Premier Miton Group (LSE:PMI) — Interim Results For the six months ended 31 March 2025

0:01 Good afternoon, ladies and gentlemen, and welcome to the PREMIER MITON GROUP PLC Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and we'll publish those responses where it's appropriate to do so on the investor meet company platform. And before we begin, we would just like

0:33 to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from PREMIER MITON GROUP PLC. Mike, good afternoon, sir. Good afternoon. Hello, everyone, and thank you for joining us today. I'm Mike O'Shea. I'm the chief executive of PREMIER MITON, and I'm joined by our CFO, Piers Piers Harrison, and we're here to present our interim results for the six months ended 03/31/2025. Let's begin with the highlights from the first half of FY 2025. Despite persistent macroeconomic uncertainty and market volatility, PREMIER MITON continues to demonstrate resistance and adaptability.

1:19 We closed the period with 10,200,000,000 of assets under management, and 71% of our funds have outperformed their respective sectors since inception or fund manager tenure. That's nearly three out of every four funds outperforming, which is an achievement we're proud of. We delivered an adjusted profit before tax of 5,400,000 and our cash position remains healthy at 31,200,000. Importantly, we're seeing a strong pipeline of opportunities across our fixed income, absolute return, and several of our equity strategies. We also completed a comprehensive operational infrastructure review identifying $3,000,000 in annual run rate savings, efficiencies that will support future growth without compromising our investment capabilities.

2:11 And since the period end, it's pleasing to note that assets under management have risen to £10,400,000,000. Our product mix continues to evolve in a way that strengthens our business. Today, we are a genuinely diversified asset manager. Fixed income and absolute return strategies now account for a significant share of our assets under management alongside our established equity and multi asset offerings. This deliberate diversification strengthens our ability to meet evolving client needs and positions us well, I think, to capture flows in high demand areas. It also allows us to serve a broader range of client needs and reduces our reliance on any single asset class or market condition.

3:03 It also positions us well to capture flows in areas where we see growing demand, particularly in income generating and risk managed strategies. I wanted to just take a moment to talk about what's happening in the markets right now because whilst there's a lot going on, we're seeing some real opportunity in the current environment. The macro environment is shifting. We're seeing a pivot in global leadership with The US facing trade tensions, potentially a recession, and a slowdown in the so called magnificent seven tech stocks. Meanwhile, UK and European markets are showing renewed strength, and smaller companies, which have long been overlooked, are finally beginning to reassert themselves, which is good news.

3:51 Consumer behavior is also changing, and there's a clear move toward value with discretionary spending under pressure. And these dynamics are creating a more complex and volatile market backdrop. And these are exactly the sign types of conditions where active management can really add value and where our teams are well equipped to find opportunities. Our investment performance remains a key differentiator. As of April, 71% of our funds and 68% of our assets under management are outperforming since launch or manager tenure. I mentioned above that a more complex and volatile market creates opportunities for active managers, and it is encouraging to see our very short term numbers improving.

4:40 We have seen 70% of our funds performing above median and almost half delivering top quartile performance so far this calendar year, for example. And this number excludes our absolute return strategies, which are also delivering on their objectives. And this consistency reflects the depth of our investment expertise and the strength of our conviction led approach. It reflects the strength of our investment teams, the rigor of our investment processes, and our commitment to genuinely active management. In a world where investors are seeking complementary active strategies, our approach is delivering real value. And I just wanna delve down into a couple of key areas of performance in more detail.

5:31 Our fixed income franchise has become a cornerstone of our diversified offering. With assets under management now at 2,100,000,000, this segment has grown substantially, and this growth reflects both strong client demand and the credibility of our investment team. Our investment approach is active, flexible, and unconstrained. We invest across sectors, across geographies, and across credit qualities, and this allows us to adapt to changing market conditions. The performance of our flagship funds, corporate bond monthly income, and strategic monthly income have been consistently strong with both ranked in the top quartile of their sectors. Strategic bond has delivered market leading performance and attractive risk adjusted returns against its major peers in the sector, which I think positions us strongly to attract future flows and scale further in this key area.

6:32 We've also expanded internationally with the launch of the global dynamic credit fund in Dublin, which is an identical strategy to our UK based strap bond, but denominated in US dollars. And this opens access to significant opportunities for addressable offshore demand.

6:50 This not only diversifies our investor base, but it also enhances our ability to scale outside The UK, and we have a healthy pipeline of potential new business developing as a result. Our absolute return strategies are also increasingly relevant in today's environment. Market volatility, macro uncertainty, and style rotation all create opportunities for strategies that can go both long and short. And with volatility elevated and macro uncertainty persisting, the ability to generate returns from both rising and falling stocks is a powerful advantage. The PREMIER MITON TELWORTH UK Select Fund, for instance, has delivered both strong performance and low volatility.

7:38 And the team's ability to identify both winners and losers across The UK equity market whilst maintaining factor and market neutral positions has been a key differentiator for this strategy. And Telworth's success is also a testament to our m and a strategy. Since the acquisition, the team has been fully integrated. Their assets under management have grown significantly, and they are now a core part of our absolute return offering. Importantly, the team has remained intact and motivated, and that's a testament to the cultural alignment and shared ambition. It's a clear example of how we at PREMIER MITON can identify, acquire and scale high quality investment talent.

8:27 We continue to manage other absolute return strategies, including the PREMIER MITON Alternative Investment Fund, which is now at $126,000,000 and this provides clients with differentiated sources of return and risk management. We're also seeing strong demand for absolute return segregated mandates. Our distribution strategy continues to build momentum and broaden our reach. We were pleased to welcome over 200 attendees to our annual conference in February, an event that not only showcased our investment capabilities, but also reinforced the strength of our relationships across the adviser and wealth manager community. Our recent brand refresh has been well received. It's more than just a new look. I think it reflects our evolution as a business and our ambition to grow.

9:18 We've now launched targeted product specific advertising campaigns to further raise awareness and to drive engagement with our key strategies.

9:28 We're also seeing real traction in our offshore distribution efforts. The launch of two new funds this spring, Global Credit that I've already mentioned, and US opportunities has expanded the product mix and opened new channels for growth. In addition, we've established a new distribution channel via South Africa, and we've launched a managed portfolio service range, which is helping us reach a broader client base and meet the growing demand for outcome oriented solutions. Our distribution team is active. It's energized. It's increasingly effective. And they're not only deepening existing relationships, but also opening new doors for us, ensuring that our high conviction, actively managed strategies are front of mind with advisers and with allocators.

10:16 In short, we're seeing a step change in our distribution capability, one that positions us well to capture market share as conditions improve. And with these foundations in place, we're confident in accelerating our reach and deepening our engagement across all of our main channels. As we look ahead, we believe PREMIER MITON is well positioned for the next phase of growth. We are entering a bifurcated world where passive strategies dominate the low cost core, but active managers are increasingly sought after for alpha generation and risk management and control.

10:58 Our high active share and high tracking error metrics reflect our conviction led approach. We don't hug benchmarks. We aim to outperform them. And this is exactly what our clients are looking for in a more volatile, less predictable world. We have ample capacity across our fund range and a strong pipeline of new ideas and a culture that encourages innovation and accountability. This is a business that encourages people to think differently, to challenge convention, and to find new ways to deliver value for clients. We're also an attractive home for talent, whether it is fund managers looking for a platform that supports their ideas or teams looking to join a business with momentum, PREMIER MITON is increasingly seen as a good home for talent.

11:51 Our balance sheet is robust, giving us the flexibility to invest in growth, and we've got a track record of executing m and a effectively when the right opportunities come along and where they make strategic sense. In short, we are a diversified active asset manager with the scale, agility and expertise to thrive in the years ahead. I would now like to hand over to Piers to run through our key financial metrics for the period. Thanks Mike. The Group continues to generate management fee income based on the level of assets being managed across our investment teams. Now the assets under management or AUM ended the half year at 10,200,000,000 which was a decrease of 5% on the opening position for the period.

12:44 Whilst the first quarter of the financial year was broadly flat in terms of net flows and AUM, there was a return to market volatility in the second quarter and particularly so in March. Over the six months we saw net outflows of £254,000,000 and negative market and investment performance of £228,000,000 Now the Group's average AUM for the period was £10,600,000,000 which represented an increase of 6% on the comparative period.

13:14 Whilst we saw higher levels of carry through of average AUM, the blended net management fee margin decreased by 4% to 57 basis points. Now this decrease continues to be primarily driven by changes in the group's product mix and strong traction in the fixed income range. This has resulted in these products being a higher proportion of our overall average AUM when compared to the previous period. The resulting net management fees for the six months were actually flat on the previous period at 30,200,000. We saw performance fees totalling 2,100,000 being generated in the period and a resulting gross profit of

13:57 Administration expenses increased by 9% and I will provide some more details shortly on that, but the adjusted profit before tax for the period was Now the amortization charge was broadly flat at GBP 2,600,000 and the share based payments fell 38% to GBP 1,300,000 reflecting the rolling off investing of the nil cost contingent share rights. Non recurring costs of $400,000 related to operational efficiencies, which were completed in the first half of the year and the resulting profit before tax for the six months was up at 1,100,000 Now turning to the administration expenses, these totaled 27,700,000 for the six months and like in previous periods in most financial services companies, the largest portion of our cost base relates to our staff.

14:47 The fixed staff costs increased by to for the period, reflecting staff salary increases and a full six months of the post Telworth acquisition salary costs. The average headcount for the period increased to 164. The variable staff costs increased to 5,700,000 for the six months and this increase was primarily driven by performance fee shares in the period. Adjusting for these, the variable staff costs were actually broadly unchanged from the prior period, reflecting the comparable levels of net revenue and the underlying profitability of the group. The overheads and other costs increased by 500,000 to 10,500,000 for the period and as Mike mentioned the additional spend predominantly related to the increased marketing activities and the launch of the group's new visual identity which took place in February along with the associated advertising costs there too, and also a full period of the telework related costs.

15:45 Now we continue to take a prudent approach to cost discipline and as previously flagged in December we completed the comprehensive review of our operations and identified further efficiencies that are expected to reduce our annual run rate by approximately 3,000,000 whilst maintaining a resilient and scalable platform.

16:04 We regularly review and assess our range of funds to ensure that they continue to offer good value and outcomes for investors and during the period we closed one fund and after the period in May we merged another. Indeed, on the May 12 we announced the closure of the Emerging Markets Sustainable Fund and the restructure of three global equity funds with the overall investment responsibilities being assumed by the Group's CIO. Now turning to the balance sheet, the additional 1,000,000 of goodwill recognized in the period relates to the additional consideration due on the first anniversary of the acquisition of Telworth. As already mentioned, on March 31 the Group had $31,200,000 of cash. If we look at the regulatory capital position, after the interim dividend the Group has a surplus capital of circa 12,800,000 Now the Board has declared an interim dividend of 3p per share and this is unchanged from the interim dividend last year and indeed the year before.

17:06 The dividend will be payable on the 08/01/2025 and as noted in previous updates, the Board continues to take a pragmatic approach to the level of dividends. Consideration is given to the balance sheet prudence, the market outlook and returns to stakeholders. The stated dividend policy is to target a range of approximately 5065% of profit after tax and that remains unchanged. And I'll hand back to Mike for a summary. Yes. Thank you very much indeed. So just in closing, I want to leave you with a clear message. PREMIER MITON is built for the current environment and for the future. We are a diversified asset manager with strength across asset classes from equities to fixed income, from multi asset to absolute return, and this breadth allows us to adapt, to innovate, and to meet the evolving needs of our clients.

17:57 I think we've proven our ability to execute strategic M and A, not just acquiring businesses, but integrating them seamlessly and unlocking real value for our shareholders, and Telworth is a prime example of that success. And I believe that now is a particularly attractive time for further m and a. Valuations across the sector remain compelling. Many smaller firms are facing margin pressure, and the need for scale, operational efficiency, and distribution reach has never been greater. And with our strong balance sheet, our proven integration capabilities, and disciplined approach, I think we are well placed to be a consolidator of choice as this m and a, unfolds.

18:43 Our culture is one of high conviction, entrepreneurial thinking, and accountability. And I think it's a culture that attracts top talent and empowers them to deliver for our clients. And in a world that is increasingly volatile, increasingly complex, and bifurcated between passive and active, we believe our high conviction, high active share strategies are exactly what investors are looking for. We have the platform, we have the people, and we have the performance to grow. We're well capitalized, we're operationally efficient, and we're strategically focused. PREMIER MITON has weathered the storm, I think, reasonably well over the last few years, and I really believe we're poised to lead in the recovery and to capture the opportunities ahead.

19:31 And I'd like to thank you all for your continued support. Thank you. Perfect. Mike Pearce, if I may just jump back in there. Thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that have been submitted already, I'd just like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can all be accessed via your investor dashboards. Mike, peers, you can see that we have received a number of questions throughout your presentation this afternoon, and thank you to all of those on the call for taking the time to submit their questions. But, guys, at this point, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so. If I pick up from you at the end, that would be great. Thank you.

20:22 Thanks. Thank you very much indeed. And thanks, everyone, for the questions. I'll just run through. We've had a question about a specific stock that we hold in one or two of our portfolios. I can't really comment on the specific stock because, a, because I don't know an awful lot about it, and b, I think it's better for the actual portfolio manager who holds that stock to comment. So we will, after this, we'll put an email address up. And if the person who wants information on that specific stock emails us, I'll make sure that that's passed across to the appropriate fund manager, and they'll come back to you directly. I think the second question here sorry. I'm just struggling with my, hang on. My mouse ears.

21:09 Well, your mouse, in fact. Here we go. The our annual report says that we had a 160 full time, employees at the end of twenty twenty four. And the question is how many of them are working in sales? And the reason for asking is the growth in funds under management is gonna be a key driver of future performance, which we obviously agree with. I just happen to know that number off the top of my head. We have 18 people working in sales, and we have 14 people working in the marketing team. A lot of our distribution effort is actually put through our marketing, both through social media and so on. So all of those people are really focused on the distribution side. And then there's a supplementary question from the same person. We've referenced our Dublin ICVC as helping to meet offshore demand.

21:59 Are you spreading yourselves too thin in trying to service clients outside of The UK as well as in your home market? That's a I mean, that's a good question. I think the you know, we we're quite targeted actually in terms of where we've been marketing our ICBC. So it's just been in Ireland, in The Channel Islands, and in South Africa. So we're very conscious that we don't want to spread ourselves too thinly. And obviously, if we if we're successful in harnessing demand for those funds, then that will allow us further revenues to support our distribution efforts. We also have a number of clients in The UK, for example, wealth managers who manage money for both on and offshore clients. And those individuals often need a similar fund for for on and offshore clients. So we are also able to sell offshore funds, so our Dublin fund range, back into The UK for for clients who are actually having their money managed offshore.

22:56 So I don't think at this stage we are spreading ourselves too thinly. We have a question around mergers and acquisitions. And the and, basically, the question is, you know, how many businesses in the sort of 100 to 1,000,000,000 funds under management players are there in The UK. I I don't have an exact number, but we do see and I think, you know, since the Telworth acquisition, we've had quite a bit of incoming from people who've seen that work successfully, who are perhaps running assets in that space, and who are interested in seeing what they might be able to do if they were part of our team. So, you know, we will continue to follow those through.

23:41 You know, as as I'm sure you're aware, in m and a, you have to you have to look at a lot of things before you find something that you you want to focus on, but we are quite active. And I I would also add that we're not necessarily restricted just in that sort of 100 to 1,000,000,000 space. We we're very comfortable, I think, to look at larger m and a or combinations where they would make sense. I think we have had a number of conversations in that regard, and we continue to focus not just on businesses that are smaller than us but businesses that are around about the same size or even bigger, where we think, you know, our management team can come in and really make a difference and solve some of those issues that the the sector has faced, over the last few years.

24:28 And then there's a question on buying back shares, Pearce. Did you want to take that one? Yes. Yeah. I mean, I think obviously capital management's on the agenda with the board at all meetings. I mean, I think obviously share buybacks is one option. Obviously, when you go through volatile times, clearly the dividend is an area of focus as well. And should you be paying a dividend that is close to being uncovered, obviously having surplus cash is an ability to perhaps carry on with that dividend payment over the cycle should the board deem that appropriate. I think if you look at the capital side of the business, as I mentioned earlier, we had about $12,800,000 of regulatory capital surplus and that's very much akin to the liquid asset surplus requirement that you need as well.

25:13 So you are required to hold liquid assets, which is effectively cash on balance sheet. So it is appropriate to hold a surplus there should there be more volatile times. And I think having a buffer is really important when you are going through sort of market volatilities. We are it not only means that we're here and can weather the storm, but also I think for people maybe wanting to join PREMIER MITON GROUP PERE for the future. Yeah, no, would agree with that Piers. And I think the other point we shouldn't lose sight of is that where there are M and A opportunities, having that sort of cash on the balance sheet is valuable. So I think we have to balance all of those things when we look at our capital allocation process. It gives us optionality. Exactly. And then there's a question from Matt saying, you know, what size would bolt on M and A be? What size AUM and new investment areas or funds with synergies?

26:06 I think, you know, when I I mean, it's a good question. And we are happy to look at m and a really across the board. I don't think there are levels of which it's just too small for us to look at. But anything from sort of $405,100,000,000 dollars upwards, we will look at if it's teams, you know, for for larger scale m and a. We're quite happy to look at businesses the same size or or bigger than us if it's appropriate to do so. You know, we looked at a business last autumn. We actually didn't proceed with it because we're worried about the stability of the assets, but it it was, you know, bigger than the Telworth type transaction. So we're quite active. You know, we have really strong contacts across the investment banking world. So we do see a lot of things. We don't do them all, but we do see a lot.

26:54 So I think, you know, for us, when we look at m and a, we really have sort of three key things that we're looking at. You know, will it bring us scale for for existing strategies that that we run? Will it bring us new products, new strategies that will be of interest to our clients? Or will it bring us new clients that we perhaps don't already sell to? And I think when you look back at Telworth, it really ticked a couple of those boxes because it gave us new strategies that we thought would be of interest to our clients with with the long short absolute return strategies, but they also were reasonably active in the sort of family office space and in the hedge fund world. So that gave us a new set of clients that we could go and try and sell product to. And I think that has been responsible for some of the the growth in assets under management within Telworth, just being able to capitalize on those opportunities as we provided a more stable base for that business to operate within.

27:51 And then we have a question from Bruce about corporate M and A remaining a theme across the sector. Do you get a sense that teams are more attainable as opposed to waiting for corporate transactions than they were twelve months ago, particularly having seen the success of Telworth? And and I I would say that's right. Yeah. I mean, we, we are getting sort of incoming from from people who perhaps have tried to go out on their own or have set up a business and have seen, you know, the difficult environment that we've been through and and are interested in perhaps bringing their business into a more stable environment so that we could put our, you know, operational infrastructure around them. We can put our distribution capability alongside them, and and as we have done with Telworth, and and hopefully drive assets under management, for for those teams.

28:38 And then we have a question from Stuart, which is an absolutely brilliant question. How do we measure the return on investment on marketing efforts in asset management, and what are the plans to grow brand awareness internationally? We get quite a few questions on this from our non executive directors, and it's quite a difficult question to answer. I mean, clearly, we can track things like brand awareness, name awareness. We can, you know, we can track click throughs and so on. So we we get that sort of data from the marketing team so we can see but but it's actually quite difficult to, you know, link, say, you know, a piece of new business that comes into, you know, say, our our UK opportunities fund back to an advert that we've run or whatever, it tends to be a sort of cumulative impact, I think. So, you know, we build brand awareness.

29:27 You know, we hold perhaps a a seminar where advisers and wealth managers come along to hear two or three of our fund managers speak. You know, they then latch on to, I don't know, the guy who runs our UK opportunity strategy, for example, and they want more information. They want maybe a one on one with him, and then that leads to flow. So I don't think there's a it's it's not like we can put an advert in and then say, yes. We've got money in. But I think it all really helps in terms of building the brand, building the name awareness, and building a a sense with wealth managers and advisers that we are a firm that that that they could and should be doing business with. And I think the success of our investment conference, you know, we had 200 wealth advice wealth managers and, advisers along, at the end of February, you know, for a whole day, We got absolutely fantastic feedback on that, you know, during the sort of, you know, feedback sessions afterwards.

30:21 And I think, you know, that, again, is another part of our marketing. It's quite an expensive day to put on. But I think it all helps to build the PREMIER MITON brand and the sense that we are a business that can do good things for advisors and wealth managers' clients. So I think that's pretty much all the questions, Piers, isn't it, that we've got on the screen? Absolutely, guys. If I may just jump back in there. Thank you very much indeed for being so generous of your time then, addressing all of those questions that came in from investors today. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But, Mike, perhaps before now, really looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great.

31:12 Yeah. No. And and thank you. Thank you, everyone, for attending. I you know, we are we have to be optimistic running an asset management business. And I think as we look forward from here, we we're getting a definite sense that the the backdrop is improving, and and I really hope that we see that continue to develop over the course of the summer. And so when we come back, to update you at the year end, we can report on a more positive environment. But I'd like to thank you all for your support. Thank you for your time today, and look forward to keeping you updated. Perfect. Mike Pearce, that's great. Thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations?

32:01 This will only take a few moments to complete, but I'm sure it'd be greatly valued by the company. On behalf of the management team of PREMIER MITON GROUP PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.