Premier Miton Regulatory News (PMI)

Embargoed until 7.00am 5 December 2023

PREMIER MITON GROUP PLC

FULL YEAR RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2023

Robust investment performance despite market volatility.

Premier Miton Group plc ('Premier Miton', 'Company' or 'Group'), the AIM quoted fund management group, today announces its final results for the year ended 30 September 2023.

Highlights 

· £9.8 billion closing Assets under Management 4 ('AuM') (2022: £10.6 billion)

· Strong investment performance with 73% of funds in the first or second quartile of their respective sectors since launch or fund manager tenure

· Net outflows of £1,147 million for the year (2022: £1,076 million outflow)

· Adjusted profit before tax 1,4 of £15.7 million (2022: £24.3 million)

· Adjusted earnings per share 2,4 of 8.80 pence (2022: 13.79 pence)

· Profit before tax 3 of £5.9 million (2022: £14.9 million)

· Cash balances were £37.9 million at 30 September 2023 (2022: £45.8 million)

· Final proposed dividend of 3.0 pence per share (2022: 6.3 pence per share)

· Total proposed dividend for the year of 6.0 pence per share (2022: 10.0 pence per share)

· Significant continued investment in fund management and distribution talent to help create a modern, active asset management business positioned for future growth

Post period end

· On 1 November the Group announced the acquisition of Tellworth Investments LLP, a leading UK equity boutique with AuM of £559m as at 30th September 2023

· Tellworth offers both long/short and long only strategies to wholesale and institutional clients with potential for institutional distribution, building on Premier Miton's developing presence in that market

· A continued focus on inorganic opportunities alongside our clear organic growth strategy

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 £0.1 million during the year (2022: £0.1 million).

(4) These are Alternative Performance Measures ('APMs').

Mike O'Shea, Chief Executive Officer of Premier Miton Group, commented:

"The general market backdrop for asset management businesses in the UK has remained challenging during the period. Despite making good progress in certain areas of the business and delivering strong long term performance, the Group saw AuM fall by 7% ending at £9.8 billion. With interest rates in the UK at multi-year highs and more geopolitical uncertainty than we have seen for many years, investors have been taking a more cautious approach. Despite this difficult backdrop, we remain a financially robust business and have a diversified range of products delivering excellent outcomes for our clients over the medium to long term. Our fund management team is experienced and respected and we have a product suite that is fit for purpose. Across our fund range, our relative investment performance remains attractive, with 73% of our funds in the first or second quartile of their respective sectors since manager inception. We are also well placed to take advantage of inorganic opportunities as they arise and our recently announced acquisition of Tellworth is a good example of this.

"Whilst we had withdrawals from our equity funds, we continued to see growing net sales into our fixed income funds - up by 88% year on year. We continue to have confidence that our fixed income business will grow as the sector returns to popularity with investors after many years of being out of favour. We also saw inflows into our 'Diversified' multi-asset funds were up by 19% year on year, and which remain a popular option for advisers and their clients.

"The changes we have made to our distribution team over the past twelve months have laid the groundwork to deliver growth as and when confidence returns. We continue to maintain high levels of visibility by participating in numerous fund manager roadshows and events and showcasing the breadth and depth of our investment talent.

"Our business has the operational infrastructure to manage a multiple of the assets it currently looks after and we have built the necessary distribution and marketing platform to capitalise on this opportunity. We will continue to assess opportunities that can add talented investment teams, or which allow us to access new markets or product capabilities."

ENDS

For further information, please contact:

Notes to editors:

Premier Miton Investors is focused on delivering good investment outcomes for investors through relevant products and active management across its range of investment strategies, which include equity, fixed income, multi-asset and absolute return.

LEI Number: 213800LK2M4CLJ4H2V85

Chairman's Statement

We have a clear purpose in actively managing our assets for the benefit of our clients and take a long-term view of how we do this. We believe in the value of active asset management and are committed to delivering this for the benefit of our clients. Our strategy is designed to support this purpose.

Results

Our financial results for 2023 reflect the ongoing challenges facing investment markets in general and the UK's savings industry in particular. Whilst we saw withdrawals from our equity funds, we saw strong growth in our fixed income and multi-asset business, showcasing the benefits of our diversified fund range.

Investment businesses are by their nature cyclical and financial results are driven by markets, performance and flows. While we have a well-diversified range of funds and a strong long-term performance track record, the near-term challenges have been difficult. However, we are confident in the fundamental strengths of our business and the abilities of our teams. Of course, we must and indeed are managing our costs to reflect the requirements of the business and to align interests as closely as possible. This is receiving full management attention.

Sector background

These are challenging times for the UK's domestic asset management industry and for market participants. The causes of this are complex and are receiving plenty of industry, media and, increasingly, political attention.

At its core are several deep-seated structural issues particular to the UK affecting the creation, intermediation and allocation of long-term savings and capital, alongside several, probably more temporary, market and sector adjustment factors. No company or business involved is immune from the consequences of this and all need to consider carefully what will be the future shape of the UK's savings and capital markets sectors and their positioning within these.

The consequences of further weakening of the UK-centred investment industry would be deeply uncomfortable for our country, and we believe most importantly would reduce the resilience and capacity of the UK to create wealth and to build and sustain the type of society we need. The creation of domestic long-term savings and their allocation into productive domestic investments is an essential feature of a successful modern economy and we are proud to play a part in this. Alongside many other firms, organisations and individuals, we also have sought to influence public policy decisions to address these structural issues in a positive way.

The debate about the value of active and passive asset management is ongoing.

We believe that both have a place to play in the investment sector and that genuinely active investing has a core and important role for savers and investors. Our approach is to have a range of genuinely active funds with strategies that have a clear place in the investment landscape. There are times when some funds may underperform and then we seek to ensure that recovery is achievable and that, through management action if needed, we have confidence in a return to positive long term performance.

Strategy

Against this complex background, over the year we have closely considered our own strategy to ensure that it remains achievable, mindful of the need to manage our resources and processes as smartly as possible for the long-term interests of the business as a whole. We are focusing on a range of commercial, tactical and strategic opportunities. We continue to review our product range to ensure it has relevance in our chosen markets. We are also actively looking to access the pools of capital, within and outside the UK, that welcome our investment skills and capabilities, and what arrangements we need to structure to secure these. These strategic priorities and careful management of our existing business may involve organic and inorganic investment.

An example of this is our announcement after the year end of the acquisition of Tellworth, a leading UK-based equities boutique with some £559m of AuM, running long/short and long only strategies for wholesale and institutional clients. The acquisition expands our product offering and brings in a highly regarded investment team delivering good, consistent investment performance and scope for significant asset growth when supported by our distribution team.

Dividend

In our interim report I set out the Board's approach to dividend payments. Our stated policy is to pay a dividend in the range of 50-65% of adjusted profit after tax. We are willing to exceed this if appropriate and within the bounds of prudence. We are highly reluctant to pay an uncovered dividend except in exceptional circumstances, in which both the market and business outlook are obviously both clearer and brighter. While we remain confident about the longer-term prospects for our business, I am sure shareholders will understand that we must act prudently and always in the interests of the business as a whole when making decisions on capital allocation, ensuring that we safeguard our strong financial position.

Accordingly, alongside the interim dividend of 3p we have decided to recommend a final dividend of 3p, bringing the total dividend for the year to 6p, equal to approximately 68% of adjusted EPS of 8.8p.

People

Our people are what make our business succeed and I thank all of them for their hard work and efforts last year. Our leadership team has many years of experience at managing businesses in our sector through both good and challenging times and understands the importance of maintaining good communication and a positive culture.

We continue to evolve our reward models across the firm to ensure that we are competitive for talent and that we align stakeholder interests in the business as closely as possible. In particular, and as in prior years, we aim to ensure that for our key employees who drive shareholder value creation, that their compensation framework reflects both the position of the business and keeping a focus on long-term behaviours and securing performance for investors in our funds. All of this needs to be managed in a framework that aligns with and provides suitable and attractive rewards for our shareholders as the owners of our business.

The Board has continued to be highly engaged and supportive and I am grateful to each of the members for their ongoing commitment. During the year David Barron left the Board and I would like to thank him for his valued contribution, both as Chief Executive of Miton Group plc for many years and subsequently as a Non-Executive Director bringing a huge depth of experience and business understanding to our deliberations and decisions.

Outlook

There are many reasons to be concerned about the current condition of the UK's economy and our domestic long-term savings markets, as well as the state of geopolitics and the pace of societal and technological change. Equally, the business of managing savings and capital allocation is an important one for our country and it too is changing. Through all of this, there are and will continue to be attractive opportunities for Premier Miton's business. As a Board, a leadership team and across our business, we are determined to tackle these with vigour, clear sightedness and a commitment to doing as well as we can for our clients. By doing this to the best of our abilities, our shareholders and other stakeholders should also benefit over time. We remain resilient and flexible, optimistic and ambitious, as well as long-term in our approach to running Premier Miton.

Robert Colthorpe

Chairman

04 December 2023

Chief Executive Officer's Statement

It has been a challenging landscape for the industry. The Group's AuM ended the period at £9.8 billion, a fall of 7% on the opening position for the year. With interest rates in the UK at multi-year highs and more geopolitical uncertainty than we have seen for many years, investors have simply stayed away from equity funds.

Performance

The year was characterised by investors taking a more cautious approach to new investments rather than accelerating their withdrawals. We saw a reduction in demand for equity funds, which were down by 37% on financial year 2022, but the level of redemptions from these funds were only down by 9% year on year.

On the positive side, we continued to see growing net sales into our fixed income funds - up by 88% year on year - and into our 'Diversified' multi-asset funds which were up by 19% year on year. We continue to have confidence that our fixed income funds can continue to grow as the sector returns to popularity with investors after many years of being out of favour.

We have a strong investment team who have delivered good investor outcomes during their three years with the firm and fixed income remains a key focus for our distribution team.

The net management fee margin (the retained revenue of the firm after deducting the costs of OCF caps, direct research costs and any enhanced fee arrangements), was 61.7bps compared with 64.6bps last year. The adjusted operating margin decreased from 30.0% to 23.5% reflecting the lower level of AuM and reduced fees earned. The Group generated £15.7 million of adjusted profit before tax for the year and had a closing cash position of £37.9 million.

Investment performance has remained good with 73% of our funds delivering performance ahead of median since manager inception and 62% over the three-year period.

Strategy

The changes we made last year to our distribution team have bedded in well. We now have well-regarded distribution and marketing teams committed to high levels of activity targeting those strategies that are currently in demand from investors, such as fixed income, money market and multi-asset. We are also laying the groundwork for when there is a renewed risk appetite for equities. We continue to maintain high levels of visibility by participating in numerous fund manager roadshows and events servicing existing clients and showcasing the breadth and depth of our investment talent to prospective clients, whilst increasing advertising and press activity.

Given the more difficult market backdrop, there has been an ongoing focus on ensuring costs within the business are fully aligned with revenue expectations. Good progress has been made in this regard with several restructuring changes completed during the year the benefit of which will come through partially in FY23 with full impact in FY24.

One notable feature of the more difficult market conditions is that we are seeing more potential acquisition opportunities. This is a feature of the market that we expect will continue for some time. With our strong operational and distribution platform and robust balance sheet, we are keen to take advantage of opportunities that can add talented investment teams to our portfolio or which allow us to access new markets or product capabilities.

In that context, shortly after the end of the period we were pleased to announce the acquisition of Tellworth Investments LLP ('Tellworth'), a leading UK equities boutique with AuM of £559 million as at 30 September 2023.

The acquisition, which remains subject to FCA approval, is in line with our stated inorganic strategy, of buying complementary asset management platforms that bring industry expertise and product diversification as part of a wider commitment to continue to invest in growth opportunities.

The acquisition broadens our offering into liquid alternatives with the addition of long / short strategies and further strengthens our existing UK equity franchise. Tellworth's institutional client base also enhances our developing presence in that market. The core investment team of Tellworth, including co-founders Paul Marriage and John Warren will be joining us after completion, bringing with them long track records of working in UK equities with established industry reputations and strong networks of contacts. The investment team's strong, consistent investment performance across its strategies provides scope for significant asset growth when supported by PMI's well-resourced distribution team.

Outlook

I mentioned in my full year report to shareholders last year that the world had changed and that the forces of globalisation that helped drive down inflation and interest rates during the first two decades of the century had dissipated. I continue to believe that this will result in lower growth and that investors will ultimately have to work much harder to both keep pace with inflation and achieve their financial objectives.

Governments around the world have incurred significant amounts of debt since the financial crisis in 2008/9 and this burden has increased markedly since the COVID-19 pandemic. Excessive debt can act as a drag on economic growth as interest costs crowd out productive investment. It is also tempting for governments to allow inflation to remain above long-term trends to deflate the value of the debt. Ultimately, therefore, holding cash on deposit is not a sustainable investment strategy in this inflationary environment. Equities, however, have a long history of providing returns in line with, or ahead of, inflation and in due course, we are confident that investors will return to buying equity funds.

As I mention above, we are in a market environment that will create opportunities for inorganic growth and we are keen to use our platform to take advantage of this. Tellworth is one such example but there are several further opportunities under review that could bring new teams, additional AuM or new products allowing us to access new markets. Whilst there is no certainty around these opportunities, we will continue to appraise them diligently and pursue them where it is appropriate to do so.

As a business, we have a well-diversified range of genuinely active funds managed by a respected and experienced fund management team with a proven track record of delivering strong investor outcomes.

From the feedback we receive through our staff surveys as well as feedback from advisers and clients, Premier Miton has a strong culture that puts clients first and within which people are respected, and work well together. Our collaborative and collegiate environment makes Premier Miton a good home for talented investment professionals and dedicated support teams. We have the operational infrastructure in place to manage significantly more assets than we do currently. If we are successful in attracting these assets as market condition improve, the operational gearing inherent in our business will work for the benefit of shareholders. In the meantime, we will keep our costs aligned with our revenues and will concentrate on our primary goal of delivering superior investment returns for the clients who have entrusted us with their savings.

Mike O'Shea

Chief Executive Officer

04 December 2023

Financial Review

Financial performance

Profit before tax decreased to £5.9 million (2022: £14.9 million).

Adjusted profit before tax*, which is after adjusting for amortisation, share-based payments, merger related costs and exceptional costs decreased to £15.7 million (2022: £24.3 million).

Adjusted profit and profit before tax

* These are Alternative Performance Measures ('APMs').

Assets under Management * ('AuM')

A combination of net outflows totalling £1,147 million and market performance resulted in the AuM ending the year at £9,821 million (2022: £10,565 million), a decrease of 7%. The Average AuM for the year decreased by 14% to £10,845 million (2022: £12,615 million).

Net revenue

1 Being management fee income less trail/rebate expenses and the cost of capping any OCFs, and direct research costs.

2 Average AuM for the year is calculated using the daily AuM adjusted for the monthly closing AuM invested in other funds managed by the Group.

3 Net management fee margin represents net management fees divided by the average AuM.

4 Adjusted profit before tax divided by net revenue.

The Group's revenue represents management fees generated on the assets being managed by the Group.

Net management fees decreased to £66.8 million from £81.5 million last year, a 18% decrease reflecting both the decrease in the Group's average AuM and net management fee margin.

The Group's net management fee margin for the year was 61.7bps. The decrease is driven by the change in our business mix, and the impact of flows and markets on our existing business.

Administration expenses

Administration expenses (excluding share-based payments) totalled £51.4 million (2022: £56.8 million), a decrease of 10%.

Staff costs continue to be the largest component of administration expenses, these consist of both fixed and variable elements.

The fixed staff costs, which include salaries and associated National Insurance, employers' pension contributions and other indirect costs of employment increased to £22.8 million (2022: £20.4 million). The rise predominantly reflects annual salary increases and £1.0 million of staff related restructuring costs completed in the year.

The average headcount for the year has decreased, from 164 to 163. At the year end the full time equivalent headcount was 159 (2022: 166). Variable staff costs totalled £9.7 million (2022: £17.3 million). These costs move with the net revenues of the Group and the adjusted profit before tax, hence the decrease against the comparative period.

Included within this are general discretionary bonuses, sales bonuses and bonuses in respect of the fund management teams, plus associated employers' national insurance.

Overheads and other costs were broadly flat on the previous year at £18.1 million (2022: £17.9 million). The Group continues to assess the cost base and will make efficiencies where possible whilst ensuring the platform remains positioned for growth when sentiment returns.

Exceptional costs

During the year the Group incurred exceptional costs, net of associated income, totalling £0.2 million following the cessation of the development of the Group's online portal 'Connect'.

Administration expenses

Share-based payments

The share-based payment charge for the year was £4.7 million (2022: £4.5 million). Of this charge, £4.0 million related to nil cost contingent share rights ('NCCSR') (2022: £4.3 million).

At 30 September 2023 the Group's Employee Benefit Trusts ('EBTs') held 9,452,500 ordinary shares representing 6% of the issued ordinary share capital (2022: 12,356,304 shares).

At the year end the outstanding awards totalled 9,324,749 (2022: 11,015,578). The decrease reflects 1,577,500 NCCSR awards issued during the year (2022: 1,902,500) offset by 3,268,629 NCCSR awards being exercised (2022: 1,628,284).

On 13 January 2023, the Group granted 2,651,034 long-term incentive plan ('LTIP') awards (2022: 4,182,569). The costs of the awards is the estimated fair value at the date of grant of the estimated entitlement to ordinary shares. At each reporting date the estimated number of ordinary shares that may be ultimately issued is assessed.

Balance sheet and cash

Total shareholders' equity as at 30 September 2023 was £121.1 million (2022: £126.8 million).

At the year end the cash balances of the Group totalled £37.9 million (2022: £45.8 million).

The Group has no external bank debt.

Capital management

Dividends totalling £13.6 million were paid in the year (2022: £14.7 million).

The Board is recommending a final dividend payment of 3p per share, bringing the total dividend payment for 2023 to 6p per share (2022: 10.0p).

If approved by shareholders at the Annual General Meeting on 7 February 2024, the dividend will be paid on 16 February 2024 to shareholders on the register at the close of business on 19 January 2024.

The Group's dividend policy is to target an annual ordinary dividend pay-out of approximately 50 to 65% of profit after tax, adjusted for exceptional costs, share-based payments and amortisation.

Going concern

The Directors assessed the prospects of the Group considering all the factors affecting the business when deciding to adopt a going concern basis for the preparation of the accounts.

The Directors confirm that they have a reasonable expectation that the Group will continue to operate and meet its liabilities, as they fall due, comprising a period of at least 12 months from the date of this report.

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 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 and Risk Assessment ('ICARA'). The forecast considers the Group's profitability, cash flows, dividend payments and other key variables. Sensitivity analysis is also performed on certain key assumptions used in preparing the forecast, both individually and combined, in addition to scenario analysis that is performed as part of the ICARA process, which is formally approved by the Board.

Alternative Performance Measures ('APMs')

The Directors use the following APMs in evaluating the performance of the Group and for planning, reporting and incentive-setting purposes.

Financial Statements

Consolidated Statement of Comprehensive Income For the year ended 30 September 2023

No other comprehensive income was recognised during 2023 or 2022. Therefore, the profit for the year is also the total comprehensive income.

All of the amounts relate to continuing operations.

Consolidated Statement of Changes in Equity For the year ended 30 September 2023 

Consolidated Statement of Financial Position

As at 30 September 2023

Consolidated Statement of Cash Flows

For the year ended 30 September 2023

Selected notes to the Consolidated Financial Statements

For the year ended 30 September 2023

1. Authorisation of financial statements and statement of compliance with IFRS

The Consolidated Financial Statements of Premier Miton Group plc (the 'Company') and its subsidiaries (the 'Group') for the year ended 30 September 2023 were authorised for issue by the Board of Directors on 4 December 2023 and the Consolidated Statement of Financial Position was signed on the Board's behalf by Mike O'Shea and Piers Harrison.

The Company is a public limited company incorporated and domiciled in England and Wales. The Company's ordinary shares are traded on the Alternative Investment Market ('AIM').

These Consolidated Financial Statements were prepared in accordance with UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006. The Consolidated Financial Statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.

The principal accounting policies adopted by the Group are set out in note 2.

2. Accounting policies

Basis of preparation

The Consolidated Group Financial Statements for the year ended 30 September 2023 have been prepared in accordance with UK-adopted International Financial Reporting Standards ('IFRS'). The Consolidated Financial Statements have been prepared on a going concern basis, 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.

The Directors have assessed the prospects of the Group considering all the factors affecting the business when deciding to adopt a going concern basis for the preparation of the accounts. The Directors confirm that they have a reasonable expectation that the Group will continue to operate and meet liabilities, as they fall due, comprising a period of at least 12 months from the date of this report. This assessment has been made after considering the impact of recent geopolitical events and Ukraine crisis on the business. The Directors note that the Group has no external borrowings and maintains significant levels of cash reserves.

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 and Risk Assessment ('ICARA'). The forecast considers the Group's profitability, cash flows, dividend payments and other key variables. Sensitivity analysis is also performed on certain key assumptions used in preparing the forecast, both individually and combined, in addition to scenario analysis that is performed as part of the ICARA process, which is formally approved by the Board. This analysis demonstrates that even after modelling materially lower levels of assets under management ('AuM') associated with a reasonably plausible downside scenario, the business remains cash generative.

3. Revenue

Revenue recognised in the Consolidated Statement of Comprehensive Income is analysed as follows:

All revenue is derived from the UK and Channel Islands.

4. Exceptional items and merger related costs

Recognised in arriving at operating profit from continuing operations:

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.

In accordance with the accounting policy for exceptional items these costs have been treated as exceptional.

Exceptional items, net of associated income were incurred in relation to the cessation of the development of the Group's online portal 'Connect'. This resulted in net expenditure of £250,000.

Merger related costs in the year totalling £51,132 (2022: £51,132) represented legal and professional fees associated with the merger with Miton Group plc.

5. Operating profit

(a) Operating profit is stated after charging:

(b) Auditor's remuneration

The remuneration of the auditor is analysed as follows:

6. Staff costs and Directors' remuneration

Staff costs during the year were as follows:

The average monthly number of employees of the Group during the year was made up as follows:

7. Finance expense

8. Taxation

(a) Tax recognised in the Consolidated Statement of Comprehensive Income

(b) Reconciliation of the total income tax charge

The tax expense in the Consolidated Statement of Comprehensive Income for the year is higher than the standard rate of corporation tax in the UK of 22% (2022: 19%). The differences are reconciled below:

(c) Change in corporation tax rate

In the Spring Budget 2021, the Government announced that from 1 April 2023 the corporation tax rate will increase to 25% from 19%. This was substantively enacted on 24 May 2021. The deferred tax balances included within the Consolidated Financial Statements have been calculated with reference to the rate of 25% to the relevant balances from 1 April 2023.

(d) Deferred tax

The deferred tax included in the Group's Consolidated Statement of Financial Position is as follows:

All movements in deferred tax balances relate to profit and loss except for the £38,000 that is included in equity.

9. Earnings per share

Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary equity shareholders of the Parent Company by the weighted average number of ordinary shares outstanding at the year end.

The weighted average of issued ordinary share capital of the Company is reduced by the weighted average number of shares held by the Group's EBTs. Dividend waivers are in place over shares held in the Group's EBTs.

In calculating diluted earnings per share, IAS 33 'Earnings Per Share' requires that the profit is divided by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares during the period.

(a) Reported earnings per share

Reported basic and diluted earnings per share has been calculated as follows:

(b) Adjusted earnings per share

Adjusted earnings per share is based on adjusted profit after tax, where adjusted profit is stated after charging interest but before amortisation, share-based payments, merger related costs and exceptional items.

Adjusted profit for calculating adjusted earnings per share:

Adjusted earnings per share was as follows using the number of shares calculated at note 9(a):

10. Goodwill and other intangible assets

Cost amortisation and net book value of intangible assets are as follows:

Impairment tests for goodwill

The Group has determined that it has a single group of CGUs in relation to asset management for the purposes of assessing the carrying value of goodwill. In line with IAS 36, 'Impairment of Assets', a full impairment review was undertaken as at 30 September 2023. The recoverable amount within the fund management CGU was determined by assessing the value-in-use using long-term cash flow projections for the CGU. The Group operates as a single CGU for the purposes of monitoring and assessing goodwill for impairment. This reflects one operating platform, into which acquired businesses are fully integrated and from which acquisition-related synergies are expected to be realised. Senior management receive and review internal financial information as one single entity, with no disaggregation for segments or geography.

Data for the explicit forecast period of 2024-2028 is based on the 2024 budget and forecasts for 2025-2028. AuM levels were determined by assuming net flows, per fund, over this five-year period based on two key metrics - the first being the momentum of net flows over the preceding two years, and the second being the investment performance of the fund against its sector. The Group believes these two factors are key when making assumptions about the growth of AuM in the future, and hence expected future cash flows. Net revenue margins per fund have been assumed at current levels, unless sufficient reasons exist to deviate, for example share class consolidation.

The projected operating margin moves in line with the Group's AuM levels and its overall product mix each year. Increases in operating costs have been taken into account and include assumed new business volumes. No cost allowance has been made for future acquisitions, nor any acquired levels of AuM. The Group's commitment to responsible investing has also been considered (within headcount over the forecast period) and the impact to its cash flows on a longer-term basis, particularly in light of the possible actions of regulators, customers and suppliers. Cash flows beyond the explicit forecast period are extrapolated using a long-term terminal growth rate of 1.7% (2022: 1.7%). To arrive at the net present value, cash flows have been discounted using a discount rate of 14.5% (2022: 13%) determined using the capital asset pricing model (post-tax). The Group engaged valuation specialists in determining the inputs to calculate the appropriate discount rate, including current assessments of comparative betas, long-term economic growth rates and the equity risk premiums published and observed in the wider industry. The increase in the discount rate from the prior year is largely due to the increase in the long-term risk-free rate which was based on 30-year gilts (the 2053 maturity) yielding 4.6% (2022: 3.2%). The Group's pre-tax discount rate was calculated to be 18% (2022: 16%).

The value-in-use amount calculated was greater than the carrying value and hence no impairment charge was recognised. As noted above, the most material assumptions used in determining this conclusion were the discount rate and compound annual AuM growth rate. As an additional consideration the Group compares its value-in-use amount and net assets to market multiples within the UK asset management sector.

Sensitivity analysis

Management have performed a sensitivity analysis as at 30 September 2023 and established that an increase in the post tax discount rate to 19% would be required before an impairment of goodwill would be considered necessary. This would require the long-term risk-free rate and equity risk premium to be at significantly higher levels than at present. Analysis was also completed using materially lower levels of AuM and the corresponding impact on projected cash flows within the impairment assessment. The base case annual growth rate for AuM is assumed at 10.3% over the forecast period. Due to the cash generative nature of the business, and that a large proportion of costs are linked to the net revenues and underlying profitability of the Group, this rate would need to remain under 5.5% per annum over the entire five-year period before any impairment was identified. This also assumes no material change to the Group's cost base during this five year period as well as the discount rate to remain unchanged. Management note the average annual return for the MSCI World Index (in GBP) over the past 25 years was approximately 7%. The base case annual growth rate of 10.3% is a combination of both this market beta movement and an assumption of fund inflows into the Group's product suite.

The sensitivity analysis established that an increase in the discount rate by 3% (to 17.5%) would not have a material impact on the Group's results. We conclude no reasonable change in assumptions would trigger an impairment to goodwill. The Group is, however, mindful of the current uncertainty that exists in markets including the threat posed by recent geopolitical events and that extreme movements may be cause for further examination into the possibilities of impairment in the future.

Other intangible assets

The Group's other intangible assets comprise of investment management agreements ('IMAs') purchased by the Group. The carrying amount above relates to two historic transactions, the largest being the merger with Miton Group plc with a carrying value of £11,055,890 and a remaining amortisation period of three years (2022: £14,596,097 and a remaining amortisation period of four years). The remaining balance relates to a transaction completed in 2007 to acquire IMAs which now have a carrying value of £6,599,618 and a remaining amortisation period of five years (2022: £7,920,267 and a remaining amortisation period of six years).

The determination of useful lives, and hence amortisation period, used for other intangible assets requires an assessment of the length of time the Group expects to derive benefits from the asset. This depends on a number of factors, the most significant being the duration of customer investment timeframes and the type of underlying fund (for example the asset classes specified by the fund's investment objectives will give insight into its usual life).

An assessment is performed at each reporting period for each intangible asset for indicators of impairment. There are two core metrics used in this assessment - the first being the comparison of AuM levels at the period end with those included in the original intangible asset valuation and the second being the investment performance of each individual fund against its comparable peers and benchmarks. In addition, both internal and external factors affecting the funds are considered such as current net margin, potential regulatory changes and future demand for its asset class. For each intangible asset mentioned above, if required, further analysis is performed on a fund management team basis, and the estimated aggregate cashflows generated by each team. These estimated cashflows are modelled based on the current level of AuM for the funds managed by each team and are compared against the original basis used to value the intangible at the acquisition date and their remaining amortisation period. Despite the recent fluctuations in AuM, no indicators of impairment were noted when analysing at a fund management team level. Notably, the largest other intangible asset is more than halfway through its amortisation period of 7 years, resulting in the carrying amount being less than half of its original value on inception. The long-term investment performance for all investment teams assessed were above the relevant sector average, reflecting the quality of the investment process.

11. Trade and other receivables

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.

Non-current other receivables represent deferred compensation awards with maturities greater than 12 months after Consolidated Statement of Financial Position date. Deferred compensation awards are released in accordance with the employment period to which they relate.

12. Cash and cash equivalents

13. Trade and other payables

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.

Other payables relate predominantly to amounts due to outsource providers for administrative services provided to the Group's funds.

The Directors consider that the carrying amount of trade payables approximates to their fair value.

14. Provisions

Provisions relate to dilapidations for the offices at 6th Floor, Paternoster House, London, the lease on this property runs to 28 November 2028 and the provision for dilapidations on this office has been disclosed as non-current. This provision is based on prices quoted at the time of the lease being taken on.

15. Share capital

The deferred share carries no voting rights and no right to receive a dividend.

16. Share-based payments

The total charge to the Consolidated Statement of Comprehensive Income for share-based payments in respect of employee services received during the year to 30 September 2023 was £4,720,721 (2022: £4,504,620), of which £3,953,896 related to nil cost contingent share rights (2022: £4,314,386).

17. Dividends declared and paid

The Directors recommend a final dividend of 3p per share (2022: 6.3p) payable on 16 February 2024 to shareholders on the register as at 19 January 2024.