Source - LSE Regulatory
RNS Number : 7479U
Premier Miton Group PLC
07 December 2021
 

7 December 2021

 

PREMIER MITON GROUP PLC

FULL YEAR RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2021

 

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 2021.

 

Highlights 

 

·      £13.9 billion closing Assets under Management 4 ('AuM') (2020: £10.6 billion) - up 31%

·      £14.0 billion closing AuM as at 31 October 2021 (unaudited)

·      Net inflows of £830 million for the year (2020: £619 million outflow)

·    Strong investment performance with 83% of funds in the first or second quartile of their respective sectors since launch or fund manager tenure (2020: 65%)

·      Adjusted profit before tax 1,4 of £28.6 million (2020: £22.4 million) - up 28%

·      Adjusted earnings per share 2,4 of 16.46 pence (2020: 12.46 pence) - up 32%

·      Profit before tax 3 of £17.5 million (2020: £9.6 million) - up 82%

·      Cash balances were £47.7 million at 30 September 2021 (2020: £36.0 million) - up 32%

·      Final proposed dividend of 6.3 pence per share (2020: 4.5 pence per share) - up 40%

·      Total proposed dividend for the year of 10.0 pence per share (2020: 7.0 pence per share) - up 43%

·      Three investment teams hired and three new funds launched in the year

 

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 £1.4 million during the year (2020: £4.5 million).

(4)  These are Alternative Performance Measures ('APMs').

 

 

Mike O'Shea, Chief Executive Officer of Premier Miton Group, commented:

"I am pleased to deliver a strong set of results for the Group.  We have achieved net inflows of £830 million in 2021, with all four quarters seeing positive flows. In terms of investment performance, 83% of our funds are outperforming since manager tenure. From a financial point of view, we have a healthy level of cash on our balance sheet and our AuM is at an all-time high.

 

"We have a diversified business and a strong, broad product range which we have continued to develop over the year, including the launch of the Premier Miton European Sustainable Leaders Fund, managed by our highly successful European equities team, as well as the Premier Miton Global Smaller Companies Fund and Premier Miton European Equity Income Fund managed by our new investment teams.  Our ability to deliver such good results is entirely down to the hard work and diligence of the talented people within our Group. We would like to thank them for their efforts which have allowed us to maintain the highest levels of business continuity and investment excellence over the period.

 

"As a business we have a clear medium-term goal of growing our assets under management to £20bn and beyond. With our talented investment teams, excellent long-term performance, and strong distribution capabilities we can see how this is achievable. As part of this growth ambition, we will continue to develop our successful profile in the UK wealth management and independent financial advisory space as well as exploring opportunities to grow our presence in the UK institutional market.

 

"We have continued to make significant progress with the integration of ESG into our investment processes across the firm alongside the launch of two more dedicated responsible investing funds with more planned in the future. This is a very important focus for the Group, and we are determined to make this a key area of success for Premier Miton.

 

"Our key strengths of investment excellence, relevant products, powerful distribution, financial position, operating platform, strong culture, and acting responsibly as we move towards a more sustainable future, support our belief that Premier Miton is well positioned for future growth."

 

ENDS

For further information, please contact:

 

Premier Miton Group plc

Mike O'Shea, Chief Executive Officer

 

 

01483 306 090

 

Investec Bank plc (Nominated Adviser and Broker)

Bruce Garrow / Ben Griffiths / Virginia Bull / Harry Hargreaves

 

 

 

020 7260 1000

 

Edelman Smithfield Consultants (Financial PR)

John Kiely / Latika Shah

 

 

 

07785 275665/

07950 671948

 

 

 

Notes to editors:

Premier Miton Investors is focused on delivering good investment outcomes for investors through relevant products and active management across its range of investment strategies, which include equity, fixed income, multi-asset and absolute return.

 

LEI Number: 213800LK2M4CLJ4H2V85

 

 

Chairman's Statement

 

In February, I was delighted to be appointed Chairman of the Group and I am pleased to introduce my first Annual Results statement.

 

I am happy to report that under Mike O'Shea's leadership our business achieved strong asset growth and demonstrated its clear purpose in 2021. Global markets have recovered much of the falls experienced at the start of the wretched pandemic, contributing well to our results. Many of our funds are exhibiting excellent performance metrics.

 

We are a leading UK based active investment management business and seek to deliver durable returns for our clients over the medium to longer term. Our purpose is to manage our clients' investments actively and responsibly for a better financial future. We know that good investing can make a huge positive difference to individual lives and understanding this connection and the responsibilities that go with it is the bedrock of our culture.

 

Assets under Management ('AuM')

At 30 September 2021 the Group had AuM of £13.9 billion, an increase of 31% on the prior year end. This figure reflects a return to positive inflows for the Group and continued outperformance across our fund range. AuM at the year-end is split between equity funds 59%, multi-asset funds 28%, fixed income funds 7% and investment trusts 6%. Average AuM rose by 26%, to £12.7 billion, up from £10.1 billion.

 

Investment performance

Investment performance remains strong with 83% of funds in the first or second quartile of their respective sectors since launch or fund manager tenure (2020: 65%). Our culture places our customers at the centre of our business model. We believe that continued good investment performance over the medium to longer term is core to our success and aligns clearly with shareholders' interests.

 

Results & Dividend

In 2021 the business performed strongly, driven largely by the rise in AuM. Our profit before tax was £17.5 million, representing an increase of 82% on the comparative year. The Group aims to increase profitability over time by growing AuM through the provision of value-for-money funds and investments that deliver attractive returns. We seek to charge a fair fee for our services and are rigorous in managing our cost base.

 

We work hard in the interests of our shareholders, alongside our other stakeholders, and thank them for their continuing support. The Board does what it can reasonably and prudently do to grow shareholder value and to secure attractive returns in all ways, including through our share price performance.

 

Dividends matter to our shareholders and the Board is recommending a final dividend for 2021 of 6.3p per share. This brings the total proposed dividend for 2021 to 10.0p per share, representing an increase of 43% on 2020. If approved by the shareholders at the Annual General Meeting on 2 February 2022, the final dividend of 6.3p per share will be paid on 11 February 2022 to shareholders on the register at the close of business on 14 January 2022. The Group seeks to grow the dividend over time reflecting increasing profitability.

 

We also recognise that retaining a healthy level of profit on the balance sheet is important for business confidence, stability, and to support initiatives which will contribute to shareholder value growth. The Directors' intention is therefore to maintain a strong capital position with enough resources to support the business to grow whilst taking a sensible long-term view. At 30 September 2021 the Group was robustly financed with no debt and cash balances of £47.7 million.

 

Strategic process

The savings and investment markets in the UK are large and growing, economically valuable and competitively dynamic. We are unashamedly an active manager of our funds and believe in the ability of our investment teams to add value over time. We have plenty of scope for growth in these markets and good investment performance and client diversity are critical to our future success.

 

We run highly active funds with concentrated portfolios that we believe will deliver for our clients over the long term. Inevitably, there will be periods when particular funds may be performing less well relative to peers. That is in the nature of the way we manage money. However, diversity in the range of the group's funds is a source of strategic strength and our portfolio of funds is valuable for our business and our shareholders.  At the same time, we regularly review the portfolio to see if there are areas for change and improvement.

 

Following the completion in the year of the operational aspects of the merger of Premier and Miton we have a platform that is well balanced, resilient and capable of supporting significant growth in AuM, and generating improving profit margins. Our primary focus is to build greater market share for our funds and investment strategies, yet we also keep a close watch on industry developments for strategic and tactical opportunities. A number of ideas are under consideration at any one time and these are vigorously pursued by our experienced and capable leadership group where we see favourable cost/benefit outcomes.

 

Environmental, Social & Governance ('ESG')

Developing our positioning on ESG matters is an ongoing opportunity and one on which we need to keep stepping up our efforts, in common with the broad fund management sector. Of course, along with our industry peers we want to play our part, both as stewards of investment capital managed actively, and as a corporate entity, recognising that our primary task is to deliver attractive investment returns from our diverse range of funds.

 

We have several initiatives in progress, including the launch of a new sustainable equity fund and increasing the coverage of our ESG data to support the integration of ESG factors alongside financial factors across our fund range. We are increasing our oversight of decisions on key company votes, such as shareholder and climate-related resolutions.

 

We were delighted to be awarded a B rating for our 2020 submission to the CDP disclosure system, designed to help manage environmental impacts. We joined the CDP as an investor and partnered with them on their 2021 non-disclosure initiative, encouraging other companies to complete the CDP climate assessment.

 

Culture & People

A healthy, positive and client-focused culture is crucial for the long-term success of our firm. Monitoring culture and shaping it as needed will be made easier by the return of our people to office working and thus being together. We are encouraging this across the business and believe it will be beneficial for everyone involved. Clearly, this may take some time and we should have flexibility to cater for an adjustment in people's expectations and needs. Our people deserve praise for the way they have worked through this difficult time. They have demonstrated resilience and positivity; I thank them and am sure they will continue to show their professionalism and enthusiasm as we approach the year ahead.

 

We are proud and pleased to have a talented and capable team across the business and we seek to incentivise and reward our people fairly and appropriately, to align rewards with the outcomes we expect and need to succeed as a business. As with our clients and their investments, we know that our people have choices as to where they pursue their careers, so retention strategies and succession planning are important responsibilities for the Board to consider.

 

Board

I would like to reiterate my deep thanks to Mike Vogel, who stood down as Chairman earlier this year, for his extensive contribution to getting the Group to where it is now. We were pleased that Sarah Mussenden and Sarah Walton joined our Board in June. They each have impressive capabilities and experience and we look forward to their guidance as we develop the business. Sarah Walton has taken on the role as Chair of the Audit & Risk Committee and her first report in the role will be set out in the Annual Report. We expect and need our Board to be high performing and I would like to thank all our Directors for their full and thoughtful contributions during the year, especially in being so supportive of the transitions and changes which have taken place on the Board and in the committees.

 

Outlook

We are an ambitious and growing business. We achieved significant strategic milestones in the year including the completion of our merger, the redesign our multi-asset offering and the launch of three new funds. With the pandemic still here, markets everywhere continue to adjust and show signs of strain with at times material volatility. There is also an uncertain political and regulatory environment affecting our industry which adds to our challenges. However, the prospects for the UK savings and investment markets are attractive and I believe we have resilient, agile and energetic people working at Premier Miton. We are well placed to navigate the future with confidence and determination for the benefit of all our stakeholders. The Board and I look forward to working with our team to steer us to ongoing success.

 

Robert Colthorpe

Chairman

06 December 2021

 

 

Chief Executive Officer's Statement

 

I am pleased to deliver a strong set of results for the Group. We have achieved net inflows of £830 million in 2021, with all four quarters seeing positive flows. In terms of investment performance, 83% of our funds are in the first or second quartile since manager tenure. We have a diversified business and a broad range of products delivering excellent outcomes for our clients over the medium to longer term. We have a financially robust balance sheet, and we continue to increase the efficiency of our platform, as evidenced by the higher profit margin for 2021.

 

Business performance

At the end of September 2021 Assets under Management ('AuM') stood at £13.9 billion representing an increase of 31% on last year. Average AuM (a key metric of success and a determinant of the Group's profitability) finished the year at £12.7 billion, an increase of 26% on the previous year.

 

The net management fee margin (the retained revenue of the firm after deducting the costs of fund administration, external Authorised Corporate Directors ('ACD') and any enhanced fee arrangements), was 65.0bps compared with 65.9bps last year. On 27 November 2020 the Group, successfully completed the on boarding of all open-ended funds onto the in-house ACD platform and consequently rebranded the names of all funds under the Premier Miton marque.

 

The adjusted operating margin increased from 33.5% to 33.8%. Our strategy continues to focus on delivering good outcomes for our investors and to diversify and increase the levels of AuM being managed by the Group. We aim to meet investor demand through the creation of transparent, value-for-money products that have well-defined objectives. Many are highly differentiated from other funds and have uncorrelated returns when compared with mainstream indices.

 

We classify our products according to four categories: equity funds, multi-asset funds, fixed income funds, and investment trusts. At the year end, equity funds accounted for 59% of the total AuM, multi-asset funds 28%, fixed income 7%, with investment trusts making up the remainder.

 

Investment flows

Premier Miton's range of high active share, alpha focused funds are well placed to deliver for investors in the current environment. I am pleased to report that, during the period, we experienced net flows into our products totalling £830 million (2020: £619 million outflow). This represents a strong improvement on last year and a net addition of some 7% of the Group's average AuM.

 

Looking at specific funds, we saw continued success from several of our single strategy funds. The Premier Miton European Opportunities Fund, launched in 2015, ended the period with AuM of just under £3 billion. Also growing strongly was the Premier Miton US Opportunities Fund demonstrating a consistent, active investment approach without investing in the big-name tech stocks. During the year it surpassed the important AuM milestone of £1 billion, ending the year with £1.3 billion of AuM. I am also pleased to note that our Premier Miton UK Value Opportunities Fund, has delivered excellent returns for investors despite traditional 'value stocks' being out of favour with the market.  The fund is in the top quartile of funds in its sector over one, three five and seven years and ended the period with AuM of over £700 million.

 

We have been successful at launching new products and bringing on talented fund managers with scope to grow. In the last eighteen months, we have launched six new funds and have taken on two segregated mandates. At 30 September 2021 we had a total of £693 million of AuM (in aggregate) in these new strategies. This is a good result during challenging market conditions and broadens our product range for future flows over the years ahead.

 

We have also made good progress on the development of our multi-asset fund range. In January 2021 we made changes to our multi-asset multi-manager fund range, driven by the aim to reduce the costs borne by investors. This team now offers nine funds covering income, risk-targeted, growth and wealth preservation - many of which now have significantly reduced ongoing charges. Our multi-manager range sits alongside our two other multi-asset investment strategies, Diversified and Macro Thematic, each with their own specialist investment teams. 17 out of our 19 multi-asset funds now have OCFs below 1%. We offer five directly invested multi asset Premier Miton Diversified funds, the first one launched in March 2013, and all of which are top quartile over one year and since launch, and over three and five years where applicable. These funds are gaining increasing sales traction through advisers and will be a core focus for our advisory business development team in the year ahead. During the year the Diversified funds collectively gathered £130 million of net inflows versus outflows of £3 million in 2020 and we intend to focus on building on this success during the coming year.

 

Despite the overall outflow from multi-asset funds during the year, we are encouraged that the changes we have instigated are having an effect with outflows in the second half of the year being lower (£183 million) than in the first half of the year (£627 million). The pace of outflows has clearly slowed and we believe that the combination of reduced costs on our multi-asset funds coupled with an improving relative performance profile has been behind this. We can see from industry data that there is clearly ongoing demand for multi-asset solutions from advisers and with our strong distribution presence we believe that we can return to growth for this part of our business in the future.

 

Our strong investment flows into existing and new strategies are not just due to excellent investment performance, but also testament to hardworking distribution teams. We have developed a cohesive team that puts clients and their advisers at the centre of what they do, with an aim of building lasting relationships over investment cycles. The sales team consists of 23 people in discretionary and advisory intermediary markets throughout the United Kingdom. The distribution team continues to use detailed sales data to enhance the overall client experience. Supporting this is an astute marketing team whose aim is to build awareness of our products with meaningful campaigns and events.

 

Fund range

2021 was a busy year for the Group as we continued to develop our product range. During the year we launched three new funds and completed two fund mergers designed to reduce costs for investors. The purpose of continued product development is to create a better result for our clients and to offer funds that are differentiated, high-performing and, importantly, value for money. We know that our clients have a choice of where they invest their money, so it is vital that our investment teams offer the outcomes required.

 

The investment performance across our equity, fixed income, multi-asset and absolute return funds has been excellent. At 30 September 2021 65% of AuM was in the first quartile and 83% performing above median within their respective IA sectors since the tenure of the fund manager. Shorter-term numbers were also good with 82% above median over one year and 79% above median over three years.

 

In November, Emma Mogford joined the Group from Newton Investment Managers and assumed management of three UK equity income funds. Emma has a disciplined style that we believe will do well for investors over the long term.

 

In January we made changes to our multi-asset multi-manager fund range, as noted above, to deliver even more value to underlying investors. This range of funds covers all outcome objectives and is led by David Hambidge and head of research, Ian Rees. Wayne Nutland, manager of the Premier Miton Managed Index Balanced Fund, also joined this team in February and adds his expertise in ETF investing. David Jane and Anthony Rayner assumed responsibility for the Premier Miton Multi-Asset Growth & Income Fund and the Premier Miton Multi-Asset Conservative Growth Fund from 1 February 2021.

 

Our European equities team of Carlos Moreno and Thomas Brown were joined by Russell Champion in August following the successful launch of their second fund, Premier Miton European Sustainable Leaders, on 10 May 2021. This fund has started well and has been amongst the top performers in its sector since launch. At 30 September 2021 their first fund, Premier Miton European Opportunities Fund, was £2.9 billion in size and top decile since launch returning 228.7% versus 86.3% from the sector.

 

In March we launched the Premier Miton Global Smaller Companies Fund. The experienced investment team of Alan Rowsell and Imogen Harris joined us in late 2020 having managed over £1 billion in global smaller companies at their previous employer. The fund has returned 12.1% since launch versus 9.7% from the sector. This is yet another example of where our actively managed funds in a dynamic asset class can make a meaningful impact in many portfolios.

 

Our Fixed Income team have been with the firm for a little over a year and have created a sound foundation on which to build future fund flows. They are a talented group of individuals and performance across their product range is attractive. Having reached just over £1 billion of assets under management in their first year, they have the potential to raise many times this over the years ahead.

 

I would also like to congratulate Gervais Williams and Martin Turner who celebrated their ten-year anniversary as managers of the £1.2 billion Premier Miton UK Multi Cap Income Fund in October 2021. The fund has delivered excellent returns to investors having grown by 249.3% (with dividends reinvested) since launch to the 30 September 2021. This compares with 111.2% for the IA UK Equity Income sector average and 106.1% for the FTSE All-Share Index.

 

Towards the end of the period, we added to our range of income funds with the launch of the Premier Miton European Equity Income Fund managed by Will James. The fund offers increased choice to investors looking for alternative sources of equity income during a period of low interest rates and low bond yields. We look forward to bringing this new fund to a wider audience as it builds its track record. Finally, we also completed the merger of the Premier Global Infrastructure Income Fund into the Premier Miton Global Infrastructure Fund, creating a single, larger fund that we believe will be more attractive to potential investors as well as offering economies of scale to reduce ongoing investor costs.

 

Over the last year we have been pleased that the quality of our investment performance and fund managers has continued to be recognised through winning various industry awards including Specialist Group of the Year Award and two fund awards at the Investment Week Fund Manager of the Year Awards 2021. Our investment trust business is also being recognised, where we were a finalist for Group of the Year Award and nominated for four individual trust awards at the Investment Week Investment Company of the Year Awards 2021 in November.

 

Responsible investing

During the year we expanded our range of sustainable and responsible products covering a number of global equity, European equity and UK equity funds. We have continued to make significant progress with the integration of ESG into our investment processes across the firm alongside the launch of two more dedicated ESG/sustainable funds. This is important for the Group, and we are determined to make this a key area of success for Premier Miton.

 

On 14 December 2021 the Premier Miton Ethical Fund will be renamed the Premier Miton Responsible UK Equity Fund. Changing the name of the fund to reference the focus on companies that act responsibly and have a positive influence on society and the environment, will help to make the investment approach of the fund clearer for investors. This fund was also nominated for 'Best Sustainable and ESG Equity Fund' in the Investment Week Sustainable & ESG Investment Awards 2021.

 

We have also continued to work hard to build diversity across all levels of our business. With the appointment of Sarah Walton and Sarah Mussenden to our board I am pleased that we are making a clear statement that we would like our business to have a much better gender balance over the years ahead. At the end of September our workforce was 64% male and 36% female which is a small improvement on the 72%/28% split we had at the end of the previous financial year. We clearly have more work to do. Our non-executive team is now 50% male and 50% female and I am keen to see further progress in this direction across our wider workforce as we move through 2022 and beyond.

 

Elsewhere, we continue to make progress on environmental matters and it was pleasing to be awarded a B rating for our first CDP submission in recognition of how we are managing our environmental impact as a firm. We have more to do here in order to maintain our momentum and I am grateful to the members of our Environmental Committee for their hard work and guidance through the last 12 months.

 

COVID-19

During the year we operated a predominantly home working environment in line with government guidance. Despite the challenging circumstances we delivered continuity to our clients and continued to provide the exceptional outcomes they expect from us. In September we transitioned to a flexible hybrid working arrangement and made changes to the office layouts in both London and Guildford, as well as introducing technology to facilitate video conferencing and the booking of desk space.

We believe there are clear benefits both individually and for the business in having a combination of office and home working. It is also clear from our staff surveys that many want to retain more flexibility going forward but also maintain the ability to meet and work together, share ideas and foster creativity.

 

Strategy

Since the merger in 2019, we have invested significantly in our investment teams, developed key systems and processes, and built scalable operational and risk management frameworks. Our medium-term ambition is to reach £20 billion of AuM. We think that this is a credible challenge for the business but believe that we have the people, the products and the performance to achieve it. As part of this growth ambition, we will continue to develop our successful profile in the UK wealth management and independent financial advisory space as well as exploring opportunities to grow our presence in the UK institutional market. . If we are to be successful in achieving our goals, it is important that we maintain our clear focus on delivering excellent outcomes for our investors, that we work together as a team and that we manage our business effectively for the benefit of all stakeholders.

 

Closing

The 2021 financial year was an active and productive period for the Group. Despite the pandemic, we completed many key initiatives to strengthen our core business and that will enhance our enterprise value into the future. These initiatives range from hiring high performing individuals and teams, seeding new investment capabilities, and increasing our diversity. Some initiatives will take time to come to fruition but we are committed to maintaining a business environment that is supportive for success - individually and collectively.

 

Our staff deserve to be congratulated for their hard work and diligence during the past two years. The whole board of Premier Miton Group plc are immensely proud of the way they have continued to work and persevere in such difficult and challenging circumstances. The Group's ability to launch, position and maintain its investment strategies entirely depends on our talented people. I am proud to say that we have maintained the highest levels of business continuity and investment excellence over the past 12 months and believe that we can continue to do so into the future.

 

Our funds offer many of the characteristics that we believe investors will be seeking over the coming decade and beyond. They are run by experienced teams free to employ their own individual skills for the benefit of investors, they have high active shares, high tracking errors against underlying indices, long-term time horizons and are unconstrained from house views.

 

From a financial point of view, we have a healthy level of cash on our balance sheet, our AuM are at an all-time high and our net sales flows are positive and getting stronger. Our key strengths of investment excellence, relevant products, powerful distribution, financial position, operating platform, and acting responsibly as we move towards a more sustainable future, means we believe that Premier Miton is well positioned for the future.

 

Mike O'Shea

Chief Executive Officer

6 December 2021

 

 

 

 

 

Financial Review

 

Financial performance

Profit before tax increased to £17.5 million (2020: £9.6 million). During the year the operational aspects of the merger were completed, the reported profit before tax included a further £1.4 million (2020: £4.5 million) of costs associated with the merger.

 

Adjusted profit before tax *, which is after adjusting for amortisation, share-based payments, merger related costs and exceptional costs increased to £28.6 million (2020: £22.4 million).

 

 

 

2021

£m

2020

£m

%

Change

Net revenue

  84.5

66.8

26.5

Administrative expenses

(55.8)

(44.4)

25.7

Adjusted profit before tax *

28.6

22.4

27.7

Amortisation

(5.1)

(4.5)

13.3

Share-based payments

(4.5)

(3.6)

25.0

Merger related costs

(1.4)

(4.5)

(68.9)

Exceptional costs

(0.1)

(0.2)

(50.0)

Profit before tax

17.5

9.6

82.3

* These are Alternative Performance Measures ('APMs').

 

Assets under Management * ('AuM')

AuM ended the year at £13,931 million (2020: £10,608 million), an increase of 31%.

Average AuM for the year increased by 26% to £12,751 million (2020: £10,110 million). The increase reflects good fund performance, a return to net inflows of £830 million (2020: outflows of £619 million) and strong market performance from the lows of March 2020.

 

Net revenue

 

 

2021

£m

2020

£m

%

Change

Management fees

93.2

77.5

20.3

Fees and commission expenses

(10.3)

(10.9)

(5.5)

Net management fees 1 *

82.9

66.6

24.5

Other income

1.6

0.2

700.0

Net revenue

84.5

66.8

26.5

Average AuM 2

      12,751

10,110

26.1

Net management fee margin 3 (bps)

65.0

65.9

(1.4)

 

1      Being management fee income less trail/rebate expenses and the cost of fund accounting and external Authorised Corporate Director ('ACD') fees for the former Miton fund range

2      Average AuM for the year is calculated using the daily AuM

3     Net management fee margin represents net management fees divided by the average AuM

 

The Group's revenue represents management fees generated on the assets being managed by the Group.

Net management fees increased to £82.9 million from £66.6 million last year, a 25% increase reflecting the 26% increase in the Group's average AuM.

 

The Group's net management fee margin for the year was 65.0 basis points, a reduction of 1.4% from the previous year, the reduction is driven by the change in our business mix and the impact of flows and markets on our existing business.

 

Administration expenses

Administration expenses (excluding share-based payments) totalled £55.8 million (2020: £44.4 million), an increase of 26%.

 

Staff costs continue to be the largest component of administration expenses, these consist of both fixed and variable elements.

 

The fixed staff costs, which includes salaries and associated National Insurance, employers' pension contributions and other indirect costs of employment increased to £19.1 million (2020: £16.7 million). The rise reflects the increase in costs associated with an additional 1.5 months of former Miton staff as well as the annualised impact of new joiners at the end of 2020. The average headcount for the year has stayed broadly in line, from 150 to 153 (this increase being due primarily to further hires in the investment teams).

 

Variable staff costs totalled £18.6 million (2020: £10.9 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, the strong growth in the Group's average AuM has driven this increase.

 

Overheads and other costs totalled £16.7 million (2020: £15.5 million) being 20% of net revenue (2020: 23%).

 

 

 

2021

£m

2020

£m

%

Change

Fixed staff costs

19.1

16.7

14.4

Variable staff costs

18.6

10.9

70.6

Overheads and other costs

16.7

15.5

7.7

Depreciation - fixed assets

0.7

0.6

16.7

Depreciation - leases

0.7

0.7

-

Administration expenses

55.8

44.4

25.7

 

Share-based payments

The share-based payment charge for the year was £4.5 million (2020: £3.6 million).

 

As at 30 September 2021 the Group's Employee Benefit Trusts ('EBTs') held 10,947,088 ordinary shares representing 6.9% of the issued ordinary share capital (2020: 9,921,565 shares).

 

At the year end the outstanding awards totalled 10,741,362 (2020: 9,329,115). The increase reflects 3,980,000 awards issued during the year (2020: 4,130,000). See note 15 for further detail.

 

Balance sheet and cash

Total shareholders' equity as at 30 September 2021 was £132.2 million (2020: £129.7 million).

 

At the year end the cash balances of the Group totalled £47.7 million (2020: £36.0 million). The increase reflects the increased profitability of the Group.

 

The Group has no external bank debt.

 

Capital management

Dividends totalling £12.1 million were paid in the year (2020: £11.7 million), see note 16 for further details.

The Board is recommending a final dividend payment of 6.3p per share bringing the total dividend payment for 2021 to 10.0p per share (2020: 7.0p).

 

If approved by the shareholders at the Annual General Meeting on 2 February 2022, the dividend will be paid on 11 February 2022 to shareholders on the register at the close of business on 14 January 2022.

 

The Group's dividend policy is to target an annual ordinary dividend pay-out of approximately 50 to 65% of profit after tax, adjusted for exceptional costs, share-based payments and amortisation.

 

Going concern

The Directors have assessed the prospects of the Group 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 2024. 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.

 

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.

 

Alternative Performance Measures ('APMs')

The Directors use the following APMs in evaluating the performance of the Group and for planning, reporting and incentive-setting purposes.

 

 

Unit

Used in management appraisals

Aligned with shareholder
returns

Strategic KPI

Adjusted profit before tax

Definition: Profit before interest, taxation, amortisation, share-based payments, merger related costs and exceptional items.

 

Purpose: This measure encompasses all operating expenses in the business, including fixed and variable staff cash costs, except those incurred on a non-cash, non-business as usual basis. It provides 

a proxy for cash generated and is the key measure of profitability for management decision making.

£

Adjusted operating margin

Definition: Adjusted profit before tax divided by net revenue.

 

Purpose: Used to determine the efficiency of operations and the ratio of operating expenses to revenues generated in the year.

%

Cash generated from operations

Definition: Profit before taxation adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals and items of income 

or expense associated with investing or financing cash flows.

 

Purpose: Provides a measure in demonstrating the amount of cash generated from the Group's ongoing regular business operations.

£

 

 

AuM

Definition: The value of assets that are managed by the Group.

 

Purpose: Management fee income is calculated based on the level of AuM managed. The AuM managed by the Group is used to measure the Group's relative size against the industry peer group.

£

Net management fee

Definition: The net revenue of the Group. Calculated as gross management fee income, less the cost of fund accounting, external Authorised Corporate Directors ('ACD') and any enhanced fee arrangements.

 

Purpose: Provides a consistent measure of the profitability of the Group and its ability to grow and retain clients, after removing amounts paid to third parties.

£

 

 

Net management fee margin

Definition: Net management fees divided by average AuM.

 

Purpose: A measure used to demonstrate the blended fee rate earned from the AuM managed by the Group. A basis point ('bps') represents one hundredth of a percent, this measure is used within the asset management sector and provides comparability of the Group's net revenue generation.

bps

 

Adjusted earnings per share (basic)

Definition: Adjusted profit after tax divided by the weighted average number of shares in issue in the year.

 

Purpose: Provides a clear measure to shareholders of the profitability of the Group from its underlying operations. The exclusion of amortisation, share-based payments, merger related costs and exceptional items provides a consistent basis for comparability of results year on year.

p

 

 

 

Financial Statements

Consolidated Statement of Comprehensive Income
For the year ended 30 September 2021

 

Notes

 

 2021

£000

 

 2020

£000

Revenue

3

94,726

77,721

Fees and commission expenses

(10,248)

(10,948)

Net revenue

84,478

66,773

Administration costs

(55,832)

(44,408)

Share-based payment expense

15

(4,528)

(3,581)

Amortisation of intangible assets

9

(5,117)

(4,517)

Merger related costs

4

(1,350)

(4,467)

Exceptional items

4

(126)

(216)

Operating profit

5  

17,525

9,584

Finance revenue

-

20

Profit for the year before taxation

17,525

9,604

Taxation

7

(3,496)

(3,714)

Profit for the year after taxation attributable to equity holders of the parent

14,029

5,890

 

 

 

pence

pence

Basic earnings per share

8

9.53

4.14

Diluted earnings per share

8

8.96

4.00

 

No other comprehensive income was recognised during 2021 or 2020. 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 2021 

 

 

Notes

Share

capital

£000

Merger reserve

£000

Own shares held by an EBT

 £000

Capital redemption reserve

 £000

Retained

earnings

£000

Total

Equity

£000

At 1 October 2019

 

50

-

(6,944)

4,532

47,688

45,326

Profit for the year

 

-

-

-

-

5,890

5,890

Issue of share capital on merger

9,14

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

Profit for the year

 

-

-

-

-

                14,029

14,029

Purchase of own shares held by an EBT

 

-

-

(4,101)

-

-

(4,101)

Exercise of options

 

-

-

2,960

-

                (2,960)

-

Share-based payment expense

15

-

-

-

-

4,528

4,528

Other amounts direct to equity

 

-

-

-

-

(134)

(134)

Deferred tax direct to equity

 

-

-

-

-

305

305

Equity dividends paid

16

-

-

-

-

(12,097)

(12,097)

At 30 September 2021

 

60

94,312

(15,790)

4,532

49,110

132,224

 

 

 

Consolidated Statement of Financial Position

As at 30 September 2021

 

 

Notes

 

 2021

£000

 

 2020

£000

Non-current assets

 

 

Goodwill

9

70,688

70,948

Intangible assets

9

27,377

32,234

Other investments

 

100

100

Property and equipment

 

1,737

2,385

Right-of-use assets

 

1,751

2,414

Deferred tax asset

7

2,166

1,599

Trade and other receivables

10

971

367

 

104,790

110,047

Current assets

 

 

Financial assets at fair value through profit and loss

 

3,529

2,697

Trade and other receivables

10

146,084

44,409

Cash and cash equivalents

11

47,675

35,992

 

197,288

83,098

Total assets

 

302,078

193,145

 

 

Current liabilities

 

 

Trade and other payables

12

(163,208)

(53,046)

Current tax liabilities

 

-

(2,948)

Provisions

13

(15)

-

Lease liabilities

 

(870)

(857)

 

(164,093)

(56,851)

Non-current liabilities

 

 

Provisions

13

(374)

(389)

Deferred tax liability

7

(4,237)

(4,152)

Lease liabilities

 

(1,150)

(2,059)

Total liabilities

 

(169,854)

(63,451)

Net assets

 

132,224

129,694

 

 

Equity

 

 

Share capital

14

60

60

Merger reserve

 

94,312

94,312

Own shares held by an Employee Benefit Trust

 

(15,790)

(14,649)

Capital redemption reserve

 

4,532

4,532

Retained earnings

 

49,110

45,439

Total equity shareholders' funds

 

132,224

129,694

 

 

 

 

 

 

Consolidated Statement of Cash Flows

For the year ended 30 September 2021

 

Notes

 

 2021

£000

 

 2020

£000

Cash flows from operating activities:

 

Profit for the year

 

14,029

5,890

Adjustments to reconcile profit to net cash flow from operating activities:

 

 

Tax on continuing operations

7

3,496

3,714

Finance revenue

 

-

(20)

Interest payable on leases

 

94

93

Depreciation - fixed assets

 

688

617

Depreciation - leases

 

625

689

Gain on sale of financial asset at fair value through profit and loss

 

-

(13)

Loss/(gain) on revaluation of financial assets at fair value through profit and loss

 

(407)

6

Loss on disposal of property and equipment

 

28

-

Increase in employee benefit liability

 

970

1,182

Purchase of plan assets (held for employee benefit liability)

 

(970)

(1,182)

Amortisation of intangible assets

9

5,117

4,517

Share-based payment expense

15

4,528

3,581

(Increase)/decrease in trade and other receivables

 

(101,769)

8,479

Increase/(decrease) in trade and other payables

 

110,162

(19,533)

Cash generated from operations

 

36,591

8,020

Income tax paid

 

(7,267)

(3,226)

Net cash flow from operating activities

 

29,324

4,794

Cash flows from investing activities:

 

 

Interest received

 

-

20

Acquisition of assets at fair value through profit and loss

 

(1,261)

(12,166)

Proceeds from disposal of assets at fair value through profit and loss

 

836

10,304

Purchase of property and equipment

 

(68)

(138)

Cash acquired on merger

 

-

27,296

Net cash flow from investing activities

 

(493)

25,316

Cash flows from financing activities:

 

 

Lease payments

 

(950)

(566)

Exercise of options

 

-

127

Purchase of own shares held by an EBT

 

(4,101)

(2,669)

Equity dividends paid

 

(12,097)

(11,699)

Net cash flow from financing activities

 

(17,148)

(14,807)

Increase in cash and cash equivalents

 

11,683

15,303

Cash and cash equivalents at the beginning of the year

 

35,992

20,689

Cash and cash equivalents at the end of the year

11

47,675

35,992

 

 

 

 

Selected notes to the Consolidated Financial Statements

For the year ended 30 September 2021

 

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 2021 were authorised for issue by the Board of Directors on 6 December 2021 and the Consolidated Statement of Financial Position was signed on the Board's behalf by Mike O'Shea and Piers Harrison.

 

The Company is a public limited company incorporated and domiciled in England and Wales. The Company's ordinary shares are traded on the Alternative Investment Market ('AIM').

 

These Consolidated Financial Statements were prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The Consolidated Financial Statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.

 

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

 

2. Accounting policies

Basis of preparation

The Consolidated Group Financial Statements for the year ended 30 September 2021 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 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.

 

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 2024. 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 key assumptions used in preparing the forecast, both individually and combined, in addition to scenario analysis that is performed as part of the ICAAP process, which is formally approved by the Board. This analysis demonstrates that even after modelling materially lower levels of assets under management ('AuM') associated with a reasonably plausible downside scenario, the business remains cash generative.

 

3. Revenue

Revenue recognised in the Consolidated Statement of Comprehensive Income is analysed as follows:

 

 

2021

£000

2020

£000

Management fees

93,171

77,506

Commissions

1,075

7

Other income

480

208

Total Revenue

94,726

77,721

 

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:

 

2021

£000

2020

£000

Fund development costs

-

52

Connect development costs

126

164

Total exceptional costs

126

216

 

Merger related costs

822

2,560

Merger employment restructuring costs

528

1,907

Total merger related costs

1,350

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.

 

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.

 

In accordance with the accounting policy for exceptional items these costs have been treated as exceptional.

 

Merger related costs in the year totalling £821,886 (2020: £2,560,242) represented legal and professional fees associated with the merger with Miton Group plc of £51,132 (2020: £1,687,116) and merger integration costs of £770,754 (2020: £873,126).

 

Employment restructuring costs arising as a result of the merger totalled £528,031 (2020: £1,906,618) of which £528,031

(2020: £1,900,618) related to redundancy costs and £nil (2020: £6,000) of associated legal costs.

 

5. Operating profit

(a) Operating profit is stated after charging:

 

Notes

2021

£000

2020

£000

Auditor's remuneration

5(b)

468

511

Staff costs

6

40,868

29,978

Interest - leases

 

94

93

Amortisation of intangible assets

 

5,117

4,517

Exceptional items

4

126

216

Merger related costs

4

1,350

4,467

Loss on disposal of fixed assets

 

28

-

Depreciation - fixed assets

 

688

617

Depreciation - leases

 

625

689

 

(b) Auditor's remuneration:

The remuneration of the auditors is analysed as follows:

 

 

2021

£000

2020

£000

Audit of Company

 

90

75

Audit of subsidiaries

 

190

188

Total audit

 

280

263

Audit-related assurance services

 

48

95

- Tax compliance services

 

-

38

- Other non-audit services not covered above

 

140

115

Total other non-audit services

 

140

153

Total non-audit services

 

188

248

Total fees

 

468

511

 

 

 

 

 

 

6.  Staff costs and Directors' remuneration

Staff costs during the year were as follows:

 

 

 

2021

£000

2020

£000

Salaries, bonus and performance fee share

 

30,769

22,471

Social security costs

 

4,696

3,085

Share-based payments

 

4,528

3,581

Other pension costs

 

875

841

Total staff costs

 

40,868

29,978

 

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

 

 

2021

number

2020

number

Directors

 

7

7

Investment management

 

51

44

Sales and marketing

 

33

38

Finance and systems

 

11

13

Legal and compliance

 

12

11

Administration

 

39

37

Total employees

 

153

150

 

 

7. Taxation

(a) Tax recognised in the Consolidated Statement of Comprehensive Income

 

2021

£000

2020

£000

Current income tax:

 

 

UK corporation tax

4,583

4,326

Current income tax charge

4,583

4,326

Adjustments in respect of prior periods

(909)

(82)

Total current income tax

3,674

4,244

Deferred tax:

 

 

Origination and reversal of temporary differences

(680)

(536)

Adjustments in respect of prior periods

502

6

Total deferred tax income

(178)

(530)

Income tax charge reported in the Consolidated Statement of Comprehensive Income

3,496

3,714

 

(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% (2020: 19%). The differences are reconciled below:

 

2021

£000

2020

£000

Profit before taxation

17,525

9,604

Tax calculated at UK standard rate of corporation tax of 19% (2020: 19%):

3,330

1,824

- Other differences

73

69

- Share-based payments

264

906

- Expenses not deductible for tax purposes

4

324

- Amortisation not deductible

250

252

- Income not subject to UK tax

(38)

(23)

- Change in tax rate

531

395

- Tax relief on vested options

(525)

(3)

- Fixed asset differences

15

46

- Adjustments in respect of prior periods

(408)

(76)

Income tax charge in the Consolidated Statement of Comprehensive Income

3,496

3,714

 

(c) Change in corporation tax rate

In the Spring Budget 2021, the Government announced that from 1 April 2023 the corporation tax rate will increase to 25% from 19%. This was substantively enacted on 24 May 2021. The deferred tax balances included within the Consolidated Financial Statements have been calculated with reference to the rate of 25% to the relevant balances from 1 April 2023.

 

(d) Deferred tax

The deferred tax included in the Group's Consolidated Statement of Financial Position is as follows:

 

2021

£000

2020

£000

Deferred tax asset:

 

 

- Fixed asset temporary differences

(38)

(236)

- Accrued bonuses

619

782

- Share-based payments

1,585

491

- Losses and other deductions

-

562

Deferred tax disclosed on the Consolidated Statement of Financial Position

2,166

1,599

 

 

 

 

2021

£000

2020

£000

Deferred tax liability:

 

 

- Arising on acquired intangible assets

4,216

4,119

- Fixed asset temporary differences

21

33

Deferred tax disclosed on the Consolidated Statement of Financial Position

4,237

4,152

 

 

2021

£000

2020

£000

Deferred tax in the Consolidated Statement of Comprehensive Income:

 

 

- Origination and reversal of temporary differences

(680)

(536)

- Adjustments in respect of prior periods

502

6

Deferred tax (income)

(178)

(530)

 

 

 

2021

£000

2020

£000

Unprovided deferred tax asset:

 

 

- Non trade loan relationship losses

1,971

1,764

- Excess management expenses

51

46

- Non trade intangible fixed asset losses

399

357

Unprovided deferred tax asset

2,421

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:

 

 

2021

£000

2020

£000

Profit attributable to ordinary equity shareholders of the Parent Company for basic earnings

14,029

5,890

 

Number

000

Number

000

Issued ordinary shares at 1 October

157,913

105,801

- Effect of own shares held by an EBT

(10,641)

(9,220)

- Effect of shares issued

-

45,705

Weighted average shares in issue

147,272

142,286

- Effect of movement in share options

9,239

5,056

Weighted average shares in issue - diluted

156,511

147,342

Basic earnings per share (pence)

9.53

4.14

Diluted earnings per share (pence)

8.96

4.00

 

(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:

 

2021

£000

2020

£000

Profit before taxation

17,525

9,604

Add back:

 

 

- Share-based payment expense

4,528

3,581

- Amortisation of intangible assets

5,117

4,517

- Merger related costs

1,350

4,467

- Exceptional items

126

216

Adjusted profit before tax

28,646

22,385

Taxation:

 

 

- Tax in the Consolidated Statement of Comprehensive Income

(3,496)

(3,714)

- Tax effects of adjustments

(914)

(936)

Adjusted profit after tax for the calculation of adjusted earnings per share

24,236

17,735

 

Adjusted earnings per share was as follows using the number of shares calculated at note 8(a):

 

2021

(pence)

2020

(pence)

Adjusted earnings per share

16.46

12.46

Diluted adjusted earnings per share

15.49

12.04

 

 

 

9. Goodwill and other intangible assets

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

 

 

Goodwill

£000

Other

£000

Total

£000

Cost:

 

 

 

At 1 October 2020

77,927

81,025

158,952

Additions / (disposals)

-

-

-

At 30 September 2021

77,927

81,025

158,952

 

 

 

 

Amortisation and impairment:

 

 

 

At 1 October 2020

6,979

48,791

55,770

Impairment during the year

260

-

260

Amortisation during the year

-

4,857

4,857

At 30 September 2021

7,239

53,648

60,887

 

 

 

 

Carrying amount:

 

 

 

At 30 September 2021

70,688

27,377

98,065

At 30 September 2020

70,948

32,234

103,182

 

During the year there were no additions to goodwill (2020: £55,350,821 relating to the acquisition of Miton Group plc).

 

The Group recognised an impairment for the total amount of goodwill specifically related to the Acorn Income Fund Limited. This

entity announced on 23 September 2021 its residual assets will rollover into the Unicorn UK Income Fund, an open ended vehicle managed by Unicorn Asset Management Limited from 13 October 2021. The Group no longer acts as investment manager to the Trust.

 

In the comparative year, an all-share merger with Miton Group plc resulted in the shareholders of Miton Group plc receiving 0.30186 of a share in Premier Miton Group plc which was satisfied through newly issued shares. On the acquisition date, 15 November 2019, the consideration and net assets acquired from Miton Group plc were as follows:

 

£000

Fair value of equity consideration in the prior year

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

2020 Goodwill addition

55,351

 

 

The fair value of the equity consideration was calculated by reference to the number of shares issued and the share price at the completion date. The purchase consideration in the table above was grossed up for the value of the EBT shares issued.

 

The 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.

 

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 2021. 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 2022-2026 is based on the 2022 budget and forecasts for 2023-2026. 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 1.9% (2020: 3.0%). To arrive at the net present value, cash flows have been discounted using a discount rate of 12.0% (2020: 13.0%). The Group engaged valuation specialists in determining the inputs to calculate the appropriate discount rate, including comparative betas, long term economic growth rates and a study of the equity risk premiums published and observed in the wider industry.

 

The overall value-in-use was greater than the carrying value and hence no impairment charge has been recognised above the amount specifically recognised for the Acorn Income Fund Limited as noted above. The key assumptions used in determining this conclusion were expected aggregated fund flows and the discount rate.

 

Sensitivity analysis

Management have performed a sensitivity analysis as of 30 September 2021 and established that an increase in the discount rate to 39% 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 5% and would need to reduce to -16% per annum for the estimated recoverable amount to equal the carrying value. The sensitivity analysis established that a +/-3% change in the discount rate and long-term terminal growth rate assumptions would not have a material impact on the Group's results. The Group is, however, mindful of the current uncertainty that exists in markets including the threat posed by the COVID-19 pandemic and that extreme movements may be cause for further examination into the possibilities of impairment.

 

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 £18,136,303 and a remaining amortisation period of five years (2020: merger with Miton Group plc with a carrying value of £21,676,510 and a remaining amortisation period of six years).

 

10. Trade and other receivables

Current

2021

£000

2020

£000

Due from trustees/investors for open end fund redemptions/sales

132,587

34,491

Other trade debtors

530

2,566

Fees receivable

8,185

3,549

Prepayments

2,195

2,487

Corporation tax

644

-

Other receivables

1,943

1,316

Total trade and other receivables

146,084

44,409

 

 

 

Non-current

 

 

Other receivables

971

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

 

2021

£000

2020

£000

Cash at bank and in hand

47,552

35,911

Cash held in EBTs

123

81

Total cash and cash equivalents

47,675

35,992

 

 

12. Trade and other payables

 

2021

£000

2020

£000

Due to trustees/investors for open end fund creations/redemptions

132,403

34,488

Other trade payables

2,295

996

Other tax and social security payable

3,345

1,929

Accruals

22,789

14,398

Pension contributions

25

20

Other payables

2,351

1,215

Total trade and other payables

163,208

53,046

 

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

 

 

2021

£000

2020

£000

At 1 October

389

            -

Arising on merger

-

389

At 30 September

389

389

Current

15

-

Non-current

374

389

 

389

389

 

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

2021 allotted, called up and fully paid:

Number of shares

Ordinary shares 0.02 pence each Number

Deferred shares

Number

At 1 October 2020

157,913,035

1

Movement in the year

-

-

At 30 September 2021

157,913,035

1

 

2020 allotted, called up and fully paid:

Number of shares

Ordinary shares 0.02 pence each Number

Deferred shares

Number

At 1 October 2019

105,801,310

1

Issued on merger

52,111,725

-

At 30 September 2020

157,913,035

1

 

2021 allotted, called up and fully paid:

Value of shares

Ordinary shares

0.02 pence each

£000

Deferred

shares

£000

Total

£000

At 1 October 2020

31

29

60

Movement in the year

-

-

-

At 30 September 2021

31

29

60

 

2020 allotted, called up and fully paid:

Value of shares

Ordinary shares

0.02 pence each

£000

Deferred

shares

£000

Total

£000

At 1 October 2019

21

29

50

Issued on merger

10

-

10

At 30 September 2020

31

29

60

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 2021 was £4,528,000 (2020: £3,581,000), of which £4,405,000 related to nil  cost contingent share rights.

 

16. Dividends declared and paid

 

2021

£000

2020

£000

Equity dividends on ordinary shares:

 

 

- Interim dividend: 3.7 (2020: first interim 1.75) pence per share

5,437

2,591

- Second interim: nil (2020: second interim 0.75) pence per share

-

1,110

- Final dividend for 2020: 4.5 (2019 final interim 5.4) pence per share

6,660

7,998

Dividends paid

12,097

11,699

 

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