PAM.L Regulatory News (PAM)

16 Dec 2005 07:01

Premier Asset Management PLC16 December 2005 Premier Asset Management PLC Final Results for the year ended 30th September 2005 Highlights • Turnover up 27% to £8,637,000 from £6,815,000 • Funds under management as at 30th November 2005 at £1.1 billion, up by 96% on November 2004 • Post-tax profit on ordinary activities of £481,000 before amortisation and exceptional items compared to £333,000 for the previous year, representing an increase of 44% year on year • Net new business written during the year to September 2005 of £107 million • Continued success of Third Party Services with funds under management at November 2005 of £197 million compared to £48 million at November 2004 • Purchase of BFS Investments (Guernsey) Ltd and the business of BFS Investments PLC in October 2005 adding £330 million to funds under management Enquiries 01483 306090 Premier Asset Management PLCMike O'SheaChief Executive Chairman's Statement Introduction Over the last twelve months, your Company has continued to develop its businessactivities and has added considerably to its funds under management. As at the30th November funds under management stood at £1.1 billion as compared to £563million at the same time last year. It is the firmly held view of your Boardthat this provides a significant increase in scale which puts your Company in amuch stronger position than at any time in recent years to enhance earnings, toaccelerate the improvement in profitability that began in 2003 and to increaseassets under management still further over the coming years. Before looking to the future it is worth reviewing the last twelve months bothin terms of the financial results and the activities that have created theincreased scale for your Company's future expansion. Financials During the year, turnover increased by 27% to £8,637,000 from £6,815,000. I ampleased to announce that your Board is reporting a modest increase in profit onordinary activities after taxation, but before amortisation and exceptionals, of£481,000 as against a comparable profit of £333,000 last year. Sales Growth Your Board is also pleased to report that sales of Premier funds have continuedto grow at a good pace. During the twelve months under review your Companyachieved net new business of open ended funds and discretionary business of £107million, which represents a marked improvement on last year's numbers. Of particular note has been the strong growth in the Third Party fund saleswhere your Company is providing fund selection and administration services forintermediaries who wish to design their own product for their clients. This isan area where there has been a noticeable shift in the market and your Companyhas been quick to capitalise on the opportunity that this has presented. Sales of structured plans have not been maintained at the previous year's levelof £949,000. Instead, increased competition in the market for structured plans,coupled with an improvement in equity markets and increasing investorconfidence, meant that sales were harder to achieve than had been hoped. Theactual sales were £348,000, some £601,000 down on the previous year. However, the increased fees on fund management assets have largely replaced thelost revenue on structured plans. It is the view of your Board that the fees onfund management assets will be valued far more highly by investors and willserve to underpin the value of your Company on an ongoing basis. In addition, there are very encouraging signs of interest in the PremierAdvantage funds where some excellent performance numbers are allowing the fundsand their managers to stand out from the crowd. Your Board believes that thesteady growth in sales throughout the year is encouraging and bodes well for thefuture. A full review of the year can be found in the reports of the Chief Executive andthe Finance Director, but the following are particularly worthy of mention. Corporate Activity In April, your Board announced the acquisition of a 30% interest in CastlefieldInvestment Partners LLP for £700,000 in cash and shares. Castlefield is aspecialist asset manager working primarily in the charity and pensions marketand has developed an impressive investment process. The acquisition wassuccessfully completed in September and we look forward to working with theCastlefield partners to build a successful relationship as well as welcomingthem as shareholders in your Company. In May, your Company instigated the launch of Renewable Energy Generation Ltd, aGuernsey Investment Company that is now listed on London's AIM market. Thiscompany specialises in investing in renewable energy projects, such as windfarms, primarily in the UK and Europe, building on our experience in theutilities sector. Following early success in identifying interesting investmentopportunities, your Company was pleased to assist the directors of REG, as ithas become known, in successfully completing a secondary fund raising of £30million in November, taking the total raised to £55 million. My colleagues and Ilook forward to working with the REG team over the coming years through ournewly formed subsidiary, REG Power Management Ltd, which acts as the manager ofREG's portfolio of assets. In August, your Board announced the acquisition of the Solus Eastern EnterpriseFund, which is now being managed by your Company's Chief Investment Officer,Richard Muckart and his team. This acquisition strengthened your Company'sgrowing presence in the specialist open ended funds area which are marketedunder the Premier Advantage brand. After the year end, your Board announced the acquisition of BFS Investments(Guernsey) Ltd and the business and certain activities of BFS Investments PLC.As a result, your Company was able to add approximately £330 million to itstotal assets under management as well as bringing in a first classadministrative capability and enhancing its fund management skills. I would liketo take the opportunity to welcome the BFS private clients to Premier, as wellas to extend my gratitude to the boards of the BFS investment trusts for theirconfidence in entrusting their assets to our care. Finally, in November your Board announced the acquisition of the Solus ShortDated Gilt Fund and Solus Gilt Growth Fund, which will utilise the skills of therecently acquired BFS Fixed Income team. Move to the Alternative Investment Market The Company announced on 24th March 2005 its intention to move its share listingfrom the Official List to the Alternative Investment Market (AIM) of the LondonStock Exchange. Your Board believes that the greater flexibility afforded by AIMmakes it a more appropriate market for your Company given its size andshareholder base. The transfer to AIM, which took place on 26th April 2005, willalso allow your Company to pursue its growth objectives in a more cost effectivemanner and will simplify the ongoing administration and reporting requirementsof your Company. Your Company continues to be subject to the regulatory anddisciplinary controls of the London Stock Exchange. Future In summary, your Board feels that during the last twelve months your Company hasmade significant progress. In particular, the combination of both organic andacquisition growth demonstrates that the Company's strategic ambitions areachievable and that shareholder values can be enhanced. In the absence ofunforeseen circumstances the Company is now well placed to continue this growthinto the next financial year. Your Board has reviewed the prospects forannouncing a dividend but remains of the opinion that it is still too early todo so. However, if trading continues to improve, then your Board hopes that itwill be able to review this option more favourably in the future. Staff and Colleagues As ever, I would like to express my gratitude to the whole team at Premier. Iwould, of course, also like to thank the advisers, asset managers andindependent investment trust directors who continue to allow us to manage andadminister their assets. Roger WoodChairman15th December 2005 Consolidated Profit and Loss AccountFor the year ended 30th September 2005 Notes 2005 2004 £ £Turnover 8,636,818 6,814,825Operating expensesAmortisation (242,163) (231,546)Other operating expenses (8,424,653) (6,715,530)Exceptional items 2 (462,032) -Total operating expenses (9,128,848) (6,947,076) Operating loss (492,030) (132,251)Net interest receivable 143,511 133,599 (Loss)/profit on ordinaryactivities before taxation (348,519) 1,348Tax on (loss)/profit onordinary activities 125,000 100,000 (Loss)/profit on ordinary activities (223,519) 101,348after taxationDividends (non equity) - (12,450) Retained (loss)/profit for the year (223,519) 88,898 Earnings per share before amortisationand exceptionals- basic 3 3.66 2.63- diluted 3 3.63 2.61 (Loss)/earnings per share afteramortisation and exceptionals- basic 3 (1.70) 0.73- diluted 3 (1.69) 0.72 All the amounts relate to continuing operations. The group has no recognisedgains or losses other than those reported above. The accompanying accounting policies and notes form an integral part of thesefinancial statements. Consolidated Balance Sheet At 30th September 2005 Restated* 2005 2005 2004 2004 £ £ £ £Fixed assets Intangible fixed assets 2,531,314 1,454,657Goodwill 2,231,950 1,628,511Tangible fixed assets 309,003 335,115Investment in associate 43,500 - 5,115,767 3,418,283 Current assetsInvestments 135,827 90,108Debtors 5,297,859 2,859,154Cash 3,551,341 2,749,287 8,985,027 5,698,549 Creditors: amounts falling duewithin one year (8,456,748) (3,273,497) Net current assets 528,279 2,425,052Total assets less current liabilities 5,644,046 5,843,335 Called up share capital 1,316,669 1,309,917Share premium account 686,646 606,772Capital redemption reserve 830,000 830,000Profit and loss account 2,810,731 3,096,646Shareholders' funds 5,644,046 5,843,335 The financial statements were approved on behalf of the Board of Directors on15th December 2005. \* The 2004 figures have been restated to reclassify certain assets from goodwillto intangible fixed assets. Consolidated Cash Flow StatementFor the year ended 30th September 2005 2005 2005 2004 2004 £ £ £ £ Net cash inflow/(outflow) from operatingactivities 943,542 (897,351) Returns on investmentsand servicing of financeInterest received 158,897 133,753Interest paid (15,386) (154)Non - equity dividends paid - (287,237) Net cash inflow/(outflow) from returns oninvestments and servicing of finance 143,511 (153,638) TaxationUK corporation tax paid - - Capital expenditure and financial investment Purchase of tangible fixed assets (50,444) (47,048)Purchase of current asset investments (94,718) (368,762)Purchase of intangible fixed assets (701,723) (126,339)Investment in associate (137,570) -Sale of tangible fixed assets 1,475 27,880Sale of current asset investments 49,000 592,029 Net cash (outflow)/inflow from capital (933,980) 77,760expenditure and financial investment Financing Repurchase of shares in treasury (447,279) - Issue of shares (net of expenses) 34,010 725,747 Repayment of preference shares - (830,000) Bank loan 658,864 - Net cash inflow/(outflow) from financing 245,595 (104,253) Increase/(decrease) in cash 398,668 (1,077,482) The accompanying accounting policies and notes form an integral part of thesefinancial statements. Notes 1. Basis of preparation This preliminary statement, which has been agreed with the auditors, wasapproved by the Board on 15th December 2005. It is not the Company's statutoryaccounts. The statutory accounts for the year ended 30th September 2004 havebeen delivered to the Registrar of Companies, received an unqualified auditreport and did not contain statements under s237 (2) or (3) of the Companies Act1985. The statutory accounts for the year ended 30th September 2005 havereceived an unqualified audit report and did not contain statements under s237(2) or (3) of the Companies Act 1985 and will be delivered to the Registrar ofCompanies. 2. Exceptional ItemsThe exceptional costs arose for the following reasons:(1) Director's compensation for loss of officeOn 3rd May 2005, Jonathan Fry resigned as a director of the Company in order toseek new challenges in his career. (2) Settlement of FSA split capital investigationAs previously noted in the 2004 annual report and accounts, Premier FundManagers Ltd ("PFM") was assisting the Financial Services Authority ("FSA") withits industry wide investigation of the split capital investment sector. The FSAhad suggested to PFM and the other firms under investigation that the partiesshould consider making a contribution into a fund that was to be established bythe FSA for the purpose of making distributions to eligible investors who feltthat they would have a claim for losses as a result of investing in certainsplit capital investments. On 24th December 2004 PFM, along with a number ofother firms, reached an agreement with the FSA, bringing to an end the splitcapital investment sector investigation. In this respect PFM agreed to pay£150,555 without admission of liability. (3) Costs of aborted capital raisingDuring the year the directors embarked on an exercise to raise additionalcapital via a placing of shares to fund an expansion programme. Due to changingmarket conditions which became adverse it was subsequently decided by thedirectors that the raising of additional capital at the then price of 62p, wasnot in the best interests of the existing shareholders and therefore the capitalraising exercise was aborted. Exceptional costs recognised within operating loss areas follows: 2005 2004 £ £Director's compensation for loss of office 257,346 -Settlement of FSA split capital investigation 150,555 -Costs of aborted capital raising 54,131 - 462,032 - 3. Earnings Per Share The calculation of earnings per share has been made in accordance with FRS14 'Earnings Per Share'. 2005 2004 Per share Weighted Per share Weighted Amount Earnings Average No Amount Earnings Average No pence £ of shares pence £ of shares Attributable (loss)/ (223,519) 13,134,814 (1.70) 88,898 12,172,723 0.73profitAmortisation 242,163 - 1.84 231,546 - 1.90Exceptional items 462,032 - 3.52 - - - Adjusted earningsper share 480,676 13,134,814 3.66 320,444 12,172,723 2.63Share options - 104,007 - - 91,676 - Diluted earningsper share (223,519) - (1.69) 88,898 12,264,399 0.72Amortisation 242,163 - 1.83 231,546 - 1.89Exceptional Items 462,032 - 3.49 - - -Diluted adjusted earningsper share 480,676 13,238,821 3.63 320,444 12,264,399 2.61 Supplementary earnings per share figures excluding amortisation and exceptionalitems have been presented in these accounts as the directors consider that thesesupplementary figures provide a useful additional indication of performance. 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