TIDMPAM
RNS Number : 8320I
Premier Asset Management Group PLC
29 November 2018
29 November 2018
Premier Asset Management Group PLC
("Premier" or the "Company") Annual Results for the Year Ended
30 September 2018
Premier Asset Management Group PLC (AIM: PAM) today announces
its audited results for the year ended 30 September 2018.
Assets under management
-- GBP6.9 billion as at 30 September 2018 (30 September 2017: GBP6.1 billion)
-- GBP6.6 billion as at close of business on 23 November 2018
Investment performance
-- Continued strong investment performance:
o Over five years: 83% of AUM above median(1)
o Over five years: 78% of AUM in first quartile of IA
sectors(1)
Net inflows
-- Net flows of GBP734 million (FY17: GBP747m)
-- 22 consecutive quarters of net positive flows
Financial results
-- Adjusted EBITDA(2) of GBP19.1 million (2017: GBP15.0m), an increase of 27.3%
-- Adjusted profit before tax(3) of GBP18.9 million (2017:
GBP14.7 million), an increase of 28.6%
-- Profit before tax of GBP15.9 million (2017: GBP11.5 million), an increase of 38.3%
-- Basic earnings per share of 12.09p (2017: 8.53p), an increase of 41.7%
Full year dividend
-- Total dividend: 10.25p (2017: 8.00p) an increase of 28%
(1) Performance figures represent 82% of Premier's total AUM as
at 30 September 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 30 September 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, tax, depreciation, amortisation,
share based payments and exceptional items
(3) Profit stated before exceptional items, amortisation,
interest expense, share based payments and tax
Mike O'Shea, Chief Executive Officer, commented:
"I am pleased to report another strong year for the business in
terms of continuing to deliver good long term investment
performance for our clients, continued flows into Premier funds and
good financial results for shareholders.
Although investment and political conditions have remained
uncertain, Premier achieved another year of strong net inflows
supported by good performance, relevant products, including our
broad range of multi-asset funds and our strong distribution
capabilities.
We remain a market leader for multi-asset investments(1) and
believe we have strengthened our future position in this area by
the continued development of our multi-asset product range to
include both multi-manager and directly invested multi-asset funds.
We are confident that in a more difficult investment environment,
there will continue to be strong demand for good actively managed
products, including both multi-asset and single strategy funds.
Independent recognition for the quality of our investment
managers, products and performance continued during the year.
Premier won a number of individual fund and company awards
including Specialist Management Group of the Year (under GBP10
billion AUM) in the Investment Week Specialist Investment Awards
2018.
The need for individuals to save and invest for their future
remains critically important even if the economic and political
environment is uncertain. We believe that our combination of
relevant investment products, good investment performance, strong
distribution capability, strong brand and experienced investment
managers means we are well placed to take advantage of the
opportunities that arise for both our investors and
shareholders.
Trading during the early part of the current financial year has
been more challenging as the UK government seeks to finalise an
acceptable withdrawal agreement with the EU. Anecdotal evidence
suggests that retail investors are taking a wait-and-see approach
and, as a result, fund flows have been slower in the first few
weeks of the current year than they have been in recent months.
Despite this, investment performance, particularly across our multi
asset range has remained resilient on a relative basis."
(1) Source: Bdifferent Financial Services Market Research. Based
on UK adviser fieldwork from 2 May 2018 to 5 June 2018.
Dividend
The Company's dividend for the financial year ended 30 September
2018 will be 10.25p, comprising three interim dividends of 1.65p
per share, paid on 2 March 2018, 1 June 2018 and 31 August 2018,
and a final interim dividend of 5.30p per share which will go
ex-dividend on 6 December 2018 with a record date of 7 December
2018, and which will be paid on 4 January 2019.
Enquiries:
Premier Asset Management Group Tel: 01483 306090
PLC Mike O'Shea
Numis Securities Limited Tel: 020 7260
(NOMAD and Broker) 1000
Kevin Cruickshank
Charles Farquhar
Liberum Capital Limited Tel: 020 3100
(Joint Broker) 2000
Richard Crawley
Jamie Richards
Smithfield Consultants Tel: 020 3047
(Financial PR) 2544
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 GBP6.9 billion of assets under
management as at 30 September 2018.
Chairman's statement
Introduction
The Group continued to make good progress this year. Premier is
a client focused and investment led business and we believe our
strong financial results have been driven by our relevant
investment products, good long term investment performance and
strong distribution capabilities.
Financial results
Over the year we experienced net inflows of GBP734 million and
have now recorded twenty two successive quarters of positive net
inflows. As a result of these strong inflows and some market
movement, our assets under management reached a record high level
of GBP6.9 billion as at the end of September 2018.
The increase in assets under management helped to deliver an
increase in profit before tax to GBP15.9m, whilst underlying profit
before tax increased by 29% to GBP18.9m, with net management fees
increasing by GBP7.2m to GBP48.1m, and adjusted EBITDA increasing
by 27% to GBP19.1m.
The Group 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 dividend. The Board may revise the
dividend policy from time to time in line with the actual results
of the Group.
The Board has announced a final interim dividend of 5.30p which
means the full-year dividend will be 10.25p (2017: 8.0p),
equivalent to a 28% increase on last year. The full year dividend
represents 70% of adjusted profit after taxation.
Business update
We believe our existing investment product range is well placed
to meet the needs of UK advisers and their clients, whether they
are looking for standalone managed solutions, offered by our range
of multi-asset funds, or specialist funds which we expect will form
part of a broader investment portfolio. Many of our funds are
income focused, and are designed to help those seeking long term
income from their investments.
During the year we have continued to develop our product range.
This included promoting existing members of our UK equity team to
manage our UK equity growth fund, and utilising existing investment
capabilities from our derivatives desk and global equity team to
launch a new high yielding global equity income fund. We believe
that these developments will create further opportunities to
attract fund flows over the coming years.
At the core of what we do is active investment management. All
of our investment products are managed by our specialist investment
teams on this basis, and this approach has produced good long term
investment results, after all charges, over many years.
Over the course of the year, business conditions have continued
to be challenging, with continued economic, political and
investment uncertainty. We believe this uncertainty, including
concerns over the outcome of the Brexit negotiations, has created a
more volatile and difficult environment for the investment
industry. So far, this belief has been borne out in a lower level
of fund sales in 2018, as compared to 2017, across the UK funds
industry. We clearly do not know how this challenging environment
will evolve, but we believe our active investment management
approach is well placed to help investors over the longer term.
Board
I would like to thank my fellow Board members for their guidance
over the year. Although there were no changes to the composition of
the Board over the year, Luke Wiseman and I stepped down from the
Audit & Risk Committee at the end of September. It was our
intention that Robert Colthorpe, who currently serves as our senior
independent director, would succeed Luke Wiseman as Chair of the
Audit & Risk Committee and I am pleased to announce that Robert
commenced in this role on 1 January 2018. The Audit & Risk
Committee will now comprise of the independent non-executive
directors only, currently Robert Colthorpe and William Smith.
Outlook
Despite the current political and macroeconomic uncertainties
impacting the investment environment, particularly as the UK enters
the final stages of Brexit, the Board believes that Premier has a
compelling and resilient long term strategy, built around active
investment management, relevant products, strong investment
performance and strong distribution capabilities that can continue
to deliver value for our clients and shareholders. In closing, I
would like to say thank you to everyone at Premier who has worked
hard to contribute to the Company's success, and to everyone else
who has supported us, including our clients and our
shareholders.
Approved and signed on behalf of the Board.
Mike Vogel
Chairman
28 November 2018
Chief executive's report
Introduction
I am pleased to report another strong year for the business, in
terms of continuing to deliver good long term investment
performance for our clients after all fees, continued flows into
Premier funds and good financial results for shareholders.
At the core of what we do is our focus on helping our clients
achieve their financial goals. We do this by retaining and hiring
high quality, specialist investment professionals to actively
manage our range of investment products. Each fund that we run or
service that we offer is designed to meet a specific investment
objective and produce good long term investment results for our
clients, after all fund fees.
By doing this well, and by managing our business effectively and
efficiently, we believe we can deliver value to our clients, create
value for our shareholders, and also reinvest in our business and
our people to create ongoing value for our clients and
shareholders.
Thanks to the quality of the people who work for Premier,
including their skills, experience and hard work, and the strength
of our investment products and operating platform, I believe our
business is well placed for the future.
Investment performance after fees
We have continued to maintain good long term investment
performance, with 83% of our assets under management outperforming
their respective sector medians over five years. As well as
producing good long term growth after all fund fees, many of our
funds have a primary objective of delivering income or
risk-adjusted returns for our clients. I am pleased that despite
many external challenges, our fund managers have continued to
deliver good income and risk-adjusted performance for our clients
over time.
Awards
We are pleased to report that the quality of our multi-asset
investment teams, investment products and investment performance
has continued to be recognised by various recent awards.
Premier won Multi-Asset Group of the Year at the Investment Week
Specialist Investment Awards 2017, Best Multi-Asset Fund Group of
the Year at the Professional Adviser Awards 2018 and Best
Multi-Asset Group 2017 in the Rayner Spencer Mills Awards.
Individual multi-asset fund awards included Premier Multi-Asset
Distribution Fund winning Best Multi-Asset Fund in the rising
income category at the Professional Adviser Awards 2018.
Premier Multi-Asset Global Growth Fund won Best Managed Growth
Fund at the Investment Week Fund Manager of the Year Awards 2018,
Best Mixed Asset Aggressive Fund at the Thomson Reuters Lipper Fund
Awards 2018 and was the winner in an FTAdviser FT100 Club 2017
category.
Premier Diversified Fund was highly commended in the Managed
Balanced Category in the Investment Week Fund Manager of the Year
Awards 2018.
One of Premier's absolute return funds, Premier Defensive Growth
Fund, won Best Multi-Asset Fund in the Positive Return category at
the Professional Adviser Awards 2018.
Financial results
Over the year, we experienced strong net inflows of GBP734m and
our assets under management hit a record high of GBP6.9 billion as
at the end of September 2018, up 13% on the previous year. These
strong net inflow figures were achieved despite a more subdued
environment for industry retail fund sales, which according to the
Investment Association, fell 34% over the year to 30 September 2018
when compared with the previous year.
Relevant investment products
Premier launched its first multi-asset style fund in 1995 and we
now manage GBP4.3 billion across our range of twelve multi-asset
funds, which include ten multi-manager funds. Whilst each of the
twelve funds has specific investment objectives, they can be
categorised as having a primary investment focus on either income,
growth, wealth preservation or risk-targeted returns.
As many advisers seek suitable outsourced investment partners
for their respective centralised investment propositions, we
believe the combination of our broad multi-asset product range,
specialist investment expertise and experience in this area,
performance track record and client support make Premier an
attractive ongoing investment partner for advisers.
We are pleased we have established a strong position in the
adviser market for multi-asset funds, and according to research
from Bdifferent, Premier is a market leader for multi-asset and
multi-strategy funds. We remained focused on continuing to develop
and grow in this area.
Product development
We continue to review and refine our product range with the aim
of trying to make sure we offer products that meet the ongoing
demands from clients.
To complement our existing range of market-leading multi-asset
funds, over the last few years we have developed two new
multi-asset funds, Premier Diversified Fund and Premier Diversified
Income Fund. Premier Diversified Fund has now built a strong five
year track record. Premier Diversified Income Fund was launched in
June 2017 and has had a good first year. Both of these funds have
been a core part of Premier's sales and marketing activity over the
last year and have achieved encouraging positive net flows.
Premier Diversified Fund and Premier Diversified Income Fund are
managed by Premier's Chief Investment Officer together with our
in-house equity and fixed income teams. They invest directly into a
diversified portfolio of stocks and shares using the skills of
seven of Premier's specialist investment managers, covering
different asset classes. The Diversified funds have a focus on
producing returns with significantly less volatility than the UK
equity market.
During the year, we were pleased to promote two of our UK equity
investment team as co-managers of the Premier UK Growth Fund. Over
their first year, the fund is ranked 11 out of 262 funds in the IA
UK All Companies universe, and has significantly outperformed the
fund's comparative index, the FTSE All-Share Index. Whilst this is
a very short term time frame, we are pleased with this initial
success and will be supporting the managers as they build their
longer term track record.
In September 2018, we launched the Premier Global Optimum Income
Fund. This new fund is based on our existing investment
capabilities in global equities and in managing option strategies
to target a yield of 6% p.a. In a continued low interest rate
environment, and with more people looking for suitable income
options in retirement, we believe this fund will prove an
attractive option for income-seeking investors.
Regulation
This year has included some key regulatory changes and
announcements. A significant amount of work went into ensuring we
were ready for the new MiFID II regulations when they were
implemented in January 2018. This year also saw important market
study announcements by the FCA.
In April 2018, the FCA published a policy statement outlining
its feedback and final rules relating to its Asset Management
Market Study. The final rules and guidance cover a number of areas,
including a requirement for fund managers to make an annual
assessment of value, as part of their duty to act in the best
interests of the investors in their funds, and a requirement for
fund managers to appoint a minimum of two independent directors to
their boards. These specific new rules come into effect during
2019.
We support these measures, which are designed to deliver better
protection for investors, including those who are actively engaged
with their investments and those who do not follow their
investments closely.
We are proud of the good investment outcomes that we deliver for
our clients, and we will continue to work hard to ensure we are
transparent about our fund charges, as well as exploring ways to
improve how we show the value we are delivering to our clients,
after all fund fees.
The FCA published their investment platforms market study
interim report in July 2018. This is of relevance to Premier as a
significant amount of our business is held through investment
platforms. The report sets out the FCA's provisional view on the
way competition works in the investment platform market and how
they would like the market to develop. We will monitor the FCA's
next report with interest.
Brexit
Our business, along with other UK based investment companies,
faces a number of challenges. Although economic and political
uncertainty is a global phenomenon, the Brexit negotiations and the
various potential outcomes continue to dominate economic and
political discussions in the UK.
In the short term, it is possible that Brexit results in the UK
economy having a period of prolonged contraction, which could also
mean exchange rate volatility and further falls in the value of
sterling.
As an active investment manager, our fund managers can be
proactive about where they invest, and many of our funds can choose
to be partly, mainly or wholly invested outside of UK listed
investments.
However, Brexit could well lead to a period of very difficult
economic circumstances and poor investor confidence, which could
impact on future flows into Premier's funds.
The Board has considered market access rights in the context of
Brexit for fund distribution and fund management. Whilst the
outcome of negotiations remains uncertain, the Board notes that
Premier is a UK retail funds business distributing UK funds through
UK intermediaries to UK investors. The Board has concluded that as
far as Premier's existing business strategy is concerned, the
overall impact of changes in the rules governing distribution of
funds within and to the EU post Brexit will not be a significant
risk factor. Other than its potential impact on markets and
investor confidence as noted above, the Board does not believe that
Brexit will significantly impact on Premier's ongoing business
strategy or, importantly, on our current operational platform.
The Board has also noted that Brexit could have an impact on the
retention of skilled employees and on recruitment for many
businesses. As at 30 September 2018, 5% of Premier's employees are
from non-UK countries in the EU. The Board very much hopes that
negotiations will be concluded in such a way as to enable us to
retain these people and for the business to continue to benefit
from their positive contribution.
In an ideal world, the Board would like the Group to have the
ability to recruit from as wide a pool of talent as possible, from
both within the EU and further afield. However, taking into account
the overall size of Premier, the Board does not feel that a "no
deal" Brexit creates significantly increased risk for the business
in the area of recruitment and retention.
Finally, the Board has considered the impact of declines in the
debt market and the impact of tighter credit conditions more
generally and concluded that, other than their overall impact on
the economy, these do not present increased risks to Premier in
terms of our debtors or creditors.
Industry Dynamics
Technology is changing the way most of us are leading and
managing our lives, and is also impacting our industry in areas
such as technology driven investment management, the way advisers
and our clients buy, hold and sell funds, and how funds are
marketed. We also face increasing competition from passive funds
and from combined investment and advice firms that offer their own
in-house investment products.
Against this backdrop, it is important that we have a robust and
responsive business model, including relevant investment products
backed by good investment performance records and strong
distribution. We believe that we have this and can continue to do
well for our clients and shareholders by delivering good performing
investment products that meet the long term needs of our
clients.
To our minds, the case for active management remains strong.
Active managers have the ability to make ongoing proactive
investment decisions about where to invest and where not to invest
and to give investors access to different types of asset classes
and portfolio structures, as well as avoiding specific types of
investments. We also believe that active management is well placed
to help clients achieve specific investment outcomes, including
long term income in retirement, and to navigate the investment
challenges that can arise from an increasingly uncertain global
economic and political environment. Our view is that active
management plays a crucial part in the efficient allocation of
capital within the economy. It does this by not only influencing
the way that today's companies are managed but also by providing
finance for the growth of these companies and for the growth of
tomorrow's companies.
Our strategy
We believe there are clear reasons to be optimistic about the
long term future for the investment industry and investment
providers who can demonstrate they deliver value to clients by
offering good investment solutions. We also believe we have
investment products well suited for financial advisers seeking to
outsource investment management for their own clients, as well as
for advisers seeking relevant investment components for their own
managed portfolios. We remain a highly focused business in terms of
our product offering, our market and our clients. We are wholly
focused on the UK market and our distribution is through UK
intermediaries, including financial advisers, wealth managers, life
companies, fund of funds, and platforms, which means our end
clients will typically be UK based.
We will continue to evolve our business strategy and we plan to
ensure we are well placed to help our clients achieve their
objectives by offering relevant investment products, delivering
strong investment performance, running a strong distribution
capability and maintaining a scalable operating platform.
Outlook
Trading during the early part of the current financial year has
been more difficult. The combination of more volatile investment
markets and the ongoing uncertainty around Brexit have impacted on
both the level of assets under management and the rate of fund
flows. Anecdotal evidence suggests that retail investors are taking
a wait-and-see approach and, as a result, fund flows have been
slower in the first few weeks of the current year than they have
been in recent months. Despite this, investment performance,
particularly across our multi asset range has remained resilient on
a relative basis. We are confident that as the uncertainty around
Brexit clears one way or another over the coming months, we can
resume making further progress in terms of both continued good
outcomes for investors as well as in increasing assets under
management from new fund flows.
Thank you
Finally, I would like to finish where I started my review of the
year, by thanking my colleagues at Premier and our clients. I would
like to thank my co-workers for their professionalism, hard work
and enthusiasm during the year. I would also like to thank our
clients for their trust in allowing us to manage their money, and
their advisers for their support in using or recommending our
funds. And finally, I would like to thank our shareholders for
their continued support.
Approved and signed on behalf of the Board.
Mike O'Shea
Chief Executive Officer
28 November 2018
Financial review
Assets under management ('AUM')
AUM as at 30 September 2018 stood at GBP6,866m, up some GBP778m
(+12.8%) over the year, with average AUM standing at GBP6,554m for
the year, up GBP1,019m (+18.4%) on the previous financial year. The
following table shows the progression of AUM over the last three
financial years:
FY18 FY17 FY16
GBPm GBPm GBPm
Opening AUM 6,088 4,999 4,081
-------------- -------- -------- --------
Sales 2,239 2,150 1,944
Redemptions (1,505) (1,403) (1,166)
Net sales 734 747 778
------------- -------- -------- --------
Closures - - (174)
Performance 44 342 314
Closing AUM 6,866 6,088 4,999
-------------- -------- -------- --------
Average AUM 6,554 5,535 4,526
-------------- -------- -------- --------
Average AUM has grown year-on-year as a function of continued
positive net inflows and market performance. The final quarter of
the financial year ended September 2018 was the twenty-second
consecutive quarter of positive net inflows.
The following table shows the split of closing AUM by product
type as at the end of the last three financial years:
FY18 FY17 FY16
Retail funds 95.3% 94.6% 93.9%
Investment trusts 2.2% 2.7% 3.0%
Segregated mandates 2.5% 2.7% 3.1%
100.0% 100.0% 100.0%
--------------------- ------- ------- -------
In terms of closing AuM by asset class as at the end of the last
three financial years, this is shown in the following table:
FY18 FY17 FY16
Multi-asset, multi-manager 59% 54% 51%
UK equities 21% 24% 27%
Absolute return 9% 12% 11%
Fixed income 6% 6% 7%
Global equities 3% 3% 3%
Multi-asset 2% 1% 1%
100% 100% 100%
---------------------------- ----- ----- -----
Financial performance
Profit before tax for the year ended 30 September 2018 amounted
to GBP15.9m (2017: GBP11.5m), representing an increase of GBP4.4m
(+38.3%) over the previous financial year. The following table
shows an analysis of the financial performance over the last three
financial years.
FY18 FY17 FY16
Net management fees GBP48.1m GBP40.9m GBP33.3m
Other income GBP0.7m GBP0.1m GBP0.1m
------------------------ ----------- ----------- -----------
Net revenues GBP48.8m GBP41.0m GBP33.4m
Adjusted administrative
costs (GBP29.9m) (GBP26.3m) (GBP22.8m)
Amortisation (GBP1.7m) (GBP2.5m) (GBP5.1m)
Exceptional items (GBP0.3m) (GBP0.4m) (GBP0.5m)
Share based payments (GBP1.0m) (GBP0.3m) -
------------------------ ----------- ----------- -----------
Operating profit GBP15.9m GBP11.5m GBP5.0m
Finance costs - - (GBP2.5m)
------------------------ ----------- ----------- -----------
Profit before tax GBP15.9m GBP11.5m GBP2.5m
Taxation (GBP3.4m) (GBP2.6m) (GBP1.5m)
Profit after tax GBP12.5m GBP8.9m GBP1.0m
------------------------ ----------- ----------- -----------
Net management fees
Net management fees generated during the year amounted to
GBP48.1m, which represents a GBP7.2m (+17.6%) increase over the
previous financial year and an annual compound growth rate over the
last three financial years of 20.2%.
FY18 FY17 FY16
Management fees GBP52.7m GBP45.9m GBP39.0m
Less: Trail/renewal
commission (GBP4.6m) (GBP5.0m) (GBP5.7m)
-------------------- ---------- ---------- ----------
Net management fees GBP48.1m GBP40.9m GBP33.3m
-------------------- ---------- ---------- ----------
Average AuM GBP6,554m GBP5,535m GBP4,526m
-------------------- ---------- ---------- ----------
Net management fee
margin 73.4bps 73.9bps 73.6bps
-------------------- ---------- ---------- ----------
Based on the average AUM as shown above, the net management fee
margin has decreased slightly during the year from 73.9bps to
73.4bps, with the change in margin being primarily due to a change
in the product mix.
Other income
Other income generated during the year amounted to GBP0.7m
compared to GBP0.1m in the previous financial year. This increase
is mainly due to a GBP0.56m performance fee that was generated
during the year in respect of the Acorn Income Fund and is not
considered to be a recurring item. Included within Administrative
Costs is an amount of GBP0.38m which represents the amount of the
performance fee that is payable to the relevant fund managers, with
GBP0.35m included within Variable Other Costs and GBP0.03m included
within Variable Staff Costs.
Adjusted administrative costs
Administrative costs (excluding renewal commissions and
share-based payments) during the year amounted to GBP29.9m,
compared to GBP26.3m in the previous financial year, representing
an increase of GBP3.6m (+13.7%). The largest component of
administrative costs continues to be staff costs, which amounted to
GBP16.7m compared to GBP14.7m in the previous financial year. The
following table analyses the adjusted administrative costs between
both fixed and variable elements of staff costs and other
costs:
FY18 FY17 FY16
Fixed staff costs GBP9.4m GBP8.6m GBP7.7m
Variable staff costs GBP7.3m GBP6.1m GBP5.4m
--------------------- --------- --------- ---------
Total staff costs GBP16.7m GBP14.7m GBP13.1m
Fixed other costs GBP9.3m GBP8.0m GBP6.5m
Variable other costs GBP3.9m GBP3.6m GBP3.2m
--------- --------- ---------
Total GBP29.9m GBP26.3m GBP22.8m
--------------------- --------- --------- ---------
Share based payments are excluded from administration costs on
the basis that they are disclosed separately in the financial
performance table shown above.
The total administrative costs shown in the consolidated
statement of comprehensive income includes renewal commissions and
share-based payments, which for the purposes of this review are
analysed separately. A reconciliation of the above totals and those
shown in the Consolidated Statement of Comprehensive Income is
shown below:
FY18 FY17 FY16
Consolidated statement of comprehensive
income GBP35.5m GBP31.6m GBP28.5m
Less: Renewal commission (GBP4.6m) (GBP5.0m) (GBP5.7m)
Less: Share based payments (GBP1.0m) (GBP0.3m) -
Total GBP29.9m GBP26.3m GBP22.8m
---------------------------------------- ---------- ---------- ----------
Staff costs consist of two elements, the first being fixed,
which includes salaries and associated national insurance,
employers' pension contributions and other indirect costs of
employment, which rose by 9.3% to GBP9.4m; this compares with a 7%
increase in average headcount as shown in note 6(a). The second
element of staff costs is in respect of variable items such as
general discretionary bonuses, sales bonuses and fund based bonuses
in respect of the fund management teams, together with the
associated employers national insurance. Variable staff costs
increased by GBP1.2m (+19.7%), which compares with the 18.4%
increase in average AUM as mentioned above, together with a 27%
increase in adjusted EBITDA (see below).
Fixed other costs have increased by GBP1.3m (+16.3%) with the
main components being office costs, advertising & marketing,
consultancy (including audit, taxation, legal and regulatory fees)
and other items, including irrecoverable VAT.
Variable other costs, which includes the cost of the fund
administrators, have increased by GBP0.3m (+8.3%).
Share based payments
Included within the Consolidated Statement of Comprehensive
Income is a charge of GBP1.0m (2017: GBP0.3m) in respect of awards
that have been made over shares held within the Employee Benefit
Trust ("EBT"). Such awards, which are considered to be the deferred
element of the overall annual bonus plan, are an integral part of
the long term incentive and retention package for executive
directors and senior employees. It aims to reward good performance
and ensure that the interests of such employees are aligned with
the interests of shareholders. As at 30 September 2018 the EBT held
3,242,830 ordinary shares, representing 3.07% of the issued
ordinary share capital. As at 30 September 2018 the total awards
issued amounted to 2,885,000 ordinary shares. The fair value of the
awards is amortised over the relevant three year vesting period.
The increase in charge is in respect of a full year's cost relating
to the 2017 awards, together with a part year charge for those
awards made in 2018.
Exceptional items
Exceptional costs incurred during the year amounted to
GBP248,000. These costs relate firstly to FSCS levies, which have
increased significantly over previous years due to increased
compensation paid by the FSCS, and secondly, to PremierConnect
development costs relating to external consultants who have been
engaged in the testing of the PremierConnect platform during the
year.
Underlying profit before and after tax*, and underlying earnings
per share*
Underlying profit before tax increased to GBP18.9m from GBP14.7m
in the previous financial year, representing an increase of GBP4.2m
(+28.6%). The following table reconciles retained profit and
underlying profit before tax for the last three financial
years:
FY18 FY17 FY16
Retained profit GBP12.5m GBP8.9m GBP1.0m
Taxation GBP3.4m GBP2.6m GBP1.5m
--------------------------- ---------- ---------- ----------
Profit before tax GBP15.9m GBP11.5m GBP2.5m
Amortisation of intangible
assets GBP1.7m GBP2.5m GBP5.1m
Exceptional items GBP0.3m GBP0.4m GBP0.5m
Share based payments GBP1.0m GBP0.3m -
Net interest payable - - GBP2.5m
--------------------------- ---------- ---------- ----------
Underlying profit before
tax GBP18.9m GBP14.7m GBP10.6m
Taxation (GBP3.4m) (GBP2.6m) (GBP1.5m)
Underlying profit after
tax GBP15.5m GBP12.1m GBP9.1m
--------------------------- ---------- ---------- ----------
In arriving at underlying profit before and after tax, the Board
believes that making adjustments for amortisation of intangible
assets, exceptional items, share based payments and net interest
payable, provides for consistent period on period comparisons and
makes it easier for users of the accounts to identify trends.
Underlying profit after tax increased to GBP15.5m from GBP12.1m
in the previous financial year, representing an increase of GBP3.4m
(+28.1%).
The underlying earnings per share, which is based on the
underlying profit after tax, is a non-GAAP measure, which the Board
believes provide a useful representation of the Group's trading
performance.
FY18 FY17 FY16
Underlying profit after
tax GBP15.50m GBP12.10m GBP9.10m
Weighted average number of ordinary
shares 105,060,401 104,085,100 68,742,550
Adjusted diluted earnings
per share 14.75p 11.63p 13.24p
-------------------------------------- ------------ ------------ -----------
The Group's basic and diluted earnings per share, which is based
on profit after tax, for FY18 were 12.09p and 11.92p respectively,
compared with 8.53p for FY17 on a basic and diluted basis.
It should be noted that the figures for FY16 represent a period
which was prior to the Company's shares being admitted to trading
on the Alternative Investment Market of the London Stock Exchange,
which took effect on 7 October 2016. As part of the listing
process, the Company subdivided its ordinary share capital, with
each ordinary share of 1p nominal value being replaced with 50
ordinary shares with a nominal value of 0.02p; in addition, and as
part of the listing process, the Company issued 35,875,660 ordinary
shares with a nominal value of 0.02p each. The weighted average
number of ordinary shares for FY16 have, for comparative purposes,
been adjusted to reflect the sub-division of shares as if it had
taken place prior to 30 September 2016.
Adjusted EBITDA
Adjusted EBITDA increased to GBP19.1m from GBP15.0m in the
previous financial year, representing an increase of GBP4.1m
(+27.3%). The following table reconciles retained profit and
Adjusted EBITDA for the last three financial years:
FY18 FY17 FY16
Retained profit GBP12.5m GBP8.9m GBP1.0m
Taxation GBP3.4m GBP2.6m GBP1.5m
---------------------------- --------- --------- ---------
Profit before tax GBP15.9m GBP11.5m GBP2.5m
Amortisation of intangible
assets GBP1.7m GBP2.5m GBP5.1m
Exceptional items GBP0.3m GBP0.4m GBP0.5m
Share based payments GBP1.0m GBP0.3m -
Net interest payable - - GBP2.5m
Depreciation GBP0.2m GBP0.3m GBP0.3m
Adjusted EBITDA GBP19.1m GBP15.0m GBP10.9m
---------------------------- --------- --------- ---------
Adjusted EBITDA margin 39.1% 36.6% 32.6%
----------------------------- --------- --------- ---------
Balance sheet and cash management
The Group is cash generative and as at 30 September 2018 the
cash balances of the Group amounted to GBP20.8m (2017: GBP16.4m),
representing an increase of GBP4.3m (+26.3%) over the year. The
split between Group and Trading account cash balances over the last
three financial years is shown in the table below:
FY18 FY17 FY16
Company cash GBP19.4m GBP15.8m GBP9.4m
Trading account cash GBP1.4m GBP0.6m GBP1.2m
GBP20.8m GBP16.4m GBP10.6m
--------------------- --------- --------- ---------
The above Trading account cash balances relate to the designated
bank accounts that are used for the settlement of trades in the
open-ended funds as operated by Premier Portfolio Managers Ltd. As
at 30 September 2018, the projected trading account balance, after
accounting for all outstanding trades, was a surplus cash balance
of GBP1.2m (2017: GBP1.2m).
Shareholders' equity
Total shareholders' equity as at 30 September 2018 stood
unchanged at GBP45.3m (2017: GBP45.3m). The EBT is consolidated
into the group financial statements. As such, those shares that are
held in the EBT and which have awards attaching to them, are
accounted for as own shares held by an EBT, and are therefore shown
as a deduction in the Consolidated Statement of Changes in Equity,
amounting to GBP4.0m. During the year retained earnings increased
by GBP4.0m; this consisting of a retained profit for the financial
year of GBP12.5m less dividends paid during the year of GBP9.5m
plus, a GBP1.0m movement in reserves associated with the share
based payments.
Going concern
The Directors have assessed the prospects of the Group over a
period of three years after the balance sheet date, rather than the
12 months required by the Going Concern provision.
The Directors confirm that they have a reasonable expectation
that the Group will continue to operate and meet its liabilities,
as they fall due, up to 30 September 2021. 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 Assess Process ('ICAAP').
The three-year period is consistent with the Group's current
strategic forecast and ICAAP. The forecast considers the Group's
profitability, cash flows, dividend payments and other key
variables. Sensitivity analysis is also performed on certain of the
key assumptions in the forecast, both individually and combined, in
addition to scenario analysis that is performed as part of the
ICAAP process, which if formally approved by the Board.
Alternative Performance Measures ('APMs')
The group uses the following APMs which should be read together
with the Group's financial statements:
Underlying profit before tax
Definition: Profit before taxation, amortisation of intangible
assets, exceptional items, share based payments and net
interest
Reason for use: This measure of profitability presents users of
the accounts with a clear view of what the Group considers to be
the results of its underlying operations after excluding the
effects of taxation, financing (interest payable), capital
investment (depreciation and amortisation), non-recurring
exceptional items and share based payments, thereby enabling
consistent period on period comparisons and making it easier for
users of the accounts to identify trends.
Underlying profit after tax
Definition: Profit after taxation but before amortisation of
intangible assets, exceptional items, share based payments and net
interest
Reason for use: This measure of profitability presents users of
the accounts with a clear view of what the Group considers to be
the results of its underlying operations after excluding the
effects of financing (interest payable), capital investment
(depreciation and amortisation), non-recurring exceptional items
and share based payments, thereby enabling consistent period on
period comparisons and making it easier for users of the accounts
to identify trends.
Underlying earnings per share
Definition: Underlying profit after tax divided by the weighted
average number of shares in issue during the period
Reason for use: This measure of profitability presents users of
the accounts with a clear view of what the Group considers to be
the results of its underlying operations per share after excluding
the effects of financing (interest payable), capital investment
(depreciation and amortisation), non-recurring exceptional items
and share based payments, thereby enabling consistent period on
period comparisons and making it easier for users of the accounts
to identify trends.
Assets Under Management ("AUM")
Definition: AUM is the total value of assets that are managed by
the Group on behalf of clients.
Reason for use: AUM is a financial industry measure of size of
an investment management firm that allows comparison with other
firms within the sector. AUM is also the base value that is used
for calculating management fee income and directly related variable
costs.
Adjusted EBITDA
Definition: Earnings before interest, taxation, depreciation,
amortisation of intangible assets, exceptional items and share
based payments
Reason for use: To provide a measure of profitability which is
aligned with the requirements of shareholders and potential
shareholders and which excludes the effects of taxation, financing
(net interest payable), capital investment (depreciation and
amortisation), non-recurring exceptional items and share based
payments, enabling comparison with the Group's competitors who may
use different accounting policies and finance methods.
Adjusted EBITDA margin
Definition: Adjusted EBITDA divided by Net Revenue
Reason for use: To provide a measure of profitability which is
aligned with the requirements of shareholders and potential
shareholders and which excludes the effects of taxation, financing
(net interest payable), capital investment (depreciation and
amortisation), non-recurring exceptional items and share based
payments, enabling comparison with the Group's competitors who may
use different accounting policies and finance methods.
Net revenue
Definition: Turnover of GBP53.4m (2017: GBP46.0m) less
trail/renewal commission expense of GBP4.6m (2017: GBP5.0m), which
is included within administrative costs in the Consolidated
Statement of Comprehensive Income.
Reason for use: Asset managers and analysts typically use this
performance measure to smooth out the effect of fee related
trail/renewal commission that is included within administrative
costs.
Net management fees
Definition: Management fee income of GBP52.7m (2017: GBP45.9m)
less trail/renewal commission expense of GBP4.6m (2017: GBP5.0m),
which is included within administrative costs in the Consolidated
Statement of Comprehensive Income.
Reason for use: Asset managers and analysts typically use this
performance measure to smooth out the effect of fee related
trail/renewal commission that is included within administrative
costs.
Net management fee margin
Definition: Net management fees divided by average AUM
Reason for use: Asset managers and analysts typically use this
performance measure to smooth out the effect of fee related
trail/renewal commission that is included within administrative
costs and provides a measure of the revenue earning capability of
AUM. The use of basis points (bps) is a commonly used term within
the finance sector with one basis point being equivalent to one
hundredth of a percent.
Neil Macpherson
Group Finance Director
28 November 2018
Consolidated statement of comprehensive income
For the year ended 30 September 2018
Year to Year to
30 September 2018 30 September 2017
Note GBP000 GBP000
=============================================== ===== =================== ===================
Revenue 3 53,396 46,046
Administrative costs (35,548) (31,558)
Amortisation of intangible assets (1,686) (2,536)
Exceptional items 4 (248) (415)
=============================================== ===== =================== ===================
Total operating costs (37,482) (34,509)
=============================================== ===== =================== ===================
Operating profit 5 15,914 11,537
Finance income/(costs) 7 2 (44)
=============================================== ===== =================== ===================
Profit on ordinary activities before taxation 15,916 11,493
Tax expense 8 (3,393) (2,617)
=============================================== ===== =================== ===================
Profit on ordinary activities after taxation 12,523 8,876
Other comprehensive income - -
=============================================== ===== =================== ===================
Total comprehensive income 12,523 8,876
=============================================== ===== =================== ===================
Basic earnings per share 9 12.09p 8.53p
=============================================== ===== =================== ===================
Diluted basic earnings per share 9 11.92p 8.53p
=============================================== ===== =================== ===================
All the amounts relate to continuing operations.
Consolidated statement of financial position
As at 30 September 2018
2018 2017
Note GBP000 GBP000
======================================================== ===== ======== =======
Assets
Non-current assets
Intangible assets 10 13,479 15,165
Goodwill 10 15,597 15,597
Property, plant and equipment 11 999 911
Deferred tax asset 8 543 1,097
======================================================== ===== ======== =======
Total non-current assets 30,618 32,770
Current assets
Financial assets at fair value through profit and loss 14 910 1,354
Trade and other receivables 13 53,710 47,932
Cash and cash equivalents 15 20,774 16,449
======================================================== ===== ======== =======
Total current assets 75,394 65,735
Total assets 106,012 98,505
======================================================== ===== ======== =======
Equity
Capital and reserves attributable to equity holders
Share capital 18 50 21
Capital redemption reserve 19 4,532 4,532
Own shares held by an EBT 21 (4,047) -
Retained earnings 44,733 40,728
======================================================== ===== ======== =======
Total equity 45,268 45,281
======================================================== ===== ======== =======
Liabilities
Current liabilities
Trade and other payables 16 57,941 51,079
Current tax liabilities 2,803 2,145
Total current liabilities 60,744 53,224
Total liabilities 60,744 53,224
======================================================== ===== ======== =======
Total equity and liabilities 106,012 98,505
======================================================== ===== ======== =======
Consolidated statement of changes in equity
For the year ended 30 September 2018
Own shares
held Capital
Share Share by an redemption Retained Total
capital premium EBT reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
========================== ========= ========= =========== ============ ========== ========
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
(note22) - - - - (3,939) (3,939)
Share based payment
expense - - - - 322 322
Profit for the financial
year - - - - 8,876 8,876
========================== ========= ========= =========== ============ ========== ========
At 30 September 2017 21 - - 4,532 40,728 45,281
Deferred share issued 29 - - - (29) -
Purchase of own shares
held by an EBT - - (4,047) - - (4,047)
Equity dividends paid
(note22) - - - - (9,522) (9,522)
Share based payment
expense - - - - 1,033 1,033
Profit for the financial
year - - - - 12,523 12,523
========================== ========= ========= =========== ============ ========== ========
At 30 September 2018 50 - (4,047) 4,532 44,733 45,268
========================== ========= ========= =========== ============ ========== ========
Consolidated statement of cash flow
For the year ended 30 September 2018
2018 2017
Note GBP000 GBP000
=============================================================================== ===== ========= =========
Cash flows from operating activities
Profit for the year 12,523 8,876
Adjustments for:
Financial (income)/expense 7 (2) 44
Taxation 8 3,393 2,617
Depreciation 11 237 225
Share based payments 1,033 322
Gain on sale of financial assets at fair value through profit and loss - (16)
Gain on revaluation of financial assets at fair value through profit and loss (25) (51)
Amortisation 10 1,686 2,536
Changes in working capital:
Increase in trade and other receivables (5,778) (11,308)
Increase in trade and other payables 6,862 10,934
Cash generated from operations 19,929 14,179
Tax paid (2,181) (1,364)
=============================================================================== ===== ========= =========
Net cash from operating activities 17,748 12,815
Cash flows from investing activities
Acquisition of assets at fair value through profit and loss (262) (856)
Proceeds from disposal of assets at fair value through profit and loss 733 630
Acquisitions of property, plant and equipment 11 (325) (203)
Net cash from investing activities 146 (429)
Cash flows from financing activities
Repayment of borrowings - (42,670)
Interest paid on borrowings - (4,686)
Dividends paid to shareholders (9,522) (3,939)
Purchase of own shares held by an EBT 21 (4,047) -
Proceeds from the issue of share capital - 44,720
=============================================================================== ===== ========= =========
Net cash from financing activities (13,569) (6,575)
Net increase in cash and cash equivalents 4,325 5,811
=============================================================================== ===== ========= =========
Cash and cash equivalents at the beginning of the period 16,449 10,638
=============================================================================== ===== ========= =========
Cash and cash equivalents at the end of the period 20,774 16,449
=============================================================================== ===== ========= =========
Notes to the consolidated financial statements
At 30 September 2018
1. Authorisation of financial statements and statement of compliance with IFRS
The consolidated financial statements of Premier Asset
Management Group PLC (the "Company") and its subsidiaries (the
"Group") for the year ended 30 September 2018 were authorised for
issue by the Board of Directors on 28 November 2018 and the
statement of financial position was signed on the Board's behalf by
Mike O'Shea and Neil Macpherson. The Company is incorporated and
domiciled in England and Wales.
These consolidated financial statements were prepared in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the EU. 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
2.1 Basis of preparation
The consolidated Group financial statements for the year ended
30 September 2018 have been prepared in accordance with IFRS. The
consolidated financial statements have been prepared on a going
concern basis, which has been explained in greater detail in the
Financial Review, 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.
2.2 Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Company and its subsidiary undertakings as at 30
September 2018. Profits and losses on intra-group transactions are
eliminated in full. On acquisition of a subsidiary, all of the
subsidiary's identifiable assets and liabilities which exist at the
date of acquisition are recorded at their fair values reflecting
their condition at that date.
Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the
investee. Specifically, the Group controls an investee if, and only
if, the Group has:
(i) power over the investee (i.e., existing rights that give it
the current ability to direct the relevant activities of the
investee);
(ii) exposure, or rights, to variable returns from its involvement with the investee; and
(iii) the ability to use its power over the investee to affect
its returns.
Consolidation of a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in
the consolidated financial statements from the date the Group gains
control until the date the Group ceases to control the
subsidiary.
When necessary, adjustments are made to the financial statements
of subsidiaries to bring their accounting policies into line with
the Group's accounting policies. All intra-group assets and
liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on
consolidation.
2.3 New standards, amendments and interpretations
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet
effective:
(i) IFRS 9 'Financial instruments' (effective for a period beginning on or after 1 January 2018)
(ii) IFRS 15 'Revenue from contracts with customers' (effective
for a period beginning on or after 1 January 2018)
IFRS 15 specifies the requirements that an entity must apply in
order to measure and recognise revenue and its related cash flows.
The core principle of the standard is that an entity should
recognise revenue at an amount that reflects the consideration to
which the entity expects to be entitled in exchange for
transferring promised goods or services to a customer. The Group
does not anticipate that the implementation of the standard will
have a material impact on its results, though some minor changes to
disclosures around the payments of rebates and commissions may be
required.
(iii) IFRS 16 'Leases' (effective for a period beginning on or
after 1 January 2019)
IFRS 16 provides a single accounting model for leases, requiring
lessees to recognise assets and liabilities for all leases unless
the lease term is 12 months or less or the underlying asset has a
low value. It will supersede the current guidance found in IAS 17
Leases. The Group has not yet quantified the impact that the
adoption of IFRS 16 may have on the Group's total assets and
liabilities as a result of the requirement to capitalise both the
right to use leased assets and the contractual payments to be made
under lease obligations, the amounts of which will be driven by the
Group's outstanding lease commitments at the date of adoption.
There are no other IFRSs or IFRIC interpretations that are not
yet effective and would be expected to have a material impact on
the Group.
2.4 Judgements and key sources of estimation uncertainty
The preparation of consolidated financial statements requires
management to make judgements, estimates and assumptions that
affect the amounts reported for assets and liabilities as at the
statement of financial position date and the amounts reported for
revenue and expenses during the year. However, the nature of
estimation means that actual outcomes could differ from those
estimates. The Group has not had to make any judgements or
estimates in preparing the
financial statements, that require disclosure under the relevant
accounting standard.
2.5 Significant accounting policies
(a) Business combinations and goodwill
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured as the aggregate of
the consideration transferred, which is measured at the acquisition
date fair value and the amount of any non-controlling interest in
the acquiree. For each business combination, the Group elects
whether to measure the non-controlling interest in the acquiree at
fair value or at the proportionate share of the acquiree's
identifiable net assets.
When the Group acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition date.
This includes the separation of embedded derivatives in host
contracts by the acquiree.
Any contingent consideration to be transferred by the acquirer
will be recognised at fair value at the acquisition date. All
contingent consideration is measured at fair value with the changes
in fair value in profit or loss.
Goodwill is initially measured at cost (being the excess of the
aggregate of the consideration transferred and the amount
recognised for non-controlling interests) and any previous interest
held, over the net identifiable assets acquired and liabilities
assumed. If the fair value of the net assets acquired is in excess
of the aggregate consideration transferred, the Group re-assesses
whether it has correctly identified all of the assets acquired and
all of the liabilities assumed and reviews the procedures used to
measure the amounts to be recognised at the acquisition date. If
the reassessment still results in an excess of the fair value of
net assets acquired over the aggregate consideration transferred,
then the gain is recognised in profit or loss. Goodwill is
monitored at the Group level.
Goodwill is not amortised but is tested annually for impairment
or more frequently if events or changes in circumstances indicate
potential impairment. After initial recognition, goodwill is
measured at cost less any accumulated impairment losses.
In respect of goodwill, the recoverable amount is estimated at
each annual balance sheet date. The recoverable amount is the
higher of fair value less costs to sell and value in use.
Impairment losses represent the amount by which the carrying amount
exceeds the recoverable amount; they are recognised in profit and
loss in amortisation. Impairment losses recognised in respect of
the cash generating unit are allocated first to reduce the carrying
amount of any goodwill allocated to the cash generating unit and
then to reduce the value of any other assets in the unit on a
pro-rata basis.
An impairment loss in respect of goodwill is not reversed.
(b) Property, plant and equipment
Plant and equipment is stated at cost less accumulated
depreciation and accumulated impairment losses. Cost comprises the
aggregate amount paid and the fair value of any other consideration
given to acquire the asset and includes costs directly attributable
to making the asset capable of operating as intended.
Depreciation is provided on all property, plant and equipment,
other than land, on a straight-line basis over its expected useful
life as follows:
Short leasehold property - the term of the lease
Plant and equipment - 5 years
Computer equipment - 3 years
Motor vehicles - 3 years
Fixtures and fittings - 15%
The carrying amounts of property, plant and equipment are
reviewed for impairment if events or changes in circumstances
indicate the carrying amount may not be recoverable, and are
written down immediately to their recoverable amount. Useful lives
and residual values are reviewed annually and where adjustments are
required these are made prospectively.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on
the derecognition of the asset is included in the income statement
in the period of derecognition.
(c) Trade and other receivables
Trade and other receivables are initially recognised at fair
value and subsequently at amortised cost. A bad debt provision is
made when there is objective evidence that the Group will not be
able to recover balances in full. Balances are written off when the
probability of recovery is assessed as being remote. Other
receivables mainly comprise of refundable rent deposits and amounts
the Group is due to receive from third parties in the normal course
of business.
(d) Provisions and other liabilities
A provision is recognised when the Group has a legal or
constructive obligation as a result of a past event; it is probable
that an outflow of economic benefits will be required to settle the
obligation; and a reliable estimate can be made of the amount of
the obligation.
Where the effect of the time value of money is material
provisions are discounted. The increase in the provision due to
passage of time is recognised as a finance cost.
Where the Group, as lessee, is contractually required to restore
a leased property to an agreed condition prior to the release by a
lessor, provision is made for such costs as they are
identified.
Where the Group expects some or all of a provision to be
reimbursed, the reimbursement is recognised as a separate asset but
only when recovery is virtually certain.
(e) Income taxes
Current and deferred tax are recognised in income or expense,
except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case the
current and deferred tax are also recognised in other comprehensive
income or directly in equity respectively. Current tax assets and
liabilities are measured at the amount expected to be recovered
from or paid to the taxation authorities based on tax rates and
laws that are enacted or substantively enacted by the statement of
financial position date.
Deferred income tax is recognised on all temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements, with the following
exceptions:
(i) where the temporary difference arises from the initial
recognition of goodwill or of an asset or liability in a
transaction that is not a business combination that at the time of
the transaction affects neither accounting nor taxable profit or
loss;
(ii) in respect of taxable temporary differences associated with
investments in subsidiaries, associates and joint ventures, where
the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will
not reverse in the foreseeable future; and
(iii) deferred income tax assets are recognised only to the
extent that it is probable that taxable profit will be available
against which the deductible temporary differences, carried forward
tax credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an
undiscounted basis at the tax rates that are expected to apply when
the related asset is realised or liability is settled, based on tax
rates and laws enacted or substantively enacted at the statement of
financial position date.
The carrying amount of deferred income tax assets is reviewed at
each statement of financial position date and reduced to the extent
that it is no longer probable that sufficient taxable profits will
be available to allow all or part of the asset to be recovered.
(f) Foreign currencies
The Group's consolidated financial statements are presented in
pounds sterling. The functional currency of the Group's entities is
pounds sterling. Transactions in foreign currencies are initially
recorded in the functional currency by applying the spot exchange
rate ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are retranslated at
the functional currency rate of exchange ruling at the statement of
financial position date. All differences are taken to the profit
and loss account.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rates as at
the dates of the initial transactions. Non-monetary items measured
at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined.
The Group does not apply hedge accounting of foreign exchange
risks in its company financial statements.
(g) Financial instruments
(i) Financial assets
Initial recognition and measurement - Financial assets within
the scope of IAS 39 are classified as financial assets at fair
value through profit and loss, loans and receivables or available
for sale financial assets, as appropriate. Management determines
the classification of its financial assets at initial recognition.
All financial assets are recognised initially at fair value plus
directly attributable transaction costs.
Subsequent measurement - The subsequent measurement of financial
assets depends on their classification as follows:
-- Financial assets at fair value through profit of loss
Financial assets at fair value through profit or loss include
financial assets held for trading and financial assets designated
upon initial recognition at fair value through profit or loss.
Financial assets are classified as held for trading if they are
acquired for the purpose of selling in the near term. The Group has
designated financial assets in this category if acquired
principally for the purpose of selling in the short term or if so
designated by management. Financial assets at fair value through
profit and loss are carried in the statement of financial position
at fair value with changes in fair value recognised in finance
revenue or finance expense in the income statement.
-- Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. Such assets are carried at amortised cost using the
effective interest (EIR) method, less impairment. Amortised cost is
calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR.
The EIR amortisation is included in finance revenue in the income
statement. The losses arising from impairment are recognised in the
income statement in other operating expenses. They are included in
current assets, except for maturities greater than 12 months after
the end of the reporting period. Loans and receivables comprise
mainly cash and cash equivalents and trade and other
receivables.
-- Available for sale financial assets
Available for sale financial investments include equity
securities. Equity investments classified as available for sale are
those, which are neither classified as held for trading nor
designated at fair value through profit or loss. After initial
measurement, available for sale financial investments are
subsequently measured at fair value with unrealised gains or losses
recognised as other comprehensive income in the unrealised gains
and losses reserve until the investment is derecognised, at which
time the cumulative gain or loss is recognised in other operating
income, or determined to be impaired, at which time the cumulative
loss is recognised in the income statement in other operating
expenses and removed from the unrealised gains and losses reserve.
The Company evaluates its available for sale financial assets and
whether the ability and intent to sell them in the near term is
still appropriate. When the Company is unable to trade these
financial assets due to inactive markets and management's intent
significantly changes to do so in the foreseeable future, the
Company may elect to reclassify these financial instruments in rare
circumstances. Reclassification to loans and receivables is
permitted when the financial asset meets the definition of loans
and receivables and when the Company has the intent and ability to
hold these assets for the foreseeable future or until maturity. The
Company has not designated any financial assets upon initial
recognition as available for sale.
Derecognition of financial assets - A financial asset is
derecognised when (i) the rights to receive cash flows from the
asset
have expired or (ii) the Group has transferred its rights to
receive cash flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay to a
third party under a "pass through" arrangement; and either (a) the
Group has transferred substantially all the risks and rewards of
the asset, or (b) the Group has neither transferred nor retained
substantially all the risks and rewards of the asset, but has
transferred control of the asset.
Impairment of financial assets - The Group assesses at each
reporting date whether there is any objective evidence that a
financial asset or group of financial assets is impaired. If there
is objective evidence that an impairment loss on loans and
receivables carried at amortised cost has been incurred, the amount
of the loss is measured as the difference between the asset's
carrying amount and the present value of estimated future cash
flows (excluding future credit losses that have been incurred)
discounted at the financial asset's original effective interest
rate (i.e. the effective interest rate computed at initial
recognition). The carrying amount of the asset is reduced, with the
amount of the loss recognised in administration costs.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised, the previously
recognised impairment loss is reversed. Any subsequent reversal of
an impairment loss in recognised in the profit and loss account, to
the extent that the carrying amount of the asset does not exceed
its amortised cost at the reversal date.
(ii) Financial liabilities and equity
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual arrangement. Generally, an obligation to deliver cash
or other financial asset to another party at a fixed date in the
future would require presentation of a financial instrument as a
liability.
No significant restrictions exist to transfer cash or assets
within the Group or pay out dividends, except for regulatory
capital restrictions within the regulated companies.
Preference shares, which are mandatorily redeemable on a
specific date, are classified as liabilities. The fair value of
preference shares is not materially different to their carrying
value. The dividends on these preference shares are recognised in
the income statement as interest expense.
(iii) Other financial liabilities
Other financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs. Other financial
liabilities are subsequently measured at amortised cost using the
EIR, with interest expense recognised on an effective yield
basis.
The EIR used to recognise interest expense is the rate that
exactly discounts estimated future cash payments through the
expected life of the financial liability, or, where appropriate, a
shorter period, to the net carrying amount on initial
recognition.
The Group derecognises financial liabilities when the Group's
obligations are discharged, cancelled or expired.
(iv) Fair values
The fair value of financial instruments that are traded in
active markets at the reporting date is determined by reference to
quoted market prices or dealer price quotations (bid price for long
positions and ask price for short positions), without any deduction
for transaction costs. For financial instruments not traded in an
active market, the fair value is determined using appropriate
valuation techniques. Such techniques may include using recent
arm's length market transactions; reference to the current fair
value of another instrument that is substantially the same;
discounted cash flow analysis or other valuation models.
(h) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and highly
liquid short-term deposits that are readily convertible to known
amounts of cash within three months or less. Bank overdrafts that
are repayable on demand and form an integral part of the Group's
cash management are included as a component of cash and cash
equivalents for the purpose of the statement of cash flows and are
presented in current liabilities.
(i) Exceptional items
The Group presents as exceptional items those items of income
and expense, which are not incurred in the normal course 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. This aids to facilitate comparison with prior periods and
assists in assessing trends in financial performance.
(j) Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured at the fair value of the
consideration received, excluding value added tax.
The Group's primary source of income is fee income from
investment management activities. These fees are generally based on
an agreed percentage, as per the management contract, of the assets
under management and are recognised as the service is provided.
Commission includes fees based on a set percentage of certain
flows into our funds and are recognised on receipt.
Other income also included within revenue includes performance
fees which are accounted for as and when relevant performance
criteria are met and the fees become receivable. This policy is in
line with IAS 18.
(k) Pensions
The Group operates defined contribution plans. The Group has no
further payment obligations once the contributions have been paid.
The contributions are recognised as employee benefit expense as the
service is provided. Prepaid contributions are recognised as an
asset to the extent that a cash refund or a reduction in the future
payments is available.
(l) Leases
All leases are classified as operating leases. Rents payable
under operating leases are charged to income on a straight-line
basis over the term of the relevant lease. Contingent rentals
arising under operating leases are recognised as an expense in the
period in which they are incurred.
In the event that lease incentives are received to enter into
operating leases, such incentives are recognised as a liability.
The aggregate benefit of incentives is recognised as a reduction of
rental expense on a straight-line basis over the lease term.
(m) Intangible assets
Intangible assets with finite lives are amortised over the
useful economic life and assessed for impairment whenever there is
an indication that the intangible asset may be impaired. The
amortisation period and the amortisation method are reviewed at
least at each financial year end. Changes in the expected useful
life or the expected pattern of consumption of future economic
benefits embodied in the asset are accounted for by changing the
amortisation period or method, as appropriate, and are treated as
changes in accounting estimates. Gains or losses arising from
derecognition of an intangible asset are measured as the difference
between the net disposal proceeds and the carrying amount of the
asset and are recognised in the income statement in amortisation
when the asset is derecognised.
Investment management contracts purchased by the Group are
capitalised as intangible fixed assets and are amortised on a
straight line basis over periods ranging from 7 to 20 years
depending on the nature of the assets purchased.
(n) Trade and other payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are
presented as non-current liabilities.
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method.
(o) Borrowings
Borrowings, are recognised initially at fair value, net of
attributable transaction costs. Subsequent to initial recognition,
borrowings are carried at amortised cost, with any difference
between the proceeds (net of transaction costs) and the redemption
value being recognised in the statement of comprehensive income
over the period of the borrowings using the EIR.
All other borrowing costs are recognised in profit and loss in
the period in which they are incurred.
(p) Related party transactions
All companies forming part of the consolidated Group are
considered to be related parties as these companies are owned
either directly or indirectly by Premier Asset Management Group
PLC. Key management, being the members of the Executive Committee,
are also identified as a related party.
The adoption of IFRS 10 Consolidated Financial Statements has
not resulted in the consolidation of additional funds where the
Group is now deemed to have a controlling interest under the
definition of this standard. The Group did not hold a material
investment in any of the funds managed by the Group and has
therefore determined that no controlling interest was held.
(q) Earnings per share
Basic earnings per share is calculated by dividing the total
comprehensive income for the year by the weighted average number of
ordinary shares in issue during the year, excluding the average
number of ordinary shares purchased by the Group as own shares held
by an EBT.
(r) Employee benefit trust ('EBT')
The Company provides finance to the EBT to purchase the
Company's shares on the open market in order to meet its obligation
to provide shares when an employee exercises awards made under the
Group's share based payment scheme. Administration costs connected
with the EBT are charged to the Consolidated Statement of
Comprehensive Income. The cost of shares purchased and held by the
EBT is deducted from equity. The assets held by the EBT are
consolidated into the Group's financial statements.
(s) Share based payments
The Group makes equity-settled share based payment transactions
in respect of services received from certain employees. The fair
value of the services received is measured by reference to the fair
value of the shares on the grant date. This cost is then recognised
in the Consolidated Statement of Comprehensive Income over the
vesting period, with a corresponding credit to equity.
3. Revenue
Revenue recognised in the statement of comprehensive income is
analysed as follows:
2018 2017
GBP000 GBP000
================= ======= =======
Management fees 52,718 45,894
Commissions 57 83
Other income 621 69
=================== ======= =======
Total revenue 53,396 46,046
=================== ======= =======
All revenue is derived from the United Kingdom and Channel
Islands.
4. Exceptional items
Recognised in arriving at operating profit from continuing
operations:
2018 2017
GBP000 GBP000
================================== ======= =======
Staff redundancy costs - 40
FCA FSCS levy 138 -
PremierConnect development costs 110 -
Floating on AIM - 331
Capital reduction - 44
Total exceptional items 248 415
==================================== ======= =======
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.
Staff redundancy costs are in relation to the rationalisation
and restructuring of various departments and functions.
Floating on AIM represents costs associated with the admission
to trading on the Alternative Investment Market.
Capital reduction costs in 2017 were in respect of professional
fees relating to the cancellation of the share premium account of
the Company, which became effective on 27 July 2017. FCA FSCS levy
costs in 2018 represents the 2018/19 contribution to the FSCS which
have increased significantly over the previous year as a result of
the increased levels of compensation paid by the FSCS.
PremierConnect development costs relate to external consultants who
have been deployed in the testing of the new PremierConnect
platform during the development stage prior to launch. These costs
will not be incurred once the development stage is completed.
5. Operating profit
(a) Operating profit is stated after charging:
2018 2017
Note GBP000 GBP000
=============================================== ===== ======= =======
Auditor's remuneration 5(b) 172 572
Staff costs 6 16,107 14,260
Operating lease payments - rent 17 284 255
Amortisation of intangible assets 10 1,686 2,536
Exceptional items 4 248 415
Depreciation of property, plant and equipment 11 237 225
=============================================== ===== ======= =======
(b) Auditor's remuneration
The remuneration of the auditors is analysed as follows:
2018 2017
GBP000 GBP000
====================================================================== ======= =======
Audit of Company 46 35
Audit of Subsidiaries 62 47
======================================================================== ======= =======
Total audit 108 82
Audit-related assurance services 65 67
Tax compliance services 34 28
Services related to corporate finance transactions not covered above - 351
Other non-audit services not covered above 28 44
======================================================================== ======= =======
Total other non-audit services 62 423
======================================================================== ======= =======
Total non-audit services 127 490
======================================================================== ======= =======
Total fees 235 572
======================================================================== ======= =======
6. Staff costs and Directors' remuneration
(a) Staff costs during the year were as follows:
2018 2017
GBP000 GBP000
=========================================== ======= =======
Salaries, bonus and performance fee share 13,826 12,181
Social security costs 1,790 1,648
Other pension costs 491 431
Total staff costs 16,107 14,260
============================================= ======= =======
The average monthly number of employees of the Group during the
year was made up as follows:
2018 2017
Directors 6 6
Investment management 29 28
Sales and marketing 29 28
Finance and systems 7 6
Legal and compliance 7 8
Administration 29 24
Total employees 107 100
========================= ===== =====
(b) Directors' remuneration
The remuneration of the Directors during the year was as
follows:
Salary and payment in lieu of pension Bonus Benefits 2018 2017
GBP000 GBP000 GBP000 GBP000 GBP000
=============================== ======================================== ======= ========= ======= =======
Executive Directors
Michael Patrick O'Shea 302 500 8 810 680
Neil Macpherson 185 175 28 388 338
=============================== ======================================== ======= ========= ======= =======
Non-executive Directors
Michael Andrew Vogel 75 - - 75 75
Luke Anton Wiseman 43 - - 43 50
William Longden Smith 35 - - 35 35
Robert Colthorpe 48 - - 48 40
Total Director's remuneration 688 675 36 1,399 1,218
=============================== ======================================== ======= ========= ======= =======
Details of awards made under the EBT to the Directors as part of
their annual bonus packages, and which are not included in the
above table, can be seen in the Remuneration Committee Report.
The number of Directors accruing benefits under money purchase
pension schemes at the year end was nil (2017: nil).
7. Finance costs
2018 2017
GBP000 GBP000
================================================================= ======= =======
Interest receivable (2) -
================================================================= ======= =======
Other loans (including the debt component of preference shares) - 44
=================================================================== ======= =======
Total interest expense - 44
=================================================================== ======= =======
Net finance (income)/costs (2) 44
=================================================================== ======= =======
8. Income taxes
(a) Tax charged in the statement of comprehensive income
2018 2017
GBP000 GBP000
====================================================== ======= =======
Current income tax:
UK corporation tax 2,684 2,106
======================================================== ======= =======
Current income tax charge 2,684 2,106
======================================================== ======= =======
Adjustments in respect of prior periods 155 29
======================================================== ======= =======
Total current income tax 2,839 2,135
======================================================== ======= =======
Deferred tax:
Origination and reversal of temporary differences 684 482
Adjustments in respect of prior periods (130) -
Total deferred tax 554 482
======================================================== ======= =======
Tax expense in the statement of comprehensive income 3,393 2,617
======================================================== ======= =======
(b) Reconciliation of the total tax charge
The tax expense in the statement of comprehensive income for the
year is higher than the standard rate of corporation tax in the UK
of 19% (2017: 19.5%). The differences are reconciled below:
2018 2017
GBP000 GBP000
============================================================================ ======= =======
Profit on ordinary activities before taxation 15,916 11,493
============================================================================== ======= =======
Tax calculated at UK standard rate of corporation tax of 19% (2017: 19.5%) 3,024 2,241
Deferred tax not recognised 196 63
Expenses not deductible for tax purposes 12 103
Dividends on preference shares included in finance costs - 7
Amortisation not deductible 255 258
Income not subject to UK tax (69) (19)
Change in tax rate (80) (71)
Fixed asset differences 30 6
Adjustments in respect of prior periods 25 29
============================================================================== ======= =======
Tax expense in the statement of comprehensive income 3,393 2,617
============================================================================== ======= =======
(c) Change in Corporation Tax rate
A reduction in the UK corporation tax rate from 20% to 19%
(effective from 1 April 2017) and to 18% (effective 1 April 2020)
were substantively enacted on 26 October 2015, and an additional
reduction to 17% (effective 1 April 2020) was substantively enacted
on 6 September 2016. This will reduce the Group's future current
tax charge accordingly. The deferred tax asset at 30 September 2018
has been calculated based on these rates.
(d) Deferred tax
The deferred tax included in the Group statement of financial
position is as follows:
2018 2017
GBP000 GBP000
=============================================================== ======= =======
Deferred tax asset:
Fixed asset temporary differences (44) (71)
Accrued bonuses 264 225
Losses and other deductions* 323 943
================================================================= ======= =======
Deferred tax disclosed on the statement of financial position 543 1,097
================================================================= ======= =======
*Deferred tax assets have been recognised in respect of this
item because it is probable that future taxable profits will be
available against which the Group can use the benefits
therefrom.
2018 2017
GBP000 GBP000
======================================================== ======= =======
Deferred tax in the statement of comprehensive income:
Origination and reversal of temporary differences 684 482
Adjustments in respect of prior periods (130) -
Deferred tax expense / (credit) 554 482
========================================================== ======= =======
Deferred tax assets have not been recognised in respect of the
following items because it is not probable that future taxable
profits will be available against which the Group can use the
benefits therefrom.
2018 2017
GBP000 GBP000
========================================= ======= =======
Unprovided deferred tax asset:
Non trade loan relationship losses 1,693 1,693
Excess management expenses 249 53
Non trade intangible fixed asset losses 420 420
=========================================== ======= =======
Deferred tax expense 2,362 2,166
=========================================== ======= =======
9. 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 year and the weighted average number of
ordinary shares in issue for each period.
2018 2017
GBP000 GBP000
===================================================== ============ ============
Basic:
Profit attributable to equity holders of the Group 12,523 8,876
Issued ordinary shares at 1 October 105,801,310 1,398,513
Effect of shares issued during the year - 102,686,587
Effect of own shares held by an EBT (2,236,175) -
===================================================== ============ ============
Weighted average number of ordinary shares in issue 103,565,135 104,085,100
======================================================= ============ ============
Basic earnings per share 12.09p 8.53p
======================================================= ============ ============
Diluted:
Profit attributable to equity holders of the Group 12,523 8,876
Issued ordinary shares at 1 October 105,801,310 1,398,513
======================================================= ============ ============
Effect of shares issued during the year - 102,686,587
======================================================= ============ ============
Effect of own shares held by an EBT (2,236,175) -
===================================================== ============ ============
Effect of share options awarded 1,495,266 -
===================================================== ============ ============
Weighted average number of ordinary shares in issue 105,060,401 104,085,100
======================================================= ============ ============
Diluted earnings per share 11.92p 8.53p
======================================================= ============ ============
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 GBP63.7 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.
Own shares held by an EBT represents the Company's own shares
purchased and held by the Employee Benefit Trust (EBT), shown at
cost. In the year ending 30 September 2018 the EBT purchased
1,643,000 (2017: nil) of the Company's own shares.
10. Goodwill and other intangible assets
Cost amortisation and net book value of intangible assets are as
follows:
Goodwill Other Total
GBP000 GBP000 GBP000
============================== ========= ======= =======
Cost:
At 1 October 2017 22,576 56,231 78,807
At 30 September 2018 22,576 56,231 78,807
============================== ========= ======= =======
Amortisation and impairment:
At 1 October 2017 6,979 41,066 48,045
Amortisation during the year - 1,686 1,686
============================== ========= ======= =======
At 30 September 2018 6,979 42,752 49,731
Carrying amount:
============================== ========= ======= =======
At 30 September 2018 15,597 13,479 29,076
============================== ========= ======= =======
At 30 September 2017 15,597 15,165 30,762
============================== ========= ======= =======
Impairment tests for goodwill
Goodwill is monitored by management at the operating segment
level, which reflects the entire Group. Therefore, goodwill is
assessed as part of one CGU in relation to asset management. No
further allocation of goodwill has been made.
The recoverable amount of the Group has been determined based on
value-in-use calculations. These calculations are for the
three-year period following the year end and are based on the next
year's annual budget and subsequent two year forecasts. Budgeted
increases in the level of assets under management, revenues and
associated costs have been taken into account. Management forecasts
revenues and associated costs based on the current structure of the
business, adjusting for inflationary increases and these do not
reflect any future restructurings or cost saving measures. To
arrive at the net present value, the cash flows have been
discounted using a discount factor of 12.0%. The compound annual
growth rate for the net cash flows over the forecast period is
28.2% (2017: 17.7%). The overall value in use was greater than the
carrying amount of the CGU and so no impairment charge has been
recognised. The key estimates made in calculating the value in use
were the net cash flows and the discount rate. In determining the
net cash flows assumptions were made on the level of future fund
inflows, fund redemptions and market growth.
Investment management contracts purchased by the Group are
capitalised as intangible fixed assets and are amortised over
periods ranging from 7 to 20 years depending on the nature of the
assets purchased. These finite life intangible assets were assessed
for indicators of impairment, both internal and external factors,
of which no indicators were noted. The largest of the intangible
assets was in relation to a business combination in 2007 with a
carrying value of GBP13,199,256 and a remaining amortisation period
of 10 years.
Sensitivity analysis
Management have performed a sensitivity analysis as of 30
September 2018 and any reasonable changes in key assumptions in the
determination of the recoverable amount would not result in an
impairment in goodwill.
11. Property, plant and equipment
Land and buildings Plant and equipment Total
GBP000 GBP000 GBP000
============================== =================== ==================== =======
Cost or fair value:
At 1 October 2017 1,057 547 1,604
Additions 243 82 325
At 30 September 2018 1,300 629 1,929
============================== =================== ==================== =======
Depreciation:
At 1 October 2017 398 295 693
Depreciation during the year 118 119 237
At 30 September 2018 516 414 930
Carrying amount:
============================== =================== ==================== =======
At 30 September 2018 784 215 999
============================== =================== ==================== =======
At 30 September 2017 659 252 911
============================== =================== ==================== =======
12. Group entities
At 30 September 2018 the Company held (directly and indirectly)
100% of the allotted share capital of the following subsidiary
undertakings, all of which are incorporated in Great Britain with
the exception of Premier Asset Management (Guernsey) Limited which
is incorporated in Guernsey. All subsidiary undertakings are
consolidated within the Group accounts.
Proportion of voting rights and
Class of share held shares held Nature of the business
================================== ==================== =================================== =======================
(a) Directly held
Premier Asset Management MidCo Ordinary
Limited 100% Holding company
(b) Indirectly held
Premier Asset Management Holdings Ordinary
Limited 100% Holding company
Premier Asset Management Limited Ordinary 100% Holding company
Premier Investment Group Limited Ordinary 100% Holding company
Premier Portfolio Managers Ordinary 100%
Limited Investment manager/ACD
PAM PLC Ordinary 100% Dormant
Premier Offshore Asset Management Ordinary
Limited 100% Dormant
Premier Asset Management Ordinary
(Guernsey) Limited 100% Investment manager
Eastgate Court Nominees Limited Ordinary 100% Nominee company
Premier Fund Managers Limited Ordinary 100% Investment manager
Premier Investment Administration Ordinary
Limited 100% Dormant
Premier Discretionary Asset Ordinary
Management PLC 100% Dormant
Premier Fund Services Limited Ordinary 100% Dormant
PremierConnect Nominees Limited Ordinary 100% Dormant
Eastgate Investment Services Ordinary
Limited 100% Dormant
================================== ==================== =================================== =======================
13. Trade and other receivables
2018 2017
GBP000 GBP000
================================================================= ======= =======
Due from trustees/investors for open end fund redemptions/sales 46,405 42,170
Other trade debtors 160 113
Accrued income 4,605 4,221
Prepayments 2,310 1,326
Other receivables 230 102
Total trade and other receivables 53,710 47,932
================================================================= ======= =======
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.
The ageing profile of trade receivables that are due but not
impaired is:
2018 2017
GBP000 GBP000
======================== ======= =======
Days
0 to 30 46,485 42,226
31 to 60 40 57
61 to 90 40 -
Over 90 - -
Total trade receivables 46,565 42,283
======================== ======= =======
These amounts have not been impaired as there has not been any
significant changes in credit quality and the amounts are still
considered recoverable.
14. Financial instruments
(a) Financial assets at fair value through profit and loss
The financial instruments carried at fair value are analysed by
valuation method. The different levels have been defined as
follows:
(i) Quoted prices (unadjusted) in active markets for identical
assets or liabilities (Level 1)
(ii) Inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices)
(Level 2)
(iii) Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (Level
3).
The fair value of financial assets is as follows:
2018 2017
GBP000 GBP000
=================== ======= =======
Other investments
Quoted - level 1 910 1,354
Total 910 1,354
===================== ======= =======
Quoted investments - Level 1
The Group holds shares and units in a number of funds for which
quoted prices in an active market are available. The fair value
measurement is based on Level 1 in the fair value hierarchy.
Financial instruments measured at amortised cost, but fair value
is disclosed
The following financial instruments are not measured at fair
value in the balance sheet, but information about the fair value is
disclosed.
Trade debtors and trade creditors
The trade debtors and trade creditors largely have a maturity of
less than one year. The fair value of trade creditors and trade
debtors are not materially different to their carrying value.
Borrowings and overdraft
The fair value of the bank borrowings and overdrafts are not
materially different from the carrying value due to the variable
interest rate and the short duration.
Financial risk management
The Group's activities expose it to a variety of financial
risks: market risk (including foreign exchange risk, cash flow and
fair value interest rate risk), credit risk and liquidity risk.
The Group monitors and manages the financial risks relating to
the operations of the Group through internal risk reports which
analyses exposure by degree and magnitude of risks. These risks
include market risk (including currency risk, fair value interest
rate risk and price risk), credit risk, liquidity risk and cash
flow interest rate risk.
Market risks
The Group is exposed to market risk through interest rates,
availability of credit, liquidity and foreign exchange
fluctuations.
(a) Interest rate risk
The Group is exposed to interest rate risk as the Group borrows
at floating interest rates.
A 1% increase in interest rates on the Group's debt balances at
30 September 2018, would increase the annual net interest payable
in the statement of comprehensive income and reduce equity by
GBPnil (2017: GBPnil). The sensitivity has been calculated by
applying the interest rate change to the variable rate
borrowings.
(b) Foreign exchange risk
The Group undertakes transactions denominated in US Dollars and
Euros; consequently, exposures to exchange rate fluctuations
arise.
At 30 September 2018, if the US Dollar and Euro had strengthened
by 10% against the Pound with all other variables held constant,
this would have had an GBP126,000 (2017: GBP124,000) impact on the
statement of comprehensive income and equity.
The Group does not have any cash holdings in a currency other
than GBP.
(c) Credit risk
The Group credit risk is primarily focused on trade receivables
due from trustees/investors for open end fund cancellations/sales.
The risk is that a counterparty fails to settle on a trade and
thereby creates an illiquid asset. However, in such cases the Group
has the ability to arrange with the trustees of the relevant fund
to cancel the trade and to liquidate the units issued, thereby
settling the trade. A possible exposure will arise in such an
instance whereby the price achieved on a cancellation of a trade is
less than the original price at which the units were issued.
The credit risk on liquid assets is limited because the
counterparties are banks with relatively high credit ratings.
The Group has no significant concentration of credit risk as
exposure is spread over a large number of counterparties and
customers.
(d) Liquidity risk
The Group's approach to managing liquidity risk is to ensure, as
far as possible, that it will always have sufficient liquidity to
meet its liabilities when due without incurring unacceptable losses
or risking damage to the Group's reputation.
The table below analyses the Group's financial liabilities into
relevant maturity groupings based on the remaining period at the
balance sheet date to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash
flows.
Between
Less than 3 months Between
3 months and 1 year 1 and 5 years Over 5 years
GBP000 GBP000 GBP000 GBP000
========================== ========== ============ =============== =============
As at 30 September 2018
Trade and other payables 55,763 218 1,764 196
55,763 218 1,764 196
========================== ========== ============ =============== =============
As at 30 September 2017
Trade and other payables 49,416 293 1,174 196
49,416 293 1,174 196
========================== ========== ============ =============== =============
Capital Management
Working capital
The Group manages the level of its working capital on an ongoing
basis. The Group uses detailed financial information provided by
its forecasting model and by regular review of its consolidated
management information.
Regulatory capital requirements
In accordance with the Capital Requirements Directive (CRD), the
Group is required to maintain a minimum level of capital as
prescribed in the UK by the Financial Conduct Authority (FCA). The
Group is required to conduct an Internal Capital Adequacy
Assessment Process (ICAAP), referred to as Pillar 2 capital
requirements. The objective of this process is to ensure that firms
have adequate capital to enable them to manage risks not deemed to
be adequately covered under Pillar 1 minimum requirements. This is
a forward looking exercise which includes stress testing on major
risks, considering how the firm would cope with a significant
market downturn, for example, and an assessment of the Group's
ability to mitigate the risks. Each of the regulated companies in
the Group maintained surpluses of regulatory capital throughout the
year.
The primary objective of the Group's capital management is to
maintain a strong capital base in order to maintain investor,
creditor and market confidence and to provide a suitable base to
sustain the future development of the business, while ensuring
compliance with regulatory capital requirements.
During the period the Group and its subsidiary entities complied
with all regulatory capital requirements.
Offsetting financial assets and financial liabilities
There are no financial assets and liabilities subject to
offsetting, enforceable master netting arrangements and similar
agreements.
15. Cash and cash equivalents
2018 2017
GBP000 GBP000
================================= ======= =======
Cash at bank and in hand 20,744 16,449
Total cash and cash equivalents 20,744 16,449
=================================== ======= =======
16. Trade and other payables
2018 2017
GBP000 GBP000
=================================================================== ======= =======
Due to trustees/investors for open end fund creations/redemptions 46,333 41,375
Other trade payables 1,256 1,145
Other tax and social security payable 1,325 1,048
Accruals 8,097 6,830
Pension contributions 24 26
Other payables 906 655
Total trade and other payables 57,941 51,079
=================================================================== ======= =======
Trade creditors and accruals principally comprise amounts
outstanding for trade purchases and ongoing costs. The Group has
financial risk management policies in place to ensure that all
payables are paid within the pre-agreed credit terms.
The Directors consider that the carrying amount of trade
payables approximates to their fair value.
17. Obligations under leases
Operating lease agreements where the Group is lessee.
The Group has entered into commercial leases on certain
properties. These leases have an average duration of between 5 and
10 years. The costs associated with the development of
PremierConnect will be treated as an operating lease with a
duration of 5 years.
Future minimum rentals payable under non-cancellable operating
leases are as follows:
Restated*
2018 2017
GBP000 GBP000
============================ ======= ==========
Between zero and one year 857 306
Between one and two years 1,001 666
Between two and five years 2,694 1,653
Over five years 409 630
Total lease obligations 4,961 3,255
============================== ======= ==========
*The restatement of the 2017 disclosure is now in line with
required disclosure of IAS 17; previously the amounts disclosed did
not reflect all future payments but just the following year's
payments.
18. Share capital
2018 2017
Authorised
Ordinary shares of 0.02p each 105,801,310 105,801,310
Deferred shares 1 -
Allotted, issued and fully paid
Ordinary shares of 0.02p each 105,801,310 105,801,310
Deferred shares 1 -
=================================== ============ ============
On 8 February 2018, following the approval of a special
resolution, one redeemable deferred share with a nominal value of
GBP28,839.74 was issued and allotted to Eastgate Court Nominees
Limited. The deferred share carries no voting rights and no right
to receive a dividend.
19. Capital redemption reserve
2018 2017
GBP000 GBP000
================================== ======= =======
Redemption of preference shares 4,000 4,000
Cancellation of deferred shares 532 532
Total capital redemption reserve 4,532 4,532
==================================== ======= =======
On the redemption of the preference shares a transfer was made
from retained earnings to the capital redemption reserve equivalent
to the nominal value of the preference shares redeemed. On 19
October 2015 GBP4,000,000 of the 8% Preference shares, plus
GBP359,452 of accrued interest, was redeemed.
20. Shared based payments
All share options awarded to employees through the EBT under the
Group's equity-settled share based payments are valued by reference
to the fair value of the share options on the grant date. The share
options in issue under the equity-settled share based payment
scheme have been valued at prices ranging from GBP1.40 to GBP2.70
per share. The charge to the Consolidated Statement of
Comprehensive Income for the year to 30 September 2018 in respect
of these was GBP1,033,458 (2017: GBP322,778).
All share options have an exercise price of GBPnil, the fair
value of share options outstanding at the end of the period
are:
Fair value
Award date GBP000 Number of options
==================== =========== ==================
7 March 2017 1,703 1,216,667
11 April 2018 1,720 735,000
10 July 2018 2,614 968,333
====================== =========== ==================
Awards via the EBT 6,037 2,920,000
====================== =========== ==================
Premier Asset Management Group PLC established an EBT on 25 July
2016 to purchase ordinary shares in the Company to satisfy awards
of share options to certain employees. All administrative expenses
connected with the EBT are charged to the Consolidated Statement of
Comprehensive Income. The EBT has waived the rights to dividends.
Shares purchased and held by the EBT are deducted from equity and
classified as own shares held by an EBT. The following table shows
the number of shares held by the EBT that have not yet vested.
2018 2017
Number of shares Number of shares
====================== ================= =================
At 1 October 1,599,830 1,160,550
Acquired in the year 1,643,000 439,280
At 30 September 3,242,830 1,599,830
======================== ================= =================
The 439,280 shares acquired by the EBT in the prior period were
acquired in lieu of cash consideration.
21. Own shares held by an EBT
2018 2017
GBP000 GBP000
================================ ======= =======
Own shares held by an EBT 4,047 -
Total own shares held by an EBT 4,047 -
================================ ======= =======
The reserve for the Company's own shares held by an EBT
comprises of the Company's shares held by the Group. At 30
September 2018, the Group held 3,242,830 (2017: 1,599,830).
22. Dividends paid
2018 2017
GBP000 GBP000
==================================================== ======= =======
Declared and paid during the year:
Equity dividends on ordinary shares:
First interim: 1.65 (2017: 1.25) pence per share 1,689 1,323
Second interim: 1.65 (2017: 1.25) pence per share 1,712 1,308
Third interim: 1.65 (2017: 1.25) pence per share 1,692 1,308
====================================================== ======= =======
Final dividend for 2017 4,429 -
==================================================== ======= =======
Dividends paid 9,522 3,939
====================================================== ======= =======
23. Related party transactions
All companies forming part of the consolidated Group are
considered to be related parties as these companies are owned
either directly or indirectly by Premier Asset Management Group
PLC.
The Group manages, through its subsidiaries, a number of open
ended investment companies and investment trusts. The subsidiary
companies receive management fees from these entities for managing
assets and in some instances receive performance fees. The Group
acts as manager and/or authorised corporate director for 28 (2017:
27) funds as at 30 September 2018.
(a) Asset management vehicles
The Group provides investment management services for a number
of collective investment schemes where Group companies are
investment managers/advisors of underlying funds and which meet the
criteria of related parties (note 2.5(p)). In return the Group
receives management fees for the provision of these services.
2018 2017
GBP000 GBP000
======================================= ======= =======
Management fees 52,353 44,968
Amounts outstanding at the year end 4,526 4,102
Investment in funds held by the Group 910 1,354
========================================= ======= =======
(b) Key management compensation
The key management personnel compensation that is represented by
the Executive Committee, for employee and Director services during
the year is shown below:
2018 2017
GBP000 GBP000
Salaries and bonuses 3,998 3,281
Share-based payments 517 186
Benefits in kind 40 33
================================ ======= =======
Short-term employee benefits 4,555 3,500
================================ ======= =======
24. 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.
25. Post balance sheet events
The Directors are not aware of any conditions that existed at
the reporting date or events since, that would affect the
disclosures in these financial statements.
26. Contingent liabilities
There were no contingent liabilities as at 30 September 2018
(2017: nil).
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FEFFAAFASELF
(END) Dow Jones Newswires
November 29, 2018 02:00 ET (07:00 GMT)
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