TIDMSAM
For immediate release:
Syndicate Asset Management Plc
("Syndicate", the "Company" or the "Group")
Final Results for the Year Ended 31 March 2010
Syndicate Asset Management Plc (AIM: SAM), the fund management group with
approximately GBP5.8 billion under management, today announces its audited
results for the year ended 31 March 2010.
Operational highlights for period:
* Syndicate Asset Management board restructured - new chairman, CEO and CFO
appointed;
* operating divisions restructured into a complementary group of
non-competing brands (Ashcourt Rowan, Savoy and EPIC) and services;
* new management teams of operating divisions appointed;
* new remuneration packages introduced to focus management teams on
profitable growth;
* single, scalable, platform of centralised services being implemented across
the Group; and
* balance sheet restructured.
Financial highlights for period:
* GBP22.0m of new equity raised - bank debt of GBP7.8m repaid, loan notes of GBP
6.9m repaid, deferred consideration reduced by GBP2.3m to GBP1.1m, free cash
increased to GBP3.8m (2009: GBP1.2m);
* strong second half of year revenue growth - up 8% on first half to GBP18.52m
(H1 GBP17.16);
* H2 margins improved - H2 cost of sales reduced to 34.5% of revenue (H1
36.5%);
* H2 adjusted EBITDA increased 13% to GBP1.7m (H1 GBP1.5m);
* loss before tax for year reduced from GBP19.07m for 2009 to GBP2.5m for 2010;
and
* loss per share 0.2p at 31 March 2010 compared to a loss per share of 14.29p
at 31 March 2009.
Post Period Highlights:
As per the trading update of 20 July 2010, post period highlights for the Group
are:
* Group restructuring programme largely completed;
* revenues for the first quarter up 8% when compared to 2009 first quarter -
the wealth management divisions recording a 19.5% increase over same period
last year;
* administrative expenses reduced;
* unaudited profit before tax for the quarter circa GBP300,000, compared to a
loss before tax of approximately GBP280,000 for the same period last year;
and
* Group now cash generative.
Peter Dew, Chairman of Syndicate Asset Management, commented:
"We have spent a large amount of time and effort over the course of the last
twelve months reviewing and re-organising our Group. The focus of our attention
has now turned towards building upon our existing strengths in order that our
revenues and profits grow."
Jonathan Freeman, Group CEO:
"Looking forward across the Group, our goals remain clear: firstly, to ensure
each operating business has clear financial and performance goals to achieve;
secondly, to ensure that our wealth management brands are clearly positioned in
the market-place and where relevant build their national foot-print and
services so that they are less reliant on the performance of equity markets;
and thirdly, continue broadening the base of our institutional clients and the
bespoke investment services provided to them. To conclude, as a result of the
hard work carried out during the last financial year, we can now look with
confidence to the continued expansion of our businesses in the current
financial year."
The Company's Annual General Meeting will be held at 10AM on 15 September 2010
at the offices of Memery Crystal LLP, 44 Southampton Buildings, London, WC2A
1AP.
-Ends-
Further information:
Syndicate Asset Management plc
Jonathan Freeman (Group CEO) Tel: 020 7659 8060
Cenkos Securities plc
Stephen Keys/Julian Morse Tel: 020 7397 8900
GTH Communications
Toby Hall/Christian Pickel Tel: 020 3103 3903
Chairman's statement
I am pleased to report to you the results of Syndicate Asset Management plc
("Syndicate" or the "Group") for the year to 31 March 2010. The year under
review was perhaps the most difficult time for the financial services sector in
living memory. The external issues we faced are well reported and therefore, I
do not propose to go through those here. In addition to those external factors
we also had a wide range of internal issues to address. These included an
over-extended balance sheet, regulatory issues and concerns over management,
operational structures and costs that became inappropriate in the economic
climate that we are now in. We set ourselves certain clear goals in order to
address the various issues we faced and I am very pleased to be able to report
that those goals have now been largely achieved. Of particular note, we raised
a total of approximately GBP22 million via a placing with existing shareholders
and employees in May 2009 and an Open Offer and Placing, again with existing
shareholders in October 2009. These fund raisings were an essential part of the
reconstruction of the Group and the whole Board joins me in thanking all our
shareholders and employees in agreeing to provide this vital financing for
Syndicate.
As we went about the re-structuring process, it is important to explain that
the Board had - and continues to have - a very clear vision of what we wanted
to achieve through the process. To explain, the vision that we have is to
create a single platform of `central services', for example information
technology, operations, compliance, finance and HR, which is expert, efficient
and scalable. This will provide these services to a range of non-competing
financial services businesses and brands, each of which will have a business
model and client offering which will provide material future growth. This
structure allows our businesses to concentrate on growing their franchise and
providing their clients with a personal service that combines expertise,
experience and knowledge whilst `central services' has the scale to allow it to
recruit specialists and experts and to gain significant cost savings. During
the last 12 months we have reviewed almost every aspect of the Group in order
to bring this strategic vision into reality and to improve our systems, reduce
our risks and enhance the products and communication that we provide to our
clients. This review and change has included the Board and Senior Management, a
reorganisation of our business processes, the merger of Ashcourt and Rowan and
the centralisation of Finance, Compliance, Information Technology and HR. We
have also reviewed and updated the remuneration structures around the Group,
worked with many of our employees in revising their roles, job titles and
contracts of employment and simplified our investment offerings. The list of
reviews made and actions taken throughout the Group is long and wide and has
been carried out with a great deal of enthusiasm. We are now re-directing that
enthusiasm towards growing our Company. We are confident that we have now
created a scalable business and with a business model that has been created to
take advantage of the huge opportunities that are now presenting themselves.
People
During the course of the year under review, and shortly after the period end,
there were a number of changes to the Board. Jane Dumeresque stepped down as
Finance Director on 12 November 2009 and David Pinckney stepped down as
Chairman on 31 March 2010. I initially moved from being a Non-Executive
Director to Interim Joint CEO on 16 March 2009, then became an Executive
Director on 7 August 2009 and, as of 31 March 2010, became Non-Executive
Chairman of the Board. In addition we welcomed Ranil Perera to the Board as a
Non-Executive Director on 31 March 2010 and Neil Hale joined the Board as Chief
Financial Officer on 16th April 2010, having been promoted from the position of
Group Financial Controller. Jonathan Freeman moved from being a Non-Executive
Director to Interim Joint CEO on 16 March 2009 and then to Group CEO on 7
August 2010. All Directors of the Group, past and present, have played vital
roles in the development of Syndicate. We believe that it would be appropriate
to bring one further non-executive director on to the Board and are currently
developing the profile of particular skill sets and experience that we believe
would add most value.
In addition, we have made significant changes to the executive management of
the Group. These changes have been undertaken in order to provide clear lines
of communication and areas of responsibility, transparency of decision-making
and to ensure that the most important focus of everyone in the Group is towards
providing a first class service and offering to all of our clients. We
currently have a management structure which consists of a largely non-executive
board of directors to which the senior management within the Group report. This
senior management team is divided into the Group Executive Committee ("GEC"),
which consists of the CEO's of Epic, Savoy and Ashcourt Rowan, the Group CEO
and the Chief Financial Officer, and the Group Management Committee ("GMC")
which is made up of the members of the GEC together with the Heads of
Compliance, HR, IT, Operations and Zenith. In addition to formal reports to the
Board by each of the members of the GMC the non-executive directors also
regularly attend the regular meetings of these two management groups in order
to gain firsthand knowledge of the businesses of the Group. We will keep this
structure under review and will adapt as is necessary in order to keep our
management structures as efficient as possible.
The last 18 months has likewise seen significant change for most of our
employees across the Group. This change has been in terms of contracts of
employment, roles and job titles and location of work. We have all had to think
hard about the way we do things and to recognise what we do well and to change
what we have done less well. The changes that we have made have necessitated a
significant amount of painful but necessary redundancy. I would like to take
this opportunity to thank and congratulate everyone within the Group for their
willingness to bring about the significant changes that we have undertaken and
their continued dedication and enthusiasm. As a result of their hard work, we
have been able to create a leaner and more skilled group of people who are
determined to provide a first class service to all our clients. To ensure all
staff are fully motivated and remunerated, we have during the course of the
year under review, and as previously reported, brought in a new Long Term
Incentive Plan ("LTIP") for our employees. The first awards under this plan
were made in December 2009 and have been very well received. In addition we
have used the structures of this LTIP to provide a `one-off' share based and
deferred discretionary bonus to employees in recognition of the work carried
out during the year to 31 March 2010. The Group Chief Executive has turned down
his allocation within this discretionary bonus and no discretionary bonus was
offered to any of the other directors who were on the Board during the year to
31 March 2010. We expect to put in place a new annual discretionary bonus
scheme for future discretionary bonus awards in the near future but believe
that it is appropriate for this one off scheme to have been used for the year
under review.
Outlook
We have spent a large amount of time and effort over the course of the last
twelve months reviewing and re-organising our Group. We still have work to do
in completing this process in order that our strategic vision can be truly
delivered but believe that we are now nearing completion of this process. The
focus of our attention has now turned towards building upon our existing
strengths in order that our revenues and profits grow. In the ever more
complicated financial environment within which the UK population has to work we
strongly believe that the demand for well informed and professional financial
planning advice covering the whole of a client's financial position and future
requirements will rapidly increase. Within Ashcourt Rowan we already provide
such a financial planning service to both the private and corporate communities
under the brand Ashcourt Rowan Financial Planning. Key targets we have set
ourselves in the near term include the further strengthening of this national
presence of financial planners. We have also recently begun to further enhance
our learning and development programmes to ensure that all our employees remain
amongst the most highly qualified and experienced within their chosen careers.
We believe that the ability of the Group to provide a high level of learning
and development for all our employees is one of the key strengths of being a
part of the Syndicate Group. We are also aware that within the UK wealth
management sector there are a wide range of clients which require very
different types of service. There are, for example, those whose portfolios are
currently relatively limited and who, therefore, would be best served by a
service offering that takes into account the requirements of the client within
the context of low fees. This `centralised asset management service', which
enables the provision of asset management expertise to lower value portfolio's,
is a core service provision of Ashcourt Rowan Asset Management. There are also
many people whose portfolios are of a size that requires a bespoke advice
service and many more clients who fall somewhere between these two extremes.
Through Ashcourt Rowan and Savoy we have a range of investment process
offerings to private clients which means that whoever approaches the Syndicate
Group for advice regarding the management of their investment portfolio we are
able to offer a service which genuinely suits that person. There have been too
many of our competitors who have attempted to shoe horn a new client into an
inappropriate service rather than admit that they are not the appropriate
advisor. The advantage for the client of providing a range of investment
processes is that we are able to find one that suits the unique needs of the
individual.
We are also very aware that the need for bespoke and specialist expertise in
fixed income investment advice for the portfolios of most, if not all,
individuals and corporates who have savings for the future is compelling.
Unfortunately this need is often ignored by traditional asset managers - I am
constantly amazed by the number of fund managers who are tasked by a client
with the management of their investment portfolio but whose centre of
attention, knowledge and experience is firmly within the equity markets and who
appear to have no direct access to this specialist knowledge. The Syndicate
Group is able to directly draw on such bespoke specialist knowledge from its
fixed income institutional asset management business, Epic, for all Group
clients. We are currently further widening and strengthening this specialist
team and have also just recently launched Epic's first fund, the Epic
International Bond Fund, which has been designed to be available to both the
institutional and retail marketplaces and offers a highly cost effective way of
accessing the government and quasi-government bond markets with a very small
minimum investment size.
Our revenue streams are still nevertheless heavily reliant upon the level of
the UK stock market, the trading volumes within that stock market and the rate
of growth in profitable funds under management that we can achieve. We are
therefore putting a great deal of effort into the increase of our financial
planning and fixed income revenue streams which, if successful, would decrease
this reliance but until this work begins to have an impact these three metrics
remain key for the improvement in our revenue and profitability. In addition to
our efforts to increase and widen the revenues of the Group we will continue to
work on reducing our costs. We view the future with cautious optimism -
cautious because of the current uncertainty of the financial markets and
optimism because of the successful restructuring we have undertaken which, we
believe, creates the platform for a successful future.
Peter Dew
Chairman of the Board
19 July 2010
Group Chief Executive's report
The financial year to 31 March 2010 was a period which began badly and ended
well. Our revenues for the year totalled GBP35.68 million (12 months to 31 March
2009: GBP37.5 million). This year-on-year decline in revenues hides the
significant improvement in revenues in the second half of the year. During the
first half of the year our revenues were GBP17.16 million which compares with
revenues of GBP18.52 million for the second half of the year. This 8% increase in
revenues between the two halves reflects the higher levels in the market and
increased trading volumes that we experienced. Our second half revenues were
our largest 6 month revenue total since the six months to 30 September 2008.
The lower revenue also reflects the fact that a large number of directors,
senior management and employees were focused upon resolving the many internal
issues that we faced rather than revenue generation and growth. I am very
pleased to be able to report that we have now refocused on growing and
strengthening the Group through increasing our revenues and profits. Our
improved second half performance has been continued into the new financial year
with unaudited revenues for the quarter ending 30 June 2010 being GBP9.2 million.
This compares to revenues for the equivalent quarter last year, ending 30 June
2009, of GBP8.5 million and shows that we are continuing to generate consistently
higher revenues than was previously the case, even though the UK market ended
the first quarter 13.4% lower than at the beginning of the quarter.
It is also interesting to note that our revenues during the second half of the
period under review have increased despite the fact that our funds under
management for the Group have fallen from a high point of GBP6.4 billion as at 30
September 2009 to GBP5.8 billion as at 31 December 2009 and where they remained
reasonably static for the remainder of the financial year under review. This is
because within that figure the mix of our funds under management has changed to
higher margin mandates. In particular, and as previously reported, we lost
certain very low margin mandates within our institutional division, Epic,
totalling approximately GBP850 million between October and December 2009 but at
the same time we have won new mandates and increased the size of certain
existing mandates with much higher margins within both Epic and across the
Group generally. This has meant that, overall, our funds under management
remain at approximately the same level, but our lower margin institutional
funds account for 37% of total funds as at 31 March 2010, falling from 48% of
total funds as at 31 March 2009.
We have previously commented on our efforts to deliver our strategic vision of
creating a single platform of expert `central services' which is efficient and
scalable and which provides those services to a range of non-competing
financial services businesses and brands, each of which will have a business
model and client offering which will provide material future growth. We believe
that these efforts are now beginning to bear fruit with our cost of sales
(excluding `one off' costs) representing 34.5% of revenue in the six months to
31 March 2010 compared to 36.5% of revenue in the six months to 30 September
2009. We are also pleased to be able to report that our administrative expenses
(excluding `one off' costs, depreciation and amortisation) have also begun to
fall - for the year to 31 March 2010 they totalled GBP19.3 million which is a
reduction of GBP2.4 million from the previous year (12 months to 31 March 2009: GBP
21.7 million). In terms of percentage of revenue, administrative expenses
(excluding one off costs depreciation and amortisation) for the year under
review were 54.1% of revenues which compares to 57.9% for the year to 31 March
2009. We are continuing to seek further cost reductions across all parts of the
Group and have a number of initiatives underway at the moment. It should also
be noted that the majority of cost saving initiatives which accounted for the
savings achieved in the year under review were only brought in during the
course of the year and so did not contribute a full 12 month impact to our cost
base.
The re-organisation of our Group, re-financing of the balance sheet and
resolving of the other issues we faced during the year under review meant that
one-off costs (and certain one-off revenues) were incurred (and accrued) and
which, for the year under review, totalled a net cost of approximately GBP3.5
million (12 months to 31 March 2009: GBPnil). These one-off costs include sums
paid with regards to redundancies and staff restructuring costs, senior
management recruitment costs, costs relating to the various regulatory and
employment issues that occurred, the crystallisation of bank charges upon the
bank debts being repaid, professional costs relating to a wide variety of
corporate finance issues and the costs of merging the businesses of Ashcourt
and Rowan. In addition we have included within this net one-off cost figure the
writing back into the accounts as income previously accrued interest payments
that were due on the loan notes which were, as previously reported, repaid in
December 2009 and which included the loan note holders agreeing to waive all
interest payments from 1 January 2009. We anticipate that some further one-off
costs will be incurred in the current year as certain restructuring work
continues to take place but we anticipate that these will total materially less
than in the year under review.
Our reported Earnings before Interest, Tax, Depreciation and Amortisation
("EBITDA") was a loss of GBP1.109m. Once this EBITDA has been adjusted for the
net one-off items discussed in the previous paragraph of this report and the
effect of share-based payments, the adjusted EBITDA is positive with earnings
of GBP3.2 million for the 12 month period under review (12 months to 31 March
2009 : GBP2.73 million). Our adjusted EBITDA for the second half of the year
under review was GBP1.7 million which represents a 13% increase on our adjusted
EBITDA of GBP1.5 million for the first half of the period under review. Whilst I
would very much have wished that we would have been able to provide a positive
reported EBITDA, rather than only a positive EBITDA when adjusted for one off
costs, I believe that in the circumstances we were in at the beginning of 2009
together with the very significant changes that we have made to the business
during the year, this is a reasonable result.
Within our Interim Report for the 6 months to 30 September 2009 we provided for
the first time a breakdown of the revenues and profits and losses of each of
our operating businesses (EPIC, Savoy, Ashcourt, Rowan (under the company name
IMH) and Zenith (under the company name Syndicate C.I.)). We believe that this
is of value to our shareholders in assessing the performance of our underlying
operating businesses and intend to continue to provide this information going
forward. This financial information is included within Note 4 of the accounts
contained within this report with the change that we have now merged the
Ashcourt and Rowan businesses and so provide this information as a single
entity.
Ashcourt Rowan
Ashcourt Rowan accounts for approximately GBP2.3 billion of the Group's funds
under management (as at 31 March 2010). Its CEO is Mark Cheshire who joined us
in November 2009 having previously been CEO of Lloyds TSB Private Banking and,
prior to that Retail Director of Lloyds TSB UK Retail Banking. Ashcourt Rowan
has approximately 20,000 clients and 17 offices across the UK. The two main
parts of this business are asset management and financial planning. In addition
Ashcourt Rowan has a growing SIPP administration business. Revenues for
Ashcourt Rowan for the year to 31 March 2010 were GBP21.09 million (year to 31
March 2009: GBP20.65 million). Approximately 58% of this revenue was in relation
to financial planning advice and 41% from discretionary and advisory asset
management. Ashcourt Rowan's operating profit for the year to 31 March 2010 was
GBP2.72 million (year to 31 March 2009: GBP2.96 million) and the reportable segment
profit before tax was GBP1.67 million (year to 31 March 2009: GBP1.46 million).
Ashcourt Rowan is now a national provider of financial advice, which covers the
full spectrum of a clients financial planning requirements, and also provides a
highly effective portfolio management service offering a centralised service
and a bespoke service which ensures that the most appropriate method of
portfolio management is available to each client.
Savoy
Savoy provides bespoke stockbroking and investment management services to
private clients, charities and trustees. Christopher Jeffreys is the CEO of
this company, having taken on this role in April 2009. Savoy prides itself on
the bespoke fund management focus its fund manager provides to its clients.
Savoy's services include discretionary investment management, advisory
investment management and tax efficient investment solutions. In addition Savoy
is now developing the opportunity to offer Ashcourt Rowan's bespoke financial
planning expertise across Savoy's existing client base. As of 31 March 2010
Savoy was managing approximately GBP1.1 billion of funds on behalf of its clients
of which approximately 66% was under discretionary mandates and managed
advisory mandates. Revenues for Savoy for the year ended 31 March 2010 were GBP
8.1 million (year to 31 March 2009: GBP8.6 million). Savoy made an operating loss
for the year to 31 March 2010 of GBP232,000 after one off legal and professional
fees of approximately GBP246,000 (year to 31 March 2009: profit of GBP107,000) and
a reportable segment loss before tax of GBP659,000 (year to 31 March 2009: loss
of GBP465,000).
Epic
Epic provides fixed income investment solutions and services to institutional
clients in the United Kingdom, Europe and the Middle East. In addition, Epic
launched the Epic International Bond Fund on 12 July 2010 which is an open
ended, ISA qualified fund into which both retail and institutional investors
can invest. Ravi Shankar is the CEO of Epic and the knowledge and experience of
the team at Epic is regarded as a core strength that the Group is able to
provide to other businesses within the Group. In order to assist the
dissemination of this knowledge Ravi has also taken on the role of Group Chief
Investment Officer with the task of ensuring that all parts of the Group have
full access to the extensive specialist knowledge and experience that already
exists. As at 31 March 2010 Epic was managing approximately GBP2.35 billion of
funds under management for 32 clients having grown this client list from 10 as
of 1 January 2009. For the year to 31 March 2010 Epic earned revenues of GBP3.99
million (year to 31 March 2009: GBP4.39 million) and made an operating profit of
GBP409,000 (year to 31 March 2009: GBP1.1 million) and a reportable segment profit
before tax of GBP232,000 (year to 31 March 2009: GBP898,000).
Zenith
Zenith Funds provide individuals and financial intermediaries a range of
investment funds and multi-manager investment funds. Funds are available priced
in Sterling, Euros and US dollars and are invested in a broad range of assets
including fixed interest, equity, alternative investments and in the money
markets. We have taken the strategic decision that the Guernsey based `Class B'
funds, which make up the majority of the Zenith Funds, are not core to our
business and we are therefore working to sell this business to a third party.
We are in exclusive negotiations with a third party and hope to be able to
provide shareholders with further information regarding this sale in the very
near future. As at 31 March 2010 the Zenith funds accounted for just over GBP250
million of funds under management and for the year to 31 March 2010 Syndicate
C.I. (which is the appointed manager for these funds) received revenues of GBP
2.69 million (year to 31 March 2009: GBP4.34 million). Syndicate C.I made an
operating loss for the year to 31 March 2010 of GBP384,000 (year to 31 March
2009: profit of GBP788,000) and a reportable segment loss before tax of GBP546,000
(year to 31 March 2009: profit of GBP602,000).
Looking forward across the Group, our goals remain clear:
1. to ensure each operating business has clear financial and performance goals
to achieve;
2. to ensure that our wealth management brands are clearly positioned in the
market-place and where relevant build their national foot-print and
services so that they are less reliant on the performance of equity
markets;
3. on our institutional business, continue broadening the base of our clients
and the bespoke investment solutions and services provided to them.
To conclude, as a result of the hard work carried out during the last financial
year, we can now look with confidence to the continued expansion of our
businesses in the current financial year.
Jonathan Freeman
Group Chief Executive
19 July 2010
Consolidated Income statement
Year ended 31 March 2010
Note 2010 2009
GBP'000s GBP'000s
Revenue 5 35,684 37,490
Cost of sales (13,615) (13,107)
Gross profit 22,069 24,383
Administrative expenses (24,688) (23,225)
(Loss)/profit from operations 6 (2,619) 1,158
Investment income 8 97 355
Other gains and losses 9 - (19,314)
Net Finance costs 10 10 (1,270)
Loss before tax (2,512) (19,071)
Taxation 11 & 18 408 33
Loss for the year attributable to the (2,104) (19,038)
equity holders of the parent
Loss per share
Basic 12 (0.20)p (14.29)p
Diluted 12 (0.20)p (14.29)p
Consolidated statement of comprehensive income
For the year ended 31 March 2010
2010 2009
GBP'000s GBP'000s
Loss for the year (2,104) (19,038)
Other comprehensive income:
Unrealised currency (loss)/gain recognised (153) 153
directly in equity
Transfer from equity reserve - 160
Total comprehensive income for the year (2,257) (18,725)
Attributable to:
Equity holders of the Parent (2,257) (18,725)
Total recognised income and expense for the (2,257) (18,725)
year
Consolidated balance sheet
as at 31 March 2010
Note 2010 2009
GBP'000s GBP'000s
Non-current assets
Goodwill 13 46,576 48,090
Other intangible assets 14 5,900 6,955
Property, plant and equipment 15 984 1,078
Available-for-sale investments 16 146 146
Total non-current assets 53,606 56,269
Current assets
Trade and other receivables 17 13,142 12,528
Cash and cash equivalents 7,531 7,101
Available-for-sale investments 16 - 22
Total current assets 20,673 19,651
Total assets 74,279 75,920
Current liabilities
Trade and other payables 20 (12,096) (12,515)
Obligations under finance leases 19 - (8)
Loans and deferred consideration 21 (917) (9,128)
Short-term provisions 22 (125) (1,073)
Total current liabilities (13,138) (22,724)
Non-current liabilities
Loans and deferred consideration 21 - (7,210)
Deferred tax liabilities 18 (1,395) (1,842)
Obligations under finance leases 19 - (5)
Long-term provisions 22 (277) (2,761)
Total non-current liabilities (1,672) (11,818)
Total liabilities (14,810) (34,542)
Net assets 59,469 41,378
Equity
Share capital 23 3,608 275
Share premium account 24 72,522 55,750
Equity reserve 25 935 692
Retained earnings 26 (17,596) (15,339)
Equity attributable to equity 27 59,469 41,378
holders of the parent
Consolidated statement of changes in equity
For the year ended 31 March 2010
Share Share Equity Retained Total
Capital Premium Reserve Earnings GBP'000s
(Note 23) (Note 24) (Note 25) (Note 26)
GBP'000s GBP'000s GBP'000s GBP'000s
At 31 March 2008 261 53,517 560 3,386 57,724
Total comprehensive income for
the year:
Loss for the period - - - (19,038) (19,038)
Other comprehensive income,
net of tax:
Unrealised currency gain - - - 153 153
Transfer to retained earnings - - (160) 160 -
Transactions with owners
recorded directly in equity:
Share-based payments - - 510 - 510
Issues of shares 14 2,233 - - 2,247
Costs of share issue - - (18) - (18)
Cancellation of warrants - - (200) - (200)
At 31 March 2009 275 55,750 692 (15,339) 41,378
Total comprehensive income for
the year:
Loss for the year - - - (2,104) (2,104)
Other comprehensive income,
net of tax:
Unrealised currency loss - - - (153) (153)
Transactions with owners
recorded directly in equity:
Share-based payments - - 543 - 543
Cancellation of share-based - - (300) - (300)
payment
Issues of shares 3,333 19,117 - - 22,450
Costs of share issue - (2,345) - - (2,345)
At 31 March 2010 3,608 72,522 935 (17,596) 59,469
Consolidated cash flow statement
For the year ended 31 March 2010
2010 2009
GBP'000s GBP'000s
Operating activities Note
Loss for the year (2,104) (19,038)
Adjustments for:
Depreciation of property, plant 6 455 515
and equipment
Amortisation of intangible assets 6 1,055 1,055
Impairment of goodwill and - 18,797
intangible assets
Share based payment expense 543 510
Impairment of investment 16 22 23
available-for-sale
Discount on repayment of loan 10 (276) -
notes
Impairment of investment in - 494
associate
Unrealised foreign exchange (loss) (153) 153
/gain
Investment income 8 (97) (355)
Finance costs 10 266 1,270
Corporation tax (credit)/expense 11 (408) (33)
Operating cash (outflow)/inflowbefore (697) 3,391
movements in working capital
Increase in receivables (614) (1,871)
Increase in payables 777 210
(Decrease)/increase in provisions (126) 81
Cash (outflow)/inflow from (660) 1,811
operations
Tax paid (1,100) (3)
Interest received 8 95 286
Interest paid (318) (964)
Net cash (outflow)/inflow from operating (1,983) 1,130
activities
Investing activities
Acquisition of goodwill and 13 (58) (4,106)
intangible assets
Purchases of property, plant and 15 (361) (512)
equipment
Sales of available-for-sale - 23
investments
Dividends received 3 69
Net cash used in investing (416) (4,526)
activities
Financing activities
Proceeds of share issues 23 22,450 2,247
Costs of share issues 24 (2,345) (18)
Loans received - 3,000
Repayments of obligations under finance leases (12) (8)
Repayments of loans and payments of deferred (16,964) (3,148)
consideration
Cancellation of share-based payments/warrants (300) (200)
Net cash from financing activities 2,829 1,873
Net increase/(decrease) in cash and cash 430 (1,523)
equivalents
Cash and cash equivalents at beginning of year 7,101 8,624
Cash and cash equivalents at end of year 7,531 7,101
Notes to the Financial Statements
For the year ended 31 March 2010
1. General information
Syndicate Asset Management plc ("Syndicate" or "the Company") is a company
incorporated in the United Kingdom under the Companies Act 2006. The address of
the registered office is given on page 86. The nature of the Syndicate Group's
("the Group") operations and its principal activities are set out in the
Chairman's and Group Chief Executive's reports on pages 4 and 7 respectively,
and in the business review on page 12.
These financial statements are presented in pounds sterling because that is the
currency of the primary economic environment in which the Group operates.
2. Significant accounting policies
Basis of accounting
Both the parent company financial statements and the Group financial statements
have been prepared and approved by the Directors in accordance with
International Financial Reporting Standards as adopted by the European Union
("Adopted IFRSs") and the Companies Act 2006 applicable to companies reporting
under IFRS. On publishing the parent company financial statements here together
with the Group financial statements, the Company is taking advantage of the
exemption in s408 of the Companies Act 2006 not to present its individual
income statement and related notes that form a part of these approved financial
statements.
The financial statements have been prepared on the historical cost basis except
for available-for-sale financial assets which are included at fair value. The
principal accounting policies adopted are set out below and have been applied
consistently to all periods presented in these financial statements.
In these financial statements the following adopted IFRSs, which are effective
for the first time, have had a material effect on the financial statements and
so comparatives have been restated accordingly where required:
* IFRS 8 Operating Segments - (mandatory for periods beginning on or after 1
January 2009). This standard replaced IAS 14 and requires segment
disclosure based on the components of an entity that management monitors in
making operating decisions, rather than disclosure of business and
geographical segments. The application of IFRS 8 in the year ended 31 March
2009 would not have affected the balance sheets or income statement but
would have resulted in changes to operating segment disclosures.
* Accounting for business combinations - The Group has adopted IFRS 3
Business Combinations (2008) and IAS 27 Consolidated and Separate Financial
Statements (2008). All business combinations occurring on or after 1 April
2009 are accounted for by applying the acquisition method. The change in
accounting policy is applied prospectively and had no material impact on
earnings per share. Control is the power to govern the financial and
operating policies of an entity so as to obtain benefits from its
activities. In assessing control, the Group takes into consideration
potential voting rights that currently are exercisable. The acquisition
date is the date on which control is transferred to the acquirer. Judgement
is applied in determining the acquisition date and determining whether
control is transferred from one party to another. The Group measures
goodwill as the fair value of the consideration transferred including the
recognised amount of any non-controlling interest in the acquiree, less the
net recognised amount (generally fair value) of the identifiable assets
acquired and liabilities assumed, all measured as of the acquisition date.
Consideration transferred includes the fair values of the assets
transferred, liabilities incurred by the Group to the previous owners of
the acquiree, and equity interests issued by the Group. Consideration
transferred also includes the fair value of any contingent consideration
and share-based payment awards of the acquiree that are replaced
mandatorily in the business combination (see below). If a business
combination results in the termination of pre-existing relationships
between the Group and the acquiree, then the lower of the termination
amount, as contained in the agreement, and the value of the off-market
element is deducted from the consideration transferred and recognised in
other expenses. A contingent liability of the acquiree is assumed in a
business combination only if such a liability represents a present
obligation and arises from a past event, and its fair value can be measured
reliably. The Group measures any non-controlling interest at its
proportionate interest in the identifiable net assets of the acquiree.
Transaction costs that the Group incurs in connection with a business
combination, such as finder's fees, legal fees, due diligence fees, and
other professional and consulting fees are expensed as incurred.
* IAS 23 Borrowing Costs (2007) - In respect of borrowing costs relating to
qualifying assets for which the commencement date for capitalisation is on
or after 1 April 2009, the Group capitalises borrowing costs directly
attributable to the acquisition, construction or production of a qualifying
asset as part of the cost of that asset. Previously the Group immediately
recognised all borrowing costs as an expense. This change in accounting
policy was due to the adoption of IAS 23 Borrowing Costs (2007) in
accordance with the transitional provisions of such standard; comparative
figures have not been restated. The change in accounting policy had no
material impact on earnings per share.
* IAS 1 revised Presentation of Financial Statements, which became effective
as of 1 April 2009. As a result, the Group presents in the consolidated
statement of changes in equity all owner changes in equity, whereas all
non-owner changes in equity are presented in the consolidated statement of
comprehensive income. Comparative information has been re-presented so that
it also is in conformity with the revised standard. Since the change in
accounting policy only impacts presentation aspects, there is no impact on
earnings per share.
The effect on the financial statements on the adoption of these standards is in
the form of disclosure only.
Going concern
The financial statements have been prepared on a going concern basis which the
Directors believe to be appropriate for the following reasons. During the year
the Company raised additional equity capital of GBP20.1 million, net of costs
(see note 23), and repaid GBP17.0 million of bank loans, loan notes and other
deferred consideration (see notes 21 and 22). At 31 March 2010 the Group
reported net current assets of GBP7.5 million (2009: net current liabilities of GBP
3.1 million). The Directors have reviewed profit and cash flow forecasts for
the coming year and expect the Group to return to profitability and to produce
a net increase in cash.
The directors consider that the Group is sufficiently diversified and has no
over reliance on any one customer or supplier.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up
to 31 March 2010. Control is achieved where the Company has the power to govern
the financial and operating policies of an investee entity so as to obtain
benefits from its activities.
On acquisition, the assets and liabilities and contingent liabilities of a
subsidiary are measured at their fair values. Any excess of the cost of
acquisition over the fair values of the identifiable net assets acquired is
recognised as goodwill.
The results of subsidiaries acquired during the period are included in the
consolidated income statement from the date that control commences.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by
the Group.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Investments in associates
An associate is an entity over which the Group is in a position to exercise
significant influence, but not control or joint control, through participation
in the financial and operating decisions of the investee. Significant influence
is the power to participate in the financial and operating policy decisions of
the investee but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these
financial statements using the equity method of accounting. Investments in
associates are carried in the balance sheet at cost, as adjusted by
post-acquisition changes in the Group's share of the net assets of the
associates, less any impairment in the value of the individual investments.
Losses of the associates in excess of the Group's interest in those associates
are not recognised.
Where a Group company transacts with an associate of the Group, profits and
losses are eliminated to the extent of the Group's interest in the relevant
associate.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of each
acquisition over the Group's interest in the fair value of the identifiable
assets liabilities and contingent liabilities of each subsidiary at the
respective dates of acquisition.
For the purpose of impairment testing, goodwill is allocated to the Group's
cash-generating units expected to benefit from the synergies of combination.
Cash-generating units to which goodwill has been allocated are tested for
impairment annually or more frequently where there is an indication that the
unit may be impaired. If the recoverable amount of the cash-generating unit is
less than the carrying amount of the unit, the impairment loss is allocated
first to reduce the carrying amount of any goodwill allocated to the unit and
then to the other assets of the unit pro-rata on the basis of the carrying
amount of each asset in the unit. An impairment loss recognised for goodwill is
not reversed in a subsequent period.
On disposal of a subsidiary, the amount of goodwill attributable is included in
the determination of the profit or loss on disposal.
Other intangible assets
Other intangible assets comprise client relationships and unit trust management
and investment trust contracts recognised upon the acquisition of subsidiaries.
Such assets are assessed and capitalised when it is probable that future
economic benefits attributable to the assets will flow to the Group and the
cost of the assets can be measured reliably.
(a) Client relationships
Acquired client relationships are capitalised at fair value based on
management's estimate of expected future cash flows to be generated over their
expected useful lives. The capitalised amounts are amortised on a straight-line
basis over the expected useful lives, estimated to be ten years.
(b) Unit trust and investment trust management contracts
Acquired unit trust management and investment trust contracts are capitalised
at fair value based on management's estimate of the expected future cash flows
that these contracts will generate over their useful lives. The capitalised
amounts are amortised on a straight-line basis over the expected useful lives,
estimated to be ten years or the life of the trust.
Property, plant and equipment
Fixtures and equipment are stated at cost less accumulated depreciation and any
recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation of assets over
their estimated useful lives, using the straight-line method, on the following
bases:
Fixtures and equipment 10% - 33%
Assets held under finance leases are depreciated over their expected useful
lives on the same basis as owned assets or, where shorter, over the term of the
relevant lease.
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss. Where the asset does not generate cash flows
that are independent from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and value
in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to
the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised as an expense immediately, unless the relevant asset is carried
at a re-valued amount, in which case the impairment loss is treated as a
revaluation decrease.
Revenue recognition
Portfolio and other management advisory and service fees are recognised on a
straight-line basis over the period the service is provided. Asset management
fees are recognised pro rata over the period the service is provided.
Dealing commissions are recognised as net amount due on trade date.
Initial commissions receivable and commission rebates payable are recognised in
the period in which the services are provided and the customer has agreed
payment.
Trail and renewal commissions are accounted for on an ongoing basis over the
period that the service is provided.
Interest income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable, which is the rate
that discounts estimated future cash receipts through the expected life of the
financial asset to that asset's net carrying amount.
Dividend income from investments is recognised when the shareholders' rights to
receive payment have been established.
Cost of sales
Cost of sales comprises the direct employment costs associated with front
office staff plus any payments to third parties in respect of revenue share
arrangements, accounted for on an accruals basis.
Leasing
Leases are classified as finance leases when the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee. All other
leases are classified as operating leases.
Assets held under finance leases are recognised as assets of the Group at their
fair value or, if lower, at the present value of the minimum lease payments.
The corresponding liability to the lessor is included in the balance sheet as a
finance lease obligation. Lease payments are apportioned between finance
charges and reduction of the lease obligation so as to achieve a constant rate
of interest on the remaining balance of the liability. Finance charges are
charged directly against income.
Rentals payable under operating leases are charged to income on a straight-line
basis over the term of the relevant lease. Benefits received and receivable as
an incentive to enter into an operating lease are also spread on a
straight-line basis over the lease term.
Borrowing costs
Borrowing costs are recognised in profit or loss in the period in which they
are incurred. Qualifying borrowing costs relating to bank facilities are
capitalised and expensed over the term of the loan facility.
Profit from operations
Profit from operations represents the result from trading activities after
charging any restructuring costs and aborted acquisition costs, but before
investment income and finance costs.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged as an
expense as they fall due. Payments made to state-managed retirement benefit
schemes are dealt with as payments to defined contribution schemes where the
Group's obligations under the schemes are equivalent to those arising in a
defined contribution retirement benefit scheme. The Group does not operate a
defined benefit retirement scheme.
Taxation
The tax charge or credit represents the sum of the tax currently payable on
Group results and deferred tax.
The taxable result differs from net result as reported in the income statement
because it excludes items of income or expense that are taxable or deductible
in other periods and it further excludes items that are never taxable or
deductible. Any liability for current tax is calculated using tax rates that
have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a
transaction that affects neither the tax result nor the accounting result.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries except where the Group is able to
control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited in the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity.
Classification of financial instruments issued by the Company
Financial instruments issued by the Company are treated as equity only to the
extent that they meet the following two conditions:
* they include no contractual obligations upon the Company to deliver cash or
other financial assets or to exchange financial assets or financial
liabilities with another party under conditions that are potentially
unfavourable to the Company; and
* where the instrument will or may be settled in the Company's own equity
instruments, it is either a non-derivative that includes no obligation to
deliver a variable number of the Company's own equity instruments or is a
derivative that will be settled by the Company's exchanging a fixed amount
of cash or other financial assets for a fixed number of its own equity
instruments.
To the extent that this definition is not met, the proceeds of issue are
classified as a financial liability. Where the instrument so classified takes
the legal form of the Company's own shares, the amounts presented in these
financial statements for called up share capital and share premium account
exclude amounts in relation to those shares.
Non-derivative financial instruments
Financial assets and financial liabilities are recognised on the Group's
balance sheet when the Group becomes a party to the contractual provisions of
the instrument.
Trade receivables
Trade receivables are measured at initial recognition at fair value, and are
subsequently measured at amortised cost using the effective interest rate
method. Appropriate allowances for estimated irrecoverable amounts are
recognised in profit or loss when there is objective evidence that the asset is
impaired.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other
short term highly liquid investments that are readily convertible into a known
amount of cash and are subject to an insignificant risk of changes in value.
Available-for-sale investments
These are measured at fair value based on bid prices where there is an active
market and Directors' estimate for unquoted holdings. Investments in equity
investments that do not have a quoted market price in an active market and
whose fair value cannot be reliably determined are measured at cost.
Borrowings
Interest bearing loans are recorded on initial recognition at their fair value
and are subsequently measured at amortised cost, using the effective interest
rate method. Finance charges, including premiums payable on settlement or
redemption and direct issue costs, are accounted for on an accruals basis to
the income statement using the effective interest method and are added to the
carrying amount of the instrument to the extent that they are not settled in
the period in which they arise.
Trade payables
Trade payables are initially measured at their fair value, and are subsequently
measured at amortised cost, using the effective interest rate method.
Equity instruments
Equity instruments issued by the Company are recorded as the amount of proceeds
received, net of direct issue costs.
Provisions
Provisions are recognised when the Group has a present obligation as the result
of a past event, when it is probable that the Group will be required to settle
that obligation. Provisions are recognised at the Directors' best estimate of
the expenditure required to settle the Group's liability.
Share-based payments
The Company issues equity-settled share-based payments to certain employees of
the Group. Equity settled share-based payments are measured at fair value at
the date of grant. Where market related vesting conditions exist the fair value
is determined using the Black-Scholes model at the grant date or a Monte Carlo
simulation model and is expensed on a straight-line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest and
adjusted for the effect of non-market based vesting conditions. Where options
that are currently in issue are modified during the period, the Company
recognises the incremental increase in the fair value of the new options
compared to the old options at the modification date and expenses this increase
over the life of the modified award as well as the original expense.
The valuation models used together with the assumptions used on expected
volatility, risk free rates, expected dividend yields and expected forfeiture
rates are disclosed in note 25.
The Company issued a warrant to certain advisers for services provided in a
previous period in connection with an acquisition made. These warrants were
measured at fair value in an equity reserve using the Black-Scholes model.
Deferred and contingent consideration
Deferred consideration due in respect of acquisitions, where the amount due is
uncertain and contingent on future events, is included in provisions at the
fair value of the Directors' estimate of amounts due. Where deferred
consideration is a fixed amount this is included at fair value in Loans and
Deferred Consideration.
Segment reporting
An operating segment is a component of the Group that engages in business
activities from which it may earn revenues and incur expenses, including
revenues and expenses that relate to transactions with any of the Group's other
components. All operating segments' operating results are reviewed regularly by
the Group's CEO to make decisions about resources to be allocated to the
segment and assess its performance, and for which discrete financial
information is available.
New standards and interpretations not applied
The following Adopted IFRS was available for early application but has not been
applied by the Group in these financial statements. Its adoption is not
expected to have a material effect on the financial statements:
* Amendments to IFRS 2 Group cash settled share-based payment transactions
* Amendments to IAS 32 Financial instruments: Classification of Rights Issues
* Amendments to IFRS 7 Improving disclosure about financial instruments
* Amendments to IAS 27 Consolidated and separate financial statements
3. Critical accounting judgements and key areas of uncertainty
Critical judgements in applying the Group's accounting policies
In adopting IFRSs as the basis of selecting and applying appropriate Group
accounting policies management has had regard to critical judgements and also
key sources of estimation uncertainty. Key sources of critical judgements and
estimation uncertainty have been identified as follows:
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in
use of the cash-generating units ("CGUs") to which goodwill has been allocated.
The value in use calculation requires the entity to estimate the future cash
flows expected to arise from the cash-generating unit and a suitable discount
rate in order to calculate present value. Details of the cash generating units
are contained in note 13.
The key assumptions used are those regarding growth rates, and anticipated
changes to revenues and costs during the period covered by the calculations.
Changes to revenue and costs are based upon management's expectation. The Group
prepares its annual budget and five-year cash flow forecasts derived therefrom
and thereafter extrapolates using a terminal growth rate of 3% (2009: 5%),
which management consider does not exceed industry average long term growth
rates.
Management estimates discount rates using pre-tax rates which reflect current
market estimates of the time value of money and risks specific to the CGU's.
The rate used to discount the forecast cash flows from all CGU's is 11% (2009:
12%). This rate is also broadly similar to rates which management has observed
in use by other groups operating in the wealth management sector.
The carrying amount of goodwill at the balance sheet date was GBP46.58 million
(2009: GBP48.09 million). No Impairment (2009: GBP18.13 million) has been made
during the year based upon the Directors' review. The discount rate would need
to increase to 14% before any impairment would need to be considered.
The excess of the recoverable amounts over the carrying value of goodwill and
intangible assets of each CGU is as follows:
GBP'000s
Ashcourt Rowan 14,466
Savoy 3,289
EPIC 1,065
Syndicate C.I. (Zenith) 604
Other intangible assets
Acquired client relationships, unit trust management and investment trust
contracts are capitalised on the basis of the net discounted expected revenues
and costs over their estimated lives. The Directors' estimates are based on
historical rates of client and contract retention and revenue generation.
Client relationship, unit trust management and investment trust contracts are
valued at GBP4.06 million, GBP1.67 million and GBP0.17 million (2009: GBP4.71 million,
GBP1.99 million and GBP0.26 million) respectively at the balance sheet. The
Directors' estimated useful lives for the client relationships and the unit
trust management contracts are ten years, and for the investment trust contract
five years, being the life of the contract.
Provisions
The Directors have estimated provisions in respect of onerous property leases
and contingent deferred consideration, totalling GBP0.40 million (2009: GBP3.83
million), which would be dependent on achieving certain key performance
indicators, based upon information available at the balance sheet date. In
estimating these provisions the Directors have made key assumptions regarding
the timeframe of the expected cash outflows. For the onerous lease provision, a
discount rate of 5% has been used to value the expected future cash flows.
4. OPERATING SEGMENTS
The Group has four reportable segments, as described below, which are the
Group's strategic business units. The strategic business units offer a
different mix of products and services, and are managed separately. For each of
the strategic business units, the Group's CEO reviews internal management
reports on at least a monthly basis. The following summary describes the
operations in each of the Group's reportable segments:
Ashcourt Rowan Group - Wealth management and financial planning
EPIC - Institutional investment management
Savoy - Wealth management
Syndicate C.I. (Zenith) - Retail fund management
Information regarding the results of each reportable segment is included below.
Performance is measured based on segment profit before tax, as included in the
internal management reports that are reviewed by the Group's CEO. Segment
profit is used to measure performance as management believes that such
information is the most relevant in evaluating the results of certain segments
relative to other entities that operate within these industries. Inter-segment
pricing is determined on an arm's length basis. The group has no other
operating segments other than those listed above.
Year ending 31 March Ashcourt EPIC Savoy Syndicate Total
2010 C.I.
Rowan
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
External revenues 21,017 3,880 8,099 2,688 35,684
Inter-segment revenues 73 112 - - 185
Total revenue 21,090 3,992 8,099 2,688 35,869
External cost of sales (7,634) (1,709) (3,035) (1,237) (13,615)
Inter-segment cost of - - - (185) (185)
sales
Total cost of sales (7,634) (1,709) (3,035) (1,422) (13,800)
Gross Profit 13,456 2,283 5,064 1,266 22,069
Administrative expenses (10,115) (1,871) (5,187) (1,650) (18,823)
Depreciation and (625) (3) (109) - (737)
amortisation
Total administrative (10,740) (1,874) (5,296) (1,650) (19,560)
expenses
Operating profit 2,716 409 (232) (384) 2,509
Finance income 68 3 9 4 84
Finance expense (176) - (1) (21) (198)
Group management charges (935) (180) (435) (145) (1,695)
Reportable segment 1,673 232 (659) (546) 700
profit before tax
Segment assets 35,745 4,776 5,792 7,219 53,532
Segment liabilities (25,363) (515) (2,583) (5,979) (34,440)
Year ending 31 March Ashcourt EPIC Savoy Syndicate Total
2009 C.I.
Rowan
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
External revenues 20,448 4,096 8,604 4,342 37,490
Inter-segment revenues 202 295 - - 497
Total revenue 20,650 4,391 8,604 4,342 37,987
External cost of sales (6,984) (1,376) (3,205) (1,542) (13,107)
Inter-segment cost of - - - (497) (497)
sales
Total cost of sales (6,984) (1,376) (3,205) (2,039) (13,604)
Gross Profit 13,666 3,015 5,399 2,303 24,383
Administrative expenses (10,312) (1,826) (5,183) (1,515) (18,836)
Depreciation and (392) (76) (109) - (577)
amortisation
Total administrative (10,704) (1,902) (5,292) (1,515) (19,413)
expenses
Operating profit 2,962 1,113 107 788 4,970
Finance income 170 36 30 29 265
Finance expense (375) (1) (2) (15) (393)
Group management charges (1,300) (250) (600) (200) (2,350)
Reportable segment 1,457 898 (465) 602 2,492
profit before tax
Segment assets 32,916 5,500 5,614 7,790 51,820
Segment liabilities (26,026) (1,082) (1,520) (6,004) (34,632)
Reconciliations of reportable segment revenues, profit or loss
2010 2009
GBP'000s GBP'000s
Revenues
Total revenue for reportable segments 35,869 37,987
Less intra-segment revenue (185) (497)
Consolidated revenue 35,684 37,490
Intra segment revenue relates to management fees paid by Syndicate CI (Zenith)
to Ashcourt Rowan and EPIC in respect of investment management services
provided to the Zenith offshore funds.
2010 2009
GBP'000s GBP'000s
Total administrative expenses
Total administrative expenses for (19,560) (19,413)
reportable segments
Less unallocated items:
Amortisation and depreciation (773) (993)
Head office costs and costs of parent (4,355) (2,819)
company
Consolidated administrative expenses (24,688) (23,225)
2010 2009
GBP'000s GBP'000s
Profit or loss before tax
Total profit before tax for reportable 700 2,492
segments
Unallocated amounts:
Management fees paid to parent 1,695 2,350
Head office costs and costs of parent (4,374) (2,819)
company
Amortisation and depreciation (773) (993)
Other gains and losses - (19,314)
Investment income 13 90
Net finance costs 227 (877)
Consolidated loss before tax (2,512) (19,071)
Reportable Adjustments Consolidated
Segment GBP'000s totals
Total GBP'000s
GBP'000s
Other material items 2010
Investment income 84 13 97
Finance expense (198) 208 10
Amortisation and depreciation (548) (962) (1,510)
Reportable Adjustments Consolidated
Segment GBP'000 s totals
Total GBP'000s
GBP'000s
Other material items 2009
Finance income 265 90 355
Finance expense (393) (877) (1,270)
Amortisation and depreciation (577) (993) (1,570)
5. Revenue
2010 2009
GBP'000s GBP'000s
Wealth management services 32,385 33,394
Institutional fund management 3,299 4,096
35,684 37,490
No material revenue was generated outside of the UK and the Channel Islands.
6. LOSS/PROFIT from operations
Loss/profit from operations has been arrived at after charging:
2010 2009
GBP'000s GBP'000s
Depreciation of property, plant and equipment (see 455 515
note 15)
Staff costs (see note 7) 18,690 19,526
Auditors' remuneration (see below) 235 371
Amortisation of intangible assets (see note 14) 1,055 1,055
The analysis of Auditors' remuneration is as follows:
2010 2009
GBP'000s GBP'000s
Annual audit fee in respect of current financial
year:
Audit of these financial statements 42 157
Audit of subsidiaries pursuant to legislation 193 214
235 371
Fees payable to the Company's Auditor and their associates for other services
to the Group are as follows:
2010 2009
GBP'000s GBP'000s
Tax services 37 12
Other services 82 43
119 55
7. Staff costs, including Directors' remuneration
The average monthly number of employees (including executive directors) was:
2010 2009
Number Number
Administration staff 209 177
Fund managers and investment advisers 83 94
Directors and other managers 32 45
324 316
Their aggregate remuneration comprised:
2010 2009
GBP'000s GBP'000s
Wages and salaries 15,829 16,569
Social security costs 1,857 1,710
Other pension costs paid to defined contribution 1,004 1,247
arrangements
18,690 19,526
Aggregate Directors' emoluments included above comprised:
2010 2009
GBP'000s GBP'000s
Emoluments 740 741
Pension contributions 39 52
779 793
The emoluments and pension contribution for the highest paid Director were GBP
221,455 and GBP17,500 respectively (2009: GBP227,715 and GBP22,672).
8. Investment Income
2010 2009
GBP'000s GBP'000s
Interest on cash and cash equivalents 95 286
Dividends on available-for-sale investments 2 69
Interest on overpaid tax - -
97 355
9. Other gains and (Losses)
2010 2009
GBP'000s GBP'000s
Impairment of goodwill (see note 13) - (18,133)
Impairment of other intangible assets (see note 14) - (665)
Impairment of investment in associate company - (494)
Impairment of available-for-sale investment - (22)
- (19,314)
10. NET Finance costs
2010 2009
GBP'000s GBP'000s
Interest on loans 179 929
Interest on deferred consideration 85 339
Interest on obligations under finance leases 2 2
Discount on early redemption of loan notes (276) -
Total borrowing costs (10) 1,270
Interest on deferred consideration relates to the amortisation of imputed
interest arising on the recording of the deferred consideration at fair value.
11. Taxation
2010 2009
GBP'000s GBP'000s
Current tax - (364)
Over provision in prior periods (39) (150)
(39) (514)
Deferred tax credit (see note 18) 447 547
408 33
Corporation tax is calculated at 28% (2009: 28%) of the estimated assessable
result for the year. The current charge for the year can be reconciled to the
result per the income statement as follows:
2010 2009
GBP'000s GBP'000s
Loss before tax in the year (2,512) (19,071)
Tax charge at 28%(2009: 28%) thereon 703 5,340
Expenses not deductible for tax (538) (6,032)
Other allowances 121 160
Losses utilised/carried forward (146) -
Foreign tax adjustments (140) 168
Tax on foreign dividends - -
Under provision in prior periods (39) (150)
(39) (514)
12. Loss per share
The calculation of the basic and diluted loss per share is based on the
following data:
2010 2009
GBP'000s GBP'000s
Loss for the purposes of basic loss per share being (2,104) (19,038)
loss attributable to equity holders of the parent
2010 2009
Number Number
Weighted average number of ordinary shares for the 1,049,591,627 133,245,612
purposes
of basic earnings per share
Effect of dilutive potential ordinary shares:
Warrants - -
Options - -
Weighted average number of ordinary shares for the 1,049,591,627 133,245,612
purposes of fully diluted earnings per share
The denominator for the purposes of calculating basic earnings per share has
been adjusted to reflect the share issues which took place in the year. In the
year the potential ordinary shares under the warrant and options would have the
effect of reducing the loss per share and therefore are anti-dilutive.
13. Goodwill
GBP'000s
Cost
As at 31 March 2008 62,603
Acquisitions (note 21 (g)) 4,557
Adjustment to the fair value of consideration payable:
EPIC (1,000)
Towerpoint (165)
PSD (171)
IFS 450
Burfield (51)
Impairment of goodwill:
Ashcourt (7,358)
IMH (987)
Savoy (5,692)
EPIC (1,925)
SAM C.I. (2,171)
As at 31 March 2009 48,090
Adjustment to the fair value of consideration payable:
EPIC (see note 22 (a)) (1,573)
Additional amountspaid on restructuring of deferred consideration 59
Impairment of goodwill -
As at 31 March 2010 46,576
Goodwill arising in a business combination is allocated to the cash generating
unit ("CGU") which is expected to benefit from the acquisition. The carrying
amount of goodwill has been allocated as follows:
2010 2009
GBP'000s GBP'000s
Ashcourt - a single CGU 27,412 19,551
IMH - a single CGU - 7,802
Savoy - a single CGU 8,924 8,924
EPIC - a single CGU 9,621 11,194
Syndicate C.I. - a single CGU 619 619
Total 46,576 48,090
During the year the operating businesses within the IMH CGU were transferred to
Ashcourt and fully integrated within the Ashcourt CGU. Accordingly in the
opinion of management this combined business should now be reported as a single
CGU. Ashcourt and Savoy both provide wealth management services to private
clients, trusts charities and pension funds. EPIC provides cash and bond
management services to institutional investors and fixed interest and equity
fund management services for specialist closed-end funds. Syndicate C.I.
administers a range of collectives in Dublin, Guernsey and the UK, managed by
other group companies.
The Group tests for impairment in the period of acquisition and annually
thereafter unless there are indications that goodwill may be impaired such that
earlier assessment is required. The recoverable amounts of CGU's are derived
from value-in-use calculations. The key assumptions used are those regarding
growth rates, and anticipated changes to revenues and costs during the period
covered by the calculations. Changes to revenue and costs are based upon
management's expectation. The Group prepares its annual budget and five-year
cash flow forecasts derived therefrom and thereafter extrapolates using a
terminal growth rate of 3% (2009: 5%), which management consider does not
exceed industry average long term growth rates.
Management estimates discount rates using pre-tax rates which reflect current
market estimates of the time value of money and risks specific to the CGU's.
The rate used to discount the forecast cash flows from all CGU's is 11% (2009:
12%).
It is possible that the Company's time value of money and risks specific to the
CGU's may increase in the future which would cause the carrying amount of each
CGU to exceed their value-in-use.
14. Other intangible assets
Acquired Acquired
Acquired unit trust Investment
client management trust
relationships contracts management
contracts
Total
GBP'000s GBP'000s GBP'000s GBP'000s
Cost
At 31 March 2008 5,779 3,251 442 9,472
Acquired on acquisition of 640 - - 640
subsidiaries
At 31 March 2009 6,419 3,251 442 10,112
Acquired on acquisition of - - - -
subsidiaries
At 31 March 2010 6,419 3,251 442 10,112
Amortisation
At 31 March 2008 1,071 268 98 1,437
Charge for the year 642 325 88 1,055
Impairment losses - 665 - 665
At 31 March 2009 1,713 1,258 186 3,157
Charge for the year 641 325 89 1,055
At 31 March 2010 2,354 1,583 275 4,212
Carrying amount
At 31 March 2010 4,065 1,668 167 5,900
At 31 March 2009 4,706 1,993 256 6,955
At 31 March 2008 4,708 2,983 344 8,035
The recognition of acquired intangible assets in the period resulted from the
acquisitions as described in notes 13. Acquired client relationships and
acquired unit trust management contracts are amortised over their estimated
useful lives, being ten years. Acquired investment trust management contracts
are amortised over the life of the investment trust which on acquisition was
five years.
The impairment loss recognised during the year relates to Management's estimate
of the impairment in value of the unit trust management contracts acquired as
part of the acquisition of EPIC. See note 13 for details of impairment testing.
15. Property, plant and equipment
Fixtures
and
equipment
GBP'000s
Cost
At 31 March 2008 2,219
Acquired on acquisition of subsidiaries -
Additions 512
At 31 March 2009 2,731
Additions 361
At 31 March 2010 3,092
Depreciation and impairment
At 31 March 2008 1,138
Charge for the year 515
At 31 March 2009 1,653
Charge for the year 455
At 31 March 2010 2,108
Carrying amount
At 31 March 2010 984
At 31 March 2009 1,078
At 31 March 2008 1,081
The carrying amount of the Group's fixtures and equipment includes an amount of
GBP3,000 (2009: GBP4,000) in respect of assets held under finance leases.
16. Available-for-sale investments
The table below analyses financial instruments carried at fair value, by
valuation method. The different levels have been defined as follows:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or
liabilities
Level 2 - inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e., as prices) or
indirectly (i.e., derived from prices)
Level 3 - inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The available for sale investments held by the group are level three
investments and are split as follows:
Included in non-current assets: 2010 2009
GBP'000s GBP'000s
Equity investments 146 146
146 146
Included in current assets: 2010 2009
GBP'000s GBP'000s
Collective investment schemes - 22
- 22
During the year there were no transfers between level 1 and level 2 valuation
,methods and no transfers into or out of level 3 valuation method
These investments are held at the Directors' estimate of fair value. The effect
of fair value changes is not considered significant.
17. Other financial assets
2010 2009
GBP'000s GBP'000s
Trade and other receivables
Client receivables 8,062 7,733
Prepayments and accrued income 4,365 3,835
VAT recoverable and other receivables 715 960
13,142 12,528
Allowance is made for estimated irrecoverable amounts from trade receivables of
GBP35,000 (2009: GBP41,000). The Directors consider that the carrying amount of
trade and other receivables approximates to their fair value.
Bank balances and cash comprise cash held by the Group and short-term bank
deposits with an original maturity of three months or less. The carrying amount
of these assets approximates to their fair value.
Financial risk management
The financial risk management objectives and policies of the Group and related
disclosures are set out on pages 13 to 16 in the Business Review and note 28.
18. Deferred tax
The following are the major deferred tax liabilities and assets recognised by
the Group and movements thereon during the current and prior reporting period.
At the balance sheet date, excess management expenses and tax losses available
for carry forward are approximately GBP3.8 million (2009: GBP2.9 million). No
deferred tax asset has been recognised in respect of the losses due to the
unpredictability of future profit streams in the companies where the losses
reside. Such losses may be carried forward indefinitely.
The net deferred tax liability comprises temporary timing differences arising
from the fair value of non-goodwill intangible assets (see note 14) arising on
the acquisition of subsidiaries, net of the deferred tax asset on timing
differences arising on the charge on share-based payments. The net liability is
made up as follows:
On On Total
acquisitions share-based GBP'000s
payments
GBP'000s
GBP'000s
At 31 March 2008 2,255 (44) 2,211
Arising on acquisition of 179 - 179
intangible assets (see notes 13
and 14)
Arising on share based payments - (67) (67)
Released in the year (see note 11) (481) - (481)
At 31 March 2009 1,953 (111) 1,842
Arising on share based payments - (153) (153)
Released in the year (see note 11) (294) - (294)
At 31 March 2010 1,659 (264) 1,395
19. Obligations under finance leases
20.
Present Minimum Present
Minimum lease payments value of lease value of
lease payments lease
2010 payments payments
2010 2009 2009
GBP'000s GBP'000s GBP'000s GBP'000s
Amounts payable under finance
leases:
Within one year - - 9 8
In the second to fifth years - - 5 5
inclusive
Total - 14 13
Less: future finance charges - (1)
- 13
It is the Group's policy to lease certain of its fixtures and equipment under
finance leases. The average lease term is three to four years. For the year
ended 31 March 2010, the average effective borrowing rate was 9% (31 March 2009
- 9%). Interest rates are fixed at the contract date. All leases are on a fixed
repayment basis and no arrangements have been entered into for contingent
rental payments.
The fair value of the Group's lease obligations approximates to their carrying
amount.
The Group's obligations under finance leases are secured by charges over the
leased assets.
20. Other financial liabilities
Trade and other payables
2010 2009
GBP'000s GBP'000s
Trade and other payables 12,096 12,515
The Directors consider that the carrying amount of trade payables approximates
to their fair value.
21. Loans and deferred consideration
Loans and deferred consideration have arisen in connection with various
acquisitions as follows:
31 March 2010 Bank Deferred Loan Sub-ordinated Total
Loans consideration notes loans
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Chartwell House Group - - - - -
plc (note a)
PSD Robinson Gear (note - - - - -
b)
EPIC Investment Partners - - - - -
(note c)
Syndicate Asset - - - - -
Management (C.I.) Ltd
formerly Insight
Investment Management
(C.I.) Ltd (note d)
Independent Financial - - 856 - 856
Solutions Group Ltd
(note f)
Pagan Osborne (note g) - - - - -
Other (notes e, h, i and - - 29 32 61
j)
- - 885 32 917
Repayable as follows:
Within one year - - 885 32 917
In the second year - - - - -
In the third to fifth - - - - -
years inclusive
- - 885 32 917
Less: Amounts due within - - (885) (32) (917)
one year
Amounts due for - - - - -
settlement after one
year
31 March 2009 Bank Deferred Loan Sub-ordinated Total
Loans consideration notes loans
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Chartwell House Group - 82 82
plc (note a)
PSD Robinson Gear (note - - 237 - 237
b)
EPIC Investment Partners - - 6,910 - 6,910
(note c)
Syndicate Asset 2,325 - - - 2,325
Management (C.I.) Ltd
formerly Insight
Investment Management
(C.I.) Ltd (note d)
Independent Financial 1,275 - 1,245 - 2,520
Solutions Group Ltd
(note f)
Pagan Osborne (note g) 2,300 - - - 2,300
Other (notes e, h and i) 1,900 - 32 32 1,964
7,800 - 8,424 114 16,338
Repayable as follows:
Within one year 7,500 - 1,514 114 9,128
In the second year 200 - - - 200
In the third to fifth 100 - 6,910 - 7,010
years inclusive
7,800 - 8,424 114 16,338
Less: Amounts due within (7,500) - (1,514) (114) (9,128)
one year
Amounts due for 300 - 6,910 - 7,210
settlement after one
year
(a) On 10 November 2005, Ashcourt Holdings Limited acquired 100% of the issued
share capital of Chartwell House Group Plc for a cash consideration of GBP
1,659,000 plus consideration of GBP900,000 by way of a subordinated loan. The
loan pays interest at a rate of 1% above the HSBC Bank Plc base rate and the
Directors estimated its fair value on issue to be GBP880,000. The loan is
repayable each year and the amount of repayment is based on 15% of the annual
turnover of the Chartwell House business acquired. The loan must be fully
repaid by 30 April 2011. The balance at 31 March 2010 was GBPnil (31 March 2009:
GBP82,000).
(b) On 3 December 2006 Ashcourt Holdings Limited acquired 100% of PSD Robinson
Gear (Investment Planning) Limited. Consideration included deferred
consideration to the maximum of GBP1,500,000 based on 40% of revenue arising post
acquisition. The deferred consideration is payable over the period from the
date of acquisition to 30 November 2008 in the form of loan notes which bear
interest at the rate of 1% over the Bank of England base rate until redeemed,
with redemption at the option of the holder. At 31 March 2010 the amount of
loan notes issued not yet redeemed amounted to GBPnil (31 March 2009: GBP237,000).
(c) On 19 January 2007 the company acquired 100% of the issued share capital of
EPIC Investment Partners plc for a cash consideration of GBP4,718,000, 5,404,451
ordinary shares in the company, loan notes totalling GBP6,910,000 and additional
contingent deferred consideration (see note 22). The loan notes carry a coupon
of 6% and are repayable in two instalments in 4 and 5 years. The deferred
consideration is payable over 3 years based on the performance of the acquired
business. During the year the loan notes were redeemed early at a discount of
4% so at 31 March 2010 the balance of loan notes outstanding was GBPnil (31 March
2009: GBP6,910,000).
(d) On 29th June 2007 Syndicate Asset Management plc acquired 100% of the
issued share capital of Syndicate Asset Management (C.I.) Limited (formerly
Insight Investment Management (C.I.) Limited) for GBP5.5m plus expenses of GBP
203,000. This acquisition was partly financed by a 5 year term loan from
National Westminster Bank of GBP4.125m carrying an interest rate of 1.75% over
LIBOR. This loan was rescheduled and combined with our bank loans (see note (j)
below).
(e) On 29th June 2007 Syndicate Asset Management plc put in place a 3 year GBP3m
Revolving Credit Facility from National Westminster Bank carrying an interest
rate of 1.5% over LIBOR. To date GBP1.4m has been drawn down on this facility.
This loan has been rescheduled and combined with our loans (see (j) below).
(f) On 4 February 2008, Ashcourt Holdings Limited acquired 100% of the issued
share capital of Independent Financial Solutions Group Limited ("IFS").
Consideration included deferred consideration to the maximum of GBP2,100,000
based on 55% of revenue arising post acquisition. The deferred consideration is
payable over the period from the date of acquisition to 31 January 2010 in the
form of loan notes which bear interest at the rate of 0.5% over the Bank of
England base rate until redeemed, with redemption at the option of the holder.
At 31 March 2010 there were loan notes issued but not redeemed of GBP856,000 (31
March 2009: GBP1.244 million).
(g) On 29 August 2008 the Company acquired the investment management and
financial planning businesses of Pagan Osborne solicitors. Consideration
included a maximum deferred consideration of GBP2.5 million payable in December
2008 and December 2009. This acquisition was partly financed by a 3 year term
loan from National Westminster Bank of GBP2.5 million carrying an interest rate
of 1.75% over LIBOR. This loan has been rescheduled and combined with our loans
(see (j) below).
(h) The unsecured loan notes carry interest at the rate of 7.25% per annum and
are redeemable in whole or in part at the note-holders' option on 30 April 2007
or on any 30 April or 31 October, up to and including 30 April 2010.
(i) The subordinated loan is repayable on demand and carries interest at a
fixed rate of 7.5% per annum.
(j) During the year the company rescheduled its various loan facilities with
National Westminster Bank into a single facility carrying an interest rate of
3% over LIBOR, which was subsequently repaid. The balance at 31 March 2010 was
GBPnil million (31 March 2009: GBP7.8 million).
22. Provisions
Contingent
Surplus leasehold property costs deferred Total
consideration GBP'000s
GBP'000s GBP'000s
At 31 March 2008 227 5,114 5,341
On acquisitions - 964 964
Increase/(reduction) in provision 81 (2,552) (2,471)
At 31 March 2009 308 3,526 3,834
Increase/(reduction) in provision (124) (3,308) (3,432)
At 31 March 2010 184 218 402
2010 2009
GBP'000s GBP'000s
Included in current 125 1,073
liabilities
Included in non-current 277 2,761
liabilities
402 3,834
The provision in respect of surplus leasehold assets reflects management's best
estimate of the liability arising from onerous lease obligations in respect of
leasehold property interests acquired on the acquisition of subsidiaries in the
period ended 31 March 2006.
The provision in respect of contingent deferred consideration relates to
consideration on acquisitions that will fall due only if future conditions are
met. These conditions include future levels of profitability, turnover or
values of funds under management as follows:
a) On 19 January 2007 the Company acquired EPIC Investment Partners Plc. The
total consideration on this acquisition included deferred consideration,
contingent on the profitability of the acquired business over the next three
years. Due to the results of this business no further consideration is payable.
Therefore the provision included above at the balance sheet date is GBPnil (2009:
GBP1,559,000).
b) On 4 February 2008 Ashcourt Holdings Limited, a wholly owned subsidiary of
the Company, acquired Independent Financial Solutions Group Limited. The total
consideration on this acquisition included deferred consideration, contingent
on a maximum of 55% of the turnover of the acquired business over the next two
years. The provision included above at the balance sheet date is GBPnil (2009: GBP
819,000).
c) On 28 August 2008 Ashcourt Holdings Limited, a wholly owned subsidiary of
the Company, acquired the business of St Andrews Asset Management and Pagan
Osborne IFA. The total consideration on this acquisition included deferred
consideration contingent on the funds under management of the asset management
business at a future date and the turnover of the IFA business over the next 15
months. The provision included at 31 March 2010 is GBP87,000 (2009: GBP964,000).
d) On 29 February 2008 Investment Management Holdings Limited acquired 100% of
the issued share capital of Burfield and Partners Asset Management Limited.
Consideration included minimum deferred consideration of GBP100,000 to a maximum
of GBP275,000 based on 71% of revenue arising post acquisition. The deferred
consideration is payable over the period from the date of acquisition to 31
March 2011. The provision included at 31 March 2010 is GBP130,000 (2009: GBP
184,000).
23. Share capital
2010 2009
GBP'000s GBP'000s
Authorised:
2,500 million (2009: 250 million) ordinary shares of GBP 5,000 500
0.002 each
Issued and fully paid:
1,804,015,296 (2009:137,579,042) ordinary shares of GBP 3,608 275
0.002 each
During the year the Company issued shares on the under-noted dates in the
following amounts:
Number Nominal Proceeds
of shares value of share
issued issue
of shares
Number issued GBP'000s
GBP'000s
Ordinary shares of GBP0.002 each issued 112,469 1 5
on 7 April 2009 to Yorkshire Building
Society on behalf of the Syndicate
staff share incentive scheme.
Ordinary shares of GBP0.002 each issued 16,137 - 1
on 20 April 2009 to Yorkshire
Building Society on behalf of the
Syndicate staff share incentive
scheme.
Placing of ordinary shares of GBP0.002 510,000,000 1,020 5,100
each on 27 May 2009
Placing and Open Offer of ordinary 1,147,707,648 2,295 17,216
shares of GBP0.002 each on 30 October
2009
Issue of ordinary shares of GBP0.002 8,600,000 17 129
each to advisers on 30 October 2009
in lieu of fees on Pacing and Open
Offer
The Company has one class of ordinary shares which carries no right to fixed
income.
Management of the Company's capital is discussed in the Risk Management section
of the Director's Report and in Note 28.
Share
capitalGBP
'000s
At 31 March 2008 261
Issue of equity shares 14
At 31 March 2009 275
Issue of equity shares 3,333
At 31 March 2010 3,608
24. Share premium account
Share
premium GBP
'000s
At 31 March 2008 53,517
Issue of equity shares 2,233
At 31 March 2009 55,750
Issue of equity shares 19,117
Cost of issue of equity shares (2,345)
At 31 March 2010 72,522
25. Equity reserve
Staff Equity
Warrants share-based reserve
GBP'000s payments GBP'000s
GBP'000s
At 31 March 2008 378 182 560
Share-based payments - Options - 210 210
Share-based payments - Deferred share bonus - 300 300
Cancellation of warrants (200) - (200)
Costs of share issue (18) - (18)
Transfer to retained earnings (160) - (160)
At 31 March 2009 - 692 692
Share-based payments - Options - 167 167
Share-based payments - Long Term Incentive - 202 202
Share-based payments - Deferred share bonus - 174 174
Cancellation of 2009 deferred share bonus - (300) (300)
At 31 March 2010 - 935 935
A charge of GBP543,000 (GBP2009: GBP510,000) has been recognised in the income
statement. The balance on the equity reserve represents amounts provided in
respect of share-based payments.
On 6 August 2006 the Company issued options over 855,555 ordinary shares of the
Company. The options have been valued using the Black-Scholes model and
accounted for as equity settled share-based payments. Inputs to the model are
as follows:
Weighted average share price GBP0.655
Weighted average exercise price GBP0.655
Expected volatility 7.68%
Expected life 5 years
Risk-free rate 4.84%
Expected dividends -
On 21 March 2007 the Company issued options over 2,169,444 shares which were
not included in the 2007 accounts but have been valued under the Black-Scholes
model and accounted for as equity settled share-based payments in the year to
31 March 2008 onwards. The inputs to the valuation of this issue are:
Weighted average share price GBP0.675
Weighted average exercise price GBP0.675
Expected volatility 3.34%
Expected life 5 years
Risk-free rate 5.10%
Expected dividends -
On 30 May 2008 the Company also issued options over a further 975,000 shares
which have been valued under the Black-Scholes model and accounted for as
equity settled share-based payments in the year to 31 March 2009. The inputs to
the valuation of this issue are:
Weighted average share price GBP0.85
Weighted average exercise price GBP0.875
Expected volatility 7.63%
Expected life 3.5 years
Risk-free rate 4.01%
Expected dividends -
On 30 May 2008 the Company entered into a deed of cancellation with Noble
Financial Holdings Limited (`Noble'), a subsidiary of Noble Group Holdings
Limited, pursuant to which it was agreed that Noble cancel its outstanding
warrants over 931,666 ordinary shares in the capital of the Company, which were
exercisable at a price of 60p a share, upon receiving the sum of GBP200,000 from
the Company. There were costs of GBP18,000 associated with the cancellation of
these warrants. After deducting these two amounts the surplus of GBP160,000 held
in the equity reserve in respect of these warrants was transferred to earnings.
On 16 December 2008 employees and Directors released their entitlement to
3,500,000 options over the Company's shares due to the fact that the options
were out of the money and unlikely ever to be in the money. These options were
replaced on 18 December 2008, for no gain or loss in the income statement, by
options over 3,500,000 shares which have been valued under the Black-Scholes
model and accounted for as equity settled share-based payments in the year to
31 March 2009. The inputs to the valuation of this issue are:
Weighted average share price GBP0.0875
Weighted average exercise price GBP0.12
Expected volatility 30%
Expected life 4 years
Risk-free rate 2.63%
Expected dividends -
The Company has established an unauthorised and an authorised share option
scheme. The authorised scheme received HM Revenue and Customs approval on 9
November 2006. For each award the exercise price is not greater than the market
value of the shares at the date of grant. The vesting period for each award is
three years and options are settled by an allotment of shares to individuals.
If the options remain unexercised after a period of ten years from the date of
award, the options expire. Furthermore, options are forfeited if the employee
leaves the Group before the options vest. Employees who are deemed `good
leavers' are entitled to exercise their option for a period of six months after
they leave.
The following share options granted under the scheme were in place at 31 March
2009:
Date option granted Option Price Number of
Per share Options
18 December 2008 12.0p 2,650,000
The number and weighted average exercise price ("WAEP") of share options
outstanding are as follows:
Number WAEP
(pence)
Outstanding at 31 March 2008 3,150,000 13.20
Forfeited during the year (500,000) 19.55
Outstanding at 31 March 2009 2,650,000 12.00
In March 2009 the company awarded deferred bonuses of GBP300,000 to staff to be
issued as ordinary shares in December 2009. This amount was recognised in the
income statement in the year to 31 March 2009 and included in the charge for
share-based payments of GBP510,000 above. In December 2009 the Group settled
these bonuses in cash.
On 3 December 2009 the Company awarded 48.5 million ordinary shares to
employees of the Group under a long term incentive plan. These shares are
accounted for as equity settled share-based payments and vest in equal
instalments on the first second and third anniversaries of the award date,
subject to certain performance related vesting conditions. A further 37 million
shares were awarded on 2 March 2010. These also vest in equal instalments on
the first, second and third anniversaries of the award date subject to certain
performance related vesting conditions.
The fair value of these awards has been calculated based on the likelihood of
successful completion of the vesting conditions and has been charged to the
income statement over the vesting period of the awards.
At 31 March 2010 the Company had also provided for a deferred bonus to be
awarded to staff for the year. The bonus will take the form of an equity
settled deferred award of shares to be issued in one year. It is expected that
25 million shares will be awarded. The Directors have estimated the fair value
at the grant date and this amount will be charged to the income statement over
the period from 1 April 2009 and 31 March 2011 consistent with the service
period attached to the awards.
26. Retained EARNINGS/(deficit)
GBP'000s
At 31 March 2008 3,386
Loss for the year (19,038)
Unrealised currency gain 153
Transfer from equity reserve (see note 25) 160
At 31 March 2009 (15,339)
Loss for the year (2,104)
Unrealised currency loss (153)
At 31 March 2010 (17,596)
27. Reconciliation of movements in shareholders' funds
2010 2009
GBP'000s GBP'000s
Opening shareholders' funds 41,378 57,724
Loss for the year (2,104) (19,038)
Issue of ordinary shares 20,105 2,247
Share-based payments 543 510
Cancellation of share-based payments/warrants (300) (218)
Unrealised currency gain (153) 153
Closing shareholders' funds 59,469 41,378
28. Risk management
Exposure to credit risk, market risk (which combines foreign currency risk,
interest rate risk and market price risk) and liquidity risk arises in the
normal course of the Group's business. For details of the risks of the Company
see note 45.
Capital risk management
The Group manages its capital through continuous review of the total regulatory
capital requirements of its regulated subsidiaries which is reported monthly to
the Board. The Group and each regulated entity have been in compliance with
their Regulatory Capital requirements at all times during the year.
Externally imposed capital requirements
The Group contains subsidiaries that are supervised in the UK by the Financial
Services Authority ("FSA"). The regulated subsidiary companies submit quarterly
returns to the FSA relating to capital adequacy. The Group submits a return at
the half year and year end setting out the Group's position in relation to the
FSA's requirements on a consolidated basis but has been granted a waiver to
these requirements until November 2011. Throughout the year the Group held
significant surplus capital over the regulatory requirements.
Credit risk
The credit risk to the Group is limited to the non-payment of investment
management fees, commissions earned but not received, cash at banks and
investments. At the balance sheet date there were no significant concentrations
of credit risk external to the Group.
Management has a credit policy in place and the exposure to credit risk is
monitored on an ongoing basis. The Group does not require collateral in respect
of financial assets because for the majority of client accounts the Group has
the right to deduct its management fees from the client's investment portfolio.
The historical incidence of bad debts has been very isolated and infrequent.
The credit risk on liquid funds is limited because the counterparties are banks
with high credit ratings assigned by international credit-rating agencies.
At the balance sheet date the Group had the following credit risk exposures:
2010 2009
GBP'000s GBP'000s
Cash and cash 7,531 7,101
equivalents
Client 8,062 7,733
receivables
Other debtors 715 960
16,308 15,794
The amounts in the above table are based on the carrying value of all accounts.
The Group has other receivables that are not subject to credit risk.
The following table represents the aged breakdown of client receivables as at
the balance sheet date that are past their due date:
2010 2009
GBP'000s GBP'000s
Gross Bad Debt Gross Bad Debt
Provisions Provisions
< 60 days 2,702 - 2,435 -
60 - 180 days 99 22 167 4
180 - 360 days 39 3 60 21
> 360 days 75 10 26 16
2,915 35 2,688 41
Foreign currency risk
The Group is exposed to foreign currency risk on cash balances that are
denominated in a currency other than Sterling. The currencies giving rise to
this risk are primarily U.S. Dollars and Euros.
In respect of other monetary assets and liabilities held in currencies other
than Sterling, the Group ensures that the net exposure is kept to an acceptable
level, by buying or selling foreign currencies at spot rates where necessary to
address short-term imbalances.
The significant majority of the Group's clients are invoiced in Sterling and
the Group only maintains a small float of cash in foreign currencies.
Therefore, the Group's currency risk is minimal and accordingly no sensitivity
analysis has been presented.
Interest rate risk
The Group's exposure to interest rate risk on financial assets is mitigated by
placing surplus funds on fixed deposit for various levels of maturity. The
interest rates obtained are market rates which are typically linked to base
rate. Typically, cash is held on deposit for no longer then 90 days. All cash
balances at the year end were held on call deposit. The Group also has
interest-bearing financial liabilities with floating interest rates.
Management deems interest rate risk immaterial and does not actively manage
this risk. At the balance sheet date, the Group held GBP7.5 million (2009: GBP7.1
million) in cash and cash equivalents on which interest is earned and had GBP0.9
million (2009: GBP7.8 million) payable in loans and deferred consideration on
which interest is paid with floating rates of interest.
An increase of 50 basis points in interest rates at the balance sheet date
would increase the interest payable on floating rate interest bearing
liabilities held at the balance sheet date by GBP3,000 per annum net of tax,
assuming a corporation tax rate of 28%.
An increase of 50 basis points in interest rates at the balance sheet date
would increase interest receivable on cash and cash equivalents held at the
balance sheet date by GBP27,000 per annum net of tax, assuming a corporation tax
rate of 28%.
Market price risk
Equity prices are governed by markets in which such equities are traded. The
construction of equity portfolios for funds which the Group acts as Manager is
driven by the investment objectives of each fund and consequently market risk
cannot be fully mitigated. There were no principal stock positions at the
balance sheet date.
Management deems market price risk to be immaterial.
Liquidity risk
Liquidity risk is the risk that the Group does not have sufficient financial
resources to meet its obligations when they fall due, or will have to do so at
excessive cost. This risk can arise from mismatches in the timing of cash flows
relating to assets, liabilities and off-balance sheet instruments. The Group
monitors liquidity risk taking into account cash balances held and levels of
borrowing in addition to the requirements imposed by the Financial Services
Authority on the Group's regulated subsidiaries.
Non-derivative cash flows
The table below presents the cash flows receivable and payable by the Group
under non-derivative financial assets and liabilities by remaining contractual
maturities at the balance sheet date. The amounts disclosed in the table are
the contractual, undiscounted cash flows whereas the Group manages inherent
liquidity risk on expected undiscounted cash flows.
The net liquidity positions in the table below, relate to cash flows on
contractual obligations existing at the balance sheet date. They do not take
account of any cash flows generated from profits on normal trading activities
nor do they reflect the rescheduling of the bank debt described in note 22.
On demand < 3 months 3 - 12 1 - 5 > 5 years
months years
GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
As at 31 March 2010
Assets
Cash and cash 7,131 400 - - -
equivalents
Client receivables 2,044 6,018 - - -
Other financial assets 619 1,004 14 - -
Total financial assets 9,794 7,422 14 - -
On demand < 3 months 3 - 12 1 - 5 > 5 years
months years
GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
Liabilities
Trade and other payables - 10,510 204 - -
Bank loan commitments - - - - -
Loan note commitments - - 894 - -
Deferred consideration - - - 92 -
Minimum operating lease - 332 982 3,207 536
commitments
Finance lease - - - - -
commitments
Total financial - 10,842 2,080 3,299 536
liabilities
Net liquidity surplus/ 9,794 (3,420) (2,066) (3,299) (536)
(deficit)
On demand < 3 months 3 - 12 1 - 5 > 5 years
months years
GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
As at 31 March 2009
Assets
Cash and cash 7,101 - - - -
equivalents
Client receivables 2,647 5,086 - - -
Other financial assets - 137 313 - 75
Total financial assets 9,748 5,223 313 - 75
Liabilities
Trade payables - 8,803 692 - -
Bank loan commitments - 7,300 - 500 -
Loan note commitments - 1,481 - 6,910 -
Deferred consideration - 82 1,091 2,507 -
Minimum operating lease - 329 920 3,781 681
commitments
Finance lease - - 8 5 -
commitments
Total financial - 17,995 2,711 13,703 681
liabilities
Net liquidity surplus/ 9,748 (12,772) (2,398) (13,703) (606)
(deficit)
Fair values
Estimation of fair values
The following summarises the major methods and assumptions used in estimating
the fair values of financial instruments reflected in the table.
Other investments
Fair value is based on quoted market prices at the balance sheet date without
any deduction for transaction costs.
Trade and other receivables / payables
For receivables / payables with a remaining life of less than one year, the
notional amount is deemed to reflect the fair value. All other receivables /
payables greater than one year are discounted at base rate to determine the
fair value.
29. Operating lease arrangements
30.
2010 2009
GBP'000s GBP'000s
Minimum lease payments under operating leases 1,052 1,431
recognised in income for the year
At the balance sheet date, the Group had outstanding commitments for future
minimum lease payments under non-cancellable operating leases, which fall due
as follows:
2010 2009
GBP'000s GBP'000s
Within one year 1,314 1,249
In the second to fifth years inclusive 3,207 3,781
After five years 537 681
5,058 5,711
Operating lease payments represent rentals payable by the Group for certain of
its office properties. Leases were negotiated for an average term of seven
years and rentals are fixed for an average of three years.
30. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note. Transactions between the Company and its subsidiaries are disclosed in
the Company's separate financial statements (see note 43).
Remuneration of key management personnel
The remuneration of the Directors, who are the key management personnel of the
Group, is set out below in aggregate for each of the categories specified in
International Accounting Standard 24 Related Party Disclosures. Further
information about the remuneration of individual Directors is provided on page
29.
2010 2009
GBP'000s GBP'000s
Short-term employee benefits 747 741
Other long-term benefits 61 52
808 793
Note 2010 2009
GBP'000s GBP'000s
Non-current assets
Property, plant and equipment 35 455 279
Investments in subsidiaries 39,634 39,247
Due from group companies 19,031 12,683
Total non-current assets 59,120 52,209
Current assets
Other receivables 565 383
Due from group companies 650 4,487
Cash and cash equivalents 80 8
Total current assets 1,295 4,878
Total assets 60,415 57,087
Current liabilities
Other payables 37 (1,316) (376)
Due to group companies (3,131) (3,050)
Loans and deferred consideration 38 - (7,500)
Total current liabilities (4,447) (10,926)
Non-current liabilities
Loans and deferred consideration 38 - (7,210)
Long term provisions 39 - (1,559)
Total non-current liabilities - (8,769)
Total liabilities (4,447) (19,695)
Net assets 55,968 37,392
Equity
Share capital 3,608 275
Share premium account 72,522 55,750
Equity reserve 935 692
Retained earnings (21,097) (19,325)
Equity attributable to equity 55,968 37,392
holders of the parent
The financial statements were approved by the Board of Directors and authorised
for issue on
19 July 2010 .They were signed on its behalf by:
N Hale J Freeman
Group Chief Financial Officer Group Chief Executive
2010 2009
GBP'000s GBP'000s
Loss for the year (2,072) (16,995)
Other comprehensive income:
Transfer from equity reserve 300 160
Total comprehensive income for the year (1,772) (16,835)
2010 2009
GBP'000s GBP'000s
Loss for the year (2,072) (16,995)
Adjustments for:
Depreciation of property, plant and equipment 137 43
Share based payment expense 148 96
Investment income (13) (21)
Impairment of investments in subsidiaries - 17,193
Discount on repayment of loan notes (276) -
Finance costs 69 860
Management charges from group companies (1,695) (2,350)
Dividends received from subsidiary company . (200) (780)
Corporation tax credit and group relief (478) (92)
(4,380) (2,046)
(Increase)/decrease in other and group (167) 492
receivables
Increase/(decrease) in other creditors and 940 (24)
accruals
Management charges received 1,695 2,350
Net cash (used in)/from operating activities (1,912) 772
Investing activities
Interest income 13 21
Dividends received from subsidiary companies 200 780
Investment in subsidiaries (1,563) -
Purchases of property, plant and equipment (313) (240)
Loans to Group companies to invest in (1,968) (4,000)
subsidiaries
Net cash used in investing activities (3,631) (3,439)
Financing activities
Proceeds of share issues 22,450 2,247
Cancellation of warrants - (200)
Costs of share issue (2,345) (18)
Loans received - 3,000
Loans repaid (14,434) (1,930)
Interest paid (56) (666)
Net cash from financing activities 5,615 2,433
Net increase/(decrease) in cash and cash 72 (234)
equivalents
Cash and cash equivalents at beginning of year 8 242
Cash and cash equivalents at end of year 80 8
31. Significant accounting policies - the Company
The separate financial statements of the Company are presented as required by
the Companies Act 2006. As permitted by that Act, the separate financial
statements have been prepared in accordance with IFRSs as adopted by the EU as
applied in accordance With the provisions of the Companies Act 2006. Advantage
has been taken of s408 of the Companies Act 2006 and a Company only income
statement is not presented.
The financial statements have been prepared on the historical cost basis. The
principal accounting policies adopted are the same as those set out in note 2
to the consolidated financial statements except as noted below.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less, where appropriate,
provisions for impairment, plus the fair value of share-based payments
attributable to employees of the Company's subsidiary companies.
Share-based payments
The Company issues equity-settled and cash-settled share-based payments to
certain employees of the Company and the Group. Equity settled share-based
payments are measured at fair value at the date of grant. The fair value is
determined using the Black-Scholes model at the grant date and in respect of
employees of the Company is expensed on a straight-line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest and
adjusted for the effect of non-market based vesting conditions. For share-based
payments in respect of employees of other Group companies the fair value is
added to the cost of investment in those group companies on a straight-line
basis.
The valuation models used together with the assumptions used on expected
volatility, risk free rates, expected dividend yields and expected forfeiture
rates are disclosed in note 25.
The Company issued a warrant to certain advisers for services provided in a
previous period in connection with an acquisition made. These warrants were
measured at fair value in an equity reserve using the Black-Scholes model.
32. LOSSfrom operations - the Company
The auditors' remuneration for audit services to the Company was GBP58,000 (2009:
GBP107,500).
33. Tax - the Company
2010 2009
GBP'000s GBP'000s
Current tax - -
Underprovision in prior years (172) (59)
(172) (59)
The charge to corporation tax for the year is GBPnil (2009: GBPnil). Losses were
incurred during the year, which were surrendered to subsidiary companies and a
payment for this group relief was received in the sum of GBP650,000 (2009: GBP
151,000).
34. Subsidiaries
Ashcourt Holdings Limited (formerly Ashcourt Holdings plc), Savoy Asset
Management Limited (formerly Savoy Asset Management Plc), EPIC Investment
Partners Limited, Syndicate Asset Management (C.I.) Limited (formerly Insight
Asset Management (C.I.) Limited) and Syndicate Administration Limited are the
only directly wholly owned subsidiaries of the Company. Details of the
Company's subsidiaries (excluding dormant companies) at 31 March 2010 are as
follows:
Name of subsidiary Place of Proportion Proportion
incorporation
ownership and of voting of
operation interest power held
% %
Ashcourt Holdings Limited UK 100 100
Wholly Owned by Ashcourt Holdings
Limited:
Ashcourt Rowan Asset Management UK 100 100
Limited
Ashcourt Investment Advisers Limited UK 100 100
Ashcourt Rowan Administration UK 100 100
Limited
Ashcourt Rowan Financial Planning UK 100 100
Limited
PSD Robinson Gear (Investment UK 100 100
Planning) Limited
Robinson Gear (Management Services) UK 100 100
Limited
Independent Financial Solutions UK 100 100
Group Limited
Investment Management Holdings plc UK 100 100
Rowan & Company Capital UK 100 100
Management plc
Savoy Asset Management Limited UK 100 100
Wholly owned by Savoy Asset
Management Limited:
Savoy Investment Management Limited UK 100 100
EPIC Investment Partners Limited UK 100 100
Wholly owned by EPIC Investment
Partners Limited:
EPIC Asset Management Limited UK 100 100
EPIC Investment Partners (Guernsey) Guernsey 100 100
Limited
Syndicate Asset Management (C.I.) Guernsey 100 100
Limited
Syndicate Administration Limited UK 100 100
During the year the Ashcourt Asset Management Limited changed its name to
Ashcourt Rowan Asset Management, Ashcourt Financial Planning changed its name
to Ashcourt Rowan Financial Planning and Ashcourt Administration changed its
name to Ashcourt Rowan Administration.
35. property plant and equipment - the company
Fixtures
and
equipment
GBP'000s
Cost
At 31 March 2008 106
Additions 240
At 31 March 2009 346
Additions 313
At 31 March 2010 659
Depreciation and impairment
At 31 March 2008 24
Charge for the year 43
At 31 March 2009 67
Charge for the year 137
At 31 March 2010 204
Carrying amount
At 31 March 2010 455
At 31 March 2009 279
At 31 March 2008 82
36. Financial assets - the Company
At the balance sheet date, amounts due from Group companies include amounts
receivable from Group companies of GBP19.03 million (2009: GBP12.68 million),
principally loaned for the financing of acquisitions. Although the amounts over
one year did not attract interest during the period, the Directors are putting
in place interest arrangements and therefore consider the balances due
approximate to fair value. Group receivables of GBPnil (2009: GBPnil) are due
within one year in respect of management charges. Other receivables comprise
VAT recoverable and prepaid expenses.
Cash and cash equivalents
These comprise cash held by the Company and short-term bank deposits with an
original maturity of three months or less. The carrying amount of these assets
approximates their fair value.
37. Financial liabilities - the Company
Other payables comprise:
2010 2009
GBP'000s GBP'000s
Other creditors and accruals 1,316 376
The Directors consider that the carrying amount of other creditors approximates
to their fair value.
At the balance sheet date, amounts due to Group companies were GBP3,131,000
(2009: GBP3,051,000). Although the amounts over one year did not attract interest
during the period, the Directors are formalising these arrangements and
therefore consider the balance approximates fair value.
38. Loans and deferred consideration - company
Loans and deferred consideration have arisen in connection with various
acquisitions as follows:
31 March 2010 Bank Loans Loan Notes Total
GBP'000s
GBP'000s GBP'000s
EPIC Investment Partners (note 21 c) - - -
Syndicate Asset Management (C.I.) Ltd - - -
formerly Insight Investment
Management (C.I.) Ltd (note 21 d)
Independent Financial Solutions Group - - -
Ltd (note 21 f)
Pagan Osborne (note 21 g) - - -
Other (note 21 e, h, i) - - -
- - -
Repayable as follows:
Within one year - - -
In the second year - - -
In the third to fifth years inclusive - - -
- - -
Less: Amounts due within one year - - -
Amounts due for settlement after one - - -
year
31 March 2009 Bank Loans Loan Notes Total
GBP'000s GBP'000s GBP'000s
EPIC Investment Partners (note 21 c) - 6,910 6,910
Syndicate Asset Management (C.I.) Ltd 2,325 - 2,325
formerly Insight Investment
Management (C.I.) Ltd (note 21 d)
Independent Financial Solutions Group 1,275 - 1,275
Ltd (note 21 f)
Pagan Osborne (note 21 g) 2,300 - 2,300
Other (notes 21 e, h, i) 1,900 - 1,900
7,800 6,910 14,710
Repayable as follows:
Within one year 7,500 - 7,500
In the second year 200 - 200
In the third to fifth years inclusive 100 6,910 7,010
7,800 6,910 14,710
Less: Amounts due within one year (7,500) - (7,500)
Amounts due for settlement after one 300 6,910 7,210
year
39. Provisions
Contingent deferred consideration
GBP'000s
At 31 March 2008 2,657
Reduction in provision (1,098)
At 31 March 2009 1,559
Reduction in provision (1,559)
At 31 March 2010 -
2010 2009
GBP'000s GBP'000s
Included in current - -
liabilities
Included in non-current - 1,559
liabilities
- 1,559
The provision in respect of contingent deferred consideration relates to
consideration on acquisitions that will fall due only if future conditions are
met. These conditions include future levels of profitability, turnover or
values of funds under management as follows:
a) On 19 January 2007 the Company acquired EPIC Investment Partners Plc. The
total consideration on this acquisition included deferred consideration,
contingent on the profitability of the acquired business over the next three
years. The provision included above at the balance sheet date is GBPnil (2009: GBP
1,559,000).
40. Share capital, share premium account and equity reserve
The movements on these items are disclosed in notes 23, 24 and 25 to the
financial statements.
41. Retained deficit - the Company
GBP'000s
As at 31 March 2008 (2,490)
Loss for the year (16,995)
Transfer from equity reserve 160
As at 31 March 2009 (19,325)
Loss for the year (2,072)
Transfer from equity reserve 300
As at 31 March 2010 (21,097)
42. Reconciliation of movements in shareholders' funds - company
43.
2010 2009
GBP'000s GBP'000s
Opening shareholders' funds 37,392 51,848
Loss for the year (2,072) (16,995)
Issue of ordinary shares 20,105 2,247
Share-based payments 543 510
Cancellation of share-based payment/warrants - (218)
Closing shareholders' funds 56,968 37,392
43. Related party transactions
The Company charged management fees to its subsidiaries of GBP1,695,000 (2009: GBP
2,350,000). Amounts due to and due from Group companies at 31 March 2010 are
disclosed in notes 36 and 37. Other related party transactions are disclosed in
note 30.
44. Staff costs
The average monthly number of employees (including executive directors) was:
2010 2009
Number Number
Administration staff 31 2
Directors and other managers 5 5
36 7
Their aggregate remuneration comprised:
2010 2009
GBP'000s GBP'000s
Wages and salaries 1,432 919
Social security costs 183 109
Other pension costs paid to defined contribution 97 92
arrangements
1,712 1,120
45. RISK MANAGEMENT
Exposure to credit risk, market risk (which combines foreign currency risk,
interest rate risk and market price risk) and liquidity risk arises in the
normal course of the Company's business.
Credit risk
The credit risk to the Company is limited to the amounts owed by subsidiary
companies and cash at banks. At the balance sheet date there were no
significant concentrations of credit risk and no amounts were overdue.
The credit risk on liquid funds is limited because the counterparties are banks
with high credit ratings assigned by international credit-rating agencies.
At the balance sheet date the Company had the following credit risk exposures:
2010 2009
GBP'000s GBP'000s
Cash and cash 80 8
equivalents
Due from - 4,487
Group
companies
Other debtors 565 383
645 4,878
The amounts in the above table are based on the carrying value of all accounts.
Foreign currency risk
The Company has no material exposure to foreign exchange risk.
Interest rate risk
The Company's exposure to interest rate risk on financial assets is mitigated
by placing surplus funds on fixed deposit for various levels of maturity. The
interest rates obtained are market rates which are typically linked to base
rate. Typically, cash is held on deposit for no longer 90 days. All cash
balances at the year end were held on call deposit. The Company also has
interest-bearing financial liabilities with floating interest rates.
Management deems interest rate risk immaterial and does not actively manage
this risk. At the balance sheet date, the Company held GBP80,000 (2009: GBP8,000)
in cash and cash equivalents on which interest is earned and had GBPnil (2009: GBP
7.8 million) payable in loans and deferred consideration on which interest is
paid with floating rates of interest.
An increase of 50 basis points in interest rates at the balance sheet date
would increase the interest payable on floating rate interest bearing
liabilities held at the balance sheet date by GBPnil per annum net of tax,
assuming a corporation tax rate of 28%.
An increase of 50 basis points in interest rates at the balance sheet date
would increase interest receivable on cash and cash equivalents held at the
balance sheet date by GBPnil per annum net of tax, assuming a corporation tax
rate of 28%.
Market price risk
Management considers the market price risk to the Company to be immaterial.
Liquidity risk
Liquidity risk is the risk that the Company does not have sufficient financial
resources to meet its obligations when they fall due, or will have to do so at
excessive cost. This risk can arise from mismatches in the timing of cash flows
relating to assets, liabilities and off-balance sheet instruments. The Company
monitors liquidity risk taking into account cash balances held and levels of
borrowing.
Non-derivative cash flows
The table below presents the cash flows receivable and payable by the Company
under non-derivative financial assets and liabilities by remaining contractual
maturities at the balance sheet date. The amounts disclosed in the table are
the contractual, undiscounted cash flows whereas the Company manages inherent
liquidity risk on expected undiscounted cash flows.
The net liquidity positions in the table below, relate to cash flows on
contractual obligations existing at the balance sheet date. They do not take
account of any cash flows generated from profits on normal trading activities
or dividends received from subsidiary companies.
On demand < 3 3 - 12 1 - 5 > 5 years
GBP'000 months months years
GBP'000 GBP'000 GBP'000 GBP'000
As at 31 March 2010
Assets
Cash and cash 80 - - - -
equivalents
Total financial 80 - - - -
assets
Liabilities
Trade payables - 1,348 - - -
Bank loan - - - - -
commitments
Loan note - - - - -
commitments
Deferred - - - - -
consideration
Total financial - - - - -
liabilities
Net liquidity 80 (1,348) - - -
surplus/(deficit)
On demand < 3 months 3 - 12 1 - 5 years > 5 years
GBP'000 GBP'000 months GBP'000 GBP'000
GBP'000
As at 31 March 2009
Assets
Cash and cash 8 - - - -
equivalents
Total financial 8 - - - -
assets
Liabilities
Trade payables - 376 - - -
Bank loan - 7,300 - 500 -
commitments
Loan note - - - 6,910 -
commitments
Deferred - - - 1,559 -
consideration
Total financial - 7,676 - 8,969 -
liabilities
Net liquidity 8 (7,676) - (8,969) -
surplus/(deficit)
Estimation of fair values
The following summarises the major methods and assumptions used in estimating
the fair values of financial instruments.
Other investments
Fair value is based on quoted market prices at the balance sheet date without
any deduction for transaction costs.
Trade and other receivables / payables
For receivables / payables with a remaining life of less than one year, the
notional amount is deemed to reflect the fair value. All other receivables /
payables greater than one year are discounted at base rate to determine the
fair value.
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Annual General Meeting (Meeting) of Syndicate
Asset Management plc (Company) will be held at 10am on 15 September 2010 at the
offices of Memery Crystal LLP, 44 Southampton Buildings, London, WC2A 1AP.
END
Syndicate Asset Management (LSE:SAM)
Graphique Historique de l'Action
De Mai 2024 à Juin 2024
Syndicate Asset Management (LSE:SAM)
Graphique Historique de l'Action
De Juin 2023 à Juin 2024
