REG - Premier Miton Group - Full Year Results
02/12/2022 07:00
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RNS Number : 3539I Premier Miton Group PLC 02 December 2022
PREMIER MITON GROUP PLC
FULL YEAR RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2022
Premier Miton Group plc ('Premier Miton', 'Company' or 'Group'), the AIM
quoted fund management group, today announces its final results for the year
ended 30 September 2022.
Highlights
· £10.6 billion closing Assets under Management (4) ('AuM') (2021:
£13.9 billion)
· £11.3 billion closing AuM at 25 November 2022 (unaudited)
· Net outflows of £1,076 million for the year (2021: £830 million
inflow)
· Strong investment performance with 87% of funds in the first or
second quartile of their respective sectors since launch or fund manager
tenure (2021: 83%)
· Adjusted profit before tax (1,4) of £24.3 million (2021: £28.6
million)
· Adjusted earnings per share (2,4) of 13.79 pence (2021: 16.46
pence)
· Profit before tax (3) of £14.9 million (2021: £17.5 million)
· Cash balances were £45.8 million at 30 September 2022 (2021:
£47.7 million)
· Final proposed dividend of 6.3 pence per share (2021: 6.3 pence
per share)
· Total proposed dividend for the year of 10.0 pence per share
(2021: 10.0 pence per share)
· Significant investment in fund management and distribution talent
over the last three years to help create a modern, active asset management
business positioned for future growth
Notes
(1) Adjusted profit before tax is calculated before the deduction of taxation,
amortisation, share-based payments, merger related costs and exceptional
costs. Reconciliation included within the Financial Review section.
(2) Adjusted earnings per share is calculated before the deduction of
amortisation, share-based payments, merger related costs and exceptional
costs.
(3) Merger related costs totalled £0.1 million during the year (2021: £1.4
million).
(4) These are Alternative Performance Measures ('APMs').
Mike O'Shea, Chief Executive Officer of Premier Miton Group, commented:
"I am pleased to deliver a resilient set of results for the Group despite
tougher market conditions. I believe we remain well positioned to achieve our
long-term growth ambitions. We have a financially robust business and a
diversified range of products delivering excellent outcomes for our clients
over the medium to long term. I am very much of the view that when confidence
returns, investors will increasingly seek genuinely active strategies as they
look to deliver added value for their clients above benchmark returns. Premier
Miton is well placed to take advantage of this opportunity, given our track
record of delivering strong investment performance for our clients.
"Across our fund range, our relative investment performance remains
attractive, with 87% of our funds in the first or second quartile of their
respective sectors since manager inception. Shorter-term numbers also remain
encouraging with 88% of funds above median over three years.
"As part of our long-term growth strategy, we have continued to invest in our
business. We were pleased to announce the appointment of Jonathan Willcocks as
our Global Head of Distribution. Jonathan will play a key role in developing
and leading our distribution and marketing strategy as we expand our
investment strategies, diversify our client base and seek to grow AuM with
both wholesale and institutional investors. During the year, we also announced
that Matthew Tillett joined the Group in October 2022 as manager of the
Premier Miton UK Value Opportunities Fund.
"Our fund management team is experienced and respected, with a proven track
record of delivering strong investor outcomes over many years. Our business
has the operational infrastructure to manage a multiple of the assets it
currently looks after. We believe that the demand for what we do will grow
significantly in the more challenging investment environment we are now in and
that we have built the necessary distribution and marketing reach and
experience to capitalise on this opportunity.
"Finally, it has been encouraging to see a recovery in assets under management
since the year end and to have seen a return to net positive flows into our
funds during the first two months of the current financial year."
ENDS
For further information, please contact:
Premier Miton Group plc
Mike O'Shea, Chief Executive Officer 01483 306 090
Investec Bank plc (Nominated Adviser and Broker)
Bruce Garrow / Ben Griffiths / Virginia Bull / Harry Hargreaves 020 7260 1000
Edelman Smithfield Consultants (Financial PR)
John Kiely / Latika Shah 07785 275665 /
07950 671948
Notes to editors:
Premier Miton Investors is focused on delivering good investment outcomes for
investors through relevant products and active management across its range of
investment strategies, which include equity, fixed income, multi-asset and
absolute return.
LEI Number: 213800LK2M4CLJ4H2V85
Chairman's Statement
The last year has been badly affected by material macroeconomic and
geopolitical events and their consequent deep impact on financial and
investment markets. Our results reflect this.
Performance
At 30 September 2022, we had Assets under Management ('AuM') of £10.6
billion, a reduction of 24% on last year end. This change reflects both market
movements and net outflows, which have occurred across the UK savings
industry.
Investment performance is fundamental to our success as a business and I am
pleased that this remains strong with 87% of funds in the first or second
quartile of their respective sectors since launch or fund manager tenure
(2021: 83%).
Results & dividend
The Group's profit before tax for the year was £14.9 million representing a
fall of 15% on the comparative year. At 30 September 2022 the Group was
robustly financed with no debt and cash balances of £45.8 million.
When considering the dividend, the board focuses on both nearer term
commercial decisions and longer-term strategic horizons, to ensure the
interests of the business as a whole and of our shareholders are accommodated.
We are proud to have created a financially strong business, adhering to a
prudent approach to capital management. Our dividend policy is an important
part of this framework.
Asset management is a cyclical business where external market factors can have
a significant short-term impact on revenues, irrespective of the long-term
strengths and prospects for the business. We have a disciplined approach on
costs and a track record of managing the business efficiently. This focus is
critical in managing our operational leverage and is reflected in the strength
of the balance sheet, despite the challenging conditions we are navigating.
We also believe that shareholders should benefit directly from the financial
performance of the business, which includes our cash generation should the
circumstance and opportunity allow. Equally, we know that shareholders will
understand how important it is that the business retains sufficient balance
sheet strength, so that we can fully take advantage of the recovery when it
comes.
Having assessed all this carefully, and to reward shareholders appropriately
for their long-term support of the business, the Board is recommending an
annual dividend for 2022 of 10.0p per share. If approved by shareholders at
the Annual General Meeting on 1 February 2023, the final dividend of 6.3p per
share will be paid on 10 February 2023 to shareholders on the register at 13
January 2023. The proposed annual dividend represents a 72% pay-out ratio of
adjusted profit after tax (2021: 61%).
We see this as a pragmatic deviation from our stated dividend policy which we
are otherwise not changing. It reflects our prudent views on the current
commercial and strategic position of the business, our balance sheet needs,
and our attention to delivering through the cycle returns to our shareholders.
Environmental, Social & Governance ('ESG')
The role of the investment industry in ESG matters, particularly environment
and climate change aspects, is under great scrutiny. The debate over what we
do and how has advanced considerably over the last year or so, and we expect
this to continue to evolve. We know that our stakeholders can have strong
views on this and want us to have a position that makes sense to them, which
can at times present us with the challenge of balancing these interests.
The Board takes its governance and strategy setting role seriously on these
matters and we have sought to inform ourselves and have, over the last year,
debated how we best position Premier Miton for success. In November 2022 we
made a commitment to the Net Zero Asset Managers initiative and we look
forward to reporting on our future progress in this important area.
Culture & people
Businesses operating in the asset management sector need a healthy culture to
prosper and serve their fundamental purposes. The Board takes its
responsibilities seriously on supervising and shaping our culture, ensuring
that through our organisation we are doing what we should and must, and for
the right reasons. I was pleased by the results of culture surveys undertaken
during the year and I am conscious that with the current strains on markets
and our industry, we will continue to focus in this area.
We have talented, hard-working and motivated staff who have coped remarkably
well with the challenges of the year, and I thank them. As a business we seek
to provide our people with an environment where they can develop their talents
and performance, as well as enjoy and be proud to work at Premier Miton. I am
pleased to see the various initiatives we have underway and how our leadership
group have engaged with creating a high performance and positive culture.
Under Mike O'Shea's strong and effective leadership, we have a committed and
hard-working executive team who again have shown that they stand out in our
industry for their skills and capabilities.
I was especially pleased that Jonathan Willcocks has joined us at the end of
the year as our new Global Head of Distribution, bringing with him a depth of
experience and reserves of energy that I am sure will be invaluable to us over
the coming years.
Our reward model needs to work well and is important for the success of the
business. During the year we updated our approach and made awards for the
first time under the 2016 Long Term Incentive Plan for the senior executive
team. These are designed to motivate and reward exceptional performance on a
basis of fully aligned interests, especially with those of our shareholders.
The scheme is structured in line with others in our market and has the usual
protections built in. The Board will closely monitor this as we proceed to
ensure that it is effective.
Finally, I must thank my colleagues on the Board for their support and counsel
over the year. They have all made valuable contributions in what is a
challenging time for all businesses. Having the right culture is vital for a
healthy business and the Board strives to set the appropriate tone in our work
and contribution across all aspects of our roles. I would especially like to
thank Will Smith who left the Board on 30 September 2022 having served for six
years, latterly as our Senior Independent Director and Chair of Remuneration
Committee.
Strategy
We have a clear purpose in actively managing our assets for the benefit of our
clients and we take a long term view of how we do this. We believe in the
value of active asset management and are committed to delivering this for the
benefit of our clients. Our strategy is designed to support this purpose. As a
Board we monitor this closely and work with our management team to make sure
that our decisions and resources are aligned with this purpose. In this way,
we believe that the needs and ambitions of our other key stakeholders,
particularly our people and shareholders, will also be fully supported through
executing our strategy to the best of our ability.
The investment industry matters, to our clients as well as to business and our
economy, perhaps especially so over the coming period as we go through these
challenging times while holding on to the prospect of better days ahead. There
is currently considerable political debate about the role in the UK of
business and capital and investment markets, as well as on the UK's own needs
and positioning.
This debate is likely to continue for some time and matters not just for the
future of our own business but for broader societal interests. We hope that
the fundamental issues at stake are resolved in a way that provides us with
improvements to the environment where, as a high performing, active investment
firm, we can further prosper.
We are fortunate that through careful management Premier Miton has several
attributes that hold us in good stead strategically even for a relatively
small player in the market. Aside from our products and performance, these
include our culture, focus and leadership expertise, all of which have served
us well over the year as we have explored tactical and strategic choices. They
are likely to be called on again over the coming period and we will not
hesitate to engage constructively with emerging opportunities and challenges
alike in the interests of our business as a whole.
Outlook
We are a business focused on the long term, and at the core of what we do is
the unconstrained approach of our portfolio managers to make investment
decisions that are designed to deliver attractive returns to our clients over
time.
We are determined that Premier Miton will be run in a disciplined way and not
only endure but will use this period to improve our business, performing as
well as we can for our clients, curating our resources to the best of our
abilities, and readying the business to attract inflows of funds as and when
broad sentiment recovers. Our ambition remains bold and we remain resilient
and positive.
Robert Colthorpe
Chairman
01 December 2022
Chief Executive Officer's Statement
The last 12 months have been a challenging period for the business. However,
this must be set in the context of a major shift in market conditions, the
impact of which will be felt for several years to come. For the first time in
many years, we have seen a concerted effort by leading central banks to drain
liquidity from markets and to raise interest rates to contain inflation. This,
alongside significantly higher geopolitical tension following the Russian
invasion of Ukraine, has caused bond yields to rise rapidly and equity markets
to retrench.
Despite these challenging conditions, which have resulted in net outflows and
a lower level of Assets under Management, the Group remains well positioned to
achieve its growth ambitions, including our medium term ambition to reach £20
billion. We have a financially robust business and a diversified range of
products delivering excellent outcomes for our clients over the medium to
longer term. We believe that when confidence returns more investors will seek
genuinely active strategies as they look to deliver added value for their
clients above and beyond benchmark returns. Premier Miton is well placed to
take advantage of this opportunity, given our track record of delivering
strong investment performance for our clients, across a range of asset
classes.
Business performance
At the end of September 2022 Assets under Management ('AuM') stood at £10.6
billion representing a decrease of 24% on last year. Average AuM stood at
£12.6 billion for the period, which is broadly the same level as the previous
year.
The drop in AuM is largely a result of falling markets and a reluctance on the
part of investors to invest during market turbulence and uncertain
macro-conditions.
The net management fee margin (the retained revenue of the firm after
deducting the costs of external Authorised Corporate Directors ('ACD'), OCF
caps, direct research costs and any enhanced fee arrangements), was 64.6bps
compared with 65.0bps last year.
The adjusted operating margin decreased from 33.8% to 30.0% reflecting the
lower level of AuM and our strategic investment in the fixed cost base of the
business via new fund management teams and the launch of new funds, which in
turn will enhance the Group's growth profile going forward.
Despite this reduction in adjusted operating margin, the Group remains
robustly profitable, generating £24.3 million of adjusted profit before tax
for the year and a closing cash position of £45.8 million.
Investment flows
The more difficult market conditions we have seen over the last year have
unfortunately prevented us from building on the positive net flows we saw
during the previous year. Fears over the future path of interest rates, rising
inflation and the ongoing conflict in Ukraine have increased the risk aversion
of investors who have understandably remained cautious about committing new
investments during this period.
The Group experienced net outflows of £1.1 billion during the year,
reflecting this tough backdrop. The main driver for outflows came from our
equity funds with net redemptions split almost equally between our UK and
non-UK equity funds. Within multi-asset, it was pleasing to see positive flows
into our directly invested multi-asset strategies which continue to appeal to
the UK financial adviser community, although continued redemptions from our
multi-manager strategies more than offset these, leaving us in net redemption
for the year.
Finally, we saw good flows into our fixed income strategies which helped us to
build on the solid progress made here in the previous year. I should highlight
that with fixed income markets repricing and yields rising, investors are now
beginning to look afresh at this sector. This gives us encouragement for the
growth of our fixed income funds over the coming year and beyond, especially
considering that our fixed income team are building towards an attractive
three year track record having commenced management of our fund range in
mid-2020.
For the 12 months to 30 September 2022, gross redemptions from open-ended
funds run by the Group were down 4% year on year, however, gross inflows into
these products were down 35% over the same period.
We take some comfort from this because it reflects a lack of appetite to
invest that has driven the move from net inflow last year to net outflow this
year. We believe that the Group should be positioned favourably when
confidence returns to markets and capital starts to be allocated again.
Investment performance
As highlighted above, the last year has been much more difficult in terms of
making positive progress for our investors. Our strategies are not immune to
falling equity and bond markets in the short term and we recognise that it is
disappointing for investors to see the value of their holdings fall. However,
these periods often present good opportunities for active managers to take
advantage of falling prices and to position their portfolios to do well as and
when markets recover. Of course, we tend to measure performance success over
multi year periods and when looking across our fund range, our performance
relative to peers remains strong.
We manage 34 funds where a peer group comparison is relevant. Looking at the
period since our managers commenced management of these funds, 22 achieved
first quartile performance compared to peers and a further eight are in the
second quartile. Three are in the third quartile and just one is in the fourth
quartile. In total, this means that some 92% of these assets under management
are performing ahead of peers since we commenced management of the funds.
Shorter term performance also remains relatively attractive. We have 30 funds
that have a three-year track record and where a sector comparison is
appropriate. Of these, 19 are in the first quartile of their peer group and
four are in the second quartile, three are in the third quartile and four are
in the fourth quartile. In total some 75% of our AuM are performing ahead of
peers over three years.
For those funds where a sector comparison is not appropriate, which would
include funds with a volatility target or an absolute return objective, we
monitor performance outcomes closely. We are satisfied that these funds are
meeting their objectives and producing good client outcomes over the long
term. Similarly, performance of the investment trusts and segregated mandates
we manage remain attractive relative to peers and to benchmarks over the long
term.
Fund range
The Group divides its funds under management into three asset class
categories, equities, multi-asset, and fixed income. At the year end, we
managed £6.1 billion in equities of which £2.4 billion was invested in UK
equities and £3.7 billion is invested in non-UK equities. Our multi-asset
strategies totalled £3.3 billion and our fixed income strategies were £1.2
billion.
In September 2022 we announced that Matthew Tillett would join the Group in
October 2022 from Allianz Global Investors. Matthew will take over as manager
of the Premier Miton UK Value Opportunities Fund from Andy Jackson who is
retiring at the end of December 2022. We are delighted that we have attracted
another talented fund manager to the team. I believe that Matthew's high
conviction, value investing style and contrarian mindset is very well suited
to the Premier Miton investment culture.
During the year we have continued to enhance our product range. In keeping
with our ambition to expand our ESG-focused products, we introduced the
Premier Miton Diversified Sustainable Growth Fund in March. This is part of
our successful Diversified multi-asset fund range.
The Diversified investment team assumed management of this fund in 2021 and we
are pleased to note that the fund is attracting positive sales flows and
performance of the fund over this period has been strong relative to peers.
The Diversified Sustainable Growth Fund was recently nominated in the 'Best
ESG Fund' category at the Shares Awards organised by Shares magazine and
published by investment platform and stockbroker, AJ Bell.
We now have a total of six funds that have a dedicated responsible and
sustainable investing objective. This number will increase to seven in 2023
with the launch of a new global emerging market sustainable equity strategy
led by Fiona Manning and William Scholes who joined the Group in August 2022.
We remain committed to supporting relevant responsible investing related
initiatives. We are a signatory to the Financial Reporting Council's
Stewardship Code and achieved a B- rating for our most recent CDP submission
covering our environmental impacts, processes, and plans. We have also
partnered with Climate Action 100+, an investor led initiative to ensure the
world's largest corporate greenhouse gas emitters take necessary action on
climate change. We have participated in CDP's Non-Disclosure Campaign,
offering us the opportunity to actively engage companies that have received
the CDP disclosure request on behalf of investors but have not provided a
response. The objective of the campaign is to drive further corporate
transparency around climate change, deforestation, and water security, by
encouraging companies to respond to CDP's disclosure request.
Distribution
Having appointed a new Global Head of Distribution, we have now taken the
important step of creating a single unified team approach to the UK wholesale
market. This will result in a UK wholesale distribution team capable of taking
all the Group's strategies to all clients across equities, fixed income and
multi-asset.
This, combined with a more strategic and consistent approach to marketing and
sales under a single head will, I believe, enhance the overall distribution
capabilities of the Group. In addition, the hire of a Head of Institutional
Business Development opens a new distribution channel for the Group where we
have already identified a select list of strategies that resonate with
institutional investors.
Lastly, we are aware that we have several investment strategies across the
three core asset classes that will appeal to international investors, and we
will be exploring how to capitalise on that opportunity in the coming year. I
look forward to reporting on future progress in this important area.
Strategy
In the period immediately following the merger of Premier and Miton in
November 2019, we set ourselves four key objectives for the business. The
first of these was to integrate the business onto a single operating platform
with appropriate risk, compliance and operating capability and capacity to
manage a significant multiple of the assets we currently manage.
Our second objective was to broaden our product range to offer a diverse range
of strategies that would meet the needs of both our current and future
clients. With this in mind, we have added several global equity strategies, a
new fixed income capability and broadened our suite of sustainable strategies.
Our third objective was to both broaden and reinvigorate our distribution
capabilities as highlighted above.
Our final objective was to ensure that the business was appropriately
resourced with the necessary balance sheet strength to weather the storms we
would inevitably face.
Throughout this period of change, our focus has remained on actively and
responsibly managing our clients' investments for a better financial future.
We believe that this is best done by adopting a genuinely active investment
approach where our portfolios are often very different from the underlying
indices against which our funds are compared.
Our thesis is that this will result in better outcomes over the long term than
investing in all the companies - good and bad - in a particular index. We
accept that for much of the last decade when interest rates and inflation have
been falling and when central banks have been flooding markets with liquidity,
investing in many equity and bond indices has achieved respectable returns.
However, in our view the world has changed significantly over the course of
the last 12 months and not just because of heightened geopolitical tensions,
although these may have helped to hasten this change. With central banks
withdrawing liquidity from the world economy and interest rates rising,
perhaps belatedly, to supress inflationary forces, the outlook is more
uncertain than it has been since the financial crisis of 2008/9.
Several things strike us about this new world that we find ourselves in. The
first of which is that there will be no quick return to the easy money days of
the last decade. Interest rates and inflation will be higher, and higher for
longer, than many people expect. The forces of globalisation that helped drive
down inflation have dissipated for the foreseeable future.
The second is that growth will be lower - an inevitable function of high
levels of indebtedness - and investors will be forced to work much harder for
the returns they need, to keep pace with inflation and achieve their financial
objectives. It is in this environment where we believe that genuinely active
managers can excel.
We look forward to meeting our clients' expectations and investing actively
and responsibly in these more challenging markets.
Closing
In closing, the business has a diversified range of genuinely active funds
managed by a respected and experienced fund management team with a proven
track record of delivering strong investor outcomes over many years. It has
the operational infrastructure to manage a multiple of the assets the business
currently looks after.
We believe that the demand for what we do will grow significantly in the more
challenging investment environment we are now in. We have built the necessary
distribution and marketing reach to capitalise on this opportunity as markets
recover. The operational leverage within the business will come to the fore as
we build our AuM from the current levels. In summary, it is our belief that
the business is well placed to deliver for its clients and for its
shareholders.
And finally, our business is nothing without the hard work, skill and
enthusiasm of the people that have chosen to build their careers with us. I am
continually impressed with how focused each one of them is on delivering for
our investors. I would like to thank them all personally for their continued
support and dedication.
Mike O'Shea
Chief Executive Officer
01 December 2022
Financial Review
Financial performance
Profit before tax decreased to £14.9 million (2021: £17.5 million).
Adjusted profit before tax *, which is after adjusting for amortisation,
share-based payments, merger related costs and exceptional costs decreased to
£24.3 million (2021: £28.6 million).
Adjusted profit and profit before tax
2022 2021 %
£m £m Change
Net revenue 81.2 84.5
Administrative expenses (56.8) (55.8)
Adjusted profit before tax * 24.3 28.6 (15)
Amortisation (4.8) (5.1)
Share-based payments (4.5) (4.5)
Merger related costs (0.1) (1.4)
Exceptional costs - (0.1)
Profit before tax 14.9 17.5 (15)
* These are Alternative Performance Measures ('APMs').
Assets under Management * ('AuM')
A combination of net outflows totalling £1,076 million and market performance
resulted in the AuM ending the year at £10,565 million (2021: £13,931
million), a decrease of 24%. The Average AuM for the year decreased by 1% to
£12,615 million (2021: £12,751 million).
Net revenue
2022 2021 %
£m £m Change
Management fees 90.6 93.2
Fees and commission expenses (9.1) (10.3)
Net management fees (1 *) 81.5 82.9 (2)
Other income (0.3) 1.6
Net revenue 81.2 84.5 (4)
Average AuM (2) 12,615 12,751 (1)
Net management fee margin (3) (bps) 64.6 65.0 (1)
1 Being management fee income less trail/rebate expenses and the
cost of capping any OCFs, direct research costs and external Authorised
Corporate Director ('ACD') fees
2 Average AuM for the year is calculated using the daily AuM
adjusted for the monthly closing AuM invested in other funds managed by the
Group
3 Net management fee margin represents net management fees divided
by the average AuM
The Group's revenue represents management fees generated on the assets being
managed by the Group.
Net management fees decreased to £81.5 million from £82.9 million last year,
a 2% decrease reflecting the decrease in the Group's average AuM and net
management fee margin.
The Group's net management fee margin for the year was 64.6bps. The margin for
the second half of 2022 was 63.7bps, a reduction of 2% on reported position at
31 March 2022. The decrease is driven by the change in our business mix, the
impact of flows and markets on our existing business and share class
consolidations completed in the period.
Other loss for the year is the result of movements in the portfolio of
financial assets held on the Group's balance sheet. See note 3 for further
details.
Administration expenses
Administration expenses (excluding share-based payments) totalled £56.8
million (2021: £55.8 million), an increase of 2%.
Staff costs continue to be the largest component of administration expenses,
these consist of both fixed and variable elements.
The fixed staff costs, which includes salaries and associated National
Insurance, employers' pension contributions and other indirect costs of
employment increased to £20.4 million (2021: £19.1 million). The rise
predominantly reflects new joiners in the second half of 2021, now annualised,
and further investment in people in the current year.
The average headcount for the year has increased from 153 to 164. At the year
end the full time equivalent headcount was 166 (2021: 160). Variable staff
costs totalled £17.3 million (2021: £18.6 million). These costs move in line
with the net revenues of the Group and the adjusted profit before tax, hence
the decrease against the comparative period. Included within this are general
discretionary bonuses, sales bonuses and bonuses in respect of the fund
management teams, plus associated employers' national insurance.
Overheads and other costs totalled £17.9 million (2021: £16.7 million). The
rise primarily relates to the cost of supporting new investment teams along
with increased travel costs following the easing of COVID restrictions and
additional sales and marketing activity.
Administration expenses
2022 2021 %
£m £m Change
Fixed staff costs 20.4 19.1 7
Variable staff costs 17.3 18.6 (7)
Overheads and other costs 17.9 16.7 7
Depreciation - fixed assets 0.6 0.7 -
Depreciation - leases 0.6 0.7 -
Administration expenses 56.8 55.8 2
Share-based payments
The share-based payment charge for the year was £4.5 million (2021: £4.5
million).
At 30 September 2022 the Group's Employee Benefit Trusts ('EBTs') held
12,356,304 ordinary shares representing 7.8% of the issued ordinary share
capital (2021: 10,947,088 shares).
At the year end the outstanding awards totalled 11,015,578 (2021: 10,741,362).
The increase reflects 1,902,500 awards issued during the year (2021:
3,980,000) offset by 1,628,284 awards being exercised (2021: 1,629,478). See
note 16 for further detail.
Balance sheet and cash
Total shareholders' equity as at 30 September 2022 was £126.8 million (2021:
£132.2 million).
At the year end the cash balances of the Group totalled £45.8 million (2021:
£47.7 million).
The Group has no external bank debt.
Capital management
Dividends totalling £14.7 million were paid in the year (2021: £12.1
million), see note 17 for further details.
The Board is recommending a final dividend payment of 6.3p per share bringing
the total dividend payment for 2022 to 10.0p per share (2021: 10.0p).
If approved by the shareholders at the Annual General Meeting on 1 February
2023, the dividend will be paid on 10 February 2023 to shareholders on the
register at the close of business on 13 January 2023.
The Group's dividend policy is to target an annual ordinary dividend pay-out
of approximately 50 to 65% of profit after tax, adjusted for exceptional
costs, share-based payments and amortisation.
Going concern
The Directors have assessed the prospects of the Group considering all the
factors affecting the business when deciding to adopt a going concern basis
for the preparation of the accounts.
The Directors confirm that they have a reasonable expectation that the Group
will continue to operate and meet its liabilities, as they fall due,
comprising a period of at least 12 months from the date of this report. The
Directors' assessment has been made with reference to the Group's current
position and strategy, the Board's appetite for risk, the Group's financial
forecasts, and the Group's principal risks and how these are managed, as
detailed in the Strategic Report.
The Directors have also reviewed and examined the financial stress testing
inherent in the Internal Capital Adequacy Assessment Process ('ICAAP'). The
forecast considers the Group's profitability, cash flows, dividend
payments and other key variables. Sensitivity analysis is also performed on
certain key assumptions used in preparing the forecast, both individually and
combined, in addition to scenario analysis that is performed as part of the
ICAAP process, which is formally approved by the Board.
Alternative Performance Measures ('APMs')
The Directors use the following APMs in evaluating the performance of the
Group and for planning, reporting and incentive-setting purposes.
Unit Used in management appraisals Aligned with shareholder Strategic KPI
returns
Adjusted profit before tax £ • • •
Definition: Profit before interest, taxation, amortisation, share-based
payments, merger related costs and exceptional items.
Purpose: Except for the noted costs, this encompasses all operating expenses
in the business, including fixed and variable staff cash costs, except those
incurred on a non-cash, non-business as usual basis. Provides a proxy for cash
generated and is the key measure of profitability for management decision
making.
Adjusted operating margin % • • •
Definition: Adjusted profit before tax divided by net revenue.
Purpose: Used to determine the efficiency of operations and the ratio of
operating expenses to revenues generated in the year.
Cash generated from operations £ •
Definition: Profit before taxation adjusted for the effects of transactions of
a non-cash nature, any deferrals or accruals and items of income or expense
associated with investing or financing cash flows.
Purpose: Provides a measure in demonstrating the amount of cash generated from
the Group's ongoing regular business operations.
AuM £ • • •
Definition: The value of external assets that are managed by the Group.
Purpose: Management fee income is calculated based on the level of AuM
managed. The AuM managed by the Group is used to measure the Group's relative
size against the industry peer group.
Net management fee £ •
Definition: The net management fee revenue of the Group. Calculated as gross
management fee income, less the cost of external Authorised Corporate
Directors ('ACD'), OCF caps, direct research costs and any enhanced fee
arrangements.
Purpose: Provides a consistent measure of the profitability of the Group and
its ability to grow and retain clients, after removing amounts paid to third
parties.
Net management fee margin bps • •
Definition: Net management fees divided by average AuM.
Purpose: A measure used to demonstrate the blended fee rate earned from the
AuM managed by the Group. A basis point ('bps') represents one hundredth of a
percent, this measure is used within the asset management sector and provides
comparability of the Group's net revenue generation.
Adjusted earnings per share (basic) p • • •
Definition: Adjusted profit after tax divided by the weighted average number
of shares in issue in the year.
Purpose: Provides a clear measure to shareholders of the profitability of the
Group from its underlying operations. The exclusion of amortisation,
share-based payments, merger related costs and exceptional items provides a
consistent basis for comparability of results year on year.
Financial Statements
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2022
Notes
2022 2021
£000 £000
Revenue 3 90,233 94,726
Fees and commission expenses (9,062) (10,248)
Net revenue 81,171 84,478
Administrative costs (56,818) (55,832)
Share-based payment expense 16 (4,505) (4,528)
Amortisation of intangible assets 10 (4,861) (5,117)
Merger related costs 4 (51) (1,350)
Exceptional items 4 - (126)
Operating profit 5 14,936 17,525
Finance expense (23) -
Profit for the year before taxation 14,913 17,525
Taxation 8 (5,346) (3,496)
Profit for the year after taxation attributable to equity holders of the 9,567 14,029
parent
pence pence
Basic earnings per share 9 6.54 9.53
Diluted earnings per share 9 6.12 8.96
No other comprehensive income was recognised during 2022 or 2021. Therefore,
the profit for the year is also the total comprehensive income.
All of the amounts relate to continuing operations.
Consolidated Statement of Changes in Equity
For the year ended 30 September 2022
Notes Share Merger reserve Own shares held by an EBT Capital redemption reserve Retained Total
capital £000 £000 £000 earnings Equity
£000 £000 £000
At 1 October 2020 60 94,312 (14,649) 4,532 45,439 129,694
Profit for the year - - - - 14,029 14,029
Purchase of own shares held by an EBT - - (4,101) - - (4,101)
Exercise of options - - 2,960 - (2,960) -
Share-based payment expense 16 - - - - 4,528 4,528
Other amounts direct to equity - - - - (134) (134)
Deferred tax direct to equity - - - - 305 305
Equity dividends paid 17 - - - - (12,097) (12,097)
At 30 September 2021 60 94,312 (15,790) 4,532 49,110 132,224
Profit for the year - - - - 9,567 9,567
Purchase of own shares held by an EBT - - (4,492) - - (4,492)
Exercise of options - - 3,538 - (3,538) -
Share-based payment expense 16 - - - - 4,505 4,505
Deferred tax direct to equity - - - - (344) (344)
Equity dividends paid 17 - - - - (14,696) (14,696)
At 30 September 2022 60 94,312 (16,744) 4,532 44,604 126,764
Consolidated Statement of Financial Position
As at 30 September 2022
Notes
2022 2021
£000 £000
Non-current assets
Goodwill 10 70,688 70,688
Intangible assets 10 22,516 27,377
Other investments 100 100
Property and equipment 1,192 1,737
Right-of-use assets 908 1,751
Deferred tax asset 8(d) 1,928 2,166
Finance lease receivables 77 -
Trade and other receivables 11 1,081 971
98,490 104,790
Current assets
Financial assets at fair value through profit and loss 2,089 3,529
Finance lease receivables 197 -
Trade and other receivables 11 136,052 146,084
Cash and cash equivalents 12 45,764 47,675
184,102 197,288
Total assets 282,592 302,078
Current liabilities
Trade and other payables 13 (148,820) (163,208)
Provisions 14 - (15)
Lease liabilities (887) (870)
(149,707) (164,093)
Non-current liabilities
Provisions 14 (374) (374)
Deferred tax liability 8(d) (5,485) (4,237)
Lease liabilities (262) (1,150)
Total liabilities (155,828) (169,854)
Net assets 126,764 132,224
Equity
Share capital 15 60 60
Merger reserve 94,312 94,312
Own shares held by an Employee Benefit Trust (16,744) (15,790)
Capital redemption reserve 4,532 4,532
Retained earnings 44,604 49,110
Total equity shareholders' funds 126,764 132,224
Consolidated Statement of Cash Flows
For the year ended 30 September 2022
Notes
2022 2021
£000 £000
Cash flows from operating activities:
Profit for the year 9,567 14,029
Adjustments to reconcile profit to net cash flow from operating activities:
- Tax on continuing operations 8(a) 5,346 3,496
- Finance expense 7 23 -
- Interest payable on leases 60 94
- Depreciation - fixed assets 580 688
- Depreciation - leases 621 625
- Gain on derecognition of right-of-use asset (115) -
- Receivable for the net investment in sub-lease 334 -
- Loss on revaluation of financial assets at fair value through profit and 345 (407)
loss
- Loss on disposal of property and equipment 171 28
- Amortisation of intangible assets 10 4,861 5,117
- Share-based payment expense 16 4,505 4,528
- Decrease/(increase) in trade and other receivables 10,800 (101,769)
- (Decrease)/increase in trade and other payables (14,403) 110,162
Cash generated from operations 22,695 36,591
Income tax paid (5,352) (7,267)
Net cash flow from operating activities 17,343 29,324
Cash flows from investing activities:
Interest paid 7 (23) -
Acquisition of assets at fair value through profit and loss (85) (1,261)
Proceeds from disposal of assets at fair value through profit and loss 1,180 836
Purchase of property and equipment (207) (68)
Net cash flow from investing activities 865 (493)
Cash flows from financing activities:
Lease payments (931) (950)
Purchase of own shares held by an EBT (4,492) (4,101)
Equity dividends paid 17 (14,696) (12,097)
Net cash flow from financing activities (20,119) (17,148)
(Decrease) / Increase in cash and cash equivalents (1,911) 11,683
Cash and cash equivalents at the beginning of the year 47,675 35,992
Cash and cash equivalents at the end of the year 12 45,764 47,675
Selected notes to the Consolidated Financial Statements
For the year ended 30 September 2022
1. Authorisation of financial statements and statement of compliance with IFRS
The Consolidated Financial Statements of Premier Miton Group plc (the
'Company') and its subsidiaries (the 'Group') for the year ended 30 September
2022 were authorised for issue by the Board of Directors on 1 December 2022
and the Consolidated Statement of Financial Position was signed on the Board's
behalf by Mike O'Shea and Piers Harrison.
The Company is a public limited company incorporated and domiciled in England
and Wales. The Company's ordinary shares are traded on the Alternative
Investment Market ('AIM').
These Consolidated Financial Statements were prepared in accordance with
UK-adopted international accounting standards in conformity with the
requirements of the Companies Act 2006. The Consolidated Financial Statements
are presented in Sterling and all values are rounded to the nearest thousand
pounds (£000) except when otherwise indicated.
The principal accounting policies adopted by the Group are set out in note 2.
2. Accounting policies
Basis of preparation
The Consolidated Group Financial Statements for the year ended 30 September
2022 have been prepared in accordance with UK-adopted International Financial
Reporting Standards ('IFRS'). The Consolidated Financial Statements have been
prepared on a going concern basis, under the historical cost convention, as
modified by the revaluation of financial assets and financial liabilities
measured at fair value through profit or loss. Costs are expensed as incurred.
The Directors have assessed the prospects of the Group considering all the
factors affecting the business when deciding to adopt a going concern basis
for the preparation of the accounts. The Directors confirm that they have a
reasonable expectation that the Group will continue to operate and meet its
liabilities, as they fall due, comprising a period of at least 12 months from
the date of this report. This assessment has been made after considering the
impact of recent geopolitical events and Ukraine crisis on the business. The
Directors note that the Group has no external borrowings and maintains
significant levels of cash reserves.
The Directors' assessment has been made with reference to the Group's current
position and strategy, the Board's appetite for risk, the Group's financial
forecasts, and the Group's principal risks and how these risks are managed, as
detailed in the Strategic Report. The Directors have also reviewed and
examined the financial stress testing inherent in the Internal Capital
Adequacy Assessment Process ('ICAAP'). The forecast considers the Group's
profitability, cash flows, dividend payments and other key variables.
Sensitivity analysis is also performed on certain key assumptions used in
preparing the forecast, both individually and combined, in addition to
scenario analysis that is performed as part of the ICAAP process, which is
formally approved by the Board. This analysis demonstrates that even after
modelling materially lower levels of assets under management ('AuM')
associated with a reasonably plausible downside scenario, the business remains
cash generative.
3. Revenue
Revenue recognised in the Consolidated Statement of Comprehensive Income is
analysed as follows:
2022 2021
£000 £000
Management fees 90,570 93,171
Commissions 4 1,075
Other (loss)/income (341) 480
Total revenue 90,233 94,726
All revenue is derived from the UK and Channel Islands.
4. Exceptional items and merger related costs
Recognised in arriving at operating profit from continuing operations:
2022 2021
£000 £000
Connect development costs - 126
Total exceptional costs - 126
Merger related costs 51 822
Merger employment restructuring costs - 528
Total merger related costs 51 1,350
Exceptional items are those items of income and expense, which are considered
not to be incurred in the normal course of business of the Group's operations,
and because of the nature of the events giving rise to them, merit separate
presentation to allow shareholders to understand better the elements of
financial performance in the year.
In accordance with the accounting policy for exceptional items these costs
have been treated as exceptional.
Merger related costs in the year totalling £51,132 (2021: £821,886)
represented legal and professional fees associated with the merger with Miton
Group plc of £51,132 (2021: £51,132) and merger integration costs of £nil
(2021: £770,754).
During the year there were no employment restructuring costs arising as a
result of the merger (2021: £528,031 related to redundancy costs).
5. Operating profit
(a) Operating profit is stated after charging
Notes 2022 2021
£000 £000
Auditor's remuneration 5(b) 592 468
Staff costs 6 41,072 40,868
Interest - leases 60 94
Amortisation of intangible assets 10 4,861 5,117
Exceptional items 4 - 126
Merger related costs 4 51 1,350
Loss on disposal of fixed assets 171 28
Depreciation - fixed assets 580 688
Depreciation - leases 621 625
(b) Auditor's remuneration
The remuneration of the auditor is analysed as follows:
2022 2021
£000 £000
Audit of Company 114 90
Audit of subsidiaries 193 190
Total audit 307 280
- Audit-related assurance services 65 48
- Other non-audit services 220 140
Total non-audit services 285 188
Total fees 592 468
6. Staff costs and Directors' remuneration
Staff costs during the year were as follows:
2022 2021
£000 £000
Salaries, bonus and performance fee share 31,141 30,769
Social security costs 4,436 4,696
Share-based payments 4,505 4,528
Other pension costs 990 875
Total staff costs 41,072 40,868
The average monthly number of employees of the Group during the year was made
up as follows:
2022 2021
number number
Directors 8 7
Investment management 55 51
Sales and marketing 36 33
Finance and systems 11 11
Legal and compliance 12 12
Administration 42 39
Total employees 164 153
7. Finance expense
2022 2021
£000 £000
Interest receivable (21) -
Interest payable 44 -
Net finance expense 23 -
8. Taxation
(a) Tax recognised in the Consolidated Statement of Comprehensive Income
2022 2021
£000 £000
Current income tax:
UK corporation tax 4,262 4,583
Current income tax charge 4,262 4,583
Adjustments in respect of prior periods (59) (909)
Total current income tax 4,203 3,674
Deferred tax:
Origination and reversal of temporary differences 1,128 (680)
Adjustments in respect of prior periods 15 502
Total deferred tax expense/(income) 1,143 (178)
Income tax charge reported in the Consolidated Statement of Comprehensive 5,346 3,496
Income
(b) Reconciliation of the total income tax charge
The tax expense in the Consolidated Statement of Comprehensive Income for the
year is higher than the standard rate of corporation tax in the UK of 19%
(2021: 19%). The differences are reconciled below:
2022 2021
£000 £000
Profit before taxation 14,913 17,525
Tax calculated at UK standard rate of corporation tax of 19% (2021: 19%): 2,833 3,330
- Other differences 2,042 72
- Share-based payments 777 264
- Expenses not deductible for tax purposes 20 4
- Amortisation not deductible 125 250
- Income not subject to UK tax 5 (38)
- Change in tax rate - 531
- Tax relief on vested options (418) (525)
- Fixed asset differences 6 15
- Adjustments in respect of prior periods (44) (407)
Income tax charge in the Consolidated Statement of Comprehensive Income 5,346 3,496
(c) Change in corporation tax rate
In the Spring Budget 2021, the Government announced that from 1 April 2023 the
corporation tax rate will increase to 25% from 19%. This was substantively
enacted on 24 May 2021. The deferred tax balances included within the
Consolidated Financial Statements have been calculated with reference to the
rate of 25% to the relevant balances from 1 April 2023.
(d) Deferred tax
The deferred tax included in the Group's Consolidated Statement of Financial
Position is as follows:
2022 2021
£000 £000
Deferred tax asset:
- Fixed asset temporary differences 8 (38)
- Accrued bonuses 556 619
- Share-based payments 1,364 1,585
Deferred tax disclosed on the Consolidated Statement of Financial Position 1,928 2,166
2022 2021
£000 £000
Deferred tax liability:
- Arising on acquired intangible assets 3,543 4,216
- Arising on historic business combination 1,940 -
- Fixed asset temporary differences 2 21
Deferred tax disclosed on the Consolidated Statement of Financial Position 5,485 4,237
At 30 September 2022 a deferred tax liability of £1,940,448 has been included
in relation to a temporary difference on an intangible asset held on the
balance sheet acquired in a business combination in 2007. Management has
assessed this adjustment to be not material (on both quantitative and
qualitative bases) to require restating comparatives, and as such the deferred
tax liability has been recognised in the Group's Consolidated Statement of
Financial Position via the current period tax charge.
2022 2021
£000 £000
Deferred tax in the Consolidated Statement of Comprehensive Income:
- Origination and reversal of temporary differences (938) (680)
- Arising on historic business combination 2,066 -
- Adjustments in respect of prior periods 15 502
Deferred tax expense/(income) 1,143 (178)
All movements in deferred tax balances relate to profit and loss except for
the £344,000 that is included in equity.
2022 2021
£000 £000
Unprovided deferred tax asset:
- Non trade loan relationship losses 1,971 1,971
- Excess management expenses 51 51
- Non trade intangible fixed asset losses 399 399
Unprovided deferred tax asset 2,421 2,421
9. Earnings per share
Basic earnings per share is calculated by dividing the profit for the year
attributable to ordinary equity shareholders of the Parent Company by the
weighted average number of ordinary shares outstanding at the year end.
The weighted average of issued ordinary share capital of the Company is
reduced by the weighted average number of shares held by the Group's EBTs.
Dividend waivers are in place over shares held in the Group's EBTs.
In calculating diluted earnings per share, IAS 33 'Earnings Per Share'
requires that the profit is divided by the weighted average number of ordinary
shares outstanding during the year plus the weighted average number of
ordinary shares that would be issued on conversion of all the dilutive
potential ordinary shares into ordinary shares during the period.
(a) Reported earnings per share
Reported basic and diluted earnings per share has been calculated as follows:
2022 2021
£000 £000
Profit attributable to ordinary equity shareholders of the Parent Company for 9,567 14,029
basic earnings
Number Number
000 000
Issued ordinary shares at 1 October 157,913 157,913
- Effect of own shares held by an EBT (11,677) (10,641)
Weighted average shares in issue 146,236 147,272
- Effect of movement in share options 10,184 9,239
Weighted average shares in issue - diluted 156,420 156,511
Basic earnings per share (pence) 6.54 9.53
Diluted earnings per share (pence) 6.12 8.96
(b) Adjusted earnings per share
Adjusted earnings per share is based on adjusted profit after tax, where
adjusted profit is stated after charging interest but before amortisation,
share-based payments, merger related costs and exceptional items.
Adjusted Profit for calculating adjusted earnings per share:
2022 2021
£000 £000
Profit before taxation 14,913 17,525
Add back:
- Share-based payment expense 4,505 4,528
- Amortisation of intangible assets 4,861 5,117
- Merger related costs 51 1,350
- Exceptional items - 126
Adjusted profit before tax 24,330 28,646
Taxation:
- Tax in the Consolidated Statement of Comprehensive Income (5,346) (3,496)
- Tax effects of adjustments 1,176 (914)
Adjusted profit after tax for the calculation of adjusted earnings per share 20,160 24,236
Adjusted earnings per share was as follows using the number of shares
calculated at note 9(a):
2022 2021
pence pence
Adjusted earnings per share 13.79 16.46
Diluted adjusted earnings per share 12.89 15.49
10. Goodwill and other intangible assets
Cost amortisation and net book value of intangible assets are as follows:
Year to 30 September 2022 Goodwill Other Total
£000 £000 £000
Cost:
At 1 October 2021 and 30 September 2022 77,927 81,025 158,952
Amortisation and impairment:
At 1 October 2021 7,239 53,648 60,887
Amortisation during the year - 4,861 4,861
At 30 September 2022 7,239 58,509 65,748
Carrying amount:
At 30 September 2022 70,688 22,516 93,204
At 30 September 2021 70,688 27,377 98,065
Year to 30 September 2021 Goodwill Other Total
£000 £000 £000
Cost:
At 1 October 2020 and 30 September 2021 77,927 81,025 158,952
Amortisation and impairment:
At 1 October 2020 6,979 48,791 55,770
Amortisation and impairment during the year 260 4,857 5,117
At 30 September 2021 7,239 55,648 60,887
Carrying amount:
At 30 September 2021 70,688 27,377 98,065
At 30 September 2020 70,948 32,234 103,182
Impairment tests for goodwill
The Group has determined that it has a single CGU in relation to asset
management for the purposes of assessing the carrying value of goodwill. In
line with IAS 36, 'Impairment of Assets', a full impairment review was
undertaken as at 30 September 2022. The recoverable amount within the fund
management CGU was determined by assessing the value-in-use using long-term
cash flow projections for the CGU. The Group operates as a single CGU for
the purposes of monitoring and assessing goodwill for impairment. This
reflects one operating platform, into which acquired businesses are fully
integrated and from which acquisition-related synergies are expected to be
realised. Senior management receive and review internal financial information
as one single entity, with no disaggregation for segments or geography.
Data for the explicit forecast period of 2023-2027 is based on the 2023 budget
and forecasts for 2024-2027. AuM levels were determined by assuming net flows,
per fund, over this five-year period based on two key metrics - the first
being the momentum of net flows over the preceding two years, and the second
being the investment performance of the fund against its sector. The Group
believes these two factors are the most appropriate to consider when making
assumptions about the growth of AuM in the future, and hence expected future
cash flows. Net revenue margins per fund have been assumed at current levels,
unless sufficient reasons exist to deviate, for example share class
consolidation.
The projected operating margin is in line with levels historically achieved by
the Group. Increases in operating costs have been taken into account and
include assumed new business volumes. The Group's commitment to responsible
investing has also been considered (within headcount over the forecast period)
and the impact to its cash flows on a longer term basis, particularly in light
of the possible actions of regulators, customers and suppliers. Cash flows
beyond the explicit forecast period are extrapolated using a long-term
terminal growth rate of 1.7% (2021: 1.9%). To arrive at the net present value,
cash flows have been discounted using a discount rate of 13% (2021: 12%)
determined using the capital asset pricing model (post-tax). The Group engaged
valuation specialists in determining the inputs to calculate the appropriate
discount rate, including current assessments of comparative betas, long term
economic growth rates and the equity risk premiums published and observed in
the wider industry.
The overall value-in-use was greater than the carrying value and hence no
impairment charge has been recognised. As noted above the most material
assumptions used in determining this conclusion were expected aggregated fund
flows and the discount rate. As an additional consideration the Group
compares its net assets to its adjusted market capitalisation.
Sensitivity analysis
Management have performed a sensitivity analysis as at 30 September 2022 and
established that an increase in the discount rate to 28% would be required
before an impairment of goodwill would be considered necessary. This would
require the long-term risk-free rate and equity risk premium to be at
significantly higher levels than at present. Analysis was also completed using
materially lower levels of AuM and the corresponding impact on projected cash
flows within the impairment assessment. Due to the cash generative nature of
the business, and that a large proportion of costs are linked to the net
revenues and underlying profitability of the Group, no impairment was
identified at these lower levels of AuM.
The compound annual growth rate for expected fund flows over the forecast
period is 10% and would need to reduce to -2% per annum for the estimated
recoverable amount to equal the carrying value. Management note the average
annual return for the MSCI World Index over the past 40 years was
approximately 11%. In light of this, we do not consider the use of 28%
discount rate and -2% CAGR assumptions to be reasonable. The sensitivity
analysis established that a +/-3% change in the discount rate and long-term
terminal growth rate assumptions would not have a material impact on the
Group's results. The Group is, however, mindful of the current uncertainty
that exists in markets including the threat posed by recent geopolitical
events including the Ukraine crisis and that extreme movements may be cause
for further examination into the possibilities of impairment.
Other intangible assets
The Group's other intangible assets comprise of investment management
agreements ('IMA') purchased by the Group. The carrying amount above relates
to two historic transactions, the largest being the merger with Miton Group
plc with a carrying value of £14,596,097 and a remaining amortisation period
of four years (2021: merger with Miton Group plc with a carrying value of
£18,136,303 and a residual amortisation period of five years). The remaining
balance relates to a transaction completed in 2007 to acquire IMAs which now
have a carrying value of £7,920,267 and a remaining amortisation period of
six years (2021: value of £9,240,917 and a remaining amortisation period of
seven years).
The determination of useful lives, and hence amortisation period, used for
other intangible assets requires an assessment of the length of time the Group
expects to derive benefits from the asset. This depends on a number of
factors, the most significant being the duration of customer investment
timeframes and the type of underlying fund (for example the asset classes
specified by the fund's investment objectives will give insight into its usual
life).
An assessment is performed at each reporting period for each intangible asset
for indicators of impairment. There are two core metrics used in this
assessment - the first being the comparison of AuM levels at the period end
with those included in the original intangible asset valuation and the second
being the investment performance of each individual fund against its
comparable peers and benchmarks. In addition, both internal and external
factors affecting the funds are considered such as current net margin,
potential regulatory changes and future demand for its asset class. For each
intangible asset mentioned above, if required, further analysis is performed
on a fund management team basis, and the estimated aggregate cashflows
generated by each team. These estimated cashflows are modelled based on the
current level of AuM for the funds managed by each team and are compared
against the original basis used to value the intangible at the acquisition
date and their remaining amortisation period. No indicators of impairment were
noted when analysing at a fund management team level.
11. Trade and other receivables
Current 2022 2021
£000 £000
Due from trustees/investors for open end fund redemptions/sales 122,339 132,587
Other trade debtors 526 530
Fees receivable 6,132 8,185
Prepayments 2,662 2,195
Corporation tax 1,794 644
Other receivables 2,599 1,943
Total trade and other receivables 136,052 146,084
Non-current
Other receivables 1,081 971
Trade and other receivables are all current and any fair value difference is
not material. Trade and other receivables are considered past due once they
have passed their contracted due date.
Non-current other receivables represent deferred compensation awards with
maturities greater than 12 months after Consolidated Statement of Financial
Position date. Deferred compensation awards are released in accordance with
the employment period to which they relate.
12. Cash and cash equivalents
2022 2021
£000 £000
Cash at bank and in hand 45,682 47,552
Cash held in EBTs 82 123
Total cash and cash equivalents 45,764 47,675
13. Trade and other payables
2022 2021
£000 £000
Due to trustees/investors for open end fund creations/redemptions 122,334 132,403
Other trade payables 1,542 2,295
Other tax and social security payable 3,031 3,345
Accruals 20,021 22,789
Pension contributions 9 25
Other payables 1,883 2,351
Total trade and other payables 148,820 163,208
Trade creditors and accruals principally comprise amounts outstanding for
trade purchases and ongoing costs. The Group has financial risk management
policies in place to ensure that all payables are paid within the pre-agreed
credit terms.
Other payables relate predominantly to amounts due to outsource providers for
administrative services provided to the Group's funds.
The Directors consider that the carrying amount of trade payables approximates
to their fair value.
14. Provisions
2022 2021
£000 £000
At 1 October 389 389
Movement in the year (15) -
At 30 September 374 389
Current - 15
Non-current 374 374
374 389
Provisions relate to dilapidations for the offices at 6th Floor, Paternoster
House, London, the lease on this property runs to 28 November 2023 and the
provision for dilapidations on this office has been disclosed as non-current.
This provision is based on prices quoted at the time of the lease being taken
on.
15. Share capital
2022 allotted, called up and fully paid: Ordinary shares 0.02 pence each Number Deferred shares Number
Number of shares
At 1 October 2021 157,913,035 1
Movement in the year - -
At 30 September 2022 157,913,035 1
2021 allotted, called up and fully paid: Ordinary shares 0.02 pence each Number Deferred shares Number
Number of shares
At 1 October 2020 157,913,035 1
Movement in the year - -
At 30 September 2021 157,913,035 1
2022 allotted, called up and fully paid: Ordinary shares Deferred Total
shares
Value of shares 0.02 pence each
£000 shares
£000
£000
At 1 October 2021 31 29 60
Movement in the year - - -
At 30 September 2022 31 29 60
2021 allotted, called up and fully paid: Ordinary shares Deferred Total
shares
Value of shares 0.02 pence each
£000 shares
£000
£000
At 1 October 2020 31 29 60
Movement in the year - - -
At 30 September 2021 31 29 60
The deferred share carries no voting rights and no right to receive a
dividend.
16. Share-based payments
The total charge to the Consolidated Statement of Comprehensive Income for
share-based payments in respect of employee services received during the year
to 30 September 2022 was £4,505,000 (2021: £4,528,000), of which £4,314,000
related to nil cost contingent share rights.
17. Dividends declared and paid
2022 2021
£000 £000
Equity dividends on ordinary shares:
- Interim dividend: 3.7 (2021: interim 3.7) pence per share 5,427 5,437
- Final dividend for 2021: 6.3 (2020 final interim 4.5) pence per share 9,269 6,660
Dividends paid 14,696 12,097
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