Miton : Half Year Results to 30 June 2016

22 September 2016

MITON GROUP PLC HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016

Strong increase in profits driven by higher average AUM

Miton Group plc (the 'Company' or 'Group'), the AIM quoted fund management group, today announces its half year results for the six months ended 30 June 2016.

Business Highlights

• £2,542 million Assets under Management (AuM), up from £2,225 million for the same period last year.

• £2,710 million AuM as at 31 August 2016. The multi-asset fund range AuM has increased by 7.1% since 31 December (excluding CF Miton Total Return Fund) to reach £487m as at 31 August 2016.

• Adjusted Profit before tax significantly higher at £3.1m, up from £0.8m in the same period last year.

• Net management fee margin maintained across the product range.

• Significant net inflows in the first quarter were offset in the second quarter primarily due to the outflows from the CF Miton UK Value Opportunities Fund.

• Andrew Jackson joined the Group on 27 June 2016 and assumed responsibility for the management of the CF Miton UK Value Opportunities Fund from 1 July 2016.

• CF Miton European Opportunities Fund had £71 million in AuM as at 31 August 2016 after being launched in December 2015. The fund has delivered top quartile performance since inception.

• £18.4 million net cash at 31 August 2016.

Financial Highlights

Unaudited six months to 30 June 2016 £m	Unaudited six months to 30 June 2015 £m	Audited year to 31 December 2015 £m
Closing AuM	2,542	2,225	2,784
Average AuM (1)	2,792	2,140	2,319
Net revenue	9.6	7.1	15.7
Adjusted Profit before tax (2)	3.1	0.8	3.0
Profit before tax (3)	2.9	0.6	2.1
Cash generated from operations	4.4	0.9	2.4
Total Cash	17.4	13.6	14.1
pence	pence	pence
Adjusted earnings per share (4)	1.67	0.43	1.43
Diluted adjusted earnings per share (5)	1.48	0.37	1.18
Basic earnings per share	1.56	0.28	0.92
Diluted Basic earnings per share	1.39	0.24	0.75

Notes

(1) Average AuM is based on the total month end closing AuM for each product managed by the Group.

(2) Adjusted Profit is calculated before the deduction of amortisation, exceptionals, VAT provision relating to prior years and taxation.

(3) The 2016 profit before tax includes £0.04m of exceptional operating expenses (31 December 2015: £0.32m) relating to costs associated with the implementation of a new remuneration structure for the investment team. In 2015 the exceptional items related to redundancy and restructuring costs.

(4) Adjusted earnings per share excludes charges for amortisation, exceptionals, VAT provision and associated taxation.

(5) Diluted adjusted earnings per share involves a dilution of 12.5% largely as a result of an estimate of the Miton Group plc shares which would be issued if all the Growth Share Plan shares with an accrued value at 30 June 2016 had vested and had been exchanged for Miton Group plc ordinary shares at that date.

Ian Dighé, Executive Chairman of Miton Group, commented:

"We are pleased to report a significant increase in half year profits, driven by a higher level of average AUM over the period in unsettled market conditions.

"Since the half year end we have regained asset growth momentum, most pleasingly in our multi-asset fund range through a combination of inflows and performance.

"Our focus remains on continuing to grow assets by delivering distinctive active management of our funds, whilst keeping a tight control of costs. Overall, we have confidence in the outlook for the year as a whole."

For further information, please contact: Miton Group plc	020 3714 1500
Ian Dighé (Executive Chairman) Gervais Williams (Managing Director) Piers Harrison (Chief Operating Officer)
MHP Communications Reg Hoare / Simon Hockridge / Charlie Barker	020 3128 8100
Peel Hunt (Nominated adviser and Broker) Guy Wiehahn / Rishi Shah	020 7418 8893
www.mitongroup.com

Notes to Editors:

Miton Group plc (referred to as the "Company" or "Group"), is an equity and multi-asset fund management specialist. As at 30 June 2016 the Group managed £2,542 million of assets including eight OEICs, two unit trusts and four investment trusts under the Miton brand.

Chairman's Statement Overview

I am pleased to report that for the first six months of the financial year the Group has delivered an increase in

profits which has been driven by higher average Assets under Management (AuM) over the period.

Strong inflows in the first quarter saw the AuM rise to £3,032m. However, these gains were more than offset in the second quarter due to net outflows of £423m experienced from the CF Miton UK Value Opportunities Fund and market volatility immediately after the EU Referendum vote at the end of June.

AuM on 30 June 2016 was £2,542m. This has subsequently grown to £2,710m as at 31 August 2016.

The net sales during the first quarter of £259m were a record for the Group. Strong performance across our fund range has aided inflows and by continuing to deliver distinctive strategies for our clients with clear and regular communication we have built on the strong foundations that are now well established.

The change to the fund managers on the CF Miton UK Value Opportunities Fund inevitably led to redemptions. The Group moved swiftly to appoint Andrew Jackson who has an impressive and consistent performance record of delivering value for clients over a number of investment cycles. Andrew's approach has been well received and he has already made progress since taking over the fund on 1 July 2016, delivering first quartile performance from that date against significant challenges post the referendum.

Miton continues to demonstrate its ability to launch funds and provide talented managers with a platform for asset gathering. Our most recent launch, the CF Miton European Opportunities Fund in December 2015, has now grown to £71m as at 31 August 2016. The managers' distinctive investment proposition has delivered first quartile performance since inception. The Miton UK MicroCap Trust plc also raised an additional £28m through a C Share issue in February. This focus on the very smallest companies continues to attract client interest and attention.

With regards to our multi-asset funds, I am pleased to report that the combination of good performance over the two year management tenure by the team and client demand has allowed us to renew the momentum in inflows for these products.

Investment Performance

Low bond yields imply that longer term returns on assets could be more limited in future. At 31 August the Group's product range continues to perform well with 9 out of 14 funds in the first quartile of their respective sectors over the tenures of the current managers.

Results

Adjusted Profit before tax was £3.1m (30 June 2015: £0.8m), an increase of 288% compared to the comparative period last year. This figure included an accounting credit of £0.43m to share-based payments reflecting the forfeitures of awards during the period.

The Group continues to be soundly financed with £17.4m of cash on hand as at 30 June 2016 (31 December 2015: £14.1m) and no long term debt.

Fund Manager Retention

Miton operates within an increasingly competitive market with remuneration and incentives on the agenda of both clients and our regulator. As announced in July, the current fund manager retention and incentive arrangement will be discontinued as the principal reward mechanism for new fund managers and for those where no value has been accrued to date. From the second half of 2016, a new remuneration structure has been introduced which is based upon a share of net revenues and adjusted for high investment perform ance and the achievement of our clients' objectives. It will not require the issuance of Miton Group plc shares.

Outlook

Whilst financial markets continue to be unsettled by the political landscape our experienced investment teams are delivering distinct and strong investment performance with attractive returns for investors. We will continue to take advantage of changing market trends not only with our existing range of funds but also with new products that provide solutions to our clients' future needs. Since the half year-end, we have experienced renewed momentum in asset growth giving us confidence in the outlook for the year as a whole.

Ian Dighé, Executive Chairman 21 September 2016 Financial Review Results for the half year

The average Assets under Management (AuM) for the period were £2,792m reflecting the significant net inflows achieved in the first quarter. Adjusted Profit before tax increased by 288% to £3.1m compared to £0.8m for the 2015 comparable period. Cash generated from operations for the period increased to £4.43m (2015:

£0.88m). This is partly due to the reversal of the high trade receivables balance noted in the 2015 accounts.

AuM by asset class

Equity funds	Opening AuM 1 Jan 2016 £m	Net Flows £m	Market / investment performance £m	Closing AuM 30 June 2016 £m
	1,834	(101)	(135)	1,598
Multi-asset funds	477	(17)	18	478
Total funds	2,311	(118)	(117)	2,076
Investment trusts	473	28	(35)	466
Total	2,784	(90)	(152)	2,542

Net outflows were experienced in the second quarter primarily due to the CF Miton UK Value Opportunities Fund. This offset the net inflows achieved in the first quarter.

Net management fees and margins

Unaudited six months to 30 June 2016	Unaudited six months to 30 June 2015	Audited year to 31 December 2015
Average AuM* (£m)	2,792	2,140	2,319
Net management fees (£m)	9.6	7.1	15.7
Net management fee margin (bps)	68.8	66.6	67.7

*calculated on a monthly basis based on closing AuM

Net management fee margins increased slightly to 68.8bps (2015 full year: 67.7bps). This reflects the higher margins attained on our investment trust business and the Group's maturing equity funds.

Costs

Administrative expenses (excluding share-based payments) were £6.2m for the half year. Fixed personnel costs were in line with expectations. Semi-variable personnel costs rose due to bonus accruals from a higher Adjusted Profit before tax figure. Additional bonus provisions were recognised for the fund managers relating to the introduction of the new remuneration scheme totalling £0.42m at the half year.

Overheads comprise IT, administration, sales and marketing, insurance and occupancy costs. Included within overheads were non-recurring recruitment costs amounting to £0.16m associated with the changes to the CF Miton UK Value Opportunities Fund.

Other costs consist principally of depreciation and irrecoverable VAT.

Share-based payments decreased during the period due to write-backs arising from the forfeiture of awards in accordance with IFRS. The charge for the period of £0.24m reflects a credit for these forfeitures totalling

£0.43m.

Exceptional expenses of £0.04m for the period (2015: £nil) related to costs associated with the implementation of a new remuneration structure for the investment team. The Growth Share Plan will be discontinued as the principal reward and retention mechanism for new fund managers and for those where no value has been accrued to date.

Initiatives

As noted in the 2015 full year accounts, the significant infrastructure changes for the Group have now been completed. The liquidations of Miton (Hong Kong) Limited and PSigma Asset Management Limited are due to be completed by the year-end.

In February the Group completed the transition of the Miton Income Fund to the operating model adopted for all open ended funds.

The CF Miton Total Return Fund was identified as economically unviable due to its lack of critical mass. It was therefore deemed to be in the best interests of the investors to wind up the fund. This was completed on 17 May 2016.

2016 HY £m	2015 FY £m	2014 FY £m
Net revenue	9.6	15.7	17.2
Administrative expenses	(6.2)	(11.3)	(11.3)
Share-based payments	(0.2)	(1.2)	(0.9)
Interest	-	-	0.1
Add back: VAT*	-	(0.2)	0.2
Adjusted Profit before tax	3.1	3.0	5.3
Adjusted Profit before tax margin %	32.6	19.1	30.6
* Provision relating to prior years

Piers Harrison

Chief Operating Officer 21 September 2016