TIDMTAM
RNS Number : 6021T
Tatton Asset Management PLC
16 November 2023
16 November 2023
Tatton Asset Management PLC
("TAM plc", the "Group" or the "Company")
AIM: TAM
UNAUDITED INTERIM RESULTS
For the six-month period ended 30 September 2023
"Strong net inflows underpin the Group's track record of
consistent growth"
TAM plc, the investment management and IFA support services
group, today announces its interim results for the six-month period
ended 30 September 2023 (the "Period").
FINANCIAL HIGHLIGHTS
-- Group revenue increased 9.9% to GBP17.506m (Sep 2022: GBP15.934m)
-- Adjusted operating profit (1) up 11.2% to GBP8.872m (Sep 2022:
GBP7.982m)
-- Adjusted operating profit (1) margin 50.7% (Sep 2022: 50.1%)
-- Adjusted fully diluted EPS (2) increased 6.4% to 10.52p (Sep
2022: 9.89p)
-- Strong financial liquidity position, with net cash of GBP24.222m
(Mar 2023: GBP26.494m)
-- Interim dividend (3) up 77.8% to 8.0p (Sep 2022: 4.5p)
-- Strong balance sheet with net assets GBP40.336m
Operating profit before exceptional items, share-based payment
(1) charges and amortisation of acquired intangibles.
Adjusted fully diluted earnings per share is adjusted for
(2) exceptional items, share-based payment charges, amortisation
of acquired intangibles, the unwinding of discount on deferred
consideration and the tax thereon. The dilutive shares for
this measure assumes that all contingently issuable shares
will fully vest.
A larger element of this year's total dividend has been brought
(3) forward, our progressive dividend policy of paying c.70% of
annual adjusted diluted earnings per share remains unchanged.
OPERATIONAL HIGHLIGHTS
-- Assets Under Management/Influence ("AUM/I") increased 19.8%
to GBP14.784bn (Sep 2022: GBP12.343bn). AUM/I at 31 March
2023 GBP13.871bn, an annualised increase of 13.2%
-- Organic net inflows were GBP0.910bn (Sep 2022: GBP0.907bn),
an annualised increase of 13.1% of opening AUM/I with an average
run rate of GBP152m per month
-- Tatton's IFA firms increased by 5.2% to 914 (Mar 2023: 869)
and the number of accounts increased 7.1% to 114,650 (Mar
2023: 107,010)
-- Paradigm Mortgages completions reduced by 5.5% to GBP6.9bn
(Sep 2022: GBP7.3bn). Paradigm Mortgages member firms increased
to 1,798 members (Mar 2023: 1,751 members)
-- Paradigm Consulting members increased to 437 (Mar 2023: 431)
-- Expansion of MPS range with the successful launch of Money
Market risk profile
-- Implementation of Consumer Duty regulation - strong alignment
with Tatton's MPS proposition and core values
Paul Hogarth, Chief Executive Officer, commented:
"The Group has delivered a solid first half result, successfully
meeting our strategic objectives and maintaining strong organic
growth of revenue and profits. While volatile markets continued to
be a challenge, our Assets Under Management/Influence (AUM/I) still
reached GBP14.8 billion and we expect to exceed our GBP15 billion
"Roadmap to Growth" strategy by March 2024.
"I am delighted with the performance of Tatton, which has
continued to perform strongly by consistently delivering an average
of GBP150 million net inflows per month over the last eighteen
months. This level of net inflow has continued into the second
half, reinforcing the attractiveness of the MPS proposition and
highlighting our ability to maintain consistent performance even in
difficult macroeconomic conditions.
"Paradigm has also delivered a resilient performance in the
period, despite a subdued housing market which has led to a
changing mix of mortgage lending. We anticipate that this trend
will continue throughout the second half of the year, with
expectations for Paradigm to maintain its resilient
performance.
"We look forward to making further progress over the rest of the
year, while remaining acutely aware of the continuing macroeconomic
turbulence and market volatility. The Board remains confident in
the future prospects of the Group."
For further information please contact:
Tatton Asset Management plc
Paul Hogarth (Chief Executive Officer)
Paul Edwards (Chief Financial Officer)
Lothar Mentel (Chief Investment Officer) +44 (0) 161 486 3441
Zeus - Nomad and Broker
Martin Green (Investment Banking)
Dan Bate (Investment Banking and QE) +44 (0) 20 3829 5000
Singer Capital Markets - Joint Broker
Peter Steel / Charles Leigh-Pemberton (Investment
Banking) +44 (0) 20 7496 3000
Belvedere Communications - Financial PR
John West / Llew Angus (media) 44 (0) 20 7653 8705
Cat Valentine / Keeley Clarke (investors) + 44 (0) 7715 769078
tattonpr@belvederepr.com
Trade Media Enquiries +44 (0) 7469 854
Roddi Vaughan Thomas 011
For more information, please visit:
www.tattonassetmanagement.com
STRATEGIC REVIEW
The Group maintains a track record of steady growth
The Group has performed well in the Period and delivered
continued growth in revenue and profits, with strong net inflows
reflecting high demand for our services. We have continued to make
substantial progress in line with our strategic objectives, in what
has been a difficult and volatile market, demonstrating the
effectiveness of our business model.
Group revenue for the Period increased by 9.9% to GBP17.506
million (Sep 2022: GBP15.934 million). Adjusted operating profit(1)
for the Period increased by 11.2% to GBP8.872 million (Sep 2022:
GBP7.982 million), with adjusted operating profit margin(1) at
50.7% (Sep 2022: 50.1%).
Pre-tax profit after the impact of amortisation of intangibles
relating to acquisitions and joint ventures, finance costs and
share-based payment charges increased to GBP7.693 million (Sep
2022: GBP6.624 million) and taxation charges for the Period were
GBP2.302 million (Sep 2022: GBP1.291 million). This gives an
effective tax rate of 29.9% when measured against profit before
tax. Adjusting for amortisation and share-based payments, the
effective tax rate is 25.8%.
The basic earnings per share was 8.97p (Sep 2022: 9.01p). When
adjusted for amortisation of intangibles relating to acquisitions
and joint ventures, finance costs relating to the unwinding of
discounts on deferred consideration, and share-based payment
charges, basic adjusted earnings per share was 11.08p (Sep 2022:
10.43p). Adjusted earnings per share fully diluted for the impact
of share options was 10.52p (Sep 2022: 9.89p), an increase of
6.4%.
Tatton
Tatton continues to perform strongly and has sustained strong
organic net inflows in an environment where, in general, asset
managers have been suffering redemptions. In the last six months,
organic net inflows have averaged GBP152 million per month and were
in total GBP910 million (Sep 2022: GBP907 million). In fact, over
the last eighteen months we have now consistently delivered an
average of GBP150 million per month, which reinforces both the
attractiveness of the model portfolio services ("MPS") proposition
and our ability to maintain consistency of performance even in
difficult macroeconomic conditions.
The total AUM/AUI(1) at the end of the Period increased to
GBP14.784 billion (Mar 2023: GBP13.871 billion). As we enter the
final leg of the journey in our "Roadmap to Growth" strategy of
delivering GBP15 billion AUM/AUI(1) by March 2024, we remain very
confident that we will exceed this amount by the target date.
Platforum, the Financial Services research consultants, have
maintained their forecast that the MPS market is expected to grow
at a rate of 25% per annum and reach up to GBP200 billion by the
end of 2026 (Platforum MPS Report: July 2023). The current level of
MPS on platform is GBP103.5 billion (Dec 2021: GBP81.4 billion).
The Group has GBP14.784 billion, or 14.3% share of this market (Mar
2023: 13.4%).
Through this market growth and our increased activity, Tatton's
revenue has increased by 13.4% to GBP14.451 million (Sep 2022:
GBP12.738 million) and now accounts for 82.5% of total Group
revenue. Meanwhile, Tatton's adjusted operating profit(1) grew by
17.3% to GBP8.986 million (Sep 2022: GBP7.663 million), delivering
an adjusted operating profit margin(1) of 62.2% (Sep 2022:
60.2%).
This Period has also seen an expansion in our range of
propositions. With the changing shape of the economic landscape and
the potential for investor fatigue from market volatility coupled
with rising interest rates, we launched a new risk rating within
our MPS range, the Money Market risk profile. Our new risk profile
offers the potential for clients to receive a return on cash that
tracks the Bank of England base rate more closely than most instant
access UK bank deposit accounts. While still early days, the
initial uptake has been encouraging as we continue to support IFAs
and their clients by providing products that meet their evolving
needs.
Our strategy to promote and support the growth of the MPS market
on platform through a wide-ranging IFA education programme will
continue. We also continue to increase our market penetration
through a broadened distribution base. As a minimum, we aim to
maintain our market share and continue to grow our distribution
footprint through meaningful strategic partnerships. In support of
this, we have been pleased to see our IFA firms continue to grow by
over 5.2% to 914 (Mar 2023: 869) over this Period. We look forward
to seeing these close relationships continue to develop in the
coming months as intensive activity continues to further promote
the Tatton service.
As we look ahead, we will keep the needs of the IFA at the heart
of our business as this remains central to all we do. This year we
welcomed the launch of Consumer Duty regulation and we continue to
help and assist IFAs in meeting the rising regulatory bar by
continuing to build and strengthen long-term partnerships. We aim
to deliver a consistent high level of service, investment
performance and IFA support. Consequently, we were delighted to be
recognised as leaders in our field for a sixth year running by
Moneyfacts, this year winning both the "Best Investment Service"
award for the second consecutive year and also this year the "Best
Ethical Fund Manager" - voted for by IFAs across the UK.
As we head towards the end of our GBP15 billion three-year
strategic growth target by the end of March 2024, we have broadly
delivered the target with six months remaining. The business has
made strong progress over this Period and we look forward to making
further progress in the coming years. Setting targets keeps the
Group focused and has served the Group well as we have consistently
met our goals. It has taken Tatton ten years to grow to GBP15
billion and we intend to set a new ambitious AUM/AUI(1) target
following the end of this financial year, March 2024. To do this,
we will give careful thought to the stability of the market
environment at that time, but more importantly, taking into
consideration our leading position in the growing and maturing MPS
market, the strength of our brand and the quality of the Tatton
proposition.
Paradigm
Paradigm has delivered a resilient performance in the Period,
delivering revenue of GBP3.059 million (Sep 2022: GBP3.198 million)
and adjusted operating profit(1) of GBP0.959 million (Sep 2022:
GBP1.352 million). Paradigm Mortgages increased the number of
mortgage firms utilising the services to 1,798 (Mar 2023: 1,751)
and Paradigm Consulting increased its members to 437 (Mar 2023:
431).
Paradigm Consulting continues to perform in line with our
expectations and Paradigm Mortgages has continued to deliver a
strong volume of completions in a challenging economic climate,
where lenders are predicting a gross market of c.GBP220 billion in
2023, c.30% below 2022 volumes of GBP320 billion. Intermediary
channel share, as opposed to mortgages sold direct by banks,
continued to grow, reaching c.85% of all new sales and record
product transfer maturities despite significantly reduced
residential purchases. New mortgage and remortgage activity helped
Paradigm Mortgages participate in completions totalling GBP6.9
billion (Sep 2022: GBP7.3 billion), a 5.5% reduction, which
compares well with the total market and demonstrates the resilience
of the Paradigm business.
The ongoing cost of living issues, driven by the economic
climate and stubborn inflationary pressures, have negatively
impacted mortgage affordability and confidence of both sellers and
buyers. As a consequence, mortgage intermediaries have focused on
maturities (Product Transfers) which, for the first time on record,
are likely to exceed the value of gross mortgages. The impact of
rising interest rates has also had a significant impact on both the
supply and confidence in both the residential and buy to let
mortgage market throughout 2023, and the nature and distribution of
our completions this Period has reflected the wider market and
shifted towards this lower margin product mix.
Looking forward, CACI, the retail finance benchmarking
specialist, confirms that there are c.GBP176 billion of maturities
in the second half of the calendar year 2023, with record peaks
expected in both November and December. These product transfer
opportunities, combined with a more stable but subdued house
purchase market, improving consumer confidence and greater
affordability, suggests a similar volume and mix of completions for
the second half of our financial year.
There continues to be underlying demand for home ownership in
the UK, albeit lower levels of new build activity means stock
remains stubbornly low. However, on a point of optimism, subdued
house prices and wage increases/inflation have led to a fall of up
to 10% in the house price to income ratio, which has led to greater
affordability in both consumer and lender outlook.
Lenders are now delivering record levels of choice of available
products and rates continue to fall. In addition, with house price
falls stabilising, we believe that, once inflation is seen to be
under control and rates begin to fall further, pent up purchase
activity will once again provide a strong mortgage market.
Separately disclosed items
Share-based payment charges, amortisation of intangible assets
relating to acquisitions and joint ventures, and exceptional items
are reported separately to give better clarity of the underlying
performance of the Group. The alternative performance measures
("APMs") are consistent with how the business performance is
planned and presented within the internal reporting to the Board.
Some of these measures are also used for the purpose of setting
remuneration targets.
Balance sheet
The Group's balance sheet remains healthy, with net assets at 30
September 2023 totalling GBP40.3 million (Sep 2022: GBP35.7
million) reflecting the continued growth and profitability of the
Group.
Cash resources
Cash generated from operations before exceptional costs was
GBP8.3 million (Sep 2022: GBP7.3 million) and was 93% of adjusted
operating profit(1) . The Group remains debt free, with closing net
cash at the end of the Period of GBP24.2 million (Mar 2023: GBP26.5
million). The cash resources are after the purchase of own shares
of GBP2.6m, the payment of corporation tax of GBP2.2 million and
dividend payments of GBP6.0 million relating to the final dividend
for the year ended 31 March 2023.
Issue of new shares
In the Period, the Group issued 455,677 new shares, which were
issued to satisfy the exercise of options related to the Enterprise
Management Incentive ("EMI") and Company's Save As You Earn
("SAYE") employee share option schemes.
Dividend proposal and capital adequacy
In this interim period, the Board recommends an increase in the
interim dividend to 8.0p (Sep 2022: 4.5p), an increase of 77.8%. A
larger element of this year's total dividend has been brought
forward to the interim dividend and reflects the confidence of the
Board in the Group's financial performance, high levels of cash and
liquidity, and headroom over our regulatory capital requirement.
Our long-held progressive dividend policy of paying c.70% of annual
adjusted diluted earnings per share remains unchanged.
The interim dividend of 8.0p per share, totalling GBP4.8
million, will be paid on 8 December 2023 to shareholders on the
register at close of business on 24 November 2023 and will have an
ex-dividend date of 23 November 2023. In accordance with
International Financial Reporting Standards ("IFRSs"), the interim
dividend has not been included as a liability in this interim
statement.
Business risk
The Board identified principal risks and uncertainties which may
have a material impact on the Group's performance in the Group's
2023 Annual Report and Accounts (pages 32 and 33), and believes
that the nature of these risks remains largely unchanged at the
half year. The Board will continue to monitor and manage identified
principal risks throughout the second half of the year.
Post balance sheet events
There have been no post balance sheet events.
Going concern
As stated in note 2.2 of these condensed financial statements,
the Directors are satisfied that the Group has sufficient resources
to continue in operation for the foreseeable future, a period not
less than twelve months from the date of this report. Accordingly,
they continue to adopt the going concern basis in preparing these
condensed financial statements.
Summary and outlook
The Group has delivered a solid first half result, delivering
against our strategic objectives and maintaining strong organic
growth of revenue and profits. While volatile markets continued to
remain a drag on asset growth at the end of this Period, our
AUM/AUI(1) still reached GBP14.8 billion and we are pleased with
the overall performance of the Group.
Net inflows remained very strong in the first six months and we
remain focused on continuing to deliver similar levels of flows but
remain mindful of the economic environment. However, we expect to
exceed our GBP15 billion "Roadmap to Growth" strategy by March 2024
and Paradigm should continue to perform in line with the first half
of the year.
In summary, we look forward to making further progress over the
rest of the year, while remaining acutely aware of the continuing
macroeconomic turbulence and market volatility. The Board remains
confident in the future prospects of the Group.
(1) Alternative performance measures are detailed in note 17
CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
For the six months ended 30 September 2023
Unaudited Unaudited
six months six months Audited
ended ended year ended
30-Sep 30-Sep 31-Mar
2023 2022 2023
Note (GBP'000) (GBP'000) (GBP'000)
Revenue 17,506 15,934 32,327
Share of profit from joint
venture 257 - 160
Administrative expenses (10,030) (9,006) (15,877)
----------------------------------------- ----- ------------ ------------ -------------
Operating profit 7,733 6,928 16,610
----------------------------------------- ----- ------------ ------------ -------------
Share-based payment costs 4 829 495 1,511
Amortisation of acquisition-related
intangibles 4 310 207 534
Gains arising on changes in
fair value of contingent consideration 4 - - (2,651)
Exceptional items 4 - 352 398
----------------------------------------- ----- ------------ ------------ -------------
Adjusted operating profit (before
separately disclosed items)(1) 8,872 7,982 16,402
----------------------------------------- ----- ------------ ------------ -------------
Finance costs (40) (304) (614)
----------------------------------------- ----- ------------ ------------ -------------
Profit before tax 7,693 6,624 15,996
----------------------------------------- ----- ------------ ------------ -------------
Taxation charge 5 (2,302) (1,291) (2,623)
----------------------------------------- ----- ------------ ------------ -------------
Profit attributable to shareholders 5,391 5,333 13,373
----------------------------------------- ----- ------------ ------------ -------------
Earnings per share - Basic 6 8.97p 9.01p 22.43p
Earnings per share - Diluted 6 8.66p 8.72p 21.70p
Adjusted earnings per share
- Basic(2) 6 11.08p 10.43p 21.72p
Adjusted earnings per share
- Diluted(2) 6 10.52p 9.89p 20.61p
----------------------------------------- ----- ------------ ------------ -------------
(1) Adjusted for exceptional items, share-based payment charges
and amortisation of acquired intangibles. See note 17.
(2) Adjusted for exceptional items, share-based payment charges,
amortisation of acquired intangibles, the unwinding of discount
on deferred consideration and the tax thereon. The dilutive
shares for this measure assumes that all contingently issuable
shares will fully vest. See note 17.
There were no other recognised gains or losses other than those
recorded above in the current or prior period and therefore a
statement of other comprehensive income has not been presented.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2023
Unaudited Unaudited
six months six months Audited
ended ended year ended
31-Mar
30-Sep 2023 30-Sep 2022 2023
Note (GBP'000) (GBP'000) (GBP'000)
Non-current assets
Investment in joint ventures 8 6,820 6,996 6,762
Goodwill 7 9,337 9,337 9,337
Intangible assets 9 3,405 3,831 3,615
Property, plant and equipment 10 328 593 454
Deferred tax assets 1,541 806 1,258
Other receivables 11 188 - -
------------------------------- ----- ------------- ------------- ------------
Total non-current assets 21,619 21,563 21,426
------------------------------- ----- ------------- ------------- ------------
Current assets
Trade and other receivables 11 4,078 3,902 3,782
Financial assets at fair
value through profit or loss 13 175 122 123
Corporation tax 570 941 121
Cash and cash equivalents 24,222 21,622 26,494
------------------------------- ----- ------------- ------------- ------------
Total current assets 29,045 26,587 30,520
------------------------------- ----- ------------- ------------- ------------
Total assets 50,664 48,150 51,946
------------------------------- ----- ------------- ------------- ------------
Current liabilities
Trade and other payables 12 (8,013) (6,633) (7,911)
------------------------------- ----- ------------- ------------- ------------
Total current liabilities (8,013) (6,633) (7,911)
------------------------------- ----- ------------- ------------- ------------
Non-current liabilities
Other payables 12 (2,315) (5,851) (2,254)
------------------------------- ----- ------------- ------------- ------------
Total non-current liabilities (2,315) (5,851) (2,254)
------------------------------- ----- ------------- ------------- ------------
Total liabilities (10,328) (12,484) (10,165)
------------------------------- ----- ------------- ------------- ------------
Net assets 40,336 35,666 41,781
------------------------------- ----- ------------- ------------- ------------
Equity attributable to equity
holders of the entity
Share capital 12,102 12,006 12,011
Share premium account 15,487 15,219 15,259
Own shares (2,567) - -
Other reserve 2,041 2,041 2,041
Merger reserve (28,968) (28,968) (28,968)
Joint venture reserve 37 - (21)
Retained earnings 42,204 35,368 41,459
------------------------------- ----- ------------- ------------- ------------
Total equity 40,336 35,666 41,781
------------------------------- ----- ------------- ------------- ------------
The financial statements were approved by the Board of Directors
on 15 November 2023 and were signed on its behalf by:
Paul Edwards
Director
Company registration number: 10634323
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 September 2023
Joint
Share Share Other Merger venture Retained Total
capital premium Own shares reserve reserve reserve earnings equity
(GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000)
At 1 April
2022 11,783 11,632 - 2,041 (28,968) - 34,556 31,044
--------------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Profit and
total
comprehensive
income - - - - - - 5,333 5,333
Dividends - - - - - - (5,012) (5,012)
Share-based
payments - - - - - - 658 658
Tax on
share-based
payments - - - - - - (167) (167)
Issue of share
capital on
exercise
of employee
share
options 47 77 (28) - - - - 96
Own shares
utilised
on exercise
of
options - - 28 - - - - 28
Issue of share
capital on
acquisition
of a joint
venture 176 3,510 - - - - - 3,686
--------------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
At 30
September
2022 12,006 15,219 - 2,041 (28,968) - 35,368 35,666
--------------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Profit and
total
comprehensive
income - - - - - 39 8,001 8,040
Dividends - - - - - - (2,702) (2,702)
Share-based
payments - - - - - - 649 649
Tax on
share-based
payments - - - - - - 83 83
Issue of share
capital on
exercise
of employee
share
options 5 40 - - - - - 45
Dividends
received
from joint
venture - - - - - (60) 60 -
--------------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
At 31 March
2023 12,011 15,259 - 2,041 (28,968) (21) 41,459 41,781
--------------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Profit and
total
comprehensive
income - - - - - 178 5,213 5,391
Dividends - - - - - - (6,006) (6,006)
Share-based
payments - - - - - - 521 521
Tax on
share-based
payments - - - - - - 897 897
Issue of share
capital on
exercise
of employee
share
options 91 228 - - - - - 319
Own shares
acquired
in the Period - - (2,567) - - - - (2,567)
Dividends
received
from joint
venture - - - - - (120) 120 -
--------------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
At 30
September
2023 12,102 15,487 (2,567) 2,041 (28,968) 37 42,204 40,336
--------------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 September 2023
Unaudited Unaudited
six months six months Audited
ended ended year ended
30-Sep 30-Sep 31-Mar
2023 2022 2023
Note (GBP'000) (GBP'000) (GBP'000)
Operating activities
Profit for the Period 5,391 5,333 13,373
Adjustments:
Income tax expense 5 2,302 1,291 2,623
Finance costs 40 304 614
Depreciation of property, plant
and equipment 10 192 190 384
Amortisation of intangible
assets 9 330 330 661
Share-based payment expense 4 829 495 1,420
Post-tax share of profits of
joint venture less amortisation
of related intangible assets (153) (40) (39)
Changes in fair value of contingent
consideration - - (2,651)
Changes in:
Trade and other receivables (619) (169) (146)
Trade and other payables (46) (751) (449)
------------------------------------- ----- ------------ ------------ ------------
Exceptional costs - 352 398
------------------------------------- ----- ------------ ------------ ------------
Cash generated from operations
before exceptional costs 8,266 7,335 16,188
------------------------------------- ----- ------------ ------------ ------------
Cash generated from operations 8,266 6,983 15,790
Income tax paid (2,160) (1,620) (2,559)
------------------------------------- ----- ------------ ------------ ------------
Net cash from operating activities 6,106 5,363 13,231
------------------------------------- ----- ------------ ------------ ------------
Investing activities
Payment for the acquisition
of subsidiary, net of cash
acquired - - (152)
Purchase of intangible assets (120) (114) (229)
Purchase of property, plant
and equipment (66) (34) (89)
Cost of underwriting shares - (152) -
------------------------------------- ----- ------------ ------------ ------------
Net cash used in investing
activities (186) (300) (470)
------------------------------------- ----- ------------ ------------ ------------
Financing activities
Interest received/(paid) 146 (92) (186)
Dividends paid (6,006) (5,012) (7,714)
Dividends received from joint
venture 120 - 60
Proceeds from the issue of
shares 249 87 132
Purchase of own shares (2,567) - -
Repayment of the lease liabilities (134) (134) (269)
------------------------------------- ----- ------------ ------------ ------------
Net cash used in financing
activities (8,192) (5,151) (7,977)
------------------------------------- ----- ------------ ------------ ------------
Net (decrease)/increase in
cash and cash equivalents (2,272) (88) 4,784
------------------------------------- ----- ------------ ------------ ------------
Cash and cash equivalents at
beginning of Period 26,494 21,710 21,710
------------------------------------- ----- ------------ ------------ ------------
Net cash and cash equivalents
at end of Period 24,222 21,622 26,494
------------------------------------- ----- ------------ ------------ ------------
The accompanying notes are an integral part of the interim
financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General Information
Tatton Asset Management plc (the "Company") is a public company
limited by shares. The address of the registered office is Paradigm
House, Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND, United
Kingdom. The registered number is 10634323.
The Group comprises the Company and its subsidiaries. The
Group's principal activities are discretionary fund management, the
provision of compliance and support services to IFAs, the provision
of mortgage adviser support services and the marketing and
promotion of multi-manager funds run by the companies under Tatton
Capital Limited.
The condensed consolidated interim financial statements for the
six months ended 30 September 2023 do not constitute statutory
accounts as defined under section 434 of the Companies Act 2006.
The Annual Report and Accounts (the "financial statements") for the
year ended 31 March 2023 were approved by the Board on 12 June 2023
and have been delivered to the Registrar of Companies. The auditor,
Deloitte LLP, reported on these financial statements; its report
was unqualified, did not contain an emphasis of matter paragraph
and did not contain statements under section 498 (2) or (3) of the
Companies Act 2006.
News updates, regulatory news and financial statements can be
viewed and downloaded from the Group's website,
www.tattonassetmanagement.com. Copies can also be requested from:
The Company Secretary, Tatton Asset Management plc, Paradigm House,
Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND.
2. Accounting Policies
The principal accounting policies applied in the presentation of
the interim financial statements are set out below.
2.1 Basis of preparation
The unaudited condensed consolidated interim financial
statements for the six months ended 30 September 2023 have been
prepared in accordance with IAS 34 'Interim Financial Reporting' as
adopted by the United Kingdom. The condensed consolidated interim
financial statements should be read in conjunction with the
financial statements for the year ended 31 March 2023, which have
been prepared in accordance with International Financial Reporting
Standards ("IFRSs") as adopted by the United Kingdom. The condensed
consolidated interim financial statements were approved for release
on 15 November 2023.
The condensed consolidated interim financial statements have
been prepared on a going concern basis and prepared on the
historical cost basis.
The condensed consolidated interim financial statements are
presented in sterling and have been rounded to the nearest thousand
(GBP'000). The functional currency of the Company is sterling as
this is the currency of the jurisdiction where all the Group's
sales are made.
The preparation of financial information in conformity with
IFRSs requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Although these estimates
are based on management's best knowledge of the amount, event or
actions, actual events may ultimately differ from those
estimates.
The key accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in the
consolidated financial statements.
The accounting policies adopted by the Group in these interim
financial statements are consistent with those applied by the Group
in its consolidated financial statements for the year ended 31
March 2023.
2.2 Going concern
These financial statements have been prepared on a going concern
basis. The Directors have prepared cash flow projections and are
satisfied that the Group has adequate resources to continue in
operational existence for the foreseeable future. To form the view
that the consolidated financial statements should continue to be
prepared on an ongoing basis in light of the current economic
uncertainty, the Directors have assessed the outlook of the Group
by considering various market scenarios and management actions.
This review has allowed management to assess the potential impact
on income, costs, cash flow and capital, and the ability to
implement effective management actions that may be taken to
mitigate the impact. Accordingly, the Directors continue to adopt
the going concern basis in preparing these financial
statements.
2.3 New accounting standards
There have been a number of amendments to standards which have
been adopted in the period, but these have not had a significant
impact on the Group's financial results or position.
A number of new standards are effective for annual periods
beginning after 1 April 2024 and earlier application is permitted;
however, the Group has not early adopted the new or amended
standards in preparing these condensed consolidated financial
statements.
None of the standards not yet effective are expected to have a
material impact on the Group's financial statements.
2.4 Operating segments
The Group comprises the following two operating segments, which
are defined by trading activity:
-- Tatton - investment management services.
-- Par adigm - the provision of compliance and support services
to IFAs and mortgage advisers.
The Board is considered to be the chief operating decision
maker.
2.5 Significant judgements, key assumptions and estimates
In the process of applying the Group's accounting policies,
which are described in the consolidated financial statements for
the year ended 31 March 2023, management have made judgements and
estimations about the future that have an effect on the amounts
recognised in the financial statements. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period. If
the revision affects both current and future periods, it is revised
in the period of the revision and in future periods. Changes for
accounting estimates would be accounted for prospectively under IAS
8.
The judgements, estimates and assumptions applied in the interim
financial statements, including the key sources of estimation
uncertainty, were the same as those applied in the Group's last
annual financial statements for the year ended 31 March 2023.
Management have reviewed the estimates for the satisfaction of
the performance obligations attached to certain awards in the
share-based payment schemes. It is currently estimated that 100% of
the options in the existing schemes will vest.
2.6 Alternative performance measures
In reporting financial information, the Group presents
alternative performance measures ("APMs") which are not defined or
specified under the requirements of IFRSs. The Group believes that
these APMs provide users with additional helpful information on the
performance of the business.
The APMs are consistent with how the business performance is
planned and reported within the internal management reporting to
the Board. Some of these measures are also used for the purpose of
setting remuneration targets. All the APMs used by the Group are
set out in note 17, including explanations of how they are
calculated and how they can be reconciled to a statutory measure
where relevant.
3. Segment Reporting
Information reported to the Board of Directors as the chief
operating decision maker ("CODM") for the purposes of resource
allocation and assessment of segmental performance is focused on
the type of revenue. The principal types of revenue are
discretionary fund management and the marketing and promotion of
the funds run by the companies under Tatton Capital Limited
("Tatton") and the provision of compliance and support services to
IFAs and mortgage advisers ("Paradigm").
The Group's reportable segments under IFRS 8 are therefore
Tatton, Paradigm, and "Central", which contains the operating
Group's central overhead costs. Centrally incurred overhead costs
are allocated to the Tatton and Paradigm divisions on a pro rata
basis as this is how information is presented to the Group's
CODM.
The principal activity of Tatton is that of discretionary fund
management of investments on platform and the provision of
investment wrap services. The principal activity of Paradigm is
that of provision of support services to IFAs and mortgage
advisers. For management purposes, the Group uses the same
measurement policies used in its financial statements.
The following is an analysis of the Group's revenue and results
by reportable segment:
Period ended 30 September Tatton Paradigm Central Group
2023 (GBP'000) (GBP'000) (GBP'000) (GBP'000)
Revenue 14,451 3,059 (4) 17,506
Share of post-tax
profit from joint
ventures 257 - - 257
Administrative expenses (6,032) (2,100) (1,898) (10,030)
------------------------------------- ----------- ----------- ----------- -----------
Operating profit/(loss) 8,676 959 (1,902) 7,733
------------------------------------- ----------- ----------- ----------- -----------
Share-based payment
costs - - 829 829
Amortisation of acquisition-related
intangibles 310 - - 310
Exceptional costs - - - -
------------------------------------- ----------- ----------- ----------- -----------
Adjusted operating
profit/(loss) (before
separately disclosed
items) (1) 8,986 959 (1,073) 8,872
------------------------------------- ----------- ----------- ----------- -----------
Finance costs 43 (1) (82) (40)
------------------------------------- ----------- ----------- ----------- -----------
Profit/(loss) before
tax 8,719 958 (1,984) 7,693
------------------------------------- ----------- ----------- ----------- -----------
Period ended 30 September Tatton Paradigm Central Group
2022 (GBP'000) (GBP'000) (GBP'000) (GBP'000)
Revenue 12,738 3,198 (2) 15,934
Administrative expenses (5,634) (1,846) (1,526) (9,006)
------------------------------------- ----------- ----------- ----------- -----------
Operating profit/(loss) 7,104 1,352 (1,528) 6,928
------------------------------------- ----------- ----------- ----------- -----------
Share-based payment
costs - - 495 495
Amortisation of acquisition-related
intangibles 207 - - 207
Exceptional costs 352 - - 352
------------------------------------- ----------- ----------- ----------- -----------
Adjusted operating
profit/(loss) (before
separately disclosed
items) (1) 7,663 1,352 (1,033) 7,982
------------------------------------- ----------- ----------- ----------- -----------
Finance costs (124) (1) (179) (304)
------------------------------------- ----------- ----------- ----------- -----------
Profit/(loss) before
tax 6,980 1,351 (1,707) 6,624
------------------------------------- ----------- ----------- ----------- -----------
Year ended 31 March Tatton Paradigm Central Group
2023 (GBP'000) (GBP'000) (GBP'000) (GBP'000)
Revenue 25,929 6,404 (6) 32,327
Share of post-tax
profit from joint
ventures 160 - - 160
Administrative expenses (8,540) (3,999) (3,338) (15,877)
------------------------------------- ----------- ----------- ----------- -----------
Operating profit/(loss) 17,549 2,405 (3,344) 16,610
------------------------------------- ----------- ----------- ----------- -----------
Share-based payment
costs - - 1,511 1,511
Amortisation of acquisition-related
intangibles 534 - - 534
Gain arising on changes
in fair value of
contingent consideration (2,651) - - (2,651)
Exceptional costs 398 - - 398
------------------------------------- ----------- ----------- ----------- -----------
Adjusted operating
profit/(loss) (before
separately disclosed
items) (1) 15,830 2,405 (1,833) 16,402
------------------------------------- ----------- ----------- ----------- -----------
Finance costs (182) - (432) (614)
------------------------------------- ----------- ----------- ----------- -----------
Profit/(loss) before
tax 17,367 2,405 (3,776) 15,996
------------------------------------- ----------- ----------- ----------- -----------
All turnover arose in the United Kingdom.
(1) Alternative performance measures are detailed in note 17
4. Separately Disclosed Items
Unaudited Unaudited Audited
six months six months year
ended ended ended
30-Sep 30-Sep 31-Mar
2023 2022 2023
(GBP'000) (GBP'000) (GBP'000)
Acquisition-related expenses - 352 398
------------------------------------- ------------ ------------ -----------
Total exceptional costs - 352 398
------------------------------------- ------------ ------------ -----------
Gain arising on changes
in the fair value of contingent
consideration - - (2,651)
Amortisation of acquisition-related
intangible assets 310 207 534
Share-based payment costs 829 495 1,511
------------------------------------- ------------ ------------ -----------
Total separately disclosed
costs 1,139 1,054 (208)
------------------------------------- ------------ ------------ -----------
Separately disclosed items shown separately on the face of the
Consolidated Statement of Total Comprehensive Income or included
within Administrative expenses reflect costs and income that do not
relate to the Group's normal business operations and that are
considered material individually, or in aggregate if of a similar
type, due to their size or frequency.
Amortisation of acquisition-related intangible assets
Amortisation of intangible assets relating to joint ventures is
GBP104,000 (2022: GBPnil). This includes the acquisition of
customer relationships and brands. Amortisation of other customer
relationships and brand intangible assets is GBP206,000 (2022:
GBP207,000).
Payments made for the introduction of customer relationships and
brands that are deemed to be intangible assets are capitalised and
amortised over their useful life, which has been assessed to be 10
years. This amortisation charge is recurring over the life of the
intangible asset, though has been excluded from the core business
operating profit since it is a significant non-cash item.
Underlying profit, being adjusted operating profit, represents
largely cash-based earnings and more directly relates to the
financial reporting period.
Share-based payment charges
Share-based payments is a recurring item, though the value will
change depending on the estimation of the satisfaction of
performance obligations attached to certain awards. It has been
excluded from the core business operating profit since it is a
significant non-cash item. Underlying profit, being adjusted
operating profit, represents largely cash-based earnings and more
directly relates to the financial reporting period.
Exceptional items
Acquisition-related expenses in the prior year relate to the
Group acquiring 50% of the share capital of 8AM Global Limited and
also relate to one-off costs incurred on the acquisition of the
Verbatim funds. These costs were treated as exceptional items.
5. Taxation
Unaudited Unaudited Audited
six months six months year
ended ended ended
30-Sep 30-Sep 31-Mar
2023 2022 2023
(GBP'000) (GBP'000) (GBP'000)
Current tax expense
Current tax on profits
for the Period 2,215 1,498 3,159
Share-based payment costs 139 (83) -
Adjustment for under-provision
in prior periods - - 14
-------------------------------- ------------ ------------ -----------
2,354 1,415 3,173
-------------------------------- ------------ ------------ -----------
Deferred tax expense
Share-based payment costs 83 (101) (371)
Origination and reversal
of temporary differences (78) (23) -
Adjustment in respect of
previous years - - (56)
Effect of changes in tax
rates (57) - (123)
-------------------------------- ------------ ------------ -----------
(52) (124) (550)
-------------------------------- ------------ ------------ -----------
Total tax expense 2,302 1,291 2,623
-------------------------------- ------------ ------------ -----------
The reasons for the difference between the actual tax charge for
the Period and the standard rate of corporation tax in the UK
applied to profit for the Period are as follows:
Unaudited Unaudited Audited
six months six months year
ended ended ended
30-Sep 30-Sep 31-Mar
2023 2022 2023
(GBP'000) (GBP'000) (GBP'000)
Profit before taxation 7,693 6,624 15,996
Tax at UK corporation tax
rate of 25% (2022: 19%) 1,923 1,259 3,039
Expenses not deductible
for tax purposes 44 49 93
Capital allowances in excess
of depreciation 22 42 3
Adjustments in respect
of previous years - - (41)
Share-based payments 370 (59) 184
Income not taxable - - (533)
Effect of changes in tax
rates (57) - (122)
------------------------------ ------------ ------------ -----------
Total tax expense 2,302 1,291 2,623
------------------------------ ------------ ------------ -----------
An increase in the UK corporation tax rate from 19% to 25%
became effective 1 April 2023 and has increased the Company's
current tax charge accordingly. The deferred tax asset at 30
September 2023 has been calculated based on these rates, reflecting
the expected timing of reversal of the related temporary
differences (31 March 2023: 25%).
6. Earnings per Share and Dividends
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares during the Period.
Number of shares
Unaudited Unaudited Audited
six months six months year
ended ended ended
30-Sep 30-Sep 31-Mar
Number of shares 2023 2022 2023
Basic
Weighted average number
of shares in issue 60,127,572 59,220,759 59,608,203
Effect of own shares held
by an EBT (60,761) - -
---------------------------------- ------------ ------------ -----------
60,066,811 59,220,759 59,608,203
---------------------------------- ------------ ------------ -----------
Diluted
Effect of weighted average
number of options outstanding
for the year 2,182,144 1,909,700 2,006,603
---------------------------------- ------------ ------------ -----------
Weighted average number
of shares in issue (diluted)(1) 62,248,955 61,130,459 61,614,806
---------------------------------- ------------ ------------ -----------
Adjusted diluted
Effect of full dilution
of employee share options
which are contingently
issuable or have future
attributable service costs 1,012,719 1,305,290 1,192,528
---------------------------------- ------------ ------------ -----------
Adjusted diluted weighted
average number of options
and shares for the year(2) 63,261,674 62,435,749 62,807,334
---------------------------------- ------------ ------------ -----------
(1) The weighted average number of shares is diluted due to
the effect of potentially dilutive contingent issuable shares
from share option schemes.
(2) The dilutive shares used for this measure differ from those
used for statutory dilutive earnings per share; the future
value of service costs attributable to employee share options
is ignored and contingently issuable shares for Long-Term
Incentive Plan ("LTIP") options are assumed to fully vest.
The Directors have selected this measure as it represents
the underlying effective dilution by offsetting the impact
to the calculation of basic shares of the purchase of shares
by the Employee Benefit Trust ("EBT") to satisfy options.
Own shares held by an EBT represents the Company's own shares
purchased and held by the EBT, shown at cost. During the Period,
the EBT was gifted 346,896 of the Company's own shares. These
shares were fully utilised during the Period to satisfy the
exercise of employees' EMI options. The EBT subsequently purchased
a further 513,800 of the Company's own shares which remain
unutilised at the Period end. In the year ended 31 March 2023, the
EBT purchased 139,500 of the Company's own shares, which were fully
utilised during that year to satisfy the exercise of employee share
options.
Unaudited Unaudited
six months six months Audited
ended ended year ended
30-Sep 2023 30-Sep 2022 31-Mar 2023
Earnings attributable to ordinary
shareholders
Basic and diluted profit for the
Period 5,391 5,333 13,373
Share-based payments - IFRS 2 option
charges 829 495 1,511
Amortisation of customer relationship
intangibles 310 207 534
Exceptional costs (note 4) - 352 398
Gain arising on changes in the
fair value of contingent consideration - - (2,651)
Unwinding of discount on deferred
consideration 100 - 228
Tax impact of adjustments 27 (213) (447)
----------------------------------------- ------------- ------------- -------------
Adjusted basic and diluted profits
for the Period and attributable
earnings 6,657 6,174 12,946
----------------------------------------- ------------- ------------- -------------
Earnings per share - basic (pence) 8.97 9.01 22.43
Earnings per share - diluted (pence) 8.66 8.72 21.70
Adjusted earnings per share - basic
(pence)(1) 11.08 10.43 21.72
Adjusted earnings per share - diluted
(pence)(1) 10.52 9.89 20.61
----------------------------------------- ------------- ------------- -------------
1. Alternative performance measures are detailed in note 17.
Dividends
The Directors consider the Group's capital structure and
dividend policy at least twice a year ahead of announcing results
and do so in the context of its ability to continue as a going
concern, to execute the strategy and to invest in opportunities to
grow the business and enhance shareholder value.
In August 2023, Tatton Asset Management plc paid the final
dividend related to the year ended 31 March 2023 of GBP6,006,000,
representing a payment of 10.0p per share.
In the year ended 31 March 2023, Tatton Asset Management plc
paid the final dividend related to the year ended 31 March 2022 of
GBP5,012,000, representing a payment of 8.5p per share.
In addition, the Company paid an interim dividend of
GBP2,904,000 (2022: GBP2,357,000) to its equity shareholders. This
represents a payment of 4.5p per share (2022: 4.0p per share).
7. Goodwill
Intangible
assets
(GBP'000)
-------------------------------------- -----------
Cost and carrying value at 31 March
2022, 30 September 2022,
31 March 2023 and 30 September 2023 9,337
-------------------------------------- -----------
Impairment loss and subsequent reversal
Goodwill is subject to an annual impairment review based on an
assessment of the recoverable amount from future trading. Where, in
the opinion of the Directors, the recoverable amount from future
trading does not support the carrying value of the goodwill
relating to a subsidiary company then an impairment charge is made.
Such impairment is charged to the Consolidated Statement of Total
Comprehensive Income.
Goodwill impairment testing
For the purpose of impairment testing, goodwill is allocated to
the Group's operating companies, which represents the lowest level
within the Group at which the goodwill is monitored for internal
management accounts purposes.
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash- generating units ("CGUs") or group of
units that are expected to benefit from that business combination.
The Directors test goodwill annually for impairment, or more
frequently if there are indicators that goodwill might be impaired.
The Directors have considered the carrying value of goodwill at 30
September 2023 and do not consider that it is impaired.
Growth rates
The value in use is calculated from cash flow projections based
on the Group's forecasts for the year ended 31 March 2024, which
are extrapolated for a further four years. The Group's latest
financial forecasts, which cover a three-year period, are reviewed
by the Board.
Discount rates
The pre-tax discount rate used to calculate value is 11.2%
(2022: 11.5%). The discount rate is derived from a benchmark
calculated from a number of comparable businesses.
Cash flow assumptions
The key assumptions used for the value in use calculations are
those regarding discount rate, growth rates and expected changes in
margins. Changes in prices and direct costs are based on past
experience and expectations of future changes in the market. The
growth rate used in the calculation reflects the average growth
rate experienced by the Group for the industry.
From the assessment performed, there are no reasonable
sensitivities that result in the recoverable amount being equal to
the carrying value of the goodwill attributed to the CGU.
8. Investment in Joint Ventures
Unaudited Unaudited
six months six months Audited
ended ended year ended
30-Sep 30-Sep 31-Mar
2023 2022 2023
(GBP'000) (GBP'000) (GBP'000)
Opening Investment 6,762 - -
Additions in the Period - 6,956 6,765
Profit for the Period after tax 257 40 160
Amortisation of intangible assets
relating to joint ventures (103) - (121)
Deferred tax credit on amortisation
of intangible assets relating to
joint ventures 24 - 18
Distribution of profits (120) - (60)
------------------------------------- ------------ ------------ ------------
Closing Investment 6,820 6,996 6,762
------------------------------------- ------------ ------------ ------------
Additions in the prior period relates to the acquisition of 50%
of the share capital of 8AM Global Limited for an initial
consideration of GBP3,838,000 followed by discounted deferred
consideration of GBP3,118,000 (undiscounted deferred consideration
GBP3,501,000) based on certain performance measures. The initial
consideration was paid by way of shares in Tatton Asset
Management.
9. Intangibles
Computer Client
software relationships Brand Total
(GBP'000) (GBP'000) (GBP'000) (GBP'000)
Cost
Balance at 1 April 2022 1,006 4,034 98 5,138
Additions 114 - - 114
-------------------------- ----------- --------------- ----------- -----------
Balance at 30 September
2022 1,120 4,034 98 5,252
Additions 115 - - 115
-------------------------- ----------- --------------- ----------- -----------
Balance at 31 March 2023 1,235 4,034 98 5,367
Additions 120 - - 120
-------------------------- ----------- --------------- ----------- -----------
Balance at 30 September
2023 1,355 4,034 98 5,487
-------------------------- ----------- --------------- ----------- -----------
Accumulated amortisation
and impairment
Balance at 1 April 2022 (645) (441) (5) (1,091)
Charge for the Period (123) (202) (5) (330)
-------------------------- ----------- --------------- ----------- -----------
Balance at 30 September
2022 (768) (643) (10) (1,421)
Charge for the Period (124) (202) (5) (331)
-------------------------- ----------- --------------- ----------- -----------
Balance at 31 March 2023 (892) (845) (15) (1,752)
Charge for the Period (123) (202) (5) (330)
-------------------------- ----------- --------------- ----------- -----------
Balance at 30 September
2023 (1,015) (1,047) (20) (2,082)
-------------------------- ----------- --------------- ----------- -----------
Carrying amount
At 1 April 2022 361 3,593 93 4,047
At 30 September 2022 352 3,391 88 3,831
At 31 March 2023 343 3,189 83 3,615
-------------------------- ----------- --------------- ----------- -----------
At 30 September 2023 340 2,987 78 3,405
-------------------------- ----------- --------------- ----------- -----------
All amortisation charges on intangible assets are included
within Administrative expenses in the Consolidated Statement of
Total Comprehensive Income.
10. Property, Plant and Equipment
Computer,
office
equipment
and Fixtures
motor and Right-of-use
vehicles fittings assets Total
(GBP'000) (GBP'000) (GBP'000) (GBP'000)
Cost
Balance at 1 April
2022 345 477 991 1,813
Additions 31 3 - 34
-------------------------- ----------- ----------- ------------- -----------
Balance at 30 September
2022 376 480 991 1,847
Additions 55 - - 55
Disposals (77) - - (77)
-------------------------- ----------- ----------- ------------- -----------
Balance at 31 March
2023 354 480 991 1,825
Additions 58 8 - 66
-------------------------- ----------- ----------- ------------- -----------
Balance at 30 September
2023 412 488 991 1,891
-------------------------- ----------- ----------- ------------- -----------
Accumulated depreciation
and impairment
Balance at 1 April
2022 (239) (302) (523) (1,064)
Charge for the
Period (34) (48) (108) (190)
-------------------------- ----------- ----------- ------------- -----------
Balance at 30 September
2022 (273) (350) (631) (1,254)
Charge for the
Period (38) (48) (108) (194)
Disposals 77 - - 77
-------------------------- ----------- ----------- ------------- -----------
Balance at 31 March
2023 (234) (398) (739) (1,371)
Charge for the
Period (40) (44) (108) (192)
-------------------------- ----------- ----------- ------------- -----------
Balance at 30 September
2023 (274) (442) (847) (1,563)
-------------------------- ----------- ----------- ------------- -----------
Carrying amount
At 1 April 2022 106 175 468 749
At 30 September
2022 103 130 360 593
At 31 March 2023 120 82 252 454
-------------------------- ----------- ----------- ------------- -----------
At 30 September
2023 138 46 144 328
-------------------------- ----------- ----------- ------------- -----------
All depreciation charges are included within Administrative
expenses in the Consolidated Statement of Total Comprehensive
Income.
The Group leases buildings, IT equipment and a car. The Group
has applied the practical expedient for low value assets and so has
not recognised IT equipment within right-of-use assets.
The average lease term is five years. No leases have expired in
the current financial Period.
Right-of-use assets
Unaudited Unaudited Audited
six months six months year
ended ended ended
30-Sep 30-Sep 31-Mar
2023 2022 2023
(GBP'000) (GBP'000) (GBP'000)
Amounts recognised in profit
and loss
Depreciation on right-of-use
assets (108) (108) (216)
Interest expense on lease
liabilities (3) (7) (14)
Expense relating to short-term
leases (33) (31) (59)
Expense relating to low
value assets (1) (1) -
-------------------------------- ------------ ------------ -----------
Total (145) (147) (289)
-------------------------------- ------------ ------------ -----------
At 30 September 2023, the Group is committed to GBP66,000 for
short-term leases. The total cash outflow for leases amounts to
GBP168,000.
11. Trade and Other Receivables
Unaudited Unaudited Audited
six months six months year
ended ended ended
30-Sep 30-Sep 31-Mar
2023 2022 2023
(GBP'000) (GBP'000) (GBP'000)
Trade receivables 420 522 278
Prepayments and accrued
income 3,597 3,348 3,457
Amounts due from related
parties 2 - -
Other receivables 247 32 47
--------------------------- ------------ ------------ -----------
4,266 3,902 3,782
--------------------------- ------------ ------------ -----------
Less non-current portion:
Other receivables (188) - -
--------------------------- ------------ ------------ -----------
Total non-current trade
and other receivables (188) - -
--------------------------- ------------ ------------ -----------
Total current trade and
other receivables 4,078 3,902 3,782
--------------------------- ------------ ------------ -----------
The carrying value of trade receivables is considered a fair
approximation of their fair value. The Group applies the IFRS 9
simplified approach to measuring expected credit losses ("ECLs")
for trade receivables at an amount equal to lifetime ECLs. In line
with the Group's historical experience, and after consideration of
current credit exposures, the Group does not expect to incur any
credit losses and has not recognised any ECLs in the current year
(2022: GBPnil).
The amounts due from related parties are net of provisions. The
Group holds no provisions (2022: GBP1,311,000).
Trade receivable amounts are all held in sterling.
12. Trade and Other Payables
Unaudited Unaudited Audited
six months six months year
ended ended ended
30-Sep 30-Sep 31-Mar
2023 2022 2023
(GBP'000) (GBP'000) (GBP'000)
Trade payables 720 913 397
Amounts due to related
parties - 234 234
Accruals 3,434 2,521 3,301
Deferred income 121 155 138
Contingent consideration 3,089 5,722 2,989
Other payables 2,964 2,939 3,106
--------------------------- ------------ ------------ -----------
Total 10,328 12,484 10,165
--------------------------- ------------ ------------ -----------
Less non-current portion:
Contingent consideration (2,315) (5,722) (2,209)
Other payables - (129) (45)
--------------------------- ------------ ------------ -----------
Total non-current trade
and other payables (2,315) (5,851) (2,254)
--------------------------- ------------ ------------ -----------
Total current trade and
other payables 8,013 6,633 7,911
--------------------------- ------------ ------------ -----------
The carrying values of trade payables, amounts due to related
parties, accruals and deferred income are considered reasonable
approximations of fair value. Trade payable amounts are all held in
sterling.
13. Financial Instruments
The Group finances its operations through a combination of cash
resources and other borrowings. Short-term flexibility could be
satisfied if required by overdraft facilities in Paradigm Partners
Limited which are repayable on demand.
Fair value estimation
IFRS 7 requires disclosure of fair value measurements of
financial instruments by level of the following fair value
measurement hierarchy:
-- Quoted prices (unadjusted) in active markets for identical
assets or liabilities (level 1).
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (level
2).
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level
3).
All financial assets except for financial investments are
categorised as Loans and receivables and are classified as level 1.
Financial investments are categorised as Financial assets at fair
value through profit or loss and are classified as level 1 and the
fair value is determined directly by reference to published prices
in an active market.
Financial assets at fair value through profit or loss (level
1)
Unaudited Unaudited Audited
six months six months year
ended ended ended
30-Sep 30-Sep 31-Mar
2023 2022 2023
(GBP'000) (GBP'000) (GBP'000)
--------------------------- ------------ ------------ -----------
Financial investments in
regulated funds or model
portfolios 175 122 123
--------------------------- ------------ ------------ -----------
All financial liabilities except for contingent consideration
are categorised as Financial liabilities measured at amortised cost
and are also classified as level 1. The only financial liabilities
measured subsequently at fair value on level 3 fair value
measurement represent contingent consideration relating to a
business combination.
Financial liabilities at fair value through profit or loss
(level 3)
Contingent consideration GBP'000
Balance at 1 April 2022 2,486
Recognised on acquisition 3,118
Changes in the fair value of contingent
consideration 118
----------------------------------------- --------
Balance at 30 September 2022 5,722
Recognised on acquisition (192)
Unwinding of discount rate 228
Changes in the fair value of contingent
consideration (2,769)
----------------------------------------- --------
Balance at 31 March 2023 2,989
Unwinding of discount rate 100
----------------------------------------- --------
Balance at 30 September 2023 3,089
----------------------------------------- --------
14. Equity
Number
Authorised, called up and fully paid
At 1 April 2022 58,914,887
Issue of share capital on exercise of
employee share options 237,962
Issue of share capital as payment for
an acquisition 877,737
--------------------------------------- -----------
At 30 September 2022 60,030,586
Issue of share capital on exercise of
employee share options 25,136
--------------------------------------- -----------
At 31 March 2023 60,055,722
Issue of share capital on exercise of
employee share options 455,677
--------------------------------------- -----------
At 30 September 2023 60,511,399
--------------------------------------- -----------
15. Share- Based Payments
During the Period, a number of share-based payment schemes and
share options schemes have been utilised by the Company.
(A) Schemes
(I) Tatton Asset Management plc EMI scheme ("TAM EMI
scheme")
On 7 July 2017, the Group launched an EMI share option scheme
relating to shares in Tatton Asset Management plc to enable senior
management to participate in the equity of the Company. 3,022,735
options with a weighted average exercise price of GBP1.89 were
granted, exercisable in July 2020. There have been nil (2022: nil)
options exercised during the Period from this scheme.
The scheme was extended on 8 August 2018, 1 August 2019, 28 July
2020, 15 July 2021, 25 July 2022 and 24 July 2023, with 1,709,498,
193,000, 1,000,001, 279,858, 274,268 and 204,523 zero cost options
granted in each respective year. These options are exercisable on
the third anniversary of the grant date.
The options granted in 2018 vested and became exercisable in
August 2021. There have been 50,000 (2022: 50,000) options
exercised during the Period from this scheme. 168,193 of these
options lapsed in 2021.
The options granted in 2019 vested and became exercisable in
August 2022. There have been no options exercised during the Period
from this scheme (2022: 139,500).
The options granted in 2020 vested and became exercisable in
July 2023. There have been 296,896 options exercised during the
Period from this scheme. 27,919 of these options lapsed in the
Period.
The options granted in 2021, 2022 and 2023 vest in July 2024,
July 2025 and July 2026 respectively provided certain performance
conditions and targets, set prior to grant, have been met. If the
performance conditions are not met, the options lapse.
A total of 2,627,186 options remain outstanding at 30 September
2023, 1,878,861 of which are currently exercisable. 6,961 options
were forfeited in the Period (2022: 4,250). Within the accounts of
the Company, the fair value at grant date is estimated using the
appropriate models, including both the Black-Scholes and Monte
Carlo modelling methodologies.
Number
of share Weighted
options average
granted price
(number) (GBP)
Outstanding at 1 April 2022 2,726,026 0.60
Granted during the Period 274,268 -
Forfeited during the Period (4,250) -
Lapsed during the Period - -
Exercised during the Period (189,500) -
---------------------------------- ---------- ---------
Outstanding at 30 September 2022 2,806,544 0.59
---------------------------------- ---------- ---------
Exercisable at 30 September 2022 1,256,668 1.31
---------------------------------- ---------- ---------
Outstanding at 1 October 2022 2,806,544 0.59
Granted during the Period - -
Forfeited during the Period (2,105) -
Exercised during the Period - -
Lapsed during the Period - -
---------------------------------- ---------- ---------
Outstanding at 31 March 2023 2,804,439 0.59
---------------------------------- ---------- ---------
Exercisable at 31 March 2023 1,256,668 1.31
---------------------------------- ---------- ---------
Outstanding at 1 April 2023 2,804,439 0.59
Granted during the Period 204,523 -
Forfeited during the Period (6,961) -
Lapsed during the Period (27,919) -
Exercised during the Period (346,896) -
---------------------------------- ---------- ---------
Outstanding at 30 September 2023 2,627,186 0.63
---------------------------------- ---------- ---------
Exercisable at 30 September 2023 1,878,861 0.88
---------------------------------- ---------- ---------
(II) Tatton Asset Management plc Sharesave scheme ("TAM
Sharesave scheme")
On 7 July 2017, 5 July 2018, 3 July 2019, 6 July 2020, 2 August
2021, 4 August 2022 and 25 August 2023, the Group launched all
employee Sharesave schemes for options over shares in Tatton Asset
Management plc. Employees are able to save between GBP10 and GBP500
per month over the three-year life of each scheme, at which point
they each have the option to either acquire shares in the Company
or receive the cash saved.
The 2020 TAM Sharesave scheme vested in August 2023 and 108,781
shares options became exercisable. Over the life of the 2021, 2022
and 2023 TAM Sharesave schemes it is estimated that, based on
current savings rates, 39,160, 52,387 and 93,850 share options
respectively will be exercisable. The exercise price for these
schemes is shown below.
During the Period, 108,781 (2022: 48,462) options have been
exercised and 2,656 (2022: 2,494) options have been forfeited.
Within the accounts of the Company, the fair value at grant date
is estimated using the Black-Scholes methodology for 100% of the
options. Share price volatility has been estimated using the
historical share price volatility of the Company, the expected
volatility of the Company's share price over the life of the
options and the average volatility applying to a comparable group
of listed companies. Key valuation assumptions and the costs
recognised in the accounts during the Period are noted in (B) and
(C) respectively.
Number
of share Weighted
options average
granted price
(number) (GBP)
Outstanding at 1 April 2022 140,077 2.14
Granted during the Period 38,185 2.52
Forfeited during the Period (2,494) 3.03
Exercised during the Period (48,462) 1.79
---------------------------------- ---------- ---------
Outstanding at 30 September 2022 127,306 2.37
---------------------------------- ---------- ---------
Exercisable at 30 September 2022 25,137 1.79
---------------------------------- ---------- ---------
Outstanding at 1 October 2022 127,306 2.37
Granted during the Period 34,512 2.81
Forfeited during the Period (4,895) 2.55
Exercised during the Period (25,137) 1.79
---------------------------------- ---------- ---------
Outstanding at 31 March 2023 131,786 2.57
---------------------------------- ---------- ---------
Exercisable at 31 March 2023 - -
---------------------------------- ---------- ---------
Outstanding at 1 April 2023 131,786 2.57
Granted during the Period 27,131 2.91
Forfeited during the Period (2,656) 3.07
Exercised during the Period (108,781) 2.29
---------------------------------- ---------- ---------
Outstanding at 30 September 2023 47,480 3.47
---------------------------------- ---------- ---------
Exercisable at 30 September 2023 - -
---------------------------------- ---------- ---------
(B) Valuation assumptions
Assumptions used in the option valuation models to determine the
fair value of options at the date of grant were as follows:
EMI scheme Sharesave scheme
2023 2022 2021 2020 2023 2022 2021 2020
Share price at grant
(GBP) 4.74 4.03 4.60 2.84 4.91 4.25 4.80 2.85
Exercise price (GBP) - - - - 3.89 3.26 3.60 2.29
Expected volatility
(%) 35.24 34.05 33.76 34.80 35.13 34.05 33.76 34.80
Expected life (years) 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Risk free rate (%) 4.64 1.71 0.24 (0.14) 4.74 1.71 0.12 (0.57)
Expected dividend
yield (%) 3.06 3.11 2.39 3.38 2.95 3.11 2.39 3.38
----------------------- ------ ------ ------ ------- ------ ------ ------ -------
(C) IFRS 2 share-based option costs
Unaudited Unaudited Audited
six months six months year
ended ended ended
30-Sep 30-Sep 31-Mar
2023 2022 2023
(GBP'000) (GBP'000) (GBP'000)
TAM EMI scheme 797 463 1,446
TAM Sharesave scheme 32 32 65
---------------------- ------------ ------------ -----------
829 495 1,511
---------------------- ------------ ------------ -----------
16. Related Party Transactions
There have been no related party transactions that have taken
place during the Period that have materially affected the financial
position or the performance of the Group. There were also no
changes to related party transactions from those disclosed in the
2023 Annual Report and Accounts that could have a material effect
on the financial position or the performance of the Group.
Transactions between the Company and its subsidiaries have been
eliminated on consolidation and are not disclosed. There were no
other transactions with related parties which were not part of the
Group during the Period, with the exception of remuneration paid to
key management personnel.
17. Alternative Performance Measures
Income statement measures
APM Closest Reconciling Definition and
equivalent items to purpose
measure their statutory
measure
------------------- ------------ ------------------------ ----------------------
Adjusted operating Operating Exceptional An important measure
profit profit items, share-based where exceptional
before separately payments items distort
disclosed and amortisation the understanding
items of acquisition-related of the operating
intangibles. performance of
See note the business.
4. Allows comparability
between periods.
See also note
2.6.
------------------- ------------ ------------------------ ----------------------
Adjusted operating Operating Exceptional An important measure
profit profit items, share-based where exceptional
margin before payments items distort
separately and amortisation the understanding
disclosed of acquisition-related of the operating
items intangibles. performance of
See note the business.
4. Allows comparability
between periods.
See also note
2.6.
------------------- ------------ ------------------------ ----------------------
Adjusted profit Profit Exceptional An important measure
before tax before items, share-based where exceptional
before separately tax payments items distort
disclosed and amortisation the understanding
items of acquisition-related of the operating
intangibles. performance of
See note the business.
4. Allows comparability
between periods.
See also note
2.6.
------------------- ------------ ------------------------ ----------------------
Adjusted earnings Earnings Exceptional An important measure
per per share items, share-based where exceptional
share - basic - basic payments, items distort
amortisation the understanding
of acquisition-related of the operating
intangibles performance of
and the unwinding the business.
of discount Allows comparability
on deferred between periods.
consideration. See also note
See note 2.6.
4.
------------------- ------------ ------------------------ ----------------------
Adjusted earnings Earnings Exceptional An important measure
per per share items, share-based where exceptional
share - diluted - diluted payments items distort
and amortisation the understanding
of acquisition-related of the operating
intangibles, performance of
the unwinding the business.
of discount Allows comparability
on deferred between periods.
consideration See also note
and the tax 2.6.
thereon.
The dilutive
shares for
this measure
assume that
all contingently
issuable
shares will
fully vest.
See note
6.
------------------- ------------ ------------------------ ----------------------
Net cash generated Net cash Exceptional An important measure
from operations generated items, share-based where exceptional
before separately from payments items distort
disclosed operations and amortisation the understanding
items of acquisition-related of the operating
intangibles. performance of
See note the business.
4. Allows comparability
between periods.
See also note
2.6.
------------------- ------------ ------------------------ ----------------------
Other measures
APM Closest Reconciling Definition and
equivalent items to purpose
measure their statutory
measure
-------------------- ------------ ----------------- ------------------------
Tatton - assets None Not applicable AUM is representative
under management of the customer
("AUM") and assets and is
net inflows a measure of the
value of the customer
base. Movements
in this base are
an indication
of performance
in the year and
growth of the
business to generate
revenues going
forward. Net inflows
measure the net
of inflows and
outflows of customers'
assets in the
year.
-------------------- ------------ ----------------- ------------------------
Tatton - assets None Not applicable AUI is representative
under influence of the customer
("AUI") assets which are
not directly managed
by Tatton but
over which we
hold significant
influence due
to our shareholding
in the company
in which they
are managed. Movements
in this customer
base are an indication
of our participation
in the performance
of the joint venture
and its growth
in order to generate
Tatton's share
of profits going
forward.
-------------------- ------------ ----------------- ------------------------
Paradigm Consulting None Not applicable Alternative growth
members and measure to revenue,
growth giving an operational
view of growth.
-------------------- ------------ ----------------- ------------------------
Paradigm Mortgages None Not applicable Alternative growth
completions, measure to revenue,
member firms giving an operational
and growth view of growth.
-------------------- ------------ ----------------- ------------------------
18. Events after the Reporting Period
There were no material post balance sheet events.
19. Contingent Liabilities
At 30 September 2023, the Directors confirmed there were
contingent liabilities of GBPnil (2022: GBPnil).
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END
IR QELFFXFLZFBQ
(END) Dow Jones Newswires
November 16, 2023 02:00 ET (07:00 GMT)
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