REG - Premier Miton Group - Half Year Results
31/05/2023 07:00
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RNS Number : 0888B Premier Miton Group PLC 31 May 2023
PREMIER MITON GROUP PLC
HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2023
Premier Miton Group plc ('Premier Miton', 'Company' or 'Group'), the AIM
quoted fund management group, today announces its half year results for the
six months ended 31 March 2023 (the 'Period').
Highlights
· £11.0 billion closing Assets under Management (2) ('AuM') (2022 HY:
£12.8 billion)
· Net outflows of £32 million in the Period (2022 HY: £401 million
outflows)
· Continued inflows into fixed income strategies of £399 million in
the Period (2022 HY: £138 million inflows)
· 76% of funds above median investment performance since launch or
tenure (3) (2022 HY: 80%)
· Adjusted profit before tax (1,2) of £7.9 million (2022 HY: £14.6
million)
· Profit before tax of £2.4 million (2022 HY: £9.9 million)
· Proposed interim dividend of 3.0 pence per share (2022 interim: 3.7
pence per share)
· Successful launch of Premier Miton Emerging Markets Sustainable Fund
on 21 April 2023
· Continued focus on distribution capabilities to service our existing
and new client base, and positioning for inflows when market and sentiment
conditions turn positive again, by showcasing the depth and breadth of our
investment talent across asset classes
· £11.0 billion closing AuM at 30 April 2023
Notes
(1) Adjusted profit before tax is calculated before the deduction of
taxation, amortisation, share-based payments, merger related costs and
exceptional items.
(2) These are Alternative Performance Measures ('APMs').
(3) At 31 March 2023. Based on Investment Association sector classifications
where applicable, with data sourced from FE Analytics FinXL using the main
representative post-RDR share class, based on a total return, UK Sterling
basis. All data is as at 31 March 2023 and the performance period relates to
when the fund launched or the assumed tenure of the fund manager(s).
Performance for investment trusts is calculated on Net Asset Value ('NAV'),
ranked against the relevant Morningstar category for each investment trust.
Mike O'Shea, Chief Executive Officer of Premier Miton Group, commented:
"Although this has been a tougher period for investors, we remain convinced
that the work we have done in building a diversified active manager that can
offer products across equities, fixed income and multi-asset will bear fruit
in the long term.
At times of market stress there are substantial opportunities for genuinely
active managers who have the courage of their convictions to run
differentiated, long-term, and focussed portfolios by taking an agile and
positive role in the capital allocation process.
Our long term investment performance record is good, we have a strong
distribution and marketing capability, a strong balance sheet and an
operational platform that can handle many times the current level of assets we
manage. As confidence returns to markets and to investors, we are well placed
to return to growth."
ENDS
For further information, please contact:
Premier Miton Group plc 01483 306 090
Mike O'Shea, Chief Executive Officer
Investec Bank plc (Nominated Adviser and Broker) 020 7260 1000
Bruce Garrow / Ben Griffiths / Virginia Bull / Harry Hargreaves
Edelman Smithfield Consultants (Financial PR) 07785 275665/
John Kiely / Latika Shah 07950 671948
www.premiermiton.com (http://www.premiermiton.com)
About Premier Miton
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 political and financial turmoil in the UK in late 2022 has revealed with
brutal clarity some deep problems affecting the structure of the UK savings
market, especially for longer term savings and access to capital and
investment support in public markets. A healthy, successful and efficiently
functioning capital market is vital for the UK's strategic and business
interests. I am pleased to see there are many initiatives now under way to
identify what can be done to create better conditions for the future. Well
thought through changes will also, if implemented soon, provide us with a much
more attractive environment for our business and, more importantly, for our
clients. We will continue to do what we can to encourage positive and well
implemented changes and to successfully navigate these testing times.
I met several of our shareholders following the announcement of our results
for 2022 to discuss their thoughts and views on our business, and to listen to
the issues that they raise. I value these exchanges and am always impressed by
the care and attention they give to their investment. Their focus and issues
are varied and I appreciate the support of our shareholders for the business
we are building, and the recognition that we are seeking to do our very best
for all stakeholders in these challenging times for our industry.
During the period we again held a Board strategy day to review our markets,
our industry, our ambitions, plans and resources, taking a clear look at what
we can do to improve our business. While I am sure that we are working as hard
as we can, with discipline and focus, and that there are always things that
can be improved or adjusted, we are to a great extent dependent on the overall
market environment improving.
We are continuing with our ambitious organic growth plans, and I am pleased
that good progress is being made here especially in our overall client,
distribution and marketing initiatives.
We have also been active in reviewing several strategic ideas which have the
potential to materially advance our
business, contributing to shareholder value. We have an experienced team and
focussed approach as to how we assess these strategic ideas and we will need
to continue to apply this focus as the industry is going through a period of
potentially deep change.
I continue to be impressed by the hard work and dedication of our people. We
all feel that the responsibility of looking after other people's savings is
something to be proud of and we seek to do to the best of our abilities.
Businesses like ours which have a strong and healthy culture should be able to
prosper relative to others and I believe this is happening. Of course, it
isn't easy and the leadership group has a clear focus on managing Premier
Miton to achieve our purpose, while remembering that, essentially, the
business of business is business! From this, other positive things can flow.
Our financial performance has been broadly flat over the period, with AuM
standing at £11 billion at period end and adjusted profit before tax of £7.9
million.
These are challenging and, we believe, unusual times for the whole UK asset
management market, affecting savings flows and investment market levels and
performance. The Board is confident that we have a well-considered and
coherent strategy supported by a business model and resources that promote
long term shareholder value creation and growth. We recognise that we need to
navigate these times with great care and that our management team must
actively and confidently manage the business to position us for success. This
means we closely examine and make decisions on the mix, focus and financial
management of all our activities.
The business is fundamentally cash generative and has operational gearing
which should allow for improved profit and cash creation as markets and
savings flows improve and our financial results recover. We know it is
important to manage our capital resources prudently, not just to cover our
regulatory capital requirements but also to maintain a strong balance sheet
which allows us to navigate more difficult times, to be agile, invest for
future growth, and, critically, to focus leadership energies on creating a
valuable business.
We have a clearly stated dividend policy of paying a total annual dividend in
a range of 50-65% of adjusted profit after tax, in line with our peer group.
Our dividend payments are a key part of our overall approach to generate
shareholder value and we intend to keep to this policy over time. However,
reflecting the inherent strengths of our business and our overall approach to
capital management, we are willing to exceed this policy if appropriate to do
so and within the bounds of prudence. Indeed, we did so for the dividend for
the last financial year. I should say that we are highly reluctant to pay an
uncovered dividend except in exceptional circumstances, specifically these
would include where both the market and business outlook are obviously both
clearer and brighter. And shareholders will understand that paying an
uncovered dividend for an extended period of time is neither prudent nor a
sustainable policy.
We will consider the position more closely at year end, reflecting business
results and outlook, and overall trading and market conditions, conscious that
there is plenty of potential for a range of developments to affect our
business. We are always mindful of the reasonable near-term income
expectations of shareholders and a need to balance these with longer term
interests of the business as a whole. We are also confident that we have a
high quality, attractively positioned and well managed business and that in
due course markets, investment flows and business performance will recover.
However, it is not clear when this will be. Accordingly we have decided to pay
an interim dividend of 3.0p equal to approximately 68% of interim adjusted EPS
of 4.4p and we believe that this reflects all these matters in the round. In
the current market conditions, our shareholders ought not to infer that the
split between interim and final dividend will be consistent with prior years.
The political, economic and social outlook is still clouded with challenges,
yet there is a huge need for good management of long term savings and we
believe there is a valuable and significant role for genuinely active
investment management, in both retail and institutional markets. With our
breadth of product, our strong performance and experienced teams, we are well
placed to continue building a successful business in the interests of all our
stakeholders.
Robert Colthorpe
Chairman
30 May 2023
Chief Executive Officer's Statement
The current financial year has seen a recovery in equity and fixed income
markets after the difficult period experienced in the last financial year.
Despite this, we have seen a continuation of the more challenging environment
for the UK's long term savings industry.
Investors appear to have been shaken by the events of 2022 and are reluctant
to commit to new investments. This has been reflected in industry data which
continues to show large outflows from actively managed funds - particularly in
areas like UK equities and European equities - during the six months. There
has, however, been an uptick in demand for fixed income strategies where we
are well placed to serve our clients.
It is some comfort that our own performance is slightly better than the wider
industry with net outflows from our funds of £32 million in total over the
six months. Whilst it is disappointing that our strong investment performance
record has not allowed us able to make more positive headway, this must be set
against the overall industry backdrop.
Business performance
At the end of March 2023 Assets under Management ('AuM') stood at £11.0
billion representing an increase of 4% on the beginning of the year. Average
AuM stood at £11.2 billion for the period, which is 17% lower than in the
previous period. The drop in AuM has been driven by falling markets during
2022 and a reluctance on the part of investors to invest during market
turbulence and the continuation of uncertain macro-conditions.
The net management fee margin (the retained revenue margin of the firm
after deducting the costs of OCF caps, direct research costs and any enhanced
fee arrangements) was 62.5bps compared with 65.1bps last year.
The adjusted operating margin decreased from 33% to 23% reflecting the lower
level of AuM and our continuing 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 long term growth profile.
Over the six months, the group generated £7.9 million of adjusted profit
before tax for the year and had a closing cash position of £31.5 million.
Investment flows
For the first half of the current financial year, we saw inflows into our
largest US equity strategy although these were more than offset by outflows
from our European and UK equity strategies.
In total, our equity strategies had £360 million of outflow during the
period. Our fixed income strategies saw net inflows of £380 million during
the six months mainly driven by flows into our Strategic and Corporate bond
funds. We also saw small inflows into our segregated fixed income mandates. In
multi-asset, we continued to see good levels of interest in our Diversified
funds, although continued outflow from our multi-manager and macro-thematic
funds meant that in total we saw £69 million of outflow across
our multi-asset strategies.
Investment performance
Across our equity strategies we invest across the market capitalisation with a
number of our strategies often favouring mid and smaller capitalisation
stocks. This is because we believe that these companies will deliver strong
long term returns for our investors. There are periods, however, when these
sectors of the market perform less well relative to the very largest
companies. We have been through just such a period in the last six months or
so and this has impacted our very short-term performance. We expect this to
reverse in our favour in due course.
It is pleasing to note that our longer-term numbers remain attractive across
our equity, fixed income and multi-asset strategies with 83% of our assets
under management (where a sector comparison is appropriate) performing ahead
of median since manager inception.
Fund range
We have made no significant changes to our portfolio of funds during the last
six months. We have been preparing, however, for the launch of a new Global
Emerging Markets Sustainable fund that will be managed by Fiona Manning and
William Scholes who joined us from abdrn in the second half of last year.
We believe that a product investing in the fast-growing emerging markets will
be attractive to investors, particularly with Fiona and Will's strong
investment process that focuses on identifying companies offering exposure to
sustainable growth themes and a positive influence on society and the
environment, as identified through a material alignment to the UN Sustainable
Development Goals. In the longer term it will also help to further diversify
the asset mix within Premier Miton, increasing our exposure to global equites
alongside our existing global sustainable, global smaller companies and global
infrastructure funds.
Distribution
During the last six months we were delighted to welcome Jonathan Willcocks to
the team as Head of Global Distribution. Jonathan brings a wealth
of experience to Premier Miton gained during his time in a similar role at
M&G and before that with MFS, abrdn, Prolific and Hambros.
Since joining he has created a unified distribution and marketing team that
can bring our full product range of equity, fixed income and multi-asset funds
into our key markets of wealth manager, independent adviser and institutional
fund buyers.
Strategy
Looking forwards we have a well-diversified product offering that is managed
by experienced and talented investment managers. We cover around 82% of the
key demand pools in terms of assets under management within the UK market
according to Investment Association data. This means that there is a sizeable
market for us take our products to and to capture increased market share
within. We know that investors will continue to seek out strategies where they
believe managers can add long term value over and above investing in a simple
index strategy. And we know that our managers have demonstrated an ability to
deliver this for investors over the long term.
Our distribution team has been restructured and reinvigorated and can cover
the key fund buyer markets in the UK. As and when market sentiment improves
and fund buyers return, we are confident of growing our business organically
once more. We are also mindful of the opportunities that exist outside our
home market and continue to investigate ways in which our funds and our
services can be brought to a wider audience in Europe and beyond.
And of course, having successfully completed the merger of Premier and Miton,
we are open minded about the prospects to grow our business through further
merger and acquisition activity should the opportunity present itself.
Closing
Although this has been a tougher period for our investors, as indeed it has
for our shareholders, we remain convinced that the work we have done in
building a diversified active manager that can offer products across equities,
fixed income and multi-asset will bear fruit in the long term.
Our investment performance record is good, we have a strong distribution and
marketing capability, a strong balance sheet and an operational platform that
can handle many times the current level of assets we manage. As confidence
returns to markets and to investors, we are well placed to return to growth.
Mike O'Shea
Chief Executive Officer
30 May 2023
Financial Review
Financial performance
Profit before tax for the period was £2.4 million (2022 HY: £9.9 million).
The decrease in profitability is due to the lower average level of assets
being managed by the Group when compared to the comparative period, detailed
below.
Adjusted profit before tax *, which is stated before amortisation, share-based
payments, merger related costs and exceptional costs decreased to £7.9
million (2022 HY: £14.6 million).
Adjusted profit and profit before tax
Unaudited six months to 31 March 2023 Unaudited six months to 31 March 2022 Audited
£m £m year to
30 September 2022
£m
Net revenue 35.0 43.7 81.2
Administrative expenses (27.1) (29.1) (56.8)
Adjusted profit before tax* 7.9 14.6 24.3
Amortisation (2.4) (2.4) (4.8)
Share-based payments (2.6) (2.2) (4.5)
Merger related costs - - (0.1)
Exceptional costs (0.5) - -
Profit before tax 2.4 9.9 14.9
* Indicates Alternative Performance Measures ('APMs').
Assets under Management * ('AuM')
AuM at 31 March 2023 was £10,995 million (2022 HY: £12,847 million)
representing a 4% increase from the opening position for the period of
£10,565 million.
Despite this, the Group's average AuM decreased by 17% over the comparative
period to £11,194 million (2022 HY: £13,453 million) reflecting the lower
opening AuM position.
Whilst there were early signs of returning confidence amongst fund buyers in
the latter stages of 2022 this did not follow through into 2023 and the
banking shocks that unfolded towards the end of the period appear to have
dented risk appetite.
The Group saw continued inflows into the fixed income, US equity and
Diversified multi-asset funds and outflows from the European equity and UK
equity funds which broadly reflects what the wider industry data is showing.
The net outflows for the period were £32 million (2022 HY: £(401) million).
Movement in AuM by asset class
Opening AuM Half year net flows £m Market/ investment performance Closing
1 October 2022 £m AuM
£m 31 March 2023
£m
Equity funds 5,631 (360) 366 5,637
Multi-asset funds 3,263 (69) 80 3,274
Fixed income funds 750 380 (2) 1,128
Investment trusts 519 (2) (4) 513
Segregated mandates 402 19 22 443
Total 10,565 (32) 462 10,995
Net revenue
Unaudited six months to 31 March 2023 Unaudited six months to 31 March 2022 Audited
£m £m year to
30 September 2022
£m
Management fees 38.8 48.5 90.6
Fees and commission expenses (3.9) (4.8) (9.1)
Net management fees (1 *) 34.9 43.7 81.5
Other income/(loss) 0.1 - (0.3)
Net revenue 35.0 43.7 81.2
Average AuM (2) (*) 11,194 13,453 12,615
Net management fee margin (bps) (3 *) 62.5 65.1 64.6
1 Being management fee income less trail/rebate expenses
2 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 annualised net management
fees divided by the average AuM
The Group's revenue represents management fees generated on the assets being
managed by the Group. The net management fee margin for the period was 62.5
basis points. The decrease from the comparative period primarily reflects the
change in the Group's product mix.
Net management fees decreased by 20% to £34.9 million (2022 HY: £43.7
million) reflecting the lower level of average AuM compared to the comparative
period.
Administration expenses
Administration expenses for the period (excluding share-based payments)
totalled £27.1 million (2022 HY: £29.1 million), a decrease of 7%.
Staff costs continue to be the largest component of administration expenses,
consisting 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 £10.9
million (2022 HY: £9.8 million). At the period end the Group had 167 full
time staff including non-executive directors (2022 HY: 163).
Variable staff costs totalled £6.6 million (2022 HY: £9.5 million). Included
within this are general discretionary bonuses, sales bonuses and bonuses in
respect of the fund management teams, plus associated employers' national
insurance. These costs move with the net revenues of the Group and the
adjusted profit before tax.
Overheads and other costs were broadly flat at £9.1 million (2022 HY: £9.2
million).
Administration expenses
Unaudited six months to 31 March 2023 Unaudited six months to 31 March 2022 Audited
£m £m year to
30 September 2022
£m
Fixed staff costs 10.9 9.8 20.4
Variable staff costs 6.6 9.5 17.3
Overheads and other costs 9.1 9.2 17.9
Depreciation - fixed assets 0.2 0.3 0.6
Depreciation - leases 0.3 0.3 0.6
Administration expenses 27.1 29.1 56.8
Exceptional costs
During the period the Group incurred exceptional costs totalling £0.5
million. These comprise of £0.25 million relating to restructuring of the
Group's distribution activities and £0.25 million following the strategic
review to cease development of the Group's online portal 'Connect'.
Share-based payments
The share-based payment charge for the period was £2.6 million (2022 HY:
£2.2 million). Of this charge, £2.2 million related to nil cost contingent
share rights ('NCCSR').
During the period 1,577,500 NCCSR awards were issued (2022 HY: 1,902,500).
On 13 January 2023, the Group granted 2,651,034 long-term incentive plan
('LTIP') awards (2022 HY: nil). The cost of the awards is the estimated fair
value at the date of grant of the estimated entitlement to ordinary shares. At
each reporting date the estimated number of ordinary shares that may be
ultimately issued is assessed.
At 31 March 2023 the Group's Employee Benefit Trusts ('EBTs') held 11,469,161
ordinary shares representing 7.3% of the issued ordinary share capital (2022
HY: 12,692,553 shares). See note 12 for further detail.
Balance sheet, capital management and dividends
Total shareholders' equity as at 31 March 2023 was £121.4 million (2022 HY:
£127.7 million). At the period end the cash balances of the Group totalled
£31.5 million (2022 HY: £36.0 million). The Group has no external bank debt.
Dividends totalling £9.1 million were paid in the period (2022 HY: £9.3
million). The Board is recommending an interim dividend payment of 3.0p per
share (2022 HY: 3.7p). The interim dividend will be paid on 4 August 2023 to
shareholders on the register at the close of business on 7 July 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, merger related costs, share-based payments and amortisation.
Piers Harrison
Chief Financial Officer
30 May 2023
Alternative Performance Measures ('APMs')
APM Unit Definition Purpose
Adjusted profit before tax £ Profit before interest, taxation, amortisation, share-based payments, merger Except for the noted costs, this encompasses all operating expenses in the
related costs and exceptional costs. business, including fixed and variable staff cash costs. Provides a proxy for
cash generated and is the key measure of profitability for management
decision making.
AuM £ The value of external assets that are managed by the Group. 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 £ The net management fee revenue of the Group. Calculated as gross management Provides a consistent measure of the profitability of the Group and its
fee income, less the cost of OCF caps, direct research costs and any enhanced ability to grow and retain clients, after removing amounts paid to third
fee arrangements. parties.
Net management fee margin bps Net management fees divided by average AuM. 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 Profit after tax excluding amortisation, share-based payments, merger related Provides a clear measure to shareholders of the profitability of the Group
costs and exceptional costs, divided by the weighted average number of shares from its underlying operations. The exclusion of amortisation, share-based
in issue in the period. payments, merger related costs and exceptional items provides a consistent
basis for comparability of results period on period.
Unaudited Condensed Consolidated Statement of Comprehensive Income
for the six months ended 31 March 2023
Notes Unaudited Unaudited Audited
six months to six months to year to
31 March 31 March 30 September
2023 2022 2022
£000 £000 £000
Revenue 4 38,838 48,503 90,233
Fees and commission expenses (3,868) (4,789) (9,062)
Net revenue 34,970 43,714 81,171
Administration expenses (27,067) (29,140) (56,818)
Share-based payment expense 12 (2,581) (2,240) (4,505)
Amortisation of intangible assets 8 (2,424) (2,424) (4,861)
Merger related costs 5 (25) (25) (51)
Exceptional items 5 (462) - -
Operating profit 2,411 9,885 14,936
Finance income/(expense) 5 (7) (23)
Profit for the period before taxation 2,416 9,878 14,913
Taxation 6 (776) (4,062) (5,346)
Profit for the period after taxation attributable to equity holders of the 1,640 5,816 9,567
parent
Pence pence pence
Basic earnings per share 7(a) 1.12 3.97 6.54
Diluted basic earnings per share 7(a) 1.05 3.71 6.12
No other comprehensive income was recognised during 2023 or 2022. Therefore,
the profit for the period is also the total comprehensive income.
All of the amounts relate to continuing operations.
Unaudited Condensed Consolidated Statement of Changes in Equity
for the six months ended 31 March 2023
Notes Share Merger reserve Employee Capital redemption reserve Retained Total
capital £000 Benefit Trust £000 earnings £000
£000 £000 £000
At 1 October 2022 60 94,312 (16,744) 4,532 44,604 126,764
Profit for the period - - - - 1,640 1,640
Purchase of own shares held by an EBT 12(c) - - (381) - - (381)
Exercise of options - - 1,617 - (1,617) -
Share-based payment expense 12 - - - - 2,581 2,581
Other amounts direct to equity - - - - (17) (17)
Deferred tax direct to equity - - - - (9) (9)
Equity dividends paid 3 - - - - (9,147) (9,147)
At 31 March 2023 (Unaudited half year) 60 94,312 (15,508) 4,532 38,035 121,431
At 1 October 2021 60 94,312 (15,790) 4,532 49,110 132,224
Profit for the period - - - - 5,816 5,816
Purchase of own shares held by an EBT 12(c) - - (3,222) - - (3,222)
Exercise of options - - 393 - (393) -
Share-based payment expense 12 - - - - 2,240 2,240
Deferred tax direct to equity - - - - (103) (103)
Equity dividends paid 3 - - - - (9,269) (9,269)
At 31 March 2022 (Unaudited half year) 60 94,312 (18,619) 4,532 47,401 127,686
At 1 October 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 - - - - 4,505 4,505
Deferred tax direct to equity - - - - (344) (344)
Equity dividends paid - - - - (14,696) (14,696)
At 30 September 2022 (Audited) 60 94,312 (16,744) 4,532 44,604 126,764
Unaudited Condensed Consolidated Statement of Financial Position
as at 31 March 2023
Notes Unaudited Unaudited Audited
31 March 31 March 30 September
2023 2022 2022
£000 £000 £000
Non-current assets
Goodwill 8 70,688 70,688 70,688
Intangible assets 8 20,092 24,953 22,516
Other investments 100 100 100
Property and equipment 488 1,561 1,192
Right-of-use assets 646 1,411 908
Deferred tax asset 1,757 2,431 1,928
Finance lease receivables 1 - 77
Trade and other receivables 563 803 1,081
94,335 101,947 98,490
Current assets
Financial assets at fair value through profit and loss 1,171 3,458 2,089
Finance lease receivables 176 - 197
Trade and other receivables 167,513 114,395 136,052
Cash and cash equivalents 9 31,520 36,038 45,764
200,380 153,891 184,102
Total assets 294,715 255,838 282,592
Current liabilities
Trade and other payables (167,250) (120,241) (148,820)
Lease liabilities (651) (868) (887)
(167,901) (121,109) (149,707)
Non-current liabilities
Provisions 10 (374) (374) (374)
Deferred tax liability (4,950) (5,958) (5,485)
Lease liabilities (59) (711) (262)
Total liabilities (173,284) (128,152) (155,828)
Net assets 121,431 127,686 126,764
Equity
Share capital 11 60 60 60
Merger reserve 94,312 94,312 94,312
Own shares held by an Employee Benefit Trust 12(c) (15,508) (18,619) (16,744)
Capital redemption reserve 4,532 4,532 4,532
Retained earnings 38,035 47,401 44,604
Total equity shareholders' funds 121,431 127,686 126,764
Unaudited Condensed Consolidated Statement of Cash Flows
for the six months ended 31 March 2023
Notes Unaudited Unaudited Audited
six months to six months to year to
31 March 31 March 30 September
2023 2022 2022
£000 £000 £000
Cash flows from operating activities:
Profit after taxation 1,640 5,816 9,567
Adjustments to reconcile profit to net cash flow from operating activities:
- Tax on continuing operations 6 776 4,062 5,346
- Finance (income)/expense (5) 7 23
- Interest payable on leases 18 34 60
- Depreciation - fixed assets 220 282 580
- Depreciation - leases 263 337 621
- Gain on derecognition of right-of-use asset - - (115)
- Receivable for the net investment in sub-lease - - 334
- (Gain)/loss on revaluation of financial assets at fair value through profit (98) 18 345
and loss
- Loss on disposal of property and equipment 500 - 171
- Amortisation of intangible assets 8 2,424 2,424 4,861
- Share-based payment expense 12 2,581 2,240 4,505
-(Increase)/decrease in trade and other receivables (30,650) 32,157 10,800
- Increase/(decrease) in trade and other payables 18,430 (42,980) (14,403)
Cash generated from operations (3,901) 4,397 22,695
Income tax paid (1,363) (3,008) (5,352)
Net cash flow from operating activities (5,264) 1,389 17,343
Cash flows from investing activities:
Interest received/(paid) 5 (7) (23)
Acquisition of assets at fair value through profit and loss - (55) (85)
Proceeds from disposal of assets at fair value through profit and loss 1,016 107 1,180
Purchase of property and equipment (16) (106) (207)
Net cash flow from investing activities 1,005 (61) 865
Cash flows from financing activities:
Lease payments (457) (474) (931)
Purchase of own shares held by an EBT 12(c) (381) (3,222) (4,492)
Equity dividends paid 3 (9,147) (9,269) (14,696)
Net cash flow from financing activities (9,985) (12,965) (20,119)
Decrease in cash and cash equivalents (14,244) (11,637) (1,911)
Opening cash and cash equivalents 45,764 47,675 47,675
Closing cash and cash equivalents 9 31,520 36,038 45,764
Notes to the Unaudited Condensed Consolidated Financial Statements
for the six months ended 31 March 2023
1. Basis of accounting
These interim unaudited Condensed Consolidated Financial Statements do not
constitute statutory accounts within the meaning of section 435 of the
Companies Act 2006. They have been prepared on the basis of the accounting
policies as set out in the Group's Annual Report for the year ended 30
September 2022.
The interim unaudited Condensed Consolidated Financial Statements to 31 March
2023 have been prepared in accordance with
IAS 34 'Interim Financial Reporting' and the Listing Rules of the Financial
Conduct Authority.
Premier Miton Group plc (the 'Group') is the Parent Company of a group of
companies which provide a range of investment management services in the
United Kingdom and Channel Islands.
The Group's 2022 Annual Report is prepared in accordance with International
Financial Reporting Standards ('IFRS') as adopted by the United Kingdom, and
is available on the Premier Miton Group plc website (www.premiermiton.com).
The Group has considerable financial resources and ongoing investment
management contracts. As a consequence, the Directors believe that the Group
demonstrates the financial resilience required to manage its business risks
successfully. The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for a period of at
least 12 months after the date the interim financial statements are signed.
Thus, the Directors continue to adopt the going concern basis of accounting in
preparing the interim unaudited Condensed Consolidated Financial Statements.
The Directors note that the Group has no external borrowings and maintains
significant levels of cash reserves. The Group has conducted financial
modelling at materially lower levels of AuM with the business remaining cash
generative. The Directors have also reviewed and examined the financial stress
testing inherent in the Internal Capital Adequacy and Risk Assessment
('ICARA').
These interim unaudited Condensed Consolidated Financial Statements were
approved and authorised for issue by the Board acting through a duly
authorised committee of the Board of Directors on 30 May 2023.
The full-year accounts to 30 September 2022 were approved by the Board of
Directors on 1 December 2022 and have been delivered to the Registrar of
Companies. The report of the auditor on those accounts was unqualified, did
not contain an emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006. The figures for the six months
ended 31 March 2023 and the six months ended 31 March 2022 have not been
audited.
The interim unaudited Condensed Consolidated Financial Statements are
presented in Sterling and all values are rounded to the nearest thousand
pounds (£000) except where otherwise indicated.
Forward looking statements
These interim unaudited Condensed Consolidated Financial Statements are made
by the Directors in good faith based on information available to them at the
time of their approval of the accounts. Forward looking statements should be
treated with caution due to the inherent uncertainties, including economic,
regulatory and business risk factors underlying any such statement. The
Directors undertake no obligation to update any forward looking statement
whether as a result of new information, future events or otherwise. The
interim unaudited Condensed Consolidated Financial Statements have been
prepared to provide information to the Group's shareholders and should not be
relied upon by any other party or for any other purpose.
2. Segmental reporting
The Group has only one business operating segment, asset management for
reporting and control purposes.
IFRS 8 'Operating Segments' requires disclosures to reflect the information
which the Group's management uses for evaluating performance and the
allocation of resources. The Group is managed as a single asset management
business and as such, there are no additional operating segments to disclose.
Under IFRS 8, the Group is also required to make disclosures by geographical
segments. As Group operations are solely in the UK and Channel Islands, there
are no additional geographical segments to disclose.
3. Dividend
The final dividend for the year ended 30 September 2022 of 6.3p per share was
paid on 10 February 2023 resulting in a distribution of £9,147,109. This is
reflected in the unaudited Condensed Consolidated Statement of Changes in
Equity (2022 HY: £9,268,748).
4. Revenue
Revenue recognised in the unaudited Condensed Consolidated Statement of
Comprehensive Income is analysed as follows:
Unaudited Unaudited Audited
six months
six months to 31 March
year to
2022
30 September
to 31 March
2022
2023 £000
£000
£000
Management fees 38,737 48,516 90,570
Commissions 2 2 4
Other income/(loss) 99 (15) (341)
Total revenue 38,838 48,503 90,233
All revenue is derived from the United Kingdom and Channel Islands.
5. Exceptional items and merger related costs
Recognised in arriving at operating profit from continuing operations:
Unaudited Unaudited Audited
six months six months year to
to 31 March to 31 March 30 September
2023 2022 2022
£000 £000 £000
Restructuring 212 - -
Closure of connect 250 - -
Total exceptional costs 462 - -
Merger related costs 25 25 51
Total merger related costs 25 25 51
Exceptional items are those items of income or expenditure that are considered
significant in size and/or nature to merit separate disclosure and which are
non-recurring.
£211,185 of employment related redundancy costs were incurred arising from
the restructuring of the Group's distribution activities undertaken in the
period (2022 HY: £nil).
Exceptional items, net of associated income were incurred in relation to the
cessation of the development of the Group's online portal 'Connect'. This
resulted in net expenditure of £250,000.
There were £25,496 of merger related legal and professional costs in the
period (2022 HY: £25,496).
6. Taxation
Unaudited Unaudited Audited
six months six months year to
to 31 March to 31 March 30 September
2023 2022 2022
£000 £000 £000
Corporation tax charge 1,150 2,708 4,203
Deferred tax liability arising on historic business combination - 2,066 2,066
Deferred tax credit (374) (712) (923)
Tax charge reported in the unaudited Condensed Consolidated Statement of 776 4,062 5,346
Comprehensive Income
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 subsequently 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.
7. Earnings per share
Basic earnings per share is calculated by dividing the profit for the period attributable to ordinary equity shareholders of the Parent Company by the weighted average number of ordinary shares outstanding during the period.
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 Employee Benefit Trusts ('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 period 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:
Unaudited Unaudited Audited
six months six months year to
to 31 March to 31 March 30 September
2023 2022 2022
£000 £000 £000
Profit attributable to ordinary equity shareholders of the Parent Company for 1,640 5,816 9,567
basic earnings
No.000 No.000 No.000
Issued ordinary shares at 1 October 157,913 157,913 157,913
-Effect of own shares held by an EBT (12,111) (11,571) (11,677)
Weighted average shares in issue 145,802 146,342 146,236
-Effect of movement in share options 10,936 10,259 10,184
Weighted average shares in issue - diluted 156,738 156,601 156,420
Basic earnings per share (pence) 1.12 3.97 6.54
Diluted earnings per share (pence) 1.05 3.71 6.12
(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 share-based
payments, amortisation, merger related costs and exceptional items.
Adjusted profit for calculating adjusted earnings per share:
Unaudited Unaudited Audited
six months six months year to
to 31 March to 31 March 30 September
2023 2022 2022
£000 £000 £000
Profit before taxation 2,416 9,878 14,913
Add back:
-Share-based payment expense 2,581 2,240 4,505
-Amortisation of intangible assets 2,424 2,424 4,861
-Merger related costs 25 25 51
-Exceptional items 462 - -
Adjusted profit before tax 7,908 14,567 24,330
Taxation:
-Tax in the unaudited Consolidated Statement of Comprehensive Income (776) (4,062) (5,346)
-Tax effect of adjustments (697) 1,344 1,176
Adjusted Profit after tax for the calculation of adjusted earnings per share 6,435 11,849 20,160
Adjusted earnings per share was as follows using the number of shares
calculated at note 7(a):
Unaudited Unaudited Audited
six months to
six months to
year to
31 March
31 March
30 September
2023
2022
2022
pence
pence
pence
Adjusted earnings per share 4.41 8.10 13.79
Diluted adjusted earnings per share 4.11 7.57 12.89
8. Goodwill and other intangible assets
Cost amortisation and net book value of intangible assets are as follows:
Goodwill Unaudited Unaudited Audited
six months to
six months to
year to
31 March
31 March
30 September
2023
2022
2022
£000 £000 £000
Cost:
At 1 October 77,927 77,927 77,927
Additions - - -
At 31 March/30 September 77,927 77,927 77,927
Amortisation and impairment:
At 1 October 7,239 7,239 7,239
Amortisation during the period - - -
At 31 March/30 September 7,239 7,239 7,239
Carrying amount:
At 31 March/30 September 70,688 70,688 70,688
Other intangible assets Unaudited Unaudited Audited
six months to
six months to
year to
31 March
31 March
30 September
2023
2022
2022
£000 £000 £000
Cost:
At 1 October 81,025 81,025 81,025
Additions - - -
At 31 March/30 September 81,025 81,025 81,025
Accumulated amortisation and impairment:
At 1 October 58,509 53,648 53,648
Amortisation during the period 2,424 2,424 4,861
At 31 March/30 September 60,933 56,072 58,509
Carrying amount:
At 31 March/30 September 20,092 24,953 22,516
Other intangible assets relate to the investment management agreements acquired in business combinations between the funds to which they were the investment manager and the value arising from the underlying client relationships.
The Group has determined that it has a single cash-generating unit ('CGU') for the purpose of assessing the carrying value of goodwill. Impairment testing is performed at least annually whereby the recoverable amount of the goodwill is analysed via the value-in-use method and compared to the respective carrying value. During the period no impairment was identified.
9. Cash and cash equivalents
Unaudited Unaudited Audited
six months to
six months to
year to
31 March
31 March
30 September
2023
2022
2022
£000 £000 £000
Cash at bank and in hand 31,520 36,038 45,764
10. Provisions
£000
At 1 October 2022 374
Disposals -
At 31 March 2023 (Unaudited) 374
Current -
Non-current 374
374
At 1 October 2021 389
Additions (15)
At 31 March 2022 (Unaudited) and 30 September 2022 (Audited) 374
Provisions relate to dilapidations for the offices at 6th Floor, Paternoster House, London, the lease on this property runs to 28 November 2028 and the provision for dilapidations has been disclosed as non-current.
11. Share capital
Allotted, called up and fully paid: Ordinary shares 0.02 pence each Number Deferred shares
Number of shares Number
At 1 October 2022 157,913,035 1
Issued - -
At 31 March 2023 (Unaudited) 157,913,035 1
At 1 October 2021 157,913,035 1
Issued - -
At 31 March 2022 (Unaudited) and 30 September 2022 (Audited) 157,913,035 1
Allotted, called up and fully paid: Ordinary shares Deferred Total
Value of shares 0.02 pence each shares £000
£000 £000
At 1 October 2022 31 29 60
Issued - - -
At 31 March 2023 (Unaudited) 31 29 60
At 1 October 2021 31 29 60
Issued - - -
At 31 March 2022 (Unaudited) and 30 September 2022 (Audited) 31 29 60
12. Share-based payment
The total expense recognised for share-based payments in respect of employee services received during the period to 31 March 2023 was £2,580,666 (2022 HY: £2,240,420), of which £2,208,196 related to nil cost contingent share rights (2022 HY: £2,176,867).
(a) Nil cost contingent share rights ('NCCSRs')
During the period, 1,577,500 (2022 HY: 1,902,500) NCCSRs over ordinary shares
of 0.02p in the Company were granted to 19
employees (2022 HY: 32 employees). Of the total award, nil (2022 HY: 375,000)
NCCSRs were awarded to Executive Directors. The awards will be satisfied from
the Group's EBTs.
The share-based payment expense is calculated in accordance with the fair
value of the NCCSRs on the date of grant. The price per right at the date of
grant was £1.045 on 14 December 2022, resulting in a fair value of
£1,648,488 to be expensed over the relevant vesting period of between two to
five years.
The key features of the awards include: automatic vesting at the relevant
anniversary date with the delivery of the shares to the
participant within 30 days of the relevant vesting date.
During the period, 1,251,668 NCCSRs over ordinary shares of 0.02p in the
Company were exercised by 14 employees. Of the total, 150,000 were exercised
by an Executive Director.
After the period end 2,016,661 NCCSRs over ordinary shares of 0.02p in the
Company that vested on 14 April 2023, were exercised by 37 employees. Of the
total, 400,000 were exercised by an Executive Director.
(b) Long-Term Incentive Plan ('LTIP')
On 13 January 2023 the Group granted 2,651,034 LTIP awards (2022 HY: nil). Of
the total award, 811,541 were awarded to Executive Directors.
Vesting of awards is subject to continued employment and performance
conditions based on Total Shareholder Return ('TSR'), Earnings Per Share
('EPS'), fund performance and other operational conditions, all measured over
a three-year performance period.
The cost of the awards is the estimated fair value at the date of grant of the
estimated entitlement to ordinary shares of 0.02p in the Company. At 13
January 2023 the cost was estimated at £797,961 and is to be expensed over
the vesting period of three year. At each reporting date the estimated number
of ordinary shares that may be ultimately issues is assessed.
The fair value of the LTIP awards was estimated using a Monte Carlo Simulation
('MCS') and the prepaid forward share price, adjusting the loss of dividends
over the vesting period. The following table lists the inputs to the model
used for the period ended 31 March 2023.
13 January 2023
Dividend yield (%) 2.24
Nominal risk-free rate (%) 3.27
Expected share price volatility (%) 40.00
Discount for lack of marketability ('DLOM') (%) 12.00
Share price (£) 1.19
Performance period (months) 36
Holding period post vesting (months) 24
(c) Employee Benefit Trusts ('EBTs')
Premier Miton Group plc established an EBT on 25 July 2016 to purchase
ordinary shares in the Company to satisfy share awards to certain employees.
During the period, 364,525 (2022 HY: 1,902,500) shares were acquired and held
by the Group's EBTs at a cost of £380,804 (2022 HY: £3,222,043).
At 31 March 2023, 11,469,161 (2022 HY: 12,692,553) shares are held by the
Group's EBTs.
At 31 March 2023, the cost of the shares held by the EBTs of £15,508,385
(2022 HY: £18,619,283) has been disclosed as own shares held by an EBT in the
unaudited Condensed Consolidated Statement of Changes in Equity and the
unaudited Condensed Consolidated Statement of Financial Position.
13. Subsequent events post balance sheet
At 30 May 2023, there were no subsequent events to report.
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