrity of the Group’s financial reporting and challenged our external audit firm to ensure that their audit procedures and processes remain robust, especially where any elements of the audit were conducted remotely. We keep the Group’s financial position and levels of capital and liquidity under review, to ensure that the Group has sufficient resources. The Committee reviews and challenges all elements of the Group’s ICAAP to ensure the Group holds appropriate levels of regulatory capital. We have prepared for the transition to the new Internal Capital Adequacy and Risk Assessment (ICARA) which will replace the ICAAP in 2022. An enhanced supplier management framework was reviewed and approved by the Committee, which has been developed by our Procurement team. This has enhanced our management and oversight of third-party suppliers and provides us with additional assurance on the operational resilience of our key suppliers. The team are working to transition suppliers to the new framework, starting with our most critical suppliers, and the Committee will be updated on progress during 2022. The threat of cyber security breaches has only accelerated throughout the pandemic. The Committee assessed the Group’s information security controls and measures in place to help protect us from an attack, which included an analysis of recent cyber security incidents. We have also considered our resilience in the event of a successful attack and how we would restore our systems and business operations as quickly as possible. Tailored training sessions on phishing awareness were rolled out to all staff across the Group to help develop a positive cyber security culture, increase staff awareness and prevent cyber attacks. We will continue to focus on this key area and will be further testing our operational resilience, in the event of a cyber-attack, through incident response exercises in 2022. There have been a number of changes to the composition of the Committee during the year. Jonathon Bond stepped down from the Board and Committee following the conclusion of the AGM in 2021 and I would like to thank Jonathon for his contribution to the Committee during his seven-year tenure, especially for his diligent and considered approach, and his commitment to sustainability. I am delighted to welcome David Cruickshank and Dale Murray who were appointed to the Committee on 1 June 2021 and 1 September 2021 respectively. Both are qualified chartered accountants and have strengthened the financial expertise on the Committee. David was the former Chairman of Deloitte and brings extensive leadership skills and a keen focus on sustainability. Dale is a technology entrepreneur who brings technology expertise and experience of disrupted sectors. David Cruickshank will be appointed Chairman of the Committee with effect from the conclusion of the 2022 AGM. I know David will continue to drive focus on the Committee’s key areas of responsibility. This year there have been a number of important initiatives and projects in the Committee’s areas of oversight. I would like to thank my fellow Committee members for their commitment and diligence throughout the year and, most importantly, the people across Jupiter who have continued to innovate and drive progress in the most remarkable circumstances. I hope to be able to meet with shareholders in person for my final AGM on 11 May 2022. Polly Williams Chair of the Audit and Risk Committee AUDIT AND RISK COMMITTEE REPORT continued 92 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE COMMITTEE’S ACTIVITIES The table below shows the key activities undertaken by the Committee throughout the year. Activity Outcomes Financial reporting Annual and interim reporting > See page 96 for further information Reviewed the annual and interim reports and recommended them to the Board, which included ensuring there were effective financial controls operating across the Group to safeguard the integrity of the Group’s financial reporting. The Committee reviewed and suggested changes to the annual and interim reports to ensure they provided a true and fair view of the Company’s position and that they were fair, balanced and understandable. Statement of viability and going concern > See page 98 for further information Considered, challenged and approved the Group’s statement of viability and the preparation of the annual and interim accounts on a going concern basis. The Committee specifically focused on the uncertainty caused by the Global pandemic and considered a variety of stress scenarios. Significant accounting judgements and estimates > See page 96 for further information The Committee reviewed, challenged and approved all significant accounting judgements and estimates for both the annual and interim reports. Before agreeing the accounting estimates and judgements the Committee engaged with the External Auditors to seek their view on these key items. Alternative Performance Measures > See page 98 for further information Challenged and approved the use of Alternative Performance Measures in the Annual Report and Accounts and ensured that these were appropriate to provide users of the accounts with a clearer understanding of the Group’s business. The Committee reviewed the disclosures to ensure that they were clear to the readers of the accounts. Internal Capital Adequacy Assurance Process The Committee reviewed and approved the Group’s ICAAP and wind-down plan, with a focus on the operational risk scenarios and stress testing. Received a briefing from external advisors on the new requirements introduced by the move to the ICARA. Risk and compliance Risk Appetite Statement and Enterprise Risk Management Framework This year the CRO led the process to revise our Risk Appetite Statement and Enterprise Risk Management Framework, to better align our risk taxonomy with our business operations. The Committee have been fully involved in this review with a dedicated additional meeting being held in June to provide input and challenge to the proposed changes. The CRO also held a number of meetings with individual Committee members to discuss their views during the process and ensure their feedback was incorporated. The final documents were then reviewed and approved at the Committee’s October and December meetings. Material and emerging risks Discussed the material and emerging risks and considered potential impacts to the Group. Reviewed and approved the risk management disclosures in the annual and interim reports, which included the Top-Down Risk Assessment and suggested a number of changes to provide further clarity to readers of the accounts. Internal controls Reviewed the effectiveness of the internal control environment including consideration of risk incidents, the output from the risk and control self-assessment, compliance and internal audit findings. There was specific consideration of the internal control operation in light of the remote working environment. Risk and compliance reporting The Committee receives a report at each meeting from the Group’s CRO which provides an update on risk and compliance matters. This includes the review of the Top-Down Risk Assessment, a detailed overview of any risk incidents or breaches, key priorities for the activities of the teams, compliance monitoring findings and an update on any regulatory matters, engagement or change. The Committee requested follow-up reporting on a number of matters to ensure they were resolved satisfactorily. ESG risk management Considered ESG-related risks arising from the Group’s investment activities and how these are managed and overseen within the Governance framework. Liquidity risk management Monitored the Group’s implementation of the revised liquidity risk management procedures and liquidity stress testing in line with the new liquidity risk management requirements and best practice. Cyber risk The Committee received an update on Jupiter’s cyber defences and the operational resilience of the Group in the event of a successful attack. This included reviewing specific incidents, outside of Jupiter, to identify areas of improvements within Jupiter’s cyber risk management. The Committee added specific scenario requirements to the planned cyber incident test to be undertaken in 2022. Supplier management policy and procedures Reviewed and challenged the proposed changes to the Group’s supplier management policy and framework which has been enhanced to improve oversight of third-party suppliers on a risk-based approach. Compliance monitoring plan The Committee reviewed and approved the Group’s compliance monitoring plan, under which the compliance team review and test key areas of the firm’s business as part of the second line of defence oversight. 93 Jupiter Fund Management plc | Annual Report and Accounts 2021 Activity Outcomes Legal and litigation risks Received an update from the General Counsel on potential legal and litigation risks across the Group. AAF report The Committee oversaw the preparation of the Group’s annual assurance report on internal controls which was audited by EY and approved the final report before it was sent to third parties. Financial crime prevention The Committee received an update from the Head of Financial Crime on the policies and procedures in place to manage money laundering and financial crime risks across the Group. It was noted that the framework and management of the risks were considered to be effective. Whistleblowing arrangements The Committee reviewed the firm’s whistleblowing policy and arrangements and found these to be effective and in-line with best practice. The Chairman of the Committee is the whistleblowing champion and ensures, should any reports be received, these are independently investigated. Fraud deterrence policies and procedures The Committee assessed the effectiveness of the policies and procedures in place to prevent fraud across the organisation, including measures designed to protect our clients. These were found to be effective; however, the Committee highlighted the need to remain vigilant in light of the increasing sophistication of fraud cases. The Committee also requested that specific warnings of known scams be better signposted on our website to help protect clients and the public. Rebate agreements The Committee reviewed the additional controls implemented to prevent errors in calculating payments to clients under rebate agreements and found that the additional preventative and detective controls were operating effectively and had helped to mitigate this risk. The Committee also received an update on the review of rebate agreements which had transitioned from the legacy Merian business. External audit > Further information on page 99 External audit tender During the year the Committee oversaw a tender for the external audit services. The Committee approved the tender process and oversaw its implementation. In November an additional meeting was held to consider presentations from the participating External Audit firms, following which the Committee recommended to the Board the appointment of EY as the Group’s external auditors. External audit reporting The Committee receives regular reporting from the external auditors on the external audit plan, progress thereon and any matters identified in the course of the audit. A key focus of the Committee was the effectiveness of the external audit in light of the remote working environment. External auditor effectiveness The Committee reviewed the effectiveness of the external auditor, which included the results from the internal evaluation, as well as the FRC’s Audit Quality Review (AQR) on PwC. Overall the reports showed that the external auditors were delivering an effective audit to the Group and its subsidiaries. Key areas for improvement related to communication and the timings of subsidiary audits. The Committee challenged PwC on the findings of the FRC’s AQR and their plans to address the items raised. Independence of external auditor The Committee is responsible for maintaining policies and procedures to help ensure the independence of the external audit function. In May this year the Committee refreshed the existing Auditor independence policies, which included the provision of non-audit services, the recruitment of individuals previously employed by the Group’s external auditor and the policy covering personal use of the external auditor. The policies were in accordance with all regulatory requirements and best practice and were formally adopted by the Committee. At each meeting the Committee considers the independence of the external auditors, which includes approving non-audit related engagements and expenditure. The Committee is satisfied that the external auditor continues to be independent. External audit fee The Committee reviewed and challenged the proposed fees for the external audit of the Company and its subsidiaries. This year the external audit fee has decreased by £200k, which is primarily due to the reduction in complexity following the completion of the Merian acquisition. Internal audit > Further information on page 100 Internal audit reporting At each meeting the Committee receives a report from Internal Audit which provides an update on the internal audit plan, an overview of all internal audit reports issued during the period and an update on identified and outstanding management actions. The Committee reviewed the reports and challenged management on any actions which had been identified as overdue. Internal audit plan The Committee reviews and approves the internal audit plan, which is considered in conjunction with the Compliance monitoring plan to ensure effective assurance reporting over all of the Group’s operations, with appropriate focus on higher risk areas. Internal audit transition Last year we confirmed our intention to move to a co-sourced internal audit function and we have now built out our Internal Audit team, who will be supported in the delivery of their duties by an external co-sourced provider. The Committee has overseen the transition to ensure that all planned audits were delivered effectively and that there was minimum disruption to the business. The transition has progressed very smoothly and we are already seeing the benefits of developing our in-house function. Due to the ongoing monitoring of the Internal Audit transition by the Committee, a formal review of the effectiveness of Internal Audit was not undertaken during the year. AUDIT AND RISK COMMITTEE REPORT continued 94 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Activity Outcomes Internal Audit Charter Our new Head of Internal Audit reviewed and proposed a number of changes to the Group’s Internal Audit Charter, which can be found on our website at www.jupiteram.com. The Committee reviewed and approved the new charter, highlighting the improvements. Internal Audit co-source tender Our Head of Internal Audit, supported by management, undertook a comprehensive tender for the co-sourced Internal Audit provider. By having a co-sourced function we are able to leverage the wide expertise and depth of resource of our co-sourced provider. The Committee oversaw the tender process and the Chairman of the Committee met with finalist firms. The Committee approved the appointment of BDO LLP as the Group’s Internal Audit co-sourced provider. Other Client Money and Custody Asset Assurance (CASS) report Each year the Group’s independent auditors are required to undertake a CASS audit which reports on the Group’s compliance with the Client Assets Sourcebook. The Committee reviewed and approved the CASS Report and will oversee the implementation of the control findings identified by PwC. Unlisted Assets Valuation Committee > Please see page 98 for further information Reviewed the operation of the UAVC, including the structure of the UAVC, the valuation process and the responsibilities of the relevant parties including the independent valuation experts, AIFM and, where relevant, the independent Investment Trust or Fund Board. Consultation – Restoring Trust in Audit and Corporate Governance Reviewed the consultation launched by the Department for Business, Energy & Industrial Strategy entitled ‘Restoring Trust in Audit and Corporate Governance’. The Committee oversaw the Group’s response to the consultation as both a listed company and a major investor in UK equities. The Committee will continue to monitor the outcome from the consultation and ensure appropriate preparation is undertaken for the implementation of the new rules. Tax strategy The Committee reviewed and approved the Group’s tax strategy which includes details of how we manage the tax affairs and related risks to our business. Terms of reference Reviewed its Terms of Reference to ensure they remained up to date and in accordance with best practice. A small number of minor amendments were approved, but these did not change the roles and responsibilities of the Committee. Committee evaluation > Please see page 101 for further information The Committee monitored the actions arising from the 2020 Committee evaluation and discussed the results of the 2021 Committee evaluation, including the agreed actions and areas of focus for the Committee during 2022. 95 Jupiter Fund Management plc | Annual Report and Accounts 2021 Financial reporting One of the core responsibilities of the Committee is to ensure the integrity of the Group’s financial reporting, which includes overseeing the effectiveness of the financial control environment. Prior to recommending the year-end financial statements to the Board for approval, the Committee reviews the accounting policies adopted by the Group and considers the principal areas of financial statement risk and challenges management on areas of estimation and judgement. The significant judgement areas considered by the Committee are set out in the table below. In each case the Committee concluded that the accounting treatment and disclosure in the financial statements are appropriate. The Committee has also assessed the Annual Report and Accounts to ensure that, taken as a whole, it is fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Group’s position and performance, business model and strategy. Key areas of estimation and judgements Share-based payments Assessment of area of estimation and judgement The most significant share-based payment accounting costs for the Group relate to Long-Term Incentive Plans (LTIP), Deferred Bonus Plans and the Deferred Earn Out Awards. There have been no changes in use of estimation in the Group’s share-based awards. The principal area of estimation relates to the probability of vesting of performance-based awards. Considerations The Committee considered the status of the Group’s outstanding LTIP awards and agreed that no adjustments for lower future vesting expectations should be made for the year ended 31 December 2021. Goodwill and intangible assets Assessment of area of estimation and judgement The Group has goodwill of £570.6m on its balance sheet which is not amortised and remains unchanged from year to year unless deemed impaired. A full impairment test using a discounted cash flow model was conducted which demonstrates that there continues to be significant headroom available between the fair value of the goodwill asset and its carrying value. The Group’s intangible asset arising from the acquisition of Merian was £75.0m at the acquisition date. The asset is being amortised over a period of four years. An assessment of whether the asset may be impaired, with consideration having been given to internal and external factors, demonstrated that there were no compelling indicators of impairment. Outcome The Committee agreed with the Finance team’s recommendation that no impairment of the Group’s goodwill and intangible assets is required. Consolidation of seed investments Assessment of area of estimation and judgement In accordance with IFRS 10 the Group is required to consolidate any entities under the control of the Company. A number of factors are applied to identify the funds that require consolidation and there has been no change to the methodology applied in 2020. Outcome In applying the agreed methodology two changes were proposed to the list of funds to be consolidated, with one additional fund being incorporated and one removed from the consolidation. These were agreed by the Committee. AUDIT AND RISK COMMITTEE REPORT continued 96 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Significant accounting matters Merger relief reserve Summary of significant accounting item In the 2020 Annual Report and Accounts and the 2021 Interim Report, the Group accounted for the shares it issued in consideration for the Merian acquisition within the share capital and share premium account. However, under s.612 of the Companies Act, where 90% or more of the consideration paid is in equity then merger relief must be applied. This means that the share premium must be recorded in a separate reserve. There was no impact on the overall financial position or distributable reserves of the Group or Company. Considerations The Committee agreed that a restatement of the consolidated and individual company balance sheet and associated notes, together with an explanation of the impact of the reclassification, was required. Performance fees Summary of significant accounting item A significant part of the gross performance fee owed by the Chrysalis Investment Trust was paid to the Group in Chrysalis shares. The number of shares transferred to the Group equalled the number of shares needed by the Group to hedge the deferred compensation element (which are in the form of Chrysalis shares), plus sufficient shares to hedge against national insurance and similar liabilities. Considerations The Committee considered the principal accounting consequence of this, which means that the Chrysalis shares will become assets of the Group until the deferred awards fully vest and will be marked to fair value through the income statement, resulting in gains or losses for the Group offset by changes in the value of the deferred awards and related taxes. Consideration and related matters arising from the Merian acquisition Summary of significant accounting item The consideration paid for the Merian acquisition is subject to potential adjustments that could arise from an obligation for TA Associates to repay specific cash amounts back to the Group under the Purchase Price Agreement (PPA) and in respect of Deferred Earn Out (DEO) obligations. Considerations Under the terms of the PPA and DEO any obligation for TA Associates to repay cash amounts back to the Group is offset by Merian related performance fees. The performance fees earned from Merian funds up to 31 December 2021 exceeded any potential payments due from TA Associates under the PPA and DEO. Disclosure of exceptional items Summary of significant accounting item The Committee reviewed management’s proposals to include a number of items as exceptional items which are defined as “Items of income or expenditure that are significant in size and which are not expected to repeat over the short to medium term”. Exceptional items incurred in 2021 amounted to £33.0m and related to costs arising from the Merian acquisition and the final stage of a restructuring programme that commenced in 2020. Considerations The Committee agreed that the above-mentioned items meet the definition of exceptional items, which was a view confirmed by the External Auditors. The costs relating to the Merian acquisition, principally the amortisation of intangible assets, would be classified as exceptional items until the costs were extinguished in 2024. Notes to the cash flow statement Summary of significant accounting item The reconciliation of the changes in liabilities arising from financing activities (note 2.2 to the cash flow statement) in the 2020 Annual Report and Accounts excluded lease liabilities. Considerations The Committee agreed with management’s proposal to amend the note in the 2021 financial statements to reflect all financing activities (i.e. including leases), and the comparative amounts have been restated. 97 Jupiter Fund Management plc | Annual Report and Accounts 2021 Going concern and statement of viability The Directors are required under UK law and the UK Corporate Governance Code to conclude on the Group’s ability to continue as a going concern and to include a statement of viability in the Group’s Annual Report and Accounts respectively. They must satisfy themselves as to the Company’s ability to continue as a going concern for a period of 12 months from the date of the approval of the financial statements. In addition, the Company is required to provide a statement of viability, which can be found on page 26, and which reports on the viability of the Company over a three-year period. The Committee supports the Board in its assessment of going concern and ongoing viability by considering and reviewing a number of factors such as the current financial position, budget and cash flow forecasts, liquidity, contingent liabilities and unfavourable market scenarios, versus the Group’s core forecasts, the Group’s ICAAP and wind-down plan, and risks to the Group’s operations including transition risk related to the Merian acquisition, or balance sheet position. The Committee considered and assessed the Company’s viability under a combination of severe stress scenarios including the impact of multiple risks occurring simultaneously and whether there was potential for further pandemic-related market uncertainty. The Committee recommended to the Board that it was appropriate for the Group to adopt the going concern basis of accounting in preparing the half-year and annual financial statements for the year ended 31 December 2021 and that the Company would remain commercially viable over a three-year period. Fair, balanced and understandable The Committee assessed whether, taken as a whole, the 2021 Annual Report and Accounts was fair, balanced and understandable and provided the information necessary to assess the Company’s position and performance, business model and strategy. To assist with the Committee’s assessment as to whether the Annual Report and Accounts is fair, balanced and understandable, the Committee receives and discusses papers from management outlining changes in the application of any accounting policies together with material estimates and judgements. The Committee received and reviewed a full draft of the accounts at its February meeting and considered whether the performance and position of the Group had been described in a fair and balanced way in the financial review. We believe that the tone and content accurately reflect the performance of the business, while also providing relevant information for users. The Committee’s attention was given to the disclosure in respect of the use of APMs (see following paragraph for further detail) to ensure that the disclosure in respect of APMs was clear and transparent. Following its review, the Committee was of the opinion that the 2021 Annual Report and Accounts was representative of the year and presents a fair, balanced and understandable overview. The Committee was also of the opinion that the Annual Report and Accounts provides a true representation to shareholders of the Company’s position and performance, business model and strategy. Alternative performance measures The Committee reviewed the approach proposed by the Finance team for disclosure of APMs specifically around the presentation of exceptional items and performance fees in the Group’s income statement. Exceptional items are defined as items of income or expenditure that are significant in size and which are not expected to repeat over the short to medium term. Such items were separately presented to enable a better understanding of the Group’s ongoing financial performance. The exceptional items for the 2021 financial year are consistent with those disclosed in 2020 and relate principally to a cost reduction programme and to costs arising from the Merian acquisition in 2020, that are required to be recognised over multiple accounting periods. The Committee reviewed and challenged the costs proposed by management as exceptional items for the period and agreed that they met the principles for treatment as exceptional items, which was also agreed by the Group’s external auditors. Additional APMs have been used in the presentation of the 2021 Annual Report to exclude the impact of substantial performance fees received and associated variable compensation awards. Such fees are unlikely to recur at the same levels in future years and could therefore be seen as unrepresentative of the Group’s core fee-earning potential as well as its variable cost base. The Committee considered whether the exclusion of such items of income and cost from underlying performance measures was appropriate, and whether this resulted in more useful information for users of the accounts. The Committee also considered whether this treatment created an excess of APMs in the Annual Report and Accounts which could prevent it from being fair, balanced and understandable. The Committee concluded that the use and disclosure of APMs in the Annual Report and Accounts was appropriate, and that the definitions and explanations were clear. Unlisted valuations During 2021 the Committee considered the process for the valuation of unlisted asset held by products managed by Jupiter. This primarily related to assets held by Chrysalis, whose fee structure includes a performance fee. The Chrysalis performance fees are earned based on clear contractual criteria set out in the Chrysalis prospectus and within their subsequent financial reports and is not subject to clawback. The Committee specifically considered the valuation process in light of the valuation responsibilities and potential performance fees, which included: • Valuations are determined in accordance with International Private Equity and Venture Capital Guidelines. • Valuations are prepared by an independent expert valuer, are subject to a clear control framework and are considered and approved by the UAVC of the AIFM. • Enhancements to the process had been identified that were implemented in 2021 including the appointment of an independent non-executive chairman of the UAVC. • Valuations are audited by the Chrysalis external auditor as part of the statutory audit and are approved by the Chrysalis Board. In conjunction with the Board and the Remuneration Committee, the basis of the performance fee related pay was also considered. For 2021, it was agreed with the Chrysalis Board that the performance fee should be partially settled in Chrysalis shares. The number of shares was determined by reference to the Chrysalis share price as at 30 September 2021, the date the performance fee crystalised. 54% of the 2021 performance fee was settled in Chrysalis shares, equivalent to the deferred awards to be granted to the Chrysalis investment desk, including related employer taxes. As a result, the fair value of the deferred bonus award was established as at 30 September 2021 and the value of that award has decreased based on the Chrysalis share price at 31 December 2021. The deferred awards vest over three years and the actual fair value is determined based on the Chrysalis share price at the exercise dates. The accounting requirements for this award, including the accounting timing recognition mismatch of the reduction in the fair value of the asset and the deferred bonus awards in accordance with IFRS, were considered by the Committee. External audit PwC served as the Group’s external auditors during the year. PwC was first appointed as AUDIT AND RISK COMMITTEE REPORT continued 98 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE external auditor in 2007 and their reappointment as the Company’s external auditor was confirmed following a formal external audit tender process in 2014. Colleen Local was appointed as lead audit partner in January 2020. For the year ended 31 December 2021 only, Lindsay Gardiner provided parental leave cover and led the external audit. The Company is in compliance with the requirements of the Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender Processes and Audit Committee Responsibilities) Order 2014 and the Corporate Governance Code. Under these requirements a tender for the external audit must be undertaken no later than 2024. During the year, the Company commenced and completed the Audit Tender Process which was overseen by the Committee (see below for further detail). The Committee met with representatives from PwC without management present to ensure that there were no issues that needed to be brought to the attention of the Committee. External audit tender The Committee undertook a formal tender exercise for the external audit services in the second half of 2021 and conducted the tender in accordance with the FRC’s Best Practice Guide to Audit Tendering. In May, the Committee reviewed and approved the proposal for the audit tender process. They considered and agreed the scope of the audit tender along with which firms were to be invited to tender for the audit and related services. Five firms were invited to tender including two firms outside the ‘big four’ audit firms. The Committee focused on identifying which firm would provide appropriate challenge and deliver high-quality assurance whilst also providing the best fit with Jupiter. The scope of the Request for Proposal (RFP) comprised the provision of the auditors’ report on the Annual Report and Accounts of Jupiter Fund Management plc and each of its corporate subsidiary undertakings, along with audit-related services including the interim review report, client assets reporting in accordance with FCA requirements, and the AAF. An assessment of each firm’s independence was considered by the Committee taking into account existing services currently being provided to Jupiter, that would not be permissible in the future, should the provider be successful with the tender. Initial meetings were held with management and each of the providers. Throughout the audit tender process the Committee monitored each firm’s independence and assessed the plans for the transition of existing services or new services where the incumbent firm would need to be replaced. In November, a meeting of the Committee was convened specifically to receive and consider presentations from the three audit firms participating in the final stage of the audit tender. The Committee used the meeting to challenge and question each of the audit firms to ensure that the preferred firm would provide the highest quality, most effective and efficient audit and would be the best fit for Jupiter. Each audit firm was provided with the following guiding principles for the structure of their presentations to Jupiter: • Highlight key areas of differentiation; • Demonstrate the key strengths of your firm; and • Outline how your firm will deliver a high- quality, efficient and effective audit. The Committee sought responses to questions relating to the audit firm’s available resources, the management of conflicts in their time, the development of effective working relationships with key stakeholders whilst maintaining appropriate rigour and the process for the audit of overseas entities. The Committee also considered areas of improvement for each audit firm as identified by the FRC’s audit quality review. At the December Committee meeting the Committee agreed that EY would provide the most robust and effective audit and was the best fit for Jupiter, with two other firms also being presented to the Board. The Committee recommended to the Board that EY be appointed as External Auditor with effect from the year ended 31 December 2023, subject to shareholder approval. Throughout the process, and following the Board decision, feedback was provided by the Committee Chairman to each participant firm. An overview of the timeline for the audit tender process is detailed below: Q2 2021 The Committee approved the Audit Tender Plan, including the selection of firms to involve. Q3 2021 Audit tender process commenced. Q4 2021 The Committee selected the chosen audit firm for recommendation to the Board. 2022 The selected firm to gain independence and undertake shadowing of PwC’s work. 2023 AGM The selected firm recommended to shareholders at the AGM. External auditor independence policies In 2016, the FRC issued its Revised Ethical Standard 2016 which was updated in 2019. These aimed to strengthen auditor independence and prevent conflicts of interest in order to improve audit quality with focus on threats to the integrity, objectivity and independence of the auditors. In May, the Committee considered, reviewed and approved three updated independence policies, designed to help safeguard the independence of the external auditor by limiting the amount of influence the Group or those in financial oversight roles can have over the external auditor as follows. • Provision of non-audit services by the Group’s external auditors; • Appointment of individuals formerly employed by the Group’s external and internal auditor; and • Policy covering the personal use of the external auditor. External audit effectiveness In October, the Committee conducted a formal evaluation of the independence and effectiveness of PwC as the Company’s external auditors. The evaluation was fulfilled by means of a questionnaire completed by key internal stakeholders, in accordance with the FRC’s guidance on assessing audit quality. This included all services provided by PwC and enabled the Committee to assess and discuss with relevant parties (including the auditors) the key messages and themes emerging from the evaluation. Four criteria were used to assess audit quality; mindset and culture; skills, character and knowledge; quality control; and judgement. Overall, PwC was found to have performed effectively during the audit and to have upheld excellent standards in respect of reputation, integrity and judgement. Although there was a good level of satisfaction in relation to the 2020 audit, a small number of issues were identified. Overall the evaluation indicated that there had been an improvement to the scores from the previous year; however, feedback from Committee members had declined, which was primarily due to communication between PwC and Jupiter being impacted by the remote working environment. The Committee considered how to improve communication channels now that staff have returned to the office. Whilst this did not impact the quality of the audit, the Committee challenged PwC to ensure a more comprehensive round of planning meetings with Jupiter. The Committee also reviewed the FRC’s Audit Quality Review on PwC. In the FRC’s latest inspection published in July 2021, the FRC reviewed 20 audit engagements undertaken by PwC, half of which related to FTSE 350 firms, which showed an increase in the quality of the specific audits they reviewed in 2020/21 compared with their assessment for those audits they reviewed in 2019/20. Overall the FRC assessed PwC’s audit process as of a good standard. 99 Jupiter Fund Management plc | Annual Report and Accounts 2021 External Audit Fees £0.5m £0.3m 20 21 Audit fee £0.3m £0.3m 20 21 Audit related assurance services £0.8m £0.8m 20 21 Audit fee for subsidiaries £ 0.9m £ 0.0m £ 0.0m £ 0.0m 20 21 Other assurance services 20 21 Other non-audit services XX Non-audit services Services classified as non-audit services, as above, include the review of the interim results, CASS audit, and overseas regulatory audits. To safeguard the external auditors’ objectivity and independence the Committee has a non-audit services policy, which sets out the procedure for the provision of any non-audit services by the external auditors to any entity within the Group. The policy requires all non-audit services to be approved by the Committee, which can be facilitated by the Committee Chairman should such approval be required in between Committee meetings. At each Committee meeting the non-audit spend of the Group is reviewed and an assessment made of the independence of the external auditors. With effect from 1 January 2017, the FRC introduced new rules for auditors in respect of the provision of non-audit services whereby the proportion of non-audit service fees that can be incurred in a year is limited by reference to the average audit fee over a rolling three-year period and prohibits non-audit services fees from exceeding 70% over both UK standalone and total Group bases. In December 2019, the FRC published revised ethical standards which aim to strengthen auditor independence, prevent conflicts of interest and improve audit quality. The revised standards placed further limits on the provision of non-audit services. The Company is compliant with these requirements. External auditor oversight conclusion The Committee concluded that PwC is effective, undertakes the audit with integrity and sufficient challenge and remains independent. It is proposed that PwC be recommended to shareholders for re-appointment for the year ending 31 December 2022. Internal audit During the course of the year the Company transitioned from an out-sourced internal audit model, provided by EY, to a co-sourced internal audit model. Both the lead audit partner from EY and the Head of Internal Audit reported directly to the Committee Chairman. The Committee worked with internal audit to ensure that the audit plan for the year addressed the most material risks to the Group and the key themes affecting the asset management industry. The Committee reviews the internal audit plan at each meeting to ensure that it remains relevant for new and emerging circumstances. A total of 11 internal audits were completed during 2021 for Jupiter Fund Management plc which included a focus on third-party providers governance and oversight, market abuse, liquidity risk management, ESG, implementation of the Senior Manager and Certification Regime, cyber security, ESG framework and the Inter-Bank Offered Rate transition. In addition, four internal audits were undertaken during 2021 in respect of Jupiter Asset Management (Europe) Limited (Ireland) and 14 were undertaken for Jupiter Asset Management International S.A. (Luxembourg). The Committee has overseen the transition to a co-sourced model and the development of an internal audit function was a key focus of the Committee during the year. Under this operating model Jupiter has developed an in-house internal audit team, which will be supported by an internal audit co-sourced partner. A tender for the internal audit co-sourced partner was led by the Head of Internal Audit and following an initial phase of pre-qualification meetings with seven potential providers, five firms were asked to respond to a detailed RFP. Two firms were considered to be the most suitable firms for Jupiter’s size, business and culture and the Committee Chairman, a member of the Committee, the CEO and the CFO met with both firms. At the October Committee meeting the Committee considered the two final proposals and concluded that BDO LLP was the most suitable internal audit co-sourced provider and agreed to appoint BDO LLP with effect from 1 January 2022. Effectiveness of internal audit In line with the approach taken for the external auditors, the Committee monitors the fees paid to EY for services outside the internal audit to ensure their objectivity and independence and will continue to do so for BDO LLP. Due to the close involvement of the Committee in the internal audit transition to a co-sourced internal audit function, a formal review of the effectiveness of the internal audit function was not undertaken during the year. The Committee will undertake a review of the effectiveness of internal audit in H1 2022. Enhanced risk management At a meeting in June, which was focused on the enhanced risk management framework, the Committee reviewed and considered proposed enhancements to the enterprise risk taxonomy, the top-down risk assessment process, the risk appetite statement and metrics and the key risk indicators. The purpose of the review was to provide an enhanced holistic view of how we identify, assess, manage and report to the Board on the risk profile of Jupiter’s entities as the Group expands geographically. Consideration was also given to industry best practice. The Committee challenged and questioned the rationale behind some of the proposed changes to the risk taxonomy and Risk Appetite Statement and thresholds in advance of the formal review and approval of the updated Enterprise Risk Management Framework policy at the October meeting and the Risk Appetite Statement at the December meeting. AUDIT AND RISK COMMITTEE REPORT continued 100 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Monitoring of the Group’s risk management environment During the year the Committee received regular management reports from the CRO on: • The profile of our Strategic, Operational, Capital Adequacy, Liquidity, Credit and Counterparty, and Market Risks. • Adherence to the Group’s Risk Appetite and any breaches of risk appetite metrics. • The profile of transversal risks such as Conduct Risk and ESG. • Cyber and regulatory risk (including post Brexit divergence, SFDR and our registration in the US). • Changes to key regulations and how these will impact the Group. • Details of planned Risk and Compliance Assurance reviews and any material findings and themes. • Review and approval of the Group’s AAF. • The Committee reviewed the Group’s ICAAP and recommended its approval to the Board. In its review of the Group ICAAP, the Committee assessed and challenged: • Management’s methodology and approach. • Operational risk scenarios, assumptions and quantification. • Capital and liquidity stress testing. • The Group’s proposed wind-down plan. Monitoring of the Group’s internal control environment During the year the Committee: • Evaluated and monitored material control issues identified by management through regular reports from the CRO. • Considered reports from the second line of defence on the oversight of operational risk controls. • Reviewed processes for financial crime prevention and deterrence of fraud. • Overall, it was considered that Jupiter had effective and proportionate anti-money laundering and financial crime prevention systems and controls. Extra resource was recruited in Luxembourg to assist the Compliance Conducting Officer with financial crime prevention and other compliance matters. • Received a report from the Chairman of the Committee, in her capacity as Whistleblowing Champion, and a review of the whistleblowing procedures. • Reviewed reports from the third line of defence on the maturity of the internal control environment. • Conducted an annual and interim review of the effectiveness of Jupiter’s system of risk management and internal control which includes financial, operational and regulatory compliance controls. The Committee’s review of the internal control framework concluded that the internal control framework was operating effectively and that there were robust processes in place to ensure appropriate financial and regulatory reporting controls, including over the enlarged Group. The Committee therefore recommended to the Board that the risk management and internal control framework was operating effectively. Where the Committee identified areas requiring improvement, processes are in place to ensure that the necessary actions are taken and progress against those actions is monitored. Committee effectiveness During the year an internal evaluation of the Committee’s effectiveness was undertaken, the process for which can be found on page 85. The table below provides an update on the priorities identified in the 2020 evaluation and also a summary of the conclusions from the 2021 evaluation. 2020 priorities 2021 status Ensure a comprehensive tender for the external audit services is undertaken in 2021. A comprehensive tender for the external audit services was undertaken in 2021. See “External audit tender” on page 99 for further detail. Develop further the integrated assurance plan to continue to provide comprehensive coverage of key risk areas, whilst maximising the efficiency of the business. The development of an Internal Audit function has resulted in better collaboration between the Group’s Risk and Compliance Team and Internal Audit function. This has resulted in a comprehensive and cohesive integrated assurance plan for 2022 and beyond. Oversee continued enhancements to the risk management framework and processes, and the assurance reporting to the Committee. A dedicated meeting was scheduled in July, followed by further discussion in October, where the Committee reviewed and considered proposed enhancements to the enterprise risk taxonomy, top-down risk assessment process, risk appetite statement and metrics and the key risk indicators. See “Enhanced Risk Management” on page 100 for further detail. The CRO provides assurance reporting at each Committee meeting, and this will continue to be enhanced throughout 2022 as the revised risk management framework is embedded. 2021 evaluation conclusions The evaluation process demonstrated that the Committee had operated effectively during the year and particularly commended the effectiveness of the Chairman whose inclusive style ensures effective debate and encourages participation from all members. The Committee identified a number of priorities for 2022: • There needs to be continued focus on improving the quality of Committee papers and integrated assurance reporting aligned to the new Internal Audit model and revised risk management framework. • Ensure the new risk management framework is embedded across the organisation. • Improve reporting and consideration of strategic and emerging risks and continued focus on developing risk areas such as ESG and cyber risks. • Ensure the Committee is updated and trained on new regulatory requirements within the Committee’s remit. • Continued focus and testing of the Group’s operational resilience. 101 Jupiter Fund Management plc | Annual Report and Accounts 2021 REMUNERATION COMMITTEE REPORT Roger Yates Chairman COMMITTEE MEMBERS AND REGULAR ATTENDEES Meetings Meetings attended Roger Yates (Chair) 5/5 Jonathon Bond 1 2/2 Nichola Pease 5/5 Karl Sternberg 5/5 1. Jonathon Bond stepped down from the Board on 6 May 2021. The Committee comprises two independent Non-Executive Directors and the Chairman of the Board who was independent on appointment in accordance with the UK Corporate Governance Code. As disclosed on page 89 the Committee’s membership did not follow the requirements of the UK Corporate Governance Code throughout the year. Suzy Neubert will join the Committee on 1 March 2022 and the membership will be fully compliant with all requirements. The CEO, CFO, Company Secretary, HR Director and Head of Reward are invited to attend Remuneration Committee meetings to contribute. In addition, the CIO and CRO are invited to attend Committee meetings to provide specific input, where requested. No individual is present when their remuneration is being discussed. COMMITTEE’S KEY RESPONSIBILITIES • Determining the overarching policy for the remuneration of the Group’s employees, ensuring it is structured in a way that rewards individual and corporate performance and is aligned with appropriate risk, compliance and conduct standards and the long-term interests of shareholders, clients and other stakeholders • Determining the overall size of the annual variable compensation pool and the total compensation ratio • Determining and reviewing annually those individuals who may be considered to have a material impact on the risk profile of Jupiter, relevant subsidiaries and its funds (Code Staff) for the purposes of the relevant remuneration regulations • Determining the Chairman of the Board’s fees and the total individual remuneration packages of Executive Directors, Executive Committee members and individuals identified as Code Staff • Approving the design of, determining the targets for, and monitoring the operation of, any performance-related pay schemes operated by the Group • Reviewing the design of all share incentive plans and deferred bonus arrangements for approval by the Board and, if applicable, shareholders • Overseeing any major changes in employee benefit structures throughout the Group A full copy of the Committee’s terms of reference can be found at www.jupiteram.com. 102 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Dear Stakeholder, I am pleased to present our Directors’ Remuneration Report (DRR) for 2021. This 2021 DRR is divided into two sections: • Executive Remuneration at a Glance. This sets out the key terms of the Directors’ Remuneration Policy that was approved by shareholders at our 2021 AGM alongside a summary of how it will be implemented in 2022. • The Annual Report on Remuneration. This outlines in detail how we implemented the Remuneration Policy in 2021 and how we intend to apply it in 2022. It is subject to an advisory vote by shareholders at the 2022 AGM. Alignment of strategy and remuneration Jupiter’s primary focus is on delivering value to clients through long-term investment outperformance after all fees. Jupiter’s business model of combining this investment outperformance with an effective distribution platform, supported by efficient and scalable operations, has enabled us to deliver value to shareholders since listing in 2010 and demonstrates how an active, high-conviction approach to investment can be a differentiator from passive strategies. The variable pay structure aims to support the delivery of the Company’s growth strategy by incorporating key financial and strategic performance measures into the bonus balanced scorecard and the Long-Term Incentive Plan (LTIP) performance conditions, whilst allowing the Remuneration Committee appropriate discretion to ensure bonus and LTIP payouts remain in line with the overall experience of our various stakeholders. Longer-term alignment is achieved by a combination of a high level of deferral of bonus payouts into shares or fund units, an extended release period for LTIP awards and significant minimum shareholding guidelines. The following changes were incorporated into our 2021 variable pay structure in order to further enhance alignment with corporate strategic goals: • The 2021 bonus included an enhanced 35% weighting on strategic and individual performance measures. Pay-out on strategic measures reflects successful progress against ‘lead indicators’ that are critical to growth and our delivery of sustainable future profits. For example, in 2021, particular focus was placed on building on and delivering value from the successful integration of Merian and embedding our ESG priorities. The high level of bonus deferral ensures, beyond the initial bonus performance period, that executives remain focused on successful realisation of value from these ‘lead indicators’ in order to maintain or grow the value of their deferred awards. • Net flows was moved from being a bonus measure to a LTIP measure on the basis that it was more appropriate to assess fund flow performance on a longer-term basis. As our corporate strategy goals remain unchanged, the Committee is satisfied that the broad structure of performance measures used in 2021 remains appropriate for use in 2022 (as detailed in the below table). Percentages are weighting of each measure in the relevant plan Annual bonus LTIP PBT 40% – Net flows – 30% Investment out- performance 25% (1 yr and 3 yr) 30% (3 yr and 5 yr) EPS – 40% Strategic and individual performance 35% 1 – 1. Strategic measures used in the annual bonus plan in 2022 will be aligned to our strategic core objectives for 2022 (as set out on page 17) with particular focus on ESG and sustainability objectives. Other elements of remuneration in 2022 As detailed in last year’s DRR, the Committee is implementing a phased two-year increase in our CFO’s salary to reflect the level of responsibility and scope of his role. The second stage of this increase from £315,000 to £330,000 (4.8% increase) will take place in 2022. The CEO’s salary will remain unchanged. For context, the budgeted average employee salary increase for 2022 is 6.7%. Pension, bonus and LTIP opportunity percentages will be unchanged for both CEO and CFO in 2022. Performance and bonus outcomes for 2021 Performance As the CEO outlined in his review, this has been a year of progress for Jupiter in challenging circumstances and we have delivered strong financial results that reflect the ongoing resilience of our business and the strategy that underpins it. Our underlying PBT was up 21% as we saw the full year benefit of the contribution from Merian and our strong investment performance generated £113.0m of performance fees this year. A challenging net flow picture, reflecting a slowing in the appeal for UK equities and fixed income funds where Jupiter has a strong product line-up, was offset by another record year for gross sales. Finally, our commitment to helping our clients achieve their long-term investment objectives continues to be delivered, with 58% of our mutual fund assets outperforming over three years, one of our most important KPIs. Our investment in new areas over the past two years means that we have broadened our product offering, invested in our talent, and adopted the processes, systems and technology to meet the evolving needs of our clients. In particular, well-targeted investment has enabled us to successfully expand our sustainability capabilities, grow our international presence and position us for growth in the institutional market. Bonus outcomes Based on the good performance outlined above, the formulaic outcome of the bonus scorecard was 84.8% of maximum for the CEO and CFO. In light of the Vice Chairman’s change of role after stepping down from the Board at the 2021 AGM, the Committee exercised its discretion to reduce his maximum bonus potential from 200% to 75% of salary and to determine his 2021 bonus wholly on Group financial performance (which delivered 82.7% of the reduced maximum potential). The Committee gave careful consideration to these outcomes in respect of various internal and external factors detailed on page 110 and 111 and concluded that no further discretionary adjustments were required. A full disclosure of the bonus determination process and the scorecard outcomes is provided on pages 109 to 112. 103 Jupiter Fund Management plc | Annual Report and Accounts 2021 REMUNERATION REPORT continued CEO 2021 single figure and pay ratio The first LTIP award granted to the CEO was shortly after his appointment in 2019. The performance period for that award ended on 31 December 2021 and the formulaic outcome was 30.3% vesting, full details of which are provided on page 113. The Committee was satisfied that this vesting outcome was justified by overall performance over the three-year performance period and that no discretionary adjustment was required. Inclusive of the vested value of this LTIP award, the CEO’s 2021 single figure is £2,514k and the median CEO pay ratio is 22:1. The 2020 comparators (single figure: £1,759k; median CEO pay ratio 16:1) which did not contain any entitlement to vested LTIP, will make the 2021 figure and ratio inevitably higher. Employee share ownership Employee share ownership continues to remain a core principle for the Company, ensuring a strong alignment with our other shareholders in the long-term interest in the Group’s performance and allowing all employees to share in the Company’s success. During 2021, the Company granted all eligible employees a free share award. For employee based in the UK this is under the Company’s Share Incentive Plan (SIP). This award, contingent upon employees continuing to serve with the Company for at least three years from the award date, ensured full participation in at least one of the Company’s all employee share plans. A further free share award is planned for all eligible employees in 2022. In addition to the free shares and SIP, approximately 56% of employees hold share options under our second UK all employee share plan, Sharesave. Pay regulation During 2021 we undertook a review of our remuneration policies and approach to ensure compliance with the Investment Firms Prudential Regulation (IFPR), which is applicable from the start of this year. As part of this process we have both reassessed the number of individuals who have been identified as our key material risk takers and made some minor amendments to their pay arrangements in order to ensure alignment with all prevailing sectoral pay regulations. Shareholder engagement I would like to thank shareholders and investor bodies for the constructive input and engagement that they provided as we developed the new Remuneration Policy and I am grateful to shareholders for their support in approving both the Remuneration Policy and DRR at the 2021 AGM with, respectively, over 95% and 97% of votes cast in favour. I welcome feedback at any point in time from our entire shareholder base regarding our remuneration arrangements and I hope that we will have your support at the forthcoming AGM. Roger Yates Chairman of the Remuneration Committee 24 February 2022 104 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE EXECUTIVE REMUNERATION AT A GLANCE This table summarises the key terms for Executive Directors of the Directors’ Remuneration Policy approved by shareholders at the 2021 AGM, alongside commentary of how we intend to apply this in 2022. A full version of the Remuneration Policy can be found on pages 84-93 of the 2020 Annual Report which is available on our website at www.jupiteram.com. Element Remuneration Policy summary 2022 approach Commentary relative to 2021 approach Salary • Base salaries are generally reviewed annually taking into account a range of factors including size and scope of the role; skills, performance and experience of the individual; market competitiveness; wider market and economic conditions; and the level of increases in the wider employee population • CEO £455,000 (2021: £455,000) • CFO £330,000 (2021: £315,000) • CEO’s salary unchanged • As outlined in prior Remuneration Reports, the CFO joined Jupiter on a salary below that of his predecessor on the understanding that he may receive an above inflationary increase as he established himself in the role and dependent on performance. As disclosed in last year’s Remuneration Report, his salary is consequently being increased over two years (£315,000 in 2021 and £330,000 in 2022) to reflect the responsibility and scope of the role Pension • Pension contributions of 15% of salary are made at a consistent level to all UK employees • 15% of salary • Unchanged Bonus opportunity • Maximum opportunities: CEO 425%, CFO 250% of salary • Maximum opportunities: CEO 425%, CFO 250% of salary • Unchanged Bonus performance measures • Balanced scorecard approach • At least 65% based on corporate quantitative measures; no more than 35% based on individual and strategic measures • Payments subject to risk and compliance assessment and application of Remuneration Committee judgement • 65% based on corporate quantitative measures (profitability, investment performance over 1 and 3 year periods); 35% based on strategic objectives and individual performance • Unchanged Bonus deferral • 50% of total bonus deferred over three years vesting in annual tranches and subject to an additional six-month holding period • Deferral can be in shares or fund units • Half of the remaining 50% delivered as shares or fund units subject to a six-month holding period • Where an Executive Director has not yet met their minimum shareholding requirement, only 25% of their deferred element can be delivered in fund units • Unchanged LTIP opportunity • Maximum opportunities: CEO 375% and CFO 225% of salary • Maximum opportunities: CEO 375% and CFO 225% of salary • Unchanged LTIP performance measures • Subject to relevant performance measures normally assessed over at least three years and usually subject to an additional two-year holding period • Vesting subject to risk and compliance assessment and underlying business performance underpin • Three measures: EPS growth (40%), net flows (30%) and investment outperformance over 3 and 5 year periods (30%) • Unchanged Shareholding requirements • CEO 500%, CFO 250% of salary • Post-employment shareholding requirement of CEO 500% / CFO 250% of salary in the first year and CEO 250% / CFO 125% in the second year after stepping down • In line with the Remuneration Policy • Unchanged Malus and clawback • Malus and clawback provisions apply to all variable remuneration • In line with the Remuneration Policy • Unchanged 105 Jupiter Fund Management plc | Annual Report and Accounts 2021 REMUNERATION REPORT continued ANNUAL REPORT ON REMUNERATION Implementation in 2021 Overview of activities in 2021 The following regular agenda items were considered during the scheduled Committee meetings which took place during 2021: Jan Feb May Oct Dec Remuneration Policy and disclosures Review of Remuneration Policy • • Directors’ Remuneration Report • • • Risk and reward Input from Risk and Compliance • Review of risk checkpoints prior to variable compensation pool approval • • Malus and clawback assessment • Annual remuneration discussions Bonus and LTIP pool • • • • • Assessing performance against bonus scorecard • • • • Individual performance and remuneration outcomes • • LTIP performance condition testing • Allocation of LTIP awards • Setting bonus scorecard and LTIP performance measures • • • Setting individual objectives for Executive Directors • • Minimum shareholding testing • Review Chairman’s fees • Review of approved all employee share plans • • External market Shareholder trends and feedback • Market trends • Benchmarking data • Regulatory Internal audit of Remuneration Policy • Remuneration Policy Statement • Code Staff identification (CRD III, UCITS V, AIFMD and IFPR) • • • Gender Pay Gap • Committee remit and effectiveness Terms of reference review • Self-evaluation • Work of the Remuneration Committee in 2021 The table above provides a high level overview of the various topics which the Committee has worked on during 2021. The remainder of this section satisfies several requirements of the latest Corporate Governance Code. Provision 40 statement and strategic rationale The Committee aims to have in place remuneration arrangements which are simple and therefore well understood by the entire workforce, including the Executive Directors. The simplicity is supported, for example, by a single pension and benefits structure applicable to all UK employees and not differentiated based on seniority. Jupiter operates a single bonus deferral plan, and an LTIP scheme for a limited number of more senior employees. This simple and well communicated remuneration structure should ensure compensation spend is appropriately valued by employees, and not eroded by complexity. All variable compensation, including that for Executive Directors, is subject to a series of risk checkpoints (as described in more detail on page 122), which aim to assess a range of ex-ante and ex-post potential financial and non-financial risks to the business prior to payment of any bonuses. In conjunction with an individual risk, compliance and conduct underpin, and the provision of malus and clawback conditions on variable compensation awards to Executive Directors, the Committee is confident that its work provides a robust framework to ensure appropriate risk alignment of compensation. The range of possible pay awards available to Executive Directors under the Remuneration Policy was clearly set out in the 2020 Directors’ Remuneration Report on pages 90 to 93. An overview of how the structure of the Remuneration Policy and specific performance metrics align with Jupiter’s business strategy and culture is set out in the Committee Chairman’s statement. 106 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Engagement with shareholders Shareholder and investor bodies provided constructive input and engagement as the new policy was developed last year. Shareholders showed their support in approving both the Remuneration Policy and the DRR at the 2021 AGM with, respectively, 95% and 97% of votes cast in favour. There were no material concerns raised by shareholders following publication of the 2020 DRR and therefore specific engagement with shareholders during 2021 was largely limited to the Remuneration Policy review for that year. As stated in the Committee Chairman’s letter, the Committee welcomes feedback at any point in time from our entire shareholder base regarding our remuneration arrangements. Operation of Remuneration Policy A description of how the Committee assesses the quantum of the bonus scorecard outcomes in the context of the overall corporate performance and experience of shareholders and clients is provided separately on pages 110 and 111. Statements regarding the Committee’s use of discretion in regards to the bonus outcomes for 2021 and the testing of the LTIP performance conditions ending in 2021, which vest in March 2022, are included on pages 112 and 113 respectively. Remuneration decisions made by the Committee in relation to the Executive Directors also take into account a range of additional factors including internal relativities (details of our CEO pay ratio are on page 124) and relevant external market data. Wider workforce pay and engagement The Remuneration Committee is closely involved in considering the remuneration policies and pay levels of the wider Jupiter workforce. The Committee’s work involves debate, discussion and ultimate approval of the Company-wide variable compensation spend as well as the salary increase budget for the whole workforce, with consideration given to the amounts and proportions of total spend allocated to different areas of the business. Part of this discussion requires an assessment of the financial KPIs of the business, including underlying PBT, which is also a key metric under the bonus scorecard for Executive Directors. The Committee is provided with data illustrating the mean and median bonus levels and salary increase percentage split by gender for the current and previous performance year, in order that it can also analyse the outcomes from a gender pay perspective. More details can be found in our separate Gender Pay Gap Report. One of the recurring exercises undertaken by the Committee on an annual basis is a review of external compensation benchmarking data, giving an overview of fixed and total compensation levels for all employees relative to the wider market. This data allows the Committee to challenge pay decisions at a more granular level, and make proposals to management in respect of the upcoming pay round. The Committee approves all compensation for Code Staff, including for fund managers. Whilst this process is a regulatory requirement, it involves a detailed and robust discussion, including with the CIO, in relation to the financial and non-financial considerations for determining fund manager bonuses. Jupiter also has an established employee representation forum (Connections), whose Chairman meets with the Board regularly. This engagement is Jupiter’s method for ensuring a formal dialogue exists between employees and the Board. It provides the opportunity for employees to engage with the Board on any relevant employee matters, including pay. Collectively this work helps demonstrate the Committee’s considerations in appropriately balancing the pay outcomes for the wider employee population with its decisions regarding executive pay. During the year an internal evaluation of the Committee’s effectiveness was undertaken, the process for which can be found on page 85. An update on the actions arising from the 2020 Board evaluation are detailed below, together with an overview of the outcomes from the 2021 evaluation. 2020 priorities 2021 status Ensuring that appropriate metrics, focused on ESG and cultural matters, were included in the bonus scorecards and objectives. CSR metrics relating to the Group’s ESG credentials, progress towards diversity and inclusion targets and the firm’s culture, all formed part of the bonus scorecard. Given the importance of this matter to our stakeholders, this will remain an area of focus for 2022. Ensuring a collegial approach to preparation for meetings between management, the Committee’s advisers and the Committee Chairman. This has improved during the year and the meetings are held between management, the Committee Chairman, Secretary and, where appropriate, the Committee’s advisors in advance of the papers being circulated. This ensures papers are of a high standard and enables the incorporation of any comments. Further work will be undertaken to ensure that papers are circulated in a timely manner. 2021 evaluation conclusions The evaluation process found that the Committee is generally operating effectively with very positive scores for the Committee Chairman’s leadership style, effectiveness of the agenda and debate, and respondents particularly commended the management of the 2021 Directors Remuneration Policy Review. The Committee identified a number of priorities for 2022: • In light of the recent change in key personnel supporting the Committee, ensure effective working relationships are developed between all parties and continue to drive improvements to papers; • Ensure effective implementation of IFPR; • Consider wider remuneration practices, in light of the demand for talent, to ensure we can continue to retain and attract talented individuals aligned with our culture. 107 Jupiter Fund Management plc | Annual Report and Accounts 2021 Implementation in 2021 Single total figure Executive Directors’ 2021 and 2020 remuneration (audited information) Andrew Formica Wayne Mepham Edward Bonham Carter ] 2021 £’000 2020 £’000 2021 £’000 2020 £’000 2021 £’000 2020 £’000 A. Fixed pay Base salary 455 446 315 300 42 114 Taxable benefits 2 8 4 4 3 1 3 Pension 3 60 59 42 40 6 14 Total fixed remuneration 523 509 361 343 49 131 B. Annual bonus Annual bonus: Delivered in cash 410 311 167 121 6 37 Delivered in shares/fund units vesting immediately with six-month holding period 410 311 167 120 6 36 Delivered in shares/fund units vesting over three years 819 622 334 241 13 74 Total bonus 4 1,639 1,244 668 482 25 147 C. Vesting of LTIP awards 5 For performance in multi-year periods: 2018 award (2018-2020) 6 – – – – – 55 2019 award (2019-2021) 7 350 – – – – – Total value of LTIP vesting 350 – – – – 55 D. Other SIP matching and free shares 2 2 2 2 1 1 Sharesave award – 4 – 7 – – Total other 2 6 2 9 1 1 Total variable remuneration (B+C+D) 1,991 1,250 670 491 27 203 Total remuneration (A+B+C+D) 8 2,514 1,759 1,031 834 75 334 1. 2021 figures for Edward Bonham Carter represent the pro-rated period of the performance year up to 6 May 2021 on which date he stepped down from the Board. 2. Comprising private medical and dental insurance and reimbursement of reasonable expenses incurred in the performance of their duties and payment of any tax arising. 3. Represents employer pension contributions and/or cash allowance in lieu of pension contributions. There are no defined benefit arrangements. Employees with registered pension protection or those impacted by the Tapered Annual Allowance may elect to have some or all of their pension contributions paid instead as a cash allowance, after deducting an amount equal to the cost of employer national insurance on such cash payments. The pension amounts in the single figure table may therefore be less than 15% of the salary. 4. These amounts have been determined by the Remuneration Committee based on performance against the relevant annual bonus performance measures in respect of the relevant year. 5. The value of the LTIP awards vesting is based on the Remuneration Committee’s determination of performance against the relevant LTIP performance measures across prior multi-year performance periods. 6. The value of the 2018 LTIP award vesting in 2020 has been restated based on the share price on the vesting date 20 March 2021 of £2.70 and vesting due to performance of 33.0%. 7. Estimated value of the 2019 LTIP award vesting in 2022 based on 30.3% vesting due to performance and average closing share price over the period 1 October to 31 December 2021 of £2.50 (the actual vesting date is 22 March 2022). This includes £51k of accrued dividend equivalents. 8. Amount of single figure attributable to share price appreciation/(depreciation) for Edward Bonham Carter in respect of 2020 and Andrew Formica in respect of 2021 is as follows: 2020: (£38,537). This value has been restated based on the actual share price on the vesting date 20 March 2021 of £2.70. 2021: (£143,606). This value has been calculated using the average closing share price over the period 1 October to 31 December 2021 of £2.50 (the actual vesting date is 22 March 2022). REMUNERATION REPORT continued 108 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Executive Director variable pay awards for 2021 performance Variable pay awards for 2021 performance have been determined by the Committee using the following process: • At the start of the year, the Committee set and agree the performance metrics, relative weighting between corporate quantitative and strategic goals, and associated targets for each performance level (threshold, target and maximum) for corporate quantitative metrics. • The annual metrics and weightings are disclosed prospectively in the Directors’ Remuneration Report; the detailed targets are considered commercially sensitive and are disclosed retrospectively, following the performance year end. • Throughout the year the Committee monitor progress against the relevant performance metrics. • Following year end, actual performance against each of the bonus metrics, is assessed as reported in the scorecard on the following pages. For corporate quantitative metrics, this in the context of the threshold, target and maximum ranges set. • Individual bonuses for the Executive Directors are determined utilising a scorecard. Bonuses are not formulaic and judgement is applied by the Committee in arriving at award amounts. The Committee consider the context in which performance has been achieved, having reference to shareholder and client experience during the year on pages 110 and 111. • Overall variable compensation spend is considered in the context of the total compensation ratio relative to their expected ranges as previously communicated to shareholders. Assessing corporate quantitative performance (audited information) The following section sets out Jupiter’s actual performance against target for the primary measures relating to profitability and investment outperformance, which are given a 40% and 25% weighting respectively and therefore together comprised 65% of the CEO and CFO’s bonus metrics for 2021. As noted in the Committee Chairman’s statement, 100% of the Vice Chairman’s bonus was based on Group financial performance. Performance metric Primary measure Threshold performance (25% vesting) Target performance (50% vesting) Maximum performance (100% vesting) Actual performance Percentage outcome Commentary Profitability Underlying PBT £139.8m £174.7m £209.6m £216.7m 100% Underlying PBT targets were established based on the Group’s 2021 budget. The budget used challenging inputs, including in respect of investor demand expectations, as well as the realisation of cost reduction targets. Revenue from higher average assets under management, business mix and performance fees and the achievement of greater cost savings were partially offset by certain cost headwinds as well as investment to support the Group’s growth strategy. The net impact was actual performance in excess of the maximum. Investment outperformance Proportion of mutual funds (weighted by AUM) achieving performance of first or second quartile over one year (25% weighting) and three years (75% weighting). Proportion of segregated mandates and investment trusts (weighted by AUM) achieving performance above the benchmark over one year (25% weighting) and three years (75% weighting) 40% 60% 80% 62% 55% Our investment performance has remained strong, in particular with 58% of our mutual fund AUM performing above median over three years and 80% over one year. We have hit record levels of AUM which has been driven by investment performance. As at 31 December 2021 our AUM was £60.5bn, an increase of £1.8bn from 2020. 109 Jupiter Fund Management plc | Annual Report and Accounts 2021 Implementation in 2021 Assessing corporate strategic performance (audited information) The following table sets out supporting commentary and information the Committee considered in assessing overall performance in each of the areas of strategic performance identified for 2021, as well as the Committee’s overall qualitative assessment of the outcome for each metric. In conjunction with assessment of individual performance, these measures comprise 35% of the CEO and CFO’s bonus metrics for 2021. Performance metric 2021 Assessment Outcome Diversification Well-targeted investment has enabled Jupiter to successfully progress its diversification strategy in 2021 by growing its international presence, broadening its product offering and positioning itself for growth in the institutional client market. • Growth in international presence – this year has seen a further expansion in the breadth of international markets in which Jupiter operates. The business has made significant inroads into the US, US Offshore and Latin American markets, and following the Merian acquisition, is well advanced in plans to sell products to Australian institutional investors. At the end of December 2021, 28% of our AUM came from clients based outside the UK. • Broadening of product offering – the business has developed a robust framework to support the implementation of SFDR framework and the new Article classifications, including both existing and the launch of new SFDR- compliant funds such as the Article 8 – compliant Dynamic Bond ESG and the Article 9 – compliant Global Ecology Bond which were both launched in January 2022. This was strengthened by key investment hires to support the growth of sustainable strategies. • Positioning for growth in institutional client market – Jupiter has developed its global consultant relationships with a view to increasing the institutional client share of the business, a key strategic priority. These consultants are beginning to recognise the strength of Jupiter’s franchises and it now has 15 consultant buy ratings across nine strategies; this has more than doubled over the last twelve months. Significantly achieved Corporate social responsibility Two specific CSR areas were assessed by the Remuneration Committee: progress towards Diversity and Inclusion targets and development of the Group’s ESG credentials. 2021 has seen further progress towards our Diversity and Inclusion metrics. Jupiter considers diversity and inclusion Company-wide, by region, by function and by team, as well as at varying levels of seniority. To help build a diverse talent pipeline, Jupiter has introduced anonymised applications for entry level talent. In a challenging year for young people, Jupiter has almost tripled the number of entry level opportunities available for school leavers and graduates. In respect of sustainability, we joined the NZAM Initiative, under which we have committed to operate our business and manage all assets on a net zero emissions basis by 2050. Jupiter has also become a signatory to the UNGC, a corporate sustainability initiative which contains ten principles on human rights, labour, environment, and anti- corruption. This work has received public recognition during 2021 with accolades from the FT for our efforts in reducing our core greenhouse gas emissions, from Sustainalytics for our work in reducing exposure to material ESG risks and from Morningstar for our level of ESG commitment. At an investment level, the business continues to expand its sustainability capabilities and our sustainability-labelled strategies now hold more than £1bn in assets under management. Significantly achieved Culture, talent and client During 2021, the global pandemic continued to create uncertainty across the world with a consequent impact on clients, people and how Jupiter operates its business. The business’s agility has enabled it to adapt throughout the pandemic, to ensure it continues to serve its clients’ best interests, look after its people, progress its strategic initiatives and successfully navigate market volatility and the changing regulatory landscape. In particular, the Merian integration has demonstrated the successful ability of the business to perform as an agile organisation and embrace change. Jupiter has delivered strong investment performance for clients in a very challenging environment, including remote working and other ongoing challenges relating to Covid-19. Client engagement has accelerated, contributing to increased client and internal communication to offset the loss of face-to-face contact during the year. Ongoing work is being undertaken to ensure we optimise clients’ needs and solutions and how these are provided to clients. Jupiter continues to focus on re-building and strengthening the culture through town halls, departmental reconnection days and other initiatives. This includes focusing on the Group’s cultural pillars, supporting teams in identifying with them and determining how they can be effectively deployed to benefit employees and the business. Achieved Operating platform During the year, Jupiter completed the analysis of its operating model, identifying how it needs to be structured in the future. Going forward, operational agility will continue to remain a focus. Jupiter introduced a new flexible working model to better accommodate the competing needs of work and family. For a second year running Jupiter offered a £1,000 contribution for home office improvements to ensure our people were able to work in optimum conditions. On the reopening of its London headquarters, employees returned to an office that had been redesigned with new collaborative spaces, blending both the formal and informal to help rebuild relationships and foster communication. 2021 has seen investment in several new technological solutions and the continued development of the ESG hub, a bespoke data centre built to increase Jupiter’s fund managers’ ability to view and analyse our portfolios in the context of their exposure to ESG risk. The other key development in this area during 2021 has been the successful progression of the Merian integration, in particular a key project was the successful streamlining of our service providers following the increase in suppliers that came with the Merian acquisition. Significantly achieved REMUNERATION REPORT continued 110 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Assessing individual performance (audited information) The following table sets out supporting commentary and information the Committee referenced in assessing individual performance of the Executive Directors for 2021. Executive 2021 Assessment Outcome Andrew Formica Chief Executive Officer Andrew continued to lead Jupiter in a highly effective manner through the continuing disruption arising from Covid-19, providing clear and decisive communications to both employees and clients. He continues to articulate firm-wide culture, behaviours and strategic intent which resonate throughout the organisation. He has also developed a clear and consistent corporate and stewardship approach to ESG and CSR which is reflected in the achievements outlined on the prior page. Andrew successfully led the Executive Committee during the year and oversaw a well-managed and planned succession process for a number of roles. He also continued with the development of the Senior Leadership Group (SLG) by holding the inaugural SLG conference to ensure that strategic priorities are owned and cascaded throughout the firm. At a Board level, Andrew continues to foster a strong relationship with the Board both collectively and individually which is both open and proactive. A key challenge for Andrew in 2021 was to deliver a successful integration and retention of the Merian fund management team. This has been successfully achieved. Outstanding Wayne Mepham Chief Financial Officer Wayne has continued to form strong relationships with the Board and the Executive Committee and was instrumental in driving organisational redesign following the Merian acquisition resulting in a leaner and more agile organisation with transaction and cost synergies materialised. Wayne continues to be an ambassador to promote the cultural pillars and embody the firm-wide culture in his action and behaviour. He has enhanced the effectiveness of governance committees and worked in conjunction with the CRO to deliver effective risk monitoring oversight processes and reaction plans, including efficient and timely escalation. Wayne has led the progression of the integrated Finance, Procurement and HR operating model as well as successfully delivering the co-sourced internal audit model, including the review of a co-source partner and the external audit tender. Outstanding Determining individual Executive Director 2021 annual bonuses (audited information) The 2021 annual bonus awards have been determined by the Committee using: an assessment of performance against the metrics laid out in the balanced scorecard on the previous pages; a holistic assessment of the shareholder and client experience in the year; and an assessment of risk and compliance underpins. Specific conclusions reached by the Committee were as follows: • The Committee noted the good progress in Jupiter’s financial results, which now include a full year contribution from the acquisition of Merian in 2020. • Underlying PBT bonus targets had been set in Q1 2021 relative to a stretching budget in the prevailing market conditions. • The Committee agreed that Jupiter continues to be agile and that the client-centric approach that embodies its culture continues to deliver strong investment performance in products that are relevant to its clients’ changing needs. Jupiter’s 2021 AUM ended the year at £60.5bn, a £1.8bn increase on the prior year despite £3.8bn of net outflows. This is a record level of year-end AUM for Jupiter, driven by strong investment performance. • Jupiter has made significant progress towards delivering on strategic goals, reinforcing strong foundations and investing in areas that are important to deliver long-term growth. • Jupiter has remained focused on cost control. During the year, Jupiter implemented changes to its operating model, restructuring to position resources in areas of growth ensuring that the operating model is appropriately resourced with long-term strategic partners positioning the business to pivot to growth. 111 Jupiter Fund Management plc | Annual Report and Accounts 2021 2021 Executive Director bonus outcomes (audited information) 2021 scorecard performance metric Outcome (as percentage of maximum) Weighting Weighted percentage of maximum Andrew Formica, Chief Executive Officer £’000 Wayne Mepham, Chief Financial Officer £’000 Edward Bonham Carter, Vice Chairman £’000 Profitability 100% 40% 40% 773 315 Profitability 1 100% 61.5% 61.5% 19 Investment outperformance 55% 25% 13.8% 266 108 Investment outperformance 1 55% 38.5% 21.2% 6 Strategic goals and personal performance 88.6% 35% 31% 599 244 – Totals 1,639 668 25 Outcome as percentage of maximum 2 84.8% 84.8% 82.7% Delivered as upfront cash 410 167 6 Delivered as share options with six-month holding period 410 167 6 Delivered as share options vesting over three years 819 334 13 1. As noted in the Committee Chairman’s statement Edward Bonham Carter’s 2021 bonus has been determined wholly on the Group’s financial performance. 2. Maximum opportunity for the annual bonus is 425% of salary for the CEO, 250% of salary for the CFO and 75% of salary for the Vice Chairman. Overall compensation spend Jupiter’s overall variable compensation spend is determined appropriate and affordable in the context of Jupiter’s overall performance. We aim to balance and align the interests of our staff and our shareholders. The variable compensation spend is assessed in its financial reporting context, which considers the accounting treatment of the variable compensation spend. In addition, the Committee considers the total compensation expense, which includes the fixed component of remuneration as well as the variable. The variable compensation expense is determined by the nature and extent of bonuses awarded in 2021 as well as deferred awards (including LTIP) made in prior years. It also includes national insurance charges levied on Jupiter in relation to variable compensation. The 2021 underlying variable compensation expense of £140m (including performance fees) resulted in a total compensation ratio of 37%. Excluding performance fees the underlying variable compensation expense is £79.1m, resulting in a total compensation ratio of 33%, which remains within the range previously communicated to shareholders. Non-Executive Directors’ 2021 and 2020 fees (audited information) Nichola Pease Jonathon Bond Polly Williams Roger Yates 2 Karl Sternberg David Cruickshank 3 Dale Murray 3 2021 £’000 2020 £’000 2021 £’000 2020 £’000 2021 £’000 2020 £’000 2021 £’000 2020 £’000 2021 £’000 2020 £’000 2021 £’000 2022 £’000 2021 £’000 2020 £’000 Fees 235 196 32 92 94 94 102 85 79 75 42 – 24 – Benefits 1 – – – – – – – – – – – – – – Total 235 196 32 92 94 94 102 85 79 75 42 – 24 – 1. Benefits comprise reimbursement of reasonable taxable business expenses incurred in the performance of duties and the payment of any tax arising. 2. Year on year increase is due to Roger Yates appointment as Senior Independent Director in 2021. 3. Both David Cruickshank and Dale Murray joined the Board in 2021, the fees are therefore pro-rated. Chris Parkin is not paid any fees in conjunction with his appointment to the Board. REMUNERATION REPORT continued Implementation in 2021 • The bonus outcomes for Executive Directors were in line with the overall variable compensation experience for other employees of the Group. • There were no risk or regulatory compliance issues at a Group or individual level for which the Committee considers it appropriate to make any variable compensation adjustments for Executive Directors. In consideration of the above, the Committee was therefore satisfied that the balanced scorecard was a fair outcome consistent with the shareholder, client and wider workforce experience during the year. It has therefore made no discretionary adjustments to the bonus scorecard outcomes. A summary of the Committee’s conclusions is set out in the bonus outcomes table below. 112 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Performance condition testing for 2019 LTIP award, vesting 22 March 2022 (audited information) The LTIP award vesting figure for Andrew Formica of £350k (inclusive of £51k of accrued dividend equivalents) shown in the single total figure on page 108 is due to vest on 22 March 2022, subject to two equally weighted performance conditions measured to 31 December 2021. The performance conditions have been tested and performance against those conditions and the associated level of vesting are outlined below. The Committee is satisfied that the vesting outcome is appropriate in the context of the overall shareholder and client experience and has not exercised any discretion in relation to the testing of the performance conditions. Performance condition Performance against the condition over the performance period Proportion of condition vesting Underlying EPS growth • 0% vesting for 5% growth or below; • 100% vesting for 25% growth or above; and • Straight-line vesting between these points. Jupiter’s underlying EPS fell by 3.4% over the performance period inclusive of performance fees and fell by 2.1% exclusive of performance fees. Jupiter’s underlying EPS growth over the performance period did not therefore exceed the 5% threshold. 0.0% of condition vesting (0.0% of total award) Investment outperformance 1 The proportion of all of Jupiter’s assets (weighted by AUM) achieving above median performance relative to their peer group (retail) or above benchmark performance (institutional) weighted: • 25% over the three-year period to 31 December preceding the vesting date; and • 75% over the five-year period to 31 December preceding the vesting date. • 0% vesting for less than 50%; • 25% vesting for 50%; • 100% vesting for 80%; and • Straight-line vesting between these points. Jupiter’s investment performance was such that: • 57.8% of funds (weighted by AUM) performed above median or above the benchmark over the three-year period to 31 December 2021; and • 66.3% of funds (weighted by AUM) performed above median or above the benchmark over the five-year period to 31 December 2021. On a weighted basis, 64.2% of funds performed above median or above the benchmark. 60.5% of condition vesting (30.3% of total award) Total 30.3% vesting 1. Investment performance of mutual fund AUM outperforming the median uses Morningstar as the single source of relative investment performance data for all funds. External directorships Executive Directors are not permitted to hold external directorships or offices without the Board’s prior approval. During the year two Executives held non-executive director positions with other companies. Andrew Formica served as Non-Executive Director on the Board of Hammerson plc. This role was held by Andrew prior to his appointment to Jupiter, and the Board agreed Andrew could continue serving. During 2021, Andrew received fees of £66,500 from Hammerson plc. Edward Bonham Carter served as a Non- Executive Director of Land Securities Group plc, for which he was paid fees of £29,704. Edward also served as the Senior Independent Director to the Board of ITV plc; his fees from this position for 2021 were £33,276. The fees for both Land Securities Group plc and ITV plc are for the period 1 January 2021 to 6 May 2021 when Edward was an Executive Director of the Company. In all instances Andrew and Edward have been permitted to retain their fees for these appointments. Payments to exiting Directors (audited information) No new payments were made to any exiting Directors during 2021. Payments to former Directors (audited information) Edward Bonham Carter stepped down from the Board on 6 May 2021 but continued to work for the Company as Director of Stewardship and Corporate Responsibility. In that role, he continues to receive a salary, pension provision and annual bonus (respectively £78k, £10k and £49k in relation to the remainder of 2021). Edward’s outstanding share awards will continue to vest on their original terms. He did not receive an LTIP for 2021. Payments for loss of office (audited information) No payments were made for loss of office in 2021. 113 Jupiter Fund Management plc | Annual Report and Accounts 2021 2022 balanced scorecard Area Metric Performance measures Corporate quantitative (65%) Profitability • Measured through underlying PBT Investment outperformance • Measured through the proportion of mutual funds achieving first or second quartile performance and the proportion of separate account assets beating their benchmarks (weighted by AUM) • Measured over one year (25% weighting) and three years (75% weighting) Strategic and individual (35%) Client relationships • Evidence of diversification of client relationships, deepening client relationships through client longevity and cross-selling Investment products • Diversification of investment products, new product launches and rationalisation of product range Talent and culture • Embed, develop and measure the firm’s culture, attract and retain high-quality talent and achieve high levels of client satisfaction Operating model • Enhancing our investment capabilities and creating initiatives to optimise operational design and manage costs, increasing agility in the organisation • Continue to develop technology and office environment to support ways of working Sustainability • Ensuring our products and platform are best in class for Environmental, Social and Governance (ESG) • Becoming a sustainability leader in the industry Institutional • Developing and widening our institutional clients as well as building on our existing offerings Overseas markets • Qualitative assessment of actions taken to expand or develop our geographical diversification, including supporting areas of geographical growth over the long term Corporate Social Responsibility • Evidence of progression towards Diversity and Inclusion targets • Further develop the ESG credentials of the Group Personal performance • Achievement against specific personal performance objectives Underpin Risk and regulatory compliance • The Committee considers the checkpoints set out on page 122 when exercising its judgement to determine the appropriate variable compensation pool, at a Group level • The Committee also receives an annual report on internal control and risk management factors from the CRO to consider when assessing appropriate awards, at an individual level • Any risk or compliance factor (corporate or individual) has the potential to reduce variable compensation, including to zero REMUNERATION REPORT continued Implementation in 2022 The following section provides an overview as to how each element will be applied in 2022. Base salary The CEO’s base salary will remain at £455,000. The CFO’s base salary will increase by 4.8% in 2022 to £330,000 as disclosed in the 2020 Directors’ Remuneration Report. • Andrew Formica: £455,000 (2021: £455,000); • Wayne Mepham: £330,000 (2021: £315,000). Annual bonus Annual bonuses in respect of 2022 (inclusive of any deferred bonus award) will continue to be subject to the following individual caps as a percentage of base salary in line with the new Remuneration Policy: • Andrew Formica: 425%; • Wayne Mepham: 250%. The 2022 bonuses will be determined on the normal timetable and in line with the process below. The performance measures for the 2022 annual bonus will be set within the following balanced scorecard. 65% of these measures will be corporate quantitative measures, with clearly determined ‘Threshold’, ‘On-Target’ and ‘Maximum’ goals. The remaining objectives will be strategic and individual measures. Determination of bonus amounts is not formulaic; in addition to reviewing each of the performance measures, the Committee will take a holistic view of the overall performance of the Company for the year to ensure that any bonus amounts appropriately reflect the experience of shareholders. Where performance measures produce an outcome which does not align with that of shareholders, the Committee may exercise its discretion as it considers appropriate. 114 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Proportion of bonus and delivery method The payment of bonuses for Executive Directors for 2022 will be as follows and is compliant with the relevant remuneration regulations. 25% 25% 50% • Delivered as cash. • Delivered as either deferred Jupiter shares or deferred fund units in a Jupiter fund. Choice between these can be made by the Executive Director nearer the payment date. • Immediate vesting, but subject to a subsequent six-month post-vesting holding period. • Delivered as either deferred Jupiter shares and/or deferred fund units in a Jupiter fund. Choice between these can be made by the Executive Director nearer the payment date. Where the Executive Director has not yet met the minimum shareholding requirement, deferral into fund units will be restricted to 25% of this portion of the bonus. • Vesting in equal tranches over three years, but subject to a subsequent six-month post-vesting holding period. LTIP awards The 2022 LTIP awards will be subject to the following performance conditions. Proportion of LTIP Performance condition Performance measure Outcome 40% Underlying EPS Growth 1 Jupiter’s underlying EPS must achieve at least 5% growth over the performance period Jupiter’s underlying EPS growth over the performance period Less than 5% growth 25% growth or above Any other percentage Proportion of the award subject to the EPS performance condition that will vest 0% 100% Sliding scale between the relevant percentages above 30% Jupiter’s investment outperformance The proportion of all of Jupiter’s assets (weighted by AUM) achieving above median performance relative to their peer group (retail) or above benchmark performance (institutional) weighted: 25% over the three-year period to 31 December preceding the vesting date; and 75% over the five-year period to 31 December preceding the vesting date Proportion of funds (weighted by AUM) achieving above median/ benchmark performance Less than 50% 50% 80% or above Any other percentage Proportion of the award subject to the investment outperformance condition that will vest 0% 25% 100% Sliding scale between the relevant percentages above 30% Net flows Cumulative net flows for the Group over the performance period Net flows over the performance period Less than £1.5bn £1.5bn £4.5bn or above Any other percentage Proportion of the award subject to the net flows performance condition that will vest 0% 25% 100% Sliding scale between the relevant percentages above 1. Due to their volatility, performance fees will be excluded from the EPS growth calculation for future LTIP awards. For consistency, this will also be applied to the Executive Directors inflight LTIP awards although the vesting level will not be permitted to exceed the original calculation including performance fees. Targets for each performance measure will be set by the Committee in line with the framework described on page 105. The Committee considers more specific details of the 2022 performance measures and targets to be commercially sensitive and therefore further details of the targets and weightings for each of these measures and performance against each will be provided in the 2022 Directors’ Remuneration Report. The determination of variable pay awards in relation to 2022 performance will continue to be assessed with the application of judgement, taking into account a holistic assessment of Group and individual performance. The balanced scorecard, set out in the table on page 112, will allow the Committee to assess performance against key financial and strategic metrics. The Committee’s assessment against these metrics and the decision about any variable pay awards will be clearly disclosed to shareholders. In addition to the performance measures outlined on the previous page, the Committee considers the checkpoints set out on page 122 when exercising its judgement to determine the overall variable compensation spend for any particular year, and also considers individual risk behaviours when assessing individual awards. 115 Jupiter Fund Management plc | Annual Report and Accounts 2021 Non-Executive Director fees, roles and committee responsibilities Jupiter normally reviews Non-Executive Director fees annually. The Non-Executive Chairman’s fee and fees for certain Non-Executive roles were last increased with effect from 1 January 2018 and 1 January 2019 respectively. Fees for chairing the Audit and Risk Committee and Remuneration Committee were last increased with effect from 1 January 2020. No increases are proposed for the 2022 financial year. 2021 annual fee 2022 annual fee Base fee £64,000 £64,000 Senior Independent Director fee £12,500 £12,500 Audit and Risk Committee Chairman fee (in addition to member fee) £22,000 £22,000 Remuneration Committee Chairman fee (in addition to member fee) £22,000 £22,000 Audit and Risk Committee member fee £7,500 £7,500 Remuneration Committee member fee £7,500 £7,500 Non-Executive Chairman fee (all inclusive) £235,000 £235,000 Non-Executive Directors are reimbursed for reasonable business expenses. The roles and committee responsibilities of the Non-Executive Directors during 2021 were as follows: Director Title Roles and committee responsibilities Nichola Pease Independent Chairman Nomination Committee Chairman Remuneration Committee member Jonathon Bond Independent Non-Executive Director (stepped down 6 May 2021) Senior Independent Director Senior Independent Director Audit and Risk Committee member Nomination Committee member Remuneration Committee member Polly Williams Independent Non-Executive Director Audit and Risk Committee Chairman Nomination Committee member Karl Sternberg Independent Non-Executive Director Audit and Risk Committee member Nomination Committee member Remuneration Committee member Roger Yates Independent Non-Executive Director Senior Independent Director (from 6 May 2021) Senior Independent Director Nomination Committee member Remuneration Committee Chairman Chris Parkin Non-Executive Director Board member David Cruickshank Independent Non-Executive Director (appointed 1 June 2021) Audit and Risk Committee member Nomination Committee member Dale Murray Independent Non-Executive Director (appointed 1 September 2021) Audit and Risk Committee member Nomination Committee member REMUNERATION REPORT continued Implementation in 2022 LTIP awards continued These awards will be granted in March 2022 and will vest on the third anniversary of grant, subject to the achievement of the stretching performance conditions, as set out in the table on the previous page. The awards will also be subject to a two-year post-vesting holding period in line with the Remuneration Policy. The 2022 LTIP award values will be as follows: • Andrew Formica: £1,706,250 (375% of salary); • Wayne Mepham: £742,500 (225% of salary). Investment outperformance is critical to Jupiter’s clients and the Company’s long-term success. Its importance is recognised through its use as a performance measure within the annual bonus scorecard and the LTIP. Given the longer time horizon over which LTIP assesses performance, both a three- and five-year outperformance measure are included. EPS growth is important to shareholders and is the best measure of Jupiter’s successful execution of its growth strategy. There is no payout under this performance condition at threshold performance, or where EPS growth is less than 5% over the period. Net flows are a strong indicator of client confidence in Jupiter’s products, and are a key determinant of changes in future revenue streams for the business. In addition to a risk and compliance assessment, LTIP awards are subject to an underlying business performance underpin. The Committee will compare the vesting outcome for LTIP awards against shareholder and client experience over the same performance period. 116 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Directors’ shareholdings (audited information) Director Ordinary shares held at 31 December 2021 (no restrictions) Unvested ordinary shares held at 31 December 2021 (subject to continued employment) Total ordinary shares held at 31 December 2021 Vested but unexercised options at 31 December 2021 Unvested options, vesting not subject to performance conditions at 31 December 2021 Unvested options, vesting subject to performance conditions at 31 December 2021 Total options over ordinary shares held at 31 December 2021 Shareholding as a percentage of salary 3 Shareholding as a percentage of salary including vested and unvested share options Andrew Formica 1,121,586 4,210 1,125,796 – 357,676 1,742,074 2,099,750 618% 722% Wayne Mepham 70,422 1,894 72,316 – 184,636 519,224 703,860 57% 140% Edward Bonham Carter 1 10,037,409 3,889 10,041,298 104,179 50,399 118,227 272,805 20,889% 21,106% Nichola Pease 32,050 – 32,050 – – – – – – Jonathon Bond 2 29,794 – 29,794 – – – – – – Polly Williams – – – – – – – – – Roger Yates 225,000 – 225,000 – – – – – – Karl Sternberg 28,601 – 28,601 – – – – – – David Cruickshank 30,000 – 30,000 – – – – – – Dale Murray 40,000 – 40,000 – – – – – – Chris Parkin 4 – – – – – – – – – 1. Figures for Edward Bonhan Carter are as at 6 May 2021, the date he stepped down as a Director. 2. Figures for Jonathon Bond are as at 6 May 2021, the date he stepped down as a Director. 3. The high percentage of shares held by Edward Bonham Carter relates to shares purchased during the period 2007-2010 while Jupiter was privately owned. 4. Chris Parkin is a nominated representative of TA Associates, which currently holds 84,115,278 (15%) shares in Jupiter. There have been no changes to the above interests between the year end and 24 February 2022 (the latest practicable date before the printing of the Annual Report and Accounts). Minimum shareholding requirements (audited information) Executive Directors should maintain a significant holding of shares in the Company. The Remuneration Policy in operation for the 2021 performance year provided that the CEO should hold shares in the Company with a value equivalent to at least 500% of base salary, and other Executive Directors a value equivalent to at least 250% of base salary. The Committee expects Executive Directors to build up their required shareholding within five years from appointment to the Board, and is satisfied with the progress of all Executive Directors against this. Post-employment shareholding requirements Under the Directors’ Remuneration Policy and in line with the Corporate Governance Code requirements, the Committee has introduced a formal post-employment shareholding requirement for Executive Directors. Executive Directors will be required to maintain a meaningful shareholding for two years after stepping down as a Director, specifically shares worth 500% of salary for the CEO and 250% of salary for other Directors in the first year, decreasing to 250% of salary for the CEO and 125% of salary for other Directors in the second year after stepping down. Directors’ service contracts unexpired terms The Executive Directors are the only Directors with service contracts, none of which contains an expiry term. The CEO has a 12-month notice period. The CFO has a six-month notice period. 117 Jupiter Fund Management plc | Annual Report and Accounts 2021 Share awards (audited information) DBP – options over Jupiter shares Options held at start of year Options granted during the year Options exercised/lapsed during the year Options held at end of year Director Year granted Number of shares under option held as at 1 January 2021 including dividend adjustments 1,2 Market value per share at date of grant 3 Grant date Face value at award Price used to determine number of shares 3 Number of shares under option 1,2 Number of shares under option lapsed during the year Number of shares under option exercised during the year Number of shares under option held as at 31 December 2021 Earliest exercise date Latest exercise date Andrew Formica 2020 (in respect of 2019) 51,353 £3.11 – – – – – 54,874 4 – 5 Sept 2021 5 March 2022 51,353 £3.11 – – – – – – 54,874 5 Sept 2022 5 March 2023 51,354 £3.11 – – – – – – 54,876 5 Sept 2023 5 March 2024 2021 (in respect of 2020) – – 9 March 2021 £621,800 £2.82 79,005 – – 79,005 9 Sept 2022 9 March 2023 79,005 – – 79,005 9 Sept 2023 9 March 2024 79,007 – – 79,006 9 Sept 2024 9 March 2025 2021 (in respect of 2020) – – 9 March 2021 £310,900 £2.82 118,509 – 118,509 5 51,354 5 Sept 2021 9 March 2022 Wayne Mepham 2019 (Buyout Award) 12,518 £3.43 – – – – – 12,518 6 – 1 March 2021 1 Sept 2021 2019 (Buyout Award) 21,514 £3.43 – – – – – – 22,989 1 March 2022 1 Sept 2022 2020 (in respect of 2019) 24,114 £3.11 – – – – – 25,767 7 – 5 Sept 2021 5 March 2022 24,114 £3.11 – – – – – – 25,767 5 Sept 2022 5 March 2023 24,116 £3.11 – – – – – – 25,769 5 Sept 2023 5 March 2024 2021 (in respect of 2020) – – 9 March 2021 £241,175 £2.82 30,643 – – 30,643 9 Sept 2022 9 March 2023 30,643 – – 30,643 9 Sept 2023 9 March 2024 30,644 – – 30,644 9 Sept 2024 9 March 2025 2021 (in respect of 2020) – – 9 March 2021 £120,588 £2.82 45,965 – 45,965 8 – 9 Sept 2021 9 March 2022 REMUNERATION REPORT continued 118 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Options held at start of year Options granted during the year Options exercised/lapsed during the year Options held at end of year Director Year granted Number of shares under option held as at 1 January 2021 including dividend adjustments 1,2 Market value per share at date of grant 3 Grant date Face value at award Price used to determine number of shares 3 Number of shares under option 1,2 Number of shares under option lapsed during the year Number of shares under option exercised during the year Number of shares under option held as at 31 December 2021 Earliest exercise date Latest exercise date Edward Bonham Carter 2018 (in respect of 2017) 33,737 £4.90 – – – – – – 33,737 20 March 2021 20 Sept 2021 2019 (in respect of 2018) 9,188 £3.52 – – – – – 9,188 9 – 22 Sept 2020 22 March 2021 9,188 £3.52 – – – – – – 9,188 22 Sept 2021 22 March 2022 9,190 £3.52 – – – – – – 9,190 22 Sept 2022 22 March 2023 2020 (in respect of 2019) 11,315 £3.11 – – – – – 11,315 10 – 5 Sept 2020 5 March 2021 2020 (in respect of 2019) 7,543 £3.11 – – – – – – 7,543 5 Sept 2021 5 March 2022 7,543 £3.11 – – – – – – 7,543 5 Sept 2022 5 March 2023 7,545 £3.11 – – – – – – 7,545 5 Sept 2023 5 March 2024 2021 (in respect of 2020) – – 9 March 2021 £73,575 £12.82 8,707 – – 8,707 9 Sept 2022 9 March 2023 8,707 – – 8,707 9 Sept 2023 9 March 2024 8,707 – – 8,707 9 Sept 2024 9 March 2025 2021 (in respect of 2020) – – 9 March 2021 £36,788 £12.82 13,060 – – 13,060 9 Sept 2021 9 March 2022 1. Outstanding share awards granted in 2019, 2020 and 2021 were adjusted by 4.35% as a result of the 14 May 2021 Final and Special Dividend. See overleaf. 2. Outstanding share awards granted in 2019, 2020 and 2021 were adjusted by 2.95% as a result of the 1 September 2021 Interim Dividend. 3. Average closing share price from the three trading days prior to date of grant. 4. Closing share price on date of exercise, 20 September 2021, was £2.43. This resulted in a value of shares on exercise of £133,124. 5. Closing share price on date of exercise, 20 September 2021, was £2.43. This resulted in a value of shares on exercise of £287,503. 6. Closing share price on date of exercise, 2 March 2021, was £2.76. This resulted in a value of shares on exercise of £34,574. 7. Closing share price on date of exercise, 10 September 2021, was £2.60. This resulted in a value of shares on exercise of £66,891. 8. Closing share price on date of exercise, 10 September 2021, was £2.60. This resulted in a value of shares on exercise of £119,325. 9. Closing share price on date of exercise, 17 March 2021, was £2.75. This resulted in a value of shares on exercise of £25,169. 10. Closing share price on date of exercise, 5 March 2021, was £2.78. This resulted in a value of shares on exercise of £31,470. 119 Jupiter Fund Management plc | Annual Report and Accounts 2021 DBP – options over Jupiter fund units Options held at start of year Options granted during the year Options held at end of year Director Year granted Number of fund units under option held as at 1 January 2021 Market value per unit at date of grant 1 Grant date Face value at award Price used to determine number of units Number of units under option Number of units under option held as at 31 December 2021 Earliest exercise date Latest exercise date Wayne Mepham 2019 (Buyout Award) 35,259 £1.11 – – – – – 1 March 2021 1 Sept 2021 2019 (Buyout Award) 2,107 £27.52 – – – – 2,107 1 March 2022 1 Sept 2022 1. Average closing unit price from the three trading days prior to the date of grant. Key terms: • No performance measures are attached to options granted under the DBP, although awards are normally subject to continued employment with the Company; • Malus and clawback provisions may apply (see the Remuneration Policy table for further details); • No exercise price is payable on the exercise of DBP options; and • Holders of unvested share option awards are not entitled to cash dividend payments as the holders are not the legal owners of the shares. The Remuneration Committee determined that it was appropriate for holders of share option awards to benefit from dividends declared in 2021 as follows, as permitted under the relevant plan rules: For awards granted in 2019, 2020 and 2021 under the DBP and between 2018 and 2021 under the LTIP schemes, an upwards adjustment to the number of shares over which options were held by a factor of 4.35% and 2.95% in respect of the 14 May 2021 Special and Final Dividend and 1 September 2021 Interim Dividend respectively. These factors are equivalent to the value the holder of a share option award would have received had they been entitled to receive the Final and Interim Dividends as cash payments. LTIP – options over Jupiter shares Options held at start of year Options granted during the year Options exercised/lapsed during the year Options held at end of year Director Year granted Number of shares under option held as at 1 January 2021 including dividend adjustments 1,2 Market value per share at date of grant 3 Grant date Face value at award Price used to determine number of shares 3 Number of shares under option 1,2 Number of shares under option lapsed during the year Number of shares under option exercised during the year Number of shares under option held as at 31 December 2021 Earliest exercise date Latest exercise date Andrew Formica 2019 433,033 £3.52 – – – – – – 462,107 5 22 March 2024 22 Sept 2024 2020 589,160 £3.11 – – – – – – 629,572 5 March 2025 5 Sept 2025 2021 9 March 2021 £1,706,250 £2.82 650,395 – – 650,395 9 March 2026 9 Sept 2026 Wayne Mepham 2020 233,074 £3.11 – – – – – – 233,074 5 March 2025 5 Sept 2025 2021 9 March 2021 £708,750 £2.82 270,164 – – 270,164 9 March 2026 9 Sept 2026 Edward Bonham Carter 6 2016 28,382 £4.09 – – – – – 28,382 4 – 1 April 2019 1 April 2021 2017 20,443 £4.21 – – – – – – 20,443 29 March 2020 29 March 2022 2018 61,239 £4.61 – – – – 41,031 – 20,208 20 March 2023 20 Sept 2023 2019 56,075 £3.52 – – – – – – 56,075 5 22 March 2024 22 Sept 2024 2020 62,152 £3.11 – – – – – – 62,152 5 March 2025 5 Sept 2025 1. Outstanding share awards granted in 2019, 2020 and 2021 were adjusted by 4.35% as a result of the 14 May 2021 Final and Special Dividends. 2. Outstanding share awards granted in 2019, 2020 and 2021 were adjusted by 2.95% as a result of the 1 September 2021 Interim Dividend. 3. Average closing share price from three trading days prior to date of grant. 4. Share price on date of exercise, 17 March 2021, was £2.74. This resulted in a value of shares on exercise of £77,767. 5. The 2019 LTIP shares under option have not been adjusted for the performance conditions as at 31 December 2021. 6. The number of shares under option as at 31 December 2021 for Edward Bonham Carter are as at 6 May 2021, the date he stepped down from the Board. REMUNERATION REPORT continued 120 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Key terms: • Performance conditions for LTIP awards granted in 2016 and 2017 are: underlying EPS, net sales, investment outperformance and strategic goals, all equally weighted. These performance conditions are measured over the period 1 January in the year of grant to 31 December in the year prior to vesting. • Performance conditions for LTIP awards granted in 2018, 2019 and 2020 are: 50% EPS growth and 50% investment outperformance. • The targets and vesting schedule for EPS are as follows: For awards granted in 2018: less than 20% EPS growth over the performance period, 0% vesting; 40% EPS growth or above over the performance period, 100% vesting; any other EPS growth percentage is subject to a sliding scale between 0% and 100%. For awards granted in 2019 and 2020: less than 5% EPS growth over the performance period, 0% vesting; 25% EPS growth or above over the performance period, 100% vesting; any other EPS growth percentage is subject to a sliding scale between 0% and 100%. • The targets and vesting schedule for investment outperformance are: less than 50% of funds (weighted by AUM) achieving median/benchmark performance, 0% vesting; 50% of funds (weighted by AUM) achieving median/benchmark performance, 25% vesting; 80% or above of funds (weighted by AUM) achieving median/benchmark performance, 100% vesting; any other percentage of funds (weighted by AUM) achieving median/benchmark performance, a sliding scale in between the relevant percentages. • Performance conditions for LTIP awards granted in 2021 are: 40% EPS growth, 30% investment outperformance and 30% net flows. • The targets and vesting schedule for EPS are: less than 5% EPS growth over the performance period, 0% vesting; 25% EPS growth or above over the performance period, 100% vesting; any other EPS growth percentage is subject to a sliding scale between 0% and 100%. • The targets and vesting schedule for investment outperformance are: less than 50% of funds (weighted by AUM) achieving median/benchmark performance, 0% vesting; 50% of funds (weighted by AUM) achieving median/benchmark performance, 25% vesting; 80% or above of funds (weighted by AUM) achieving median/benchmark performance, 100% vesting; any other percentage of funds (weighted by AUM) achieving median/benchmark performance, a sliding scale in between the relevant percentages. • The targets and vesting schedule for net flows are: less than £1.5bn over the performance period, 0% vesting; £4.5bn or more over the performance period, 100% vesting; any other net flows between £1.5bn and £4.5bn is subject to a sliding scale between 25% and 100%. • These performance conditions are measured over the period 1 January in the year of grant to 31 December in the year prior to vesting. Awards are subject to a two-year post-vesting holding period. • Malus and clawback provisions may apply (see the Remuneration Policy table for further details); • An exercise price of £0.02 per share is payable on the exercise of LTIP options granted prior to 2018; and • The number of shares under award granted in 2018, 2019 and 2020 were adjusted as a result of the 14 May 2021 Final and Special Dividend and the 1 September 2021 Interim Dividend, as described under the DBP share table. Share Incentive Plan Shares held at start of year Shares acquired/forfeited during the year Shares held at end of year Number of shares subject to award as at 1 January 2021 Market value per share at award 1 Award date Face value at award Price used to determine number of shares 1 Number of shares awarded during the year Number of shares forfeited during the year Number of shares subject to award as at 31 December 2021 Earliest vesting date Andrew Formica 473 £3.80 – – – – – 473 4 April 2022 498 £3.62 – – – – – 498 7 May 2022 1,007 £1.99 – – – – – 1,007 1 April 2023 1 April 2021 £2,000 £2.79 716 – 716 1 April 2024 Wayne Mepham 1,007 £1.99 – – – – – 1,007 1 April 2023 1 April 2021 £2,000 £2.79 716 – 716 1 April 2024 Edward Bonham Carter 457 £3.28 – – – – – 457 2 May 2016 462 £3.89 – – – – – 462 2 May 2017 1 £3.50 – – – – – 1 2 Oct 2017 604 £1.99 – – – – – 604 1 April 2023 1 April 2021 £1,200 £2.79 429 – 429 1 April 2024 1. Market price on the date of purchase of SIP shares. Sharesave – options over Jupiter shares Options held at start of year Options granted during the year Options lapsed during the year Options held at end of year Director Year granted Number of shares under option as at 1 January 2021 Market value per share at date of grant Grant date Face value at award Price used to determine number of shares 1 Number of shares under option Number of shares under option lapsed during the year Number of shares under option held as at 31 December 2021 Earliest exercise date Latest exercise date Andrew Formica 2020 10,909 £1.65 – – – – – 10,909 1 Dec 2023 31 May 2024 Wayne Mepham 2020 18,181 £1.65 – – – – – 18,181 1 Dec 2025 31 May 2026 1. Sharesave is an all-employee share plan operated in line with applicable tax legislation. Average closing share price from three trading days prior to date of grant, discounted by 20% in line with the Sharesave rules applicable to all eligible employees. 121 Jupiter Fund Management plc | Annual Report and Accounts 2021 Risk and reward at Jupiter Discussion The Committee gives careful consideration to the linkage between risk and reward to ensure the desired behaviours and culture are being rewarded. This includes ensuring the reward structures are consistent with and promote sound and effective risk management, and ensuring remuneration outcomes appropriately reflect the risk profile and behaviours of the Group and each individual. This is demonstrated through a variety of reward features and processes that ensure alignment to risk considerations throughout the organisation. For example: • When assessing the overall variable compensation spend as described on page 112, the Committee considers a number of checkpoints, as described in the checkpoints chart on the right hand side of this page. • For all employees there is consideration of conduct and performance against risk and compliance criteria, ensuring there is risk adjustment at an individual level. • Assessment of individual performance includes consideration of financial and non-financial metrics. This ensures that the way in which performance has been achieved is taken into account, for example, in terms of risk and repeatability. • All employees with bonuses of over £50,000 have a portion of bonus deferred into shares and/or fund units. In total approximately one quarter of employees are subject to some kind of deferral, ensuring their interests are aligned with the long-term success of the Group and with the interests of clients. • Shareholding requirements apply to Executive Directors, further enhancing the link to the Group’s long-term success. • For Executive Directors all variable remuneration is subject to malus and clawback provisions, whereby incentive awards may be reduced, withheld or reclaimed in certain circumstances, including where there has been a material failure of risk management. In addition to the Audit and Risk Committee feeding into the process, the CRO presents a report to the Committee, setting out thoughts and assurances around how the remuneration structures and processes support sound and effective risk management. Checkpoints Capital base and liquidity Can Jupiter afford the proposed variable compensation spend? • Sufficient liquidity to make payments? • Consider impact on Jupiter’s capital base. Request and consider input from the Chief Financial Officer. Underlying financial performance Does Jupiter’s underlying financial performance support the proposed variable compensation spend? • Consider performance against financial KPIs listed in the Annual Report. • Is there any reason to believe the financial results are not a fair reflection of underlying performance? Request and consider input from the Audit and Risk Committee. Risk Does Jupiter’s risk profile and risk management support the variable compensation spend? Are any adjustments required? • Consideration of the Enterprise Risk Management report. • Are all risks being suitably monitored and managed? Have there been any material failures of risk management (or any near misses) in the year? • Consider whether profit reflects current and future risks and timing and likelihood of future revenues. Request and consider input from the Chief Risk Officer and the Audit and Risk Committee. Compliance Have there been any material compliance breaches in the year? • Are any adjustments required? • Consideration of any significant compliance breaches and/or near misses. • Consideration of any fines received in the year and any ongoing regulatory investigations. Request and consider input from the Chief Risk Officer. Commercial Are there any commercial drivers to support adjustments to the variable compensation spend? • Consider the market for talent and whether the spend would likely result in any significant over/underpayment against the market. Reputational Are there any reputational drivers to support adjustments to the variable compensation spend? • Has there been any reputational damage to the Group in the year? • Will the proposed variable compensation pool quantum have any adverse reputational impact on the Group? Variable compensation spend and total compensation ratio approval. REMUNERATION REPORT continued 122 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Dilution Our policy regarding dilution from employee share awards is to ensure that dilution will be no more than 10% in any rolling 10-year period and no more than 5% from employee share awards granted to Executive Directors of the Company in any rolling 10-year period. As at 31 December 2021, share awards granted under the DBP, LTIP and Sharesave in the ten and a half years since Jupiter’s Listing were outstanding over 28.1m shares (including 3.1m granted to Executive Directors). This represented 5.1% (0.6% to Executive Directors) of the Company’s issued share capital. Our current intention is to settle all share awards outstanding as at 31 December 2021 with market purchased shares and our ongoing practice is to purchase shares in the market to settle obligations. No new shares have been issued since listing in 2010 in settlement of share awards to employees. Therefore, we are currently operating within the relevant dilution targets by a comfortable margin. Notwithstanding the target outlined above, as a business exposed to both market shocks and critical people issues, we believe we should retain flexibility to act very quickly to take steps that could increase dilution up to a maximum of 15% on a temporary and short-term basis, if the Remuneration Committee and Board believe it is clearly in shareholders’ interests to do so. If dilution were to exceed 10% in any rolling 10-year period, this would be on an exceptional basis and for a short time period. The Directors’ Remuneration Report for the relevant year would also contain the necessary justifications for such an outcome. The Remuneration Committee and Board would ensure that dilution levels returned to within the 10% level in any rolling 10-year period as soon as practicable thereafter. Jupiter’s total shareholder return compared against total shareholder return of FTSE 250 and FTSE 350 Investment Banking and Brokerage Services indices since December 2011 The chart below shows the Company’s share price performance (based on total shareholder return, with dividends reinvested net of tax) in the 10-year period to 31 December, compared with the movement of the FTSE 250 Index and the FTSE 350 Investment Banking and Brokerage Services Index. These two indices were chosen as the Company is in the FTSE 250 and the FTSE 350 Investment Banking and Brokerage Services Index includes UK listed financial stocks, including asset managers. Compliance statement This Remuneration Report was prepared in accordance with the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013. This report contains both audited and non-audited information. The information subject to audit is set out in the Annual Report on Remuneration and is amended accordingly. During the year Jupiter has been subject to a number of regulations including CRD III and parts of the firm were also subject to AIFMD and UCITS V. The Committee fulfils all of its requirements under these regulations and ensures that the Remuneration Policy adheres to their principles. The Group has followed the requirements of the UK Corporate Governance Code with the exception detailed on page 102. Jupiter FTSE 250 Index FTSE 350 – Investment Banking and Brokerage Services £ 450 £ 400 £ 350 £ 300 £ 200 £ 250 £ 150 £ 50 £ 100 Dec 2011 Dec 2021Dec 2020Dec 2019Dec 2018Dec 2017Dec 2016Dec 2015Dec 2014Dec 2013Dec 2012 123 Jupiter Fund Management plc | Annual Report and Accounts 2021 Table of historic levels of CEO pay 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 CEO single figure of total remuneration (£’000) 1,634 1,789 2,301 1 2,716 2,437 3,546 2,014 1,764 2 1,759 2,514 CEO bonus as a percentage of maximum potential 3 N/A N/A N/A N/A N/A N/A 55% 56% 2 64% 85% Long-term incentive vesting rates against maximum opportunity 4 N/A N/A 46% 71% 44% 5 74% 6 43% 32% N/A 7 30% 8 1. Calculated as Edward Bonham Carter’s remuneration to 17 March 2014 and Maarten Slendebroek’s from 17 March 2014 when he took on the role of CEO, plus the value of Edward Bonham Carter’s LTIP award vesting based on performance to 31 December 2014. 2. Calculated as Maarten Slendebroek’s remuneration to 28 February 2019 and Andrew Formica’s from 1 March 2019 when he took on the role of CEO, plus the value of Maarten Slendebroek’s pro-rated LTIP award vesting based on performance conditions tested to 31 December 2019. Restated based on the share price on the 2017 LTIP vesting date 29 March 2020 of £1.94. 3. Jupiter’s Remuneration Policy for the period from 2011 to 2017 did not include individual maximum bonuses, therefore a percentage is not provided for these years. 4. No LTIP awards vested 2010 to 2013 as the first LTIP awards granted to the CEO after listing were in 2012. 5. Maarten Slendebroek has two separate LTIP awards included in the 2016 single figure, both of which had performance periods ending during that financial year. The 44% vesting is a weighted average of the vesting outcomes for both awards combined. 6. Maarten Slendebroek has two separate LTIP awards included in the 2017 single figure, both of which had performance periods ending during that financial year. The 74% vesting is a weighted average of the vesting outcomes for both awards combined. 7. Andrew Formica does not have an LTIP award with performance conditions ending in the 2020 performance year, therefore there is no LTIP vesting percentage available for 2020. 8. Andrew Formica’s 2019 LTIP award shown in the single total figure on page 108 is due to vest on 22 March 2022, subject to two equally weighted performance conditions measured to 31 December 2021. CEO pay ratio Year Method 25th Percentile Median 75th Percentile 2019 1 Option A 27:1 18:1 11:1 2020 Option A 23:1 16:1 9:1 2021 Option A 34:1 22:1 11:1 1. Restated based on the share price on the 2017 LTIP vesting date 29 March 2020 of £1.94. The Company has chosen to use Option A as the methodology for calculating the pay and benefits of all UK employees, as this is consistent with the approach that must be used for the CEO single figure. It therefore allows a like-for-like comparison to take place between the pay data of the CEO and employees at the lower, median and upper quartiles, as well as a more accurate analysis of the resulting ratios. For the purpose of this disclosure, the Company has chosen 31 December 2021 as the reference date on which the pay for all employees in employment as at 1 October 2021 was calculated, consistent with our approach taken in prior years. 25th Percentile Median 75th Percentile CEO single figure (£’000) 2,514 Employee single figure (£’000) 74 114 225 Employee single figure salary component (£’000) 50 73 110 As explained in the Committee Chairman’s statement, the 2020 CEO single figure did not contain an LTIP value whereas the 2021 CEO single figure does, namely the vested value of the current CEO’s first LTIP award post appointment. An inevitable consequence of this disparity is a higher CEO pay ratio in 2021 than in 2020. REMUNERATION REPORT continued 124 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Jupiter operates consistent reward policies across its UK workforce, with the exception of any variation required by regulation, legislation or corporate governance. Remuneration requirements that are considered more onerous are limited only to those individuals to whom the relevant rules apply. Notwithstanding this, the Committee recognises that the CEO pay ratio will fluctuate from year to year as it is dependent on a number of factors, some of which are out of the Committee’s control, for example movements in share price which affect the value of deferred share-based compensation with performance conditions. The Committee therefore does not target a specific pay ratio, but will consider any movement in the ratio year-on-year when assessing the balance of remuneration for all other employees relative to maintaining a competitive remuneration package for the CEO. Change in Board Directors’ pay vs employees The following table sets out the percentage change in remuneration from FY20 to FY21 paid to each Director (plus the prior year comparative), as well as the average percentage change for employees. Jupiter Fund Management plc only employs the CEO and CFO and up to May 2021 the Vice Chairman; however, data for employees has been calculated looking at all employees for the Jupiter Group as a whole. 2021 2020 % change in salary/fee (2020 to 2021) % change in taxable benefits (2020 to 2021) 6 % change in annual bonus (2020 to 2021) % change in salary/fee (2019 to 2020) % change in taxable benefits (2019 to 2020) % change in annual bonus (2019 to 2020) Andrew Formica – CEO 0% 9% 32% 2% 14% 16% Wayne Mepham – CFO 5% 9% 38% 0% 14% 16% Edward Bonham Carter 1 – Vice Chairman 0% 9% -49% 0% 16% 12% Nichola Pease 2 – Chairman 0% 0% N/A N/A N/A N/A Jonathon Bond 1 – NED, SID 0% 0% N/A 0% 0% N/A Polly Williams – NED, Chair of Audit and Risk Committee 0% 0% N/A 2% -100% N/A Roger Yates 3 – NED, Chair of Remuneration Committee, SID 20% 0% N/A 19% 0% N/A Karl Sternberg – NED 5% 0% N/A 5% 0% N/A Chris Parkin – NED 0% 0% N/A N/A N/A N/A David Cruickshank 4 – NED N/A N/A N/A N/A N/A N/A Dale Murray 4 – NED N/A N/A N/A N/A N/A N/A Employees of Jupiter Group 5 4% 9% 22% 4% 12% 15% 1. The salary, benefits and bonus for Edward Bonham Carter and fees for Jonathon Bond has been annualised for 2021 to reflect their full year equivalent amounts had they remained serving on the Board in their respective roles. Edward and Jonathon stepped down from the Board on 6 May 2021. 2. The fees for Nichola Pease has been annualised for 2020 to reflect her full year equivalent amount, notwithstanding the amounts received by her in 2020 were pro-rated in respect for the period of time she served as Chairman. 3. The fee increase for Roger Yates represents the increase received in conjunction with his appointment as Senior Independent Director on 6 May 2021. 4. David Cruickshank and Dale Murray joined the Board in 2021, therefore prior year comparative data is not available for them. 5. For salary: calculated using the average of all salary percentage changes from 2020 to 2021 for all eligible employees of the Jupiter Group as part of the annual compensation review process. For benefits: calculated using the percentage increase in the premium for private medical and dental insurance year-on-year paid by the Company. For annual bonus: calculated using the average of all full year equivalent discretionary annual bonus percentage changes from 2020 to 2021 for all eligible employees of the Jupiter Group as part of the annual compensation review process. 6. Benefits for Executive Directors and all other employees only includes private medical and dental insurance premiums. Benefits for Non-Executive Directors comprise reasonable taxable business expenses incurred in the performance of duties and the payment of any tax arising, as reported in the table on page 112. The quantums involved are often de minimis, but small changes can result in large percentage fluctuations shown in the table above. 125 Jupiter Fund Management plc | Annual Report and Accounts 2021 Relative importance of spend on pay The following chart shows the Group’s profit before tax, total employee remuneration and dividends declared on ordinary shares for 2020 and 2021. Underlying profit before tax 1 (£m) Total employee remuneration 2 (£m) Dividends declared (£m) 179.0 216.7 20 21 161.9 213.0 20 21 111.2 94.6 20 21 1. Stated before exceptional items (see APMs on page 181). 2. Being fixed staff costs before exceptional items plus variable staff costs before exceptional items (see page 23). Total employee remuneration has increased by 32%. We have made targeted investment for growth during 2021 as well as ensuring our reward packages are competitive and support the retention of existing talent, which has resulted in some increases for 2021. Our fixed to variable compensation has moved back to our historic trend of a greater weighting towards annual performance related awards. Fixed staff costs before exceptional items decreased by £3.1 million, as a result of restructuring programmes: firstly, to remove duplicated roles after the Merian acquisition, and secondly, through a targeted programme across 2020 and 2021 to reposition the Group by concentrating resource into areas of growth. Variable staff costs before exceptional items increased from £85.8 million in 2020 to £140.0 million in 2021, of which £33.2 million was due to performance fee related pay. The remaining increase was impacted by a number of factors, mainly through the inclusion of a full year of the investment teams that joined us with the Merian acquisition. In addition, the cash bonus charge has increased as we align employees with the financial performance of the Group, which we assess before performance fees and variable staff costs, as well as investment capabilities that are demonstrating growth potential but have not yet achieved sufficient scale. Shareholder voting The following table sets out the voting outcomes in respect of the most recent AGM votes on the Annual Report on Remuneration and the Directors’ Remuneration Policy, held on 6 May 2021. For Percentage of total votes cast Against Percentage of total votes cast Withheld Directors’ Remuneration Policy at 2021 AGM 434,297,136 95.62 19,898,592 4.38 701,578 Annual Report on Remuneration at 2021 AGM 444,099,193 97.78 10,097,335 2.22 700,778 Advisers In September 2017 the Remuneration Committee conducted a review of the appointment of its independent advisers. The process included a series of interviews with the Committee Chairman and members of the Committee. As a result of that review Deloitte LLP were confirmed as advisers to the Committee and a new team was appointed. The Committee has formally reviewed the work undertaken by Deloitte and is satisfied that the advice they have received has been objective and independent. Deloitte are founder members of the Remuneration Consultants Group and abide by its code of conduct in relation to executive remuneration consulting in the UK. Fees paid to Deloitte for executive remuneration consulting were £78,400 in 2021, determined on a time-spent basis. Deloitte also provided advice to the Company relating to incentive plans and regulatory matters during the year. The Remuneration Committee does not consider that the other advice provided has any impact on Deloitte’s independence as advisers to the Remuneration Committee. On behalf of the Board Roger Yates Chairman of the Remuneration Committee 24 February 2022 REMUNERATION REPORT continued 126 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE DIRECTORS’ REPORT The Directors present their report and the Group’s audited Financial Statements for the year ended 31 December 2021. Business performance Principal activities The Company’s principal activity is to act as a holding company for a group of investment management companies. Our business model is based on helping clients achieve their long-term investment objectives, by creating value through our investment performance and stewardship of the funds we manage and the effective distribution thereof. Our business model is explained in the Strategic report. The Group operates principally in the United Kingdom with international operating subsidiaries in Luxembourg, which has branches across Europe, Ireland, Hong Kong, Singapore, the United States and Switzerland. The Company is incorporated with Company Number 6150195 and is domiciled in England and Wales. Development and performance Commentary on the development and performance in the year ended 31 December 2021, and likely future developments in the Group’s business, is included in the Strategic Report on pages 2 to 67. Financial Risk Descriptions of the Group’s financial risk management objectives and policies, and its exposure to risks arising from its use of financial instruments, are set out in Note 24 to the Financial Statements on pages 154 to 158. Directors’ remuneration Information concerning Directors’ contractual arrangements and entitlements under share-based remuneration arrangements is given in the Remuneration Report on pages 102 to 126. Environmental performance The Group’s environmental performance data, including the absolute Scope 1 and 2 emissions for 2021, can be found in the Corporate Responsibility section of the Strategic Report on page 47 and the Group’s TCFD report on pages 45 to 48. Employees in the business Information concerning the involvement of employees in the business is also given in the Strategic report on pages 36 to 39 and on page 59. Stakeholder interests How we consider stakeholder interests, and our s.172 statement, can be found on pages 58, 59, 81 and 82. Important events affecting the Company since the end of the year There have been no important events affecting the Company since the end of the year. Listing Rules and Disclosure Guidance and Transparency Rules Disclosures DTR 4.1.5R, DTR 4.1.8R and DTR 4.1.11R Information which is the required content of the Management report can be found in the Strategic report and in this Directors’ report. LR 9.8.4 R Information Location Interest capitalised Not applicable Shareholder waiver of dividends Note 21 Shareholder waiver of future dividends Note 21 Agreements with controlling shareholders Not applicable Provision of services by a controlling shareholder Not applicable Details of long-term incentive schemes Remuneration Report and Note 5 Waiver of emoluments by a Director Not applicable Waiver of future emoluments by a Director Not applicable Significant contracts Page 130 Non pre-emptive issues of equity for cash Not applicable Non pre-emptive issues of equity for cash in relation to major subsidiary Not applicable Participation by parent of a placing by a listed subsidiary Not applicable Publication of unaudited financial information Page 180 Compliance statement – DTR 7.2 This statement has been provided within the Governance section on page 71 and is deemed to form part of this Directors’ report. Internal control and risk management systems – DTR 7.2.5 A description of the Company’s financial reporting, internal control and risk management processes can be found on pages 60 to 67. Structure of capital and voting rights – DTR 7.2.6 As at 31 December 2021 and 24 February 2022, there were 553,060,741 fully paid ordinary shares of 2p, amounting to £11,061,215. Each share in issue is listed on the Official List maintained by the FCA in its capacity as the UK Listing Authority. The Company has one class of ordinary shares which carry the right to attend, speak and vote at general meetings of the Company. The holders of ordinary shares have the right to participate in dividends and other distributions according to their respective rights and interests in the profits of the Company and a return of capital on a winding up of the Company. Full details regarding the exercise of voting rights in respect of the resolutions to be considered at the AGM to be held on 11 May 2022 are set out in the Notice of Annual General Meeting. To be valid, the appointment of a proxy to vote at a general meeting must be received not less than 48 hours before the time appointed for holding the meeting. Full details on how to submit the proxy can be found in the AGM Notice. 127 Jupiter Fund Management plc | Annual Report and Accounts 2021 DIRECTOR’S REPORT continued Shares and Shareholders Annual General Meeting The AGM will take place on 11 May 2022. The Notice of the AGM will be circulated to all shareholders at least 20 working days before the meeting and the details of the resolutions to be proposed will be set out in that Notice. This document will be available on the Company’s website at www.jupiteram.com. Dividends The Directors have recommended a final dividend in respect of the year ended 31 December 2021 of 9.2 pence per ordinary share (2020: 9.2 pence per ordinary share). Payment of this dividend is subject to approval by shareholders at the AGM and if approved will be paid on 20 May 2022, to shareholders on the register at the close of business on 22 April 2022. Shares held in employee benefit trusts Under the rules of the Jupiter Share Incentive Plan (the SIP), which was introduced in 2013, eligible employees are entitled to acquire ordinary shares in the Company. The SIP shares are held in trust for participants by Solium Trustee (UK) Limited (the SIP Trustee). Voting rights are exercised by the SIP Trustee on receipt of participants’ instructions. If a participant does not submit an instruction to the SIP Trustee, no vote is registered. In addition, the SIP Trustees do not vote on any unallocated shares held in trust. As at 24 February 2022, the SIP Trustee held 0.36% of the Company’s issued share capital. JTC Employer Solutions Trustee Limited, as trustee of the Jupiter Employee Benefit Trust (the EBT Trustee), holds ordinary shares in trust for the benefit of the Group’s employees. Where the EBT Trustee has allocated shares held in the trust in respect of specific awards granted under the Jupiter Employee Share Plan, the holders of such awards may recommend to the EBT Trustee how it should exercise voting rights relating to such shares. To the extent that a participant does not make such recommendations, no vote is registered. In addition, the EBT Trustee does not vote on any unallocated shares held in the trust. As at 24 February 2022, the EBT Trustee held 3.31% of the Company’s issued share capital. CREST The Company’s ordinary shares are in CREST, the settlement system for stocks and shares traded on the London Stock Exchange. Restrictions on transfer of shares Lock-up agreements On 1 July 2020, 95,360,825 new ordinary shares in the Company were issued as consideration for the acquisition of Merian and, as part of the agreement, are subject to restrictions on transfer. The following share lock-up agreements were entered into on 1 July 2020. TA Associates, holding 84,115,278 shares, have a lock-up agreement for 24 months from 1 July 2020, subject to certain exemptions and further restrictions on disposal volumes after the end of the lock-up period. Under the terms of the Merian acquisition certain key Merian Management shareholders were allotted 11,245,547 shares. There are lock-up agreements in place over these shares which prevent key Merian Management shareholders of disposing of more than 25% of their respective shares for a period of three years from 1 July 2020, subject to certain exemptions. Substantial share interests As at 31 December 2021, the Company had been notified of the following voting interests in the ordinary share capital of the Company in accordance with DTR 5 of the FCA’s Disclosure Guidance and Transparency Rules. Percentages are shown as notified, calculated with reference to the Company’s disclosed share capital as at the date of the movement triggering the notification. Name Number of shares notified to the Company Percentage interest % Silchester International Investors LLP 99,670,631 18.02 TA Associates 84,115,278 15.21 M&G plc 28,335,937 5.12 JTC Employer Solutions Trustee Limited 18,728,412 3.39 No notifications have been disclosed to the Company in accordance with DTR 5 during the period 1 January 2022 to 24 February 2022. Board of Directors During the year, Edward Bonham Carter and Jonathon Bond stepped down from the Board at the Company’s AGM held on 6 May 2021. David Cruickshank was appointed to the Board as a Non-Executive Director on 1 June 2021 and Dale Murray joined the Board as a Non-Executive Director on 1 September 2021. There have been no further Board changes up until the date of this report. The Directors of the Company who were in office during the year and up to the date of signing the financial statements were: • Edward Bonham Carter (to 6 May 2021) • Jonathon Bond (to 6 May 2021) • David Cruickshank (appointed 1 June 2021) • Andrew Formica • Wayne Mepham • Dale Murray (appointed 1 September 2021) • Chris Parkin • Nichola Pease • Karl Sternberg • Polly Williams • Roger Yates Directors 128 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE Directors’ interests The Directors’ interests in the Company’s shares are set out in the Remuneration report on page 117. No Director had a material interest in any significant contract (other than a service contract or contract for services) with the Company at any time during the year. The Directors are advised of their statutory duty to avoid conflicts of interest with the interests of the Company. All actual and potential conflicts are brought to the attention of the Board. The operation of the Company’s policy on conflicts of interest is described in the Governance section on page 89. The rights and obligations attaching to the Company’s ordinary shares, as well as the powers of the Company’s Directors, are set out in detail in the Company’s Articles of Association, which are made available for inspection by the Company’s shareholders at the AGM and are available on our website www.jupiteram.com. Appointment and replacement of Directors The Company’s Articles of Association provide that Directors may be appointed by the Company by ordinary resolution or by the Board. If appointed by the Board, a Director holds office only until the next AGM. In accordance with the Company’s Articles of Association and the Code’s requirements, all serving Directors offer themselves for election or re-election at the AGM in 2022 with the exception of Polly Williams who is standing down at the conclusion of the AGM. As part of the acquisition of Merian, TA Associates were issued 84,115,278 ordinary shares in the Company, representing 15.21% of the issued share capital. Under the terms of the transaction TA Associates retain the right to appoint a Non-Executive Director to the Board, for so long as they own 10% or more of the Company’s issued share capital. In addition to any powers under the Companies Act 2006 (the Act) to remove Directors from office, the Company may, by passing an ordinary resolution, remove any Director from the Board before the expiration of his or her period in office. The Company may, subject to the Articles of Association, appoint by ordinary resolution another person who is willing to be a Director in his or her place. The Company’s Articles of Association may be amended by special resolution of the shareholders. Powers of the Directors The Directors manage the Company under the powers set out in the Company’s Articles of Association. These powers include the Directors’ ability to issue or buy back shares. An ordinary resolution was passed at the AGM on 6 May 2021, authorising the Directors to allot new ordinary shares up to an aggregate nominal amount of £3,687,071, representing approximately one third of the Company’s issued share capital. The Directors intend to seek shareholders’ approval for the renewal of this authority at the AGM, to allot and grant rights to subscribe for ordinary shares up to an aggregate nominal amount of £3,687,071, representing approximately one third of the Company’s issued share capital as at 24 February 2022. If approved, this authority will expire on 30 June 2023 or, if earlier, at the conclusion of the AGM in 2023. At the AGM in 2021, shareholders approved a resolution authorising the Company to make purchases of its own shares and as at 24 February 2022, the Directors have not used this authority. A special resolution will be proposed at the AGM to renew the Company’s limited authority to purchase its own ordinary shares. The authority will be limited to a maximum of 55,306,074 ordinary shares (approximately 10% of the Company’s issued share capital as at 24 February 2022) and will set out the minimum and maximum prices which the Company may pay for any such purchase. If approved, this authority will expire on 30 June 2023 or, if earlier, at the conclusion of the AGM in 2023. Change of control The Company does not have agreements with any Director or employee that would provide compensation for loss of office or employment resulting from a change of control following a takeover bid, except that provisions of the Company’s share schemes may cause options and awards granted under such schemes to vest in those circumstances. Directors’ indemnities The Company’s Articles of Association permit the provision of indemnities to the Directors. In accordance with the Articles of Association, the Company has entered into a deed of indemnity in favour of each Director (which is a qualifying third-party indemnity provision under the Act) pursuant to which the Director has been granted the right to indemnification as permitted under the Act. These arrangements were in place throughout the year and up to the date of approval of this report and applied to the current and previous Directors. In addition, during the year the Company has maintained Directors’ and Officers’ liability insurance cover for Directors. Directors’ service agreements Each Executive Director, at the time of this report, has a written service agreement. This may be terminated by either party on not less than 12 months’ notice in writing for the CEO and on not less than 6 months’ notice in writing for the CFO. Non-Executive Directors’ letters of appointment The letters of appointment of the Non-Executive Directors are issued for an initial period of three years, which may be renewed for further terms as appropriate. All appointments are subject to a review by the Nomination Committee upon the third anniversary and on extension a further review is undertaken at the sixth anniversary at which the Board’s succession plans and the need to refresh the Board’s skills and experiences are carefully considered. The role and responsibilities of each Director are clearly set out and include the duties of a Director as provided in the Act. It is made clear that these duties do not include any management function but an indication that the Director is expected to support and challenge management and help in the development of the Group’s strategy. Three months’ notice in writing is required to be served by either party to terminate the appointment. The Non-Executive Directors’ letters of appointment are available for inspection at the Company’s registered office during normal business hours and at the AGM (for 15 minutes prior to, and during, the Meeting). Compensation for loss of office With reference to Schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (paragraph 13(2)(k)), there are no agreements in place between the Company and any Director or employee for loss of office in the event of a takeover. 129 Jupiter Fund Management plc | Annual Report and Accounts 2021 DIRECTOR’S REPORT continued Stakeholders Supplier oversight and significant contracts Jupiter has ten significant oversight relationships: • SS&C Technologies – Transfer Agent for unit trusts • JPMorgan – Company Secretarial and Administrator for Investment Trusts • Northern Trust – Custody, Fund Administration & Depositary for unit trusts. • IHS Markit – Enterprise Data Management (EDM) software • BlackRock – Trading, Portfolio Management and Risk Reporting system for all funds • RBS – Client Money Account and Jupiter Group Accounts • Citi – Depositary, Fund Administration and Prime Brokerage • FNZ – Transfer Agent for OEIC’s • Maitland – Company Secretarial and Administrator for the Chrysalis Investment Trust • IFS State Street – Administrator, Regulatory Reporting and Transfer Agent for the Arbea fund These organisations’ activities are defined in service level agreements that are closely monitored to ensure that service delivery standards are met. Jupiter’s supplier management function, with operations, oversee a suite of agreed activities, including: formal meeting governance; the review of key performance indicators; reviews by Jupiter’s assurance functions (including Service Delivery, Business Continuity, IT Security, Enterprise Risk, Compliance and Internal Audit where appropriate); and the review of key reports (including controls assurance reports and the financial report and Financial Statements). Site visits were not undertaken during Covid. Instead these were, where appropriate, replaced with virtual sessions and additional monitoring was introduced to cover any risks and issues associated with the pandemic. Any risks or issues arising are progressed through to resolution and, where appropriate, escalated to senior management and reported to the Board. Employees The Group gives full and fair consideration to applications for employment from disabled persons, where a disabled person can adequately fulfil the job’s requirements. Where existing employees become disabled, the Group’s policy, wherever practicable, is to provide continuing employment under normal terms and conditions and make any required changes to their working environment. The Group provides training, career development and promotion to disabled employees. Further details of the Company’s employment procedures and practices are set out in the Strategic report on pages 36 to 39. Political donations The Group made no political donations or contributions during the year (2020: £nil). Auditors and audit Independent auditors and audit information PwC were reappointed as external auditors following a tender conducted in 2014. An external audit tender took place during 2021 and the process and recommendation have been outlined in the Audit and Risk Committee report on page 99. Statements Directors’ responsibility statements The statement of Directors’ responsibility for preparing the Annual Report and Accounts is set out on page 131 and is deemed to form part of the Directors’ report. Within this, the Directors have included a statement that the Annual Report and Accounts presents a fair, balanced and understandable assessment of the Group’s position and prospects. To help the Board discharge its responsibilities in this area, the Board consulted the Audit and Risk Committee, which advised on the key considerations to comply with best practice and the Code’s requirements. Following the Committee’s advice, the Board considered and concluded that: • the business model and strategy were clearly described; • the assessment of performance was balanced; • KPIs were used consistently; • the language used was concise, with good linkages to different parts of the document; and • an appropriate forward-looking orientation had been adopted. Going concern The Strategic Report discusses the Group’s business activities, together with the factors likely to affect its future development, performance and position. In addition, it sets out the Group’s financial position, cash flows, liquidity position and borrowing facilities. The financial risk management note to the Financial Statements sets out the Group’s objectives, policies and processes for managing capital and its financial risk management objectives, together with details of financial instruments and exposure to credit and liquidity risk. The Group has access to the financial resources required to run the business efficiently and has a strong gross cash position. The Group’s forecasts and projections, which are subject to rigorous sensitivity analysis, show that the Group will be able to operate within its available resources for at least 12 months from the date of this report. This has included a detailed focus on the market uncertainty arising from Covid-19 and the potential for multiple risks to occur simultaneously. As a consequence, the Directors consider it appropriate to prepare the annual Financial Statements on a going concern basis of accounting. Statement of viability In accordance with Provision 31 of the Code, the Directors have assessed the prospects of the Group over a longer period than the 12 months required by the Going Concern provision. Details of the assessment can be found in the Financial review on page 26. By order of the Board Lisa Daniels Company Secretary 24 February 2022 130 Jupiter Fund Management plc | Annual Report and Accounts 2021 GOVERNANCE DIRECTORS’ RESPONSIBILITY AND COMPLIANCE STATEMENTS Statements relating to the preparation of the Financial Statements The Directors are responsible for preparing the Annual Report, the Remuneration Report and the Financial Statements in accordance with applicable law and regulations. Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors have prepared the Group and Company Financial Statements in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006. Additionally, the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules require the Directors to prepare the Group Financial Statements in accordance with UK-adopted International Financial Reporting Standards (IFRS) and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The Directors’ review of the Financial Statements The Directors undertook a detailed review of the Financial Statements in February 2022. Following this examination, the Board was satisfied that the Financial Statements for 2021 give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. Before approving the Financial Statements, the Board satisfied itself that in preparing the statements: • suitable accounting policies had been selected and consistently applied; • the judgements and accounting estimates that have been made were reasonable and prudent; and • where applicable International Accounting Standards in conformity with the requirements of the Companies Act 2006 have been adopted and, for the Group, UK-adopted IFRS, have been followed and that there were no material departures. The Directors’ review of going concern The Financial Statements have been prepared on the going concern basis, the Directors having determined that the Company is likely to continue in business for at least 12 months from the date of this report. The Directors’ review of current position, prospects and principal risks Supported by the Audit and Risk Committee, the Directors have completed a robust review and assessment of the principal risks in the business making use of the Enterprise Risk Framework which operates in all areas of the Company. The framework ensures that the relevant risks are identified and managed and that information is shared at an appropriate level. Full details of these risks are provided in the Risk management section of the Strategic report. The Board subjected the Enterprise Risk Framework to a detailed review in December. The Directors found it was an effective mechanism through which the principal risks and the Company’s risk appetite and tolerances could be tested and challenged. The Directors’ responsibility for accounting records The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the Financial Statements and the Directors’ Remuneration Report comply with the Companies Act 2006. The Directors’ responsibility for the safekeeping of assets The Directors have examined the steps in place for ensuring the prevention and detection of fraud and other irregularities. The procedure is examined and tested on a regular basis. The Board is satisfied it is understood and is operated well, and accordingly that the assets of the Company are safeguarded and protected from fraud and other irregularities. The Directors’ responsibility for information The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions. Statement of Directors’ responsibilities The Directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s and Company’s position and performance, business model and strategy. Each of the Directors, whose names and functions are listed in the Directors’ profile on pages 72 to 73 confirm that, to the best of their knowledge: • the Group and Company Financial Statements, which have been prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006, give a true and fair view of the assets, liabilities, financial position and profit of the Group and profit of the Company; and • the Directors’ report contained in the Annual Report and Accounts includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that it faces. In the case of each director in office at the date the Directors’ report is approved: • so far as the director is aware, there is no relevant audit information of which the Group’s and Company’s auditors are unaware; and • they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the Group’s and Company’s auditors are aware of that information. On behalf of the Board Wayne Mepham Chief Financial Officer 24 February 2022 131 Jupiter Fund Management plc | Annual Report and Accounts 2021 CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2021 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2021 Notes 2021 £m 2020 £m Revenue 1, 2 617.8 500.5 Fee and commission expenses 1 (49.2) (42.7) Net revenue 1 568.6 457.8 Administrative expenses 3 (353.1) (312.1) Other (losses)/gains 6 (4.4) 3.3 Amortisation of intangible assets 11 (20.6) (11.3) Operating profit 190.5 137.7 Finance costs 7 (6.8) (5.1) Profit before taxation 183.7 132.6 Income tax expense 8 (34.1) (27.3) Profit for the year 1 149.6 105.3 Earnings per share Basic 9 27.6p 21.3p Diluted 9 26.9p 20.8p 1. Non-controlling interests are presented in the Consolidated statement of changes in equity. 2021 £m 2020 £m Profit for the year 149.6 105.3 Items that may be reclassified subsequently to profit or loss Exchange movements on translation of subsidiary undertakings (2.5) 0.7 Other comprehensive (loss)/income for the year net of tax (2.5) 0.7 Total comprehensive income for the year net of tax 147.1 106.0 132 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS Notes 2021 £m 2020 (restated) 1 £m Non-current assets Goodwill 10 570.6 570.6 Intangible assets 11 52.1 70.8 Property, plant and equipment 12 44.1 47.4 Deferred tax assets 13 27.6 20.0 Trade and other receivables 15 0.5 0.5 694.9 709.3 Current assets Financial assets at fair value through profit or loss 14 303.5 261.1 Trade and other receivables 15 145.0 187.3 Cash and cash equivalents 16 197.3 188.1 645.8 636.5 Total assets 1,340.7 1,345.8 Equity Share capital 19 11.1 11.1 Own share reserve 20 (0.4) (0.2) Other reserves 1 20 250.1 250.1 Foreign currency translation reserve 20 0.3 2.8 Retained earnings 20 639.7 622.5 Capital and reserves attributable to owners of Jupiter Fund Management plc 900.8 886.3 Non-controlling interests – (0.2) Total equity 900.8 886.1 Non-current liabilities Loans and borrowings 17 49.3 49.2 Trade and other payables 18 102.3 87.4 Deferred tax liabilities 13 10.3 12.5 161.9 149.1 Current liabilities Financial liabilities at fair value through profit or loss 14 52.3 89.4 Trade and other payables 18 222.2 212.8 Current income tax liability 3.5 8.4 278.0 310.6 Total liabilities 439.9 459.7 Total equity and liabilities 1,340.7 1,345.8 1. The split of the Group’s total equity between different non-distributable reserves has been restated. See Notes 19 and 20. The financial statements on pages 132 to 164 were approved by the Board of Directors and authorised for issue on 24 February 2022. They were signed on its behalf by Wayne Mepham, Chief Financial Officer CONSOLIDATED BALANCE SHEET at 31 December 2021 133Jupiter Fund Management plc | Annual Report & Accounts 2021 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2021 Share capital £m Own share reserve £m Other reserves (restated) 1 £m Foreign currency translation reserve £m Retained earnings £m Total £m Non-controlling interests £m Total equity £m At 1 January 2020 9.2 (0.3) 8.0 2.1 592.7 611.7 – 611.7 Profit for the year – – – – 105.5 105.5 (0.2) 105.3 Exchange movements on translation of subsidiary undertakings – – – 0.7 – 0.7 – 0.7 Other comprehensive income – – – 0.7 – 0.7 – 0.7 Total comprehensive income – – – 0.7 105.5 106.2 (0.2) 106.0 Issuance of ordinary shares as consideration for a business combination, net of transaction costs and tax (restated) 1 1.9 – 242.1 – – 244.0 – 244.0 Vesting of ordinary shares and options – 0.2 – – – 0.2 – 0.2 Dividends paid – – – – (83.9) (83.9) – (83.9) Purchase of shares by EBT – (0.1) – – (10.6) (10.7) – (10.7) Share-based payments – – – – 19.8 19.8 – 19.8 Deferred tax – – – – (1.0) (1.0) – (1.0) Total transactions with owners (restated) 1 1.9 0.1 242.1 – (75.7) 168.4 – 168.4 At 31 December 2020 (restated) 1 11.1 (0.2) 250.1 2.8 622.5 886.3 (0.2) 886.1 Profit for the year – – – – 149.4 149.4 0.2 149.6 Exchange movements on translation of subsidiary undertakings – – – (2.5) – (2.5) – (2.5) Other comprehensive loss – – – (2.5) – (2.5) – (2.5) Total comprehensive income – – – (2.5) 149.4 146.9 0.2 147.1 Vesting of ordinary shares and options – 0.1 – – – 0.1 – 0.1 Dividends paid – – – – (109.8) (109.8) – (109.8) Purchase of shares by EBT – (0.3) – – (48.2) (48.5) – (48.5) Share-based payments – – – – 25.5 25.5 – 25.5 Current tax – – – – 0.1 0.1 – 0.1 Deferred tax – – – – 0.2 0.2 – 0.2 Total transactions with owners – (0.2) – – (132.2) (132.4) – (132.4) At 31 December 2021 11.1 (0.4) 250.1 0.3 639.7 900.8 – 900.8 Notes 19 20 20 20 20 1. The split of the Group’s total equity between different non-distributable reserves has been restated in the line ‘Issuance of ordinary shares as consideration for a business combination, net of transaction costs and tax’ for 2020. See Notes 19 and 20. 134 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS Notes 2021 £m 2020 £m Cash flows from operating activities Cash generated from operations 22 237.5 131.8 Income tax paid (48.6) (27.2) Net cash inflows from operating activities 188.9 104.6 Cash flows from investing activities Purchase of property, plant and equipment 12 (1.4) (1.3) Purchase of intangible assets 11 (2.1) (1.3) Purchase of financial assets at fair value through profit or loss (190.4) (251.5) Proceeds from disposals of financial assets at fair value through profit or loss 184.9 249.0 Cash movement from funds no longer consolidated (4.1) – Net cash received from acquisitions – 68.2 Dividend income received 1.1 0.8 Net cash (outflows)/inflows from investing activities (12.0) 63.9 Cash flows from financing activities Proceeds from debt issued – 49.0 Repayment of borrowings – (111.0) Dividends paid 21 (109.8) (83.9) Purchase of shares by EBT (48.5) (10.7) Finance costs paid (5.1) (0.6) Cash paid in respect of lease arrangements 12 (5.2) (6.7) Third-party subscriptions into consolidated funds 31.5 53.2 Third-party redemptions from consolidated funds (28.7) (47.5) Distributions paid by consolidated funds (1.9) (1.6) Net cash outflows from financing activities (167.7) (159.8) Net increase in cash and cash equivalents 9.2 8.7 Cash and cash equivalents at beginning of year 188.1 179.4 Cash and cash equivalents at end of year 16 197.3 188.1 CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December 2021 135Jupiter Fund Management plc | Annual Report & Accounts 2021 Introduction Accounting policies are contained within relevant notes, with the basis of preparation and general policies collected in Note 27. An explanation of the use of alternative performance measures (APMs) is provided on pages 181 to 183. The impact of exceptional items on the financial statements The Group has presented certain items as exceptional in 2020 and 2021. These items principally relate to the acquisition of Merian Global Investors Limited (Merian) in 2020. Further details of all items that are deemed exceptional are explained below, as well as within the relevant notes to the financial statements and in the Chief Financial Officer’s Review on page 24. The use of exceptional items and underlying profit measures in the Strategic report In the Strategic report of this document, the Group makes use of a number of APMs, including ‘Underlying profit before tax’. The use of such measures means that financial results referred to in the Strategic report section of this document may not be equal to the statutory results reported in the financial statements. Guidelines issued by the European Securities and Markets Authority require such differences to be reconciled. As a result of the Merian acquisition, there was a significant difference between ‘Underlying profit before tax’ and the statutory profit before tax in 2020 due to the recognition of material acquisition and integration costs. In 2021, the majority of the exceptional items relate to items initially recognised in 2020 where the relevant accounting charges are required to be recognised over multiple accounting periods. Further detail can be found on page 24. In addition, in 2020 and 2021, the Group has earned significant levels of net performance fee income. These items are included in Revenue and Administrative expenses in the Group’s results. Such income is not exceptional as it is likely to recur, although the amounts earned can vary from being extremely significant in size to being immaterial. In their analysis of the results, professional users of the Group’s accounts generally assign different values to recurring management fees than to potentially non-recurring net performance fees. Similarly, due to their inherent variability, results are presented both before and after net performance fees for internal management information purposes. ‘Underlying profit before tax’ is equal to the statutory profit before tax less exceptional items. Exceptional items are defined on page 24. The financial statements do not refer to or use such measures, but the table below provides a reconciliation, indicating in which note or notes to the statutory financial statements the exceptional items are recorded. Further detail on these items can be found in the relevant notes. Notes 2021 £m 2020 £m Underlying profit before tax (page 25) 216.7 179.0 Exceptional items included within the following notes: Net revenue 1 – 10.0 Administrative expenses 3 (14.2) (47.0) Intangible assets 11 (18.8) (9.4) Statutory profit before tax 183.7 132.6 Disclosure of relevant accounting information relating to the acquisition Disclosures relating to the Merian acquisition in 2020 can be found in Note 5.4 of the Group’s 2020 Annual Report and Accounts. Other disclosures Disclosure of items treated as exceptional that are not related to the Merian acquisition are reported in Note 4. NOTES TO THE GROUP FINANCIAL STATEMENTS 136 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS 1. Revenue The Group’s primary source of recurring revenue is management fees. Management fees are charged for investment management or administrative services and are normally based on an agreed percentage of the assets under management (AUM). Initial charges and commissions are for additional administrative services at the beginning of a client relationship, as well as ongoing administrative costs. Performance fees may be earned from some funds when agreed performance conditions are met. Net revenue is stated after fee and commission expenses to intermediaries for ongoing services under distribution agreements. Revenue Revenue comprises the fair value of the consideration received or receivable for the provision of investment management services. Revenue is shown net of any value added tax, rebates and discounts. Our revenue components are accounted for as follows: • management fees are earned over a period of time, and revenue is recognised in the same period in which the service is performed. Management fees are normally calculated as a percentage of net fund assets managed in accordance with individual management agreements and are billed to the client each period shortly after the relevant asset data is available, with settlement terms commonly being 30 days or fewer; • initial charges and commissions on sales of unit trusts are deferred and amortised over the anticipated period of the provision of investment management services. Revenue for initial charges and commissions is recognised over a period of time, but payment is taken upfront resulting in the recognition of contract liabilities; and • performance fees are calculated as a percentage of the appreciation in the net asset value of a fund above a defined hurdle and are recognised when the fee amount can be estimated reliably and it is highly probable that it will not be subject to significant reversal. Such fees are normally recognised at the end of the relevant reporting period of the fund and payment is collected shortly after. Management fees and performance fees are both forms of variable consideration, however there is no significant judgement or estimation. The transaction price is determined at the end of each measurement period and is normally equal to the relevant measure of AUM adjusted by a factor set out in the investment management agreement. In the case of performance fees, there will be an adjustment for a hurdle rate of return before the performance fee is due. The amount is billed to the customer as per contractual arrangements for each of the separate components of revenue listed above. All components of the Group’s revenue are performance obligations satisfied over time, and are generally not subject to returns or refunds. The Group uses the output method to recognise revenue, applying the practical expedient that allows an entity to recognise revenue in the amount to which the entity has a right to invoice if that consideration corresponds directly with the value to the customer of the entity’s performance completed to date. This is appropriate because investment management services are generally satisfied over time with either the customer simultaneously receiving and consuming the benefits provided by the fund manager as the fund manager performs the service, or with the fund manager’s performance enhancing the assets that the fund controls. Fee and commission expenses These are paid to third parties for ongoing services under distribution agreements and are charged to the income statement over the period in which the service is expected to be provided. The services provided include the provision of access to a basket of fund products, information on financial products, promotional materials, ongoing services to clients and transaction processing. 2021 £m 2020 £m Management fees 501.5 426.6 Initial charges and commissions 3.3 0.3 Performance fees 113.0 73.6 Revenue 617.8 500.5 Fee and commission expenses relating to management fees (47.8) (42.6) Fee and commission expenses relating to initial charges and commissions (1.4) (0.1) Net revenue 568.6 457.8 In 2020, exceptional items of performance fee revenue of £10.0m were reported within revenue in the Chief Financial Officer’s review. This fee revenue related to an indemnification of certain deferred awards to former shareholders of Merian who were also fund managers. The performance fees were disclosed as exceptional items to offset the exceptional cost of the deferred earn out awards that would not have been recorded as a cost to the Group if the indemnification by TA Associates were required to be fulfilled. In 2021, performance fee revenue was mainly generated through the Chrysalis Investment Trust, along with a number of small fees from other funds. Disaggregation of revenue The Group disaggregates revenue from contracts with customers on the basis of product type and geographical region, as this best depicts how the nature, amount, timing and uncertainty of the Group’s revenue and cash flows are affected by economic factors. The Group’s product types can be broadly categorised into pooled funds and segregated mandates. Pooled funds, which include both mutual funds and investment trusts, are established by the Group, with the risks, exposures and investment approach defined via a prospectus which is provided to potential investors. In contrast, segregated mandates are generally established in accordance with the requirements of a specific institutional investor. Revenue by product type 2021 £m 2020 £m Pooled funds 591.9 462.2 Segregated mandates 25.9 38.3 Revenue 617.8 500.5 137Jupiter Fund Management plc | Annual Report & Accounts 2021 2. Segmental reporting The Group offers a range of products and services through different distribution channels. All financial, business and strategic decisions are made centrally by the Board of Directors (the Board), which determines the key performance indicators of the Group. Information is reported to the chief operating decision maker, the Board, on a single-segment basis. While the Group has the ability to analyse its underlying information in different ways, for example by product type, this information is only used to allocate resources and assess performance for the Group as a whole. On this basis, the Group considers itself to be a single-segment investment management business. Management monitors operating profit for the purpose of making decisions about resource allocation and performance assessment. Geographical information Revenue by location of clients 2021 £m 2020 £m UK 494.7 374.9 Continental Europe 78.8 77.3 Asia 22.5 20.6 Rest of the world 21.8 27.7 Revenue by location 617.8 500.5 The location of clients is based on management information received from distribution partners. Where management information is not available, the location of the distribution partner is used as a proxy for the location of the client. Non-current assets for the Group (excluding financial instruments and deferred tax assets) are domiciled as set out below: Non-current assets for the Group 2021 £m 2020 £m UK 664.5 686.2 Continental Europe 1.4 1.9 Asia 0.6 0.8 Rest of the world 0.3 – Non-current assets by location 666.8 688.9 3. Administrative expenses The largest administrative expense is staff costs. Other administrative expenses include certain significant costs such as administration fees, expenditure relating to non-capitalisable investment in the business, marketing and IT costs. Administrative expenses comprise: 2021 £m 2020 £m Staff costs (Note 4) 227.2 181.9 Depreciation of property, plant and equipment (Note 12) 5.6 6.0 Auditors’ remuneration (see below) 1.4 2.5 Other administrative expenses 118.9 121.7 Total administrative expenses 353.1 312.1 Auditors’ remuneration 2021 £m 2020 £m Fees payable to the Company’s auditors and their associates for the audit of the parent company and consolidated financial statements 0.3 0.5 Fees payable to the Company’s auditors and their associates for other services to the Group: Audit of the Company’s subsidiaries pursuant to legislation 0.8 0.8 Audit-related assurance services 0.3 0.3 Other assurance services – 0.9 Total auditors’ remuneration 1.4 2.5 The Chief Financial Officer’s review on page 24 provides details of exceptional items of £14.2m (2020: £47.0m) within administrative expenses. Of this, £14.2m (2020: £20.0m) is in respect of staff costs and £nil (2020: £27.0m) relates to other administrative expenses. The staff costs are described further in Note 4. Other administrative expenses classified as being exceptional in 2020 principally comprised legal and professional fees associated with the Merian acquisition and consultancy fees relating to the post-acquisition integration process of the Merian business. Notes to the Group Financial Statements continued 138 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS 4. Staff costs Staff costs include wages and salaries, share-based payments, pension costs and redundancy costs, along with associated social security costs, and are recognised on an accruals basis as services are provided to the Group. 2021 £m 2020 £m Wages and salaries 166.0 127.3 Share-based payments (Note 5) 25.5 19.8 Social security costs 26.2 16.6 Pension costs 5.7 6.2 Redundancy costs 6.5 12.9 Staff costs before gains arising from the economic hedging of fund awards 229.9 182.8 Net gains on instruments held to provide an economic hedge for fund awards (2.7) (0.9) Staff costs 227.2 181.9 Note 3 refers to £14.2m (2020: £20.0m) of staff costs that are described as exceptional items within the Chief Financial Officer’s review, comprising £7.7m (2020: £16.0m) relating to the acquisition of Merian and £6.5m (2020: £4.0m) relating to a redundancy programme. In both 2020 and 2021, these chiefly comprise cash and share-based deferred earn out (DEO) awards and redundancy costs. The redundancy costs in both years relate to a restructuring programme of the Jupiter business post-integration which started in 2020 and redundancies relating specifically to the Merian acquisition. Pension costs The Group contributes to a number of defined contribution pension schemes for the benefit of its employees. Contributions in respect of the UK employees (at the rate of up to 15% of gross salary) are made into the Jupiter Pension Scheme whose financial statements are available from the trustees at the registered office of the Company. No liability is included in the balance sheet as no obligations were outstanding at the balance sheet date. Contributions made by the Group are charged to the consolidated income statement as they become payable in accordance with the rules of the schemes. Fund units As described in Note 5(i), deferred bonuses can be deferred into either options over the Company’s shares or a cash equivalent into units in the Group’s funds. The expense included within wages and salaries in the income statement in relation to fund units for the year ended 31 December 2021 was £59.4m (2020: £32.8m). Where bonuses are deferred into fund units, the fair value of the award is expensed over the vesting period and included within staff costs. The liability is revalued at each balance sheet date to the expected settlement amount, being the current market value of the underlying fund units adjusted for the proportion of the vesting period that has passed. Any increase or decrease in value is recognised in the income statement within staff costs. The liability is included in the balance sheet as part of accrued expenses within trade and other payables (see Note 18). Long-Term Incentive plans (LTIP) with performance conditions attached have been granted in fund units in 2021. The Group hedges its exposure to price fluctuations in the underlying fund units by purchasing the fund units at the date of grant. These are included within financial assets at fair value through profit or loss (FVTPL) in the balance sheet. Changes in the fair value of the units are recognised in the income statement within staff costs in order to match the gains and losses of both the hedging instrument and the hedged item within the same line item of the income statement. The Group provides a sensitivity analysis to show the impact to the Group’s profit before taxation in the event that forfeiture and performance condition assumptions exceed or are below the Group’s estimations on fund unit awards by the stated percentages: Impact on the income statement of a change in leaver assumptions 2021 £m 2020 £m +5% (2.1) (0.6) -5% 0.6 0.5 Impact on the income statement of a change in performance condition vesting assumptions 2021 £m 2020 £m +25% 0.2 – -25% (0.2) – The use of estimation in the calculation of fund unit awards At the year end, the Group had accrued £79.6m of deferred fund unit awards. Each year, existing awards vest and new awards are made. Given their significance as a form of employee remuneration for the Group, fund unit awards have been included as an area where the use of estimation is important in Note 27. The principal estimations made relate to: • forfeitures (where awardees leave the Group as ‘bad’ leavers and therefore forfeit unvested awards) and accelerations (where awardees are ‘good’ leavers and their awards continue to vest but there is no longer an extended service period condition); and • the satisfaction of performance conditions attached to LTIP awards. These estimates are reviewed regularly and the charge to the income statement is adjusted appropriately (at the end of the relevant scheme as a minimum). The sensitivity analysis demonstrates that the risk of material adjustment as a result of changes to our estimations in respect of granted awards by 5% for leavers and 25% for performance condition assumptions is not considered to be significant or material. 139Jupiter Fund Management plc | Annual Report & Accounts 2021 Average number of employees The monthly average number of persons employed by the Group during the year, including Executive Directors, by activity is: 2021 Number 2020 Number Fund management 139 116 Distribution and marketing 143 145 Infrastructure and operations 302 332 584 593 Information regarding Executive Directors’ aggregate emoluments of £3.6m (2020: £2.9m) is set out in the Remuneration report. 5. Share-based payments The Group engages in share-based payment transactions in respect of services receivable from certain employees by granting the right to either shares or options over shares, subject to certain vesting conditions and exercise prices. These have been accounted for as equity-settled share-based payments. The fair value of the awards granted in the form of shares or share options is recognised as an expense over the appropriate performance and vesting period. The corresponding credit is recognised in retained earnings within total equity. The fair value of the awards is calculated using an option pricing model, the principal inputs being the market value on the date of award, discounted for any dividends forgone over the holding period of the award, and an adjustment for expected and actual levels of vesting, which includes estimating the number of eligible employees leaving the Group and the number of employees satisfying the relevant performance conditions. Shares and options vest on the occurrence of a specified event under the rules of the relevant plan. A summary of the charge taken to the income statement (excluding social security) for each share-based payment arrangement is shown below: 2021 £m 2020 £m Deferred Bonus Plan (DBP) 20.4 15.7 Long-term Incentive Plan (LTIP) 1.6 2.8 Deferred Earn Out (DEO) 2.3 1.1 Sharesave Plan (SAYE) 0.3 (0.2) Share Incentive Plan (SIP) 0.4 0.4 Free Share Awards (FSA) 0.5 – Total (Note 4) 25.5 19.8 The fair value of the services provided by employees has been calculated indirectly by reference to the fair value of the equity instruments granted. Fair value amounts for the options granted under the DBP, LTIP and SAYE schemes were determined using a Black-Scholes option-pricing method and the following assumptions: 2021 2020 DBP 2020 LTIP 2021 SAYE 2021 DBP 2019 LTIP 2020 SAYE 2020 Weighted average share price £2.81 £2.81 £2.51 £2.71 £2.80 £2.13 Weighted average exercise price – – £2.15 – – £1.65 Weighted average expected volatility 35.4% 32.1% 33.7% 27.0% 28.7% 32.4% Weighted average option life (years) 1.7 4.2 4.1 2.5 4.4 4.3 Weighted average dividend yield – – 6.8% – – 7.6% Weighted average risk-free interest rate 0.8% 1.1% – – (0.1)% – Expected volatility for options granted in 2021 and 2020 has been calculated using the historical volatility of the Group. The numbers above in relation to the LTIP include Joiner Plans as both schemes have a similar structure. The Group provides a sensitivity analysis to show the impact to the Group’s profit before taxation in the event that forfeiture and performance condition assumptions exceed or are below the Group’s estimations on share-based payments by the stated percentages: Impact on the income statement of a change in leaver assumptions 2021 £m 2020 (restated) 1 £m +5% (1.8) (1.4) -5% 1.2 1.2 Impact on the income statement of a change in performance condition vesting assumptions 2021 £m 2020 £m +25% 1.9 3.1 -25% (2.0) (3.1) 1. 2020 has been restated to split out the sensitivity analysis on share-based payments and fund awards. Notes to the Group Financial Statements continued 140 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS The use of estimation in the calculation of share-based payments At the year end, the Group had approximately 28.2 million share-based awards in issue. Each year, existing awards vest and new awards are made. Around 14.4 million share-based awards were issued in 2021 in the form of deferred bonus and LTIP awards. In addition, as part of the Merian acquisition in 2020, DEO awards over shares to a maximum value of £20.0m were granted. Given their significance as a form of employee remuneration for the Group, share-based payments have been included as an area where the use of estimation is important in Note 27. The principal estimations made relate to: • forfeitures (where awardees leave the Group as ‘bad’ leavers and therefore forfeit unvested awards) and accelerations (where awardees are ‘good’ leavers and their awards continue to vest but there is no longer an extended service period condition); and • the satisfaction of performance conditions attached to certain LTIP awards and to share-based DEO awards. These estimates are reviewed regularly and the charge to the income statement is adjusted appropriately (at the end of the relevant scheme as a minimum). The sensitivity analysis demonstrates that the risk of material adjustment as a result of changes to our estimations in respect of granted awards by 5% for leavers and 25% for performance condition assumptions is not considered to be significant or material. (i) Deferred Bonus Plan All employees of the Group who are eligible for a bonus over a certain level, as determined by the Remuneration Committee, are required to participate in the DBP. The DBP provides for compulsory deferral of a proportion of bonus. Deferrals are made into either options over the Company’s shares or a cash amount equivalent to the value of units in the Group’s funds (see Note 4 for information on the treatment of fund units). The awards in respect of DBP are granted after the year end to which they relate. The awards made in 2020 and 2021, in relation to 2019 and 2020 performance respectively, were granted in the form of nil-cost options over the Company’s shares, at a price calculated as the market price immediately prior to the date of the award. Awards will also be made in 2022 in relation to 2021 performance, thus a charge for these awards has been taken to the income statement in 2021. The following table illustrates the number and weighted average exercise price (WAEP) of, and movement in, share options during the year: Options outstanding 2021 2020 Number m WAEP £ Number m WAEP £ At 1 January 10.7 – 9.4 – Granted 9.5 – 6.6 – Exercised (5.8) – (5.3) – Forfeited (0.1) – – – At 31 December 14.3 – 10.7 – Exercisable at 31 December 0.8 – 0.7 – There were 5.8m options exercised under this plan in 2021 (2020: 5.3m). The weighted average share price at the date of exercise of these options was £2.65 (2020: £2.21). The weighted average fair value of options granted under this plan during the year was £2.81 (2020: £2.94). The weighted average remaining contractual life of the share options outstanding under this plan at 31 December 2021 was 1.5 years (31 December 2020: 1.6 years). (ii) Long-Term Incentive Plan (LTIP) All employees are eligible to participate in the LTIP. Awards are made at the discretion of the Remuneration Committee and may be granted in the form of options (either at market value, nominal value or nil cost), restricted shares or conditional share awards over the Company’s shares. The LTIP awards granted in 2021 and 2020 took the form of options over the Company’s shares. Options outstanding 2021 2020 Number m WAEP £ Number m WAEP £ At 1 January 8.3 0.12 8.7 0.13 Granted 4.4 – 3.8 – Exercised (0.5) 0.01 (3.5) 0.02 Forfeited (2.6) 0.38 (0.7) 0.12 At 31 December 9.6 – 8.3 0.12 Exercisable at 31 December 1.3 0.02 1.4 0.02 There were 0.5m options exercised under this plan in 2021 (2020: 3.5m). The weighted average share price at the date of exercise of these options was £2.70 (2020: £2.05). The weighted average fair value of options granted under this plan during the year was £2.82 (2020: £2.86). The weighted average remaining contractual life of the share options outstanding under this plan at 31 December 2021 was 2.5 years (31 December 2020: 2.4 years). (iii) Deferred Earn Out (DEO) As part of the sale and purchase agreement on the acquisition of Merian, certain former Merian shareholders, who continued in employment with Jupiter post-completion, were granted nil-cost options over the Company’s shares up to a maximum value of £20.0m. For these awards to vest, the awardees must meet certain performance conditions, based on net revenues, on 1 July 2023. On this date, the awards will be converted to a number of shares, corresponding to the average closing price of a Company share over the three dealing days ending immediately before 1 July 2023 and the fulfilment of the performance conditions. Should performance conditions be fulfilled, the awards will be exercisable on 1 July 2024 and 1 July 2025. Exercise of these options will be dependent on the awardees remaining in the employment of the Group until these dates. 141Jupiter Fund Management plc | Annual Report & Accounts 2021 5. Share-based payments continued (iv) Sharesave Plan All eligible UK employees may participate in the Group’s Sharesave Plan, which was introduced in 2010. Under the terms of this plan, employees may enter into contracts to save up to the maximum amount permitted under legislation and, at the expiry of a fixed three or five-year term, have the option to use these savings to acquire shares in the Company at a discounted price, calculated under the rules of the plan (currently a 20% discount to the market price at the date of award). Participants in the plan have six months from the date of vesting to exercise their option. Options outstanding 2021 2020 Number m WAEP £ Number m WAEP £ At 1 January 3.1 1.83 1.5 3.01 Granted 0.4 2.15 2.7 1.65 Exercised (0.1) 1.67 – 3.21 Forfeited (0.7) 2.05 (1.1) 3.00 At 31 December 2.7 1.82 3.1 1.83 Exercisable at 31 December 0.1 3.35 – – The weighted average share price at the date of exercise of these options was £2.61 (2020: £3.77) per ordinary share. The weighted average fair value of the options granted under this plan during the year was £0.44 (2020: £0.41). The range of exercise prices of options granted under this plan is between £1.65 and £4.29. The weighted average remaining contractual life of the share options outstanding under this plan at 31 December 2021 was 3.1 years (31 December 2020: 3.8 years). (v) Share Incentive Plan (SIP) All eligible UK employees may participate in the Group’s Share Incentive Plan, which was introduced in 2013. Under the terms of this plan, employees may contribute from pre-tax salary up to the maximum amount permitted under legislation in any tax year, to be used to acquire shares in the Company at the market price on the relevant date. Matching shares are then awarded by the Company on a one matching share for each share purchased basis. The matching shares are subject to forfeiture where the employee leaves employment with the Group within three years of their award. The number of matching shares purchased under this scheme during the year was 0.1m (2020: 0.2m). (vi) International Share Award (ISA) All non-UK employees may participate in the Group’s International Share Award, which was introduced in 2017 to create a non-UK plan similar to the Sharesave Plan. Under the terms of this award, international employees are offered the opportunity to be granted a share option which is exercisable after three years and three months. The exercise price is set at the same level as for the Sharesave Plan. Participants in the plan have six months from the date of vesting to exercise their option. The number of awards made during the year was 0.1m (2020: 0.1m). (vii) Free Share Award (FSA) All eligible UK employees may participate in the Free Share Award which was introduced in 2020. All eligible employees receive nil-cost options which will vest over a three-year period. The number of awards made during the year was 0.4m (2020: 0.5m). 6. Other (losses)/gains Other (losses)/gains relate principally to net losses (2020: net gains) made on a hedging instrument purchased to mitigate the Group’s exposure to pricing movements in its own shares in respect of share-based awards it has granted and on the Group’s seed investment portfolio and derivative instruments held to provide economic hedges against that portfolio. The portfolio and derivatives are held at fair value through profit or loss (see Note 14). Gains and losses comprise both realised and unrealised amounts. 2021 £m 2020 £m Dividend income 1.1 0.8 Gains on financial instruments designated at fair value through profit or loss upon initial recognition 9.7 14.3 Losses on financial instruments at fair value through profit or loss (15.2) (11.8) Other (losses)/gains (4.4) 3.3 Notes to the Group Financial Statements continued 142 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS 7. Finance costs Finance costs principally relate to interest payable on Tier 2 subordinated debt notes and the unwinding of the discount applied to lease liabilities (see Notes 17 and 12 respectively for further details). Finance costs also include ancillary charges for commitment fees and arrangement fees associated with the revolving credit facility. Interest payable is charged on an accrual basis using the effective interest method. 2021 £m 2020 £m Interest on subordinated debt 4.7 3.1 Interest on lease liabilities 1.6 1.8 Finance cost on the revolving credit facility 0.3 0.2 Interest on bank deposits 0.2 – 6.8 5.1 8. Income tax expense The Group pays taxes according to the rates applicable in the countries in which it operates. The Group’s headquarters are in the UK. Most taxes are recorded in the income statement and relate to taxes payable for the reporting period (current tax), but there is also a charge or credit relating to tax payable for future periods due to income or expenses being recognised in a different period for tax and accounting purposes (deferred tax). Tax is charged to equity when the tax benefit exceeds the cumulative income statement expense on share plans. The Group provides for current tax according to the tax laws of each jurisdiction in which it operates using tax rates that have been enacted or substantively enacted by the balance sheet date. Management periodically evaluates positions taken in tax returns in respect of situations in which applicable tax regulation is subject to interpretation. It establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities. Deferred tax is provided, using the liability method, on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. A deferred tax asset is recognised when it is considered recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as probable that there will be suitable taxable profits against which to recover carried forward tax losses and from which the future reversal of underlying temporary differences can be deducted. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the temporary differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax that has arisen in respect of equity items, such as tax credits in respect of share-based payments where the fair value of awards exceeds the accounting charge, are recognised directly in equity and not in the income statement. 2021 £m 2020 £m Current tax Tax on profits for the year 45.0 27.7 Adjustments in respect of prior years (1.3) (0.3) Total current tax 43.7 27.4 Deferred tax Origination and reversal of temporary differences (9.8) (0.5) Adjustments in respect of prior years 0.2 0.4 Total deferred tax (Note 13) (9.6) (0.1) Income tax expense 34.1 27.3 Total tax expense The corporation tax rate for 2021 was 19% (2020: 19%). The tax charge in the year is lower (2020: higher) than the standard rate of corporation tax in the UK and the differences are explained below: Factors affecting tax expense for the year 2021 £m 2020 £m Profit before taxation 183.7 132.6 Taxation at the standard corporation tax rate (19%; 2020: 19%) 34.9 25.2 Non-taxable expenditure – 1.6 Other permanent differences (1.4) 0.3 Adjustments in respect of prior years (1.1) 0.1 Effect of differences in overseas tax rates 0.3 0.1 Impact of substantively enacted tax rate change on deferred tax balances 1.4 – Total tax expense 34.1 27.3 143Jupiter Fund Management plc | Annual Report & Accounts 2021 9. Earnings per share Basic earnings per share (EPS) is calculated by dividing the profit for the year by the weighted average number of ordinary shares outstanding during the year less the weighted average number of own shares held. Own shares are shares held in an EBT for the benefit of employees under the vesting, lock-in and other incentive arrangements in place. Diluted EPS is calculated by dividing the profit for the year by the weighted average number of ordinary shares outstanding during the year for the purpose of basic EPS plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. For the purposes of calculating EPS, the share capital of the parent is calculated as the weighted average number of ordinary shares in issue. The weighted average number of ordinary shares used in the calculation of EPS is as follows: Weighted average number of shares 2021 Number m 2020 Number m Issued share capital 1 553.1 505.4 Less time apportioned own shares held (10.6) (10.5) Weighted average number of ordinary shares for the purpose of basic EPS 542.5 494.9 Add back weighted average number of dilutive potential shares 12.9 10.6 Weighted average number of ordinary shares for the purpose of diluted EPS 555.4 505.5 1. The Group issued 95.4m ordinary shares on 1 July 2020 (see Note 19). Earnings per share 2021 p 2020 p Basic 27.6 21.3 Diluted 26.9 20.8 10. Goodwill Goodwill arising on acquisitions, being the excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired, is capitalised in the consolidated balance sheet. Goodwill is carried at cost less provision for impairment. The carrying value of goodwill is not amortised but is tested annually for impairment or more frequently if any indicators of impairment arise. Goodwill is allocated to cash-generating units (CGUs) for the purpose of impairment testing, with the allocation to those CGUs or groups of CGUs that are expected to benefit from the business combination in which the goodwill arose. Impairment losses on goodwill are not reversed. Goodwill relates to the 2007 acquisition of Knightsbridge Asset Management Limited (£341.2m) and the 2020 acquisition of Merian Global Investors Limited (£229.4m). 2021 £m 2020 £m Goodwill 570.6 570.6 As the Group operates a single asset management business segment and does not allocate costs between investment strategies or individual funds, it has determined that it has a single CGU for the purpose of assessing the carrying value of goodwill. In performing the impairment test, management prepares a calculation of the recoverable amount of the goodwill, using the value in use approach, and compares this to the carrying value. The use of estimation and judgement in valuing goodwill For the impairment test, the recoverable amount for the goodwill asset was based on the net present value of the Group’s future earnings. The net present value was calculated using a discounted cash flow model, with reference to the Group’s projected cash flows over a period of five years, long-term growth rates of 3% (2020: 4%) based on dividend history and forecasts, and a cost of capital of 11% (2020: 10%), which is based on the Group’s weighted average cost of capital. A significant headroom was noted, and therefore no impairment was implied. Applying stressed scenarios, such as increasing the cost of capital to 20% and/or reducing growth projections to nil would not result in the recognition of impairment losses. This impairment test requires assumptions to be made, principally concerning the future levels of profitability, and is an area where the use of estimation and judgement are therefore important. Given the size of the asset and potential impact of impairment losses on the Group’s financial position, this has been included as an area where the use of estimation is important in Note 27. However, given the headroom resulting from the impairment test, the risk of material adjustment is not deemed significant. The Group also reviews the accuracy of historical estimates of future profitability to assess whether impairment tests from prior years would have given a different result had actual profits been equal to past estimates. No instances have been identified where this would have been the case. The Group has also applied judgement in determining CGU levels within its business for the purposes of impairment testing of goodwill and in concluding that the whole Group operates as a single CGU. No impairment losses have been recognised in the current or preceding years. Notes to the Group Financial Statements continued 144 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS 11. Intangible assets Intangible assets principally comprise the expected value of investment management contracts acquired as part of the Merian acquisition, based on the premise that their value is equal to the present value of the earnings they are expected to generate. The cost of intangible assets acquired in the business combination is the fair value as at the date of acquisition. In relation to the investment management contracts, the useful lives were assessed as being finite and they are amortised over their useful economic lives. The useful economic lives of the investment management contracts acquired were assessed as a maximum of four years. The amortisation expense on intangible assets with finite lives has been recognised in the consolidated income statement on a straight-line basis. Following initial recognition, intangible assets are held at cost less any accumulated amortisation and any provision for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Other intangible assets acquired separately are measured on initial recognition at cost. Other intangible assets recognised are computer software. Software licences acquired are capitalised at the cost incurred to bring the software into use and are amortised on a straight-line basis over their estimated useful lives, which are estimated as being five years. Costs associated with developing or maintaining computer software programs that do not meet the capitalisation criteria under IAS 38 are recognised as an expense as incurred. An assessment is made at each reporting date as to whether there is any indication that an asset in use may be impaired. If any such indication exists and the carrying values exceed the estimated recoverable amount at that time, the assets are written down to their recoverable amount. The recoverable amount is measured as the greater of fair value less costs to sell and value in use. Non-financial assets that have suffered impairment are reviewed for possible reversal of the impairment at each reporting date. The Directors have reviewed the intangible assets as at 31 December 2021 and 31 December 2020 and have concluded there are no indicators of impairment. 2021 2020 Computer software £m Investment management contracts £m Total £m Computer software £m Investment management contracts £m Total £m Cost At 1 January 18.2 75.0 93.2 16.9 – 16.9 Additions 2.1 – 2.1 1.3 75.0 76.3 Disposals (0.2) – (0.2) – – – At 31 December 20.1 75.0 95.1 18.2 75.0 93.2 Accumulated amortisation At 1 January (13.0) (9.4) (22.4) (11.1) – (11.1) Charge for the year (1.8) (18.8) (20.6) (1.9) (9.4) (11.3) Disposals – – – – – – At 31 December (14.8) (28.2) (43.0) (13.0) (9.4) (22.4) Net book value At 31 December 5.3 46.8 52.1 5.2 65.6 70.8 145Jupiter Fund Management plc | Annual Report & Accounts 2021 12. Property, plant and equipment Property, plant and equipment is made up of leasehold improvements, office furniture and equipment and right-of-use lease assets and is stated at cost, less accumulated depreciation and any provision for impairment. Cost includes expenditure that is directly attributable to the acquisition of the assets. Subsequent costs are included in an asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repair and maintenance expenditures are charged to the income statement during the financial year in which they are incurred. Depreciation is calculated on a straight-line basis to allocate the cost of each asset over its estimated useful life as follows: Leasehold improvements 19 years Office furniture and equipment 5 years Right-of-use assets Shorter of the asset’s useful life and the lease term The assets’ useful economic lives and residual values are reviewed at each financial year end and adjusted if appropriate. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on the disposal of the asset, calculated as the difference between the net disposal proceeds and the carrying amount of the item, is included in the income statement in the year the item is sold or retired. 2021 2020 Right-of-use assets £m Leasehold improvements £m Office furniture and equipment £m Total £m Right-of-use assets £m Leasehold improvements £m Office furniture and equipment £m Total £m Cost At 1 January 48.3 5.4 13.8 67.5 48.3 5.2 12.9 66.4 Additions 0.9 0.3 1.1 2.3 0.4 0.2 1.1 1.7 Acquired as part of business combination – – – – 15.5 – – 15.5 Lease modifications – – – – (15.5) – – (15.5) Disposals – – – – (0.4) – (0.2) (0.6) At 31 December 49.2 5.7 14.9 69.8 48.3 5.4 13.8 67.5 Accumulated depreciation At 1 January (7.1) (1.7) (11.3) (20.1) (3.6) (1.5) (9.6) (14.7) Charge for the year (3.9) (0.3) (1.4) (5.6) (3.9) (0.2) (1.9) (6.0) Disposals – – – – 0.4 – 0.2 0.6 At 31 December (11.0) (2.0) (12.7) (25.7) (7.1) (1.7) (11.3) (20.1) Net book value At 31 December 38.2 3.7 2.2 44.1 41.2 3.7 2.5 47.4 Right-of-use assets of £15.5m were acquired on 1 July 2020 as part of the Merian acquisition. On the same date, the right-of-use asset acquired was modified and the lease liability was remeasured as the Group did not expect to gain any further economic benefits from the asset. The difference between the remeasurement and the reduction in the liability due to reassignment of the lease was recognised within administrative expenses. Leases (i) Amounts recognised in the balance sheet The balance sheet shows the following amounts relating to leases: Notes 2021 £m 2020 £m Right-of-use assets Buildings 38.0 40.8 Equipment 0.1 0.2 Motor vehicles 0.1 0.2 38.2 41.2 Lease liabilities Current 18 4.0 3.9 Non-current 18 47.1 50.3 51.1 54.2 Additions to the right-of-use assets in 2021 were £0.9m (2020: £15.9m). Notes to the Group Financial Statements continued 146 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS (ii) Amounts recognised in the income statement The income statement shows the following amounts relating to leases: 2021 £m 2020 £m Depreciation charge of right-of-use assets Buildings 3.6 3.6 Equipment 0.2 0.1 Vehicles 0.1 0.2 3.9 3.9 Interest expense (included in finance costs) 1.6 1.8 Expense relating to short-term leases (included in administrative expenses) 0.5 0.1 The total cash outflow for leases in 2021 was £5.2m (2020: £6.7m). (iii) The Group’s leasing activities and how these are accounted for The Group leases various offices, equipment and cars. Rental contracts are typically made for fixed periods of 2 to 20 years but may have extension options as described below. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: • Fixed payments (including in-substance fixed payments), less any lease incentives receivable; • Variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date; • Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option; and • Payments to be made under reasonably certain extension options. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. To determine the incremental borrowing rate, the Group: • Uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk; and • Makes adjustments specific to the lease, for example, term, country, currency and security. The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset. Lease payments are allocated between principal and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Significant area of estimation and judgement Calculation of leased assets and liabilities requires the use of both estimation and judgement. The determination of the lease term for each lease involves the Group assessing any extension and termination options, the enforceability of such options, and judging whether it is reasonably certain that they will be exercised. Several of the Group’s leases contain such clauses. For each lease, a conclusion was reached on the overall likelihood of the option being exercised. Right-of-use assets are measured at cost comprising the following: • The amount of the initial measurement of lease liability; • Any lease payments made at or before the commencement date less any lease incentives received; • Any initial direct costs; and • Restoration costs. The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. Payments associated with short-term leases are recognised on a straight-line basis as an expense in the income statement. Short-term leases are leases with a lease term of 12 months or less. Extension and termination options are included in a number of property and equipment leases across the Group. These are used to maximise operational flexibility in terms of managing the assets used in the Group’s operations. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor. 147Jupiter Fund Management plc | Annual Report & Accounts 2021 13. Deferred tax Analysis of the Group’s deferred tax assets and liabilities is shown below: Share-based payments £m Other £m Intangible assets arising upon consolidation £m Total £m Assets 7.4 12.6 – 20.0 Liabilities – – (12.5) (12.5) At 31 December 2020 7.4 12.6 (12.5) 7.5 Assets 10.6 17.0 – 27.6 Liabilities – – (10.3) (10.3) At 31 December 2021 10.6 17.0 (10.3) 17.3 Movements in temporary differences between the balance sheet dates have been reflected in the income statement and the statement of changes in equity as follows: Share-based payments £m Other £m Intangible assets arising upon consolidation £m Total £m At 1 January 2020 10.3 6.4 – 16.7 Added through acquisition – 6.0 (14.3) (8.3) (Charged)/credited to the income statement (1.9) 0.2 1.8 0.1 Charged to equity (1.0) – – (1.0) At 31 December 2020 7.4 12.6 (12.5) 7.5 Credited to the income statement 3.1 4.3 2.2 9.6 Credited to equity 0.1 0.1 – 0.2 At 31 December 2021 10.6 17.0 (10.3) 17.3 The other deferred tax balances at 31 December 2020 and 2021 include short-term timing differences and temporary differences between depreciation and capital allowances. Deferred taxes at the balance sheet date reflected in these financial statements have been measured using the relevant enacted or substantively enacted tax rate for the year in which they are expected to be realised or settled. In the Spring Budget 2020, the UK Government announced that from 1 April 2020 the corporation tax rate will remain at 19% (rather than reducing to 17%, as previously enacted). The Government made a number of budget announcements on 3 March 2021. These include confirming that the rate of corporation tax will increase to 25% from 1 April 2023. This new law was substantively enacted on 24 May 2021. Deferred taxes at the balance sheet date have been measured using these enacted or substantively enacted tax rates and reflected in the financial statements. Notes to the Group Financial Statements continued 148 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS 14. Financial instruments held at fair value Financial instruments Financial assets and liabilities are recognised when the Group becomes party to the contractual provisions of an instrument. They are initially measured at fair value adjusted for transaction costs, except for financial assets classified as at fair value through profit or loss (FVTPL) where transaction costs are immediately recognised in the income statement. Financial assets are derecognised when the rights to receive cash flows from the assets have expired or where they have been transferred and the Group has also transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when the obligation under the liability has been discharged, cancelled or has expired. Financial assets The Group’s financial assets include cash and short-term deposits, trade and other receivables, seed investments in pooled funds and derivative financial instruments. Financial assets are classified as being at FVTPL or at amortised cost. The classification adopted by the Group depends on the Group’s business model for managing the financial assets and their contractual cash flow characteristics. Financial assets at fair value through profit or loss Financial assets at FVTPL include seed investments in pooled funds which are managed and evaluated on a fair value basis, in accordance with the documented strategy, as well as units or shares in funds managed by the Group which have been acquired for the purposes of hedging deferred compensation awards. Financial assets are classified in this category if they have been acquired principally for the purpose of selling in the short term or if they serve as economic hedges to fund-linked liabilities. Other financial assets at FVTPL comprise derivative instruments which are held to provide an economic hedge in respect of specific risk exposures (see Note 24). Financial assets at FVTPL are carried at fair value, with gains and losses recognised in the income statement in the period in which they arise either in other gains/losses or in administrative expenses for instruments held to provide an economic hedge against fund unit awards. Assets in this category are classified as current assets. Financial liabilities The Group’s financial liabilities include loans and borrowings, trade and other payables, derivative financial instruments and the non-controlling interests in funds that have been consolidated as subsidiaries. Financial liabilities at fair value through profit or loss Financial liabilities at FVTPL are carried at fair value, with gains and losses recognised in the income statement within other gains/losses in the period in which they arise. Financial liabilities at FVTPL comprise non-controlling interests in consolidated funds. As at 31 December, the Group held the following financial instruments measured at fair value: 2021 £m 2020 £m Financial assets Financial assets at FVTPL 302.5 257.4 Other financial assets at FVTPL 1.0 3.7 303.5 261.1 2021 £m 2020 £m Financial liabilities Financial liabilities at FVTPL (52.3) (89.2) Other financial liabilities at FVTPL – (0.2) (52.3) (89.4) A further analysis of the Group’s financial assets is provided below: 2021 £m 2020 £m Direct seed investment at fair value 142.3 138.3 Additional financial assets due to consolidation of funds 44.3 74.0 Derivatives and fund unit hedges 61.4 48.8 Fees receivable in shares 55.5 – Total financial assets 303.5 261.1 149Jupiter Fund Management plc | Annual Report & Accounts 2021 15. Trade and other receivables Trade and other receivables are recognised initially at fair value. The Group holds trade and other receivables to collect contractual cash flows, which are solely payments of principal and interest, and are therefore subsequently measured at amortised cost using the effective interest method, less loss allowances. The Group applies the IFRS 9 simplified approach to measuring expected credit losses (ECLs) for trade receivables at an amount equal to lifetime ECLs. The ECLs on trade receivables are calculated based on actual historic credit loss experience over the preceding three to five years and are adjusted for forward-looking estimates. ECLs are applied to the total balance of non-credit impaired trade receivables. The Group considers a trade receivable to be credit impaired when one or more detrimental events have occurred, such as significant financial difficulty of the client or it becoming probable that the client will enter bankruptcy or other financial reorganisation. When a trade receivable is credit impaired, it is written off against trade receivables and the amount of the loss is recognised in the income statement. Subsequent recoveries of amounts previously written off are credited to the income statement. In line with the Group’s historical experience, and after consideration of current credit exposures, the Group does not expect to incur any credit losses and has not recognised any ECLs in the current year (2020: £nil) (see Note 24). Trade and other receivables, including loans to employees, are included in current assets except where they have maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. Accrued income relates to accrued interest and accrued management, performance and registration fees. It is based on the latest available information and therefore involves a degree of estimation relating to the valuation of underlying AUM. Non-current 2021 £m 2020 £m Deferred acquisition and commission costs – 0.1 Rent deposits 0.5 0.4 0.5 0.5 Current 2021 £m 2020 £m Trade receivables 53.8 153.3 Prepayments 8.1 9.6 Accrued income 81.6 22.6 Deferred acquisition and commission costs 1.5 1.8 145.0 187.3 Trade receivables are non-interest bearing and are generally collected within four working days. An analysis of the ageing profile of trade receivables is disclosed in Note 24. Within trade and other receivables, the amount receivable from contracts with customers is £126.9m (2020: £159.9m). 16. Cash and cash equivalents 2021 £m 2020 £m Cash at bank and in hand 193.5 179.7 Cash held by EBT and seed investment subsidiaries 3.8 8.4 197.3 188.1 Cash and cash equivalents have an original maturity of three months or less. Cash at bank earns interest at the current prevailing daily bank rates. Short-term deposits are made for varying periods of between one and 33 days, depending on the forecast cash requirements of the Group, and earn interest at the respective short-term deposit rates. Cash held by the EBT and seed investment subsidiaries is not available for use by the Group. 17. Loans and borrowings On 27 April 2020 the Group issued £50.0m of Tier 2 subordinated debt notes at a discount of £0.5m. Issue costs were £0.5m and the net proceeds were therefore £49.0m. These notes will mature on 27 July 2030 and bear interest at a rate of 8.875% per annum to 27 July 2025, and at a reset rate thereafter. The Group has the option to redeem all of the notes from 27 April 2025 onwards. The fair value of the notes as at 31 December 2021 was £58.8m (2020: £54.0m). As part of the Merian acquisition on 1 July 2020, the Group acquired £111.0m of bank loans. These loans were repaid in full on 1 July 2020. 2021 £m 2020 £m Non-current subordinated debt in issue 49.3 49.2 The Group’s revolving credit facility (RCF) enables it to borrow up to £80.0m (2020: £80.0m). The facility expires in April 2023 and was undrawn at 31 December 2020 and 31 December 2021. The RCF was undrawn throughout both 2020 and 2021. Interest on the RCF is payable at a rate per annum of SONIA (sterling overnight index average) reference rate plus a margin of 0.6%. A commitment fee is payable on the RCF at a rate of 0.21% per annum on the undrawn balance. A utilisation fee is also payable at a rate of 0.08% per annum when up to 33% of the facility is drawn, 0.15% per annum when 33% to 66% of the facility is drawn, and 0.3% per annum when more than 66% of the facility is drawn. Notes to the Group Financial Statements continued 150 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS 18. Trade and other payables Trade and other payables are recognised initially at fair value and are subsequently measured at amortised cost using the effective interest rate method. Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement. The Group may from time to time be exposed to potential legal claims, regulatory action and related costs arising from its activities through the normal course of its business. Where such claims and costs arise, there is often uncertainty over whether a payment will be required and the quantum and timing of that payment. The Directors are not currently aware of any legal claims or regulatory proceedings which are likely to lead to a material liability. The most significant accruals at the year end relate to cash and fund award bonuses. At the end of each financial year, the Group recognises accrued expenses for bonuses accrued but not yet paid in respect of service attributable to that year. Contract liabilities represent performance obligations that are unsatisfied or partially unsatisfied as at the end of the reporting period. The Group’s contract liabilities relate to initial charges and commissions where payment has been received upfront but revenue is recognised over the expected lives of the contracts, which are estimated to be up to six years, on a straight-line basis. Non-current 2021 £m 2020 £m Lease liabilities 47.1 50.3 Accrued expenses 41.9 29.8 Social security and other taxes 13.2 6.8 Contract liabilities 0.1 0.5 102.3 87.4 Current 2021 £m 2020 £m Accrued expenses 156.4 126.7 Trade payables 38.4 53.7 Social security and other taxes 18.2 16.4 Other payables 4.6 11.3 Lease liabilities 4.0 3.9 Contract liabilities 0.6 0.8 222.2 212.8 Accrued expenses of £36.8m (2020: £19.6m) included within non-current trade and other payables and £42.8m (2020: £29.9m) included within current trade and other payables relate to deferred bonus awards whose settlement amounts will be based on the value of units in the Group’s funds (see Note 4). The amount of revenue recognised in the current reporting period that was included in the contract liability balance at the beginning of the period was £0.8m (2020: £1.0m). The Group expects to recognise revenue for the remaining performance obligations over the following durations: Contract liabilities 2021 £m 2020 £m < 1 year 0.6 0.8 1-5 years 0.1 0.5 0.7 1.3 151Jupiter Fund Management plc | Annual Report & Accounts 2021 19. Share capital and share premium (restated) Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds. On 1 July 2020, 95.4 million shares were issued in order to acquire shares in Merian. Authorised, issued, allotted, called-up and fully paid 2021 Shares m 2020 Shares m 2021 £m 2020 £m Share capital Ordinary shares of £0.02 each 553.1 553.1 11.1 11.1 553.1 553.1 11.1 11.1 Number of ordinary shares Par value 2021 m 2020 m 2021 £m 2020 £m Movements in ordinary shares At 1 January 553.1 457.7 11.1 9.2 Shares issued relating to acquisition of subsidiary – 95.4 – 1.9 At 31 December 553.1 553.1 11.1 11.1 Restatement of 2020 share premium reserve In the Group’s 2020 Annual Report and Accounts, the difference between the fair and nominal values of the 95.4 million shares issued relating to the acquisition of Merian was credited to a share premium account. However, as the share issue related to an acquisition where at least 90% of the total consideration took the form of equity, under Section 612 of the Companies Act 2006, it is mandatory for merger relief to be applied to such issues. As a result, in these financial statements, the Group has restated the amount recorded in 2020 as ‘Share premium’ from £242.1m to £nil and has increased the amount recorded within ‘Other reserves’ from £8.0m to £250.1m. 20. Reserves (i) Own share reserve The Group operates an EBT for the purpose of satisfying certain retention awards to employees. The holdings of this trust, which is funded by the Group, include shares in the Company that have not vested unconditionally to employees of the Group. These shares are recorded at cost and are classified as own shares. The shares are used to settle obligations that arise from the granting of share-based awards. At 31 December 2021, 18.5m ordinary shares (2020: 7.2m), with a par value of £0.4m (2020: £0.2m), were held as own shares within the Group’s EBT for the purpose of satisfying share option obligations to employees. (ii) Other reserves (restated) Other reserves of £250.1m (2020 restated: £250.1m) comprise the merger relief reserve of £242.1m (2020 restated: £242.1m) formed on the acquisition of Merian in 2020 (this amount has been restated - see Note 19) and £8.0m (2020: £8.0m) that relates to the conversion of Tier 2 preference shares in 2010. (iii) Foreign currency translation reserve The foreign currency translation reserve of £0.3m (2020: £2.8m) is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. (iv) Retained earnings Retained earnings of £639.7m (2020: £622.5m) are the amount of earnings that are retained within the Group after dividend payments and other transactions with owners. 21. Dividends Dividend distributions to the Company’s shareholders are recognised in the accounting period in which the dividends are paid. 2021 £m 2020 £m Final dividend (9.2p per ordinary share) (2020: Full-year dividend 9.2p per ordinary share) 50.4 40.8 Interim dividend (7.9p per ordinary share) (2020: 7.9p per ordinary share) 42.9 43.1 Special dividend (3.0p per ordinary share) (2020: nil per ordinary share) 16.5 – 109.8 83.9 Final/full-year dividends and special dividends are paid out of profits recognised in the year prior to the year in which the dividends are proposed/ declared and reported. The EBT has waived its right to receive future dividends on shares held in the trust. Dividends waived on shares held in the EBT in 2021 were £1.4m (2020: £1.9m). A final dividend for 2021 of 9.2p per share (2020: 9.2p) has been proposed by the Directors. This dividend amounts to £50.9m (before adjusting for any dividends waived on shares in the EBT) and will be accounted for in 2022. Including the interim dividend for 2021 of 7.9p per share (2020: 7.9p), this gives a total dividend per share of 17.1p (2020: 20.1p (including a special dividend of 3.0p per share)). Notes to the Group Financial Statements continued 152 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS 22. Cash flows from operating activities Notes 2021 £m 2020 £m Operating profit 190.5 137.7 Adjustments for: Amortisation of intangible assets 11 20.6 11.3 Depreciation of property, plant and equipment 12 5.6 6.0 Other net gains (9.4) (7.0) Fund unit hedges (7.7) (0.9) Share-based payments 25.5 19.8 Cash inflows on exercise of share options 0.1 0.2 Performance fee receivable in shares (55.5) – Decrease/(increase) in trade and other receivables 39.1 (53.2) Increase in trade and other payables 28.7 17.9 Cash generated from operations 237.5 131.8 23. Changes in liabilities arising from financing activities 2021 2020 Financial liabilities at FVTPL £m Loans and borrowings £m Leases £m Total £m Financial liabilities at FVTPL £m Loans and borrowings £m Leases £m Total (restated) 1 £m Brought forward at 1 January 89.2 49.2 54.2 192.6 74.9 – 57.5 132.4 New leases – – 0.2 0.2 – – 17.1 17.1 Issue of subordinated debt – – – – – 49.0 – 49.0 Changes from financing cash flows 2.8 – (5.2) (2.4) 5.7 – (6.7) (1.0) Changes arising from obtaining or losing control of consolidated funds (47.0) – – (47.0) – – – – Changes in fair value 7.3 – – 7.3 8.6 – – 8.6 Interest expense – 0.1 1.6 1.7 – 0.2 1.8 2.0 Lease reassignment and modifications – – 0.3 0.3 – – (15.5) (15.5) Liabilities arising from financing activities carried forward at 31 December 52.3 49.3 51.1 152.7 89.2 49.2 54.2 192.6 Notes 14 17 18 14 17 18 1. Comparative data relating to 2020 has been restated to incorporate cash flows relating to lease liabilities. The impact of this restatement is to increase the brought forward balance by £54.2m. 153Jupiter Fund Management plc | Annual Report & Accounts 2021 Notes to the Group Financial Statements continued 24. Financial risk management Financial instruments by category The carrying value of the financial instruments of the Group at 31 December is shown below: 2021 Financial assets at FVTPL £m Financial assets held at amortised cost £m Financial liabilities at FVTPL £m Other financial liabilities £m Total financial instruments £m Non–financial instruments £m Total £m Goodwill – – – – – 570.6 570.6 Intangible assets – – – – – 52.1 52.1 Property, plant and equipment – – – – – 44.1 44.1 Deferred tax assets – – – – – 27.6 27.6 Non–current trade and other receivables 1 – 0.5 – – 0.5 – 0.5 Financial assets at FVTPL 303.5 – – – 303.5 – 303.5 Current trade and other receivables 1 - 135.4 – – 135.4 9.6 145.0 Cash and cash equivalents – 197.3 – – 197.3 – 197.3 Non–current loans and borrowings – – – (49.3) (49.3) – (49.3) Non–current trade and other payables 1 – – – (89.0) (89.0) (13.3) (102.3) Deferred tax liabilities – – – – – (10.3) (10.3) Financial liabilities at FVTPL – – (52.3) – (52.3) – (52.3) Current trade and other payables 1 – – – (203.4) (203.4) (18.8) (222.2) Current income tax liability – – – – – (3.5) (3.5) Total 303.5 333.2 (52.3) (341.7) 242.7 658.1 900.8 2020 Financial assets at FVTPL £m Financial assets held at amortised cost £m Financial liabilities at FVTPL £m Other financial liabilities £m Total financial instruments £m Non–financial instruments £m Total £m Goodwill – – – – – 570.6 570.6 Intangible assets – – – – – 70.8 70.8 Property, plant and equipment – – – – – 47.4 47.4 Deferred tax assets – – – – – 20.0 20.0 Non–current trade and other receivables 1 – 0.4 – – 0.4 0.1 0.5 Financial assets at FVTPL 261.1 – – – 261.1 – 261.1 Current trade and other receivables 1 – 175.9 – – 175.9 11.4 187.3 Cash and cash equivalents – 188.1 – – 188.1 – 188.1 Non–current loans and borrowings – – – (49.2) (49.2) – (49.2) Non–current trade and other payables 1 – – – (80.1) (80.1) (7.3) (87.4) Deferred tax liabilities – – – – – (12.5) (12.5) Financial liabilities at FVTPL – – (89.4) – (89.4) – (89.4) Current trade and other payables 1 – – – (195.6) (195.6) (17.2) (212.8) Current income tax liability – – – – – (8.4) (8.4) Total 261.1 364.4 (89.4) (324.9) 211.2 674.9 886.1 1. Prepayments, contract liabilities, deferred acquisition and commission costs and social security and other taxes do not meet the definition of financial instruments. For financial instruments held at 31 December 2021, issued subordinated debt, recorded within non–current loans and borrowings above, had a fair value of £58.8m (2020: £54.0m), less unamortised expenses of £0.3m (2020: £0.4m). Gains and losses recognised in the income statement during the year ended 31 December 2021 by category are shown below: 2021 2020 Financial assets at FVTPL 2 £m Other income and expense £m Total £m Financial assets at FVTPL 2 £m Other income and expense £m Total £m Revenue – 617.8 617.8 – 500.5 500.5 Fee and commission expenses – (49.2) (49.2) – (42.7) (42.7) Administrative expenses 2.7 (355.8) (353.1) 0.9 (313.0) (312.1) Other (losses)/gains (4.4) – (4.4) 3.3 – 3.3 Amortisation of intangible assets – (20.6) (20.6) – (11.3) (11.3) Finance costs – (6.8) (6.8) – (5.1) (5.1) Income tax expense – (34.1) (34.1) – (27.3) (27.3) (1.7) 151.3 149.6 4.2 101.1 105.3 2. See Notes 4 and 6 for further details. 154 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS The Group used the following hierarchy for determining and disclosing the fair value of financial instruments: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: other techniques, for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly. Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data (unobservable inputs). As at 31 December 2021, the Group held the following financial instruments measured at fair value: 2021 Level 1 £m Level 2 £m Level 3 £m Total £m Financial assets at FVTPL – funds 194.6 52.4 – 247.0 Financial assets at FVTPL – fees receivable in shares 55.5 – – 55.5 Other financial assets at FVTPL – derivatives – 1.0 – 1.0 Financial liabilities at FVTPL (52.3) – – (52.3) 197.8 53.4 – 251.2 As at 31 December 2020, the Group held the following financial instruments measured at fair value: 2020 Level 1 £m Level 2 £m Level 3 £m Total £m Financial assets at FVTPL – funds 183.2 74.2 – 257.4 Other financial assets at FVTPL – derivatives – 3.7 – 3.7 Financial liabilities at FVTPL (89.2) – – (89.2) Other financial liabilities at FVTPL – derivatives – (0.2) – (0.2) 94.0 77.7 – 171.7 Where funds are consolidated, we look through to the underlying instruments and assign a level in accordance with the definitions above. Where funds are not consolidated, we do not apply a look through and these funds are classified as level 1 as the prices of these funds are quoted in active markets. Level 1 financial instruments The fair value of financial instruments that are actively traded in organised financial markets is determined by reference to quoted market prices at the balance sheet date. Financial assets at FVTPL Financial assets at FVTPL – funds relates to non-consolidated seed investments and hedges of awards in fund units in mutual funds. It also includes the underlying holdings in consolidated funds that meet the definition of level 1 financial instruments. Financial liabilities at FVTPL These relate to non-controlling interests in funds that have been consolidated as subsidiaries. Level 2 financial instruments The fair value of financial instruments are valued based on observable market data from readily available external sources. Financial assets at FVTPL Financial assets at FVTPL – funds relates to underlying holdings in consolidated funds that meet the definition of level 2 financial instruments. Derivative financial instruments These are held to hedge specific seed-related exposures and have maturities designed to match the exposures they are hedging. In addition, in 2020, the Group held a forward contract over 9 million of its own shares for the purpose of hedging pricing risk in respect of unfunded share option obligations to employees. The derivatives are held at fair value, being the price to exit the instruments at the balance sheet date. Movements in the fair value are recorded in the income statement. The Group enters into swap arrangements and foreign exchange forward contracts to provide an economic hedge of certain of its seed investments. Gains and losses arising from fair value movements in the swap and forward contracts are recognised in the consolidated income statement within other gains/losses and are settled periodically, in accordance with the terms of the contract. Any cash settlements due from or to the counterparty in relation to the swap arrangements, which are required to be settled at the end of each month, are recorded within current assets or current liabilities as trade receivables or other payables, as appropriate. The fair value of the foreign exchange contracts, which are required to be settled at periods other than month end, are recorded within financial assets or liabilities at FVTPL, as appropriate. At 31 December 2021, the notional value of the swaps was £131.0m (2020: £118.1m) and the foreign exchange forward contracts was £106.7m (2020: £90.6m). The settlement amount of the swaps at 31 December 2021 was a payable of £2.5m (2020: payable of £2.2m) which is included within trade and other payables. The fair value of the foreign exchange forward contracts is included within financial assets at FVTPL (£1.0m (2020: £nil)) and financial liabilities at FVTPL (£nil (2020: £0.2m)). 155Jupiter Fund Management plc | Annual Report & Accounts 2021 24. Financial risk management continued Financial risk management objectives and policies The Group is subject to a number of financial risks throughout its business, the principal risks being market risk (including price, foreign exchange and interest rate risk), credit risk and liquidity risk. The Board is accountable for risk and is responsible for oversight of the risk management process. The Board has ultimate responsibility for the risk strategy of the Group, and for determining an appropriate risk appetite and tolerance levels within which the Group must operate. By defining these, the Board demonstrates that it is aware of and, where appropriate, has taken steps to mitigate the impact of risks that may have a material impact on the Group. The Executive Committee reviews the key corporate risks facing the Group. The Chief Executive Officer has ultimate responsibility for the governance of the risk management of the firm, but delegates the risk and control framework to the Chief Risk Officer, who has responsibility for the monitoring and reporting of risk and controls, and through the Risk and Finance Committee manages the ongoing development of the Group’s risk and control framework. Jupiter embeds risk management within the business, with independent oversight and challenge being provided by the risk and compliance function. Price risk Price risk is the risk that a decline in the value of assets will adversely impact the profitability of the Group. Management has identified price risk as the exposure to unfavourable movements in the value of financial assets held by the Group which would result in a loss recognised in the consolidated income statement. In addition, due to the nature of the business, the Group’s exposure extends to the impacts on revenue that are determined on the basis of a percentage of AUM, and are therefore impacted by the financial instrument risk exposure of our clients – the secondary exposure. This price risk analysis deals only with our primary exposure of the risks from the Group’s direct holdings. The Group is not exposed to commodity price risk. The Group holds listed equity investments in its seed investments portfolio which are exposed to the risk of changes in equity markets. At 31 December 2021, the fair value, and therefore maximum exposure to listed securities, was £142.3m (2020: £138.3m). The Group’s policy is to hedge the equity market and currency exposure of its seed investments depending on the fund mandate and whether available transactions are cost effective. As at 31 December 2020 and 31 December 2021, the Group held swap instruments to act as hedges against risk exposures arising from certain holdings in seed fund investments. Price risk sensitivity analysis on financial assets The Directors believe that 10% gives a reasonable measure of the Group’s sensitivity to price risk. An increase or decrease of 10% in equity markets would have the impact shown below on the Group’s profit before taxation. This reflects estimated gains and losses on the Group’s listed investments at the balance sheet date and not any likely impact on the Group’s revenue or costs. There is no further impact on the Group’s equity. Impact on the income statement of change in equity markets 2021 £m 2020 £m +10% 1.1 4.5 -10% (1.1) (4.5) The analysis takes account of the relevant derivative transactions the Group has entered into to hedge against such movements. Foreign exchange risk Foreign exchange risk is the risk that the Group will sustain losses through adverse movements in currency exchange rates. The Group predominantly operates in the UK, with some transactions from overseas third parties in foreign currencies, which create exposure to non-Sterling income and expenses. The Group’s policy is to hold the minimum amount of foreign currency required to cover operational needs and to convert foreign currency on receipt. Direct exposures are limited to operational cash held in overseas subsidiaries, short-term outstanding foreign currency fee debtors and investments in seed denominated in a foreign currency. The Group does not normally hedge these exposures, other than in the case of certain seed investments, which are hedged using foreign exchange forward contracts. These contracts are measured at fair value at the balance sheet date. Foreign currency risk is monitored closely and managed by the finance function. Foreign exchange rate sensitivity analysis The Directors believe that 10% gives a reasonable measure of the Group’s sensitivity to foreign exchange risk. The following table demonstrates the sensitivity to a possible change in foreign exchange rates, with all other variables held constant, on the Group’s profit before tax. This reflects estimated gains and losses on retranslating the Group’s foreign currency assets and liabilities at the balance sheet date and not any likely impact on the Group’s revenue or costs. The exposure to foreign exchange risk arises principally through operational cash balances held in foreign currencies and seed investments held in non-Sterling share classes. There is no further impact on the Group’s equity. Impact on the income statement of change in exchange rates 2021 2020 +10% £m -10% £m +10% £m -10% £m Sterling against Euro (6.2) 7.6 (5.5) 6.7 Sterling against US Dollar (0.9) 1.1 (1.1) 1.3 Sterling against SG Dollar (0.2) 0.2 (0.2) 0.2 Sterling against Swiss Franc (0.2) 0.3 (0.2) 0.3 Sterling against HK Dollar (1.2) 1.4 (0.8) 1.0 The sensitivity analysis takes account of the relevant derivative transactions the Group has entered into to hedge against such exposures. Notes to the Group Financial Statements continued 156 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to interest rate risk relates primarily to the Group’s cash balances (Note 16). The Group manages interest rate risk via the finance function monitoring of the interest rate cash flow risks and returns. The Group puts cash on deposit at fixed rates of interest for periods of up to three months. The Group’s Tier 2 subordinated debt was issued at a fixed interest rate, and therefore has no interest rate risk exposure. Interest rate sensitivity analysis The Directors believe that a movement in interest rates of 50bps gives a reasonable measure of the Group’s sensitivity to interest rate risk. The following table demonstrates the sensitivity to a possible change in interest rates, with all other variables held constant and using a floor of 0bps, on the Group’s profit before tax (mainly through the impact on floating rate cash deposits). There is no further impact on the Group’s equity. Impact on the income statement of change in interest rates 2021 £m 2020 £m +50 bps 1.0 0.9 -50 bps (0.2) (0.3) Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract leading to a financial loss in the Group’s operating activities. The Group is exposed to credit risk primarily from its treasury activities, including deposits with banks and financial institutions, but also from its trade receivables and, in certain circumstances, financial assets at fair value through profit or loss. Trade receivables are monitored regularly. Historically, default levels have been insignificant. Financial assets at FVTPL expose the Group to credit risk where seed investments in funds are consolidated and those funds hold investments in debt instruments or derivative positions with a positive fair value. The Group’s maximum exposure to credit risk is £354.0m (2020: £400.3m), represented by the carrying value of its non-equity financial assets at FVTPL (£47.4m (2020: £58.9m)), performance fee receivables included in financial assets at FVTPL (£55.5m (2020: £nil)), trade receivables (£53.8m (2020: £153.3m)) and cash and cash equivalents (£197.3m (2020: £188.1m)). The fair values of the Group’s financial liabilities at FVTPL are not affected by changes in the Group’s credit risk. There is no difference between the carrying amount of financial liabilities at FVTPL and the amount the Group would be contractually required to pay at maturity. With regard to credit risk related to financial instruments, the Group’s policy is to place deposits only with financial institutions which satisfy minimum counterparty ratings and other criteria. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. The limits are set to minimise the concentration of risks and thereby mitigate the possibility of financial loss through counterparty failure. The Group monitors any decrease in the creditworthiness of its counterparties. The table below contains an ageing analysis of current and overdue trade receivables: 2021 £m 2020 £m Neither past due nor impaired 53.7 152.9 Days past due: < 30 – – 30-60 0.1 0.2 61-90 – – > 90 – 0.2 53.8 153.3 None of the receivables past due were considered to be impaired (2020: £nil). The table below contains an analysis of financial assets held by the Group for which credit ratings are available: 2021 2020 Financial assets at FVTPL £m Trade receivables £m Cash and cash equivalents £m Total £m Financial assets at FVTPL £m Trade receivables £m Cash and cash equivalents £m Total £m AAA 0.1 – – 0.1 – – – – AA 0.7 – – 0.7 3.7 – 85.6 89.3 A – 3.5 75.0 78.5 0.3 3.9 102.5 106.7 BBB 4.9 – 122.3 127.2 10.1 – – 10.1 BB 13.8 – – 13.8 19.5 – – 19.5 B 20.1 – – 20.1 16.0 – – 16.0 CCC 7.7 – – 7.7 8.9 – – 8.9 CC – – – – 0.2 – – 0.2 C 0.1 – – 0.1 0.2 – – 0.2 Not rated 256.1 50.3 – 306.4 202.2 149.4 – 351.6 Total 303.5 53.8 197.3 554.6 261.1 153.3 188.1 602.5 157Jupiter Fund Management plc | Annual Report & Accounts 2021 Financial assets at FVTPL which are not rated comprise equity investments. Trade and other receivables which are not rated comprise cancellations of units in unit trusts and sales of units in unit trusts, title to which is not transferred until settlement is received. Liquidity risk Liquidity risk is the risk that the Group may be unable to meet its payment obligations as they fall due or only at a significantly higher cost. The Group produces cash flow forecasts to assist in the efficient management of the collection and payment of liquid assets and liabilities. The Group’s objectives in respect of liquidity are: • to ensure that both the Group as a whole and individual entities within the Group have access to sufficient liquid funds to trade solvently and meet trading liabilities as they fall due; • to allow the Group to maintain a flexible dividend policy, taking reference to prior year and prospective profitability, capital requirements and cash flow; and • to provide the Group with appropriate flexibility over the transferability of its capital and cash balances. Surplus cash held by the operating entities over and above the balances required for working capital management is held in interest-bearing accounts. Regulated companies ensure that sufficient capital is maintained to meet regulatory requirements. The Group has access to an RCF of £80.0m (2020: £80.0m) which was unutilised at 31 December 2021 (2020: same). The facility expires in 2023. The table below summarises the maturity profile of the Group’s financial liabilities at 31 December 2020 and 31 December 2021 based on contractual undiscounted payments: Financial liabilities 2021 2020 (restated) 2 Within 1 year or repayable on demand £m 1-5 years £m > 5 years £m Total £m Within 1 year or repayable on demand £m 1-5 years £m > 5 years £m Total £m Loans and borrowings¹ 4.4 63.3 – 67.7 4.4 67.7 – 72.1 Lease liabilities 5.7 19.3 36.6 61.6 5.6 19.8 41.2 66.6 Trade and other payables 196.4 41.9 – 238.3 188.7 29.7 – 218.4 Financial liabilities at FVTPL 52.3 – – 52.3 89.4 – – 89.4 Total 258.8 124.5 36.6 419.9 288.1 117.2 41.2 446.5 1. Includes contractual payments of interest. 2. Comparative data relating to 2020 has been restated to show the undiscounted values of contractual payments. The discounted values had previously been disclosed in the 2020 Annual Report and Accounts. Capital management The Group’s objectives when managing its capital and funding structure are to safeguard the Group’s ability to continue as a going concern, maintain appropriate financial resources, maximise shareholder value, maintain an optimal capital structure to reduce the cost of capital and to meet working capital requirements. 2021 £m 2020 £m Cash and short-term deposits 197.3 188.1 Loans and borrowings (49.3) (49.2) Net cash and cash equivalents 148.0 138.9 Equity¹ 260.8 261.0 Retained earnings, foreign currency translation reserve and non-controlling interests 640.0 625.1 Equity attributable to shareholders 900.8 886.1 1. Share capital, own share reserve and other reserves. Regulatory capital requirements The Group considers its share capital, reserves and subordinated debt, which was issued in 2020 and which qualifies as lower Tier 2 capital, to constitute its total capital. The subsidiaries within the Group which are regulated are required to maintain capital resources to comply with the regulatory capital requirements of the FCA and certain overseas financial regulators. Headroom over regulatory capital is discussed by the Risk and Finance Committee. In addition to the capital held to meet regulatory capital requirements, the Group maintains sufficient cash resources to meet its liabilities as and when they fall due, based on regularly produced cash forecasts, modelling both normal and stressed conditions. Liquidity risk is mitigated by the availability of the RCF and the high level of cash in the business. 25. Interests in structured entities IFRS 12 requires certain disclosures in respect of interests in subsidiaries, joint arrangements, associates and unconsolidated structured entities. A structured entity is defined as an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only, or when the relevant activities are directed by means of contractual arrangements. The Group has assessed whether the funds it manages are structured entities and concluded that mutual funds and investment trusts managed by the Group are structured entities unless substantive removal or liquidation rights exist. The Group has interests in these funds through the receipt of management and other fees and, in certain funds, through ownership of fund units or shares. The Group’s investments in these funds are subject to the terms and conditions of the respective fund’s offering documentation and are susceptible to market price risk. The investments are included in financial assets at fair value through profit or loss in the balance sheet. Notes to the Group Financial Statements continued 158 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS Where the Group has no equity holding in a fund it manages, the investment risk is borne by the external investors and therefore the Group’s maximum exposure to loss relates to future management fees and any uncollected fees at the balance sheet date. Where the Group does have an equity holding, the maximum exposure to loss constitutes the future and uncollected management fees plus the fair value of the Group’s investment in that fund. The Group does not sponsor any of the structured entities and there are no guarantees or commitments. Direct holdings in unconsolidated structured entities Direct investments in unconsolidated structured entities comprise seed investments and hedges of awards in fund units or shares in mutual funds and investment trusts, details of which are given below: Number of funds Net AUM of funds £bn Financial assets at FVTPL £m Investment management/ performance fees in the year £m Management/ performance fees receivable £m As at 31 December 2021 78 44.1 247.0 502.7 134.0 As at 31 December 2020 72 42.5 257.4 383.4 93.3 Subsidiaries and associates Information about seed investments judged to be subsidiaries and associates at 31 December 2021 is given below: Name Category Country of incorporation Principal activities Financial assets at FVTPL £m Investment in associates £m Percentage of total AUM held Share class held by the Group Date of the end of the fund’s reporting period Jupiter European Smaller Companies Subsidiary England & Wales Unit Trust 30.3 – 30% I Acc GBP 31-Aug Jupiter Global Fund SICAV: Europe ex-UK Equity Subsidiary Luxembourg SICAV sub-fund 22.0 – 66% L EUR Acc and I GBP Acc 30-Sep Jupiter Global Fund SICAV: Flexible Income Subsidiary Luxembourg SICAV sub-fund 64.6 – 81% I EUR Acc L EUR Acc I EUR Q Inc L USD M Inc HSC N USD Acc HSC A USD Acc HSC C USD Acc HSC L AUD M Inc IRD L SGD M Inc IRD HSC L M Inc USD IRD D Q Inc USD IRD HSC D USD Acc HSC L USD Acc HSC D EUR Q Inc and I GBP Acc HSC 30-Sep Jupiter Global Fund SICAV: Flexible Macro Subsidiary Luxembourg SICAV sub-fund 12.2 – 83% F EUR Acc D EUR Q Inc Dis L EUR Acc I EUR Acc D EUR Acc D GBP Acc HSC and D USD Acc HSC 30-Sep Jupiter Global Fund SICAV: Global High Yield Short Duration Bond Subsidiary Luxembourg SICAV sub-fund 19.1 – 77% F EUR Acc D EUR Q Inc Dis L EUR Acc I EUR Acc D EUR Acc D HSC Acc USD and I GBP Acc HSC 30-Sep Jupiter Global Fund SICAV: Global Sustainable Equities Subsidiary Luxembourg SICAV sub-fund 11.1 – 86% A USD Acc D USD Acc G USD Acc I USD Acc L USD Acc N USD Acc T USD Acc D EUR Acc D EUR A Inc G EUR Acc I EUR Acc L EUR Acc and L EUR A Inc 30-Sep Jupiter Merlin Real Return Subsidiary England & Wales Unit Trust 7.2 – 76% I Class Acc 31-May 159Jupiter Fund Management plc | Annual Report & Accounts 2021 25. Interests in structured entities continued Related undertakings other than subsidiaries and associates Entities in which the Group holds more than 20% of the shares in any single share class, but over which the Group neither has control nor significant influence, are summarised below: Name Share class held by the Group Country of incorporation Principal activities Financial assets at FVTPL £m Percentage of share class held by the Group Percentage of total shares held Date of the end of the fund’s reporting period Jupiter Asset Management Series Plc: Europe (ex UK) Smaller Companies Fund U2 GBP Acc Ireland ICVC sub-fund 0.1 100% 0% 31-Dec Jupiter Asset Management Series Plc: Gold & Silver Fund N USD Acc Ireland ICVC sub-fund – 100% 0% 31-Dec Jupiter Asset Management Series Plc: Jupiter Emerging Market Debt Income Fund U2 GBP Acc Ireland ICVC sub-fund – 100% 0% 31-Dec Jupiter Asset Management Series Plc: Merian Global Dynamic Bond L EUR Acc Ireland ICVC sub-fund – 100% 0% 31-Dec Jupiter Asset Management Series Plc: North American Equity Fund (IRL) U2 GBP Acc Ireland ICVC sub-fund 0.6 90% 0% 31-Dec Jupiter Asset Management Series Plc: Strategic Absolute Return Bond L SEK Acc HSC Ireland ICVC sub-fund – 82% 0% 31-Dec Jupiter Asset Management Series Plc: UK Specialist Equity Fund X GBP Acc Ireland ICVC sub-fund 3.2 46% 0% 31-Dec Jupiter Global Fund SICAV: Asia Pacific Income A USD Acc Luxembourg SICAV sub-fund – 100% 13% 30-Sep Jupiter Global Fund SICAV: Asia Pacific Income C USD Acc Luxembourg SICAV sub-fund 0.1 100% 13% 30-Sep Jupiter Global Fund SICAV: Asia Pacific Income L EUR Q Inc Luxembourg SICAV sub-fund 0.3 88% 13% 30-Sep Jupiter Global Fund SICAV: Asia Pacific Income L SGD Q Inc Dist HSC Luxembourg SICAV sub-fund 0.7 100% 13% 30-Sep Jupiter Global Fund SICAV: Asia Pacific Income N USD Acc Luxembourg SICAV sub-fund – 100% 13% 30-Sep Jupiter Global Fund SICAV: Dynamic Bond L JPY Hsc Acc Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Dynamic Bond N USD Acc Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: European Growth C USD HSC Acc Luxembourg SICAV sub-fund 0.1 78% 0% 30-Sep Jupiter Global Fund SICAV: European Growth E USD Acc Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: European Growth FIA IE Brazil SICAV sub-fund 1.2 36% 0% 30-Sep Jupiter Global Fund SICAV: European Growth L HKD HSC Acc Luxembourg SICAV sub-fund 0.1 68% 0% 30-Sep Jupiter Global Fund SICAV: European Growth N USD Acc Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: European Growth USD FC FIA IE Brazil SICAV sub-fund 1.2 69% 0% 30-Sep Jupiter Global Fund SICAV: Financial Innovation A USD Acc HSC Luxembourg SICAV sub-fund 0.1 100% 0% 30-Sep Jupiter Global Fund SICAV: Financial Innovation D USD Acc HSC Luxembourg SICAV sub-fund 0.1 100% 0% 30-Sep Jupiter Global Fund SICAV: Financial Innovation N USD Acc Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Financial Innovation N USD Acc HSC Luxembourg SICAV sub-fund 0.1 100% 0% 30-Sep Jupiter Global Fund SICAV: Global Convertibles A USD Acc HSC Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Global Convertibles C USD Acc HSC Luxembourg SICAV sub-fund 0.1 100% 0% 30-Sep Jupiter Global Fund SICAV: Global Convertibles N USD Acc HSC Luxembourg SICAV sub-fund – 70% 0% 30-Sep Jupiter Global Fund SICAV: Global Ecology Growth D EUR Acc Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Global Emerging Markets Corporate Bond A USD Q INC Luxembourg SICAV sub-fund – 100% 0% 30-Sep Notes to the Group Financial Statements continued 160 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS Related undertakings other than subsidiaries and associates continued Name Share class held by the Group Country of incorporation Principal activities Financial assets at FVTPL £m Percentage of share class held by the Group Percentage of total shares held Date of the end of the fund’s reporting period Jupiter Global Fund SICAV: Global Emerging Markets Corporate Bond D GBP A INC HSC Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Global Emerging Markets Corporate Bond I CHF Acc HSC Luxembourg SICAV sub-fund 0.1 100% 0% 30-Sep Jupiter Global Fund SICAV: Global Emerging Markets Corporate Bond L EUR Acc HSC Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Global Emerging Markets Short Duration Bond C USD Acc Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Global Emerging Markets Short Duration Bond I USD A Inc Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Global Equity Growth Unconstrained D EUR Hedged Acc HSC Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Global Equity Growth Unconstrained G EUR Acc Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Global Equity Growth Unconstrained N USD Acc Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Japan Select A USD Acc Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Jupiter Global Sovereign Opportunities A USD Acc Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Jupiter Global Sovereign Opportunities D EUR Acc HSC Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Jupiter Global Sovereign Opportunities D USD Acc Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Jupiter Global Sovereign Opportunities I EUR Acc HSC Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Jupiter Global Sovereign Opportunities I GBP Acc HSC Luxembourg SICAV sub-fund 0.1 51% 0% 30-Sep Jupiter Global Fund SICAV: Jupiter Global Sovereign Opportunities L USD Acc Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Jupiter Global Sovereign Opportunities N USD Acc Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Pan European Smaller Companies A USD Acc HSC Luxembourg SICAV sub-fund – 55% 0% 30-Sep Jupiter Global Fund SICAV: Pan European Smaller Companies C USD Acc HSC Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Pan European Smaller Companies D GBP Acc HSC Luxembourg SICAV sub-fund 0.1 81% 0% 30-Sep Jupiter Global Fund SICAV: Pan European Smaller Companies L USD Acc HSC Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Fund SICAV: Pan European Smaller Companies N USD Acc HSC Luxembourg SICAV sub-fund – 100% 0% 30-Sep Jupiter Global Sustainable Equities T Inc England & Wales Unit Trust 9.1 93% 4% 30-Apr Jupiter Investment Funds Series II: Global Strategic Bond Fund U2 GBP Inc England & Wales OEIC sub-fund – 100% 0% 31-Oct Jupiter Investment Management Series I: Monthly Income Bond Fund U2 GBP Inc England & Wales OEIC sub-fund – 99% 0% 31-Jul Jupiter Investment Management Series I: UK Equity Income Fund U2 GBP Acc England & Wales OEIC sub-fund 0.1 67% 0% 31-Jul MGI Arbea Fund Limited GBP Man Cayman Islands Hedge Fund 1.8 22% 9% 31-Dec The registered offices of the Group’s subsidiaries, associates, and unconsolidated structured entities are detailed in Note 30. 161Jupiter Fund Management plc | Annual Report & Accounts 2021 26. Related parties The Group manages a number of investment trusts, unit trusts, OEICs, SICAVs, ICVCs, an ICAV (closed in 2021), a hedge fund and a Delaware LP and receives management and, in some instances, performance fees for providing this service. The precise fee arrangements are disclosed within the financial statements of each investment management subsidiary of the Group or within other publicly available information. By virtue of the investment management agreements in place between the Group and the collective investment vehicles it manages, such funds may be considered to be related parties. Investment management and performance fees are disclosed in Note 1. The Group acts as manager for 38 (2020: 38) authorised unit trusts and 12 (2020: 12) OEICs. Each unit trust is jointly administered with the trustees, Northern Trust Global Services SE. The aggregate total value of transactions for the year was £1,912m (2020: £2,360m) for unit trust creations and £3,692m (2020: £5,295m) for unit trust redemptions. The actual aggregate amount due from (2020: to) the trustees at the end of the accounting year in respect of transactions awaiting settlement was £2.6m (2020: £1.5m). The Group also acts as the management company for the Jupiter Global Fund and Jupiter Merlin Fund SICAVs, made up of 19 sub-funds (2020: 18) and four sub-funds (2020: four) respectively as well as the Jupiter Investment Management Series II (previously known as the Merian Investment Fund Series II), the Jupiter Asset Management Series plc (previously known as the Merian Global Investors Series plc) and the Jupiter Investment Funds Series II (previously known as the Merian Global Investors Series II), made up of 12 (2020: 12), 21 (2020: 21) and nil (2020: one) sub-funds respectively. The amounts received in respect of gross management, registration and performance fee charges were £283.6m (2020: £274.9m) for unit trusts, £87.0m (2020: £42.0m) for OEICs, £122.8m (2020: £110.5m) for SICAVs, £48.2m (2020: £56.7m) for ICVCs, £nil (2020: £0.3m) for the ICAV, £119.5m (2020: £38.3m) for investment trusts and £25.9m (2020: £25.0m) for segregated mandates. At the end of the year, there was £31.2m (2020: £32.9m) accrued for annual management fees, £3.2m (2020: £3.1m) in respect of registration fees and £113.0m (2020: £72.9m) in respect of performance fees. Included within financial instruments (see Note 14) are seed investments and hedges of awards in fund units in mutual funds and investment trusts managed by the Group. At 31 December 2021, the Group had a total net investment in such funds of £202.7m (2020: £168.2m) and received distributions of £1.1m (2020: £0.8m). During 2021, it invested £70.8m (2020: £46.7m) in these funds and made disposals of £69.4m (2020: £51.1m). Three members of key management personnel (2020: three) have invested in the Group’s subordinated debt issued in 2020 in the sum of £1.6m (2020: £1.6m). These were made on terms equivalent to those that prevail in arm’s length transactions. Key management compensation Transactions with key management personnel also constitute related party transactions. Key management personnel are defined as the Directors, together with other members of the Executive Committee. The aggregate compensation paid or payable to key management for employee services is shown below: 2021 £m 2020 £m Short-term employee benefits 5.5 5.6 Share-based payments 6.9 5.4 Post-employment benefits – 0.4 Other long-term employee benefits 0.4 0.4 12.8 11.8 Notes to the Group Financial Statements continued 162 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS 27. Basis of preparation and other accounting policies Basis of preparation The consolidated financial statements have been prepared in accordance with UK-adopted International Financial Reporting Standards (IFRS) and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The financial statements have been prepared on a going concern basis using the historical cost convention modified by the revaluation of certain financial assets and financial liabilities (including derivatives) that have been measured at fair value. After reviewing the Group’s current plans and forecasts and financing arrangements, as well as the current trading activities of the Group, the Directors consider that the Group has adequate resources to continue operating for a period of at least 12 months from the date of signing. In preparing the financial statements, we have considered the impact of climate change, particularly in the context of the disclosures included on ESG and stewardship this year on pages 40 to 56. There has not been a material impact on the financial reporting judgements and estimates arising from our considerations. We have specifically considered the impact of climate change in our goodwill assessment (see Note 10). Basis of accounting The consolidated financial statements for the year ended 31 December 2021 include the consolidated financial information of the Company and its subsidiaries. The accounting policies set out those policies that have been applied consistently in preparing the Group financial statements. No Standards or Interpretations have been issued that have had or are expected to have an impact on the Group’s financial statements. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed later in this note within the section Critical accounting estimates, judgements and assumptions. Business combinations The Group applies the acquisition method to account for business combinations. The consideration for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and any equity interests issued by the Group. The consideration includes the fair value of any asset or liability resulting from contingent or deferred consideration arrangements. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Basis of consolidation Subsidiaries Subsidiaries are those entities over which the Group has control. The Group controls an entity if it is judged to have all of the following: • power over the investee; • exposure, or rights, to variable returns from its involvement with the investee; and • the ability to use its power over the investee to affect its returns. The Group’s subsidiaries comprise operating and holding companies, and those funds where the Group acts as fund manager which are consolidated as a result of additional exposure to the variable returns of the funds through seed investment. Where we own 100% of an operating or holding company, our judgement is that the above elements of control are immediately satisfied and that the companies are therefore subsidiaries of the Group. Seed investments are accounted for as subsidiaries, associates or other financial investments depending on the holdings of the Group and on the level of influence and control that the Group is judged to have. Significant area of judgement In determining the level of control for seed investments, additional judgement is required. The Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including the purpose and design of an investee, relevant activities, substantive and protective rights, and voting rights and potential voting rights. Exposure to variable returns is usually determined by the earning of management fees, and the percentage investment in the funds’ net assets. Where the value of the Group’s holding exceeds 50% of the total value of the fund, the Group deems control to automatically exist. Where ownership is under 50%, the Group applies a rebuttable presumption that interests amounting to 30% or more are consolidated, subject to review of the facts and circumstances of each individual investment relevant to establishing whether the Group is acting as principal or agent to the fund. These include the potential for large performance fees to be earned, an assessment of kick-out rights and the existence of any other large investors in the fund. Kick-out rights rarely vary between the different types of funds that the Group manages; the percentage investment in a fund is therefore the primary means for determining whether control exists for the Group, and the determination of the threshold to be used as the rebuttable presumption is a key area of judgement for the Group. This judgement determines the extent to which the Group’s balance sheet is grossed up to reflect additional financial instruments under the Group’s control and, as the value of such instruments is material to the Group, this has been included as a significant area of judgement as set out below. 163Jupiter Fund Management plc | Annual Report & Accounts 2021 27. Basis of preparation and other accounting policies continued The Group has seed investments in both its unit trusts and its SICAV sub-funds. The Group’s judgement is that control can exist in a sub-fund, even if it does not exist in the whole of the umbrella fund, as the sub-funds have no cross-liability risk to other sub-funds or to the SICAV umbrella fund and thus should be accounted for as separate entities. The Group reassesses whether or not it controls an entity if facts or circumstances indicate that there are changes to one or more of the three elements of control. A list of subsidiaries, split into operating and holding companies and consolidated funds, is provided in Note 30. Consistent accounting policies are applied across all Group companies. Intra-group transactions, balances, income and expenses are eliminated on consolidation. The transactions and balances of subsidiaries are consolidated in these financial statements from the date that control commences until the date that control ceases. Where external investors hold shares in funds controlled by the Group, the portion of profit or loss and net assets held by these non-controlling interests is included within other gains/losses in the consolidated income statement and as liabilities at fair value through profit or loss in the consolidated balance sheet respectively. Foreign currency (i) Functional and presentational currency Items included in the financial information of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Sterling, which is both the Company’s functional and presentational currency as well as the currency in which the majority of the Group’s revenue streams, assets and liabilities are denominated. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated income statement within administrative expenses. Translation differences on non-monetary financial assets and liabilities, such as equities held at fair value through profit or loss, are recognised in the consolidated income statement as part of other gains/losses. (iii) Group companies The assets and liabilities of Group entities that have a functional currency different from the presentational currency are translated at the closing rate at the balance sheet date, with income and expenses translated at average monthly exchange rates. Resulting exchange differences are recognised as a separate component of other comprehensive income and are recycled to the income statement on disposal or liquidation of the relevant branch or subsidiary. New standards and interpretations not applied The International Accounting Standards Board and IFRS Interpretations Committee (IFRS IC) have issued a number of new accounting standards, interpretations, and amendments to existing standards and interpretations. There are no IFRSs or IFRS IC interpretations that are not yet effective that would be expected to have a material impact on the Group. Critical accounting estimates, judgements and assumptions The preparation of the financial information requires management to make judgements, estimates and assumptions that affect the reported amount of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities. If such estimates and assumptions, which are based on management’s best judgement at the date of preparation of the financial information, deviate from actual circumstances, the original estimates and assumptions are modified as appropriate in the period in which the circumstances change. There are no instances in these financial statements where there is a reasonable level of risk that the use of estimates could lead to a material change within the next financial year. However, there are areas of the financial statements where the use of estimation is important, but where the risk of material adjustment is not significant, being: Note 4 Staff costs; 5 Share-based payments; 10 Goodwill; and 12 Calculation of lease assets and liabilities. The areas where judgements are significant to the Group financial statements are discussed in the following notes: 10 Goodwill; 12 Calculation of lease assets and liabilities; and 24 Consolidation of seed investments. 164 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS COMPANY BALANCE SHEET at 31 December 2021 Notes 2021 £m 2020 (restated) 1 £m Non-current assets Investment in subsidiary undertakings 29 541.1 515.6 541.1 515.6 Current assets Financial assets at FVTPL 31 13.3 3.7 Trade and other receivables 32 104.4 105.8 Cash and cash equivalents 33 1.0 0.5 118.7 110.0 Total assets 659.8 625.6 Equity capital and reserves Share capital 19 11.1 11.1 Own share reserve 20 (0.4) (0.2) Other reserves 1 20 250.1 250.1 Retained earnings at 1 January 254.7 268.0 Profit for the year 73.6 61.4 Other movements (132.5) (74.7) Retained earnings 195.8 254.7 Total equity 456.6 515.7 Non-current liabilities Loans and borrowings 17 49.3 49.2 49.3 49.2 Current liabilities Trade and other payables 35 153.8 60.7 Current income tax liability 0.1 – 153.9 60.7 Total liabilities 203.2 109.9 Total equity and liabilities 659.8 625.6 1. The split of the Company’s total equity between different non-distributable reserves has been restated. See Notes 19 and 20. The financial statements of Jupiter Fund Management plc (registered number 6150195) on pages 165 to 171 were approved by the Board of Directors and authorised for issue on 24 February 2022. They were signed on its behalf by Wayne Mepham, Chief Financial Officer 165Jupiter Fund Management plc | Annual Report & Accounts 2021 COMPANY STATEMENT OF CASH FLOWS for the year ended 31 December 2021 Notes 2021 £m 2020 £m Cash flows from operating activities Cash generated from operations 34 173.1 30.6 Net cash inflows from operating activities 173.1 30.6 Cash flows from investing activities Purchase of financial assets at FVTPL (14.0) – Proceeds from sale of financial assets at FVTPL 2.8 – Proceeds from net asset adjustment on acquisition 1.8 6.7 Net cash (outflows)/inflows from investing activities (9.4) 6.7 Cash flows from financing activities Proceeds from debt issued – 49.0 Purchase of shares by EBT (48.5) (10.7) Finance costs paid (4.9) (0.3) Dividends paid 21 (109.8) (83.9) Net cash outflows from financing activities (163.2) (45.9) Net increase/(decrease) in cash and cash equivalents 0.5 (8.6) Cash and cash equivalents at beginning of year 0.5 9.1 Cash and cash equivalents at end of year 33 1.0 0.5 COMPANY STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2021 Share capital £m Own share reserve £m Other reserves (restated) 1 £m Retained earnings £m Total £m At 1 January 2020 9.2 (0.3) 8.0 268.0 284.9 Profit for the year – – – 61.4 61.4 Total comprehensive income – – – 61.4 61.4 Issuance of ordinary shares as consideration for a business combination, net of transactions costs and tax (restated) 1 1.9 – 242.1 – 244.0 Vesting of ordinary shares and options – 0.2 – – 0.2 Dividends paid – – – (83.9) (83.9) Share-based payments – – – 19.8 19.8 Purchase of shares by EBT – (0.1) – (10.6) (10.7) Total transactions with owners 1.9 0.1 242.1 (74.7) 169.4 At 31 December 2020 11.1 (0.2) 250.1 254.7 515.7 Profit for the year – – – 73.6 73.6 Total comprehensive income – – – 73.6 73.6 Vesting of ordinary shares and options – 0.1 – – 0.1 Dividends paid – – – (109.8) (109.8) Share-based payments – – – 25.5 25.5 Purchase of shares by EBT – (0.3) – (48.2) (48.5) Total transactions with owners – (0.2) – (132.5) (132.7) At 31 December 2021 11.1 (0.4) 250.1 195.8 456.6 Notes 19 20 20 1. The split of the Company’s total equity between different non-distributable reserves has been restated in the line ‘Issuance of ordinary shares as consideration for a business combination, net of transaction costs and tax’ for 2020. See Notes 19 and 20. 166 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS 28. Accounting policies Basis of preparation The separate financial statements of the Company have been prepared in accordance with UK-adopted international financial reporting standards (IFRS) and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The principal accounting policies adopted are the same as those set out in the Group’s financial statements. The financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial assets that have been measured at fair value. The Company has taken advantage of the exemption in section 408 of the Act not to present its own income statement. The Company’s profit for the year was £73.6m (2020: £61.4m). Investments in subsidiary undertakings Investments in subsidiary undertakings are held at cost less provision for impairment. Share-based payments The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to the investment in subsidiary undertakings, with a corresponding credit to equity in the Company financial statements. 29. Investment in subsidiary undertakings 2021 £m 2020 £m At 1 January 515.6 260.0 Acquisition of subsidiary – 235.8 Share-based payments 25.5 19.8 At 31 December 541.1 515.6 On 1 July 2020, the Company acquired 100% of the share issued capital of Merian Global Investors Limited (Merian), an investment management company registered in Jersey. During 2020 and 2021, a number of subsidiary companies granted options to their employees over the shares of Jupiter Fund Management plc. For accounting purposes, these grants are recorded as investments by the Company in its subsidiary undertakings. 30. Related undertakings The following information relates to the Company’s operating subsidiaries. At 31 December 2020 and 2021 (unless otherwise indicated), with the exception of Jupiter Fund Management Group Limited and Merian Global Investors Limited, these were all indirectly held, although the Company has some direct investments in operating subsidiaries for accounting purposes as a result of share-based payment awards (see Note 29). All subsidiaries have the same reporting dates and period of reporting as the parent Company. The parent held directly or indirectly all of the issued ordinary shares and controlled all of the voting rights in all of the subsidiaries, unless otherwise indicated. All subsidiaries have been consolidated in the Group financial statements and operate and are incorporated in the countries in which they are registered. Name Registered office Principal activities Jupiter Asset Management (Asia Pacific) Limited 1 6th Floor, Alexandra House, 18 Chater Road, Central, Hong Kong Investment management Jupiter Asset Management (Asia) Private Limited 50 Raffles Place, #27-01 Singapore Land Tower, Singapore Investment management Jupiter Asset Management (Canada) Limited 45 O’Connor Street, Ottawa, Canada Dormant Jupiter Asset Management (Europe) Limited 2 53 Merrion Square, South Dublin, Ireland ICVC management Jupiter Asset Management Group Limited 70 Victoria Street, London, UK Investment holding company Jupiter Asset Management (Hong Kong) Limited 6th Floor, Alexandra House, 18 Chater Road, Central, Hong Kong Investment management Jupiter Asset Management International S.A 5 Rue Heienhaff, Senningerberg, L-1736, Luxembourg SICAV management Jupiter Asset Management Limited 70 Victoria Street, London, UK Investment management Jupiter Asset Management (N America) Inc 1209 Orange Street, Wilmington, Delaware, USA Investment holding company Jupiter Asset Management (Switzerland) AG 16 Löwenstrasse, Zurich, Switzerland Investment management Jupiter Asset Management US LLC 1675 South State Street, #B, Dover, Delaware, USA Investment management Jupiter Fund Management Group Limited 70 Victoria Street, London, UK Investment holding company Jupiter Fund Managers Limited 3 70 Victoria Street, London, UK OEIC management Jupiter Investment Management Group Limited 70 Victoria Street, London, UK Investment holding company Jupiter Investment Management Holdings LLC 1675 South State Street, #B, Dover, Delaware, USA Investment holding company 167Jupiter Fund Management plc | Annual Report & Accounts 2021 30. Related undertakings continued Name Registered office Principal activities Jupiter Investment Management Limited 4 70 Victoria Street, London, UK Investment management Jupiter Investment Trust Limited 70 Victoria Street, London, UK Dormant Jupiter Management GP LLC 1675 South State Street, #B, Dover, Delaware, USA Investment management Jupiter Unit Trust Managers Limited 70 Victoria Street, London, UK Unit trust management Knightsbridge Asset Management Limited 70 Victoria Street, London, UK Investment holding company Merian Global Investors (Finance) Limited 47 Esplanade, St Helier, Jersey, Channel Islands Investment holding company Merian Global Investors Holdings Limited 70 Victoria Street, London, UK Investment holding company Merian Global Investors (Jersey) Limited 47 Esplanade, St Helier, Jersey, Channel Islands Investment holding company Merian Global Investors Limited 47 Esplanade, St Helier, Jersey, Channel Islands Investment holding company Merian Global Investors (Singapore) PTE Limited 50 Raffles Place, #27-01 Singapore Land Tower, Singapore Investment management NZS Capital LLC (25% ownership) 850 New Burton Road, #201, Dover, Delaware, USA Investment management Tyndall Holdings Limited 70 Victoria Street, London, UK Investment holding company Tyndall Investments Limited 70 Victoria Street, London, UK Dormant 1. Previously known as Merian Global Investors (Asia Pacific) Limited. 2. Previously known as Merian Global Investors (Europe) Limited. 3. Previously known as Merian Investment Management Limited. 4. Previously known as Merian Global Investors (UK) Limited. During the year, Merian Global Investors (Switzerland) GmbH merged with Jupiter Asset Management (Switzerland) AG. Jupiter Asset Management Australia Pty Limited was incorporated on 19 January 2022. The following information relates to seed investments which are judged to be subsidiaries of the Group at 31 December 2021: Name Registered office Principal activities Percentage of AUM indirectly held by the Company Jupiter European Smaller Companies Fund 70 Victoria Street, London, UK Unit trust 30% Jupiter Global Fund SICAV: Europe ex UK Equity 1 6 Route de Trèves, Senningerberg, Luxembourg SICAV sub-fund 66% Jupiter Global Fund SICAV: Flexible Income 6 Route de Trèves, Senningerberg, Luxembourg SICAV sub-fund 81% Jupiter Global Fund SICAV: Flexible Macro 6 Route de Trèves, Senningerberg, Luxembourg SICAV sub-fund 83% Jupiter Global Fund SICAV: Global High Yield Bond 2 6 Route de Trèves, Senningerberg, Luxembourg SICAV sub-fund 77% Jupiter Global Fund SICAV: Global Sustainable Equities 6 Route de Trèves, Senningerberg, Luxembourg SICAV sub-fund 86% Jupiter Merlin Real Return 70 Victoria Street, London, UK Unit trust 76% 1. Previously known as Jupiter Global Fund SICAV: Eurozone Equity. 2. Previously known as Jupiter Global Fund SICAV: Global High Yield Short Duration Bond. The following information relates to seed investments in funds where the Group holds more than 20% of the shares in any single share class, but over which the Group has neither control nor significant influence: Name Registered office Principal activities Jupiter Asset Management Series Plc: Europe (ex UK) Smaller Companies Fund 53 Merrion Square, South Dublin, Ireland ICVC sub-fund Jupiter Asset Management Series Plc: Gold & Silver Fund 53 Merrion Square, South Dublin, Ireland ICVC sub-fund Jupiter Asset Management Series Plc: Jupiter Emerging Market Debt Income Fund 53 Merrion Square, South Dublin, Ireland ICVC sub-fund Jupiter Asset Management Series Plc: Merian Global Dynamic Bond 53 Merrion Square, South Dublin, Ireland ICVC sub-fund Jupiter Asset Management Series Plc: North American Equity Fund (IRL) 53 Merrion Square, South Dublin, Ireland ICVC sub-fund Jupiter Asset Management Series Plc: Strategic Absolute Return Bond 53 Merrion Square, South Dublin, Ireland ICVC sub-fund Jupiter Asset Management Series Plc: UK Specialist Equity Fund 53 Merrion Square, South Dublin, Ireland ICVC sub-fund Jupiter Global Fund SICAV: Asia Pacific Income 6 Route de Trèves, Senningerberg, Luxembourg SICAV sub-fund Jupiter Global Fund SICAV: Dynamic Bond 6 Route de Trèves, Senningerberg, Luxembourg SICAV sub-fund Jupiter Global Fund SICAV: European Growth 6 Route de Trèves, Senningerberg, Luxembourg SICAV sub-fund Jupiter Global Fund SICAV: Financial Innovation 6 Route de Trèves, Senningerberg, Luxembourg SICAV sub-fund Jupiter Global Fund SICAV: Global Convertibles 6 Route de Trèves, Senningerberg, Luxembourg SICAV sub-fund Jupiter Global Fund SICAV: Global Ecology Growth 6 Route de Trèves, Senningerberg, Luxembourg SICAV sub-fund Jupiter Global Fund SICAV: Global Emerging Markets Corporate Bond 6 Route de Trèves, Senningerberg, Luxembourg SICAV sub-fund Notes to the Company Financial Statements continued 168 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS Name Registered office Principal activities Jupiter Global Fund SICAV: Global Emerging Markets Short Duration Bond 6 Route de Trèves, Senningerberg, Luxembourg SICAV sub-fund Jupiter Global Fund SICAV: Global Equity Growth Unconstrained 6 Route de Trèves, Senningerberg, Luxembourg SICAV sub-fund Jupiter Global Fund SICAV: Japan Select 6 Route de Trèves, Senningerberg, Luxembourg SICAV sub-fund Jupiter Global Fund SICAV: Jupiter Global Sovereign Opportunities 6 Route de Trèves, Senningerberg, Luxembourg SICAV sub-fund Jupiter Global Fund SICAV: Pan European Smaller Companies 6 Route de Trèves, Senningerberg, Luxembourg SICAV sub-fund Jupiter Global Sustainable Equities 70 Victoria Street, London Unit trust Jupiter Investment Funds Series II: Global Strategic Bond Fund 70 Victoria Street, London OEIC sub-fund Jupiter Investment Management Series I: Monthly Income Bond Fund 70 Victoria Street, London OEIC sub-fund Jupiter Investment Management Series I: UK Equity Income Fund 70 Victoria Street, London OEIC sub-fund MGI Arbea Fund Limited 190 Elgin Avenue, George Town, Grand Cayman Hedge Fund 31. Financial instruments held at fair value In 2020, the Company purchased a forward contract over 9m of its own shares for the purpose of satisfying share option obligations to employees. This contract was settled in November 2021. In 2021, the EBT purchased shares in certain funds managed by the Group in order to hedge compensation awards made by a subsidiary of the Company. 2021 £m 2020 £m Financial assets Financial assets at FVTPL 13.3 3.7 13.3 3.7 32. Trade and other receivables Trade and other receivables are initially recorded at fair value and subsequently at amortised cost. All trade and other receivables are due within one year or repayable on demand. In line with the Company’s historical experience, and after consideration of current credit exposures, the Company does not expect to incur any credit losses and has not recognised any expected credit losses in the current year (2020: £nil). 2021 £m 2020 £m Amounts owed from subsidiaries 104.3 103.0 Trade receivables – 2.6 Prepayments and accrued income 0.1 0.2 104.4 105.8 33. Cash and cash equivalents 2021 £m 2020 £m Cash at bank and in hand 0.7 0.5 Cash held by EBT 0.3 – 1.0 0.5 34. Cash flows from operating activities 2021 £m 2020 £m Operating profit 77.9 64.4 Adjustments for: Fair value losses/(gains) on current financial assets at fair value through profit or loss 3.8 (3.7) Decrease/(increase) in trade and other receivables 0.6 (85.6) Increase in trade and other payables 90.7 55.3 Cash inflows on exercise of share options 0.1 0.2 Cash generated from operations 173.1 30.6 Notes to the Company Financial Statements continued 169Jupiter Fund Management plc | Annual Report & Accounts 2021 35. Trade and other payables 2021 £m 2020 £m Amounts owed to subsidiaries 150.3 56.9 Accruals 3.5 3.8 153.8 60.7 36. Financial instruments Financial instruments by category The carrying value of the financial instruments of the Company at 31 December is shown below: 2021 Financial assets held at amortised cost £m Financial assets held at fair value through profit or loss £m Financial liabilities held at amortised cost £m Total financial instruments £m Non-financial instruments £m Total £m Investment in subsidiary undertakings – – – – 541.1 541.1 Financial assets at FVTPL – 13.3 – 13.3 – 13.3 Current trade and other receivables 104.4 – – 104.4 – 104.4 Cash and cash equivalents 1.0 – – 1.0 – 1.0 Non-current loans and borrowings – – (49.3) (49.3) – (49.3) Current trade and other payables – – (153.8) (153.8) – (153.8) Current income tax liability – – – – (0.1) (0.1) Total 105.4 13.3 (203.1) (84.4) 541.0 456.6 2020 Financial assets held at amortised cost £m Financial assets held at fair value through profit or loss Financial liabilities held at amortised cost Total financial instruments £m Non-financial instruments £m Total £m Investment in subsidiary undertakings – – – – 515.6 515.6 Financial assets at FVTPL – 3.7 – 3.7 – 3.7 Current trade and other receivables 105.8 – – 105.8 – 105.8 Cash and cash equivalents 0.5 – – 0.5 – 0.5 Non–current loans and borrowings – – (49.2) (49.2) – (49.2) Current trade and other payables – – (60.7) (60.7) – (60.7) Total 106.3 3.7 (109.9) 0.1 515.6 515.7 For financial instruments held at 31 December 2021, issued subordinated debt, recorded within non-current loans and borrowings above, had a fair value of £58.8m (2020: £54.0m), less unamortised expenses of £0.3m (2020: £0.4m). At 31 December 2020 and 2021, the following hierarchy was used for determining and disclosing the fair value of financial instruments: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: other techniques, for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly. Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data (unobservable inputs). As at 31 December 2021, the Company held the following financial instruments measured at fair value: 2021 Level 1 £m Level 2 £m Level 3 £m Total £m Financial assets at FVTPL – funds 13.3 – – 13.3 As at 31 December 2020, the Company held the following financial instruments measured at fair value: 2020 Level 1 £m Level 2 £m Level 3 £m Total £m Financial assets at FVTPL – derivatives – 3.7 – 3.7 Notes to the Company Financial Statements continued 170 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS Financial assets at FVTPL Financial assets at FVTPL – funds relates to hedges of awards in fund shares. Financial assets at FVTPL – derivatives held at 31 December 2020 related to a forward contract the Group held over its own shares for the purpose of hedging pricing risk in respect of unfunded share option obligations to employees. Price risk Price risk is the risk that a decline in the value of assets will adversely impact the profitability of the Company. Management has identified price risk as the exposure to unfavourable movements in the value of financial assets held by the Company which would result in a loss recognised in the consolidated income statement. The Company is not exposed to commodity price risk. The Company, through an EBT, holds listed equity investments as a hedge against compensation awards made by a subsidiary of the Company. Gains and losses are borne by the subsidiary and, as a result, the Company is not subject to price risk on these investments. At 31 December 2020, the Company held a forward contract over its own shares for the purpose of satisfying share option obligations to employees. The value of the contract was exposed to the risk of changes in equity markets. At 31 December 2020, the fair value, and therefore maximum exposure to listed securities, was £3.7m. Price risk sensitivity analysis on financial assets The Directors believe that 10% gives a reasonable measure of the Group’s sensitivity to price risk. An increase or decrease of 10% in equity markets would have the impact shown below on the Company’s profit before taxation. This reflects estimated gains and losses on the Company’s investments at the balance sheet date and not any likely impact on the Company’s revenue or costs. There is no further impact on the Company’s equity. Impact on the income statement of change in equity markets 2021 £m 2020 £m +10% – 2.5 -10% – (2.5) The Company’s exposure to foreign exchange, interest rate, credit and liquidity risk is not considered to be material and, therefore, no further information is provided. 37. Related parties Investments in subsidiary undertakings are disclosed in Note 29 and the amounts due from and to subsidiaries in Notes 32 and 35. Key management compensation The Company also considers transactions with its key management personnel as related party transactions. Key management personnel is defined as the Directors, together with other members of the Executive Committee. The aggregate compensation paid or payable to key management for employee services is shown below: 2021 £m 2020 £m Short–term employee benefits 2.3 0.9 Share–based payments 2.4 0.6 Other long-term benefits 0.1 – 4.8 1.5 Notes to the Company Financial Statements continued 171Jupiter Fund Management plc | Annual Report & Accounts 2021 Report on the audit of the financial statements Opinion In our opinion, Jupiter Fund Management plc’s group financial statements and company financial statements (the “financial statements”): • give a true and fair view of the state of the group’s and of the company’s affairs as at 31 December 2021 and of the group’s profit and the group’s and company’s cash flows for the year then ended; • have been properly prepared in accordance with UK-adopted international accounting standards; and • have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements, included within the Annual Report & Accounts 2021 (the “Annual Report”), which comprise: consolidated and company balance sheets as at 31 December 2021; consolidated income statement and consolidated statement of comprehensive income; the consolidated and company statements of cash flows; the consolidated and company statements of changes in equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies. Our opinion is consistent with our reporting to the Audit and Risk Committee. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided. Other than those disclosed in note 3 to the group financial statements, we have provided no non-audit services to the company or its controlled undertakings in the period under audit. Our audit approach Context Jupiter Fund Management plc (the “group” or “company”) is an active fund manager servicing retail and institutional clients. Jupiter listed on the London Stock Exchange in 2010. The group operates principally in the United Kingdom with international operating subsidiaries in Luxembourg, which has branches across Europe, Ireland, Hong Kong, Singapore, the United States and Switzerland. Overview Audit scope • We performed an audit of the complete financial information of Jupiter Asset Management Limited and Jupiter Investment Management Limited (which are significant components as each represent more than 15% of the profit before tax of the group), Jupiter Unit Trust Managers Limited, Jupiter Asset Management International S.A, Jupiter Fund Managers Limited and Jupiter Fund Management plc based on their size and risk. • As the adjustments made for the consolidation, including those for the seeded funds, are material for a number of financial statement line items (FSLIs), we scoped in these adjustments as components and performed audit testing. • We also performed specific audit procedures on certain balances and the financial statement disclosures. • Taken together, our audit work covered more than 95% of group revenue and 99% profit before tax. Our audit scope provided sufficient appropriate audit evidence as a basis for our opinion on the group financial statements as a whole. Key audit matters • Revenue recognition (group) • Share-based payments expense and fund unit award employee benefits (group and parent) • Impairment of goodwill (group) • Current and deferred tax (group) INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF JUPITER FUND MANAGEMENT PLC 172 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS Materiality • Overall group materiality: £9.0 million (2020: £8.9 million) based on 5% of profit before tax (2020: underlying profit before tax). • Overall company materiality: £6.6 million (2020: £5.6 million) based on 1% of total assets. • Performance materiality: £6.75 million (2020: £6.7 million) (group) and £4.9 million (2020: £4.2 million) (company). The scope of our audit As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. Key audit matters Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. “Valuation of intangibles from the acquisition of Merian and impairment of the goodwill arising on acquisition” and “Impact of COVID-19”, which were key audit matters last year, are no longer included because of those matters not being significant to the year ended 31 December 2021. Otherwise, the key audit matters below are consistent with last year. Key audit matter How our audit addressed the key audit matter Revenue recognition (group) Refer to Note 1. Revenue and Note 27. Basis of preparation and other accounting policies. Revenue is the most significant balance in the consolidated income statement. The group’s primary source of revenue is management fees. Management fees are earned from ongoing business activities and are shown net of rebates. The group also earns performance fees when agreed performance conditions have been met. Management fees consist of gross management fees from pooled funds, which includes, ICVCs, SICAVs, Unit Trusts and Investment Trusts; and Segregated Mandates. Management outsourced various control activities related to these revenue streams to third party service providers. The value of management fees, net of rebates and discounts, received during the year was £501.5m. The bulk of this revenue comes from pooled funds, with segregated mandates contributing £25.9m. The key risk areas related to management fees include: • fee terms being incorrectly interpreted or entered into fee calculations; • assets under management (‘AUM’) not being correctly attributed to fee agreements; • errors in manual calculations (for segregated mandates only); and • rebates may not be recorded completely and accurately. The value of performance fees received during the year was £113.0m. Performance fees are manually calculated and more complicated than management fee calculations, increasing the risk of error. The performance fee calculation requires accurate implementation of the methodology set out in the investment management arrangements listed in the legal agreements which are bespoke to each fund / client. Given the complexity and significance to the income statement we have determined management fees and performance fees to be a key audit matter. We understood and evaluated the design and implementation of key controls in place around revenue. This included outsourced activities at third-party service providers. In order to place reliance on the relevant controls over valuation and existence of investments (AUM) at the outsourced providers we obtained control reports issued by the independent service auditor of the third- party providers. Where appropriate, we have obtained and reviewed bridging letters issued by the third-party providers and performed complementary user entity controls testing. We found that the key controls on which we placed reliance were designed, implemented and operated effectively. In addition to controls testing we performed substantive audit procedures which included the following. For pooled funds we recalculated management fees by obtaining AUM data from third parties and applying the fee rates. For a sample of fee calculations we agreed the fee rates used in the calculation to supporting evidence, such as the fact sheets or prospectus. For segregated mandates we recalculated management fees for a sample of invoices by obtaining AUM data and fee rates included within investment management agreements. For unit trusts and SICAVs we recalculated rebates using information from third parties and agreed a sample of rate inputs within our calculation to discount forms. We also tested the completeness of rebates by reviewing a sample of unit holders / investors with no recorded rebates or nil rebates terms and agreed this back to agreements. For a sample of performance fees our procedures included the below: • We verified the performance fee calculation methodology by referring to the legal agreements. • We assessed whether the performance fee crystallised and hence could be recognised, by reviewing the legal agreements, ensuring the performance conditions have been met. • We recalculated the performance fee using legal agreements and key inputs used by management. Key inputs have been agreed to legal agreements, accounting records and third party sources where available. • We agreed the receipt of performance fees (cash and shares) to the bank statement and the supporting documentation where possible. • Where available for investment trusts we agreed the performance fees to the audited financial statements of the investment trusts concerned. No material issues were identified. 173Jupiter Fund Management plc | Annual Report & Accounts 2021 Key audit matter How our audit addressed the key audit matter Share-based payments expense and fund unit award employee benefits (group and parent) Refer to the Audit and Risk Committee report, Note 5. Share-based payment and Note 27. Basis of preparation and other accounting policies. There are a number of share-based and fund unit award arrangements in place for which the recognition involves the interpretation of complex terms, increasing the complexity of the accounting for each scheme. These arrangements remunerate employees for their services by granting the right to either shares, options over shares, or fund units, subject to certain vesting conditions and exercise prices. Options and share awards are accounted for as equity-settled share-based payments whereas fund units are accounted for as cash-settled. Equity- settled awards are fair valued on the date of grant, recognised within equity and not subsequently adjusted. Cash-settled award fair values are remeasured at each reporting date and on settlement and recognised as a liability. For equity-settled awards the conditions are such that the fair value calculated on grant equals the share price. For cash-settled awards the conditions are such that at each measurement date the fair value equals the value of the funds. The share-based payments expense calculation involves a number of manual elements and is judgemental in nature, involving estimation of both the expected future outcome of the performance conditions where applicable and the level of attrition in future years. For all awards, actual leavers are adjusted either by reversing the expense recognised that relates to them (bad leavers) or by accelerating the future expense still to be recognised into the current year (good leavers). The group financial statements provide sensitivity disclosures which demonstrate the impact changes in assumptions may have on the income statement expense. We understood and evaluated the design and implementation of key controls in place around share-based payments. In testing the share-based payment and fund unit award employee benefits expense, we performed the following substantive procedures where relevant to each arrangement. • Reconciled a sample of new tranches of existing awards granted in the year to the signed Deeds of Grant, ensuring they were appropriately authorised, approved and consistent with scheme plans. • For a sample of new tranches of existing awards granted in the year (options and fund units) we independently recalculated the fair value. • Tested the classification of awards as equity or cash-settled; • Assessed the reasonableness of the key assumptions, leaver rate and expected outcome of performance conditions, by examining historical data and performing sensitivity analyses; • Tested forfeitures and lapses by agreeing samples back to source documentation and ensuring the expense recognised had been trued up appropriately, particularly in relation to good leavers and the acceleration of the expense; • Tested a sample of options exercised during the year to check they were exercised in accordance with the terms of the grant; • For cash-settled and equity-settled awards, tested a sample of current year charges. For cash-settled, this is based on the year-end price of underlying funds and results in re-measurement of the liability. For equity-settled, this is based on fair value at grant date; and • Agreed the share-based payment disclosures made in the financial statements back to supporting documentation. No material issues were identified. Impairment of goodwill (group) Refer to the Audit and Risk Committee report, Note 10. Goodwill and Note 27. Basis of preparation and other accounting policies. Goodwill of £570.6m is the most significant balance in the group’s balance sheet. Management is required by IAS 36 ‘Impairment of assets’ to perform an annual impairment review and consider if there are any impairment indicators in respect of the carrying value of goodwill. Management has performed their annual impairment review which demonstrated that no impairment was required. The impairment review used a discounted cash flow model to calculate the net present value of the group’s future earnings. The model involved a number of estimates and assumptions made by management including those related to long-term growth rates and costs of capital. Management has applied judgment in determining the cash generating unit levels within its business for the purpose of impairment testing of goodwill. Management has concluded that the group is one cash generating unit, investment management. We obtained management’s impairment review and performed the following substantive procedures. • We evaluated management’s discounted cash flow model, checking the relevant inputs to supporting documentation and challenging management on key assumptions within the calculations. Our challenge included assessing whether management had incorporated climate change considerations within their model; • We evaluated management’s assessment that only one cash generating unit exists and concluded it was appropriate; • We challenged management’s sensitivity analysis by performing our own sensitivity analysis; • We assessed the accuracy of management’s historic forecasts against actual financial results to assess the reasonableness of estimates used in the forecast; • We considered publicly available information on the asset management industry and considered whether there were any views contrary to those of management; • We compared the fair value implied by management’s models to the market value of the company for any indicators of impairment; and • Agreed the goodwill disclosures made in the financial statements back to supporting documentation. No material issues were identified. 174 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS Key audit matter How our audit addressed the key audit matter Current and deferred tax (group) Refer to Note 8. Income tax expense, Note 13. Deferred tax and Note 27. Basis of preparation and other accounting policies. The calculation of the current and deferred tax is produced manually and is based on a number of supporting complex calculations including share- based payments and deferred bonuses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the group operates and generates taxable items. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. A deferred tax asset has been recognised by management which it is considered recoverable. We obtained management’s current and deferred tax computations and workings, performing the following testing. • We checked the mathematical accuracy of management’s computations; • We agreed the inputs used in the computations to supporting documentation; • We evaluated whether the temporary difference will reverse in the future and challenged management on the assumptions made in relation to the deferred tax asset recognised; • We confirmed management had appropriately reflected the changes in UK corporation tax in their deferred tax calculations; • Agreed the current and deferred tax disclosures made in the financial statements back to supporting documentation; and • We obtained and evaluated transfer pricing arrangements in place across the group. No material issues were identified. How we tailored the audit scope We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the group and the company, the accounting processes and controls, and the industry in which they operate. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole taking into account the structure of the group and the company, the accounting processes and controls, and the industry in which they operate. The group operates as a single-segment investment management business and the majority of the operations and finance team are based in the UK resulting in most of the audit procedures being performed locally by the UK audit team. In planning our audit, we made enquiries of management to understand the extent of the potential impact of climate change risk on the group’s financial statements. Management concluded that there was no material impact on the financial statements. Our evaluation of this conclusion included challenging key judgements and estimates in areas where we considered that there was greatest potential for climate change impact. This was principally in relation to the risk of impairment of goodwill as explained in our key audit matter on “Impairment of goodwill”. We also considered the consistency of the climate change disclosures included in the Strategic Report with the financial statements and our knowledge from our audit. Based on the scoping procedures and detailed audit work performed across the group, we have obtained sufficient comfort across the individual account balances within the group financial statements, obtaining more than 95% coverage over revenue and more than 99% coverage over profit before tax. 175Jupiter Fund Management plc | Annual Report & Accounts 2021 Materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole as follows: Financial statements – group Financial statements – company Overall materiality £9.0 million (2020: £8.9 million). £6.6 million (2020: £5.6 million). How we determined it 5% of profit before tax (2020: underlying profit before tax) 1% of total assets Rationale for benchmark applied An underlying profit before tax benchmark was applied in 2020 however given the reduced volatility of profit before tax in 2021, following the reduction in exceptional costs incurred in connection with the Merian acquisition during 2020, we believe that profit before tax is the primary measure used by the shareholders in assessing the performance of the group during 2021 which is consistent with our materiality benchmark for the years ended 2018 and 2019. As the company is a holding company and does not earn any revenue, total assets is the most appropriate method to determine materiality and is a generally accepted auditing benchmark. For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality allocated across components was between £0.5 million and £8.8 million. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2020: 75%) of overall materiality, amounting to £6.75 million (2020: £6.7 million) for the group financial statements and £4.9 million (2020: £4.2 million) for the company financial statements. In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate. We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above £450,000 (group audit) (2020: £448,000) and £330,000 (company audit) (2020: £282,000) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons. Conclusions relating to going concern Our evaluation of the directors’ assessment of the group’s and the company’s ability to continue to adopt the going concern basis of accounting included: • We obtained management’s latest forecasts that support the board’s assessment and conclusions with respect to the going concern basis of preparation of the financial statements. • We checked the arithmetical accuracy of management’s forecasts. • We evaluated management’s base case forecast and downside scenarios, challenging the underlying data and adequacy and appropriateness of the underlying assumptions used to make the assessment, and evaluated the directors’ plans for future actions in relation to their going concern assessment should these be required. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group’s and the company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group’s and the company’s ability to continue as a going concern. In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. 176 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS Reporting on other information The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are responsible for the other information, which includes reporting based on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities. With respect to the Strategic report and Directors’ report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included. Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below. Strategic report and Directors’ report In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors’ report for the year ended 31 December 2021 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. In light of the knowledge and understanding of the group and company and their environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Directors’ report. Directors’ Remuneration In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. Corporate governance statement The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other information section of this report. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to: • The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks; • The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation of how these are being managed or mitigated; • The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the group’s and company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; • The directors’ explanation as to their assessment of the group’s and company’s prospects, the period this assessment covers and why the period is appropriate; and • The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. Our review of the directors’ statement regarding the longer-term viability of the group was substantially less in scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge and understanding of the group and company and their environment obtained in the course of the audit. In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit: • The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information necessary for the members to assess the group’s and company’s position, performance, business model and strategy; • The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and • The section of the Annual Report describing the work of the Audit and Risk Committee. We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors. 177Jupiter Fund Management plc | Annual Report & Accounts 2021 Responsibilities for the financial statements and the audit Responsibilities of the directors for the financial statements As explained more fully in the Statement of Directors’ responsibilities, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the company or to cease operations, or have no realistic alternative but to do so. Auditors’ responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of UK regulatory principles, such as those governed by the Financial Conduct Authority (FCA), and we considered the extent to which non- compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to revenue, and management bias in accounting estimates. Audit procedures performed by the engagement team included: • Enquiries of management, including legal, compliance, risk and internal audit, including consideration of known or suspected instances of non- compliance with laws and regulations including fraud. • Reviewing the group/company’s litigation log in so far as it related to non-compliance with laws and regulations and fraud. • Identifying and testing journal entries, in particular any journal entries posted on non-working days, unexpected account combinations or by unexpected users. • Review of relevant meeting minutes, including those of the Audit and Risk Committee and Board. • Challenging assumptions and judgements made by management in their significant accounting estimates. • Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing. There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected. A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/ auditorsresponsibilities. This description forms part of our auditors’ report. Use of this report This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. 178 Jupiter Fund Management plc | Annual Report & Accounts 2021 FINANCIAL STATEMENTS Other required reporting Companies Act 2006 exception reporting Under the Companies Act 2006 we are required to report to you if, in our opinion: • we have not obtained all the information and explanations we require for our audit; or • adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or • certain disclosures of directors’ remuneration specified by law are not made; or • the company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. Appointment We were appointed by the Directors to audit the financial statements for the year ended 31 December 2007 and subsequent financial periods. Following a competitive tender process in 2014, we were reappointed as auditor of the Company by recommendation of the Audit and Risk Committee for the period ending 31 December 2015 and subsequent financial periods. The period of total uninterrupted engagement is 15 years, covering the years ended 31 December 2007 to 31 December 2021. Other matter As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements form part of the ESEF- prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS. Colleen Local (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 24 February 2022 179Jupiter Fund Management plc | Annual Report & Accounts 2021 HISTORICAL SUMMARY (UNAUDITED) for the year ended 31 December 2021 2021 £m 2020 £m 2019 £m 2018 £m 2017 £m Net revenue 568.6 457.8 379.1 412.7 409.5 Administrative expenses (353.1) (312.1) (228.5) (225.1) (214.8) Other (losses)/gains (4.4) 3.3 4.1 (6.5) 0.6 Amortisation of intangible assets (20.6) (11.3) (1.8) (1.8) (2.3) Operating profit 190.5 137.7 152.9 179.3 193.0 Finance income – – 0.1 0.1 0.1 Finance costs (6.8) (5.1) (2.0) (0.2) (0.2) Profit before taxation 183.7 132.6 151.0 179.2 192.9 Income tax expense (34.1) (27.3) (28.2) (36.2) (38.1) Profit for the year 149.6 105.3 122.8 143.0 154.8 Earnings per share Basic (p/share) 27.6 21.3 27.5 31.8 34.5 Diluted (p/share) 26.9 20.8 26.8 31.1 33.7 Dividends per share Interim (p/share) 7.9 7.9 7.9 7.9 6.8 Final (p/share) 9.2 9.2 9.2 9.2 10.3 Special (p/share) – 3.0 – 11.4 15.5 Total dividends paid out of current year profit 17.1 20.1 17.1 28.5 32.6 AUM at year end (£bn) 60.5 58.7 42.8 42.7 50.2 Average headcount (number) 584 593 529 533 504 Cash and cash equivalents (£m) 197.3 188.1 179.4 201.7 234.2 Net cash inflows from operating activities (£m) 188.9 104.6 149.8 170.5 194.6 Underlying profit before tax (£m) 216.7 179.0 162.7 183.0 193.8 Underlying earnings per share (p/share) 31.7 28.7 28.8 32.4 34.2 180 Jupiter Fund Management plc | Annual Report and Accounts 2021 OTHER INFORMATION The Group uses Alternative Performance Measures (APMs) for two principal reasons: • We use ratios to provide metrics for users of the accounts; and • We use revenue, expense and profitability-based APMs to explain the Group’s underlying profitability. These non-IFRS measures are considered additional disclosures and are not intended to replace the financial information prepared in accordance with the basis of preparation detailed in the financial statements. Moreover, the way in which the Group defines and calculates these measures may differ from the way in which these or similar measures are calculated by other entities. Accordingly, they may not be comparable to measures used by other entities in the asset management industry. Ratios The Group calculates ratios to provide comparable metrics for users of the accounts. These ratios are derived from other APMs that measure underlying revenue and expenditure data. In the 2021 Annual Report and Accounts, we have used the following ratios: APM 2021 2020 Definition Reconciliation 1 Net management fee margin 76 bps 79 bps Net management fees divided by average AUM See table 1 below 2 Operating margin 39% 41% Operating profit (before exceptional items) divided by Adjusted net revenue 3 Operating margin before performance fees 38% 39% Operating profit (before exceptional items and performance fees) divided by Net revenue before performance fees 4 Total compensation ratio 37% 35% Fixed staff costs before exceptional items plus Variable staff costs before exceptional items as a proportion of Net revenue 5 Total compensation ratio before performance fees 33% 35% Fixed staff costs before exceptional items plus Variable staff costs before exceptional items and performance fees as a proportion of Net revenue before performance fees 6 Underlying EPS 31.7p 28.7p Underlying profit after tax divided by average issued share capital 7 Underlying pay-out ratio 54% 60% Total ordinary dividend per share divided by underlying EPS 8 Underlying EPS before net performance fees 24.1p 22.9p Underlying profit after tax before net performance fees divided by average issued share capital THE USE OF ALTERNATIVE PERFORMANCE MEASURES IN THIS ANNUAL REPORT 181 Jupiter Fund Management plc | Annual Report and Accounts 2021 Reconciliations: table 1 APM 2021 £m 2020 £m Management fees (page 137) 501.5 426.6 Less: Fees and commissions relating to management fees (page 137) (47.8) (42.6) Net management fees 453.7 384.0 Average AUM (£bn) 59.7 47.8 Net management fee margin 1 76 bps 79 bps Operating profit (page 132) 190.5 137.7 Exceptional items (page 24) 33.0 46.4 Operating profit (before exceptional items) 223.5 184.1 Net revenue (page 132) 568.6 457.8 Less: Performance fees classified as exceptional items (page 137) – (10.0) Adjusted net revenue 568.6 447.8 Operating margin 2 39% 41% Operating profit (before exceptional items) (see above) 223.5 184.1 Performance fee profits (page 21) (52.1) (35.9) Operating profit (before exceptional items and performance fees) 171.4 148.2 Net revenue before performance fees (page 21) 455.6 384.2 Operating margin before performance fees 3 38% 39% Fixed staff costs before exceptional items (page 21) 73.0 76.1 Variable staff costs before exceptional items (page 21) 140.0 85.8 Total 213.0 161.9 Net revenue (see above) 568.6 457.8 Total compensation ratio 4 37% 35% Fixed staff costs before exceptional items (see above) 73.0 76.1 Variable staff costs before exceptional items and performance fees (page 21) 79.1 58.1 Total 152.1 134.2 Net revenue before performance fees (see above) 455.6 384.2 Total compensation ratio before performance fees 5 33% 35% Statutory profit before tax (page 132) 183.7 132.6 Exceptional items (see above) 33.0 46.4 Underlying profit before tax 216.7 179.0 Tax at average statutory rate of 19% (41.2) (34.0) Underlying profit after tax 175.5 145.0 Average issued share capital (m) (page 144) 553.1 505.4 Underlying EPS 6 31.7p 28.7p Total ordinary dividend per share (page 152) 17.1p 17.1p Underlying EPS (see above) 31.7p 28.7p Underlying pay-out ratio 7 54% 60% Underlying profit after tax before net performance fees (page 25) 133.3 115.9 Average issued share capital (m) (see above) 553.1 505.4 Underlying EPS before net performance fees 8 24.1p 22.9p Revenue, expense and profit-related measures 1. Asset managers commonly draw out subtotals of revenues less cost of sales, taking into account items such as fee expenses, including commissions payable, without which a proportion of the revenues would not have been earned. Such net subtotals can also be presented after deducting non-recurring exceptional items. 2. The Group uses expense-based APMs to identify and separate out non-recurring exceptional items or recurring items that are of significant size in order to provide useful information for users of the accounts who wish to determine the underlying cost base of the Group. To further assist in this, we also provide breakdowns of administrative expenses below the level required to be disclosed in the statutory accounts, for example, distinguishing between variable and fixed compensation, as well as non-compensation expenditure. These subdivisions of expenditure are also presented before and after exceptional items and after accounting for the impact of performance fee pay-aways to fund managers. 3. Profitability-based APMs are effectively the sum of the above revenue and expense-based APMs and are provided for the same purpose - to separate out non-recurring exceptional items or recurring items that are of significant size in order to provide useful information for users of the accounts who wish to determine the underlying profitability of the Group. 4. Underlying profit after tax is, in addition, used to calculate underlying EPS which determines the Group’s ordinary dividend per share and is used in one of the criteria for measuring the vesting rates of share-based awards that have performance conditions attached. 182 Jupiter Fund Management plc | Annual Report and Accounts 2021 OTHER INFORMATION 183 Jupiter Fund Management plc | Annual Report and Accounts 2021 In the 2021 Annual Report and Accounts, we have used the following measures which are reconciled or cross-referenced in table 1: Rationale for use of measure Net management fees 1 Operating profit 3 Exceptional items 1, 2 Net revenue 1 Adjusted net revenue 1 Performance fee profits 3 Fixed staff costs before exceptional items 2 Variable staff costs before exceptional items 1 2 Underlying profit before tax 3 Underlying profit after tax 3, 4 1. We also use this measure excluding performance fees – see pages 23 and 24. As stated in 2 above, the Group presents a breakdown of administrative expenses below the level required to be disclosed in the statutory accounts, distinguishing between variable and fixed compensation, as well as non-compensation expenditure. The relevant amounts are set out in the table on page 21. Changes in use of APMs since 2020 In 2021, as a result of significant performance fee earnings, we have introduced four new APMs that serve to exclude the impact of both performance fees earned and amounts paid away to employees in respect of those performance fees. The purpose of the new APMs is to make it easier for users of the accounts to see the Group’s underlying results and profitability by excluding these substantial items of revenue and expense which, by their nature, are unlikely to be comparable year-on-year. These measures are: • Operating margin before performance fees; • Total compensation ratio before performance fees; • Underlying EPS before net performance fees; and • Performance fee profits. In 2020, but not 2021, we used ‘Variable compensation ratio’ as an APM. In addition, ‘Operating expenses (before exceptional items)’ was also an APM, although its sole purpose was to enable the calculation of the variable compensation ratio. The Group’s principal external reporting measure of compensation is the total compensation ratio. SHAREHOLDER INFORMATION Shareholder enquiries All enquiries relating to holdings of shares in Jupiter Fund Management plc, including notification of change of address, queries regarding dividend/interest payments or the loss of a share certificate, should be addressed to the Company’s Registrars: Link Group 10th Floor Central Square 29 Wellington Street Leeds LS1 4DL Tel: 0871 664 0300 (Calls are charged at the standard geographic rate and will vary by provider) Overseas tel: +44 (0) 371 664 0300 Calls outside the UK will be charged at the applicable international rate. Lines are open (UK only) 9.00am-5.30pm Monday to Friday. Email: shareholderenquiries@linkgroup.co.uk Other shareholder queries should be addressed to the Company Secretary (shareholderservices@jupiteram.com). Share dealing service There is a share dealing service offered by the Registrars. It is a simple way to buy and sell shares via the internet or telephone with quick settlement. For information visit: www.linksharedeal.com For telephone purchases: Tel: 0371 664 0445. Lines are open 8.00am to 4.30pm, Monday to Friday. UK calls are charged at the standard geographic rate. Calls outside the UK will be charged at the applicable international rate. Financial calendar Event Date Ex-dividend date for final dividend 21 April 2022 Record date for final dividend 22 April 2022 Trading update 26 April 2022 Annual General Meeting 11 May 2022 Payment date for final dividend 20 May 2022 Interim results announcement 29 July 2022 Trading update 18 October 2022 Company details and principal office Jupiter Fund Management plc The Zig Zag Building 70 Victoria Street London SW1E 6SQ Registered number: 6150195 Company Secretary – Lisa Daniels Tel: 020 3817 1000 Website The Company has a corporate website, which holds, amongst other information, copies of its latest annual report and copies of all press announcements released. This site can be found at www.jupiteram.com Share information The Company’s ordinary shares are traded on the London Stock Exchange: ISIN GB00B53P2009 SEDOL B53P200 TICKER JUP.LN Electronic communications We encourage shareholders to receive shareholder documentation electronically to help reduce the environmental impact caused by printing and distributing hard copies. You can register your communication preference at www.signalshares.com Electronic proxy voting This year we have not produced hard copies of the proxy form and are requesting all shareholders vote electronically by logging onto www.signalshares.com and selecting Jupiter Fund Management plc. Alternatively you can request a hard copy proxy form by calling our Registrars, Link Group, on the number above. Further information can be found in the 2022 Notice of Annual General Meeting. 184 Jupiter Fund Management plc | Annual Report and Accounts 2021 OTHER INFORMATION GLOSSARY OF TERMS A Act Companies Act 2006 (as amended, supplemented or replaced from time to time) AGM Annual General Meeting AIFM Alternative Investment Fund Manager AML Anti-money laundering APM Alternative Performance Measures as defined on pages 181-183 AUM Assets under management B Board The Board of Directors of the Company Bps One one-hundredth of a percentage point (0.01%) BREEAM Building Research Establishment Environmental Assessment Method is the world’s longest established method of assessing, rating, and certifying the sustainability of buildings Brexit The withdrawal of the United Kingdom from membership of the European Union C CASS The FCA’s Client Asset Sourcebook rules CDP Formerly the Carbon Disclosure Project CGU Cash-generating unit Code UK Corporate Governance Code adopted by the Financial Reporting Council in 2018 Company Jupiter Fund Management plc CREST The system for paperless settlement of trades in listed securities, of which Euroclear UK & Ireland Limited is the operator C (continued) CSR Corporate Social Responsibility D D&I Diversity and Inclusion DBP Deferred Bonus Plan DBP Deferred Earn Out E EBT The Jupiter employee benefit trust established pursuant to a trust deed dated 22 April 2004 EPS Earnings per share ESG Environmental, social and governance EU The European Union F FCA Financial Conduct Authority of the United Kingdom FRC Financial Reporting Council FSA Free Share Award FVTPL Fair value through profit or loss G GHG Greenhouse gas Good Work Initiative A ShareAction-led coalition that brings together institutional investors to collaboratively engage on workforce issues, including the Living Wage, diversity and inclusion and insecure working practices Group The Company and all of its subsidiaries I IAS International Accounting Standard(s) ICAAP Internal Capital Adequacy Assessment Process ICARA Internal Capital Adequacy and Risk Assessment ICAV Irish Collective Asset-management Vehicle ICVC Investment Company with Variable Capital IFRS International Financial Reporting Standard(s) IFRS IC IFRS Interpretations Committee IIGCC Institutional Investors Group on Climate Change ISA International Share Award J Jupiter The Company and all of its subsidiaries K KPI Key performance indicator L Listing The Company’s Listing on the London Stock Exchange on 21 June 2010 Listing Rules Regulations subject to the oversight of the FCA applicable to the Company following Listing LGBTQ+ Lesbian, gay, bisexual, transgender and other sexual or gender identities LTIP Long-term Incentive Plan for retention 185 Jupiter Fund Management plc | Annual Report and Accounts 2021 M Merian Merian Global Investors Limited and its subsidiary undertakings Mutual funds Collective investments where a group of investors pool their money (buying units or a portion of the mutual fund) N NZAM Net Zero Asset Management NZIF Net Zero Investment Framework O OEIC Open Ended Investment Company Ordinary dividends per share Interim and final/full-year dividends (does not include any special dividends) P PBT Profit before tax Platforms Service providers that enable investors to buy and hold in a single place a range of investments from multiple providers with different tax wrappers PPA Purchase price agreement R RCF Revolving credit facility RE100 RE100 is a global corporate renewable energy initiative, bringing together businesses committed to 100% renewable electricity Registrar Link Asset Services RFP Request for proposal S SAYE Save As You Earn SEDOL Stock Exchange Daily Official List Segregated mandates An investment strategy run exclusively for certain institutional clients SFDR Sustainable Finance Disclosure Regulation SICAV Société d’Investissement à Capital Variable; an open-ended collective investment scheme offered in Europe SIP Share Incentive Plan SMCR Senior Managers and Certification Regime; an FCA regime governing the regulation of senior employees of entities operating in the financial services sector in the UK SONIA Sterling Overnight Index Average T TCFD The Financial Stability Board Task Force on Climate-related Financial Disclosures (TCFD) is a market-driven initiative to help investors understand their financial exposure to climate risk and help companies disclose this information in a clear and consistent way U UCITS Undertaking for Collective Investment in Transferable Securities as defined by EC Council Directive 85/611/EEC, as amended UNGC United Nations Global Compact. A UN-led pact to encourage businesses worldwide to adopt sustainable and socially responsible policies, and to report on their implementation. It is the world’s largest corporate sustainability initiative and is based on ten principles in the areas of human rights, labour, the environment and anti-corruption W WAEP Weighted average exercise price WDI Workforce Disclosure Initiative 186 Jupiter Fund Management plc | Annual Report and Accounts 2021 OTHER INFORMATION This report is printed on Printspeed Offset which is derived from sustainable sources. Both the manufacturing paper mill and printer are registered to the Environmental Management System ISO 14001 and are Forest Stewardship Council® chain of custody certified. Designed and Produced by Black Sun Plc www.blacksunplc.com Registered address: The Zig Zag Building 70 Victoria Street London SW1E 6SQ www.jupiteram.com