Premier Miton Group plc (LON:PMI), the AIM quoted fund management group, has announced its half year results for the six months ended 31 March 2021.
Highlights
· £12.6 billion closing Assets under Management 4 (‘AuM’) (2020 HY: £9.1 billion)
· £13.1 billion closing AuM as at 30 April 2021
· Net inflows of £359 million in the Period (2020 HY: £(389) million outflows)
· 74% of funds have above median investment performance since launch or tenure 5
· Adjusted profit before tax 1,4 of £11.9 million (2020 HY: £12.2 million)
· Profit before tax of £6.2 million (2020 HY: £5.3 million)
· Proposed interim dividend of 3.7 pence per share (2020 interim: 2.5 pence per share)
Notes
(1) Adjusted profit before tax is calculated before the deduction of taxation, amortisation, share-based payments, merger related costs and exceptional costs. Reconciliation included within the Financial Review section.
(2) Adjusted earnings per share is calculated before the deduction of amortisation, share-based payments, merger related costs and exceptional costs.
(3) Merger related costs totalled £1.2 million during the period (2020 HY: £3.0 million).
(4) These are Alternative Performance Measures (‘APMs’).
(5) As at 31 March 2021. Based on Investment Association sector classifications where applicable, with data sourced from FE Analytics using the main representative post-RDR share class, based on a total return, UK Sterling basis. Performance for investment trusts is calculated on Net Asset Value (‘NAV’), ranked against the relevant Morningstar category for each investment trust.
Mike O’Shea, Chief Executive Officer of Premier Miton Group, commented:
“We have made considerable progress as a business since our merger in 2019 and it is pleasing to be able to report a return to net positive flows for the Group over the period. Premier Miton is now a well-diversified asset manager operating on a stable and sustainable platform with a robust balance sheet.”
“With attractive investment performance and a clear sense of client service, coupled with a growing brand and targeted marketing activity, this is an exciting time for the firm. I believe that the business is well positioned to deliver for our investors and for our wider stakeholders over the years ahead.”
Chairman’s Statement
I was delighted to be appointed Chairman of the Group in February and am pleased to introduce these interim results. The Group has made considerable progress over the past half year and is well placed for further success.
Financial results
These are set out in more detail below and show a strong story with Assets under Management (‘AuM’) standing at £12.6 billion at 31 March 2021, an increase of 19% on the opening position for the period. AuM at the period end is split between single-strategy 56%, multi-asset 31%, fixed income 4%, investment trusts 6% and segregated mandates 3%.
This position reflects overall improving investment markets and a return to positive net flows for the Group. Net inflows for the period totalled £359 million (2020 HY: £(389) million outflow), marking a real turn for the business.
We know that our clients have choices for their savings and will only invest with us if we perform as they expect. We seek to charge a fair fee for our services and keep a strong cost discipline to balance the interests of our clients with those of our other stakeholders. I am pleased that we are doing so and that our profit before tax for the period was £6.2 million, up by 17% against the comparative period last year.
We have declared an interim dividend of 3.7p per share representing an increase of 48% on the comparative period and I thank our shareholders for their ongoing support. The final dividend for 2020 of 4.5p per share was paid on 12 February 2021 following Shareholder approval at the Group’s Annual General Meeting on 3 February 2021.
Our strong capital position protects the Group through market cycles and allows us to take a long-term view of
business development. The Group has no external bank debt and held net cash of £34.4 million as at 31 March 2021.
Strategy
Asset management is a large and fast-changing global industry with attractive opportunities for growth. The UK remains well placed to continue as an important centre for the industry and we look forward to the future with confidence. Our clients are mainly in the UK although many of our funds invest globally. We have a resilient and well designed business platform which is highly scalable and designed to support significant growth in AuM. We are targeting a greater market share within the UK without material change to our operating model or the immediate need to increase the breadth of our product range, although of course we are always interested in adding to our investment and distribution talent.
We have now successfully completed the merger of Premier and Miton and our Group is far stronger and better placed. I believe that our leadership team did an excellent job on the merger and has accumulated valuable acquisition and integration experience.
The asset management industry is going through a period of extensive strategic change which will mean good businesses, teams and individuals becoming available. We continue to look for new strategic or tactical opportunities to grow and add value to the Group, using sensible and thought through criteria for pursuing ideas.
Culture
I know that asset management firms need a healthy culture to be successful over time. Put simply, we must do the right things, in the right way and for the right reasons. As our business grows and changes, we pay close attention to our own culture to make sure we understand if and where any adjustments are needed. Our most recent review which was led at Board level shows that overall our culture is distinctive, healthy and valuable. We intend to keep it this way through careful and thoughtful leadership.
Environmental, Social and Governance (‘ESG’)
I expect we are all feeling our way to a better understanding of ESG matters and what we need to do as a Group. This is an essential matter for a responsible asset management firm and, next to fund performance, is increasingly relevant to determining our success as a business. I believe we are taking the right steps, especially so in the investment models for several of our funds, yet we have much more to learn and do. I look forward to saying more on this in future.
People
As at 31 March 2021, we employed 151 people and over the past months their working lives have not been easy, yet I am proud of how hard they have worked and how well they have coped. The coming months are likely to be challenging as we decide together how a modern, successful workplace will look and what this means for our people. I am optimistic that, whatever the broader environment, we will find ways to attract, retain and motivate our talented people.
We know that managing other people’s savings well gives everyone in Premier Miton a strong purpose and carries broad responsibilities. I thank our people for all that they do.
Board
Mike Vogel was Chairman of the Group for 13 years and instrumental in our success and the healthy position we are now in. We thank him deeply for his stewardship. Since announcing his departure, the Nomination Committee led the process of developing our Board composition, with particular regard to opportunities to improve diversity, as well as fulfill the requirement to identify a suitable candidate to chair the Audit & Risk Committee. We set out to find candidates who would bring a full contribution to the role, especially in view of the changing nature of the industry and our ambitions. We have met several excellent candidates and expect shortly to announce on appointment.
Outlook
Premier Miton is a successful and ambitious business. We have a clear plan for growth and profitability and an experienced management team with the energy to achieve this. The market outlook is still rather clouded and volatile yet there are encouraging signs for us. I am confident that our Group will make the most of our strong platform and distinctive investment styles as we, hopefully, emerge from the wretched pandemic. I look forward, alongside the other members of the Board, to making my own contribution as your Chairman.
Robert Colthorpe
Chairman
27 May 2021
Chief Executive Officer’s Statement
The half year ended 31 March 2021 has been an important period for Premier Miton. Despite the challenging circumstances of the global pandemic, the business has continued to grow, we have seen a return to net positive fund flow across the Group, and our people have successfully delivered on our goals of business continuity and strong outcomes for our investors.
Business performance
The Group’s AuM increased by 19% in the period, to £12.6 billion as at 31 March 2021. The average AuM was £11.8 billion versus £9.9 billion for the comparative period, an increase of 19%.
Net inflows for the period were £359 million (2020 HY: £(389) million outflow).
Pleasingly, the business demonstrated robust profitability with adjusted profit before tax of £11.9 million and a resulting profit before tax of £6.2 million.
During the period we saw continued growth from several of our single strategy funds. The Premier Miton European Opportunities Fund, launched in 2015, passed the milestone of £2 billion, ending the period with AuM of £2.4 billion. Also growing strongly was the Premier Miton US Opportunities Fund demonstrating a consistent, active investment approach. It surpassed an important AuM milestone ending the half year with £1.1 billion of AuM.
It was also pleasing to see a strong recovery for our UK smaller companies fund, which has been one of the strongest performers in its sector. AuM for this fund have now reached £234 million and we have recently taken steps to restrict flows into the fund in order to protect the long-term interests of investors in the fund. Performance of the UK microcap investment trust has been similarly impressive.
We see growth opportunities across many of our funds, particularly where there has been top quartile investment performance. Over the medium term, we believe that UK equities are likely to reverse their long-term underperformance against global equities. As investor interest in UK equities returns, our UK-focused funds, which have very strong relative performance records, are, we believe, well placed to capture significant market share.
Our multi-asset multi-manager funds also have significant exposure to UK equities in order to meet their income requirements for investors. Whilst this exposure has been a headwind in performance terms, although not in income generating terms, a return to form for UK equities will be helpful looking forward.
It is also our belief that as we emerge from the pandemic the long deflationary down wave that has been in place since the financial crisis of 2008 will likely give way to a more reflationary environment. This could persist for much longer than many people expect with a significant impact on bond yields, interest rates and inflation. In this environment, we believe that genuinely active management will come to the fore, as investors will have to work much harder to achieve their financial objectives. Premier Miton’s range of high active share, alpha focused funds are well placed to help deliver for investors in this environment.
Product development
During the period our funds maintained strong investment performance, with 64% of AuM in first quartile and 75% performing above median within their respective IA sectors since the tenure of the fund manager. Shorter-term numbers also look promising and we believe that this will support future fund flows. Over three years, we have 63% above median. Over one year, we have 80% above median and 78% in the first quartile.
The Group has continued to develop its product range during the period. In November, Emma Mogford joined the Group from Newton Investment Managers and assumed management of three UK equity income funds. Emma has a disciplined style that we believe will do well for investors over the long term.
In January 2021 we made changes to our multi-asset multi-manager fund range, driven by the aim to reduce the costs borne by investors. This team, led by David Hambidge and head of research, Ian Rees, now offers nine funds covering all outcome objectives – income, risk-targeted, growth and wealth preservation. Recently Wayne Nutland, manager of the Premier Miton Managed Index Balanced Fund, joined the multi-manager team. Wayne is an experienced fund manager in asset allocation, portfolio construction and ETF selection and the team will leverage his expertise to assist in the multi-manager portfolios.
Further to these changes and with effect from 1 February 2021, David Jane and Anthony Rayner assumed the management of Premier Miton Multi-Asset Growth & Income Fund and the Premier Miton Multi-Asset Conservative Growth Fund.
Neil Birrell, our Chief Investment Officer and manager of the successful Diversified multi-asset fund range, became manager of the Premier Miton Balanced Multi Asset Fund from 1 March 2021. Building on the success of the Premier Miton Diversified Growth Fund, the fund will have similar asset allocation but with a planned focus on sustainable investments.
I am also pleased to report on the successful launch of the Premier Miton Global Smaller Companies Fund. The fund launched on the 22 March 2021 and is managed by the investment team of Alan Rowsell and Imogen Harris who both joined us from Aberdeen Standard Investments in 2020. This fund fits in well with our ethos and offers investors active stock selection in the global smaller companies universe. At the period end, this fund had £15 million in AuM.
Lastly, in terms of product development, the new Premier Miton European Sustainable Leaders Fund launched on 10 May 2021. The fund is managed by the highly regarded investment team of Carlos Moreno and Thomas Brown together with Russell Champion, who will be joining the Group later in 2021. This fund broadens the team’s investment offering and builds on their successful Premier Miton European Opportunities Fund.
Responsible investing
During the period, we have continued to develop our focus on responsible investing. This includes integration of ESG factors into our investment processes, the development of specialist investment products in this area and building clearer responsible investing reporting for our clients. We believe it is important that we offer responsible investment products to our clients and, as part of this, to actively and responsibly consider ESG issues with the companies we invest in.
As a Group, we currently manage five funds with specific sustainable, ESG or ethical objectives designed to meet increasing demand for a specialist responsible investing approach from our investors. These funds include our
top-performing ethical fund managed by Benji Dawes and Jon Hudson.
Additionally, we have announced the launch of a further sustainable product during 2021. I am delighted that we will be offering such a strong range of sustainable and responsible focused funds. I would like to thank Helene Winch, our head of responsible investing, and the many people involved in the launch or transition of these funds.
There is more for us to do in this area, but we are making good progress.
Distribution
Our distribution team has adapted well to the challenges of working remotely and moving to a virtual world of meetings and client contact. It is pleasing to see that high levels of client contact have been maintained throughout the period and that we have been able to effectively communicate the key features of our funds to investors and their advisers.
The Group purposely structures its distribution to be relationship-centric, split according to the key focus areas of the discretionary and advisory intermediary markets. Our sales team consists of 21 people and is geographically structured to provide comprehensive coverage throughout the United Kingdom. The distribution team has a detailed approach to sales data and this has been enhanced through the successful integration of the databases used by both the former Premier and Miton areas of the business.
Our marketing team continued to focus on a broad range of activities to build awareness of the Premier Miton brand and familiarity across our investment range, as well as to keep our clients informed. This work has included organising many digital events, such as webinars, for existing and potential professional investors. The Group’s new website was launched in March 2021 reflecting our brand and offering enhanced information for our different
client groups, including financial advisers and wealth managers.
COVID-19
It has been a challenging period during lockdown and the welfare of our people has been our highest priority. I have been impressed with the adaptability and resilience our staff have shown across all areas of the business.
The current indications are that the roadmap for easing restrictions remains on target. We have been thinking carefully about our working arrangements and the availability of ongoing workspace flexibility to our staff.
As a Group we believe the office is a place of collaboration, engagement and thought leadership. We also recognise the many positive elements to working from home and the benefits of not commuting every day. It is safe to say that we will endeavour to adopt a more flexible approach to office-based working in the future and create an arrangement that successfully combines the benefits of home working with a dynamic office environment.
Outlook
With the completion of the operational aspects of the merger in December 2020, we are now realising the benefits of our combined platform and the hard work put in over the past 12 months.
Our operational platform has been streamlined to support significant growth in AuM and our investment teams, with their genuinely active ethos, are very well positioned to navigate market trends as we hopefully emerge from the pandemic. We have an experienced, effective distribution team working diligently to communicate the benefits of our funds and deliver excellent client service.
Mike O’Shea
Chief Executive Officer
27 May 2021
