Half-year Results

RNS Number : 9459O

Premier Asset Management Group PLC

23 May 2018

 

23 May 2018

Premier Asset Management Group PLC

("Premier" or the "Company")

Unaudited Interim Results for the six months ended 31 March 2018

Highlights

Assets under management

·      Total assets under management (AUM) were £6.4 billion as at 31 March 2018 (31 March 2017: £5.5 billion)

·      Assets under management as at close of business on 18 May 2018 were £6.8 billion

Inflows

·      Total net inflows of £175m in the three months to 31 March 2018 (3 months to 31 March 2017: £170m)

·      Twentieth successive quarter of positive net inflows

·      Total net inflows of £411m in the six months to 31 March 2018 (6 months to 31 March 2017: £311m)

·      Total net inflows of £847m for the rolling twelve months to 31 March 2018 (rolling twelve months to 31 March 2017: £667m)

Investment performance

·        Continued strong investment performance net of all fund charges¹:

o  Over three years to 31 March 2018: 91% of AUM were above median

o  Over five years to 31 March 2018: 97% of AUM were above median

Financials

·        Adjusted EBITDA² up 44% to £9.15m (H1 FY17: £6.36m)

·        Profit before tax up 90% to £7.91m (H1 FY17: £4.16m)

·        Earnings per share up 95% to 5.91p (H1 FY17: 3.03p)

·        Quarterly dividend per share of 1.65p vs 1.25p for the same period last year

¹ Performance figures represent 85% of Premier's total AUM as at 31 March 2018 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 2018.  Net income reinvested. Data shown net of all fund charges.  C share class, or, where a C share class was not available for the full time period, the pre RDR bundled or equivalent retail share class has been used for the period the C share class was not available.

² Earnings before interest, taxation, depreciation, amortisation of intangibles, exceptional items and share based payments.

Mike O'Shea, Chief Executive, commented:

"Premier has continued to make solid progress with positive net inflows and good long term investment performance after all fund charges, despite declines in stock markets over the last three months of the period. The quality of our performance and investment teams has been recognised by more awards over the period, including Best Multi-Asset Group of the Year at the Professional Adviser Awards 2018".

"Our focus continues to be on our existing investment products, including our twelve multi-asset funds, our equity funds and absolute return funds, but we have also continued to develop our product range and announced changes to our client service model for advisers during the period.

"Looking ahead, it seems likely that although interest rates will head higher as the global economy improves, they will remain lower overall than in previous economic cycles. With equity markets now looking through the current economic upturn to what lies beyond, it is likely that market volatility will be higher than in recent years and political uncertainty will continue to have an impact. In this environment, we believe there will be good opportunities for actively managed funds to produce attractive long term investment outcomes for investors. We are confident that our investment teams are well placed to navigate these challenges for our clients."

This announcement contains inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

Chief Executive's statement

Premier has continued to make good progress over the period with strong net inflows and good investment performance after all fund charges.

Net flows

Despite challenging market conditions and continued economic and political uncertainty, a combination of relevant investment products, good investment results from our investment team and our strong distribution capability resulted in strong net flows over the six month period to 31 March 2018 of £411m. This compares with £311m in the six months to 31 March 2017.  Inflows continue to be particularly strong across our multi-asset range but our equity funds were also positive contributors.  The quarter to 31 March 2018 was the twentieth successive quarter of positive net inflows into our funds.

These inflows, plus market movements, resulted in our assets under management increasing to £6.4 billion.  AUM growth was 4% over the six months ended 31 March 2018 (six months to 31 March 2017: 11%) and 15% from the AUM level twelve months ago, as at 31 March 2017.

		Quarter ended 30 June 2017	Quarter ended 30 September 2017	Quarter ended 31 December 2017	Quarter ended 31 March 2018
		£m	£m	£m	£m
Opening AUM		5,530	5,842	6,088	6,446
	Sales	579	531	570	564
	Redemptions	(348)	(326)	(334)	(389)
Net flows		231	205	236	175
Closures		-	-	-	-
Performance		81	41	122	(256)
Closing AUM		5,842	6,088	6,446	6,365

Assets under management as at close of business on 18 May 2018 were £6.8 billion.

Financial results

Adjusted EBITDA during the six months to 31 March 2018 totalled £9.2m, an increase of 44% on the £6.4m for the six months to 31 March 2017. The key driver behind the increase in EBITDA was the impact of higher AUM levels on management fees.

		Unaudited  Six months to 31 March 2018	Unaudited  Six months to 31 March 2017	Audited Year to 30 September 2017
		£000	£000	£000
Profit before tax		7,906	4,155	11,493
Add back:
	Interest payable	-	37	44
	Amortisation of intangible assets	836	1,688	2,536
	Share based payments	285	-	322
	Exceptional items	-	371	415
Adjusted profit before tax		9,027	6,251	14,810
Add back:
	Depreciation	126	110	225
Adjusted EBITDA		9,153	6,361	15,035

Investment performance

Our investment performance continues to be strong. Based on 85% of AUM, (which means our total AUM excluding absolute return funds, investment trusts and segregated mandates), 91% of our AUM has achieved above sector median performance, net of all fund charges, over three years and the figure is 97% over five years.

Our two absolute return funds, which are not measured against a peer group, each have a 100% record of producing positive returns over rolling three-year periods. For our equity based funds, we measure performance against a relevant equity index. I am pleased to report that over the last five years to 31 March 2018, every single one of our eight equity focussed funds has outperformed its comparator index after all fund charges, with average annualised outperformance of 2.6% p.a.

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

The quality of our performance and investment teams has been recognised by more awards over the period, including at the Professional Adviser Awards 2018 and Investment Week Awards 2017 where Premier was named Best Multi-Asset Fund Group of the Year. Premier Multi-Asset Distribution Fund, Premier Multi-Asset Global Growth Fund, Premier Multi-Asset Conservative Growth Fund, Premier Defensive Growth Fund and Acorn Income Fund were also recognised with awards during the period.

Business development

Our focus continues to be on our existing investment products, including our multi-asset, equity and absolute return funds.

Premier has a strong presence in the UK retail market for multi-asset funds, and offers a range of twelve funds, including ten multi-manager funds. These funds are designed to help investors meet different long term investment objectives, including income, growth, absolute returns, conservative growth and risk-managed objectives. Our range of UK equity, global equity and absolute returns have also attracted support over the period and we continue to seek development opportunities for our different investment strategies.

We have also continued to develop our product range and announced changes to our client service model for advisers during the period.

In October 2017, we relaunched the Premier Optimum Income Fund with a new target yield of 7% p.a. and a new co-fund management team following the expansion of our equity team with specialist covered call options capabilities.

In March 2018, we announced the launch of PremierConnect, a new digital portal designed to assist financial advisers investing directly in Premier's funds on behalf of their clients. The new portal, which is planned to go live later in 2018, will give advisers access to a range of features, including on-line transactions, client specific portfolio reporting, facilitating the payment of adviser charges and client illustrations, as well as real-time integration with a range of advisers' own back office solutions for greater adviser business efficiency. There will be no additional costs for advisers or their clients to use PremierConnect.

Regulation

In addition to our ongoing focus on existing regulations, over the period we made final preparations for the implementation of MiFID II regulations on 3 January 2018 and we are also preparing for the implementation date of the General Data Protection Regulation (GDPR) on 25 May 2018. Following the FCA's publication of their final report into the asset management sector, we are waiting for further output, including policy statements and consultation papers, on a number of areas including governance, share class switching, benchmarks, performance reporting and changes to objectives and all-in fee reporting.

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 2018, are consistent with those described in the 2017 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 2017 annual report.

Dividend

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 a dividend of 8p for the last financial year ended 30 September 2017. The Company paid its first interim dividend in respect of the current financial year of 1.65p on 2 March 2018.  The Board of Premier has approved the payment of an interim dividend for the 3 month period ended 31 March 2018 of 1.65 pence per share, which will be paid on 1 June 2018 to shareholders who are on the register as at the close of business on 4 May 2018.

Outlook

Looking ahead, it seems likely that although interest rates will head higher as the global economy improves, they will remain much lower overall than in previous economic cycles. With equity markets now looking through the current economic upturn to what lies beyond it is likely that market volatility will be higher than in recent years and political uncertainty will continue to have an impact. In this environment, we believe there will be good opportunities for actively managed funds to produce attractive long term investment outcomes for investors. 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 deliver for both our fund investors and our shareholders.

Mike O'Shea

Chief Executive Officer

Interim unaudited condensed consolidated statement of comprehensive income

For the six months ended 31 March 2018

				Unaudited Six months to 31 March 2018		Unaudited Six months to 31 March 2017		Audited Year to 30 September 2017
	Note			£000		£000		£000
Revenue	3			26,293		21,795		46,046
Administrative costs				(17,551)		(15,544)		(31,558)
Amortisation of intangible assets				(836)		(1,688)		(2,536)
Exceptional items	4			-		(371)		(415)
Total operating costs				(18,387)		(17,603)		(34,509)
Operating profit				7,906		4,192		11,537
Finance costs				-		(37)		(44)
Profit on ordinary activities before taxation				7,906		4,155		11,493
Tax expense	5			(1,743)		(1,050)		(2,617)
Profit on ordinary activities after taxation				6,163		3,105		8,876
Other comprehensive income				-		-		-
Total comprehensive income				6,163		3,105		8,876
Basic earnings per share	6			5.91p		3.03p		8.53p
Diluted basic earnings per share	6			5.85p		3.03p		8.53p

All the amounts relate to continuing operations.

Interim unaudited condensed consolidated statement of financial position

As at 31 March 2018

			Unaudited  31 March 2018		Unaudited  31 March  2017		Audited 30 September 2017
	Note		£000		£000		£000
Assets
Non-current assets
Intangible assets			14,329		16,013		15,165
Goodwill			15,597		15,597		15,597
Property, plant and equipment			881		862		911
Deferred tax asset			828		1,580		1,097
Total non-current assets			31,635		34,052		32,770
Current assets
Financial assets at fair value through profit and loss			873		1,170		1,354
Trade and other receivables			82,142		60,249		47,932
Cash and cash equivalents	7		18,161		11,007		16,449
Total current assets			101,176		72,426		65,735
Total assets			132,811		106,478		98,505
Equity
Capital and reserves attributable to equity holders
Share capital	8		50		21		21
Share premium			-		44,747		-
Treasury shares			(749)		-		-
Capital redemption reserve			4,532		4,532		4,532
Retained earnings			41,029		(7,495)		40,728
Total equity			44,862		41,805		45,281
Liabilities
Current liabilities
Trade and other payables			84,330		62,289		51,079
Current tax liabilities			3,619		2,384		2,145
Total current liabilities			87,949		64,673		53,224
Total liabilities			87,949		64,673		53,224
Total equity and liabilities			132,811		106,478		98,505

Interim unaudited condensed consolidated statement of changes in equity

For the six months ended 31 March 2018

	Share capital		Share premium		Treasury shares		Capital redemption reserve		Retained earnings		Total equity
	£000		£000		£000		£000		£000		£000
At 1 October 2017	21		-		-		4,532		40,728		45,281
Deferred share issued	29		-		-		-		(29)		-
Equity dividends paid	-		-		-		-		(6,118)		(6,118)
Purchase of treasury shares	-		-		(749)		-		-		(749)
Share based payment expense	-		-		-		-		285		285
Profit for the financial period	-		-		-		-		6,163		6,163
At 31 March 2018 (Unaudited half year)	50		-		(749)		4,532		41,029		44,862
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 2016	14		34		-		4,532		(9,278)		(4,698)
Shares issued	7		44,713		-		-		-		44,720
Cancellation of share premium	-		(44,747)		-		-		44,747		-
Equity dividends paid	-		-		-		-		(3,939)		(3,939)
Share based payment expense	-		-		-		-		322		322
Profit for the financial year	-		-		-		-		8,876		8,876
At 30 September 2017 (Audited)	21		-		-		4,532		40,728		45,281

Interim unaudited condensed consolidated statement of cash flow

For the six months ended 31 March 2018

			Unaudited Six months to 31 March 2018		Unaudited Six months to 31 March 2017		Audited  Year to  30 September 2017
	Note		£000		£000		£000
Cash flows from operating activities
Profit for the period			6,163		3,105		8,876
Adjustments for:
Financial expense			-		37		44
Taxation	5		1,743		1,050		2,617
Depreciation			126		110		225
Share based payments			285		-		322
Gain on sale of financial assets at fair value through profit and loss			-		(32)		(16)
(Loss)/gain on revaluation of current asset investments			2		(16)		(51)
Amortisation			836		1,688		2,536
Changes in working capital:
Increase in trade and other receivables			(34,210)		(23,625)		(11,308)
Increase in trade and other payables			33,251		22,151		10,934
Cash generated from operations			8,196		4,468		14,179
Tax paid			-		(41)		(1,364)
Net cash from operating activities			8,196		4,427		12,815
Cash flows from investing activities
Acquisition of assets at fair value through profit and loss			(131)		(651)		(856)
Proceeds from disposal of assets at fair value through profit and loss			610		590		630
Acquisitions of property, plant and equipment			(96)		(39)		(203)
Net cash from investing activities			383		(100)		(429)
Cash flows from financing activities
Repayment of borrowings			-		(42,670)		(42,670)
Interest paid on borrowings			-		(4,686)		(4,686)
Dividends paid to shareholders			(6,118)		(1,322)		(3,939)
Purchase of treasury shares			(749)		-		-
Proceeds from the issue of share capital			-		44,720		44,720
Net cash from financing activities			(6,867)		(3,958)		(6,575)
Net increase in cash and cash equivalents			1,712		369		5,811
Cash and cash equivalents at the beginning of the period			16,449		10,638		10,638
Cash and cash equivalents at the end of the period			18,161		11,007		16,449

Notes to the condensed consolidated interim financial statements

At 31 March 2018

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 2017 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 2017.

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 22 May 2018.

The comparative figures for the financial year ended 30 September 2017 are not the Company's statutory accounts for the financial year.

The full year accounts to 30 September 2017 were approved by the Board of Directors on 29 November 2017 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 2018 and the six months ended 31 March 2017 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 2018		Unaudited Six months to 31 March 2017		Audited Year to 30 September 2017
			£000		£000		£000
Management fees			25,666		21,731		45,894
Commissions			40		34		83
Other income			587		30		69
Total revenue			26,293		21,795		46,046

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 2018		Unaudited Six months to 31 March 2017		Audited Year to 30 September 2017
			£000		£000		£000
Staff redundancy costs			-		40		40
Listing on AIM			-		331		331
Capital reduction			-		-		44
Total exceptional items			-		371		415

Staff redundancy costs are in relation to the rationalisation and restructuring of various departments and functions. 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 2018		Unaudited Six months to 31 March 2017		Audited Year to 30 September 2017
			£000		£000		£000
Current income tax:
UK corporation tax			1,474		1,050		2,106
Current income tax charge			1,474		1,050		2,106
Adjustments in respect of prior periods			-		-		29
Total current income tax			1,474		1,050		2,135
Deferred tax:
Origination and reversal of temporary differences			269		-		482
Total deferred tax			269		-		482
Tax expense in the statement of comprehensive income			1,743		1,050		2,617

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 2018		Unaudited Six months to 31 March 2017		Audited Year to 30 September 2017
			£000		£000		£000
Basic:
Profit attributable to equity holders of the Group			6,163		3,105		8,876
Weighted average number of ordinary shares in issue			104,212,837		102,359,460		104,085,100
Basic earnings per share			5.91p		3.03p		8.53p

			Unaudited Six months to 31 March 2018		Unaudited Six months to 31 March 2017		Audited Year to 30 September 2017
			£000		£000		£000
Diluted:
Profit attributable to equity holders of the Group			6,163		3,105		8,876
Weighted average number of ordinary shares in issue			105,429,504		102,359,460		104,085,100
Diluted earnings per share			5.85p		3.03p		8.53p

7.   Cash and cash equivalents

			Unaudited Six months to 31 March 2018		Unaudited Six months to 31 March 2017		Audited Year to 30 September 2017
			£000		£000		£000
Cash at bank and in hand			18,161		11,007		16,449
Total cash and cash equivalents			18,161		11,007		16,449

8.   Share capital

			Unaudited Six months to 31 March 2018		Unaudited Six months to 31 March 2017		Audited Year to 30 September 2017
Authorised
Ordinary shares			105,801,310		105,801,310		105,801,310
Deferred share			1		-		-
Allotted, issued and fully paid
Ordinary shares			105,801,310		105,801,310		105,801,310
Deferred share			1		-		-

On 8 February 2018, following the approval of a special resolution, one redeemable deferred share with a nominal value of £28,839.74 was issued and allotted to Eastgate Court Nominees Limited.

9.   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
Numis Securities Limited (NOMAD and Broker)	Tel: [phone] Kevin Cruickshank Charles Farquhar
Liberum Capital Limited (Joint Broker)	Tel: [phone] Richard Crawley Jamie Richards
Smithfield Consultants (Financial PR)	Tel: [phone] John Kiely Andrew Wilde

About Premier

Premier is a fast-growing UK retail asset management group with a focus on delivering good investment outcomes for investors through relevant products and active management across its range of investment strategies, which include multi-asset, equity and absolute return funds.  Premier had £6.4 billion of assets under management as at 31 March 2018.

LEI Number: 213800LK2M4CLJ4H2V85

 

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