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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Premier Asset Management Group Plc | LSE:PAM | London | Ordinary Share | GB00BZB2KR63 | ORD 0.02P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 183.50 | 180.00 | 187.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMPMI
RNS Number : 5435G
Premier Miton Group PLC
26 November 2020
PREMIER MITON GROUP PLC
FULL YEAR RESULTS FOR THE YEARED 30 SEPTEMBER 2020
Premier Miton Group plc ('Premier Miton', 'Company' or 'Group'), the AIM quoted fund management group, today announces its final results for the year ended 30 September 2020.
Highlights
Hot Features
Premium
-- GBP10.6 billion closing Assets under Management (4) ('AuM') (2019: GBP6.6 billion)
-- GBP11.6 billion closing AuM as at 20 November 2020 (unaudited)
-- Net outflows of GBP619 million for the year
-- Adjusted profit before tax (1,4) of GBP22.4 million (2019: GBP19.0 million)
-- Adjusted earnings per share (2,4) of 12.46 pence (2019: 15.10 pence)
-- Profit before tax (3) of GBP9.6 million (2019: GBP13.7 million)
-- Cash balances totalled GBP36.0 million at 30 September 2020 (2019: GBP20.7 million)
-- Final proposed dividend of 4.5 pence per share (2019: 5.4 pence per share)
Notes
(1) Adjusted profit before tax is calculated before the deduction of taxation, amortisation, share-based payments, merger related costs and exceptional costs. Reconciliation included within the Financial Review section.
(2) Adjusted earnings per share is calculated before the deduction of amortisation, share-based payments, merger related costs and exceptional costs.
(3) Merger related costs totalled GBP4.5 million during the year (2019: nil).
(4) These are Alternative Performance Measures ('APMs').
Mike O'Shea, Chief Executive Officer of Premier Miton Group, commented:
"It has been a landmark year for Premier Miton. Our financial year commenced following the announcement of the merger between Premier Asset Management Group plc and Miton Group plc and I am pleased to report that the integration process has gone to plan in terms of people integration and operational and financial synergies. We have also faced the significant market disruption arising from the COVID-19 pandemic and I am pleased with the overall strong performance delivered by our investment strategies via genuine active management."
"We have made a number of key investment team hires during the year in fixed income, global sustainable equities, global smaller companies, and UK equities, which further strengthens our business for the future. Although we had net outflows during the year, we are encouraged by our continued positive fund flow momentum into our equity and fixed income funds, the strong performance across our broad range of multi-asset funds, and the potential of our new investment capabilities."
"The Group seeks to maintain a dividend policy that targets an ordinary dividend payout of approximately 50% to 65% of adjusted profit after tax, and despite the challenging environment we are proposing a final dividend of 4.5p per share, bringing the total for the full year to 7p."
"Following the successful integration, we now have an even stronger and scalable investment and operating platform. We see exciting growth opportunities across our range for both our new and established funds and believe that Premier Miton is well positioned for the future."
SFor further information, please contact:
Premier Miton Group plc Mike O'Shea (Chief Executive Officer) 01483 306 090 Numis Securities Limited (NOMAD and Broker) Huw Jeremy / Charles Farquhar 020 7260 1000 Liberum Capital Limited (Joint Broker) Richard Crawley / Jamie Richards 020 3100 2000 Smithfield Consultants (Financial PR) John Kiely / Andrew Wilde 020 3047 2544
www.premiermiton.com
About Premier Miton
Premier Miton Investors is focused on delivering good investment outcomes for investors through relevant products and active management across its range of investment strategies, which include multi-asset, equity, absolute return and fixed income.
LEI Number: 213800LK2M4CLJ4H2V85
Chairman's Statement
The past 12 months have been a time of considerable activity, most notably with our business embarking on a corporate merger and dealing with the ramifications of COVID-19.
On 15 November 2019 we successfully merged two highly regarded companies - Miton Group plc and Premier Asset Management Group plc, via a court-sanctioned scheme of arrangement. The newly enlarged Premier Miton Group plc offers a more balanced and broader range of products for our clients.
From 16 March 2020 our employees moved to remote working supported by the Group's business continuity arrangements. The leadership team acted swiftly to establish measures that ensured the safety of our employees and those in vulnerable categories whilst still providing a full service to our clients. At the time of writing we continue to assess a phased approach to returning to the office, whilst still recognising the success of our working from home arrangements and the future state of flexible working.
Whilst the past year has shown a great deal of volatility in financial markets, as a business we remain fiscally strong and profitable. More than ever, our business platform is in a strong position to support the growth of our Assets under Management ('AuM') and continue to provide solutions that meet our clients' needs.
Results
The ramifications of the COVID-19 pandemic have caused many investors to be cautious. This year we have seen net outflows of GBP619 million, predominantly from our multi-manager funds due to their weaker short-term performance figures. Pleasingly however several of the Group's other strategies have seen positive inflows during the year and many funds benefited from the recovery in asset prices during May and June. Total AuM ended the year at GBP10.6 billion, up 16% since the half year.
Our key measure for financial decision making, Adjusted Profit Before Tax (adjusted for merger related costs, exceptional costs, share-based payments and amortisation) was GBP22.4 million, up by 18% against the comparative year. Cash was GBP36.0 million at year end (2019: GBP20.7 million).
Earnings per share ('EPS') for the year was 4.14p (2019: 10.82p). Understandably this was lower than the previous year because of non-recurring costs associated with the merger combined with the increased amortisation charge arising from the intangible assets recognised on the business combination.
A final dividend of 4.5p per share is proposed, bringing total dividends for the year to 7.0p (2019: 10.5p) representing a 58.4% payout ratio of adjusted profit after tax (2019: 86%). As noted at the half year, the Board made the prudent decision to reduce the quantum of the second interim dividend and adopted a dividend policy that targets an annual payout ratio of between 50% and 65% of adjusted profit after tax.
Strategy and culture
Being a public company, we endeavour to deliver durable long-term value to our stakeholders. The Group's strategy of product diversification coupled with the absence of 'house views' gives us the ability to provide differentiated outcomes for clients. Our fund managers have the freedom to express differing views - this is at the heart of our active approach to fund management. Our scalable operating platform supports this approach and facilitates growth in AuM through a client-centric business model.
As a Group we aim to achieve sustainable and durable growth over the coming years. We have sufficient capacity in our current product range and feel confident that with the right distribution strategy, talent management and effective leadership we are well placed to deliver this strategic achievement for the benefit of all our stakeholders.
The recent period of heightened volatility emphasises the importance of sound balance sheet management. As a Board we aim to safeguard our strong capital position through market cycles and apply a long-term view in the deployment of capital. The Group currently holds no bank debt on its balance sheet.
Since the merger, as an enlarged Group we have undertaken a series of interviews with key staff members to delve deeper into the Group's culture and purpose. We have solidified our purpose as being to actively steward our clients' capital for a better future.
Governance
As part of the merger integration process the Board undertook an internal review of its corporate governance structure during the year. This review included assessing the rights and responsibilities of each committee and its respective contribution to achieving the Group's long-term aspirations and the mitigation of risk. The recommendations of this review, we believe, will enhance the performance of the Group's committees, along with streamlining the reporting processes to our regulated entities and, ultimately, to the Board.
Board and people
On 14 May 2020 we announced the appointment of Alison Fleming as Non-Executive Director. Alison is a highly experienced financial services practitioner and has had an extensive career in financial markets over the last 25 years, holding senior positions within investment banks and boutique asset managers.
We also announced the departure of Non-Executive Director, Katrina Hart. We thank Katrina for her significant
contribution during her nine years' service and wish her well in future endeavours.
Products
The merger with Miton brought an additional 16 investment products to the Group's offering. Since then we have
welcomed a new fixed income team, a global smaller companies team, a global sustainable equity manager and, more recently, we announced the appointment of Emma Mogford to manage our UK equity income funds.
Outlook
The merger with Miton has been delivered against a backdrop of volatility in markets coupled with the added pressures of operating in a remote working environment.
I would like to thank the senior executive team for their hard work during the last 12 months and all our people for their valued contribution to the long-term success of the business.
Could I also extend thanks to the Board for their continued leadership over the past year. Clearly it has been a turbulent period for indices and the economic landscape over the coming 12 months remains as hard to predict as ever. The dominant issues driving economic uncertainty at the beginning of the year (Brexit, the General Election) seem a distant memory.
The talent, enthusiasm and professionalism across all areas of our organisation continues to impress. It is exciting to see the development of the enlarged Group under the new brand of Premier Miton Investors. Our actively managed products offer clear and transparent objectives for our clients and their advisers. I believe the Group is well positioned for future growth and to achieve its potential as a balanced business of high performing, active investment products.
Mike Vogel
Chairman
25 November 2020
Chief Executive Officer's Statement
It has been a landmark year in many ways for Premier Miton. Our financial year commenced following the announcement of the merger between two highly regarded businesses: Premier Asset Management Group plc and Miton Group plc. In mid-November we began the amalgamation of both businesses and pleasingly we have managed the integration process successfully to date, despite the challenges arising from the COVID-19 pandemic.
Business performance
The first half of the financial year saw an unprecedented market environment with markets falling heavily during March before rallying in April and into May following the support provided by central banks across the world. The Group's Assets under Management ('AuM') has increased by 16% since the half year to GBP10.6 billion as at 30 September 2020. The average AuM for the year was GBP10.1 billion versus GBP6.7 billion for the previous year, an increase of 51%.
Net outflows for the year were GBP619 million (2019: GBP306 million). Whilst it is disappointing to report a net outflow position we continued to see strong demand for our non-UK focused funds with the LF Miton European Opportunities Fund seeing net inflows of GBP712 million and the LF Miton US Opportunities Fund net inflows of GBP78 million since the completion of the merger. By the year end the new fixed income team had achieved net inflows of GBP136 million following their arrival in August 2020.
The net management fee margin (the retained revenue of the firm after deducting the costs of fund administration, external Authorised Corporate Directors ('ACD') and other direct costs), was 65.9bps compared with 72.3bps last year. This reflects the Group's balanced product mix, with the addition of a larger proportion of single strategy funds and inflows into the fixed income products.
The adjusted profit margin decreased against the comparative period, from 39.1% to 33.5%. Whilst disappointing to see a decrease, it is hard to draw meaningful comparisons between these two figures given they represent two different groups.
COVID-19
The COVID-19 pandemic provided an added challenge during the year. From early March our newly formed COVID-19 Response Committee made it a priority to protect the safety of our people whilst continuing to actively steward our clients' capital. Our operational platform and capability to manage our range of funds continued unaffected as our workforce transitioned to work remotely. As a newly formed Group, we have been able to demonstrate our resilience and ability to work as a team.
In June we engaged external, specialist health and safety advice, including detailed risk assessments, to assess the potential of allowing some of our people to return to our offices.
At the time of writing we have extended our flexible working from home business model to at least 31 March 2021 and we are actively discussing the design of future working arrangements for all employees. I am pleased that our current arrangements are continuing to provide high levels of service and investment outcomes for our clients. Longer term, we expect to successfully incorporate a more flexible working regime into our business.
For the small number of staff members currently attending our offices, we continue to practice social distancing and work to ensure that their health and wellbeing is maintained.
I recognise how challenging it has been to transition from an office-based to home working environment and I wish to thank our team for their hard work, passion and dedication during this difficult period.
Merger progress
I am pleased to say that the team have shown great fortitude in continuing to be ahead of target with the integration, particularly considering the macro challenges during the year. There has been a considerable amount of work undertaken to get us to this point, including managing the legal change of companies, amalgamation of systems such as Bloomberg, establishing a centralised dealing desk and much more.
From 24 April 2020 all fund management moved to a single entity, allowing the unification of the Group's investment teams under one corporate umbrella and the ability to share ideas. At the end of November, we will complete the transition to one ACD and the harmonisation of fund names across the range. They will be prefixed with 'Premier Miton' in place of 'Premier' or 'Miton', with no additional prefix for third-party ACD providers, making fund names consistent and easier for clients to identify. These achievements represent key milestones in achieving the recurring synergies outlined at the time of the merger.
As I have said before, merging two businesses creates a degree of change which can be unsettling. We endeavour to foster a culture where people's concerns are heard, and their ideas are considered. We continue to take the best practices of both businesses to ensure we are in the strongest position to deliver the best outcomes for our clients.
Investment performance
The strong performance of our single strategy funds continued during the period with 6 out of 16 funds performing in the top decile of their respective IA sectors since the tenure of the fund manager. Three of these funds are ranked as the top performing fund in their respective sectors. In recognising this outperformance, several of our funds received industry awards. The LF Miton European Opportunities Fund, managed by Carlos Moreno and Thomas Brown won Best Europe Fund at the Investment Week Fund Manager of the Year Awards 2020 in June and won Best Europe Fund in the Money Observer Fund Awards 2020. Nick Ford and Hugh Grieves, who manage the LF Miton US Opportunities Fund and the LF Miton US Smaller Companies Fund, were winners at the Investment Week Fund Manager of the Year Awards 2020.
Our UK equity growth teams have done well over the year under review with four of the five funds achieving first quartile outcomes over one and three years and one achieving second quartile. Longer-term numbers are also good with every fund achieving first quartile returns since manager tenure. Our UK equity income funds have found progress more difficult with their natural bias towards more value-orientated stocks and UK domestic names, which have been out of favour with investors.
Our new fixed income team under Lloyd Harris, who joined us from Merian Global Investors as Head of Fixed Income in August, have made a strong start. We have launched two new fixed income funds that have already enjoyed some early investor support and which, we believe, will have strong appeal in the market going forward. On 22 October 2020 the team were appointed to manage GBP330 million across two external mandates bringing the current AuM across the fixed income products to GBP821 million as at 31 October 2020.
The multi-asset macro-thematic team of David Jane and Anthony Rayner continued to deliver attractive returns to investors during 2020. Three of their four funds are first quartile over the year under review and one is second quartile. Longer-term numbers are also respectable with two funds in the first quartile and one in second quartile since manager tenure.
The multi-asset diversified suite of products managed by Neil Birrell and members of the wider investment team also performed strongly with four out of the five growth funds delivering above median performance over the year to 30 September 2020. The Diversified Growth Fund is also first quartile over three, five and seven years and since launch. The Diversified Income Fund is second quartile over one and three years and since launch.
The multi-asset multi-manager suite of products have found progress more difficult in their respective sectors. The team has had a higher weighting towards value and towards domestically focused companies than many of their peers whilst maintaining an underweight position towards growth companies and overseas equities. This has impacted negatively on relative performance in the short term. Many of the funds that the team manage do have an income bias and the team have successfully maintained an attractive income for investors over this volatile investment period led by the COVID-19 disruption.
Products
We continue to develop our business through the addition of new investment talent and by evolving our product range to meet significant client demand.
In December 2019 the Group launched the Premier Miton Managed Index Balanced Fund which is managed by Wayne Nutland. Wayne joined the Group from HSBC where he managed substantial multi-asset portfolios investing in exchange traded funds. The new fund offers further multi-asset choice to advisers and their clients.
Duncan Goodwin joined in January 2020 to manage a global sustainable equity growth strategy. Although it is still early in the process, we are very pleased to note the much improved performance on both of the global equity portfolios under Duncan's stewardship.
In March 2020 we launched our own no cost online portal for advisers, known as Connect. Connect allows advisers to hold our funds on our online portal with no additional fees thereby reducing the overall cost of investing in our funds for investors.
On 10 August 2020 we welcomed Lloyd Harris, Simon Prior and Rob James to an expanded fixed income team. This is an exciting development for our business whereby we can offer a wider range of fixed income funds to our clients. Following their arrival, we launched two new products: Premier Miton Strategic Monthly Income Bond Fund, that sits in the IA Sterling Strategic Bond sector; and the Premier Miton Financials Capital Securities Fund, that sits in the IA Specialist sector.
On 1 October 2020 Alan Rowsell joined the Group from Aberdeen Standard Investments. Alan will manage a new global smaller companies fund planned for launch in Q1 2021, subject to FCA approval. A highly active global smaller companies fund fits well into our product mix and plays to our strengths as a business. It will offer our investors access to the growth opportunities within the smaller companies universe. We now have a highly credible global equity offering for clients, alongside Duncan Goodwin's newly rebranded Global Sustainable Alpha Growth Fund and Jim Wright's Global Infrastructure Income Fund.
Distribution
During the year we refined our two specialist distribution teams. These teams are grouped according to two focus areas: the UK wealth manager market (typically equity and fixed income fund focused) and the UK adviser market (typically multi-asset fund focused). We have purposely resourced each team to meet the sales opportunities ahead and have developed a sales and marketing framework to focus on key products where we believe we will achieve the best net flow results.
Regulation
The Senior Managers and Certification Regime ('SM&CR') came into effect on 9 December 2019 and aims to strengthen market integrity by making individuals more accountable for their conduct and competence. We see it as an opportunity to continue to build a healthy culture through a robust governance framework and the appointment of clear responsibilities. As part of the implementation of SM&CR, we have agreed which roles and staff fall within each level - senior managers, certification regime and those who are subject to the new individual conduct rules.
Corporate Social Responsibility ('CSR')
During the year the Group continued to develop its CSR to allow us to play a positive, active and growing role in building a more sustainable future whilst promoting the successful business performance of the Group. Our CSR approach is designed to cover four areas: responsible investing (investing our clients' money in a responsible way); our team (making Premier Miton a good place to work including by promoting diversity and inclusion, wellbeing and personal development); environmental responsibility (managing our business to help tackle climate change); and community responsibility (engaging with charities and community/volunteer work).
In August, we submitted Premier Miton's first annual CDP climate change report. CDP runs a global disclosure system for corporate environmental reporting. We believe that disclosure is an essential step to drive positive environmental action. Each year the programme requests information on greenhouse gas emissions, energy use and the risks and opportunities from climate change. More and more investors are requesting companies to disclose their environmental position and data through CDP and we believe taking part in this disclosure process fits with our CSR approach.
Outlook
The economic environment continues to be impacted by COVID-19 with central banks doing everything they can to provide stimulus. It seems likely that the economic recovery will be fragile, and dependent on both unemployment figures and any further lockdown restrictions. Financial markets continue to be buoyed by central banks rather than the traditional metric that might demonstrate the health of an economy.
In this environment, we believe strongly that there is an opportunity for active management to perform well for investors. We have a balanced range of funds at Premier Miton backed up by a strong team across all areas of the business. We are working hard to emerge from this crisis having done a great job for investors through genuinely active asset management across our open ended funds, investment trusts and portfolio management service.
Although the outlook remains unclear, we should be encouraged by the excellent long and short-term performance of many of our active fund managers, despite the extreme market disruption. We should also be encouraged by the conviction expressed by our fund managers that the post coronavirus environment will prove to be a great opportunity for active managers, active management companies and very importantly for our clients.
We now have a strong and scalable operating platform, a focused distribution and marketing team, excellent investment products and, of course, great people throughout the organisation. I see exciting growth opportunities across our range for both new and established funds and believe that Premier Miton is well positioned for the future.
Mike O'Shea
Chief Executive Officer
25 November 2020
Financial Review
Financial performance
Profit before tax decreased to GBP9.6 million (2019: GBP13.7 million). The decline in profit before tax is after the inclusion of GBP4.5 million of non-recurring costs primarily associated with the merger with Miton Group plc coupled with a charge of GBP3.1 million relating to the amortisation of intangible assets recognised on completion of the merger.
Adjusted profit before tax*, which is after adjusting for amortisation, share-based payments, merger related costs and exceptional costs increased to GBP22.4 million (2019: GBP19.0 million).
2020 2019 %
GBPm GBPm Change
----------------------------- ------ ------ -------
Net revenue 66.8 48.6 37.4
Administrative expenses (44.4) (29.6) 50.0
Adjusted profit before tax * 22.4 19.0 18.0
----------------------------- ------ ------ -------
Amortisation (4.5) (1.5)
Share-based payments (3.6) (2.6)
Merger related costs (4.5) -
Exceptional costs (0.2) (1.2)
----------------------------- ------ ------ -------
Profit before tax 9.6 13.7 (29.9)
----------------------------- ------ ------ -------
* This is an Alternative Performance Measure ('APM').
Assets under Management * ('AuM')
AuM ended the year at GBP10,608 million (2019: GBP6,556 million). The increase was predominantly due to the merger with Miton Group plc which added GBP4,701 million of AuM at 14 November 2020. The Group's average AuM for the year was GBP10,110 million (2019: GBP6,695 million), the elevated levels of average AuM have driven the increase of 37.6% in the net management fees to end the year at GBP66.6 million (2019: GBP48.4 million).
The Group's revenue represents management fees generated on the assets being managed by the Group.
As noted at the half year, market turbulence from the COVID-19 pandemic created volatility in the Group's revenue base arising from the falls in the underlying market valuations and the resulting AuM managed by the Group. At 31 March 2020 the Group's AuM had reduced to GBP9,145 million before recovering to end the year at GBP10,608 million.
The Group's net management fee margin for the year was 65.9 basis points (2019: 72.3 basis points). The merger with Miton Group plc brought a lower average margin business, due to product mix along with a different operating model. The margin for the former Miton funds is reported after the deduction of associated Authorised Corporate Director ('ACD') and fund accounting fees. The Miton funds are expected to move to the in-house ACD model by the end of the calendar year.
Net revenue
2020 2019 %
GBPm GBPm Change
------------------------------------ ------ ----- -------
Net management fees (1) 66.6 48.4 37.6
Other income 0.2 0.2 -
------------------------------------ ------ ----- -------
Net revenue 66.8 48.6 37.4
------------------------------------ ------ ----- -------
Average AuM (2) 10,110 6,695 51.0
Net management fee margin (3) (bps) 65.9 72.3 (8.9)
------------------------------------ ------ ----- -------
1 Being gross management fee income less trail/rebate expenses and the cost of fund accounting and external ACD fees for the former Miton fund range
2 Average AuM is calculated based on monthly closing AuM 3 Net management fee margin represents net management fees divided by the average AuM
Administration expenses
Administration expenses (excluding share-based payments) totalling GBP44.4 million (2019: GBP29.6 million) were 50.0% higher than in 2019. The increase reflects the inclusion of ten and a half months of costs associated with Miton since the merger completed.
As is common for many financial services businesses, the largest component of administration expenses were staff costs, these consist of both fixed and variable elements.
The fixed staff costs, which includes salaries and associated national insurance, employers' pension contributions and other indirect costs of employment increased to GBP16.7 million (2019: GBP9.9 million).
The rise reflects the increase in the average headcount for the year from 108 in 2019 to 150, this was primarily due to the merger.
On completion of the merger, the Group had 161 full-time staff including Non-Executive Directors, as at the year end this had fallen to 149. The reduction is due to restructuring of the business completed post-merger whilst still adding to the talent across the Group, most recently with the hire of a five-strong fixed income team who joined before the year end.
Variable staff costs totalled GBP10.9 million (2019: GBP6.4 million). Included within this are general discretionary bonuses, sales bonuses and bonuses in respect of the fund management teams, plus associated employers' national insurance. These costs move in line with the net revenues of the Group and the adjusted profit before tax.
Overheads and other costs totalled GBP15.5 million (2019: 13.1 million) being 23.2% of net revenue (2019: 27.0%).
2020 2019 %
GBPm GBPm Change
---------------------------- ----- ----- -------
Fixed staff costs 16.7 9.9 68.7
Variable staff costs 10.9 6.4 70.3
Overheads and other costs 15.5 13.1 18.3
Depreciation - fixed assets 0.6 0.2 200
Depreciation - leases 0.7 - N/a
Administration expenses 44.4 29.6 50.0
---------------------------- ----- ----- -------
The core elements of overheads and other costs are, fund administration costs where the Group acts as ACD, office costs, compliance, IT, irrecoverable VAT and sales and marketing costs. The latter of which saw a reduction in expenditure in the year arising from the restrictions due to COVID-19.
Merger
The merger with Miton Group plc was effected by way of a scheme of arrangement and satisfied through the issuance of new shares. The fair value of the equity consideration is reflected in shareholders' equity with the creation of a merger reserve. In accordance with IFRS 3, the Group has recognised an intangible asset of GBP24.8 million for the investment management agreements held by Miton. This asset is being amortised over seven years and has resulted in the increase in the amortisation charge for the year. See note 9 for further detail.
Share-based payments
The share-based payment charge for the year was GBP3.6 million (2019: GBP2.6 million).
As at 30 September 2020 the Group's Employee Benefit Trusts ('EBTs') held 9,921,565 ordinary shares representing 6.3% of the issued ordinary share capital (2019: 4,642,830 shares).
At the year end the outstanding awards totalled 9,319,115 (2019: 4,618,333). The increase reflects 4,130,000 awards issued during the year (2019: 1,733,333) along with the outstanding awards in the former Miton schemes which were converted at the merger exchange ratio of 0.30186 on 14 November 2019.
Exceptional costs and merger related non-recurring costs
Merger related and exceptional costs incurred in the year amounted to GBP4.7 million (2019: GBP1.2 million).
Of this balance GBP4.5 million related to the merger. See note 4 for further detail. As set out in the Scheme Document released on 17 September 2019, the Group anticipated incurring GBP10 million of non-recurring costs to achieve annualised synergies in year three after the merger of GBP7 million.
A component of the FCA FSCS levy costs in 2019 totalling GBP0.4 million were presented as exceptional. FSCS levy costs for the current year totalled GBP1 million, these have been presented within administration expenses.
IFRS 16 'Leases'
The Group commenced accounting for IFRS 16 from 1 October 2019 and now recognises a right-of-use ('ROU') asset and a corresponding lease liability in the balance sheet. At the year end the Group had a ROU asset of GBP2.4 milllion and a lease liability of GBP2.9 million.
The nature of the expense has also changed with the recognition of a depreciation charge to unwind the ROU and an interest expense on the lease liabilities rather than a lease rental expense as in previous years. Lease rental payments are now reflected in the cash flow statement under financing activities as and when they are paid.
Capital management
At 30 September 2020 the cash balances of the Group totalled GBP36.0 million (2019: GBP20.7 million). Included within this balance was GBP1.7 million (2019: GBP1.3 million) in trading account cash balances. The trading account cash balance relates to the designated bank accounts that are used for the settlement of trades in the open-ended funds operated by Premier Portfolio Managers Limited. The Group has no external bank debt.
Dividends
Dividends totalling GBP11.7 million were paid in the year (2019: GBP10.6 million). See note 16 for further details.
During the year the Board moved to the adoption of an interim and final dividend distribution frequency, aligning it with the Group's reporting calendar.
The Board is recommending a final dividend payment of 4.5p per share bringing the total dividend payment for 2020 to 7.0p per share (2019: 10.5p). If approved by the shareholders at the Annual General Meeting on 3 February 2021, the dividend will be paid on 12 February 2021 to shareholders on the register at the close of business on 15 January 2021.
The Group seeks to maintain a dividend policy that targets an ordinary dividend payout of approximately 50% to 65% of profit after tax, adjusted for exceptional costs, share-based payments and amortisation.
Shareholders' equity
Total shareholders' equity as at 30 September 2020 was GBP129.7 million (2019: GBP45.3 million).
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 2023. The Directors' assessment has been made with reference to the Group's current position and strategy, the Board's appetite for risk, the Group's financial forecasts, and the Group's principal risks and how these are managed, as detailed in the Strategic Report.
The Directors have also reviewed and examined the financial stress testing inherent in the Internal Capital Adequacy Assessment Process ('ICAAP').
The 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 key assumptions used in preparing the forecast, both individually and combined, in addition to scenario analysis that is performed as part of the ICAAP process, which is formally approved by the Board.
Piers Harrison
Chief Financial Officer
25 November 2020
Alternative Performance Measures ('APMs')
The Directors use the following APMs in evaluating the performance of the Group and for planning, reporting and incentive-setting.
Aligned with
Used in management shareholder Strategic
Unit appraisals returns KPI
Adjusted profit before tax (described in
2019 as 'underlying earnings before tax')
Definition: Profit before taxation, amortisation,
share-based payments, merger related costs
and exceptional costs.
Purpose: Except for the above costs, this
encompasses all operating expenses in the
business, including fixed and variable
staff cash costs. Provides a proxy for
cash generated and is the key measure of
profitability for management decision making. GBP -- -- --
---- ------------------ ------------ ---------
Adjusted profit margin
Definition: Adjusted profit before tax
divided by net revenue.
Purpose: Used to determine the efficiency
of operations and the ratio of operating
expenses to revenues generated in the year. % -- -- --
---- ------------------ ------------ ---------
Cash generated from operations
Definition: Profit before taxation adjusted
for the effects of transactions of a non-cash
nature, any deferrals or accruals and items
of income or expense associated with investing
or financing cash flows.
Purpose: Provides a measure in demonstrating
the amount of cash generated from the Group's
ongoing regular business operations. GBP --
---- ------------------ ------------ ---------
AuM
Definition: The value of assets that are
managed by the Group.
Purpose: Management fee income is calculated
based on the level of AuM managed. The
AuM managed by the Group is used to measure
the Group's relative size against the industry
peer group. GBP -- -- --
---- ------------------ ------------ ---------
Net management fee
Definition: The net revenue of the Group.
Calculated as gross management fee income,
less the cost of fund accounting, external
ACDs and any enhanced fee arrangements.
Purpose: Provides a consistent measure
of the profitability of the Group and its
ability to grow and retain clients, after
removing amounts paid to third parties. GBP --
---- ------------------ ------------ ---------
Net management fee margin
Definition: Net management fees divided
by average AuM.
Purpose: A measure used to demonstrate
the blended fee rate earned from the AuM
managed by the Group. A basis point ('bps')
represents one hundredth of a per cent,
this measure is used within the asset management
sector and provides comparability of the
Group's net revenue generation. bps -- --
---- ------------------ ------------ ---------
Adjusted earnings per share (basic)
Definition: Profit after tax excluding
amortisation, share-based payments, merger
related costs and exceptional costs, divided
by the weighted average number of shares
in issue in the year.
Purpose: Provides a clear measure to shareholders
of the profitability of the Group from
its underlying operations. The exclusion
of amortisation, share-based payments,
merger related costs and exceptional items
provides a consistent basis for comparability
of results year on year. p -- -- --
---- ------------------ ------------ ---------
Financial Statements
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2020
2020 2019
Notes GBP000 GBP000
------------------------------------ ----- -------- --------
Revenue 3 77,721 52,821
Fees and commission expenses (10,948) (4,235)
------------------------------------ ----- -------- --------
Net revenue 66,773 48,586
Administration costs (44,408) (29,617)
Share-based payment expense 15 (3,581) (2,551)
Amortisation of intangible assets 9 (4,517) (1,522)
Merger related costs 4 (4,467) -
Exceptional items 4 (216) (1,178)
------------------------------------ ----- -------- --------
Operating profit 9,584 13,718
Finance revenue 20 -
------------------------------------ ----- -------- --------
Profit for the year before taxation 9,604 13,718
Taxation 7 (3,714) (2,696)
------------------------------------ ----- -------- --------
Profit for the year after taxation
attributable to equity holders
of the parent 5,890 11,022
------------------------------------ ----- -------- --------
pence pence
--------------------------- ----- -----
Basic earnings per share 8 4.14 10.82
--------------------------- ----- -----
Diluted earnings per share 8 4.00 10.44
--------------------------- ----- -----
No other comprehensive income was recognised during 2020 or 2019. Therefore, the profit for the year is also the total
comprehensive income.
All of the amounts relate to continuing operations.
Consolidated Statement of Changes in Equity
for the year ended 30 September 2020
Own shares
held Capital
Share Merger by an redemption Retained
capital reserve EBT reserve earnings Total
Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------- ----- -------- -------- ---------- ----------- --------- --------
At 1 October 2018 50 - (4,047) 4,532 44,733 45,268
--------------------------------- ----- -------- -------- ---------- ----------- --------- --------
Profit for the year - - - - 11,022 11,022
Purchase of own shares held by
an EBT - - (2,897) - - (2,897)
Share-based payment expense - - - - 2,551 2,551
Equity dividends paid - - - - (10,618) (10,618)
--------------------------------- ----- -------- -------- ---------- ----------- --------- --------
At 30 September 2019 50 - (6,944) 4,532 47,688 45,326
Profit for the year - - - - 5,890 5,890
Issue of share capital on merger 9 10 94,312 - - - 94,322
Purchase of own shares held by
an EBT - - (2,669) - - (2,669)
Shares issued to EBT as part
of the merger - - (5,178) - - (5,178)
Exercise of options - - 142 - (15) 127
Share-based payment expense 15 - - - - 3,581 3,581
Deferred tax direct to equity - - - - (6) (6)
Equity dividends paid 16 - - - - (11,699) (11,699)
--------------------------------- ----- -------- -------- ---------- ----------- --------- --------
At 30 September 2020 60 94,312 (14,649) 4,532 45,439 129,694
--------------------------------- ----- -------- -------- ---------- ----------- --------- --------
Consolidated Statement of Financial Position
as at 30 September 2020
2020 2019
Notes GBP000 GBP000
---------------------------------------------- ----- -------- --------
Non-current assets
Goodwill 9 70,948 15,597
Intangible assets 9 32,234 11,957
Other investments 100 -
Property and equipment 2,385 874
Right-of-use assets 2,414 -
Deferred tax asset 7 1,599 1,111
Trade and other receivables 10 367 -
---------------------------------------------- ----- -------- --------
110,047 29,539
---------------------------------------------- ----- -------- --------
Current assets
Financial assets at fair value through profit
and loss 2,697 827
Trade and other receivables 10 44,409 49,038
Cash and cash equivalents 11 35,992 20,689
---------------------------------------------- ----- -------- --------
83,098 70,554
---------------------------------------------- ----- -------- --------
Total assets 193,145 100,093
---------------------------------------------- ----- -------- --------
Current liabilities
Trade and other payables 12 (53,046) (52,883)
Current tax liabilities (2,948) (1,884)
Lease liabilities (857) -
---------------------------------------------- ----- -------- --------
(56,851) (54,767)
---------------------------------------------- ----- -------- --------
Non-current liabilities
Provisions 13 (389) -
Deferred tax liability 7 (4,152) -
Lease liabilities (2,059) -
---------------------------------------------- ----- -------- --------
Total liabilities (63,451) (54,767)
---------------------------------------------- ----- -------- --------
Net assets 129,694 45,326
---------------------------------------------- ----- -------- --------
Equity
Share capital 14 60 50
Merger reserve 9 94,312 -
Own shares held by an Employee Benefit Trust (14,649) (6,944)
Capital redemption reserve 4,532 4,532
Retained earnings 45,439 47,688
---------------------------------------------- ----- -------- --------
Total equity shareholders' funds 129,694 45,326
---------------------------------------------- ----- -------- --------
Consolidated Statement of Cash Flows
for the year ended 30 September 2020
2020 2019
Notes GBP000 GBP000
Cash flows from operating activities:
----------------------------------------------------- ----- -------- --------
Profit for the year 5,890 11,022
Adjustments to reconcile profit to net cash
flow from operating activities:
Tax on continuing operations 7 3,714 2,696
Finance revenue (20) -
Interest payable on leases 93 -
Depreciation - fixed assets 617 224
Depreciation - leases 689 -
Gain on sale of financial asset at fair value
through profit and loss (13) (19)
Loss/(gain) on revaluation of financial assets
at fair value through profit and loss 6 (7)
Loss on disposal of property and equipment - 327
Increase in employee benefit liability 1,182 - Purchase of plan assets (held for employee benefit liability) (1,182) - Amortisation of intangible assets 9 4,517 1,522 Share-based payment expense 15 3,581 2,551 Decrease in trade and other receivables 8,479 4,671 Decrease in trade and other payables (19,533) (5,058) Cash generated from operations 8,020 17,929 Income tax paid (3,226) (4,182) ----------------------------------------------------- ----- -------- -------- Net cash flow from operating activities 4,794 13,747 ----------------------------------------------------- ----- -------- -------- Cash flows from investing activities: Interest received 20 - Acquisition of assets at fair value through profit and loss (12,166) (4,229) Proceeds from disposal of assets at fair value through profit and loss 10,304 4,338 Purchase of property and equipment (138) (426) Cash acquired on merger 9 27,296 - ----------------------------------------------------- ----- -------- -------- Net cash flow from investing activities 25,316 (317) ----------------------------------------------------- ----- -------- -------- Cash flows from financing activities: Lease payments (566) - Exercise of options 127 - Purchase of own shares held by an EBT (2,669) (2,897) Equity dividends paid (11,699) (10,618) Net cash flow from financing activities (14,807) (13,515) ----------------------------------------------------- ----- -------- -------- Increase/(decrease) in cash and cash equivalents 15,303 (85) Cash and cash equivalents at the beginning of the year 20,689 20,774 ----------------------------------------------------- ----- -------- -------- Cash and cash equivalents at the end of the year 11 35,992 20,689 ----------------------------------------------------- ----- -------- --------
Selected notes to the Consolidated Financial Statements
For the year ended 30 September 2020
1. Authorisation of financial statements and statement of compliance with IFRS
The Consolidated Financial Statements of Premier Miton Group plc (the 'Company') and its subsidiaries (the 'Group') for the year ended 30 September 2020 were authorised for issue by the Board of Directors on 25 November 2020 and the Consolidated Statement of Financial Position was signed on the Board's behalf by Mike O'Shea and Piers Harrison. The Company is a public limited company incorporated and domiciled in England and Wales. The Company's ordinary shares are traded on AIM.
This financial information does not constitute statutory accounts but has been extracted from the statutory accounts for the years ended 30 September 2020 and 30 September 2019 on which unqualified audit reports, which did not contain a statement under s498(2) or s498(3) of the Companies Acts 2006, have been issued. The statutory accounts for the year ended 30 September 2019 were posted to shareholders on 16 December 2019 and delivered to the Registrar on 6 January 2020. The results announcement has been approved for issue by the Board of Directors on 25 November 2020.
Copies of the Annual Report and Accounts will be posted to shareholders and published on the Group's website premiermiton.com on 14 December 2020.
The Company's Annual General Meeting which will be held at 10.00am on 3 February 2021 at the registered office of the Company, Eastgate Court, High Street, Guildford, Surrey, GU1 3DE.
2. Accounting policies
Basis of preparation
The Consolidated Group Financial Statements for the year ended 30 September 2020 have been prepared in accordance with
IFRS. The Consolidated Financial Statements have been prepared on a going concern basis, under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities measured at fair value through profit or loss. Costs are expensed as incurred. The Consolidated Financial Statements are presented in Sterling and all values rounded to the nearest thousand pounds (GBP000).
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. This assessment has been made after considering the impact of COVID-19 on the business. The Directors note that the Group has no external borrowings and maintains significant levels of cash reserves.
This results announcement contains certain forward-looking statements with respect to the financial condition, results of operations and businesses and plans for Premier Miton Group plc. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that have not yet occurred. There are several different factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Nothing in this statement should be construed as a profit forecast or be relied upon as a guide to future performance.
Segmental 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.
3. Revenue
Revenue recognised in the Consolidated Statement of Comprehensive Income is analysed as follows:
2020 2019
GBP000 GBP000
---------------- ------- -------
Management fees 77,506 52,624
Commissions 7 16
Other income 208 181
Total Revenue 77,721 52,821
---------------- ------- -------
All revenue is derived from the UK and Channel Islands.
4. Exceptional items and merger related costs
Recognised in arriving at operating profit from continuing operations:
2020 2019
GBP000 GBP000
----------------------------------- ------- -------
Fund development costs 52 -
Staff redundancy costs - 44
Component of FCA FSCS levy - 397
Connect development costs 164 410
Office refurbishment PPE write off - 327
----------------------------------- ------- -------
Total exceptional costs 216 1,178
----------------------------------- ------- -------
Merger related costs 2,560 -
Merger employment restructuring costs 1,907 -
Total merger related costs 4,467 -
-------------------------------------- -----
Exceptional items are those items of income and expense, which are considered not to be incurred in the normal course of business of the Group's operations, and because of the nature of the events giving rise to them, merit separate presentation to allow shareholders to understand better the elements of financial performance in the year.
FCA FSCS levy costs in the year totalling GBP1,089,653 have been presented within administration expenses, of this cost, GBP318,627 related to the former Miton regulated entities. In 2019, the comparative costs were presented as exceptional as a result of rising significantly due to the increased levels of compensation paid by the FSCS and the inclusion of an amount invoiced in 2019 by the FCA but related to the previous year. Connect development costs relate to external consultants who have been deployed on the testing of the Connect platform during the development stage prior to launch.
Merger related costs in the year totalling GBP2,560,242 represented legal and professional fees associated with the merger with Miton Group plc of GBP1,687,116 and merger integration costs of GBP873,126.
Employment restructuring costs arising as a result of the merger totalled GBP1,906,618 of which GBP1,900,618 related to redundancy costs and GBP6,000 of associated legal costs.
5. Operating profit
(a) Operating profit is stated after charging:
Notes 2020 2019
GBP000 GBP000
---------------------------------- ----- ------- -------
Auditor's remuneration 5(b) 511 485
Staff costs 6 29,978 18,234
Operating lease payments - rent - 394
Interest - leases 93 -
Amortisation of intangible assets 4,517 1,522
Exceptional items 4 216 1,178
Merger related costs 4 4,467 -
Depreciation - fixed assets 617 224
Depreciation - leases 689 -
---------------------------------- ----- ------- -------
(b) Auditor's remuneration:
The remuneration of the auditors is analysed as follows:
2020 2019
GBP000 GBP000
----------------------------------------------------- ------- -------
Audit of Company 75 52
Audit of subsidiaries 188 69
------------------------------------------------------ ------- -------
Total audit 263 121
------------------------------------------------------ ------- -------
Audit-related assurance services 95 101
------------------------------------------------------ ------- -------
- Tax compliance services 38 40
- Services related to corporate finance transactions
not covered above - 181
- Other non-audit services not covered above 115 42
------------------------------------------------------ ------- -------
Total other non-audit services 153 263
------------------------------------------------------ ------- -------
Total non-audit services 248 364
------------------------------------------------------ ------- -------
Total fees 511 485
------------------------------------------------------ ------- -------
6. Staff costs
Staff costs, including Directors, during the year were as follows:
2020 2019
GBP000 GBP000
------------------------------------------ ------- -------
Salaries, bonus and performance fee share 22,471 13,387
Social security costs 3,085 1,722
Share-based payments 3,581 2,551
Other pension costs 841 574
------------------------------------------- ------- -------
Total staff costs 29,978 18,234
------------------------------------------- ------- -------
The average monthly number of employees of the Group during the year was made up as follows:
2020 2019
number number
---------------------- ------- -------
Directors 7 6
Investment management 44 29
Sales and marketing 38 29
Finance and systems 13 7
Legal and compliance 11 7
Administration 37 30
----------------------- ------- -------
Total employees 150 108
----------------------- ------- -------
7. Taxation
(a) Tax recognised in the Consolidated Statement of Comprehensive Income
2020 2019
GBP000 GBP000
--------------------------------------------------------- ------- -------
Current income tax:
UK corporation tax 4,326 3,025
--------------------------------------------------------- ------- -------
Current income tax charge 4,326 3,025
--------------------------------------------------------- ------- -------
Adjustments in respect of prior periods (82) 238
--------------------------------------------------------- ------- -------
Total current income tax 4,244 3,263
--------------------------------------------------------- ------- -------
Deferred tax:
Origination and reversal of temporary differences (536) 37
Adjustments in respect of prior periods 6 (604)
--------------------------------------------------------- ------- -------
Total deferred tax income (530) (567)
--------------------------------------------------------- ------- -------
Income tax charge reported in the Consolidated Statement
of Comprehensive Income 3,714 2,696
--------------------------------------------------------- ------- -------
(b) Reconciliation of the total income tax charge
The tax expense in the Consolidated Statement of Comprehensive Income for the year is higher than the standard rate of corporation tax in the UK of 19% (2019: 19%). The differences are reconciled below:
2020 2019
GBP000 GBP000
------------------------------------------------------ ------- -------
Profit before taxation 9,604 13,718
------------------------------------------------------ ------- -------
Tax calculated at UK standard rate of corporation tax
of 19% (2019: 19%): 1,824 2,607
- Other differences 69 -
- Share-based payments 906 178
- Expenses not deductible for tax purposes 324 13
- Amortisation not deductible 252 255
- Income not subject to UK tax (23) (28)
- Change in tax rate 395 (40)
- Tax relief on vested options (3) -
- Fixed asset differences 46 77
- Adjustments in respect of prior periods (76) (366)
------------------------------------------------------ ------- -------
Income tax charge in the Consolidated Statement of
Comprehensive Income 3,714 2,696
------------------------------------------------------ ------- -------
(c) Change in corporation tax rate
On 11 March 2020 it was announced (and substantively enacted on 17 March 2020) that the UK corporation tax rate would remain at 19% and not reduce to 17% (the previously enacted rate) from 1 April 2020. The deferred tax balances included within the Consolidated Financial Statements have been calculated with reference to the rate of 19%, as required under IFRS.
(d) Deferred tax
The deferred tax included in the Group's Consolidated Statement of Financial Position is as follows:
2020 2019
GBP000 GBP000
----------------------------------------------------- ------- -------
Deferred tax asset:
----------------------------------------------------- ------- -------
- Fixed asset temporary differences (236) (110)
- Accrued bonuses 782 447
- Share-based payments 491 689
- Losses and other deductions(1) 562 85
Deferred tax disclosed on the Consolidated Statement
of Financial Position 1,599 1,111
----------------------------------------------------- ------- -------
1 Deferred tax assets have been recognised in respect of this item because it is probable that future taxable profits will be available against which the Group can use therefrom
2020 2019
GBP000 GBP000
----------------------------------------------------- ------- -------
Deferred tax liability:
----------------------------------------------------- ------- -------
- Arising on acquired intangible assets 4,119 -
- Fixed asset temporary differences 33 -
Deferred tax disclosed on the Consolidated Statement
of Financial Position 4,152 -
----------------------------------------------------- ------- -------
2020 2019
GBP000 GBP000
------------------------------------------------------------ ------- -------
Deferred tax in the Consolidated Statement of Comprehensive
Income:
------------------------------------------------------------ ------- -------
- Origination and reversal of temporary differences (536) 37
- Adjustments in respect of prior periods 6 (604)
------------------------------------------------------------ ------- -------
Deferred tax (income) (530) (567)
------------------------------------------------------------ ------- -------
2020 2019
GBP000 GBP000
------------------------------------------ ------- -------
Unprovided deferred tax asset:
------------------------------------------ ------- -------
- Non trade loan relationship losses 1,764 1,764
- Excess management expenses 46 46
- Non trade intangible fixed asset losses 357 357
------------------------------------------ ------- -------
Unprovided deferred tax asset 2,167 2,167
------------------------------------------ ------- -------
8. Earnings per share
Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary equity shareholders of the Parent Company by the weighted average number of ordinary shares outstanding at the year end.
The weighted average of issued ordinary share capital of the Company is reduced by the weighted average number of shares held by the Group's EBTs. Dividend waivers are in place over shares held in the Group's EBTs.
In calculating diluted earnings per share, IAS 33 'Earnings Per Share' requires that the profit is divided by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares during the period.
(a) Reported earnings per share
Reported basic and diluted earnings per share has been calculated as follows:
2020 2019
------------------------------------------------------------------ ------- -------
Profit attributable to ordinary equity shareholders of the Parent
Company for basic earnings (GBP000) 5,890 11,022
Number Number
000 000
------------------------------------------------------------------ ------- -------
Issued ordinary shares at 1 October 105,801 105,801
- Effect of own shares held by an EBT (9,220) (3,891)
- Effect of shares issued 45,705 -
------------------------------------------------------------------ ------- -------
Weighted average shares in issue 142,286 101,910
------------------------------------------------------------------ ------- -------
- Effect of movement in share options 5,056 3,675
------------------------------------------------------------------ ------- -------
Weighted average shares in issue - diluted 147,342 105,585
------------------------------------------------------------------ ------- -------
Basic earnings per share (pence) 4.14 10.82
Diluted earnings per share (pence) 4.00 10.44
------------------------------------------------------------------ ------- -------
(b) Adjusted earnings per share
Adjusted earnings per share is based on adjusted profit after tax, where adjusted profit is stated after charging interest but before amortisation, share-based payments, merger related costs and exceptional items.
Adjusted Profit for calculating adjusted earnings per share:
2020 2019
GBP000 GBP000
------------------------------------------------------------------- ------- -------
Profit before taxation 9,604 13,718
Add back:
- Share-based payment expense 3,581 2,551
- Amortisation of intangible assets 4,517 1,522
- Merger related costs 4,467 -
- Exceptional items 216 1,178
------------------------------------------------------------------- ------- -------
Adjusted profit before tax 22,385 18,969
------------------------------------------------------------------- ------- -------
Taxation:
------------------------------------------------------------------- ------- -------
- Tax in the Consolidated Statement of Comprehensive Income (3,714) (2,696)
------------------------------------------------------------------- ------- -------
- Tax effects of adjustments (936) (886)
------------------------------------------------------------------- ------- -------
Adjusted profit after tax for the calculation of adjusted earnings
per share 17,735 15,387
------------------------------------------------------------------- ------- -------
Adjusted earnings per share was as follows using the number of shares calculated at note 8(a):
2020 2019
(pence) (pence)
------------------------------ -------- --------
Adjusted earnings per share 12.46 15.10
Diluted adjusted earnings per
share 12.04 14.57
------------------------------ -------- --------
9. 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 2019 22,576 56,231 78,807
Additions 55,351 24,794 80,145
----------------------------- -------- ------- -------
At 30 September 2020 77,927 81,025 158,952
----------------------------- -------- ------- -------
Amortisation and impairment:
At 1 October 2019 6,979 44,274 51,253
Amortisation during the year - 4,517 4,517
At 30 September 2020 6,979 48,791 55,770
----------------------------- -------- ------- -------
Carrying amount:
----------------------------- -------- ------- -------
At 30 September 2020 70,948 32,234 103,182
----------------------------- -------- ------- -------
At 30 September 2019 15,597 11,957 27,554
----------------------------- -------- ------- -------
As a result of the all-share merger with Miton Group plc, which was effected by way of a scheme of arrangement, the shareholders of Miton Group plc received 0.30186 of a share in Premier Miton Group plc on 15 November 2019 satisfied through newly issued shares. The additions to goodwill and intangible assets in the year relate solely to the acquisition of Miton Group plc.
Miton Group plc was an AIM quoted fund management group specialising in equity and multi-asset investing. See page 18 for further detail on the merger rationale. The acquired business contributed net revenues of GBP12,315,381 and a net profit after taxation of GBP2,672,573 to the Group for the period from 15 November 2019 to 30 September 2020. The contribution to the Group's net profit is after charging GBP1,118,011 of merger related costs incurred since acquisition. At the acquisition date the consideration and net assets acquired from Miton Group plc were as follows:
GBP000
------------------------------------------------------- --------
Fair value of equity consideration 94,322
------------------------------------------------------- --------
Net assets acquired:
- Intangible assets 24,794
- Deferred tax liability on intangible assets acquired (4,213)
- Investments 100
- Cash and cash equivalents 27,296
- Property, plant and equipment 491
- Trade and other receivables 5,740
- Miton Group plc shares held by EBT 5,178
- Trade and other payables (19,741)
- Provisions (389)
- Right-of-use assets (net) (285)
------------------------------------------------------- --------
Net assets acquired 38,971
Goodwill 55,351
------------------------------------------------------- --------
The fair value of the equity consideration has been calculated by reference to the number of shares issued and the share price at the completion date. The purchase consideration in the table above is grossed up for the value of the EBT shares issued. Intangible assets acquired in the business combination related to the investment management agreements between Miton and the funds to which Miton was the investment manager and the value arising from the underlying client relationships. Acquisition accounting principles under IFRS were applied.
Following initial recognition disclosed in the Interim Report 2020, the fair value of the intangible assets recognised on the business combination have been reassessed resulting in an increase of GBP0.6 million in intangible assets and a reduction in the goodwill balance of GBP0.5 million.
Goodwill arising on the acquisition of Miton is mainly attributable to the skills and technical talent of Miton's workforce, expected cash flows from new customers and significant synergies which are expected to be realised from integrating the company.
Impairment tests for goodwill and intangible assets
The Group has determined that it has a single CGU in relation to asset management for the purposes of assessing the carrying value of goodwill.
In line with IAS 36, Impairment of Assets, a full impairment review was undertaken as at 30 September 2020. The recoverable amount within the fund management CGU was determined by assessing the value-in-use using long-term cash flow projections for the CGU.
Data for the explicit forecast period of 2021-2025 is based on the 2021 budget and forecasts for 2022-2025. Increases in operating costs have been taken into account and include assumed new business volumes. Cash flows beyond the explicit forecast period are extrapolated using a long-term terminal growth rate of 3.0% (2019: 2.0%). To arrive at the net present value, cash flows have been discounted using a discount rate of 13.0% (2019: 12.35%).
The overall value-in-use was greater than the carrying value and hence no impairment charge has been recognised. The key assumptions used in determining this amount were expected aggregated fund flows and the discount rate.
Sensitivity analysis
Management have performed a sensitivity analysis as of 30 September 2020 and established that an increase in the discount rate to 25.25% would be required before an impairment of goodwill and other intangible assets would be considered necessary. In response to the market volatility arising from COVID-19, an impairment assessment was completed during the year using materially lower levels of AuM. Due to the cash generative nature of the business, no impairment was identified at these lower levels of AuM.
The compound annual growth rate for expected fund flows over the forecast period is 7.0% and would need to reduce to -4.5% per annum for the estimated recoverable amount to equal the carrying value.
Other intangible assets
Investment management contracts purchased by the Group are capitalised as other intangible assets and are amortised over periods ranging from seven to 20 years depending on the nature of the assets purchased. These finite life intangible assets were assessed for indicators of impairment by comparing AuM levels at the year end with those on the acquisition date. Additionally, both internal and external factors affecting these assets were considered. No indicators of impairment were noted.
The largest of the intangible assets was in relation to the merger with Miton Group plc with a carrying value of GBP21,676,510 and a remaining amortisation period of six years (2019: 2007 business combination with a carrying value of GBP11,878,607 and a remaining amortisation period of nine years).
10. Trade and other receivables
2020 2019
Current GBP000 GBP000
---------------------------------------------- ------- -------
Due from trustees/investors for open end fund
redemptions/sales 34,491 41,753
Other trade debtors 2,566 46
Accrued income 3,549 4,356
Prepayments 2,487 2,560
Other receivables 1,316 323
---------------------------------------------- ------- -------
Total trade and other receivables 44,409 49,038
---------------------------------------------- ------- -------
Non-current
---------------------------------------------- ------- -------
Other receivables 367 -
---------------------------------------------- ------- -------
Trade and other receivables are all current and any fair value difference is not material. Trade and other receivables are considered past due once they have passed their contracted due date.
Non-current other receivables represent deferred compensation awards with maturities greater than 12 months after Consolidated Statement of Financial Position date. Deferred compensation awards are released in accordance with the employment period to which they relate.
11. Cash and cash equivalents
2020 2019
GBP000 GBP000
-------------------------------- ------- -------
Cash at bank and in hand 35,911 20,638
Cash held in EBTs 81 51
-------------------------------- ------- -------
Total cash and cash equivalents 35,992 20,689
-------------------------------- ------- -------
12. Trade and other payables
2020 2019
GBP000 GBP000
------------------------------------------------------------------ ------- -------
Due to trustees/investors for open end fund creations/redemptions 34,488 41,751
Other trade payables 996 942
Other tax and social security payable 1,929 1,253
Accruals 14,398 8,265
Pension contributions 20 13
Other payables 1,215 659
Total trade and other payables 53,046 52,883
------------------------------------------------------------------ ------- -------
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.
13. Provisions
GBP000
---------------------------------------- ------
At 1 October 2019 -
Arising on merger 389
---------------------------------------- ------
At 30 September 2020 389
---------------------------------------- ------
Current -
Non-current 389
---------------------------------------- ------
389
---------------------------------------- ------
At 1 October 2018 and 30 September 2019 -
---------------------------------------- ------
Provisions primarily relate to dilapidations for the offices at 6th Floor, Paternoster House, London, and the Group's disaster recovery office in Reading. The lease on Paternoster House runs to 28 November 2023 and the provision for dilapidations on this office has been disclosed as non-current. This provision is based on prices quoted at the time of the lease being taken on.
14. Share capital
Ordinary
shares 0.02 Deferred
Allotted, called up and fully paid: pence each shares
Number of shares Number Number
---------------------------------------- ------------ --------
At 1 October 2019 105,801,310 1
Issued on merger 52,111,725 -
---------------------------------------- ------------ --------
At 30 September 2020 157,913,035 1
---------------------------------------- ------------ --------
At 1 October 2018 and 30 September 2019 105,801,310 1
---------------------------------------- ------------ --------
Ordinary shares Deferred
Allotted, called up and fully paid: 0.02 pence each shares Total
Value of shares GBP000 GBP000 GBP000
---------------------------------------- ---------------- -------- -------
At 1 October 2019 21 29 50
Issued on merger 10 - 10
---------------------------------------- ---------------- -------- -------
At 30 September 2020 31 29 60
---------------------------------------- ---------------- -------- -------
At 1 October 2018 and 30 September 2019 21 29 50
---------------------------------------- ---------------- -------- -------
The deferred share carries no voting rights and no right to receive a dividend.
On 14 November 2019 the Company completed an all-share merger with Miton Group plc. The Company issued 52,111,725 new ordinary shares ranked pari passu in all respects with the Company's existing shares in issue.
15. Share-based payments
The total charge to the Consolidated Statement of Comprehensive Income for share-based payments in respect of employee services received during the year to 30 September 2020 was GBP3,581,000 (2019: GBP2,551,000), of which GBP3,478,000 related to nil cost contingent share rights.
16. Dividends declared and paid
2020 2019
GBP000 GBP000
---------------------------------------------------- ------- -------
Equity dividends on ordinary shares:
- First interim: 1.75 (2019: 1.7) pence per share 2,591 1,743
- Second interim: 0.75 (2019: 1.7) pence per share 1,110 1,720
- Third interim: nil (2019: 1.7) pence per share - 1,720
---------------------------------------------------- ------- -------
- Final interim dividend for 2019 (2019: 2018 final
interim) 7,998 5,435
---------------------------------------------------- ------- -------
Dividends paid 11,699 10,618
---------------------------------------------------- ------- -------
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(END) Dow Jones Newswires
November 26, 2020 02:00 ET (07:00 GMT)
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