TIDMPMI
RNS Number : 6405V
Premier Miton Group PLC
05 December 2023
Embargoed until 7.00am 5 December 2023
PREMIER MITON GROUP PLC
FULL YEAR RESULTS FOR THE YEARED 30 SEPTEMBER 2023
Robust investment performance despite market volatility.
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 2023.
Highlights
-- GBP9.8 billion closing Assets under Management (4) ('AuM') (2022: GBP10.6 billion)
-- Strong investment performance with 73% of funds in the first
or second quartile of their respective sectors since launch or fund
manager tenure
-- Net outflows of GBP1,147 million for the year (2022: GBP1,076 million outflow)
-- Adjusted profit before tax (1,4) of GBP15.7 million (2022: GBP24.3 million)
-- Adjusted earnings per share (2,4) of 8.80 pence (2022: 13.79 pence)
-- Profit before tax (3) of GBP5.9 million (2022: GBP14.9 million)
-- Cash balances were GBP37.9 million at 30 September 2023 (2022: GBP45.8 million)
-- Final proposed dividend of 3.0 pence per share (2022: 6.3 pence per share)
-- Total proposed dividend for the year of 6.0 pence per share (2022: 10.0 pence per share)
-- Significant continued investment in fund management and
distribution talent to help create a modern, active asset
management business positioned for future growth
Post period end
-- On 1 November the Group announced the acquisition of
Tellworth Investments LLP, a leading UK equity boutique with AuM of
GBP559m as at 30th September 2023
-- Tellworth offers both long/short and long only strategies to
wholesale and institutional clients with potential for
institutional distribution, building on Premier Miton's developing
presence in that market
-- A continued focus on inorganic opportunities alongside our clear organic growth strategy
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 GBP0.1 million during the year
(2022: GBP0.1 million).
(4) These are Alternative Performance Measures ('APMs').
Mike O'Shea, Chief Executive Officer of Premier Miton Group,
commented:
"The general market backdrop for asset management businesses in
the UK has remained challenging during the period. Despite making
good progress in certain areas of the business and delivering
strong long term performance, the Group saw AuM fall by 7% ending
at GBP9.8 billion. With interest rates in the UK at multi-year
highs and more geopolitical uncertainty than we have seen for many
years, investors have been taking a more cautious approach. Despite
this difficult backdrop, we remain a financially robust business
and have a diversified range of products delivering excellent
outcomes for our clients over the medium to long term. Our fund
management team is experienced and respected and we have a product
suite that is fit for purpose. Across our fund range, our relative
investment performance remains attractive, with 73% of our funds in
the first or second quartile of their respective sectors since
manager inception. We are also well placed to take advantage of
inorganic opportunities as they arise and our recently announced
acquisition of Tellworth is a good example of this.
"Whilst we had withdrawals from our equity funds, we continued
to see growing net sales into our fixed income funds - up by 88%
year on year. We continue to have confidence that our fixed income
business will grow as the sector returns to popularity with
investors after many years of being out of favour. We also saw
inflows into our 'Diversified' multi-asset funds were up by 19%
year on year, and which remain a popular option for advisers and
their clients.
"The changes we have made to our distribution team over the past
twelve months have laid the groundwork to deliver growth as and
when confidence returns. We continue to maintain high levels of
visibility by participating in numerous fund manager roadshows and
events and showcasing the breadth and depth of our investment
talent.
"Our business has the operational infrastructure to manage a
multiple of the assets it currently looks after and we have built
the necessary distribution and marketing platform to capitalise on
this opportunity. We will continue to assess opportunities that can
add talented investment teams, or which allow us to access new
markets or product capabilities."
S
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 7597 4000
Edelman Smithfield Consultants (Financial
PR) 07785 275665 /
John Kiely / Latika Shah 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
We have a clear purpose in actively managing our assets for the
benefit of our clients and take a long-term view of how we do this.
We believe in the value of active asset management and are
committed to delivering this for the benefit of our clients. Our
strategy is designed to support this purpose.
Results
Our financial results for 2023 reflect the ongoing challenges
facing investment markets in general and the UK's savings industry
in particular. Whilst we saw withdrawals from our equity funds, we
saw strong growth in our fixed income and multi-asset business,
showcasing the benefits of our diversified fund range.
Investment businesses are by their nature cyclical and financial
results are driven by markets, performance and flows. While we have
a well-diversified range of funds and a strong long-term
performance track record, the near-term challenges have been
difficult. However, we are confident in the fundamental strengths
of our business and the abilities of our teams. Of course, we must
and indeed are managing our costs to reflect the requirements of
the business and to align interests as closely as possible. This is
receiving full management attention.
Sector background
These are challenging times for the UK's domestic asset
management industry and for market participants. The causes of this
are complex and are receiving plenty of industry, media and,
increasingly, political attention.
At its core are several deep-seated structural issues particular
to the UK affecting the creation, intermediation and allocation of
long-term savings and capital, alongside several, probably more
temporary, market and sector adjustment factors. No company or
business involved is immune from the consequences of this and all
need to consider carefully what will be the future shape of the
UK's savings and capital markets sectors and their positioning
within these.
The consequences of further weakening of the UK-centred
investment industry would be deeply uncomfortable for our country,
and we believe most importantly would reduce the resilience and
capacity of the UK to create wealth and to build and sustain the
type of society we need. The creation of domestic long-term savings
and their allocation into productive domestic investments is an
essential feature of a successful modern economy and we are proud
to play a part in this. Alongside many other firms, organisations
and individuals, we also have sought to influence public policy
decisions to address these structural issues in a positive way.
The debate about the value of active and passive asset
management is ongoing.
We believe that both have a place to play in the investment
sector and that genuinely active investing has a core and important
role for savers and investors. Our approach is to have a range of
genuinely active funds with strategies that have a clear place in
the investment landscape. There are times when some funds may
underperform and then we seek to ensure that recovery is achievable
and that, through management action if needed, we have confidence
in a return to positive long term performance.
Strategy
Against this complex background, over the year we have closely
considered our own strategy to ensure that it remains achievable,
mindful of the need to manage our resources and processes as
smartly as possible for the long-term interests of the business as
a whole. We are focusing on a range of commercial, tactical and
strategic opportunities. We continue to review our product range to
ensure it has relevance in our chosen markets. We are also actively
looking to access the pools of capital, within and outside the UK,
that welcome our investment skills and capabilities, and what
arrangements we need to structure to secure these. These strategic
priorities and careful management of our existing business may
involve organic and inorganic investment.
An example of this is our announcement after the year end of the
acquisition of Tellworth, a leading UK-based equities boutique with
some GBP559m of AuM, running long/short and long only strategies
for wholesale and institutional clients. The acquisition expands
our product offering and brings in a highly regarded investment
team delivering good, consistent investment performance and scope
for significant asset growth when supported by our distribution
team.
Dividend
In our interim report I set out the Board's approach to dividend
payments. Our stated policy is to pay a dividend in the range of
50-65% of adjusted profit after tax. We are willing to exceed this
if appropriate and within the bounds of prudence. We are highly
reluctant to pay an uncovered dividend except in exceptional
circumstances, in which both the market and business outlook are
obviously both clearer and brighter. While we remain confident
about the longer-term prospects for our business, I am sure
shareholders will understand that we must act prudently and always
in the interests of the business as a whole when making decisions
on capital allocation, ensuring that we safeguard our strong
financial position.
Accordingly, alongside the interim dividend of 3p we have
decided to recommend a final dividend of 3p, bringing the total
dividend for the year to 6p, equal to approximately 68% of adjusted
EPS of 8.8p.
People
Our people are what make our business succeed and I thank all of
them for their hard work and efforts last year. Our leadership team
has many years of experience at managing businesses in our sector
through both good and challenging times and understands the
importance of maintaining good communication and a positive
culture.
We continue to evolve our reward models across the firm to
ensure that we are competitive for talent and that we align
stakeholder interests in the business as closely as possible. In
particular, and as in prior years, we aim to ensure that for our
key employees who drive shareholder value creation, that their
compensation framework reflects both the position of the business
and keeping a focus on long-term behaviours and securing
performance for investors in our funds. All of this needs to be
managed in a framework that aligns with and provides suitable and
attractive rewards for our shareholders as the owners of our
business.
The Board has continued to be highly engaged and supportive and
I am grateful to each of the members for their ongoing commitment.
During the year David Barron left the Board and I would like to
thank him for his valued contribution, both as Chief Executive of
Miton Group plc for many years and subsequently as a Non-Executive
Director bringing a huge depth of experience and business
understanding to our deliberations and decisions.
Outlook
There are many reasons to be concerned about the current
condition of the UK's economy and our domestic long-term savings
markets, as well as the state of geopolitics and the pace of
societal and technological change. Equally, the business of
managing savings and capital allocation is an important one for our
country and it too is changing. Through all of this, there are and
will continue to be attractive opportunities for Premier Miton's
business. As a Board, a leadership team and across our business, we
are determined to tackle these with vigour, clear sightedness and a
commitment to doing as well as we can for our clients. By doing
this to the best of our abilities, our shareholders and other
stakeholders should also benefit over time. We remain resilient and
flexible, optimistic and ambitious, as well as long-term in our
approach to running Premier Miton.
Robert Colthorpe
Chairman
04 December 2023
Chief Executive Officer's Statement
It has been a challenging landscape for the industry. The
Group's AuM ended the period at GBP9.8 billion, a fall of 7% on the
opening position for the year. With interest rates in the UK at
multi-year highs and more geopolitical uncertainty than we have
seen for many years, investors have simply stayed away from equity
funds.
Performance
The year was characterised by investors taking a more cautious
approach to new investments rather than accelerating their
withdrawals. We saw a reduction in demand for equity funds, which
were down by 37% on financial year 2022, but the level of
redemptions from these funds were only down by 9% year on year.
On the positive side, we continued to see growing net sales into
our fixed income funds - up by 88% year on year - and into our
'Diversified' multi-asset funds which were up by 19% year on year.
We continue to have confidence that our fixed income funds can
continue to grow as the sector returns to popularity with investors
after many years of being out of favour.
We have a strong investment team who have delivered good
investor outcomes during their three years with the firm and fixed
income remains a key focus for our distribution team.
The net management fee margin (the retained revenue of the firm
after deducting the costs of OCF caps, direct research costs and
any enhanced fee arrangements), was 61.7bps compared with 64.6bps
last year. The adjusted operating margin decreased from 30.0% to
23.5% reflecting the lower level of AuM and reduced fees earned.
The Group generated GBP15.7 million of adjusted profit before tax
for the year and had a closing cash position of GBP37.9
million.
Investment performance has remained good with 73% of our funds
delivering performance ahead of median since manager inception and
62% over the three-year period.
Strategy
The changes we made last year to our distribution team have
bedded in well. We now have well-regarded distribution and
marketing teams committed to high levels of activity targeting
those strategies that are currently in demand from investors, such
as fixed income, money market and multi-asset. We are also laying
the groundwork for when there is a renewed risk appetite for
equities. We continue to maintain high levels of visibility by
participating in numerous fund manager roadshows and events
servicing existing clients and showcasing the breadth and depth of
our investment talent to prospective clients, whilst increasing
advertising and press activity.
Given the more difficult market backdrop, there has been an
ongoing focus on ensuring costs within the business are fully
aligned with revenue expectations. Good progress has been made in
this regard with several restructuring changes completed during the
year the benefit of which will come through partially in FY23 with
full impact in FY24.
One notable feature of the more difficult market conditions is
that we are seeing more potential acquisition opportunities. This
is a feature of the market that we expect will continue for some
time. With our strong operational and distribution platform and
robust balance sheet, we are keen to take advantage of
opportunities that can add talented investment teams to our
portfolio or which allow us to access new markets or product
capabilities.
In that context, shortly after the end of the period we were
pleased to announce the acquisition of Tellworth Investments LLP
('Tellworth'), a leading UK equities boutique with AuM of GBP559
million as at 30 September 2023.
The acquisition, which remains subject to FCA approval, is in
line with our stated inorganic strategy, of buying complementary
asset management platforms that bring industry expertise and
product diversification as part of a wider commitment to continue
to invest in growth opportunities.
The acquisition broadens our offering into liquid alternatives
with the addition of long / short strategies and further
strengthens our existing UK equity franchise. Tellworth's
institutional client base also enhances our developing presence in
that market. The core investment team of Tellworth, including
co-founders Paul Marriage and John Warren will be joining us after
completion, bringing with them long track records of working in UK
equities with established industry reputations and strong networks
of contacts. The investment team's strong, consistent investment
performance across its strategies provides scope for significant
asset growth when supported by PMI's well-resourced distribution
team.
Outlook
I mentioned in my full year report to shareholders last year
that the world had changed and that the forces of globalisation
that helped drive down inflation and interest rates during the
first two decades of the century had dissipated. I continue to
believe that this will result in lower growth and that investors
will ultimately have to work much harder to both keep pace with
inflation and achieve their financial objectives.
Governments around the world have incurred significant amounts
of debt since the financial crisis in 2008/9 and this burden has
increased markedly since the COVID-19 pandemic. Excessive debt can
act as a drag on economic growth as interest costs crowd out
productive investment. It is also tempting for governments to allow
inflation to remain above long-term trends to deflate the value of
the debt. Ultimately, therefore, holding cash on deposit is not a
sustainable investment strategy in this inflationary environment.
Equities, however, have a long history of providing returns in line
with, or ahead of, inflation and in due course, we are confident
that investors will return to buying equity funds.
As I mention above, we are in a market environment that will
create opportunities for inorganic growth and we are keen to use
our platform to take advantage of this. Tellworth is one such
example but there are several further opportunities under review
that could bring new teams, additional AuM or new products allowing
us to access new markets. Whilst there is no certainty around these
opportunities, we will continue to appraise them diligently and
pursue them where it is appropriate to do so.
As a business, we have a well-diversified range of genuinely
active funds managed by a respected and experienced fund management
team with a proven track record of delivering strong investor
outcomes.
From the feedback we receive through our staff surveys as well
as feedback from advisers and clients, Premier Miton has a strong
culture that puts clients first and within which people are
respected, and work well together. Our collaborative and collegiate
environment makes Premier Miton a good home for talented investment
professionals and dedicated support teams. We have the operational
infrastructure in place to manage significantly more assets than we
do currently. If we are successful in attracting these assets as
market condition improve, the operational gearing inherent in our
business will work for the benefit of shareholders. In the
meantime, we will keep our costs aligned with our revenues and will
concentrate on our primary goal of delivering superior investment
returns for the clients who have entrusted us with their
savings.
Mike O'Shea
Chief Executive Officer
04 December 2023
Financial Review
Financial performance
Profit before tax decreased to GBP5.9 million (2022: GBP14.9
million).
Adjusted profit before tax*, which is after adjusting for
amortisation, share-based payments, merger related costs and
exceptional costs decreased to GBP15.7 million (2022: GBP24.3
million).
Adjusted profit and profit before tax
2023 2022 %
GBPm GBPm Change
-------------------------------- ------ ------ -------
Net revenue 66.9 81.2
Administrative expenses (51.4) (56.8)
Finance Income 0.2 -
-------------------------------- ------ ------ -------
Adjusted profit before tax * 15.7 24.3 (35)
-------------------------------- ------ ------ -------
Adjusted operating margin (4) * 23.5% 30.0% (22)
Amortisation (4.8) (4.8)
Share-based payments (4.7) (4.5)
Merger related costs (0.1) (0.1)
Exceptional costs (0.2) -
-------------------------------- ------ ------ -------
Profit before tax 5.9 14.9 (60)
-------------------------------- ------ ------ -------
* These are Alternative Performance Measures ('APMs').
Assets under Management * ('AuM')
A combination of net outflows totalling GBP1,147 million and
market performance resulted in the AuM ending the year at GBP9,821
million (2022: GBP10,565 million), a decrease of 7%. The Average
AuM for the year decreased by 14% to GBP10,845 million (2022:
GBP12,615 million).
Net revenue
2023 2022 %
GBPm GBPm Change
------------------------------------ ------ ------ -------
Management fees 74.4 90.6
Fees and commission expenses (7.6) (9.1)
Net management fees (1 *) 66.8 81.5 (18)
Other income / (loss) 0.1 (0.3)
------------------------------------ ------ ------ -------
Net revenue 66.9 81.2 (18)
------------------------------------ ------ ------ -------
Average AuM (2) 10,845 12,615 (14)
Net management fee margin (3) (bps) 61.7 64.6 (4)
------------------------------------ ------ ------ -------
1 Being management fee income less trail/rebate expenses and the
cost of capping any OCFs, and direct research costs.
2 Average AuM for the year is calculated using the daily AuM
adjusted for the monthly closing AuM invested in other funds
managed by the Group.
3 Net management fee margin represents net management fees
divided by the average AuM.
4 Adjusted profit before tax divided by net revenue.
The Group's revenue represents management fees generated on the
assets being managed by the Group.
Net management fees decreased to GBP66.8 million from GBP81.5
million last year, a 18% decrease reflecting both the decrease in
the Group's average AuM and net management fee margin.
The Group's net management fee margin for the year was 61.7bps.
The decrease 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 GBP51.4 million (2022: GBP56.8 million), a decrease of
10%.
Staff costs continue to be the largest component of
administration expenses, these consist of both fixed and variable
elements.
The fixed staff costs, which include salaries and associated
National Insurance, employers' pension contributions and other
indirect costs of employment increased to GBP22.8 million (2022:
GBP20.4 million). The rise predominantly reflects annual salary
increases and GBP1.0 million of staff related restructuring costs
completed in the year.
The average headcount for the year has decreased, from 164 to
163. At the year end the full time equivalent headcount was 159
(2022: 166). Variable staff costs totalled GBP9.7 million (2022:
GBP17.3 million). These costs move with the net revenues of the
Group and the adjusted profit before tax, hence the decrease
against the comparative period.
Included within this are general discretionary bonuses, sales
bonuses and bonuses in respect of the fund management teams, plus
associated employers' national insurance.
Overheads and other costs were broadly flat on the previous year
at GBP18.1 million (2022: GBP17.9 million). The Group continues to
assess the cost base and will make efficiencies where possible
whilst ensuring the platform remains positioned for growth when
sentiment returns.
Exceptional costs
During the year the Group incurred exceptional costs, net of
associated income, totalling GBP0.2 million following the cessation
of the development of the Group's online portal 'Connect'.
Administration expenses
2023 2022 %
GBPm GBPm Change
---------------------------- ----- ----- -------
Fixed staff costs 22.8 20.4 12
Variable staff costs 9.7 17.3 (44)
Overheads and other costs 18.1 17.9 1
Depreciation - fixed assets 0.3 0.6 (50)
Depreciation - leases 0.5 0.6 (17)
Administration expenses 51.4 56.8 (10)
---------------------------- ----- ----- -------
Share-based payments
The share-based payment charge for the year was GBP4.7 million
(2022: GBP4.5 million). Of this charge, GBP4.0 million related to
nil cost contingent share rights ('NCCSR') (2022: GBP4.3
million).
At 30 September 2023 the Group's Employee Benefit Trusts
('EBTs') held 9,452,500 ordinary shares representing 6% of the
issued ordinary share capital (2022: 12,356,304 shares).
At the year end the outstanding awards totalled 9,324,749 (2022:
11,015,578). The decrease reflects 1,577,500 NCCSR awards issued
during the year (2022: 1,902,500) offset by 3,268,629 NCCSR awards
being exercised (2022: 1,628,284).
On 13 January 2023, the Group granted 2,651,034 long-term
incentive plan ('LTIP') awards (2022: 4,182,569). The costs of the
awards is the estimated fair value at the date of grant of the
estimated entitlement to ordinary shares. At each reporting date
the estimated number of ordinary shares that may be ultimately
issued is assessed.
Balance sheet and cash
Total shareholders' equity as at 30 September 2023 was GBP121.1
million (2022: GBP126.8 million).
At the year end the cash balances of the Group totalled GBP37.9
million (2022: GBP45.8 million).
The Group has no external bank debt.
Capital management
Dividends totalling GBP13.6 million were paid in the year (2022:
GBP14.7 million).
The Board is recommending a final dividend payment of 3p per
share, bringing the total dividend payment for 2023 to 6p per share
(2022: 10.0p).
If approved by shareholders at the Annual General Meeting on 7
February 2024, the dividend will be paid on 16 February 2024 to
shareholders on the register at the close of business on 19 January
2024.
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 assessed the prospects of the Group considering
all the factors affecting the business when deciding to adopt a
going concern basis for the preparation of the accounts.
The Directors confirm that they have a reasonable expectation
that the Group will continue to operate and meet its liabilities,
as they fall due, comprising a period of at least 12 months from
the date of this report.
The Directors' assessment has been made with reference to the
Group's current position and strategy, the Board's appetite for
risk, the Group's financial forecasts, and the Group's principal
risks and how these are managed, as detailed in the Strategic
Report.
The Directors have also reviewed and examined the financial
stress testing inherent in the Internal Capital Adequacy and Risk
Assessment ('ICARA'). 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 ICARA 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.
Aligned
Used in management with shareholder Strategic
Unit appraisals returns KPI
Adjusted profit before tax
Definition: Profit before taxation, amortisation,
share-based payments, merger related costs
and exceptional items.
Purpose: Except for the noted costs, this
encompasses all operating expenses in the
business, including fixed and variable staff
cash costs, except those incurred on a non-cash,
non-business as usual basis. Provides a proxy
for cash generated and is the key measure
of profitability for management decision making. GBP -- -- --
---- ------------------ ----------------- ---------
Adjusted operating margin
Definition: Adjusted profit before tax (as
above) 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 external assets that
are managed by the Group.
Purpose: Management fee income is calculated
based on the level of AuM managed. The AuM
managed by the Group is used to measure the
Group's size relative to the industry peer
group. GBP -- -- --
---- ------------------ ----------------- ---------
Net management fee
Definition: The net management fee revenue
of the Group. Calculated as gross management
fee income, less the cost of external Authorised
Corporate Directors ('ACD'), OCF caps, direct
research costs and any enhanced fee arrangements.
Purpose: Provides a consistent measure of
the profitability of the Group and its ability
to grow and retain clients, after removing
amounts paid to third parties. 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 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 operating profitability and cash generation
of the Group from its underlying operations
at a value per share. 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 2023
2023 2022
Notes GBP000 GBP000
------------------------------------ --------------------------- -------- --------
Revenue 3 74,550 90,233
Fees and commission expenses (7,612) (9,062)
------------------------------------ --------------------------- -------- --------
Net revenue 66,938 81,171
Administrative costs (51,357) (56,818)
Share-based payment expense 16 (4,721) (4,505)
Amortisation of intangible assets 10 (4,861) (4,861)
Merger related costs 4 (51) (51)
Exceptional items 4 (250) -
------------------------------------ --------------------------- -------- --------
Operating profit 5 5,698 14,936
Finance income / (expense) 7 168 (23)
------------------------------------ --------------------------- -------- --------
Profit for the year before taxation 5,866 14,913
Taxation 8 (2,190) (5,346)
------------------------------------ --------------------------- -------- --------
Profit for the year after taxation
attributable to equity holders
of the parent 3,676 9,567
------------------------------------ --------------------------- -------- --------
pence pence
--------------------------- ----- -----
Basic earnings per share 9 2.50 6.54
--------------------------- ----- -----
Diluted earnings per share 9 2.35 6.12
--------------------------- ----- -----
No other comprehensive income was recognised during 2023 or
2022. 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 2023
Own shares
held Capital
Share Merger by an redemption Retained Total
capital reserve EBT reserve earnings Equity
Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------- ----- -------- -------- ---------- ----------- --------- --------
At 1 October 2021 60 94,312 (15,790) 4,532 49,110 132,224
------------------------------- ----- -------- -------- ---------- ----------- --------- --------
Profit for the year - - - - 9,567 9,567
Purchase of own shares held
by EBTs - - (4,492) - - (4,492)
Exercise of options - - 3,538 - (3,538) -
Share-based payment expense 16 - - - - 4,505 4,505
Deferred tax direct to equity - - - - (344) (344)
Equity dividends paid 17 - - - - (14,696) (14,696)
------------------------------- ----- -------- -------- ---------- ----------- --------- --------
At 30 September 2022 60 94,312 (16,744) 4,532 44,604 126,764
------------------------------- ----- -------- -------- ---------- ----------- --------- --------
Profit for the year - - - - 3,676 3,676
Purchase of own shares held
by EBTs - - (381) - - (381)
Exercise of options - - 4,457 - (4,457) -
Share-based payment expense 16 - - - - 4,721 4,721
Other amounts direct to equity - - - - (78) (78)
Deferred tax direct to equity - - - - (38) (38)
Equity dividends paid 17 - - - - (13,601) (13,601)
------------------------------- ----- -------- -------- ---------- ----------- --------- --------
At 30 September 2023 60 94,312 (12,668) 4,532 34,827 121,063
------------------------------- ----- -------- -------- ---------- ----------- --------- --------
Consolidated Statement of Financial Position
As at 30 September 2023
2023 2022
Notes GBP000 GBP000
---------------------------------------------- ----- --------- ---------
Non-current assets
Goodwill 10 70,688 70,688
Intangible assets 10 17,655 22,516
Other investments 100 100
Property and equipment 518 1,192
Right-of-use assets 2,724 908
Deferred tax asset 8(d) 1,147 1,928
Finance lease receivables - 77
Trade and other receivables 11 482 1,081
---------------------------------------------- ----- --------- ---------
93,314 98,490
Current assets
Financial assets at fair value through profit
and loss 1,207 2,089
Finance lease receivables 77 197
Trade and other receivables 11 124,467 136,052
Cash and cash equivalents 12 37,942 45,764
---------------------------------------------- ----- --------- ---------
163,693 184,102
---------------------------------------------- ----- --------- ---------
Total assets 257,007 282,592
---------------------------------------------- ----- --------- ---------
Current liabilities
Trade and other payables 13 (128,553) (148,820)
Provisions 14 - -
Lease liabilities (265) (887)
---------------------------------------------- ----- --------- ---------
(128,818) (149,707)
---------------------------------------------- ----- --------- ---------
Non-current liabilities
Provisions 14 (374) (374)
Deferred tax liability 8(d) (4,414) (5,485)
Lease liabilities (2,338) (262)
---------------------------------------------- ----- --------- ---------
Total liabilities (135,944) (155,828)
---------------------------------------------- ----- --------- ---------
Net assets 121,063 126,764
---------------------------------------------- ----- --------- ---------
Equity
Share capital 15 60 60
Merger reserve 94,312 94,312
Own shares held by Employee Benefit Trusts (12,668) (16,744)
Capital redemption reserve 4,532 4,532
Retained earnings 34,827 44,604
---------------------------------------------- ----- --------- ---------
Total equity shareholders' funds 121,063 126,764
---------------------------------------------- ----- --------- ---------
Consolidated Statement of Cash Flows
For the year ended 30 September 2023
2023 2022
Notes GBP000 GBP000
----------------------------------------------------- ----- -------- --------
Cash flows from operating activities:
Profit for the year 3,676 9,567
Adjustments to reconcile profit to net cash flow
from operating activities:
- Tax on continuing operations 8(a) 2,190 5,346
- Finance (income) / expense 7 (168) 23
- Interest payable on leases 27 60
- Depreciation - fixed assets 335 580
- Depreciation - leases 525 621
- Gain on derecognition of right-of-use asset - (115)
- Receivable for the net investment in sub-lease - 334
- (Gain) / loss on revaluation of financial assets
at fair value through profit and loss (82) 345
- Loss on disposal of property and equipment 250 171
- Amortisation of intangible assets 10 4,861 4,861
- Share-based payment expense 16 4,721 4,505
- Decrease in trade and other receivables 11,807 10,800
- Decrease in trade and other payables (20,267) (14,403)
Cash generated from operations 7,875 22,695
Income tax paid (2,043) (5,352)
----------------------------------------------------- ----- -------- --------
Net cash flow from operating activities 5,832 17,343
----------------------------------------------------- ----- -------- --------
Cash flows from investing activities:
Interest received / (paid) 188 (23)
Acquisition of assets at fair value through profit
and loss (140) (85)
Proceeds from disposal of assets at fair value
through profit and loss 1,104 1,180
Purchase of property and equipment (160) (207)
Proceeds from disposal of property and equipment 250 -
----------------------------------------------------- ----- -------- --------
Net cash flow from investing activities 1,242 865
----------------------------------------------------- ----- -------- --------
Cash flows from financing activities:
Lease payments (914) (931)
Purchase of own shares held by EBTs (381) (4,492)
Equity dividends paid 17 (13,601) (14,696)
Net cash flow from financing activities (14,896) (20,119)
----------------------------------------------------- ----- -------- --------
Decrease in cash and cash equivalents (7,822) (1,911)
Cash and cash equivalents at the beginning of
the year 45,764 47,675
----------------------------------------------------- ----- -------- --------
Cash and cash equivalents at the end of the year 12 37,942 45,764
----------------------------------------------------- ----- -------- --------
Selected notes to the Consolidated Financial Statements
For the year ended 30 September 2023
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 2023 were authorised for issue by the Board of
Directors on 4 December 2023 and the Consolidated Statement of
Financial Position was signed on the Board's behalf by Mike O'Shea
and Piers Harrison.
The Company is a public limited company incorporated and
domiciled in England and Wales. The Company's ordinary shares are
traded on the Alternative Investment Market ('AIM').
These Consolidated Financial Statements were prepared in
accordance with UK-adopted international accounting standards in
conformity with the requirements of the Companies Act 2006. The
Consolidated Financial Statements are presented in Sterling and all
values are rounded to the nearest thousand pounds (GBP000) 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 2023 have been prepared in accordance with UK-adopted
International Financial Reporting Standards ('IFRS'). The
Consolidated Financial Statements have been prepared on a going
concern basis, under the historical cost convention, as modified by
the revaluation of financial assets and financial liabilities
measured at fair value through profit or loss. Costs are expensed
as incurred.
The Directors have assessed the prospects of the Group
considering all the factors affecting the business when deciding to
adopt a going concern basis for the preparation of the accounts.
The Directors confirm that they have a reasonable expectation that
the Group will continue to operate and meet liabilities, as they
fall due, comprising a period of at least 12 months from the date
of this report. This assessment has been made after considering the
impact of recent geopolitical events and Ukraine crisis on the
business. The Directors note that the Group has no external
borrowings and maintains significant levels of cash reserves.
The Directors' assessment has been made with reference to the
Group's current position and strategy, the Board's appetite for
risk, the Group's financial forecasts, and the Group's principal
risks and how these risks are managed, as detailed in the Strategic
Report. The Directors have also reviewed and examined the financial
stress testing inherent in the Internal Capital Adequacy and Risk
Assessment ('ICARA'). 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 ICARA 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:
2023 2022
GBP000 GBP000
--------------------- ------- -------
Management fees 74,450 90,570
Commissions 3 4
Other income/ (loss) 97 (341)
Total revenue 74,550 90,233
--------------------- ------- -------
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:
2023 2022
GBP000 GBP000
------------------------ ------- -------
Closure of connect 250 -
Total exceptional costs 250 -
------------------------ ------- -------
Merger related costs 51 51
Total merger related costs 51 51
---------------------------
Exceptional items are those items of income and expense, which
are considered not to be incurred in the normal course of business
of the Group's operations, and because of the nature of the events
giving rise to them, merit separate presentation to allow
shareholders to understand better the elements of financial
performance in the year.
In accordance with the accounting policy for exceptional items
these costs have been treated as exceptional.
Exceptional items, net of associated income were incurred in
relation to the cessation of the development of the Group's online
portal 'Connect'. This resulted in net expenditure of
GBP250,000.
Merger related costs in the year totalling GBP51,132 (2022:
GBP51,132) represented legal and professional fees associated with
the merger with Miton Group plc.
5. Operating profit
(a) Operating profit is stated after charging:
Notes 2023 2022
GBP000 GBP000
--------------------------------------- ----- ------- -------
Auditor's remuneration 5(b) 694 592
Staff costs 6 35,798 41,072
Interest - leases 27 60
Amortisation of intangible assets 10 4,861 4,861
Exceptional items - closure of Connect 4 250 -
Merger related costs 4 51 51
Loss on disposal of fixed assets - 171
Depreciation - fixed assets 335 580
Depreciation - leases 525 621
--------------------------------------- ----- ------- -------
(b) Auditor's remuneration
The remuneration of the auditor is analysed as follows:
2023 2022
GBP000 GBP000
--------------------------------------- ------- -------
Audit of Company 178 114
Audit of subsidiaries 272 193
---------------------------------------- ------- -------
Total audit 450 307
---------------------------------------- ------- -------
Audit-related assurance services 244 285
Total audit-related assurance services 244 285
---------------------------------------- ------- -------
Total fees 694 592
---------------------------------------- ------- -------
6. Staff costs and Directors' remuneration
Staff costs during the year were as follows:
2023 2022
GBP000 GBP000
---------------------- ------- -------
Salaries and bonus 26,373 31,141
Social security costs 3,628 4,436
Share-based payments 4,721 4,505
Other pension costs 1,076 990
----------------------- ------- -------
Total staff costs 35,798 41,072
----------------------- ------- -------
The average monthly number of employees of the Group during the
year was made up as follows:
2023 2022
number number
---------------------- ------- -------
Directors 8 8
Investment management 56 55
Sales and marketing 36 36
Finance and systems 11 11
Legal and compliance 12 12
Administration 40 42
----------------------- ------- -------
Total employees 163 164
----------------------- ------- -------
7. Finance expense
2023 2022
GBP000 GBP000
------------------------------- ------- -------
Interest receivable (234) (21)
Interest payable 66 44
-------------------------------- ------- -------
Net finance (income) / expense (168) 23
-------------------------------- ------- -------
8. Taxation
(a) Tax recognised in the Consolidated Statement of
Comprehensive Income
2023 2022
GBP000 GBP000
--------------------------------------------------------- ------- -------
Current income tax:
UK corporation tax 2,531 4,262
--------------------------------------------------------- ------- -------
Current income tax charge 2,531 4,262
--------------------------------------------------------- ------- -------
Adjustments in respect of prior periods (12) (59)
--------------------------------------------------------- ------- -------
Total current income tax 2,519 4,203
--------------------------------------------------------- ------- -------
Deferred tax:
Origination and reversal of temporary differences (329) 1,128
Adjustments in respect of prior periods - 15
--------------------------------------------------------- ------- -------
Total deferred tax (income) / expense (329) 1,143
--------------------------------------------------------- ------- -------
Income tax charge reported in the Consolidated Statement
of Comprehensive Income 2,190 5,346
--------------------------------------------------------- ------- -------
(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 22% (2022: 19%). The differences are reconciled
below:
2023 2022
GBP000 GBP000
------------------------------------------------------ ------- -------
Profit before taxation 5,866 14,913
------------------------------------------------------ ------- -------
Tax calculated at UK standard rate of corporation tax
of 22% (2022: 19%): 1,290 2,833
- Other differences 1 2,042
- Share-based payments 1,564 777
- Expenses not deductible for tax purposes 20 20
- Amortisation not deductible - 125
- Income not subject to UK tax - 5
- Tax relief on vested options (683) (418)
- Fixed asset differences 10 6
- Adjustments in respect of prior periods (12) (44)
------------------------------------------------------ ------- -------
Income tax charge in the Consolidated Statement of
Comprehensive Income 2,190 5,346
------------------------------------------------------ ------- -------
(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:
2023 2022
GBP000 GBP000
----------------------------------------------------- ------- -------
Deferred tax asset:
----------------------------------------------------- ------- -------
- Fixed asset temporary differences 32 8
- Accrued bonuses 315 556
- Share-based payments 800 1,364
Deferred tax disclosed on the Consolidated Statement
of Financial Position 1,147 1,928
----------------------------------------------------- ------- -------
2023 2022
GBP000 GBP000
----------------------------------------------------- ------- -------
Deferred tax liability:
----------------------------------------------------- ------- -------
- Arising on acquired intangible assets 2,764 3,543
- Arising on historic business combination 1,650 1,940
- Fixed asset temporary differences - 2
Deferred tax disclosed on the Consolidated Statement
of Financial Position 4,414 5,485
----------------------------------------------------- ------- -------
2023 2022
GBP000 GBP000
------------------------------------------------------------ ------- -------
Deferred tax in the Consolidated Statement of Comprehensive
Income:
------------------------------------------------------------ ------- -------
- Origination and reversal of temporary differences (329) (938)
- Arising on historic business combination - 2,066
- Adjustments in respect of prior periods - 15
------------------------------------------------------------ ------- -------
Deferred tax (income) / expense (329) 1,143
------------------------------------------------------------ ------- -------
All movements in deferred tax balances relate to profit and loss
except for the GBP38,000 that is included in equity.
2023 2022
GBP000 GBP000
------------------------------------------ ------- -------
Unprovided deferred tax asset:
------------------------------------------ ------- -------
- Non-trade loan relationship losses 2,593 1,971
- Excess management expenses 67 51
- Non-trade intangible fixed asset losses 525 399
------------------------------------------ ------- -------
Unprovided deferred tax asset 3,185 2,421
------------------------------------------ ------- -------
9. Earnings per share
Basic earnings per share is calculated by dividing the profit
for the year attributable to ordinary equity shareholders of the
Parent Company by the weighted average number of ordinary shares
outstanding at the year end.
The weighted average of issued ordinary share capital of the
Company is reduced by the weighted average number of shares held by
the Group's EBTs. Dividend waivers are in place over shares held in
the Group's EBTs.
In calculating diluted earnings per share, IAS 33 'Earnings Per
Share' requires that the profit is divided by the weighted average
number of ordinary shares outstanding during the year plus the
weighted average number of ordinary shares that would be issued on
conversion of all the dilutive potential ordinary shares into
ordinary shares during the period.
(a) Reported earnings per share
Reported basic and diluted earnings per share has been
calculated as follows:
2023 2022
GBP000 GBP000
---------------------------------------------------- -------- --------
Profit attributable to ordinary equity shareholders
of the Parent Company for basic earnings 3,676 9,567
---------------------------------------------------- -------- --------
Number Number
000 000
---------------------------------------------------- -------- --------
Issued ordinary shares at 1 October 157,913 157,913
- Effect of own shares held by an EBT (10,778) (11,677)
Weighted average shares in issue 147,135 146,236
---------------------------------------------------- -------- --------
- Effect of movement in share options 9,606 10,184
---------------------------------------------------- -------- --------
Weighted average shares in issue - diluted 156,741 156,420
---------------------------------------------------- -------- --------
Basic earnings per share (pence) 2.50 6.54
Diluted earnings per share (pence) 2.35 6.12
---------------------------------------------------- -------- --------
(b) Adjusted earnings per share
Adjusted earnings per share is based on adjusted profit after
tax, where adjusted profit is stated after charging interest but
before amortisation, share-based payments, merger related costs and
exceptional items.
Adjusted profit for calculating adjusted earnings per share:
2023 2022
GBP000 GBP000
---------------------------------------------------------- ------- -------
Profit before taxation 5,866 14,913
Add back:
- Share-based payment expense 4,721 4,505
- Amortisation of intangible assets 4,861 4,861
- Merger related costs 51 51
- Exceptional items 250 -
---------------------------------------------------------- ------- -------
Adjusted profit before tax 15,749 24,330
---------------------------------------------------------- ------- -------
Taxation:
---------------------------------------------------------- ------- -------
- Tax in the Consolidated Statement of Comprehensive
Income (2,190) (5,346)
---------------------------------------------------------- ------- -------
- Tax effects of adjustments (610) 1,176
---------------------------------------------------------- ------- -------
Adjusted profit after tax for the calculation of adjusted
earnings per share 12,949 20,160
---------------------------------------------------------- ------- -------
Adjusted earnings per share was as follows using the number of
shares calculated at note 9(a):
2023 2022
pence pence
------------------------------------ ------ ------
Adjusted earnings per share 8.80 13.79
Diluted adjusted earnings per share 8.26 12.89
------------------------------------ ------ ------
10. Goodwill and other intangible assets
Cost amortisation and net book value of intangible assets are as
follows:
Goodwill Other Total
Year to 30 September 2023 GBP000 GBP000 GBP000
---------------------------------------- -------- ------- -------
Cost:
At 1 October 2022 and 30 September 2023 77,927 81,025 158,952
Amortisation and impairment:
At 1 October 2022 7,239 58,509 65,748
Amortisation during the year - 4,861 4,861
---------------------------------------- -------- ------- -------
At 30 September 2023 7,239 63,370 70,609
---------------------------------------- -------- ------- -------
Carrying amount:
---------------------------------------- -------- ------- -------
At 30 September 2023 70,688 17,655 88,343
---------------------------------------- -------- ------- -------
At 30 September 2022 70,688 22,516 93,204
---------------------------------------- -------- ------- -------
Goodwill Other Total
Year to 30 September 2022 GBP000 GBP000 GBP000
-------------------------------------------- -------- ------- -------
Cost:
At 1 October 2021 and 30 September 2022 77,927 81,025 158,952
Amortisation and impairment:
At 1 October 2021 7,239 53,648 60,887
Amortisation and impairment during the year - 4,861 4,861
-------------------------------------------- -------- ------- -------
At 30 September 2022 7,239 58,509 65,748
-------------------------------------------- -------- ------- -------
Carrying amount:
-------------------------------------------- -------- ------- -------
At 30 September 2022 70,688 22,516 93,204
-------------------------------------------- -------- ------- -------
At 30 September 2021 70,688 27,377 98,065
-------------------------------------------- -------- ------- -------
Impairment tests for goodwill
The Group has determined that it has a single group of CGUs 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
2023. The recoverable amount within the fund management CGU was
determined by assessing the value-in-use using long-term cash flow
projections for the CGU. The Group operates as a single CGU for the
purposes of monitoring and assessing goodwill for impairment. This
reflects one operating platform, into which acquired businesses are
fully integrated and from which acquisition-related synergies are
expected to be realised. Senior management receive and review
internal financial information as one single entity, with no
disaggregation for segments or geography.
Data for the explicit forecast period of 2024-2028 is based on
the 2024 budget and forecasts for 2025-2028. AuM levels were
determined by assuming net flows, per fund, over this five-year
period based on two key metrics - the first being the momentum of
net flows over the preceding two years, and the second being the
investment performance of the fund against its sector. The Group
believes these two factors are key when making assumptions about
the growth of AuM in the future, and hence expected future cash
flows. Net revenue margins per fund have been assumed at current
levels, unless sufficient reasons exist to deviate, for example
share class consolidation.
The projected operating margin moves in line with the Group's
AuM levels and its overall product mix each year. Increases in
operating costs have been taken into account and include assumed
new business volumes. No cost allowance has been made for future
acquisitions, nor any acquired levels of AuM. The Group's
commitment to responsible investing has also been considered
(within headcount over the forecast period) and the impact to its
cash flows on a longer-term basis, particularly in light of the
possible actions of regulators, customers and suppliers. Cash flows
beyond the explicit forecast period are extrapolated using a
long-term terminal growth rate of 1.7% (2022: 1.7%). To arrive at
the net present value, cash flows have been discounted using a
discount rate of 14.5% (2022: 13%) determined using the capital
asset pricing model (post-tax). The Group engaged valuation
specialists in determining the inputs to calculate the appropriate
discount rate, including current assessments of comparative betas,
long-term economic growth rates and the equity risk premiums
published and observed in the wider industry. The increase in the
discount rate from the prior year is largely due to the increase in
the long-term risk-free rate which was based on 30-year gilts (the
2053 maturity) yielding 4.6% (2022: 3.2%). The Group's pre-tax
discount rate was calculated to be 18% (2022: 16%).
The value-in-use amount calculated was greater than the carrying
value and hence no impairment charge was recognised. As noted
above, the most material assumptions used in determining this
conclusion were the discount rate and compound annual AuM growth
rate. As an additional consideration the Group compares its
value-in-use amount and net assets to market multiples within the
UK asset management sector.
Sensitivity analysis
Management have performed a sensitivity analysis as at 30
September 2023 and established that an increase in the post tax
discount rate to 19% would be required before an impairment of
goodwill would be considered necessary. This would require the
long-term risk-free rate and equity risk premium to be at
significantly higher levels than at present. Analysis was also
completed using materially lower levels of AuM and the
corresponding impact on projected cash flows within the impairment
assessment. The base case annual growth rate for AuM is assumed at
10.3% over the forecast period. Due to the cash generative nature
of the business, and that a large proportion of costs are linked to
the net revenues and underlying profitability of the Group, this
rate would need to remain under 5.5% per annum over the entire
five-year period before any impairment was identified. This also
assumes no material change to the Group's cost base during this
five year period as well as the discount rate to remain unchanged.
Management note the average annual return for the MSCI World Index
(in GBP) over the past 25 years was approximately 7%. The base case
annual growth rate of 10.3% is a combination of both this market
beta movement and an assumption of fund inflows into the Group's
product suite.
The sensitivity analysis established that an increase in the
discount rate by 3% (to 17.5%) would not have a material impact on
the Group's results. We conclude no reasonable change in
assumptions would trigger an impairment to goodwill. The Group is,
however, mindful of the current uncertainty that exists in markets
including the threat posed by recent geopolitical events and that
extreme movements may be cause for further examination into the
possibilities of impairment in the future.
Change required to reduce headroom to zero %
------------------------------------------- ---
Increase in discount rate by 4.5% to: 19
Reduction in the CAGR over the entire five
year period by 4.8% to: 5.5
Other intangible assets
The Group's other intangible assets comprise of investment
management agreements ('IMAs') purchased by the Group. The carrying
amount above relates to two historic transactions, the largest
being the merger with Miton Group plc with a carrying value of
GBP11,055,890 and a remaining amortisation period of three years
(2022: GBP14,596,097 and a remaining amortisation period of four
years). The remaining balance relates to a transaction completed in
2007 to acquire IMAs which now have a carrying value of
GBP6,599,618 and a remaining amortisation period of five years
(2022: GBP7,920,267 and a remaining amortisation period of six
years).
The determination of useful lives, and hence amortisation
period, used for other intangible assets requires an assessment of
the length of time the Group expects to derive benefits from the
asset. This depends on a number of factors, the most significant
being the duration of customer investment timeframes and the type
of underlying fund (for example the asset classes specified by the
fund's investment objectives will give insight into its usual
life).
An assessment is performed at each reporting period for each
intangible asset for indicators of impairment. There are two core
metrics used in this assessment - the first being the comparison of
AuM levels at the period end with those included in the original
intangible asset valuation and the second being the investment
performance of each individual fund against its comparable peers
and benchmarks. In addition, both internal and external factors
affecting the funds are considered such as current net margin,
potential regulatory changes and future demand for its asset class.
For each intangible asset mentioned above, if required, further
analysis is performed on a fund management team basis, and the
estimated aggregate cashflows generated by each team. These
estimated cashflows are modelled based on the current level of AuM
for the funds managed by each team and are compared against the
original basis used to value the intangible at the acquisition date
and their remaining amortisation period. Despite the recent
fluctuations in AuM, no indicators of impairment were noted when
analysing at a fund management team level. Notably, the largest
other intangible asset is more than halfway through its
amortisation period of 7 years, resulting in the carrying amount
being less than half of its original value on inception. The
long-term investment performance for all investment teams assessed
were above the relevant sector average, reflecting the quality of
the investment process.
11. Trade and other receivables
2023 2022
Current GBP000 GBP000
---------------------------------------------------------------- ------- -------
Due from trustees/investors for open end fund redemptions/sales 113,310 122,339
Other trade debtors 374 526
Fees receivable 5,180 6,132
Prepayments 2,099 2,662
Corporation tax 1,299 1,794
Other receivables 2,205 2,599
---------------------------------------------------------------- ------- -------
Total trade and other receivables 124,467 136,052
---------------------------------------------------------------- ------- -------
Non-current
---------------------------------------------------------------- ------- -------
Other receivables 482 1,081
---------------------------------------------------------------- ------- -------
Trade and other receivables are all current and any fair value
difference is not material. Trade and other receivables are
considered past due once they have passed their contracted due
date.
Non-current other receivables represent deferred compensation
awards with maturities greater than 12 months after Consolidated
Statement of Financial Position date. Deferred compensation awards
are released in accordance with the employment period to which they
relate.
12. Cash and cash equivalents
2023 2022
GBP000 GBP000
-------------------------------- ------- -------
Cash at bank and in hand 37,863 45,682
Cash held in EBTs 79 82
-------------------------------- ------- -------
Total cash and cash equivalents 37,942 45,764
-------------------------------- ------- -------
13. Trade and other payables
2023 2022
GBP000 GBP000
------------------------------------------------------------------ ------- -------
Due to trustees/investors for open end fund creations/redemptions 112,541 122,334
Other trade payables 1,297 1,542
Other tax and social security payable 1,765 3,031
Accruals 11,496 20,021
Pension contributions 116 9
Other payables 1,338 1,883
Total trade and other payables 128,553 148,820
------------------------------------------------------------------ ------- -------
Trade creditors and accruals principally comprise amounts
outstanding for trade purchases and ongoing costs. The Group has
financial risk management policies in place to ensure that all
payables are paid within the pre-agreed credit terms.
Other payables relate predominantly to amounts due to outsource
providers for administrative services provided to the Group's
funds.
The Directors consider that the carrying amount of trade
payables approximates to their fair value.
14. Provisions
2023 2022
GBP000 GBP000
--------------------- ------- -------
At 1 October 374 389
Movement in the year - (15)
--------------------- ------- -------
At 30 September 374 374
Current - -
Non-current 374 374
--------------------- ------- -------
374 374
--------------------- ------- -------
Provisions relate to dilapidations for the offices at 6th Floor,
Paternoster House, London, the lease on this property runs to 28
November 2028 and the provision for dilapidations on this office
has been disclosed as non-current. This provision is based on
prices quoted at the time of the lease being taken on.
15. Share capital
Ordinary
shares Deferred
2023 allotted, called up and fully paid: 0.02 pence shares
Number of shares each Number Number
----------------------------------------- ------------ --------
At 1 October 2022 157,913,035 1
Movement in the year - -
----------------------------------------- ------------ --------
At 30 September 2023 157,913,035 1
----------------------------------------- ------------ --------
Ordinary
shares Deferred
2022 allotted, called up and fully paid: 0.02 pence shares
Number of shares each Number Number
----------------------------------------- ------------ --------
At 1 October 2021 157,913,035 1
Movement in the year - -
----------------------------------------- ------------ --------
At 30 September 2022 157,913,035 1
----------------------------------------- ------------ --------
Ordinary shares Deferred Total
2023 allotted, called up and fully paid: 0.02 pence each shares shares
Value of shares GBP000 GBP000 GBP000
----------------------------------------- ---------------- -------- -------
At 1 October 2022 31 29 60
Movement in the year - - -
----------------------------------------- ---------------- -------- -------
At 30 September 2023 31 29 60
----------------------------------------- ---------------- -------- -------
Ordinary shares Deferred Total
2022 allotted, called up and fully paid: 0.02 pence each shares shares
Value of shares GBP000 GBP000 GBP000
----------------------------------------- ---------------- -------- -------
At 1 October 2021 31 29 60
Movement in the year - - -
----------------------------------------- ---------------- -------- -------
At 30 September 2022 31 29 60
----------------------------------------- ---------------- -------- -------
The deferred share carries no voting rights and no right to
receive a dividend.
16. Share-based payments
The total charge to the Consolidated Statement of Comprehensive
Income for share-based payments in respect of employee services
received during the year to 30 September 2023 was GBP4,720,721
(2022: GBP4,504,620), of which GBP3,953,896 related to nil cost
contingent share rights (2022: GBP4,314,386).
17. Dividends declared and paid
2023 2022
GBP000 GBP000
------------------------------------------------------- ------- -------
Equity dividends on ordinary shares:
- Interim dividend: 3.0 (2022: interim 3.7) pence
per share 4,454 5,427
- Final dividend for 2022: 6.3 (2021 final 6.3) pence
per share 9,147 9,269
------------------------------------------------------- ------- -------
Dividends paid 13,601 14,696
------------------------------------------------------- ------- -------
The Directors recommend a final dividend of 3p per share (2022:
6.3p) payable on 16 February 2024 to shareholders on the register
as at 19 January 2024.
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END
FR DBBDDBDGDGXS
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December 05, 2023 02:00 ET (07:00 GMT)
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