Premier Asset Management Group PLC Final Results (9127X)

TIDMPAM

RNS Number : 9127X

Premier Asset Management Group PLC

30 November 2017

30 November 2017

Premier Asset Management Group PLC

("Premier" or the "Company") Annual Results for the Year Ended 30 September 2017

Premier Asset Management Group PLC (AIM: PAM) today announces its audited results for the year ended 30 September 2017.

Highlights

   --     Assets under management up 22% to GBP6.1bn (FY16: GBP5.0bn) 
   --     Assets under management as at close of business on 28 November 2017 were GBP6.3bn 
   --     Continued strong investment performance*: 

o Over five years: 97% of AUM above median

o Over three years: 96% of AUM above median

   --     Net flows of GBP747m (FY16: GBP778m) 
   --     18 consecutive quarters of net positive flows 
   --     Adjusted EBITDA up 38% to GBP15.0m (FY16: GBP10.9m)** 
   --     Underlying profit before tax*** up 39% to GBP14.7m (FY16: GBP10.6m) 
   --     Profit before tax of GBP11.5m (FY16: GBP2.5m) 
   --     Total dividend: 8.00p 

*Performance figures represent 83% of Premier's total AUM as at 30 September 2017 and exclude absolute return funds, investment trusts and segregated mandates. Median and quartile ranking figures are shown relative to respective Investment Association sectors. Source: FE Analytics, data to 30 September 2017. Net income reinvested. Data shown net of all fund charges. C share class, or, where a C share class was not available for the full time period, the pre RDR bundled or equivalent retail share class has been used for the period the C share class was not available.

** Earnings before interest, tax, depreciation, amortisation, share based payments and exceptional items

*** Profit stated before exceptional items, amortisation, interest expense, share based payments and tax

Mike O'Shea, Chief Executive Officer, commented:

"I am pleased to report another successful year for Premier Asset Management. This has been achieved by continuing to produce good long-term investment outcomes for our clients, after fees, across a range of relevant investment products. This, coupled with the strength of our distribution capabilities and broader business platform has enabled us to grow assets under management during the year.

Although we expect investment and political conditions to remain uncertain, and quite possibly volatile, over the coming year, we continue to see good opportunities for investment firms such as Premier and for our investors. We believe that the ongoing low interest rate environment will continue to make well diversified, income paying investment strategies attractive and we feel strongly that good active management will continue to offer investors the opportunity to achieve their long-term investment goals.

As always we face many challenges, but we are performing strongly and we believe we are well positioned for the future. There are many reasons to encourage people to save and invest for the long term and we believe Premier, as an active manager with talented investment professionals, relevant investment products, good investment performance, a strong distribution capability, growing brand and experienced management, is well placed to take advantage of the opportunities that arise for both our investors and shareholders."

Dividend

The Company has adopted a quarterly dividend policy, expecting to pay three smaller, interim dividends, representing approximately half of the estimated total dividend for the full financial year, followed by a larger, final interim dividend.

The Company's dividend for the financial year ending 30 September 2017 will be 8p, comprising three interim dividends of 1.25p per share, paid on 3 March 2017, 2 June 2017 and 1 September 2017, and a final dividend of 4.25p per share which will go ex-dividend on 7 December 2017 and which will be paid on 5 January 2018.

MiFID II

With effect from 3 January 2018 the cost of external research for Premier's multi-asset, fixed income and absolute return funds will be paid by the Group. These funds together represent 74% of Premier's assets under management. This is not expected to have a material impact on the Group's cost base.

Investors in Premier's equity funds will continue to be charged the cost of external equity investment research as this remains a significant part of the active management process for these funds. It is important to note that our fund prices, income payments and performance figures are always shown and paid net of fund fees, which, for our equity funds, includes the cost of external research.

Enquiries:

 
 Premier Asset Management Group   Tel: [phone] 
  PLC                              Mike O'Shea 
-------------------------------  ------------------- 
 Numis Securities Limited         Tel: [phone] 
  (NOMAD and Broker)               Kevin Cruickshank 
                                   Charles Farquhar 
-------------------------------  ------------------- 
 Liberum Capital Limited          Tel: [phone] 
  (Joint Broker)                   Richard Crawley 
                                   Jamie Richards 
-------------------------------  ------------------- 
 Smithfield Consultants           Tel: [phone] 
  (Financial PR)                   John Kiely 
                                   Andrew Wilde 
-------------------------------  ------------------- 
 

About Premier

Premier is a fast-growing UK retail asset management group with a focus on delivering good investment outcomes for investors through relevant products and active management across its range of investment strategies, which include multi-asset, equity and absolute return funds. Premier had GBP6.1 billion of assets under management as at 30 September 2017.

Chairman's statement

The key aim of our business is to produce good long-term investment outcomes, after fees, for our clients, and I am pleased to report that we are continuing to deliver against this objective. The strength of our investment performance, combined with our relevant investment products and our distribution capabilities have helped us achieve strong levels of net sales flow, a record high level of assets under management and record profits.

This is our first Annual Report covering the period since our flotation on the Alternative Investment Market of the London Stock Exchange ("AIM") on 7 October 2016, which was at the start of our current financial year.

Bringing our business to the market was an important decision at an important time for us. Our business was already growing strongly, thanks to the talent, hard work and enthusiasm of our people and the broad support of advisers using our funds and investment services. But after careful consideration, the Board of Premier Asset Management Group PLC (the "Board") believed a flotation on the AIM market of the London Stock Exchange was the best way of helping the business to maximise its future growth opportunities.

The IPO has significantly strengthened our financial position by giving us a debt-free balance sheet and greater potential to invest for future growth when suitable opportunities appear. It has also created a capital structure that can enhance our ability to retain and attract the right people to enable us to keep on delivering good long-term investment outcomes for our clients and growing our business.

Over the last year, we experienced strong net inflows of GBP747m and our assets under management reached a record high level of GBP6.1 billion. Premier's profit before tax increased to GBP11.5m, whilst underlying profit before tax increased by 39% to GBP14.7m, with net management fees increasing by GBP7.6m to GBP40.9m, and adjusted EBITDA increasing by 38% to GBP15.0m. I am also pleased to report that our investment performance during the year remained strong. This has added to the excellent long-term record we have of achieving good outcomes for our investors.

At the time of our flotation in October 2016, we explained that we planned to commence paying dividends to shareholders as soon as possible, as long as the relevant financial criteria were met. As detailed in the Company's admission document from October 2016, the Board has adopted a dividend policy to reflect the expectation of future cash flow generation and the long-term earnings potential of Premier. Reflecting the good performance during the year, the Board is now recommending a final interim dividend of 4.25p, which will bring the full-year dividend to 8.00p for the 2017 financial year. The fourth interim dividend will be paid on 5 January 2018 to shareholders on the register on 7 December 2017.

The global financial crisis began ten years ago and it is fair to say that economic, political and investment uncertainty has become the "new normal". Turbulence at a macro level has continued over the last twelve months in the UK and around the world, and we believe our clients should be prepared for this uncertain environment to continue for the foreseeable future.

Not long before our flotation, the UK voted to leave the European Union and we are in the midst of the long process of Brexit. The uncertainty arising from the ongoing negotiations between the UK Government and the European Commission is coupled with a low interest rate environment and UK investors continue to be faced with a number of challenges to navigate.

In this environment, we believe our focus on active management and relevant investment products for the UK market, gives us the opportunity to continue to offer long-term added investment value to our clients.

Despite these challenging conditions, thanks to the strength of our investment teams, our investment performance, the hard work of our people across the business and the continued support of our clients, we recorded our eighteenth consecutive quarter of positive net sales flows. These continued strong net sales flows demonstrate how relevant investment propositions remain attractive to new investors.

Central to our strategy is continuing to ensure we are an investment-led business, based on retaining and hiring talented investment professionals. These professionals need the appropriate freedom and support to produce good long-term investment outcomes for our clients. Our approach is to do so via a focus on active management in investment areas where we believe we can add value.

This investment focus, combined with our strong distribution and business management capability should help us deliver shareholder value through sustainable earnings, strong cash flow and dividends.

At the time of our flotation last year, we appointed two new non-executive directors to strengthen the Board. It was our intention that Robert Colthorpe, who currently serves as our senior independent director, would succeed Luke Wiseman as Chair of the Audit & Risk Committee. I am pleased to announce that Robert will commence in this role on 1 January 2018. Luke remains on the Board as a non-executive director. I would like to thank all directors for their contribution to date.

Finally, I would like to say thank you to everyone at Premier who has worked hard to contribute to the Company's success, and to everyone else who has supported us, including our clients and our shareholders.

Mike Vogel

Chairman

29 November 2017

Chief executive's report

I am pleased to report on another successful year for Premier Asset Management. This has been achieved by continuing to produce good long-term investment outcomes for our clients, after fees, across a range of relevant investment products. This, coupled with the strength of our distribution capabilities and broader business platform has enabled us to grow assets under management during the year.

Our strategy

At the core of what we do is active management. This approach is employed across different investment strategies, with the consistent aim of producing positive long-term investment outcomes for our clients, such as income, capital growth and low risk absolute returns. For Premier, the key to making this happen is our focus on getting the investment-led strategy right.

This includes hiring and retaining good investment people to manage our funds. Many of our fund managers have been with Premier for many years, whilst others have joined us more recently. What they all have in common is a proven ability to manage an investment strategy using a tested investment philosophy and approach. We work hard to ensure we provide a good working environment for our investment teams, giving them the appropriate freedom to produce good investment results, backed by an effective business platform and strong risk and compliance controls.

Investment performance

At a very high level, our investment performance continues to be strong. From a commercial perspective, based on 83% of our total assets under management (excluding absolute return funds, investment trusts and segregated mandates), 96% of our AUM has achieved above sector median performance, net of all fund charges, over three years and the figure is 97% over five years. Our two absolute return funds, which are not measured against a peer group, each have a 100% record of producing positive returns over rolling one or three-year periods, depending on their respective absolute return targets. Our closed ended funds and segregated mandates have once again continued to deliver against their respective objectives and mandates.

For our equity based funds, we measure performance against a relevant equity index. I am pleased to report that over the last 5 years to 30 September 2017, every single one of our eight equity focussed funds has outperformed its comparator index after all fees, with average annualised outperformance of 2.6% p.a.

Many of our multi-asset and equity funds have income as a primary objective. Over the year, these funds have been able to grow their dividend distributions and continue to offer attractive yields against their comparative benchmarks and cash interest rates.

It is clearly important, from a commercial point of view that we are performing strongly against our competitors. The performance figures mentioned above show that, across our total assets under management, we are doing this. We expect that the majority of our investors will be holding our funds with a clear purpose in mind - for example, attractive long-term income, low risk, long-term growth and of course diversification. We remain focused on delivering these objectives and, in the past year, have continued our long-term track record of doing so.

During my report, I will be mentioning a number of areas of our industry, which are increasingly under the spotlight. Performance is one of them, both in terms of the value investment funds are offering investors and the reporting of performance information. Clearly all of our fund prices and performance information is widely available, always after fees, through our own published information and website but also through a wide number of other sources. However, we are continuing to consider ways we could enhance the way we report our income, growth and risk-adjusted performance to our clients. We are also considering ways we could enhance the way we report our income, growth and risk-adjusted performance to others, including shareholders, who are interested in broader performance analysis across our investment range.

Investment product range

As well as ensuring that we have the right investment talent and working environment for our investment professionals to succeed, when we talk about our business with potential and existing fund investors and shareholders, we emphasise the importance of offering relevant investment products. For us, this means offering investment products that have a clear use and purpose for investors. This could be a 'one-stop' investment solution such as our successful multi-asset funds, which offer active management of diversified portfolios, through to more specialist equity and bond funds that can help clients diversify their own portfolios.

We believe our investment product range continues to be well positioned for the future. For example, our ten multi-manager funds each offer investors access to very broadly diversified and actively managed multi-asset and multi-manager portfolios but with specific long-term objectives. These include long-term income and income growth, higher income, growth, balanced growth with income, conservative growth, low risk absolute return as well as risk-targeted funds to help advisers match clients' risk profiles more easily. We believe this range offers a good example of our focus on customer outcomes, rather than a 'one size fits all' approach. Our multi-asset, multi-manager range has continued to experience strong growth and pleasingly, all ten funds have had positive net sales flows over the year.

We believe the demand for good actively managed diversified funds will endure as clients continue to seek specific long-term investment outcomes through investments that add value through active management and spread risk through real diversification.

As part of our ongoing product development, we have added to our investment range over the period with the evolution of two existing income funds and the launch of a new income fund.

Following the hire of a new and experienced manager specialising in managing covered call option strategies, we appointed new co-managers of the Premier Optimum Income Fund and introduced a 7% p.a. target yield. This fund is designed to offer a much higher yield than the UK equity market through the active management of an equity portfolio and the use of covered call options.

We have changed the name of the Premier Global Utilities Income Fund to the Premier Global Infrastructure Income Fund, to reflect the fund's broader investment remit that includes infrastructure assets. We believe that this makes the fund more relevant to a wider range of investors.

Finally, building on the strong risk-adjusted track record of the Premier Diversified Fund, which offers an actively managed, multi-asset portfolio with investment selection by Premier's in-house investment teams, we launched the Premier Diversified Income Fund, based on the same investment approach but with a focus on producing an attractive level of income as well as strong long-term risk-adjusted returns.

We believe these funds can prosper, based on the talent of the investment teams involved and their clear potential attraction for investors.

Distribution

We continue to believe that our strong distribution capability is a positive differentiator for our business. Thanks to the strength and diversity of our product range, including our multi-asset, equity and absolute return funds, we have developed a distribution team that has a good track record of working with the adviser market, including independent, regional and national firms. We will maintain our focus on the adviser market alongside our plans to develop our business with wealth managers. We believe we have already made some good progress in this area.

A challenging investment and business environment

Although we expect investment and political conditions to remain uncertain, and quite possibly volatile, over the coming year, we continue to see good opportunities for investment firms such as Premier and for our investors. We believe that the ongoing low interest rate environment will continue to make well diversified, income paying investment strategies attractive and we feel strongly that good active management will continue to offer investors the opportunity to achieve their long-term investment goals. We believe that the overall environment for the asset management sector remains attractive with more people deciding to transfer out of defined benefit pension schemes and relatively new pension legislation is allowing people to access the money in their pension funds earlier. At the same time, the broad investment sector is under more scrutiny. We are obviously taking a close interest in the development of the Financial Conduct Authority's Asset Management Market Study, which included an interim and final report during our financial year. The study is focused on ensuring that the asset management sector works well for investors, including making sure investment products offer value for money and there is clearer disclosure of costs and charges.

Investment firms and the broader investment industry, including advisers and platforms, play a key economic and social role in this country and, clearly, we support the aim of making sure the investment sector works well for investors as well as for the wider economy and that it offers value for money.

Brexit

At the time of writing, the outcome of the ongoing Brexit negotiations is unclear. The Board has considered various factors in determining what impact, if any, the implications of Brexit may have on Premier's business.

In their opinion, the most significant risks come from the impact of a prolonged period of economic uncertainty on the UK economy and the resulting possibility of it moving into an extended contractionary period. In turn, this could lead to exchange rate volatility and further falls in the value of sterling.

On the positive side, as active investment managers we have the ability to invest globally and therefore can mitigate to varying degrees the potential impact of these events for our fund investors.

However, a prolonged recession could impact on investor confidence and therefore on broader fund sales more generally, as happened in the period immediately following the credit crisis of 2007/08. Shareholders should be aware that this could have an impact on future fund flows into Premier funds. However, the Board notes that contrary to many predictions at the time, the period since the Brexit vote has been very good for fund sales generally.

The Board has considered market access rights in the context of Brexit for fund distribution and fund management. Whilst the outcome of negotiations remains uncertain, the Board notes that Premier is a UK retail funds business distributing UK funds through UK intermediaries to UK investors. They have concluded that as far as Premier's existing business strategy is concerned, the overall impact of changes in the rules governing distribution of funds within and to the EU post Brexit will not be a significant risk factor. Similarly, the Board does not believe that Brexit will significantly impact on Premier's ongoing business strategy or, importantly, on our current operational platform.

The board has also noted that Brexit could have an impact on the retention of skilled employees and on recruitment for many businesses. At the current time 5% of Premier's employees are from the EU. The Board very much hopes that negotiations will be concluded in such a way as to enable us to retain these people and for the business to continue to benefit from their positive contribution.

In an ideal world, the Board would like the Group, which includes the Company and its subsidiaries (the "Group") to have the ability to recruit from as wide a pool of talent as possible, from both within the EU and further afield. However, taking into account the overall size of Premier, the Board does not feel that a "no deal" Brexit creates significantly increased risk for the business in the area of recruitment and retention.

Finally, the Board has considered the impact of declines in the debt market and the impact of tighter credit conditions more generally and concluded that, other than their overall impact on the economy, these do not present increased risks to Premier in terms of our debtors or creditors.

Financial highlights

The above commentary covering our investment talent, investment performance, relevant product range and distribution capabilities, provides a brief background of what has been driving our business results over the financial year. Turning to the financial side of the business, we experienced strong net inflows over the period of GBP747m and our assets under management reached a record high level of GBP6.1 billion. This was mostly as a result of our net inflows but we also benefited from market movements. Premier's profit before tax increased to GBP11.5m, whilst underlying profit before tax increased by 39% to GBP14.7m and adjusted EBITDA increased by 38% to GBP15.0m.

Dividend

The Board is recommending a final interim dividend of 4.25p which will bring the full-year dividend to 8.00p for the 2017 financial year.

Outlook

As always we face many challenges but we are performing strongly and believe we are well positioned for the future. We recognise that there is hard work ahead, but we have every reason to look forward with confidence. There are many drivers to encourage people to save and invest for the long term and we believe Premier, as an active manager with talented investment professionals, relevant investment products, good investment performance, a strong distribution capability, growing brand and experienced management, is well placed to take advantage of the opportunities that arise for both our investors and shareholders. Trading for the current financial year has started well with continued net sales during the first two months of the year and assets under management increasing to GBP6.3bn.

Thank you

Lastly, I would like to say a personal thank you to everyone who has supported Premier, including my co-workers for their professionalism, hard work and enthusiasm, our end investors, financial advisers, wealth managers and our shareholders. Thank you all for your support and I look forward to working with you over the next year and beyond.

Mike O'Shea

Chief Executive Officer

29 November 2017

Financial review

Assets under management ("AUM")

Assets under management (AUM) as at 30 September 2017 stood at GBP6,088m, up some GBP1,089m (+21.8%) over the year, with average AUM standing at GBP5,535m for the year, up GBP1,009m (+22.3%) on the previous year. The following table shows the progression of AUM over the last three financial years:

 
                  FY15      FY16      FY17    CAGR 
                  GBPm      GBPm      GBPm 
 Opening AUM     3,051     4,081     4,999 
--------------  ------  --------  -------- 
  Sales          1,792     1,944     2,150 
  Redemptions    (827)   (1,166)   (1,403) 
  Net sales        965       778       747 
 -------------  ------  --------  -------- 
  Closures        (20)     (174)         - 
  Performance       85       314       342 
 Closing AUM     4,081     4,999     6,088   22.1% 
--------------  ------  --------  -------- 
 Average AUM     3,662     4,526     5,535   22.9% 
--------------  ------  --------  -------- 
 

Average AUM has grown year-on-year as a function of continued positive net flows and market performance; it is pleasing to note that the final quarter of FY17 was the eighteenth consecutive quarter of positive net flows. The following table shows the split of AUM by asset class over the last two financial years:

 
 Asset class 
  (% of total 
  AUM)              Sep-16   Sep-17 
 Multi-asset           52%      56% 
 Equities              30%      26% 
 Absolute return       11%      12% 
 Fixed income           7%       6% 
                      100%     100% 
-----------------  -------  ------- 
 

Net management fees

Net management fees generated during the year amounted to GBP40.9m, which represents a GBP7.6m (+22.9%) increase over the previous year and an annual compound growth rate of 21.7% over the last three financial years.

 
                              FY15         FY16         FY17     CAGR 
 Management fees          GBP35.6m     GBP39.0m     GBP45.9m 
 Less: trail/renewal 
  commission*            (GBP8.0m)    (GBP5.7m)    (GBP5.0m) 
---------------------  -----------  -----------  ----------- 
 Net management 
  fees                    GBP27.6m     GBP33.3m     GBP40.9m   +21.7% 
---------------------  -----------  -----------  ----------- 
 Average AUM             GBP3,662m    GBP4,526m    GBP5,535m   +22.9% 
---------------------  -----------  -----------  ----------- 
 Net management 
  fee margin               75.4bps      73.5bps      73.9bps    -1.0% 
---------------------  -----------  -----------  ----------- 
 

* Included within Administrative costs in the consolidated statement of comprehensive income

Net management fee margin rose slightly during the year from 73.5bps to 73.9bps, primarily because of a change in the product mix.

Administrative costs

Total administrative costs during the year amounted to GBP31.6m, compared to GBP28.5m in the previous financial year, representing an increase of GBP3.1m (+10.9%). The largest component of administrative costs continues to be in respect of staff costs, which were GBP15.0m. The amount of GBP14.26m shown in note 6 on page 38 excludes GBP0.32m of costs in respect of share based payments, and GBP0.44m of other staff related costs including training, recruitment and other benefits.

 
                      FY15        FY16        FY17     CAGR 
 Fixed staff 
  costs            GBP6.5m     GBP7.7m     GBP8.6m   +15.0% 
 Variable 
  staff costs      GBP4.3m     GBP5.5m     GBP6.4m   +22.0% 
--------------  ----------  ----------  ----------  ------- 
 Total staff 
  costs           GBP10.8m    GBP13.2m    GBP15.0m   +17.9% 
 Fixed other 
  costs            GBP6.4m     GBP6.5m     GBP8.0m   +11.8% 
 Variable 
  other costs     GBP10.8m     GBP8.8m     GBP8.6m   -10.8% 
 Total            GBP28.0m    GBP28.5m    GBP31.6m    +6.2% 
--------------  ----------  ----------  ----------  ------- 
 

Share based payments

Included within the consolidated income statement is a charge of GBP0.3m (2016: nil) in respect of share based payments. In March 2017, the Company granted to certain employees, awards over shares held in an Employee Benefit Trust. The awards have a three-year vesting period.

Exceptional items

Exceptional items incurred during the year amounted to GBP0.4m (2016: GBP0.5m). On 7 October 2016, the Company's shares were admitted to trading on the Alternative Investment Market of the London Stock Exchange ('AIM'). Prior to the shares being admitted, the Company placed 35.9m new ordinary shares. The total costs associated with the placing of shares and floating on AIM amounted to GBP2.948m, of which GBP2.617m was in respect of the placing of shares, with the balance of GBP0.331m being in respect of the flotation on AIM, with the former being deducted from the share premium account and the latter expensed as an exceptional item.

Dividends

When the Company floated on AIM, the Directors announced their intention to adopt a dividend policy that reflected the expectation of future cash flow generation and the long--term earnings potential of Premier. As part of its policy, the Company expected to pay three smaller, interim quarterly dividends, representing approximately half of the estimated total dividend for the full financial year, followed by a larger, final interim dividend.

The Company paid its first interim dividend of 1.25p per share on 3 March 2017, followed by two further quarterly interim dividends of 1.25p per share that were paid on 2 June 2017 and 1 September 2017 respectively. The Board is now recommending a final interim dividend of 4.25p which will bring the full-year dividend to 8.00p for the 2017 financial year.

Underlying profit before tax

Underlying profit before tax increased to GBP14.7m from GBP10.6m in the previous financial year, representing an increase of GBP4.1m (+38.7%). The following table reconciles retained profit/(loss) and underlying profit before tax for the last three financial years:

 
                                 FY15        FY16        FY17     CAGR 
 Retained profit/(loss)     (GBP0.6m)     GBP1.0m     GBP8.9m 
 Taxation                   (GBP0.1m)     GBP1.5m     GBP2.6m 
------------------------  -----------  ----------  ---------- 
 Profit/(loss) before 
  tax                       (GBP0.7m)     GBP2.5m    GBP11.5m 
 Amortisation of 
  intangible assets           GBP5.1m     GBP5.1m     GBP2.5m 
 Exceptional items            GBP0.6m     GBP0.5m     GBP0.4m 
 Share based payments               -           -     GBP0.3m 
 Net interest payable         GBP2.9m     GBP2.5m           - 
 Underlying profit 
  before tax                  GBP7.9m    GBP10.6m    GBP14.7m   +36.4% 
------------------------  -----------  ----------  ---------- 
 

Adjusted EBITDA

Adjusted EBITDA increased to GBP15.0m from GBP10.9m in the previous financial year, representing an increase of GBP4.1m (+37.6%). The following table reconciles retained profit/(loss) and EBITDA for the last three financial years:

 
                                FY15       FY16       FY17     CAGR 
 Retained profit/(loss)    (GBP0.6m)    GBP1.0m    GBP8.9m 
 Taxation                  (GBP0.1m)    GBP1.5m    GBP2.6m 
------------------------  ----------  ---------  --------- 
 Profit/(loss) before 
  tax                      (GBP0.7m)    GBP2.5m   GBP11.5m 
 Amortisation of 
  intangible assets          GBP5.1m    GBP5.1m    GBP2.5m 
 Exceptional items           GBP0.6m    GBP0.5m    GBP0.4m 
 Share based payments              -          -    GBP0.3m 
 Net interest payable        GBP2.9m    GBP2.5m          - 
 Depreciation                GBP0.2m    GBP0.3m    GBP0.3m 
 Adjusted EBITDA             GBP8.1m   GBP10.9m   GBP15.0m   +36.1% 
------------------------  ----------  ---------  --------- 
 Net revenue                GBP27.8m   GBP33.4m   GBP41.0m 
------------------------  ----------  ---------  --------- 
 Adjusted EBITDA 
  margin                       29.1%      32.6%      36.6%   +12.1% 
------------------------  ----------  ---------  --------- 
 

Regulatory changes

MiFID II

With effect from 3 January 2018 the cost of external research for Premier's multi-asset, fixed income and absolute return funds will be paid by the Group. These funds together represent 74% of Premier's assets under management and this is not expected to have a material impact on the Group's cost base.

Investors in Premier's equity funds will continue to be charged the cost of external equity investment research as this remains a significant part of the active management process for these funds. It is important to note that our fund prices, income payments and performance figures are always shown and paid net of fund fees, which, for our equity funds, includes the cost of external research.

Balance sheet and cash management

The Group is cash generative and as at 30 September 2017 the cash balances of the Group amounted to GBP16.4m (2016: GBP10.6m), representing an increase of GBP5.8m (+54.6%) over the year. The split between Group and Trading account cash balances over the last three financial years is shown in the table below:

 
                      FY15       FY16       FY17 
 Company cash      GBP8.0m    GBP9.4m   GBP15.8m 
 Trading account 
  cash             GBP0.9m    GBP1.2m    GBP0.6m 
                   GBP8.9m   GBP10.6m   GBP16.4m 
----------------  --------  ---------  --------- 
 

The above Trading account cash balances relate to the designated bank accounts that are used for the settlement of trades in the open-ended funds that are operated by Premier Portfolio Managers Ltd. As at 30 September 2017, the projected trading account balance, after accounting for all outstanding trades, was a surplus of GBP1.2m (2016: GBP1.0m).

On 7 October 2016, the Company's shares were admitted to trading on the Alternative Investment Market ('AIM'). Prior to the shares being admitted, the Company placed 35.9m new ordinary shares, with the proceeds of the placing being used to redeem GBP13.5m 8% preference shares and GBP29.17m 4% preference shares, and paid accrued interest of GBP2.25m and GBP2.43m respectively. Following the repayment of the preference shares, the Group had no debt.

Shareholders' equity

Total shareholders' equity increased by GBP49.9m to GBP45.2m (2016: -GBP4.7m), with the main contributors being GBP44.7m that was raised following the placing of 35.9m new ordinary shares, plus GBP8.8m of retained profit for the year, less the GBP3.9m in respect of the three quarterly interim dividends that were paid during the year. During the year, the Company received shareholder and High Court approval to cancel the share premium account, which, at the time of cancellation, stood at GBP44.7m; this amount being transferred to Retained Earnings.

Going concern

The Directors have assessed the prospects of the Group over a period of three years after the balance sheet date, rather than the 12 months required by the Going Concern provision.

The Directors confirm that they have a reasonable expectation that the Group will continue to operate and meet its liabilities, as they fall due, up to 30 September 2020. 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 three-year period is consistent with the Group's current strategic forecast and ICAAP. The forecast considers the Group's profitability, cash flows, dividend payments and other key variables. Sensitivity analysis is also performed on certain of the key assumptions in the forecast, both individually and combined, in addition to the scenario analysis that is performed as part of the ICAAP process, which is formally approved by the Board.

Alternative Performance Measures ('APMs')

The Group uses the following APMs:

Underlying profit before tax

Definition: Profit/(loss) before taxation, amortisation of intangible assets, exceptional items, share based payments and net interest

Reason for use: This measure of profitability presents users of the accounts with a clear view of what the Group considers to be the results of its underlying operations after excluding the effects of taxation, financing (interest payable), capital investment (depreciation and amortisation), non-recurring exceptional items and share based payments, thereby enabling consistent period on period comparisons and making it easier for users of the accounts to identify trends.

Assets Under Management ("AUM")

Definition: AUM is the total value of assets that are managed by the Group on behalf of clients.

Reason for use: AUM is a financial industry measure of size of an investment management firm that allows comparison with other firms within the sector. AUM is also the base value that is used for calculating management fee income and directly related variable costs.

Adjusted EBITDA

Definition: Earnings before interest, taxation, depreciation, amortisation of intangible assets, exceptional items and share based payments

Reason for use: To provide a measure of profitability which is aligned with the requirements of shareholders and potential shareholders and which excludes the effects of taxation, financing (net interest payable), capital investment (depreciation and amortisation), non-recurring exceptional items and share based payments, enabling comparison with the Group's competitors who may use different accounting policies and finance methods.

Adjusted EBITDA margin

Definition: Adjusted EBITDA divided by Net Revenue

Reason for use: To provide a measure of profitability which is aligned with the requirements of shareholders and potential shareholders and which excludes the effects of taxation, financing (net interest payable), capital investment (depreciation and amortisation), non-recurring exceptional items and share based payments, enabling comparison with the Group's competitors who may use different accounting policies and finance methods.

Net revenue

Definition: Turnover of GBP46.0m (2016: 39.1m) less trail/renewal commission expense of GBP5.0m (2016: GBP5.7m), which is included within administrative costs in the consolidated statement of comprehensive income on page 27.

Reason for use: Asset managers and analysts typically use this performance measure to smooth out the effect of fee related trail/renewal commission that is included within administrative costs.

Net management fees

Definition: Management fee income of GBP45.9m (2016: GBP39.0m) less trail/renewal commission expense of GBP5.0m (2016: GBP5.7m), which is included within administrative costs in the consolidated statement of comprehensive income on page 27.

Reason for use: Asset managers and analysts typically use this performance measure to smooth out the effect of fee related trail/renewal commission that is included within administrative costs.

Net management fee margin

Definition: Net management fees divided by average AUM

Reason for use: Asset managers and analysts typically use this performance measure to smooth out the effect of fee related trail/renewal commission that is included within administrative costs and provides a measure of the revenue earning capability of AUM. The use of basis points (bps) is a commonly used term within the finance sector with one basis point being equivalent to one hundredth of a percent.

Neil Macpherson

Group Finance Director

29 November 2017

Consolidated statement of comprehensive income

For the year ended 30 September 2017

 
                                                                    Year to              Year to 
                                                          30 September 2017    30 September 2016 
                                                  Note               GBP000               GBP000 
===============================================  =====  ===================  =================== 
 Revenue                                           3                 46,046               39,149 
 
 Administrative costs                                              (31,558)             (28,505) 
 Amortisation of intangible assets                                  (2,536)              (5,131) 
 Exceptional items                                 4                  (415)                (485) 
===============================================  =====  ===================  =================== 
 Total operating costs                                             (34,509)             (34,121) 
===============================================  =====  ===================  =================== 
 Operating profit                                  5                 11,537                5,028 
 
 Finance costs                                     7                   (44)              (2,497) 
===============================================  =====  ===================  =================== 
 Profit on ordinary activities before taxation                       11,493                2,531 
 
 Tax expense                                       8                (2,617)              (1,546) 
===============================================  =====  ===================  =================== 
 Profit on ordinary activities after taxation                         8,876                  985 
 
 Other comprehensive income                                               -                    - 
===============================================  =====  ===================  =================== 
 Total comprehensive income                                           8,876                  985 
===============================================  =====  ===================  =================== 
 
 Basic earnings per share                          9                  8.53p               71.68p 
===============================================  =====  ===================  =================== 
 Diluted basic earnings per share                  9                  8.53p               71.68p 
===============================================  =====  ===================  =================== 
 

All the amounts relate to continuing operations.

Consolidated statement of financial position

As at 30 September 2017

 
                                                                    2017      2016 
                                                           Note   GBP000    GBP000 
========================================================  =====  =======  ======== 
 Assets 
 Non-current assets 
 Intangible assets                                          10    15,165    17,701 
 Goodwill                                                   10    15,597    15,597 
 Property, plant and equipment                              11       911       933 
 Deferred tax asset                                         8      1,097     1,580 
========================================================  =====  =======  ======== 
 Total non-current assets                                         32,770    35,811 
 
 Current assets 
 Financial assets at fair value through profit and loss     14     1,354     1,061 
 Trade and other receivables                                13    47,932    36,624 
 Cash and cash equivalents                                  15    16,449    10,638 
========================================================  =====  =======  ======== 
 Total current assets                                             65,735    48,323 
 
 Total assets                                                     98,505    84,134 
========================================================  =====  =======  ======== 
 
 Equity 
 Capital and reserves attributable to equity holders 
 Share capital                                                        21        14 
 Share premium                                                         -        34 
 Capital redemption reserve                                 21     4,532     4,532 
 Retained earnings                                                40,728   (9,278) 
========================================================  =====  =======  ======== 
 Total equity                                                     45,281   (4,698) 
========================================================  =====  =======  ======== 
 
 Liabilities 
 Current liabilities 
 Trade and other payables                                   16    51,079    40,138 
 Current tax liabilities                                           2,145     1,375 
 Total current liabilities                                        53,224    41,513 
 
 Non-current liabilities 
 Borrowings                                                 17         -    42,670 
 Provisions and other liabilities                           19         -     4,649 
========================================================  =====  =======  ======== 
 Total non-current liabilities                                         -    47,319 
 
 Total liabilities                                                53,224    88,832 
========================================================  =====  =======  ======== 
 Total equity and liabilities                                     98,505    84,134 
========================================================  =====  =======  ======== 
 

Consolidated statement of changes in equity

For the year ended 30 September 2017

 
                                                  Capital 
                           Share      Share    redemption    Retained     Total 
                         capital    premium       reserve    earnings    equity 
                         GBP000     GBP000      GBP000         GBP000    GBP000 
=====================  =========  =========  ============  ==========  ======== 
 At 1 October 
  2015                    546         13           -          (6,263)   (5,704) 
 Shares issued             -          21           -                -        21 
 Capital reduction       (532)        -          4,532        (4,000)         - 
 Profit for the 
  financial year           -          -            -              985       985 
=====================  =========  =========  ============  ==========  ======== 
 At 30 September 
  2016                      14         34        4,532        (9,278)   (4,698) 
 Shares issued             7        44,713         -                -    44,720 
 Cancellation 
  of share premium         -       (44,747)        -           44,747         - 
 Equity dividends 
  paid (note 30)           -          -            -          (3,939)   (3,939) 
 Share based payment 
  expense                  -          -            -              322       322 
 Profit for the 
  financial year           -          -            -            8,876     8,876 

=====================  =========  =========  ============  ==========  ======== 
 At 30 September 
  2017                     21         -          4,532         40,728    45,281 
=====================  =========  =========  ============  ==========  ======== 
 

Consolidated statement of cash flow

For the year ended 30 September 2017

 
                                                                                          2017      2016 
                                                                           Note         GBP000    GBP000 
========================================================================  =====      =========  ======== 
 Cash flows from operating activities 
 Profit for the year                                                                     8,876       985 
 Adjustments for: 
 Financial expense                                                          7               44     2,497 
 Taxation                                                                   8            2,617     1,546 
 Depreciation                                                               11             225       239 
 Share based payments                                                                      322 
 Loss on sale of property, plant and equipment                                               -         1 
 Gain on sale of financial assets at fair value through profit and loss                   (16)      (12) 
 Gain on revaluation of current asset investments                                         (51)      (46) 
 Amortisation                                                               10           2,536     5,131 
 Changes in working capital: 
 (Increase)decrease in trade and other receivables                                    (11,308)     2,088 
 Increase/(decrease) in trade and other payables                                        10,934     (673) 
 Decrease in provisions                                                                      -     (530) 
========================================================================  =====      =========  ======== 
 Cash generated from operations                                                         14,179    11,226 
 Interest paid                                                                               -      (42) 
 Tax paid                                                                              (1,364)     (867) 
========================================================================  =====      =========  ======== 
 Net cash from operating activities                                                     12,815    10,317 
 
 Cash flows from investing activities 
 Acquisition of other intangible assets                                                      -   (1,275) 
 Acquisition of assets at fair value through profit and loss                             (856)     (543) 
 Proceeds from disposal of assets at fair value through profit and loss                    630        89 
 Acquisitions of property, plant and equipment                              11           (203)     (214) 
 Net cash from investing activities                                                      (429)   (1,943) 
 
 Cash flows from financing activities 
 Repayment of borrowings                                                              (42,670)   (6,250) 
 Interest paid on borrowings                                                           (4,686)     (359) 
 Dividends paid to shareholders                                                        (3,939)         - 
 Proceeds from the issue of share capital                                               44,720        21 
========================================================================  =====      =========  ======== 
 Net cash from financing activities                                                    (6,575)   (6,588) 
 
 Net increase/(decrease) is cash and cash equivalents                                    5,811     1,786 
========================================================================  =====      =========  ======== 
 Cash and cash equivalents at the beginning of the period                               10,638     8,852 
========================================================================  =====      =========  ======== 
 Cash and cash equivalents at the end of the period                                     16,449    10,638 
========================================================================  =====      =========  ======== 
 
 

Notes to the consolidated financial statements

At 30 September 2017

   1.   Authorisation of financial statements and statement of compliance with IFRS 

The consolidated financial statements of Premier Asset Management Group PLC (the 'Company') and its subsidiaries (the 'Group') for the year ended 30 September 2017 were authorised for issue by the Board of Directors on 29 November 2017 and the statement of financial position was signed on the Board's behalf by Mike O'Shea and Neil Macpherson. The Company is incorporated and domiciled in England and Wales.

These consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. The consolidated financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (GBP000) except when otherwise indicated.

The principal accounting policies adopted by the Group are set out in note 2.

   2.   Accounting policies 
   2.1   Basis of preparation 

The Group prepared its first set of consolidated financial statements for the year ended 30 September 2015, in accordance with IFRS, for inclusion in a circular to shareholders. The date of transition to IFRS was 1 October 2012. These consolidated financial statements for the year ended 30 September 2017 have been prepared in accordance with IFRS. Note 2.3 sets out further information on how the Group adopted IFRS. The consolidated financial statements have been prepared 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.

   2.2   Basis of consolidation 

The consolidated financial statements comprise the financial statements of the Company and its subsidiary undertakings as at 30 September 2017. The results of subsidiary undertakings acquired during a year are included from the date of acquisition. Profits and losses on intra-group transactions are eliminated in full. On acquisition of a subsidiary, all of the subsidiary's identifiable assets and liabilities which exist at the date of acquisition are recorded at their fair values reflecting their condition at that date.

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

(i) power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee);

   (ii)   exposure, or rights, to variable returns from its involvement with the investee; and 

(iii) the ability to use its power over the investee to affect its returns

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

   2.3   New standards, amendments and interpretations 

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:

   (i)    IFRS 9 'Financial instruments' (effective 1 January 2018) 
   (ii)   IFRS 15 'Revenue from contracts with customers' (effective 1 January 2018) 

(iii) IFRS 16 'Leases' (effective 1 January 2019)

The Directors do not expect that the adoption of the above Standards will have a material impact on the Group's financial statements except with respect to disclosures. There are no other IFRSs or IFRIC interpretations that are not yet effective and would be expected to have a material impact on the Group.

   2.4   Judgements and key sources of estimation uncertainty 

The preparation of consolidated financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the statement of financial position date and the amounts reported for revenue and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates.

(a) Deferred taxation - Management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with an assessment of the effect of future tax planning strategies. Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. Management believes recognition is probable because sufficient taxable profits are expected according to the annual budget and two year forecast. It is expected that the deferred tax asset will decrease in future years due to reductions in the corporation tax charge charged by HMRC as and when enacted. Further details are contained in note 8.

(b) The Group tests annually whether goodwill and intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 2.5(a). The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates, which are further disclosed in note 10, including a sensitivity analysis.

   2.5   Significant accounting policies 
   (a)   Business combinations and goodwill 

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred plus acquisition-related costs, which is measured at the acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interest in the acquiree at fair value or at the proportionate share of the acquiree's identifiable net assets.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. All contingent consideration is measured at fair value with the changes in fair value in profit or loss.

Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests) and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss. Goodwill is monitored at the Group level.

Goodwill is not amortised but is tested annually for impairment or more frequently if events or changes in circumstances indicate potential impairment. After initial recognition, goodwill is measured at cost less any accumulated impairment losses.

In respect of goodwill, the recoverable amount is estimated at each annual balance sheet date. The recoverable amount is the higher of fair value less costs to sell and value in use. Impairment losses represent the amount by which the carrying amount exceeds the recoverable amount; they are recognised in profit and loss. Impairment losses recognised in respect of cash generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash generating unit and then to reduce the value of any other assets in the unit on a pro-rata basis.

An impairment loss in respect of goodwill is not reversed.

   (b)   Property, plant and equipment 

Plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Cost comprises the aggregate amount paid and the fair value of any other consideration given to acquire the asset and includes costs directly attributable to making the asset capable of operating as intended.

Depreciation is provided on all property, plant and equipment, other than land, on a straight line basis over its expected useful life as follows:

Short leasehold property - the term of the lease

Plant and equipment - 5 years

Computer equipment - 3 years

Motor vehicles - 3 years

Fixtures and fittings - 15%

The carrying amounts of property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate the carrying amount may not be recoverable, and are written down immediately to their recoverable amount. Useful lives and residual values are reviewed annually and where adjustments are required these are made prospectively.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the derecognition of the asset is included in the income statement in the period of derecognition.

   (c)    Trade and other receivables 

Trade and other receivables are initially recognised at fair value and subsequently at amortised cost. A bad debt provision is made when there is objective evidence that the Group will not be able to recover balances in full. Balances are written off when the probability of recovery is assessed as being remote. Other receivables mainly comprise of refundable rent deposits and amounts the Group is due to receive from third parties in the normal course of business.

   (d)   Provisions and other liabilities 

A provision is recognised when the Group has a legal or constructive obligation as a result of a past event; it is probable that an outflow of economic benefits will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation.

Where the effect of the time value of money is material provisions are discounted. The increase in the provision due to passage of time is recognised as a finance cost.

Where the Group, as lessee, is contractually required to restore a leased property to an agreed condition prior to the release by a lessor, provision is made for such costs as they are identified.

Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when recovery is virtually certain.

   (e)   Income taxes 

Current and deferred tax are recognised in income or expense, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities based on tax rates and laws that are enacted or substantively enacted by the statement of financial position date.

Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, with the following exceptions:

(i) where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss;

(ii) in respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and

(iii) deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised.

Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the statement of financial position date.

The carrying amount of deferred income tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

   (f)    Foreign currencies 

The Group's consolidated financial statements are presented in pounds sterling. The functional currency of the Group's entities is pounds sterling. Transactions in foreign currencies are initially recorded in the functional currency by applying the spot exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the statement of financial position date. All differences are taken to the profit and loss account.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

The Group does not apply hedge accounting of foreign exchange risks in its company financial statements.

   (g)   Financial instruments 
   (i)    Financial assets 

Initial recognition and measurement - Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit and loss, loans and receivables or available for sale financial assets, as appropriate. Management determines the classification of its financial assets at initial recognition. All financial assets are recognised initially at fair value plus directly attributable transaction costs.

Subsequent measurement - The subsequent measurement of financial assets depends on their classification as follows:

Ø Financial assets at fair value through profit of loss - Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. The Group has designated financial assets in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Financial assets at fair value through profit and loss are carried in the statement of financial position at fair value with changes in fair value recognised in finance revenue or finance expense in the income statement.

Ø Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest (EIR) method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance revenue in the income statement. The losses arising from impairment are recognised in the income statement in other operating expenses. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. Loans and receivables comprise mainly cash and cash equivalents and trade and other receivables.

Ø Available for sale financial assets

Available for sale financial investments include equity securities. Equity investments classified as available for sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss. After initial measurement, available for sale financial investments are subsequently measured at fair value with unrealised gains or losses recognised as other comprehensive income in the unrealised gains and losses reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or determined to be impaired, at which time the cumulative loss is recognised in the income statement in other operating expenses and removed from the unrealised gains and losses reserve. The Company evaluates its available for sale financial assets and whether the ability and intent to sell them in the near term is still appropriate. When the Company is unable to trade these financial assets due to inactive markets and management's intent significantly changes to do so in the foreseeable future, the Company may elect to reclassify these financial instruments in rare circumstances. Reclassification to loans and receivables is permitted when the financial asset meets the definition of loans and receivables and when the Company has the intent and ability to hold these assets for the foreseeable future or until maturity. The Company has not designated any financial assets upon initial recognition as available for sale.

Derecognition of financial assets - A financial asset is derecognised when (i) the rights to receive cash flows from the asset

have expired or (ii) the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a "pass through" arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Impairment of financial assets - The Group assesses at each reporting date whether there is any objective evidence that a financial asset or group of financial assets is impaired. If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have been incurred) discounted at the financial asset's original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced, with the amount of the loss recognised in administration costs.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss in recognised in the profit and loss account, to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date.

   (ii)   Financial liabilities and equity 

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. Generally, an obligation to deliver cash or other financial asset to another party at a fixed date in the future would require presentation of a financial instrument as a liability.

No significant restrictions exist to transfer cash or assets within the Group or pay out dividends, except for regulatory capital restrictions within the regulated companies.

Preference shares, which are mandatorily redeemable on a specific date, are classified as liabilities. The fair value of preference shares is not materially different to their carrying value. The dividends on these preference shares are recognised in the income statement as interest expense.

(iii) Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the EIR, with interest expense recognised on an effective yield basis.

The EIR used to recognise interest expense is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

The Group derecognises financial liabilities when the Group's obligations are discharged, cancelled or expired.

(iv) Fair values

The fair value of financial instruments that are traded in active markets at the reporting date is determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm's length market transactions; reference to the current fair value of another instrument that is substantially the same; discounted cash flow analysis or other valuation models.

   (h)   Cash and cash equivalents 

Cash and cash equivalents comprise cash balances and highly liquid short-term deposits that are readily convertible to known amounts of cash within three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows and are presented in current liabilities.

   (i)    Exceptional items 

The Group presents as exceptional items those material items of income and expense which, because of the nature and expected infrequency of the events giving rise to them, merit separate presentation to allow shareholders to understand better the elements of financial performance in the year, so as to facilitate comparison with prior periods and to assess better trends in financial performance.

   (j)    Revenue recognition 

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding value added tax.

The Group's primary source of income is fee income from investment management activities. These fees are generally based on an agreed percentage, as per the management contract, of the assets under management and are recognised as the service is provided.

Commission includes fees based on a set percentage of certain flows into our funds and are recognised on receipt.

   (k)    Pensions 

The Group operates defined contribution plans. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

   (l)    Leases 

All leases are classified as operating leases. Rents payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis over the lease term.

(m) Intangible assets

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.

Investment management contracts purchased by the Group are capitalised as intangible fixed assets and are amortised over periods ranging from 7 to 20 years depending on the nature of the assets purchased.

   (n)   Trade and other payables 

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

   (o)   Borrowings 

Borrowings, are recognised initially at fair value, net of attributable transaction costs. Subsequent to initial recognition, borrowings are carried at amortised cost, with any difference between the proceeds (net of transaction costs) and the redemption value being recognised in the statement of comprehensive income over the period of the borrowings using the EIR.

All other borrowing costs are recognised in profit and loss in the period in which they are incurred.

   (p)   Related party transactions 

All companies forming part of the consolidated Group are considered to be related parties as these companies are owned either directly or indirectly by Premier Asset Management Group PLC. Key management, being the members of the Executive Committee, are also identified as a related party.

The adoption of IFRS 10 Consolidated Financial Statements has not resulted in the consolidation of additional funds where the Group is now deemed to have a controlling interest under the definition of this standard. The Group did not hold a material investment in any of the funds managed by the Group and has therefore determined that no controlling interest was held.

   (q)   Earnings per share 

Basic earnings per share is calculated by dividing the total comprehensive income for the year by the weighted average number of ordinary shares in issue during the year, excluding the average number of ordinary shares purchased by the Group and held as treasury shares.

   3.   Revenue 

Revenue recognised in the statement of comprehensive income is analysed as follows:

 
                        2017     2016 
                      GBP000   GBP000 
=================    =======  ======= 
 Management fees      45,894   38,957 
 Commissions              83       70 
 Other income             69      122 
===================  =======  ======= 
 Total revenue        46,046   39,149 
===================  =======  ======= 
 

All revenue is derived from the United Kingdom and Channel Islands.

   4.   Exceptional items 

Recognised in arriving at operating profit from continuing operations:

 
                                                   2017     2016 
                                                 GBP000   GBP000 
============================================    =======  ======= 
 Staff redundancy costs                              40      121 
 Fund rationalisation, closures and mergers           -       17 
 Irrecoverable VAT                                    -      333 
 Floating on AIM                                    331        - 
 Capital reduction                                   44       14 
 Total exceptional items                            415      485 
==============================================  =======  ======= 
 

Staff redundancy costs are in relation to the rationalisation and restructuring of various departments and functions.

Fund rationalisation, closure and merger costs are in relation to funds that were merged or closed during the period. Irrecoverable VAT represents input tax that was payable following the outcome of discussions with HMRC regarding the operation of an agreed partial exemption special method. Floating on AIM represents costs associated with the admission to trading on the Alternative Investment Market. Capital reduction costs in 2017 were in respect of professional fees relating to the cancellation of the share premium account of the Company, which became effective on 27 July 2017; the capital reduction costs in 2016 were in connection with the cancellation of certain share premium accounts of subsidiary undertakings.

   5.   Operating profit 
   (a)   Operating profit is stated after charging: 
 
                                                           2017     2016 
                                                  Note   GBP000   GBP000 
===============================================  =====  =======  ======= 
 Auditors' remuneration                           5(b)      572      250 
 Staff costs                                       6     14,260   12,720 
 Operating lease payments - rent                   18       255      282 
 Amortisation of intangible assets                 10     2,536    5,131 
 Exceptional items                                 4        415      485 
 Depreciation of property, plant and equipment     11       225    2,329 
===============================================  =====  =======  ======= 
 
   (b)   Auditors' remuneration 

The remuneration of the auditors is analysed as follows:

 
                                                                             2017     2016 
                                                                           GBP000   GBP000 
======================================================================    =======  ======= 
 Audit of Company                                                              35       14 
 Audit of Subsidiaries                                                         47      101 
========================================================================  =======  ======= 
 Total audit                                                                   82      115 
 Audit-related assurance services                                              67        - 
 Tax compliance services                                                       28       17 
 Services related to corporate finance transactions not covered above         351        - 
 Other non-audit services not covered above                                    44      118 
========================================================================  =======  ======= 
 Total other non-audit services                                               423      135 
========================================================================  =======  ======= 
 Total non-audit services                                                     490      135 
========================================================================  =======  ======= 
 Total fees                                                                   572      250 
========================================================================  =======  ======= 
 
   6.   Staff costs and Director's remuneration 
   (a)   Staff costs during the year were as follows: 
 
                                                  2017     2016 
                                                GBP000   GBP000 
===========================================    =======  ======= 
 Salaries, bonus and performance fee share      12,181   10,915 
 Social security costs                           1,648    1,414 
 Other pension costs                               431      391 
 Total staff costs                              14,260   12,720 
=============================================  =======  ======= 
 

The average monthly number of employees of the Group during the year was made up as follows:

 
                            2017   2016 
 Directors                     6      5 
 Investment management        28     26 
 Sales and marketing          28     28 
 Finance and systems           6      6 
 Legal and compliance          8      8 
 Administration               24     24 
 Total employees             100     97 
=========================  =====  ===== 
 
   (b)   Directors' remuneration 

The remuneration of the Directors during the year was as follows:

 
                                       Salary and payment in lieu of 
                                                             pension    Bonus   Pension and benefits     2017     2016 
                                                              GBP000   GBP000                 GBP000   GBP000   GBP000 
=================================  =================================  =======  =====================  =======  ======= 
 Executive Directors 
 Michael Patrick O'Shea                                          274      400                      6      680      602 
 Neil Macpherson                                                 176      135                     27      338      311 
=================================  =================================  =======  =====================  =======  ======= 
 Non-executive Directors 
 Michael Andrew Vogel                                             75        -                      -       75      100 
 Luke Anton Wiseman                                               50        -                      -       50       35 
 Paul Davidson Tobias (resigned 
  7(th) October 2016)                                              -        -                      -        -       35 

 Will Smith                                                       35        -                      -       35        - 
 Robert Colthorpe                                                 40        -                      -       40        - 
 Total Director's remuneration                                   650      535                     33    1,218    1,083 
=================================  =================================  =======  =====================  =======  ======= 
 

The number of Directors accruing benefits under money purchase pension schemes at the year end was nil (2016: nil).

In respect of the highest paid Director:

 
                                                 2017     2016 
                                               GBP000   GBP000 
==========================================    =======  ======= 
 Remuneration                                     680      585 
 Pension contributions                              -       17 
 Total highest paid Director remuneration         680      602 
============================================  =======  ======= 
 
   7.   Finance costs 
 
                                                                        2017     2016 
                                                                      GBP000   GBP000 
=================================================================    =======  ======= 
 Interest receivable                                                       -        - 
=================================================================    =======  ======= 
 Bank loans and overdrafts                                                 -       50 
 Other loans (including the debt component of preference shares)          44    2,266 
===================================================================  =======  ======= 
 Total interest expense                                                   44    2,316 
===================================================================  =======  ======= 
 Unwinding of discount on deferred consideration                           -      181 
===================================================================  =======  ======= 
 Net finance costs                                                        44    2,497 
===================================================================  =======  ======= 
 
   8.   Income taxes 
   (a)   Tax charged in the statement of comprehensive income 
 
                                                             2017     2016 
                                                           GBP000   GBP000 
======================================================    =======  ======= 
 Current income tax: 
 UK corporation tax                                         2,106    1,291 
========================================================  =======  ======= 
 Current income tax charge                                  2,106    1,291 
========================================================  =======  ======= 
 Adjustments in respect of prior periods                       29       33 
========================================================  =======  ======= 
 Total current income tax                                   2,135    1,324 
========================================================  =======  ======= 
 Deferred tax: 
 Origination and reversal of temporary differences            482     (51) 
 Adjustments in respect of prior periods                        -        3 
 Impact of changes in tax rate                                  -      270 
========================================================  =======  ======= 
 Total deferred tax                                           482      222 
========================================================  =======  ======= 
 Tax expense in the statement of comprehensive income       2,617    1,546 
========================================================  =======  ======= 
 
   (b)   Reconciliation of the total tax charge 

The tax expense in the comprehensive statement of income for the year is higher than the standard rate of corporation tax in the UK of 19.5% (2016: 20%). The differences are reconciled below:

 
                                                                                   2017     2016 
                                                                                 GBP000   GBP000 
============================================================================    =======  ======= 
 Profit on ordinary activities before taxation                                   11,493    2,531 
==============================================================================  =======  ======= 
 Tax calculated at UK standard rate of corporation tax of 19.5% (2016: 20%)       2,241      506 
 Deferred tax not recognised                                                         63    (382) 
 Expenses not deductible for tax purposes                                           103       15 
 Dividends on preference shares included in finance costs                             7      453 
 Amortisation not deductible                                                        258      265 
 Income not subject to UK tax                                                      (19)     (27) 
 Change in tax rate                                                                (71)      661 
 Fixed asset differences                                                              6       19 
 Adjustments in respect of prior periods                                             29       36 
==============================================================================  =======  ======= 
 Tax expense in the statement of comprehensive income                             2,617    1,546 
==============================================================================  =======  ======= 
 
   (c)    Change in Corporation Tax rate 

A reduction in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) was substantively enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively enacted on 26 October 2015, and an additional reduction to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016. This will reduce the Group's future current tax charge accordingly. The deferred tax asset at 30 September 2017 has been calculated based on these rates.

   (d)   Deferred tax 

The deferred tax included in the Group statement of financial position is as follows:

 
                                                                      2017     2016 
                                                                    GBP000   GBP000 
===============================================================    =======  ======= 
 Deferred tax asset: 
 Fixed asset timing differences                                       (71)     (74) 
 Accrued bonuses                                                       225      270 
 Losses and other deductions                                           943    1,384 
=================================================================  =======  ======= 
 Deferred tax disclosed on the statement of financial position       1,097    1,580 
=================================================================  =======  ======= 
 
 
                                                               2017     2016 
                                                             GBP000   GBP000 
========================================================    =======  ======= 
 Deferred tax in the statement of comprehensive income: 
 Origination and reversal of temporary differences              482     (51) 
 Adjustments in respect of prior periods                          -        3 
 Impact of changes in tax rate                                    -      270 
==========================================================  =======  ======= 
 Deferred tax expense / (credit)                                482      222 
==========================================================  =======  ======= 
 
 
                                                2017     2016 
                                              GBP000   GBP000 
=========================================    =======  ======= 
 Unprovided deferred tax asset: 
 Non trade loan relationship losses            1,693    1,693 
 Excess management expenses                       53       53 
 Non trade intangible fixed asset losses         420      420 
===========================================  =======  ======= 
 Deferred tax expense                          2,166    2,166 
===========================================  =======  ======= 
 
   9.   Earnings per share 

Reported earnings per share has been calculated as follows:

The calculation of basic earnings per share is based on profit/(loss) after taxation for the year and the weighted average number of ordinary shares in issue for each period.

 
                                                                 2017        2016 
                                                               GBP000      GBP000 
=====================================================    ============  ========== 
 Basic: 
 Profit attributable to equity holders of the Group             8,876         985 
 Weighted average number of ordinary shares in issue      104,085,100   1,374,851 
=======================================================  ============  ========== 
 Basic earnings per share                                       8.53p      71.68p 
=======================================================  ============  ========== 
 
 Diluted: 
 Profit attributable to equity holders of the Group             8,876         985 
 Weighted average number of ordinary shares in issue      104,085,100   1,374,851 
=======================================================  ============  ========== 
 Diluted earnings per share                                     8.53p      71.68p 
=======================================================  ============  ========== 
 

It should be noted that as a result of the IPO in October 2016, the total number of shares in issue increased significantly and as such the pre and post IPO earnings per share figures are not comparable.

10. Goodwill and other intangible assets

Cost amortisation and net book value of intangible assets are as follows:

 
                                 Goodwill    Other    Total 
                                   GBP000   GBP000   GBP000 
==============================  =========  =======  ======= 
 Cost: 
 At 1 October                     22,576    56,231   78,807 
 At 30 September                  22,576    56,231   78,807 
==============================  =========  =======  ======= 
 
 Amortisation and impairment: 
 At 1 October                     6,979     38,530   45,509 
 Amortisation during the year       -        2,536    2,536 
==============================  =========  =======  ======= 
 At 30 September                  6,979     41,066   48,045 
 
 Carrying amount: 
==============================  =========  =======  ======= 
 At 30 September 2017             15,597    15,165   30,762 
==============================  =========  =======  ======= 
 At 30 September 2016             15,597    17,701   33,298 
==============================  =========  =======  ======= 
 

Impairment tests for goodwill

Goodwill is monitored by management at the operating segment level, which reflects the entire Group. Therefore, no further allocation of goodwill has been made.

The recoverable amount of the Group has been determined based on value-in-use calculations. These calculations are for the three-year period following the year end and are based on the next years' annual budget and subsequent two year forecasts. Budgeted increases in the level of assets under management, revenues and associated costs have been taken into account. Management forecasts revenues and associated costs based on the current structure of the business, adjusting for inflationary increases and these do not reflect any future restructurings or cost saving measures. To arrive at the net present value, the cash flows have been discounted using a discount factor of 13.2%. The overall value in use was greater than the carrying amount and so no impairment charge has been recognised. The key assumptions used in calculating the value in use were the net cash flows and the discount rate. In determining the net cash flows assumptions were made on the level of future fund inflows, fund redemptions and market growth.

Investment management contracts purchased by the Group are capitalised as intangible fixed assets and are amortised over periods ranging from 7 to 20 years depending on the nature of the assets purchased.

Sensitivity analysis

Sensitivity analysis has determined that an increase in the discount rate to 214% (2016: 1,110%) would be required before an impairment of goodwill would be considered. The compound annual growth rate for the net cash flows over the forecast period is 17.7% (2016: 0%).

11. Property, plant and equipment

 
                                 Land and buildings   Plant and equipment    Total 
                                             GBP000                GBP000   GBP000 
==============================  ===================  ====================  ======= 
 Cost or fair value: 
 At 1 October 2016                      931                           769    1,700 
 Additions                              126                            77      203 
 Disposals                               -                          (299)    (299) 
==============================  ===================  ====================  ======= 
 At 30 September 2017                  1,057                          547    1,604 
==============================  ===================  ====================  ======= 
 
 Depreciation and impairment: 
 At 1 October 2016                      275                           492      767 
 Depreciation during the year           123                           102      225 
 Disposals                               -                          (299)    (299) 
==============================  ===================  ====================  ======= 
 At 30 September 2017                   398                           295      693 
 
 Carrying amount: 
==============================  ===================  ====================  ======= 
 At 30 September 2017                   659                           252      911 
==============================  ===================  ====================  ======= 
 At 30 September 2016                   656                           277      933 
==============================  ===================  ====================  ======= 
 

12. Group entities

At 30 September 2017 the Company held (directly and indirectly) 100% of the allotted share capital of the following subsidiary undertakings, all of which are incorporated in Great Britain with the exception of Premier Asset Management (Guernsey) Ltd which is incorporated in Guernsey. All subsidiary undertakings are consolidated within the Group accounts.

 
                                                              Proportion of voting rights and 
                                     Class of share held                          shares held   Nature of the business 
==================================  ====================  ===================================  ======================= 
 (a) Directly held 
 Premier Asset Management MidCo                 Ordinary 
 Limited                                                                                 100%          Holding company 
 (b) Indirectly held 
 Premier Asset Management Holdings              Ordinary 
 Limited                                                                                 100%          Holding company 
 Premier Asset Management Limited               Ordinary                                 100%          Holding company 
 Premier Investment Group Limited               Ordinary                                 100%          Holding company 
 Premier Portfolio Managers                     Ordinary                                 100% 
 Limited                                                                                        Investment manager/ACD 
 PAM PLC                                        Ordinary                                 100%                  Dormant 
 Premier Offshore Asset Management              Ordinary 
 Limited                                                                                 100%                  Dormant 
 Premier Asset Management                       Ordinary 
 (Guernsey) Limited                                                                      100%       Investment manager 
 Eastgate Court Nominees Limited                Ordinary                                 100%          Nominee company 
 Premier Fund Managers Limited                  Ordinary                                 100%       Investment manager 
 Premier Investment Administration              Ordinary 
 Limited                                                                                 100%                  Dormant 
 Premier Discretionary Asset                    Ordinary 
 Management PLC                                                                          100%                  Dormant 
 Premier Fund Services Limited                  Ordinary                                 100%                  Dormant 
 Premier Capital Management                     Ordinary 
 Limited                                                                                 100%                  Dormant 
 Eastgate Investment Services                   Ordinary 
 Limited                                                                                 100%                  Dormant 
==================================  ====================  ===================================  ======================= 
 

13. Trade and other receivables

 
                                                                      2017     2016 
                                                                    GBP000   GBP000 
=================================================================  =======  ======= 
 Due from trustees/investors for open end fund redemptions/sales    42,170   31,914 
 Other trade debtors                                                   113      161 
 Accrued income                                                      4,221    3,605 
 Prepayments                                                         1,326      516 
 Other taxes                                                             -        - 
 Other receivables                                                     102      428 
 Total trade and other receivables                                  47,932   36,624 
=================================================================  =======  ======= 
 

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.

The ageing profile of trade receivables that are due but not impaired is:

 
                             2017       2016 
                           GBP000     GBP000 
========================  =======    ======= 
 Days 
 0 to 30                   42,226     32,074 
 31 to 60                      57          1 
 61 to 90                       -          - 
 Over 90                        -          - 
 Total trade receivables   42,283     32,075 
========================  =======    ======= 
 

These amounts have not been impaired as there has not been any significant changes in credit quality and the amounts are still considered recoverable.

14. Financial instruments

   (a)   Financial assets at fair value through profit and loss 

The financial instruments carried at fair value are analysed by valuation method. The different levels have been defined as follows:

(i) Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)

(ii) Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).

(iii) Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

The fair value of financial assets is as follows:

 
                           2017     2016 
                         GBP000   GBP000 
====================    =======  ======= 
 Other investments 
 Quoted - level 1         1,354      806 
 Unquoted - level 3           -      255 
 Total                    1,354    1,061 
======================  =======  ======= 
 

Quoted investments - level 1

The Group holds shares and units in a number of funds for which quoted prices in an active market are available. The fair value measurement is based on level 1 in the fair value hierarchy.

Unquoted investments - level 3

There is no active market for the unit investments. Valuation is based on the sales of the investment shortly after the year end.

Financial instruments measured at amortised cost, but fair value is disclosed

The following financial instruments are not measured at fair value in the balance sheet, but information about the fair value is disclosed.

Trade debtors and trade creditors

The trade debtors and trade creditors largely have a maturity of less than one year. The fair value of trade creditors and trade debtors are not materially different to their carrying value.

Borrowings and overdraft

The fair value of the bank borrowings and overdrafts are not materially different from the carrying value due to the variable interest rate and the short duration.

Preference shares

The fair value of the preference shares is not materially different to their carrying value. On 7 October 2016, the preference shares were redeemed in full at par; in addition, all accrued interest up to the date of redemption was paid.

Financial risk management

The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, cash flow and fair value interest rate risk), credit risk and liquidity risk.

The Group monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyses exposure by degree and magnitude of risks. These risks include market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk.

Market risks

The Group is exposed to market risk through interest rates, availability of credit, liquidity and foreign exchange fluctuations.

   (a)   Interest rate risk 

The Group is exposed to interest rate risk as the Group borrows at floating interest rates.

A 1% increase in interest rates on the Group's debt balances at 30 September 2017, would increase the annual net interest payable in the statement of comprehensive income and reduce equity by GBPnil (2016: GBPnil). The sensitivity has been calculated by applying the interest rate change to the variable rate borrowings.

   (b)   Foreign exchange risk 

The Group undertakes transactions denominated in US Dollars and Euros; consequently, exposures to exchange rate fluctuations arise.

At 30 September 2017, if the US Dollar and Euro had strengthened by 10% against the Pound with all other variables held constant, this would have had an GBP124,000 (2016: GBP83,000) impact on the statement of comprehensive income and equity.

   (c)    Credit risk 

The Group credit risk is primarily focused on trade receivables due from trustees/investors for open end fund redemptions/sales. The risk is that a counterparty fails to settle on a trade and thereby creates an illiquid asset. However, in such cases the Group has the ability to arrange with the trustees of the relevant fund to cancel the trade and to liquidate the units issued, thereby settling the trade. A possible exposure will arise in such an instance whereby the price achieved on a cancellation of a trade is less than the original price at which the units were issued.

The credit risk on liquid assets is limited because the counterparties are banks with relatively high credit ratings.

The Group has no significant concentration of credit risk as exposure is spread over a large number of counterparties and customers.

   (d)   Liquidity risk 

The Group's approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due without incurring unacceptable losses or risking damage to the Group's reputation. Details of the bank facilities provided to the Group are provided in note 17.

The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

 
                                             Between 
                             Less than      3 months          Between 
                              3 months    and 1 year    1 and 5 years   Over 5 years 
                                GBP000        GBP000           GBP000         GBP000 
==========================  ==========  ============  ===============  ============= 
 As at 30 September 2017 
 Borrowings                      -                 -                -              - 
 Trade and other payables     49,416             293            1,174            196 
 Other liabilities               -                 -                -              - 
==========================  ==========  ============  ===============  ============= 
                              49,416             293            1,174            196 
==========================  ==========  ============  ===============  ============= 
 As at 30 September 2016 
 Borrowings                      -                 -           13,500         29,170 
 Trade and other payables     40,138               -                -              - 
 Deferred consideration          -                 -                -              - 
 Other liabilities               -                 -            2,235          2,414 
                              40,138               -           15,735         31,584 
==========================  ==========  ============  ===============  ============= 
 

Capital Management

Working capital

The Group manages the level of its working capital on an ongoing basis. The Group uses detailed financial information provided by its forecasting model and by regular review of its consolidated management information.

Regulatory capital requirements

In accordance with the Capital Requirements Directive (CRD), the Group is required to maintain a minimum level of capital as prescribed in the UK by the Financial Conduct Authority (FCA). The Group is required to conduct an Internal Capital Adequacy Assessment Process (ICAAP), referred to as Pillar 2 capital requirements. The objective of this process is to ensure that firms have adequate capital to enable them to manage risks not deemed to be adequately covered under Pillar 1 minimum requirements. This is a forward looking exercise which includes stress testing on major risks, considering how the firm would cope with a significant market downturn, for example, and an assessment of the Group's ability to mitigate the risks. Each of the regulated companies in the Group maintained surpluses of regulatory capital throughout the year.

The primary objective of the Group's capital management is to maintain a strong capital base in order to maintain investor, creditor and market confidence and to provide a suitable base to sustain the future development of the business, while ensuring compliance with regulatory capital requirements.

Offsetting financial assets and financial liabilities

There are no financial assets and liabilities subject to offsetting, enforceable master netting arrangements and similar agreements.

15. Cash and cash equivalents

 
                                        2017     2016 
                                      GBP000   GBP000 
=================================    =======  ======= 
 Cash at bank and in hand             16,449   10,638 
 Total cash and cash equivalents      16,449   10,638 
===================================  =======  ======= 
 

16. Trade and other payables

 
                                                                        2017     2016 
                                                                      GBP000   GBP000 
===================================================================  =======  ======= 
 Due to trustees/investors for open end fund creations/redemptions    41,375   31,885 
 Other trade payables                                                  1,145      420 
 Other tax and social security payable                                 1,048      759 
 Accruals                                                              6,830    5,534 
 Pension contributions                                                    26       24 
 Other payables                                                          655    1,516 
 Total trade and other payables                                       51,079   40,138 
===================================================================  =======  ======= 
 

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.

The Directors consider that the carrying amount of trade payables approximates to their fair value.

17. Borrowings

 
                                        2017      2016 
                                      GBP000    GBP000 
================================    ========   ======= 
 Bank loans                                -         - 
 Preference shares of GBP1 each             -    42,670 
 Total borrowings                           -   42,670 
=================================   =========  ======= 
 
 
                          2017      2016 
                        GBP000    GBP000 
==================    ========   ======= 
 Current                     -         - 
 Non-current                  -    42,670 
 Total borrowings             -   42,670 
===================   =========  ======= 
 

Preference shares

On 7 October 2016 the Company redeemed the 13,500,000 8% preference shares and 29,170,000 4% preference shares, and paid accrued interest of GBP2,252,429 and GBP2,433,449 respectively.

18. Obligations under leases

Operating lease agreements where the Group is lessee.

The Group has entered into commercial leases on certain properties. These leases have an average duration of between 3 and 10 years.

Future minimum rentals payable under non-cancellable operating leases are as follows:

 
                                   2017     2016 
                                 GBP000   GBP000 
============================    =======  ======= 
 Between zero and one year           12       29 
 Between one and two years            -       65 
 Between two and five years         115        - 
 Over five years                    221      221 
 Total lease obligations            348      315 
==============================  =======  ======= 
 

19. Provisions and other liabilities

Analysis of total provisions and other liabilities:

 
                                                2017      2016 
                                              GBP000    GBP000 
========================================    ========   ======= 
 Interest on preference shares                      -     4,649 
 VAT provision                                     -         - 
 Total provisions and other liabilities             -     4,649 
==========================================    =======   ======= 
 

Interest on preference shares

The accrued interest relates to the Preference shares (note 17). The entire interest accrual is non-current.

20. Share capital

 
                                             2017        2016 
 Authorised 
  Ordinary shares                     105,801,310   1,398,513 
  Deferred shares                               -           - 
 
 Allotted, issued and fully paid 
  Ordinary shares                     105,801,310   1,398,513 
  Deferred shares                               -           - 
===================================  ============  ========== 
 

On 23 September 2016, and in accordance with rule 2 of the AIM rules, the Company issued an announcement to the London Stock Exchange giving notice of its intention to apply for admission of its shares onto the Alternative Investment Market ("AIM"). In preparation for the proposed flotation of its shares, the Company applied to, and received consent from, Companies House to re-register from a private company to a public company with effect from 29 September 2016.

The Company then issued on 4 October 2016 an announcement to the London Stock Exchange giving notice of its proposed admission to trading on AIM and announced its initial public offering by way of a placing of 35,875,660 new and 12,381,916 existing ordinary shares of 0.02 pence each at a price of 132 pence per share, raising gross proceeds of GBP63.7 million.

On 7 October 2016 the Company subdivided its ordinary share capital, with each ordinary share of 1 pence each being replaced by 50 ordinary shares of 0.02 pence each. The effect of this subdivision was to replace the 1,398,513 ordinary shares of 1 pence each with 69,925,650 new ordinary shares of 0.02 pence each.

On 7 October 2016 the Company's shares were admitted to trading on AIM and 35,875,660 ordinary shares of 0.02 pence each were allotted at a price of 132 pence per share, increasing the number of issued ordinary share capital to 105,801,310 shares. The gross proceeds of the allotment, which amounted to GBP47,355,871 were used on 7 October 2016 firstly, to redeem the 13,500,000 8% preference shares and pay accrued interest thereon of GBP2,252,429 and secondly, to redeem the 29,170,000 4% preference shares and pay accrued interest thereon of GBP2,433,449.

21. Capital redemption reserve

 
                                         2017     2016 
                                       GBP000   GBP000 
==================================    =======  ======= 
 Redemption of preference shares        4,000    4,000 
 Cancellation of deferred shares          532      532 
 Total capital redemption reserve       4,532    4,532 
====================================  =======  ======= 
 

On the redemption of the Preference shares a transfer was made from retained earnings to the capital redemption reserve equivalent to the nominal value of the Preference shares redeemed. On 19(th) October 2015 GBP4,000,000 of the 8% Preference shares, plus GBP359,452 of accrued interest, was redeemed.

22. Dividends paid and proposed

 
                                                        2017       2016 
                                                      GBP000     GBP000 
===============================================      =======    ======= 
 Declared and paid during the year: 
 Equity dividends on ordinary shares: 
  First interim for 2017: 1.25 pence per share         1,323          - 
  Second interim for 2017: 1.25 pence per share        1,308          - 
  Third interim for 2017: 1.25 pence per share         1,308          - 
===============================================      =======    ======= 
 Dividends paid                                        3,939          - 
===============================================      =======    ======= 
 

23. Related party transactions

All companies forming part of the consolidated Group are considered to be related parties as these companies are owned either directly or indirectly by Premier Asset Management Group PLC.

The Group manages, through its subsidiaries, a number of open ended investment companies and investment trusts. The subsidiary companies receive management fees from these entities for managing assets and in some instances receive performance fees. The Group acts as manager and/or authorised corporate director for 27 (2016: 27) funds as at 30 September 2017.

   (a)   Asset management vehicles 

The Group provides investment management services for a number of collective investment schemes where Group companies are investment managers/advisors of underlying funds and which meet the criteria of related parties (note 2.5(p)). In return the Group receives management fees for the provision of these services.

 
                                            2017     2016 
                                          GBP000   GBP000 
=====================================    =======  ======= 
 Management fees                          44,968   37,906 
 Amounts outstanding at the year end       4,102    3,448 
=======================================  =======  ======= 
 
   (b)   Key management compensation 

The key management personnel compensation that is represented by the Executive Committee, for employee and Director services during the year is shown below:

 
                                     2017     2016 
                                   GBP000   GBP000 
==============================    =======  ======= 
 Short-term employee benefits       3,033    2,543 
================================  =======  ======= 
 

24. Segment reporting

The Group operates a single business segment of asset management for reporting and control purposes.

IFRS 8 Operating Segments requires disclosures to reflect the information which Group 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.

25. Post balance sheet events

The directors are not aware of any conditions that existed at the reporting date or events since, that would affect the disclosures in these financial statements.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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(END) Dow Jones Newswires

November 30, 2017 02:01 ET (07:01 GMT)