S Miton Group plc Final Results for the year ended 31 December 2014 Ian Dighé, Chairman Gervais Williams, Managing Director Robert Clarke, Finance Director 30 March 2015
Agenda 1. Miton as of today 2. Results analysis 3. Prospects for 2015 2
Miton as of today Fund strategies that are highly differentiated Momentum in a unified culture Demonstrably high levels of service Successful funds High profile staff Robust financial strength A brand poised for substantial growth P Constraints to our growth have been addressed P We have enhanced our brand profile P Our business is now scalable P Unified in a single office in London 3
Miton as of today 4
Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Millions AUM fell during 2014 Miton AUM since Dec-2010 3500 3000 2500 2000 1500 1000 500 0 Psigma funds Liverpool Multi Asset Equity 438m AUM sold with the Liverpool disposal 503m redemptions in multi-asset funds stemmed to some degree following the appointment of a new management team The July announcement of the retirement of Bill Mott prompted the outflow of 330m segregated SWIP mandate; and large redemptions from the PSigma Income Fund amounting to 180m Gross inflows of 708m generated via our full strength sales and marketing team 5
Results analysis 6
Detail of the AUM changes m 4.0 3.5 3.0 708 (396) (16) (438) PSigma mandate and redemptions were at the lowest margin in the Group 2.5 2.0 3,098 (503) (510) 107 Multi-asset outflows stemmed following the appointment of the new management team 1.5 2,050 1.0 2,050 0.5 0.0 2013 2014 7
Financial Highlights / KPIs 31 Dec 2014 m 31 Dec 2013 m % Assets under Management - closing 2,050 3,098-34% Assets under Management - average 2,637 2,446 +8% Net Revenue 17.2 15.0 +15% Adjusted Profit (1) 5.3 4.7 +13% (Loss)/Profit before Tax (5.5) 0.7 Cash generated from operations 4.2 5.5-23% Total Cash 15.2 11.2 +36% pence pence Adjusted EPS (2) 2.78 2.82-1% Diluted adjusted EPS (3) 2.53 2.79-9% Basic (loss)/earnings per share (3.27) 0.51 Proposed dividend per share 0.60 0.54 +11% Gross inflows + 708m Adjusted profit increased in 2014 due to higher average AUM Loss before tax and basic loss per share reflects the non-cash writeoffs of goodwill and intangible assets and a credit of 3.2m for the adjustment to deferred consideration for PSigma AUM at 30 June 2014 was 2,643m Notes (1) Adjusted Profit is before amortisation, exceptional items and taxation. (2) Adjusted EPS is based on Adjusted Profit and excludes charges for amortisation and exceptional items. (3) Diluted adjusted earnings per shares includes a dilution of 9.0% due to the inclusion of Growth Share Plan shares to be exchanged for PLC shares as if they had all vested on 31.12.14. 8
Net revenue & Adjusted profit m Net revenue 20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0-2011 2012 2013 2014 m Adjusted profit 6.0 5.0 4.0 3.0 2.0 1.0-2011 2012 2013 2014 Net revenue margin 80 bp 70 bp 60 bp 50 bp 40 bp 30 bp 20 bp 10 bp 0 bp 2011 2012 2013 2014 40% 35% 30% 25% 20% 15% 10% 5% 0% Adj PBT margin % 2011 2012 2013 2014 Net revenue margin increased to 65bps Improvement principally driven by growth of smaller funds as they began to achieve scale Full year impact of investment in the business since 2013 is reflected in the adjusted profit margin Miton is now operationally efficient and able to benefit significantly from operational gearing 9
Stable cost base m 12.0 11.3m 10.0 9.6m Other costs Legal and professional Annualised impact of changes made in 2013 8.0 Occupancy Sales & marketing Administration Robust operational strength is a continuing priority so that business remains scalable 6.0 System costs Personnel variable Costs are controlled: will recruit new fund management team(s) to help grow AUM and revenue 4.0 Personnel fixed (excl s.b.p) Occupancy costs will increase by 300,000 annualised - but remain well below market rate for new office 2.0 Full strength Sales & Marketing team is focused on attracting greater fund inflows - 2013 2014 10
Prospects for 2015 11
Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Millions AUM trends Miton AUM since Dec-2010 3500 3000 2500 2000 1500 1000 Psigma funds Liverpool Multi Asset Equity The business was 100% multiasset funds four years ago Our Multi Asset funds are now fit for purpose with the appointment of a new team and renaming of the product range The equity funds business has grown over the last four years and is presently 60% of our total AUM 500 0 Our Miton Income Fund provides another avenue for growth in 2015, particularly in the popular UK Equity Income sector But what are the growth prospects of these segments of the business going forward? 12
Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Millions Multi-asset funds set for renewed growth 1800 1600 1400 1200 1000 800 600 400 200 0 Miton s Multi Asset AUM since Dec-2010 Liverpool Multi Asset In June 2014 David Jane and his team were appointed to reverse the performance trend of Miton s Multi Asset range The trend of outflows has lessened since the appointment of David Jane In March 2015 we renamed the funds to: CF Miton Defensive Multi Asset Fund (CF Miton Strategic Portfolio) CF Miton Cautious Multi Asset Fund (CF Miton Special Situations Portfolio) 13
Miton s Multi-Asset team Anthony Rayner, David Jane, and Henna Hemnani have a proactive client facing mindset A strong fit with Miton s already established culture The Multi-Asset team has: An emphasis on capital preservation A mind-set of participating in market rallies A preference to use direct equity holdings a style which keeps fund costs down Specific and insightful communication on fund positioning 14
Darwin Multi Asset & Miton Cautious Multi Asset PFS Darwin Multi Asset A Acc and CF Miton Cautious Multi Asset A Acc vs. IA Mixed Investments 20% - 60% Shares on a Total Return basis 20 th March 2012 20 th March 2015 30% 20% 9 June 29.08% 23.71% 10% 10.25% 0% -10% PFS Darwin Multi Asset A Acc CF Miton Cautious Multi Asset A IA Mixed Investment 20%-60% Shrs TR Source: FE Analytics. Basis: Mid to mid, net income reinvested and net of fees in UK Sterling terms. Performance Table PFS Darwin Multi Asset Fund A Acc & CF Miton Cautious Multi Asset Fund A Accumulation Units 1m 3m 6m 1yr Return Quartile Return Quartile Return Quartile Return Quartile Return Quartile Return Quartile PFS Darwin Multi Asset A Ac 3.21 1 8.33 1 10.45 1 13.34 1 29.08 1 n/a n/a CF Miton Cautious Multi Asset Fund A 3.91 8.11 9.42 7.95 10.25 16.09 IA Mixed Investment 20% 60% Shrs TR 1.93 5.67 5.82 9.06 23.71 32.98 Source: FE Analytics data as at 20 th March 2015. Basis: Mid to mid, net income reinvested and net of fees in UK Sterling terms. Quartile performance is not included for CF Miton Cautious Multi Asset Fund A because it does not currently reside in the IA Mixed Investment 20% 60% share sector PFS Darwin Multi Asset Fund was launched on 19 May 2011. Performance data is not available prior to this date. CF Miton Cautious Multi Asset Fund (formerly CF Miton Special Situations Portfolio) was launched on 31 December 1997. Performance data is not available prior to this date. 3yr 5yr 15
Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Millions Single strategy funds Miton Single Strategy Funds since Dec-2010 1400 1200 1000 800 600 400 200 The Miton UK Multi Cap Income strategy was the first single strategy fund to be set up Since March 2011 these funds have grown to over 1.2bn of AUM given their strong performance and low risk metrics Miton Value Opportunities managed by George Godber and Georgina Hamilton has grown to over 200m in the two years since issue 0 Miton US Opportunities, managed by Nick Ford and Hugh Grieves, has grown to over 100m in the two years since issue 16
The CF UK Miton Multi Cap Income Fund CF Miton UK Multi Cap Income Fund A Acc vs. IA UK Equity Income TR 14 th October 2011 20 th March 2015 90% 70% 50% 92.79% 61.02% 30% 10% -10% CF Miton UK Multi Cap Income A Acc IA UK Equity Income TR Source: Bloomberg. Basis: Mid to mid, net income reinvested and net of fees in UK Sterling terms. Ratio Table CF Miton UK Multi Cap Income Fund A Accumulation Units Alpha Rank Beta Rank Downside Risk Rank Info Ratio Rel. Rank Jensens Alpha Rank Max Drawdown Rank 12.09 2 / 82 0.57 80 / 82 7.98 1 / 82 0.90 8 / 82 10.43 2 / 82-8.58 25 / 82 Max Gain Rank Max Loss Rank Negative Periods Rank Positive Periods Rank r2 Rank Relative Return Rank 16.98 9 / 82-5.68 2 / 82 52 1 / 82 126 1 / 82 0.68 77 / 82 5.53 5 / 82 Return Rank Sharpe Rank Sortino Rank Tracking Error Rank Treynor Rank Volatility Rank 21.34 5 / 82 2.44 1 / 82 2.24 1 / 82 6.16 74 / 82 31.57 1 / 82 7.32 1 / 82 Source: FE Analytics data as at 20 th March 2015. Basis: Mid to mid, net income reinvested and net of fees in UK Sterling terms. 17
CF Miton UK Value Opportunities CF Miton UK Value Opportunities Fund A Acc vs. FTSE All Share TR 25 th March 2013 20 th March 2015 40% 30% 20% 38.82% 22.56% 10% 0% -10% CF Miton UK Value Opportunities Fund A Acc FTSE All Share TR Source: Bloomberg. Basis: Mid to mid, net income reinvested and net of fees in UK Sterling terms. Ratio Table CF Miton UK Value Opportunities Fund A Accumulation Units Alpha Rank Beta Rank Downside Risk Rank Info Ratio Rel. Rank Jensens Alpha Source: FE Analytics data as at 20 th March 2015. Basis: Mid to mid, net income reinvested and net of fees in UK Sterling terms. Rank Max Drawdown 10.50 3 / 267 0.67 258 / 267 9.13 4 / 267 1.20 16 / 267 9.26 2 / 267-6.08 1 / 267 Max Gain Rank Max Loss Rank Negative Periods Rank Positive Periods Rank r2 Rank Relative Return 9.27 130 / 267-6.02 3 / 267 37 4 / 267 65 7 / 267 0.77 232 / 267 6.82 8 / 267 Return Rank Sharpe Rank Sortino Rank Tracking Error Rank Treynor Rank Volatility Rank 18.63 8 / 267 1.72 1 / 267 1.66 1 / 267 5.70 217 / 267 22.49 3 / 267 8.81 3 / 267 Rank Rank 18
Prospects for the Miton Income Fund 30% Miton Income Fund A Acc vs. FTSE All Share TR 1 st July 2013 20 th March 2015 25% 20% 25.84% 20.07% 15% 10% 5% 0% -5% Miton Income Fund A Acc Source: Bloomberg & FE Analytics data. FTSE All Share TR 1m 3m 6m 1yr Return Quartile Return Quartile Return Quartile Return Quartile Return Quartile Return Quartile Miton Income Ret Acc 4.25 1 11.79 1 10.34 1 13.91 1 42.50 3 62.58 3 IA UK Equity Income TR 2.37 9.11 7.39 11.18 47.50 68.64 FTSE All Share TR 2.19 8.71 5.47 11.00 37.50 55.29 Source: FE Analytics data as at 20 th March 2015. Basis: Mid to mid, net income reinvested and net of fees in UK Sterling terms. Miton Income Fund (formerly the PSigma Income Fund) was launched on 5 April 2007. Performance data is not available prior to this date 3yr 5yr 19
Building our Investment Trust business Miton is regarded as a group that can grow conventional Investment Trusts David Barron previously led the Investment Trust business at JP Morgan Miton s AIFM offering is well organised and competitive We are one of the limited number of houses that have grown our conventional Investment Trusts over recent years Miton is planning to launch a new Investment Trust in the coming weeks The launch of Diverse Income was timed to take advantage of the recovery potential and longer term outperformance of smaller quoted income equities The new Miton UK MicroCap Trust is timed to take advantage of the recovery potential and longer term outperformance of small quoted companies that currently have immature income potential 20
Drivers for Growth Planned launch of the Miton UK MicroCap Trust in April: target 100m The Multi Asset range is refreshed and been renamed and is now positioned to attract renewed inflows in time Our UK Value Fund continues growing strongly and has a capacity of > 1bn The Miton Income Fund has strong performance. It has the capacity to attract sizable inflows in a popular market space Substantial cash balances provide the ability to capitalise on new fund management teams and other opportunities Our business is scalable Operational gearing on AUM growth 21
Miton is distinctive Fund strategies that are highly differentiated Momentum in a unified culture Demonstrably high levels of service Successful funds We are confident of growing AUM considerably High profile staff Robust financial strength A brand poised for substantial growth 22
Please note this communication is for Professional Investors only and must not be distributed to or relied upon by retail investors. Whilst Miton Group plc has used all reasonable efforts to ensure the accuracy of the information contained in this communication, we cannot guarantee the reliability, completeness or accuracy of the contents. The views expressed in this document do not constitute investment advice. This document is provided for the purpose of information only. The information provided in relation to the investment funds in this presentation is as at 27 March 2015 and refers to the B Accumulation share class unless stated otherwise, index performance is on a total return basis. Past performance is not a guide to future returns. The value of investments and any income may fluctuate and investors may not get back the full amount invested. Miton Group plc includes the following companies that are regulated by the Financial Conduct Authority; Miton Asset Management Limited (FRN 115241), Miton Trust Managers Limited (FRN 220241) and Darwin Investment Managers Limited (FRN 540442). Miton Group plc acquired Darwin Investment Managers Limited on 12 September 2014. The Registered Office for Miton Group plc (Co House No. 5160210), Miton Asset Management Limited (Co House No.1949322), Miton Trust Managers Limited (Co House No. 4569694) and Darwin Investment Managers Limited (Co House No. 7448850) is 51 Moorgate, London, EC2R 6BH. 23