Half-year Results

RNS Number : 0324G

Premier Asset Management Group PLC

24 May 2017

 

24 May 2017

Premier Asset Management Group PLC

("Premier" or the "Company")

Unaudited Interim Results for the six months ended 31 March 2017

Highlights

•              Assets under management (AUM) increased by 11% to £5.5 billion as at 31 March 2017 (H1 FY16: AUM increased by 11% to £4.5 billion)

•              Total net inflows of £311m in the six months to 31 March 2017 (H1 FY16: £422m)

•              Total net inflows of £667m for the rolling twelve months to 31 March 2017 (2016: £901m)

•              Sixteen consecutive quarters of positive net flows

•              Continued strong investment performance net of all fund charges*:

o   Over five years to 31 March 2017

§ 96% of AUM above median

§ 80% of AUM first quartile

o   Over three years to 31 March 2017

§ 95% of AUM above median

§ 63% of AUM first quartile

•              EBITDA** up 32% to £6.36m (H1 FY16: £4.81m)

•              Adjusted profit before tax up 32% to £6.25m (H1 FY16: £4.72m)

•              Profit before tax of £4.16m

•              Earnings per share of 3.03p

•              First quarterly dividend paid on 3 March 2017 and second quarterly dividend will be paid on 2 June 2017. The Company has adopted a quarterly dividend policy, expecting to pay three smaller, interim dividends, representing approximately half of the estimated total dividend for the full financial year, followed by a larger, final interim dividend.

*Performance figures represent 83% of Premier's total AUM as at 31 March 2017 and exclude absolute return funds, investment trusts and segregated mandates. Median and quartile ranking figures are shown relative to respective Investment Association sectors. Source: FE Analytics, data to 31 March 2017, C share class or equivalent share class, income reinvested. Data shown net of all fund charges.

**Profit before interest, tax, depreciation, amortisation and exceptional items.

"Macro political events continued to dominate the market environment during the past six months. Inevitably, this led to heightened caution amongst retail investors for the majority of the period under review. Whilst this has made the backdrop for fund sales more challenging, there has been some evidence of an improvement in the short term, which is encouraging. We are therefore pleased to report positive net flows across our fund range over the six month period of £311m.  AUM growth was 11% over the six months ended 31 March 2017 and 22% from the AUM level twelve months ago.  During the three months ended 31 March 2017 we also achieved our sixteenth consecutive quarter of positive net flows. We are pleased to note that both our three and five-year performance across our assets under management remains strong, as we continue to focus on delivering good long-term outcomes for our clients, after all fund charges.

Looking forward, the challenges resulting from the UK's decision to leave the European Union are likely to continue to dominate the investment landscape for UK based investors. At the same time, the boost to economies and asset prices that followed central government intervention through quantitative easing seems to be ending. We believe that in this environment, where interest rates are still likely to remain at historic low levels, the value of good, active management will be ever more important. We are confident that our investment teams are well placed to navigate these challenges for our clients.

We continue to believe that our strategy of offering relevant investment products, which are designed to meet the different long‐term needs of UK investors, backed by good investment returns, a strong distribution capability and scalable operating platform, positions us well to produce good results for both our clients and our shareholders.''

Mike O'Shea

Chief Executive

Chairman's & Chief Executive's review

Overview

Premier Asset Management is an investment-led business, with a focus on delivering good long-term investment outcomes for our clients through active management and after all fund charges. Whilst we know there is a focus on short-term performance, our primary objective is to deliver positive long-term investment outcomes for our clients against each of our fund's investment objectives. This includes producing strong long-term growth, income, growing income, absolute returns and good risk-adjusted performance. As always, this means supporting our fund managers and investment teams and backing their investment approaches during different, and sometimes volatile, market conditions. It also means focusing on the long-term rather than on short-term market or fund price movements.

We are able to demonstrate continued strong performance for our clients after all fund charges. Over five years to 31 March 2017, 96% of our retail fund assets under management were above median and 80% were first quartile in their respective Investment Association sectors. Over three years, 95% of our retail fund assets under management were above median and 63% were first quartile.*

Many of our funds have a clear focus on generating income for investors through regular dividends or interest distributions, and these funds have strong track records of delivering attractive income to investors. They are currently offering attractive yields relative to their peers and their respective markets. Our two absolute return funds, which aim to deliver positive returns over rolling three year periods with significantly less volatility than equity markets, continue to meet their objectives, adding six more rolling three year positive periods out of six during this period.

In the first half of the year our multi-asset funds and multi-asset investment team continued to win more awards, including Investment Week Multi-Manager/Funds of Funds Management Group of the Year, Professional Adviser Best Multi-Asset Group: Flexible Investment, Professional Adviser Best Multi-Asset Fund: Long Term Growth, and RSMR Best Multi-Asset Group.

Our distribution focus is on the UK retail intermediary market. The attraction and success of our multi-asset funds, which includes ten funds covering income, growth, balanced, absolute return, conservative growth and volatility-targeted funds, means we have developed a strong presence in the financial advisory market. We will continue to focus on multi-asset and the financial advisory market, but we are also continuing to develop sales of our equity and absolute return funds through the financial advisory and wealth management market.

Flows and assets under management

Through a combination of relevant investment products, good investment results from our investment team and our strong distribution capability, we are pleased to report a positive first half year following our listing on AIM in October 2016. Net inflows across our fund range over the period were £311m (H1 FY16: £422m) and our assets under management ended the period at a record high level of £5.5 billion (H1 FY16: £4.5 billion). AUM growth was 11% over the six months ended 31 March 2017 (H1 FY16: 11%) and 22% from the AUM level twelve months ago (2016: 21%).

		Q3 FY16	Q4 FY16	Q1 FY17	Q2 FY17
		£m	£m	£m	£m
Opening AUM		4,544	4,594	4,999	5,206
	Sales	566	458	519	522
	Redemptions	(305)	(363)	(379)	(352)
Net flows		261	95	140	170
Closures		(130)	-	-	-
Performance		(81)	310	67	153
Closing AUM		4,594	4,999	5,206	5,530

Financial results

As a result of the increased level of assets under management and continued cost discipline, the Directors are pleased to report that EBITDA for the period rose to £6.36m from £4.81m for the same period last year; a rise of 32%. Overall, we remain confident on the outlook for the business. We do note that the FCA Market Study into the asset management sector is due to be published before the end of the year and we await its findings with interest.

		Unaudited  Six months to 31 March 2017	Unaudited  Six months to 31 March 2016	Audited Year to 30 September 2016
		£000	£000	£000
Reported PBT		4,155	788	2,531
Add back:
	Interest payable	37	1,209	2,497
	Amortisation of intangible assets	1,688	2,566	5,131
	Exceptional items	371	152	485
Adjusted PBT		6,251	4,715	10,644
Add back:
	Depreciation	110	95	239
EBITDA		6,361	4,810	10,883

Following the Company's IPO, all borrowings have been repaid and Premier's net assets have increased to £41.8m (H1 FY16: £(5.6)m). Net cash from operations has increased to £4.4m for the period (H1 FY16: £3.5m).

Dividend

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

The Company paid its first interim dividend of 1.25p per share on 3 March 2017. The next interim dividend of 1.25p was announced on 26 April 2017 and will be paid on 2 June 2017.

Key risks

The key risks that the Group's business activities give rise to, and those which the Group will be exposed to in the second half of 2017, are substantially the same as those described in the 2016 annual report. The risks are credit risk, liquidity risk, market price risk and operational risk. These risks, if not managed properly, increase the possibility that the Group will not be able to meet its objectives. Each of these risks and the approach to mitigate the risks are described in detail within the 2016 annual report.

Outlook and summary

Looking forward, the challenges resulting from the UK's decision to leave the EU are likely to continue to dominate the investment landscape for UK based investors. At the same time, the boost to economies and asset prices that followed central government intervention through quantitative easing seems to be ending. We believe that in this environment, where interest rates will likely continue at historic low levels, the value of good active management will be ever more important. We are confident that our investment teams are well placed to navigate these challenges for our clients.

The Company intends to implement a capital reduction process to cancel its share premium account in order to create distributable reserves at the Group level, which would be available to be used primarily for the purpose of paying future dividends and, should the Company determine in the future, any share repurchase programme. The Company will shortly release a further announcement setting out details of the capital reduction.  The capital reduction will need the approval of shareholders and the Company will send a notice of general meeting to shareholders accordingly. In addition, the Company is currently engaging with the Takeover Panel regarding the membership of the Concert Party (as defined in the Company's Admission Document) in order to clarify whether, as a result of any future allotment of new shares pursuant to the Company's long-term incentive plan (LTIP), it would be necessary to seek a waiver from the Takeover Panel of the obligation that would otherwise arise on any member of the Concert Party to make a general offer to shareholders pursuant to Rule 9 of the City Code on Takeovers and Mergers.

We continue to believe that our strategy of offering relevant investment products, which are designed to meet the different long‐term needs of UK investors, backed by good investment returns, a strong distribution capability and scalable operating platform positions us well to produce good results for both our fund investors and our shareholders.

*Performance figures represent 83% of Premier's total AUM as at 31 March 2017 and exclude absolute return funds, investment trusts and segregated mandates. Median and quartile ranking figures are shown relative to respective Investment Association sectors. Source: FE Analytics, data to 31 March 2017, C share class or equivalent share class, income reinvested. Data shown net of all fund charges.

Interim unaudited condensed consolidated statement of comprehensive income

For the six months ended 31 March 2017

				Unaudited Six months to 31 March 2017		Unaudited Six months to 31 March 2016		Audited Year to 30 September 2016
	Note			£000		£000		£000
Revenue	3			21,795		19,100		39,149
Administrative costs				(15,544)		(14,385)		(28,505)
Amortisation of intangible assets				(1,688)		(2,566)		(5,131)
Exceptional items	4			(371)		(152)		(485)
Total operating costs				(17,603)		(17,103)		(34,121)
Operating profit				4,192		1,997		5,028
Finance costs				(37)		(1,209)		(2,497)
Profit on ordinary activities before taxation				4,155		788		2,531
Tax expense	5			(1,050)		(698)		(1,546)
Profit on ordinary activities after taxation				3,105		90		985
Other comprehensive income				-		-		-
Total comprehensive income				3,105		90		985
Basic earnings per share	6			3.03p		6.62p		71.68p
Diluted basic earnings per share	6			3.03p		6.62p		71.68p

All the amounts relate to continuing operations.

Interim unaudited condensed consolidated statement of financial position

As at 31 March 2017

			Unaudited  31 March 2017		Unaudited  31 March  2016		Audited 30 September 2016
	Note		£000		£000		£000
Assets
Non-current assets
Intangible assets			16,013		20,266		17,701
Goodwill			15,597		15,597		15,597
Property, plant and equipment			862		864		933
Deferred tax asset			1,580		1,802		1,580
Total non-current assets			34,052		38,529		35,811
Current assets
Financial assets at fair value through profit and loss			1,170		995		1,061
Trade and other receivables			60,249		51,601		36,624
Cash and cash equivalents	7		11,007		5,096		10,638
Total current assets			72,426		57,692		48,323
Total assets			106,478		96,221		84,134
Equity
Capital and reserves attributable to equity holders
Share capital	10		21		546		14
Share premium			44,747		25		34
Capital redemption reserve			4,532		-		4,532
Retained earnings			(7,495)		(6,173)		(9,278)
Total equity			41,805		(5,602)		(4,698)
Liabilities
Current liabilities
Trade and other payables			62,289		54,045		40,138
Current tax liabilities			2,384		1,389		1,375
Total current liabilities			64,673		55,434		41,513
Non-current liabilities
Borrowings	8		-		42,670		42,670
Deferred consideration			-		193		-
Provisions and other liabilities	9		-		3,526		4,649
Total non-current liabilities			-		46,389		47,319
Total liabilities			64,673		101,823		88,832
Total equity and liabilities			106,478		96,221		84,134

Interim unaudited condensed consolidated statement of changes in equity

For the six months ended 31 March 2017

	Share capital		Share premium		Capital redemption reserve		Retained earnings		Total equity
	£000		£000		£000		£000		£000
At 1 October 2016	14		34		4,532		(9,278)		(4,698)
Shares issued	7		44,713		-		-		44,720
Equity dividends paid	-		-		-		(1,322)		(1,322)
Profit for the financial period	-		-		-		3,105		3,105
At 31 March 2017 (Unaudited half year)	21		44,747		4,532		(7,495)		41,805
At 1 October 2015	546		13		-		(6,263)		(5,704)
Shares issued	-		12		-		-		12
Profit for the financial period	-		-		-		90		90
At 31 March 2016 (Unaudited half year)	546		25		-		(6,173)		(5,602)
At 1 October 2015	546		13		-		(6,263)		(5,704)
Shares issued	-		21		-		-		21
Capital redemption	(532)		-		4,532		(4,000)		-
Profit for the financial year	-		-		-		985		985
At 30 September 2016 (Audited)	14		34		4,532		(9,278)		(4,698)

Interim unaudited condensed consolidated statement of cash flow

For the six months ended 31 March 2017

			Unaudited Six months to 31 March 2017		Unaudited Six months to 31 March 2016		Audited  Year to  30 September 2016
	Note		£000		£000		£000
Cash flows from operating activities
Profit for the period			3,105		90		985
Adjustments for:
Financial expense			37		1,209		2,497
Taxation	5		1,050		698		1,546
Depreciation			110		95		239
Loss/(profit) on sale of property, plant and equipment			-		1		1
Gain on sale of financial assets at fair value through profit and loss			(32)		(12)		(12)
Gain on revaluation of current asset investments			(16)		-		(46)
Amortisation			1,688		2,566		5,131
Changes in working capital:
Decrease/(increase) in trade and other receivables			(23,625)		(11,313)		2,088
(Decrease)/increase in trade and other payables			22,151		10,425		(673)
(Decrease)/increase in provisions			-		-		(530)
Cash generated from operations			4,468		3,759		11,226
Interest paid			-		(40)		(42)
Tax paid			(41)		(220)		(867)
Net cash from operating activities			4,427		3,499		10,317
Cash flows from investing activities
Acquisition of other intangible assets			-		(225)		(1,275)
Acquisition of assets at fair value through profit and loss			(651)		(521)		(543)
Proceeds from disposal of assets at fair value through profit and loss			590		89		89
Acquisitions of property, plant and equipment			(39)		(1)		(214)
Net cash from investing activities			(100)		(658)		(1,943)
Cash flows from financing activities
Repayment of borrowings			(42,670)		(6,250)		(6,250)
Interest paid on borrowings			(4,686)		(359)		(359)
Dividends paid to shareholders			(1,322)		-		-
Proceeds from the issue of share capital			44,720		12		21
Net cash from financing activities			(3,958)		(6,597)		(6,588)
Net increase/(decrease) is cash and cash equivalents			369		(3,756)		1,786
Cash and cash equivalents at the beginning of the period			10,638		8,852		8,852
Cash and cash equivalents at the end of the period			11,007		5,096		10,638

Notes to the condensed consolidated interim financial statements

At 31 March 2017

1.   Basis of accounting

a)    General information

Premier Asset Management Group PLC ("the Group") is the parent company of a group of companies which provide a range of investment management services in the United Kingdom and Channel Islands.

The Group's 2016 Annual Report is prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, and is available on the Premier Asset Management Group PLC website (www.premierfunds.co.uk).

b)    Basis of Accounting

These condensed and consolidated interim financial statements do not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006. Unless otherwise stated, they have been prepared on the basis of the accounting policies as set out in the Group's Annual Report for the year ended 30 September 2016.

The interim report has been prepared in accordance with IAS 34 'Interim Financial Reporting' and the Listing Rules of the Financial Conduct Authority.

The Group has sufficient financial resources and contracts with a number of customers and suppliers such that the Directors believe that the Group is well placed to manage its business risks successfully despite the continued uncertain economic outlook.

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the interim report.

These unaudited financial statements were approved and authorised for issue by the Board of Directors on 23 May 2017.

The comparative figures for the financial year ended 30 September 2016 are not the Company's statutory accounts for the financial year.

The full year accounts to 30 September 2016 were approved by the Board of Directors on 8 December 2016 and have been delivered to the Registrar of Companies. The report of the Auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006. The figures for the six months ended 31 March 2017 and the six months ended 31 March 2016 have not been audited.

The consolidated financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.

c)     Forward looking statements

These condensed consolidated interim financial statements which are made by the Directors in good faith based on information available to them at the time of their approval of the accounts. Forward looking statements should be treated with caution due to the inherent uncertainties, including economic, regulatory and business risk factors underlying any such statement. We undertake no obligation to update any forward looking statement whether as a result of new information, future events or otherwise. The condensed consolidated interim financial statements have been prepared to provide information to the Group's shareholders and should not be relied upon by any other party or for any other purpose.

2.   Accounting policies

2.1   Basis of preparation

The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities measured at fair value through profit or loss. Costs are expensed as incurred.

3.   Revenue

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

			Unaudited Six months to 31 March 2017		Unaudited Six months to 31 March 2016		Audited Year to 30 September 2016
			£000		£000		£000
Management fees			21,731		18,992		38,957
Commissions			34		41		70
Other income			30		67		122
Total revenue			21,795		19,100		39,149

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

4.   Exceptional items

Exceptional items are significant items of income and expense that have been presented separately by virtue of their nature to enable a better understanding of the Group's financial performance.

Recognised in arriving at operating profit from continuing operations:

			Unaudited Six months to 31 March 2017		Unaudited Six months to 31 March 2016		Audited Year to 30 September 2016
			£000		£000		£000
Staff redundancy costs			40		121		121
Fund rationalisation, closures and mergers			-		17		17
Irrecoverable VAT			-		-		333
Listing on AIM			331
Capital reduction			-		14		14
Total exceptional items			371		152		485

Staff redundancy costs are in relation to the rationalisation and restructuring of various departments and functions. Fund rationalisation, closure and merger costs are in relation to funds which were merged or closed in 2016 and 2015. Irrecoverable VAT represents input tax that was payable following the outcome of discussions with HMRC regarding the operation of an agreed partial exemption special method. Listing on AIM represents costs associated with the admission to trading on the Alternative Investment Market.

5.   Income taxes

Tax charged in the statement of comprehensive income

			Unaudited Six months to 31 March 2017		Unaudited Six months to 31 March 2016		Audited Year to 30 September 2016
			£000		£000		£000
Current income tax:
UK corporation tax			1,050		665		1,291
Current income tax charge			1,050		665		1,291
Adjustments in respect of prior periods			-		33		33
Total current income tax			1,050		698		1,324
Deferred tax			-		-		222
Tax expense in the statement of comprehensive income			1,050		698		1,546

6.   Earnings per share

Reported earnings per share has been calculated as follows:

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

			Unaudited Six months to 31 March 2017		Unaudited Six months to 31 March 2016		Audited Year to 30 September 2016
			£000		£000		£000
Basic:
Profit attributable to equity holders of the Group			3,105		90		985
Weighted average number of ordinary shares in issue			102,359,460		1,365,776		1,374,851
Basic earnings per share			3.03p		6.62p		71.68p

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

			Unaudited Six months to 31 March 2017		Unaudited Six months to 31 March 2016		Audited Year to 30 September 2016
			£000		£000		£000
Diluted:
Profit attributable to equity holders of the Group			3,105		90		985
Weighted average number of ordinary shares in issue			102,359,460		1,365,776		1,374,851
Diluted earnings per share			3.03p		6.62p		71.68p

7.   Cash and cash equivalents

			Unaudited Six months to 31 March 2017		Unaudited Six months to 31 March 2016		Audited Year to 30 September 2016
			£000		£000		£000
Cash at bank and in hand			11,007		5,096		10,638
Total cash and cash equivalents			11,007		5,096		10,638

8.   Borrowings

			Unaudited Six months to 31 March 2017		Unaudited Six months to 31 March 2016		Audited Year to 30 September 2016
			£000		£000		£000
Preference shares of £1 each			-		42,670		42,670
Total borrowings			-		42,670		42,670

Preference shares

On 7 October 2016 the Company redeemed the 13,500,000 8% preference shares and 29,170,000 4% preference shares, and paid accrued interest of £2,252,429 and £2,433,449 respectively.

9.   Provisions and other liabilities

Analysis of total provisions and other liabilities:

			Unaudited Six months to 31 March 2017		Unaudited Six months to 31 March 2016		Audited Year to 30 September 2016
			£000		£000		£000
Interest on preference shares			-		3,526		4,649
Total provisions and other liabilities			-		3,526		4,649

Interest on preference shares

The accrued interest relates to the Preference shares (note 8).

10. Share capital

			Unaudited Six months to 31 March 2017		Unaudited Six months to 31 March 2016		Audited Year to 30 September 2016
Authorised
Ordinary shares			105,801,310		1,375,302		1,398,513
Allotted, issued and fully paid
Ordinary shares			105,801,310		1,375,302		1,398,513

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

The Company then issued on 4 October 2016 an announcement to the London Stock Exchange giving notice of its proposed admission to trading on AIM and announced its initial public offering by way of a placing of 35,875,660 new and 12,381,916 existing ordinary shares of 0.02 pence each at a price of 132 pence per share, raising gross proceeds of £63.7 million.

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

On 7 October 2016 the Company's shares were admitted to trading on AIM and 35,875,660 ordinary shares of 0.02 pence each were allotted at a price of 132 pence per share, increasing the number of issued ordinary share capital to 105,801,310 shares. The gross proceeds of the allotment, which amounted to £47,355,871 were used on 7 October 2016 firstly, to redeem the 13,500,000 8% preference shares and pay accrued interest thereon of £2,252,429 and secondly, to redeem the 29,170,000 4% preference shares and pay accrued interest thereon of £2,433,449.

11. Segment reporting

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

IFRS 8 Operating Segments requires disclosures to reflect the information which Group management uses for evaluating performance and the allocation of resources. The Group is managed as a single asset management business and as such, there are no additional operating segments to disclose.

Under IFRS 8, the Group is also required to make disclosures by geographical segments. As Group operations are solely in the UK and Channel Islands, there are no additional geographical segments to disclose.

Enquiries:

Premier Asset Management Group PLC	Tel: [phone] Mike O'Shea
Stifel Nicolaus Europe Ltd trading as KBW (Nomad and Joint Broker)	Tel: [phone] Gareth Hunt Stewart Wallace
Numis Securities Limited (Joint broker)	Tel: [phone] Andrew Holloway Charles Farquhar
Smithfield Consultants (Financial PR)	Tel: [phone] John Kiely Andrew Wilde

Note to editors 

About Premier

Premier is a fast-growing UK retail asset management group with a focus on delivering good investment outcomes for investors through relevant products and active management across its range of investment strategies, which include multi-asset, equity and absolute return funds.  Premier had £5.5 billion of assets under management as at 31 March 2017.

 

END

 

 

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