Half Yearly Report

25 September 2014

MITON GROUP PLC

HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2014

Miton Group plc ('Miton' or 'the Group'; ticker: MGR), the AIM quoted fund management group, today announces its half year results for the six months ended 30 June 2014.

Financial Highlights

· Net revenues increased by 60% to £9.6m (2013: £6.0m) which includes the benefit of a full first half year from PSigma.

· Adjusted Profit before Tax increased by 89% to £3.4m (2013: £1.8m) reflecting the benefits of operational gearing.

· Loss before Tax of £10.0m is after charging non-recurring costs of £12.5m which includes a £12.0m loss on the sale of the Liverpool business. This arises from the elimination of £16.0m of goodwill and intangible assets. Consequently, intangible assets on the balance sheet have fallen from £10.1m to £0.8m during the period.

· Adjusted earnings per share* increased by 58% to 1.68p (2013: 1.06p).

· Assets under Management ('AuM') reduced to £2.64bn (30 June 2013: £2.02bn; 31 December 2013: £3.10bn) following the sale of Miton Capital Partners Limited ('MCPL' or 'Liverpool') on 31 March 2014 which reduced AuM by £0.44bn.

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· £212m of net inflows into equity funds more than offset £183m of net outflows from our defensively positioned multi-asset funds. The former included an additional £50m from a 'C' share issue in June for The Diverse Income Trust plc taking its net assets above £300m.

· Total cash balance of £16.2m as at 30 June 2014 (31 December 2013: £11.2m).

Business Highlights

· Acquisition of Darwin Investment Managers Limited ('Darwin'), majority owned by David Jane, completed on 12 September 2014 including the PFS Darwin Multi-Asset Fund (£47m).

· New multi-asset management team led by David Jane has led to improving performance and mitigating outflows. In time, it is expected that this part of our business will return to growth.

· Full scope authorisation from the FCA to act as an Alternative Investment Fund Manager ('AIFM').

· Consolidation at a unified location in the City of London with the associated operational benefits.

· In September 2014 Charles Stanley plc announced that it had agreed to sell the management contract for the FP Matterley Undervalued Assets Fund to Miton. This will strengthen Miton's UK Value Opportunities Fund which is managed by George Godber and Georgina Hamilton. This is one of our most promising areas of potential growth in the second half.

Ian Dighé, Executive Chairman of Miton Group, commented: "We have addressed challenges in the first half and our business remains strong. The Group's distinctive market position, along with our demonstrable operational strengths, highly regarded fund managers and performance culture put us in a strong position to grow AuM over the coming years."

*Adjusted earnings per share is based on Adjusted Profit and excludes charges for amortisation and exceptional items.

There will be a presentation to analysts at 9.30am today at the Peel Hunt Offices, Moor House, 120 London Wall, EC2Y 5ET.To register your attendance please contact Lorena Sanchez at MHP Communications on 0203 128 8560 or [email protected].

For further information, please contact:

Miton Group plc

Ian Dighé, Executive Chairman

Gervais Williams, Managing Director

Robert Clarke, Finance Director Tel: 0203 714 1500

Peel Hunt LLP (Nominated Adviser and Broker)

Guy Wiehahn / Andy Crossley Tel: 020 7418 8900

MHP Communications

Reg Hoare / Simon Hockridge Tel: 020 3128 8100

Notes to Editors

Miton Group plc (Miton) is an AIM-quoted leading specialist fund manager, incorporating Miton, PSigma and Darwin fund brands managed by Miton Asset Management Ltd, PSigma Unit Trust Managers Ltd, PSigma Asset Management Ltd and Darwin Investment Managers Limited: all of which are wholly owned subsidiaries within the Group.

Under the leadership of Gervais Williams, Managing Director and Fund Manager, the Group's fund management teams have a wealth of experience and are recognised for their innovative investment processes and performance. They invest in their own funds and are significant shareholders in the Group. Miton is based in the City of London.

www.mitongroup.com

Chairman's Statement

Ian Dighé, Executive Chairman of Miton Group, commented:

Adjusted Profit before Tax in the first half increased from £1.8m to £3.4m, as the benefits of year-on-year AuM growth combined with operational gearing came through. The Group ended the half year with £16.2m of cash balances, which approximates to 10p per share.

At the end of the half year AuM stood at £2.64bn. There were £183m of net outflows from our defensively positioned multi-asset funds over the period, but these were more than offset by £212m of net inflows into our range of equity funds. Also £438m of AuM was sold on 31 March 2014 as a result of the disposal of Miton Capital Partners Limited, for which we received £4m of initial consideration in the first half.

Subsequent to Martin Gray's resignation from Miton in June, it was decided to move our Reading operations to London. The Group now has all the operational benefits of a single unified location in the City.

Following the half year end, there have been some further outflows from our defensively positioned multi-asset funds given the relatively firm markets and change of fund manager. However the coincident appointment of David Jane and two colleagues from Darwin Investment Managers Limited (Darwin) has been well received by clients. Service levels remain strong and the asset values of the multi-asset funds have started appreciating in recent months. In time we anticipate that renewed inflows into these funds will more than offset any further outflows, so this part of our business will return to growth.

At the end of the year Bill Mott, who joined us with the PSigma acquisition last year, will retire. This news has led to some redemptions within the PSigma Income fund in the first months of the second half. However we anticipate further inflows elsewhere, most particularly into the CF Miton UK Value Opportunities Fund now that this fund has grown beyond £100m in AuM. Organic growth will be supplemented with the purchase of the management contract for the FP Matterley Undervalued Assets Fund, which currently has £91m in AuM from Charles Stanley plc. In addition, the completion of the acquisition of Darwin on 12 September 2014 provides an additional £47m of AuM.

We are delighted to welcome two additional Non-executive Directors who were appointed in January and May respectively. Jim Davies was previously founder and Managing Partner of national law firm DWF LLP. Alan Walton was formerly a corporate finance partner of Deloitte specialising in financial services. I am particularly grateful for the contribution they have already made.

We have addressed challenges in the first half and our business remains strong. The enhanced operational capabilities of the Group were underlined in July when we received full scope authorisation from the FCA to act as an Alternative Investment Fund Manager (AIFM) for our clients. The Group's distinctive market position, along with our demonstrable operational strengths, highly-regarded fund managers and performance culture put us in a strong position to grow AuM over the coming years.

Ian DighéExecutive Chairman24 September 2014

Financial Review

Assets under Management

On 30 June 2014 assets under management (AuM) were £2.64bn (30 June 2013: £2.02bn; 31 December 2013: £3.10bn) following the sale of Miton Capital Partners Limited ('MCPL' or 'Liverpool') on 31 March 2014 which resulted in AuM reducing by £438m as shown in the summary below.

Fund Flows Summary

Revenue

Net revenue increased from £6.0m in H1 2013 to £9.6m in H1 2014. The average net revenue margin for the first half was 65bp compared with 63bp for H1 2013 as the more recently launched funds have matured.

Costs

With the growth of the Group over the last year and the substantial upgrade of our operating capabilities, administration expenses increased to £5.8m in the period from £3.9m in H1 2013. The changes have included:

- expansion of the fund range and fund management team

- development of sales and marketing functions

- evolution of our investment trust and AIFM resources

- implementation of a new Bloomberg portfolio management system and associated operations

- enhanced risk management processes and procedures

- upgraded compliance and HR functions

The Group now has a highly effective platform for growth.

Disposal

The MCPL sale resulted in an exceptional loss of £12.0m (£10.3m after taking into account a deferred tax credit of £1.7m). Notes 4 and 5 provide more detail of the loss which is largely due to the non-cash write-offs of goodwill (£7.6m) and intangible assets (£8.4m). For intangible assets there now only remains £0.8m to be amortised over the next two years. This is already evident in the lower amortisation charge for the period of £0.9m compared with £1.5m in H1 2013.

For the three months ended 31 March 2014, the funds managed from Liverpool generated net revenue of £701,000 and there were attributable costs before tax and amortisation of £448,000.

Other non-recurring costs

The other two non-recurring exceptional items during the period relate to:

i) the introduction of the Miton Growth Share Plan (£0.3m), the first growth shares for which were issued to fund managers in January; and

ii) changes to the multi-asset fund management team and acquisition of Darwin Investment Managers Limited (£0.2m) referred to in the Chairman's Statement.

Adjusted Profit before Tax

Adjusted Profit before Tax of £3.4m for the period increased significantly, compared with £1.8m in H1 2013, benefiting from the Group's operational gearing.

Reconciliation of Adjusted Profit before Tax

1Adjusted Profit before tax is before amortisation, exceptional items and taxation.

2See Note 4 in Notes to the Consolidated Financial Statements.

Earnings per Share

Adjusted earnings per share for the period was 1.68p: an increase of 58% over 1.06p for H1 2013. Basic earnings per share of (6.20)p (H1 2013: 0.22p) were impacted by the exceptional non-recurring costs relating to the sale of MCPL, the implementation of the Growth Share Plan and the acquisition of Darwin.

Cash

At 30 June 2014 cash balances had increased to £16.2m compared with £11.2m at the start of the year, helped by proceeds from the MCPL sale. After making deductions for regulatory capital requirements, the creditors reserve and other provisions, the Group's free cash as at 30 June 2014 was £8.9m. The creditors reserve of £3.4m arose from the capital reduction in 2013 and will no longer need to be held on the balance sheet after 2015.

Unaudited Consolidated Statement of Comprehensive Income

for the period ended 30 June 2014

\* The exceptional items largely relate to the non-cash write-off of goodwill and intangible assets following the sale of MCPL.

No other comprehensive income was recognised during 2014 or 2013, therefore the profit or loss is also the total comprehensive income. All items in the above statement derive from continuing operations.

Unaudited Consolidated Statement of Changes in Equity

for the period ended 30 June 2014

Unaudited Consolidated Statement of Financial Position

as at 30 June 2014

Unaudited Consolidated Statement of Cash Flows

for the period ended 30 June 2014

Notes to the Consolidated Financial Statements

For the period ended 30 June 2014

1. Basis of accounting

These interim condensed and consolidated financial statements do not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006. They have been prepared on the basis of the accounting policies as set out in the Group's Annual Report for the year ended 31 December 2013.

The interim report has been prepared in accordance with IAS 34 'Interim Financial Reporting' and the Listing Rules of the Financial Conduct Authority.

The accounting policies applied in these interim financial statements are consistent with those applied in the Group's most recent annual financial statements, except for the adoption of new standards and interpretations effective as of 1 January 2014 as listed below. None of these will have a material impact on the Group's financial statements in the period of initial application.

The Group has sufficient financial resources and contracts with a number of customers and suppliers such that the directors believe that the Group is well placed to manage its business risks successfully.

After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the interim report.

The Group's 2013 Annual Report is prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, and is available on the Miton Group plc website (www.mitongroup.com).

These unaudited financial statements were approved and authorised for issue by a duly appointed and authorised committee of the Board of Directors on 24 September 2014.

The full year accounts to 31 December 2013 were approved by the Board of Directors on 21 March 2014 and have been delivered to the Registrar of Companies. The report of the Auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006. The figures for the six months ended 30 June 2014 and the six months ended 30 June 2013 have not been audited.

2. Segmental information

The Group operates as one business segment, Fund Management, which offers a number of fund management products through a variety of distribution channels. It therefore does not present information on different segments.

3. Dividend

The dividend for the year ended 31 December 2013 was paid on 15 May 2014, being 0.54p per share. The trustees of the Employee Benefit Trust waived their rights to this dividend, leading to a total distribution of £782,000, which is reflected in the Statement of Changes in Equity.

4. Exceptional Items

The following table lists three material non-recurring items which are disclosed as exceptional items in the Consolidated Statement of Comprehensive Income in order to provide clear representation of their nature.

i. The sale of MCPL (Liverpool business) is part of the Group's single operating segment or cash-generating unit, being Fund Management. Therefore the goodwill written off in relation to the sale of MCPL (£7.6m) has been calculated by applying that proportion of total Group net revenue which related to the business sold during the nine month period ending 31 March 2014 to the total goodwill balance at 31 March 2014. Intangible assets written off (£8.4m) are those directly relating to the business sold. The tax credit for the period referred to in Note 5 on page 20 includes a deferred tax credit of £1.7m relating to the write-off of intangible assets.

ii. Disposal proceeds include £650,000 received in July 2014 relating to a negotiated early settlement of deferred contingent consideration of up to £1m which was previously agreed as payable on the first and second anniversary of the completion of the sale of MCPL subject to the performance of AuM.

iii. Growth shares were issued for the first time under the Growth Share Plan on 14 January 2014. The costs of the introduction of the Miton Group plc Growth Share Plan comprise employer's National Insurance contributions of £220,000 and professional fees of £123,000.

iv. The costs relating to changes to the multi-asset fund management team and the acquisition of Darwin Investment Managers Limited comprise redundancy costs of £112,000 and professional fees of £85,000.

5. Taxation

6. Earnings Per Share (EPS)

Basic earnings per share is calculated by dividing the profit/(loss) for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period. In calculating diluted earnings per share, IAS 33 Earnings Per Share requires that the profit/(loss) is divided by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of any potential dilutive ordinary shares that would be issued on their conversion to ordinary shares during the period. Diluted earnings per share, on both a Statutory and Adjusted basis, is not materially different from basic earnings per share.

(a) Statutory Earnings Per Share (EPS)

(b) Adjusted Earnings Per Share (Adjusted EPS)

Adjusted EPS is based on Adjusted Profit after Tax, where Adjusted Profit is stated after charging interest and share-based payments but before amortisation and exceptional items.

7. Cash and cash equivalents

8. Provisions

The remaining provisions at 30 June 2014 are expected to be settled by the end of 2014.

9. Share capital

10. Share-based payments

The fair value of the share incentives granted in the period to 30 June 2014 was £3.0m (2013: £nil). Of the total £392,000 (2013: £311,000) share-based payment charge in the period, £107,000 (2013: £nil) relates to incentives granted in the period.

The share incentives granted in the period relate wholly to growth shares in Miton Group Service Company Limited issued under the Miton Group plc Growth Share Plan with vesting periods of between three and five years. Participants are able to hold growth shares for up to 15 years following the date of issue. The fair value was calculated at the date of issue using a Monte Carlo simulation and adjusted discounted cash flow model using assumptions regarding volatility, growth in AuM, timing of exercise, employee exit and forfeiture rates and share price. As at the date of issue the fair value at grant date of £3m was allocated over the vesting periods referred to above.

For both the MEI and MIP awards, the fair value was estimated as at the grant date using a Black-Scholes model and based on employee exit and forfeiture rates, dividend yields, share price, composite volatility and performance conditions. The expected life of the incentives has been estimated taking account of the extent to which the exercise price was above or below the share price at the grant date. The annualised volatility has been based on historical trends, which have been assumed to indicate future volatility. The risk free interest rate has been based on the UK gilts rate with a maturity corresponding to the expected life of the option.

11. Subsequent Events

The acquisition of PSigma Asset Management Holdings Limited

In July 2013 Miton Group plc announced the acquisition of the entire issued share capital of PSigma Asset Management Holdings Limited (PSigma) from Punter Southall Group Limited. The Tranche 1 deferred consideration payable in 2014 was originally agreed to be settled by the issue of new ordinary shares at a maximum undiscounted amount of £2,500,000. It has recently been agreed that this will be settled by a payment of £1,672,000 in cash and the issue of 3,320,000 Miton Group plc new ordinary shares.

The acquisition of Darwin Investment Managers Limited

On 9 June 2014 Miton Group plc announced the acquisition of the entire issued share capital of Darwin Investment Managers Limited (Darwin). The consideration comprises a mixture of cash and ordinary shares in Miton Group plc and will be between £1,350,000 and £2,050,000 dependent upon the growth of Darwin's assets under management and the value of Miton's multi-asset funds over two years. Following FCA approval, the acquisition completed on 12 September 2014 on which date initial cash consideration of £650,000 was paid and 1,655,424 new ordinary shares in Miton Group plc were issued.

FP Matterley Undervalued Assets Fund

On 4 September 2014 it was agreed that Miton Group plc would purchase the management contract of the FP Matterley Undervalued Assets Fund (£[91]m) from Charles Stanley plc.

END