TIDMTAM
RNS Number : 1268H
Tatton Asset Management PLC
22 November 2022
22 November 2022
Tatton Asset Management PLC
("TAM plc", the "Group" or the "Company")
AIM: TAM
Interim results for the six-month period ended 30 September
2022
"Record net inflows during volatile markets"
TAM plc, the investment management and IFA support services
group, today announces its interim results for the six-month period
ended 30 September 2022 (the "Period").
FINANCIAL HIGHLIGHTS
- Group revenue increased 15.1% to GBP15.9m (Sep 2021:
GBP13.8m)
- Adjusted operating profit(1) up 15.1% to GBP8.0m (Sep 2021:
GBP6.9m)
- Adjusted operating profit(1) margin 50.1% (Sep 2021:
50.1%)
- Adjusted fully diluted EPS(2) increased 12.9% to 9.89p (Sep
2021: 8.76p)
- Interim dividend up 12.5% to 4.5p (Sep 2021: 4.0p)
- Strong financial liquidity position, with net cash of GBP21.6m
(Sep 2021: GBP14.7 million)
- Strong balance sheet - Net assets increased 29.5% to GBP35.7m
(Sep 2021: GBP27.5m)
(1) Adjusted for exceptional items, share-based payment costs
and amortisation
(2) Adjusted for exceptional items, share-based payment costs,
amortisation and potentially dilutive shares
OPERATIONAL HIGHLIGHTS
- Record organic net inflows of GBP907m (Sep 2021: GBP652m), an
increase of 8.0% of opening Assets Under Management ("AUM") -
Average run rate of GBP151m per month
- Acquisition of 50% of the share capital of 8AM Global Limited
("8AM") adding c.GBP1.0bn of Assets Under Influence ("AUI")
- Assets Under Management / Influence increased by GBP1.0bn to
GBP12.3bn (Mar 2022: GBP11.3bn)
- Current AUM / AUI at 18 November 2022 c.GBP12.9bn
- Tatton's IFA firms increased by 14.7% to 806 (Sep 2021: 703)
and the number of accounts increased 20.9% to 98,650 (Sep 2021:
81,600)
- Paradigm mortgage completions up by 10.6% to GBP7.3bn (Sep
2021: GBP6.6bn). Paradigm Mortgages member firms increased by 3.6%
to 1,706 members (Sep 2021: 1,646 members)
- Paradigm Consulting increased its members by 1.4% to 424 (Sep
2021: 418)
Paul Hogarth, Chief Executive Officer, commented:
" We are pleased with our performance and while volatile markets
were a drag on AUM growth, by delivering r ecord net inflows
coupled with the acquisition of 8AM we continue to execute our
Roadmap to Growth strategy, a three-year target of increasing AUM
from GBP9.0bn (Mar 2021) to GBP15.0bn through a combination of
organic new net inflows and strategically aligned acquisitions. At
the end of this Period our AUM / AUI sits at over GBP12.3 billion
just over halfway to our target.
As we look forward, while net inflows were very strong in the
first six months as we had a number of significant wins which
complemented underlying flows, we anticipate net inflows will
return to a more normalised level in line with the second half of
the prior year and that the Paradigm business will continue to
perform well.
We look forward to making further progress over the rest of the
year while remaining mindful of the continuing macro-economic
turbulence and market volatility and we remain confident in the
Group's longer-term prospects."
For further information please contact:
Tatton Asset Management plc
Paul Hogarth (Chief Executive Officer)
Paul Edwards (Chief Financial Officer)
Lothar Mentel (Chief Investment
Officer) +44 (0) 161 486 3441
Zeus - Nominated Adviser and Broker
Martin Green/Dan Bate (Investment
Banking) +44 (0) 20 3829 5000
Singer Capital Markets - Joint
Broker
Peter Steel, Rachel Hayes, Amanda
Gray (Investment Banking)
+44 (0) 20 7496 3000
Belvedere Communications - Financial
PR +44 (0) 7407 023147
John West / Llew Angus (media) + 44 (0) 7715 769078
Cat Valentine / Keeley Clarke (investors) tattonpr@belvederepr.com
Trade Media Enquiries
Roddi Vaughan Thomas (Head of Communications) + 44 (0) 20 7139 1452
For more information, please visit:
www.tattonassetmanagement.com
Strategic Review
THE GROUP DELIVERS CONTINUED GROWTH
The Group has performed well in the Period with continued growth
in revenue and profits assisted by record net inflows in what has
been a difficult and volatile market. We also completed our third
strategically aligned acquisition towards the end of the
Period.
Group revenue for the Period increased 15.1% to GBP15.934
million (Sep 2021: GBP13.847 million). Adjusted operating profit(1)
for the Period increased 15.1% to GBP7.982 million (Sep 2021:
GBP6.934 million) with adjusted operating profit margin(1) holding
firm at 50.1% (Sep 2021: 50.1%).
Pre-tax profit after the impact of exceptional items,
amortisation of acquisition related intangibles, finance costs and
share-based payment charges increased to GBP6.624 million (Sep
2021: GBP4.787 million) and taxation charges for the Period were
GBP1.291 million (Sep 2021: GBP0.889 million). This gives an
effective tax rate of 19.5% when measured against profit before
tax. Adjusting for exceptional costs and share-based payments, the
effective tax rate is 19.6%.
The basic earnings per share was 9.01p (Sep 2021: 6.82p). When
adjusted for exceptional items, amortisation of acquisition related
intangibles and share-based payment charges, basic adjusted
earnings per share was 10.43p (Sep 2021: 9.48p). Adjusted earnings
per share fully diluted for the impact of share options was 9.89p
(Sep 2021: 8.76p), an increase of 12.9%.
TATTON
Tatton continues to perform strongly and has delivered record
net inflows in the last six months of GBP907 million an increase of
39.1% on the prior year (Sep 2021: GBP652 million). Total AUM at
the end of the Period increased to GBP11.343 billion (Mar 2022:
GBP11.341 billion) and while net inflows were very strong the
volatile markets over the Period have caused a significant drag on
the closing AUM. In addition to the strong organic inflows the
Group added a further GBP1.0 billion of AUI towards the end of the
Period following the acquisition of 50% of 8AM Global Limited. This
added to the existing AUM gives AUM / AUI of GBP12.343 billion at
the end of the Period and maintains our momentum towards the
GBP15.0 billion target in our "Roadmap to Growth" strategy by March
2024.
As a result, Tatton's revenue, which now accounts for 79.9% of
Group revenue, grew 17.0% to GBP12.738 million (Sep 2021: GBP10.885
million) and adjusted operating profit(1) grew 14.8% to GBP7.663
million (Sep 2021: GBP6.673 million), delivering an adjusted
operating profit margin(1) of 60.2% (Sep 2021: 61.3%).
The Model Portfolio Services ("MPS") market is forecast to grow
at a rate of 25% per annum (Platforum Report: August 2022) and
reach up to GBP200 billion by the end of 2026 (Dec 2021: GBP81.37
billion). As we continue to promote and support the growth of the
MPS market on platform and through a wide range of IFA education
programmes, we will look to increase our penetration through a
broadened distribution base. As a minimum we aim to maintain our
market share and continue to grow our distribution footprint
through meaningful strategic partnerships. In support of this we
have been pleased to see our IFA firms continue to grow by over
8.0% to 806 (Mar 2022: 746) throughout this Period. We look forward
to seeing these close relationships continue to evolve in the
coming months as intensive activity continues to further promote
the Tatton service.
As we look ahead, we will keep the needs of the IFA at the heart
of our business as this remains central to all we do. We are
delighted to be able to assist IFAs in meeting the rising
regulatory bar and standards required by the Consumer Duty through
the continued application of building long-term partnerships and
delivering consistent service, performance and IFA support.
Consequently, we were delighted to be recognised as leaders in our
field for a fifth year running by Moneyfacts through the "Best
Investment Service" award - voted for by IFAs across the UK.
As we head towards our tenth anniversary it is rewarding to see
the MPS space come of age. We acknowledge and welcome the increased
competitor activity in this space and see this as recognition and
validation that our price point of 0.15% is becoming the new
normal, a trend we have long predicted. We continue to respond to
competition by listening to our firms, evolving our service to meet
their changing needs and further embedding Tatton into their
operating models. We have also continued to actively engage with
consolidators as activity persists in this space and we are
optimistic that, while this is an ongoing challenge, we also see
this as an opportunity to deliver our service through this
fast-evolving landscape.
PARADIGM
Paradigm has maintained its performance following a strong
result in the year ended March 2022, growing revenue over the same
Period last year by 8.3% to GBP3.198 million (Sep 2021: GBP2.954
million) and adjusted operating profit(1) by 7.8% to GBP1.352
million (Sep 2021: GBP1.254 million).
Paradigm Consulting increased its members to 424 (Mar 2022: 421)
and Paradigm Mortgages, the Group's mortgage distribution and
support services business, increased the number of mortgage firms
utilising the services to 1,706 (Mar 2022: 1,674).
While the mortgage market environment post COVID-19 has remained
challenging, especially given the impact of rising interest rates,
Paradigm Mortgages saw the momentum from the prior year continue
into this Period. Applications with associated value of GBP8.75
billion, an increase of 18% on the prior year, translated into
Paradigm Mortgages participating in record completions of GBP7.3
billion (Sep 2021: GBP6.6 billion) of gross lending an increase of
over 10%. Protection sales also hit record highs as annual premiums
rose to GBP8.37 million (Sep 2021: GBP7.97 million) as membership
and cross-sales activities grew against market trends.
In the second half of the year we anticipate a more uncertain
environment. At the end of this Period and as a result of the
September mini budget, a significant number of products were
withdrawn from the market by lenders, twice the number withdrawn
during April 2020, and those lenders that remained active repriced
products as interest rates rose rapidly. The pressure has since
eased somewhat with residential mortgage products being
reintroduced at more competitive rates as uncertainty also eased,
but the buy-to-let and specialist markets remain difficult. In
addition, with the current cost of living crisis and general level
of inflation, affordability and resultant lender attitude to risk,
it is likely that this will hamper the purchase and mover market,
certainly in the short term.
As buyers pursue home ownership over rental status, the issue of
the number of buyers to available properties (supply and demand)
will remain and will potentially constrain the new mortgage
market.
As a result, mortgage firms' bias has moved to re-mortgages and
this is expected to continue as record market retention volumes
present significant product transfer business opportunities.
This environment is anticipated to continue into 2023 and while
the market and case placement may be more complex, it has also
never been more important to gain good advice, enhancing the
opportunity for advisers. In summary, as we continue to grow the
number of firms, we anticipate the second half of the year to
remain stable as the market recovers.
ACQUISITION
On 15 August 2022 the Group acquired 50% of the issued share
capital of 8AM Global Limited ("8AM") for a consideration of GBP7.0
million (the "Consideration"), with an option to acquire a further
50% in due course. The Consideration of c.GBP7.0 million comprises
50% or GBP3.5 million of initial consideration, payable through the
issue of new shares which incurred an additional GBP0.3 million
related to underwriting costs, and GBP3.5 million deferred
consideration payable in equal cash instalments against financial
performance targets at the end of the first year and second year
post completion. This takes the total consideration for the
acquisition to GBP7.3 million. It is expected to generate adjusted
operating profit(1) of GBP0.7 million in its first full financial
year.
SEPARATELY DISCLOSED ITEMS
Exceptional items, along with share-based payment charges and
amortisation of acquisition related intangible assets , are
reported separately to give better clarity of the underlying
performance of the Group. The alternative performance measures
("APMs") are consistent with how the business performance is
planned and reported within the internal reporting to the Board.
Some of these measures are also used for the purpose of setting
remuneration targets.
The Group incurred exceptional costs of GBP0.352 million related
to the acquisition of 8AM Global Limited and a latent one-off cost
related to the acquisition of the Verbatim range of funds in the
prior year.
BALANCE SHEET
The Group's balance sheet remains healthy with net assets at 30
September 2022 totalling GBP35.7 million (Sep 2021: GBP27.5
million) reflecting the continued growth and profitability of the
Group. In line with the capital light nature of the business model
property, plant and equipment has decreased slightly to GBP0.6
million (Sep 2021: GBP0.9 million). Intangible assets, including
goodwill and investment in joint ventures, of GBP20.2 million have
been recognised (Sep 2021: GBP13.4 million), an increase of GBP6.8
million largely relating to the acquisition of 8AM Global
Limited.
CASH RESOURCES
Cash generated from operations was GBP7.0 million, GBP7.3
million before exceptional items (Sep 2021: GBP7.0 million) and was
101% of operating profit. The Group remains debt free with closing
net cash at the end of the Period of GBP21.6 million (Sep 2021:
GBP14.7 million). The cash resources are after the payment of
corporation tax of GBP1.6 million and dividend payments of GBP5.0
million relating to the final dividend for the year ended 31 March
2022.
ISSUE OF NEW SHARES
In the Period, the Group issued 1,115,699 new shares, of which
237,962 shares were issued to satisfy the exercise of options
related to the Enterprise Management Incentive ("EMI") and
Company's Save As You Earn ("SAYE") employee share option schemes,
with a further 877,737 issued as consideration for the initial
payment relating to the acquisition of 50% of 8AM Global
Limited.
DIVID PROPOSAL AND CAPITAL ADEQUACY
The Board is pleased to recommend an interim dividend of 4.5p
per share, an increase of 12.5% on the prior period interim
dividend. This level of dividend reflects our cash performance and
underlying confidence in the business, while at the same time
ensuring that appropriate levels of capital resources are
maintained within the Group.
On 1 January 2022, the Financial Conduct Authority ("FCA")
introduced a new prudential regime for MiFID investment firms, the
Investment Firms Prudential Regime ("IFPR"). As a result of these
new rules, the Group will face an increased level of requirement in
relation to the level of capital resources held across the Group,
with restrictions in utilising cash or debt to fund
acquisitions.
The interim dividend of 4.5p per share, totalling GBP2.7
million, will be paid on 16 December 2022 to shareholders on the
register at close of business on 2 December 2022 and will have an
ex-dividend date of 1 December 2022. In accordance with
International Financial Reporting Standards ("IFRSs"), the interim
dividend has not been included as a liability in this interim
statement.
BUSINESS RISK
The Board identified principal risks and uncertainties which may
have a material impact on the Group's performance in the Group's
2022 Annual Report and Financial Statements (pages 30 and 31) and
believes that the nature of these risks remains largely unchanged
at the half year. The Board will continue to monitor and manage
identified principal risks throughout the second half of the
year.
POST BALANCE SHEET EVENTS
There have been no post balance sheet events.
GOING CONCERN
As stated in note 2.2 of these condensed financial statements,
the Directors are satisfied that the Group has sufficient resources
to continue in operation for the foreseeable future, a period not
less than 12 months from the date of this report. To form this
view, the Directors have also considered the impact of the recent
COVID-19 pandemic and the resulting economic uncertainty.
Accordingly, they continue to adopt the going concern basis in
preparing these condensed financial statements.
SUMMARY AND OUTLOOK
In summary, the Group has delivered a solid first half result,
delivering against our strategic objectives and maintaining strong
growth of revenue and profits.
We are pleased with this performance and while volatile markets
were a drag on AUM growth, by delivering record net inflows coupled
with the acquisition of 8AM, we continue to execute our "Roadmap to
Growth" strategy, a three-year target of increasing AUM from GBP9.0
billion (Mar 2021) to GBP15.0 billion through a combination of
organic new net inflows and strategically aligned acquisitions. At
the end of this Period our AUM / AUI now sits at over GBP12.3
billion, just over halfway to our target.
As we look forward, while net inflows were very strong in the
first six months due partly to a number of significant wins which
complemented underlying flows, we anticipate net inflows will
return to a more normalised level in line with the second half of
the prior year and that the Paradigm business will continue to
perform well.
We look forward to making further progress in the rest of the
year while remaining mindful of the continuing macro-economic
turbulence and market volatility and we remain confident in the
Group's longer-term prospects.
1. Alternative performance measures are detailed in note 17.
financial statements
CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 SEPTEMBER 2022
Audited year
ended 31-Mar 2022
Note Unaudited six months ended 30-Sep 2022 (GBP'000) Unaudited six months ended 30-Sep 2021 (GBP'000) (GBP'000)
Revenue 15,934 13,847 29,356
Administrative
expenses (9,006) (8,895) (17,726)
------------------- ---- ------------------------------------------------ ------------------------------------------------ ------------------
Operating profit 6,928 4,952 11,630
------------------- ---- ------------------------------------------------ ------------------------------------------------ ------------------
Share-based payment
costs 4 495 1,735 2,399
Amortisation of
acquisition
related
intangibles 4 207 60 266
Exceptional items 4 352 187 231
------------------- ---- ------------------------------------------------ ------------------------------------------------ ------------------
Adjusted operating
profit (before
separately
disclosed
items)(1) 7,982 6,934 14,526
------------------- ---- ------------------------------------------------ ------------------------------------------------ ------------------
Finance costs (304) (165) (355)
------------------- ---- ------------------------------------------------ ------------------------------------------------ ------------------
Profit before tax 6,624 4,787 11,275
Taxation charge 5 (1,291) (889) (2,033)
------------------- ---- ------------------------------------------------ ------------------------------------------------ ------------------
Profit attributable
to shareholders 5,333 3,898 9,242
------------------- ---- ------------------------------------------------ ------------------------------------------------ ------------------
Earnings per share
- Basic 6 9.01p 6.82p 15.92p
------------------- ---- ------------------------------------------------ ------------------------------------------------ ------------------
Earnings per share
- Diluted 6 8.72p 6.45p 15.17p
------------------- ---- ------------------------------------------------ ------------------------------------------------ ------------------
Adjusted earnings
per share -
Basic(2) 6 10.43p 9.48p 19.87p
------------------- ---- ------------------------------------------------ ------------------------------------------------ ------------------
Adjusted earnings
per share -
Diluted(2) 6 9.89p 8.76p 18.62p
------------------- ---- ------------------------------------------------ ------------------------------------------------ ------------------
1. Adjusted for exceptional items, amortisation of acquisition
related intangibles and share-based payment costs. See note 17.
2. Adjusted for exceptional items, amortisation of acquisition
related intangibles and share-based payment costs and the tax
thereon. See note 17.
There were no other recognised gains or losses other than those
recorded above in the current or prior period and therefore a
statement of other comprehensive income has not been presented.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2022
Audited year
Unaudited six months ended 30-Sep 2022 ended 31-Mar 2022
Note (GBP'000) Unaudited six months ended 30-Sep 2021 (GBP'000) (GBP'000)
Non-current
assets
Goodwill 7 9,337 9,275 9,337
Investment in
joint
ventures 8 6,996 - -
Intangible
assets 9 3,831 4,162 4,047
Property,
plant and
equipment 10 593 888 749
Deferred tax
assets 806 1,414 841
------------- ---- -------------------------------------- ------------------------------------------------ ------------------
Total
non-current
assets 21,563 15,739 14,974
------------- ---- -------------------------------------- ------------------------------------------------ ------------------
Current
assets
Trade and
other
receivables 11 3,902 8,565 3,805
Financial
assets at
fair value
through
profit or
loss 13 122 177 152
Corporation
tax 941 2,043 706
Cash and cash
equivalents 21,622 14,747 21,710
------------- ---- -------------------------------------- ------------------------------------------------ ------------------
Total current
assets 26,587 25,532 26,373
------------- ---- -------------------------------------- ------------------------------------------------ ------------------
Total assets 48,150 41,271 41,347
------------- ---- -------------------------------------- ------------------------------------------------ ------------------
Current
liabilities
Trade and
other
payables 12 (6,633) (10,335) (7,556)
------------- ---- -------------------------------------- ------------------------------------------------ ------------------
Total current
liabilities (6,633) (10,335) (7,556)
------------- ---- -------------------------------------- ------------------------------------------------ ------------------
Non-current
liabilities
Other
payables 12 (5,851) (3,388) (2,747)
------------- ---- -------------------------------------- ------------------------------------------------ ------------------
Total
non-current
liabilities (5,851) (3,388) (2,747)
------------- ---- -------------------------------------- ------------------------------------------------ ------------------
Total
liabilities (12,484) (13,723) (10,303)
------------- ---- -------------------------------------- ------------------------------------------------ ------------------
Net assets 35,666 27,548 31,044
------------- ---- -------------------------------------- ------------------------------------------------ ------------------
Equity
attributable
to equity
holders of
the entity
Share capital 12,006 11,781 11,783
Share premium
account 15,219 11,617 11,632
Other reserve 2,041 2,041 2,041
Merger
reserve (28,968) (28,968) (28,968)
Retained
earnings 35,368 31,077 34,556
------------- ---- -------------------------------------- ------------------------------------------------ ------------------
Total equity 35,666 27,548 31,044
------------- ---- -------------------------------------- ------------------------------------------------ ------------------
The financial statements on pages 10 to 33 were approved by the
Board of Directors on 21 November 2022 and were signed on its
behalf by:
Paul Edwards
Director
Company registration number: 10634323
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 SEPTEMBER 2022
Share Other Merger Retained Total
capital Share premium Own shares reserve reserve earnings equity
(GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000)
At 1 April
2021 11,578 11,534 (1,969) 2,041 (28,968) 30,230 24,446
Profit and
total
comprehensive
income - - - - - 3,898 3,898
Dividends - - - - - (4,284) (4,284)
Share-based
payments - - - - - 2,130 2,130
Tax on
share-based
payments - - - - - 1,265 1,265
Issue of share
capital on
exercise of
employee
share options 203 83 (193) - - - 93
Own shares
utilised on
exercise of
options - - 2,162 - - (2,162) -
-------------- -------------- -------------- ---------- -------------- -------------- -------------- ----------
At 30
September
2021 11,781 11,617 - 2,041 (28,968) 31,077 27,548
Profit and
total
comprehensive
income - - - - - 5,344 5,344
Dividends - - - - - (2,357) (2,357)
Share-based
payments - - - - - 549 549
Tax on
share-based
payments - - - - - (57) (57)
Issue of share
capital on
exercise of
employee
share options 2 15 - - - - 17
-------------- -------------- -------------- ---------- -------------- -------------- -------------- ----------
At 31 March
2022 11,783 11,632 - 2,041 (28,968) 34,556 31,044
Profit and
total
comprehensive
income - - - - - 5,333 5,333
Dividends - - - - - (5,012) (5,012)
Share-based
payments - - - - - 658 658
Tax on
share-based
payments - - - - - (167) (167)
Issue of share
capital on
exercise of
employee
share options 47 77 (28) - - - 96
Own shares
utilised on
exercise of
options - - 28 - - - 28
Issue of share
capital on
acquisition
of a joint
venture 176 3,510 - - - - 3,686
-------------- -------------- -------------- ---------- -------------- -------------- -------------- ----------
At 30
September
2022 12,006 15,219 - 2,041 (28,968) 35,368 35,666
-------------- -------------- -------------- ---------- -------------- -------------- -------------- ----------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 SEPTEMBER 2022
Unaudited six months ended Unaudited six months ended Audited year
Note 30-Sep 2022 (GBP'000) 30-Sep 2021 (GBP'000) ended 31-Mar 2022 (GBP'000)
Operating activities
Profit for the period 5,333 3,898 9,242
Adjustments:
Income tax expense 5 1,291 889 2,033
Finance costs 304 165 355
Depreciation of property,
plant and equipment 10 190 181 377
Amortisation of intangible
assets 9 330 210 536
Share-based payment expense 4 495 1,735 1,492
Distributions receivable
from joint ventures (40) - -
Changes in:
Trade and other receivables (169) (3,146) 309
Trade and other payables (751) 2,879 907
--------------------------- ---- -------------------------- -------------------------- ---------------------------
Exceptional costs 4 352 187 231
--------------------------- ---- -------------------------- -------------------------- ---------------------------
Cash generated from
operations before
exceptional costs 7,335 6,998 15,482
--------------------------- ---- -------------------------- -------------------------- ---------------------------
Cash generated from
operations 6,983 6,811 15,251
Income tax paid (1,620) (1,612) (1,612)
--------------------------- ---- -------------------------- -------------------------- ---------------------------
Net cash from operating
activities 5,363 5,199 13,639
--------------------------- ---- -------------------------- -------------------------- ---------------------------
Investing activities
Payment for the acquisition
of subsidiary, net of cash
acquired - - (2,825)
Purchase of intangible
assets (114) (2,957) (211)
Purchase of property, plant
and equipment (34) (17) (74)
Cost of underwriting shares (152)
--------------------------- ---- -------------------------- -------------------------- ---------------------------
Net cash used in investing
activities (300) (2,974) (3,110)
--------------------------- ---- -------------------------- -------------------------- ---------------------------
Financing activities
Interest paid (92) (47) (144)
Dividends paid (5,012) (4,284) (6,641)
Proceeds from the issue of
shares 87 93 111
Proceeds from exercise of
options - - 1,230
Repayment of the lease
liabilities (134) (174) (309)
--------------------------- ---- -------------------------- -------------------------- ---------------------------
Net cash used in financing
activities (5,151) (4,412) (5,753)
--------------------------- ---- -------------------------- -------------------------- ---------------------------
Net (decrease)/increase in
cash and cash equivalents (88) (2,187) 4,776
Cash and cash equivalents at
beginning of period 21,710 16,934 16,934
--------------------------------- -------------------------- -------------------------- ---------------------------
Net cash and cash equivalents at
end of period 21,622 14,747 21,710
--------------------------------- -------------------------- -------------------------- ---------------------------
The accompanying notes are an integral part of the interim
financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Tatton Asset Management plc (the "Company") is a public company
limited by shares.
The address of the registered office is Paradigm House, Brooke
Court, Lower Meadow Road, Wilmslow, SK9 3ND, United Kingdom. The
registered number is 10634323.
The Group comprises the Company and its subsidiaries. The
Group's principal activities are discretionary fund management, the
provision of compliance and support services to independent
financial advisers ("IFAs"), the provision of mortgage adviser
support services and the marketing and promotion of multi-manager
funds run by the companies under Tatton Capital Limited.
The condensed consolidated interim financial statements for the
six months ended 30 September 2022 do not constitute statutory
accounts as defined under section 434 of the Companies Act 2006.
The Annual Report and Financial Statements (the "financial
statements") for the year ended 31 March 2022 were approved by the
Board on 14 June 2022 and have been delivered to the Registrar of
Companies. The Auditor, Deloitte LLP, reported on these financial
statements; its report was unqualified, did not contain an emphasis
of matter paragraph and did not contain statements under section
498 (2) or (3) of the Companies Act 2006.
News updates, regulatory news and financial statements can be
viewed and downloaded from the Group's website,
www.tattonassetmanagement.com. Copies can also be requested from:
The Company Secretary, Tatton Asset Management plc, Paradigm House,
Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND.
2. ACCOUNTING POLICIES
The principal accounting policies applied in the presentation of
the interim financial statements are set out below.
2.1 BASIS OF PREPARATION
The unaudited condensed consolidated interim financial
statements for the six months ended 30 September 2022 have been
prepared in accordance with IAS 34 'Interim Financial Reporting' as
adopted by the United Kingdom. The condensed consolidated interim
financial statements should be read in conjunction with the
financial statements for the year ended 31 March 2022, which have
been prepared in accordance with International Financial Reporting
Standards ("IFRSs") as adopted by the United Kingdom. The condensed
consolidated interim financial statements were approved for release
on 17 November 2022.
The condensed consolidated interim financial statements have
been prepared on a going concern basis and prepared on the
historical cost basis.
The condensed consolidated interim financial statements are
presented in sterling and have been rounded to the nearest thousand
(GBP'000). The functional currency of the Company is sterling as
this is the jurisdiction where all the Group's sales are made.
The preparation of financial information in conformity with
IFRSs requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenues
and expenses during the reporting Period. Although these estimates
are based on management's best knowledge of the amount, event or
actions, actual events may ultimately differ from those
estimates.
The key accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in the
consolidated financial statements. The accounting policies adopted
by the Group in these interim financial statements are consistent
with those applied by the Group in its consolidated financial
statements for the year ended 31 March 2022.
2.2 GOING CONCERN
These financial statements have been prepared on a going concern
basis. The Directors have prepared cash flow projections and are
satisfied that the Group has adequate resources to continue in
operational existence for the foreseeable future. To form the view
that the consolidated financial statements should continue to be
prepared on an ongoing basis in light of the current economic
uncertainty, the Directors have assessed the outlook of the Group
by considering various market scenarios and management actions.
This review has allowed management to assess the potential impact
on income, costs, cash flow and capital and the ability to
implement effective management actions that may be taken to
mitigate the impact. Accordingly, the Directors continue to adopt
the going concern basis in preparing these financial
statements.
2.3 NEW ACCOUNTING STANDARDS
There have been a number of amendments to standards which have
been adopted in the Period but these have not had a significant
impact on the Group's financial results or position.
A number of new standards are effective for annual periods
beginning after 1 April 2022 and earlier application is permitted;
however, the Group has not early adopted the new or amended
standards in preparing these condensed consolidated financial
statements.
None of the standards not yet effective are expected to have a
material impact on the Group's financial statements.
2.4 OPERATING SEGMENTS
The Group comprises the following two operating segments which
are defined by trading activity:
-- Tatton - investment management services.
-- Paradigm - the provision of compliance and support services
to IFAs and mortgage advisers.
The Board is considered to be the chief operating decision
maker.
2.5 SIGNIFICANT JUDGEMENTS, KEY ASSUMPTIONS AND ESTIMATES
In the process of applying the Group's accounting policies,
which are described in the consolidated financial statements for
the year ended 31 March 2022, management have made judgements and
estimations about the future that have an effect on the amounts
recognised in the financial statements. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period. If
the revision affects both current and future periods, it is revised
in the period of the revision and in future periods. Changes for
accounting estimates would be accounted for prospectively under IAS
8.
The judgements, estimates and assumptions applied in the interim
financial statements, including the key sources of estimation
uncertainty, were the same as those applied in the Group's last
annual financial statements for the year ended 31 March 2022. The
only exceptions relate to the contingent consideration recognised
in the period and the estimated average annual effective income tax
rate applied to the pre-tax income of the interim period.
During the Period, the Group made an acquisition of 50% of the
share capital of 8AM Global Limited and has recognised an
investment and contingent consideration. The value of the earnout
consideration is variable dependent on performance conditions and
management will perform a further assessment of the valuation of
certain assets acquired and liabilities assumed with the
acquisition.
Management have reviewed the estimates for the satisfaction of
the performance obligations attached to certain awards in the
share-based payment schemes. It is currently estimated that 100% of
the options in the existing schemes will vest.
2.6 ALTERNATIVE PERFORMANCE MEASURES
In reporting financial information, the Group presents
alternative performance measures ("APMs") which are not defined or
specified under the requirements of IFRSs. The Group believes that
these APMs provide users with additional helpful information on the
performance of the business.
The APMs are consistent with how the business performance is
planned and reported within the internal management reporting to
the Board. Some of these measures are also used for the purpose of
setting remuneration targets. All the APMs used by the Group are
set out in note 17 including explanations of how they are
calculated and how they can be reconciled to a statutory measure
where relevant.
3 SEGMENT REPORTING
Information reported to the Board of Directors as the chief
operating decision maker ("CODM") for the purposes of resource
allocation and assessment of segmental performance is focused on
the type of revenue. The principal types of revenue are
discretionary fund management and the marketing and promotion of
the funds run by the companies under Tatton Capital Limited
("Tatton") and the provision of compliance and support services to
IFAs and mortgage advisers ("Paradigm").
The Group's reportable segments under IFRS 8 are therefore
Tatton, Paradigm, and "Central", which contains the Operating
Group's central overhead costs. Centrally incurred overhead costs
are allocated to the Tatton and Paradigm divisions on a pro rata
basis and this is how information is presented to the Group's
CODM.
The principal activity of Tatton is that of discretionary fund
management of investments on platform and the provision of
investment wrap services.
The principal activity of Paradigm is that of provision of
support services to IFAs and mortgage advisers.
For management purposes, the Group uses the same measurement
policies used in its financial statements.
The following is an analysis of the Group's revenue and results
by reportable segment:
Period ended 30 September 2022 Tatton Paradigm Central Group
(GBP'000) (GBP'000) (GBP'000) (GBP'000)
Revenue 12,738 3,198 (2) 15,934
Administrative expenses (5,634) (1,846) (1,526) (9,006)
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Operating profit/(loss) 7,104 1,352 (1,528) 6,928
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Share-based payment costs - - 495 495
Amortisation of acquisition related intangibles 207 - - 207
Exceptional costs 352 - - 352
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Adjusted operating profit/(loss) (before separately disclosed
items)(1) 7,663 1,352 (1,033) 7,982
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Finance costs (124) (1) (179) (304)
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Profit/(loss) before tax 6,980 1,351 (1,707) 6,624
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
1. Alternative performance measures are detailed in note 17.
Period ended 30 September 2021 Tatton Paradigm Central Group
(GBP'000) (GBP'000) (GBP'000) (GBP'000)
Revenue 10,885 2,954 8 13,847
Administrative expenses (4,272) (1,700) (2,923) (8,895)
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Operating profit/(loss) 6,613 1,254 (2,915) 4,952
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Share-based payment costs - - 1,735 1,735
Amortisation of acquisition related intangibles 60 - - 60
Exceptional costs - - 187 187
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Adjusted operating profit/(loss) (before separately disclosed
items)(1) 6,673 1,254 (993) 6,934
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Finance costs (9) - (156) (165)
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Profit/(loss) before tax 6,604 1,254 (3,071) 4,787
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Year ended 31 March 2022 Tatton Paradigm Central Group
(GBP'000) (GBP'000) (GBP'000) (GBP'000)
Revenue 23,345 5,995 16 29,356
Administrative expenses (9,939) (3,561) (4,226) (17,726)
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Operating profit/(loss) 13,406 2,434 (4,210) 11,630
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Share-based payment costs - - 2,399 2,399
Amortisation of acquisition related intangibles 231 - - 231
Exceptional costs 266 - - 266
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Adjusted operating profit/(loss) (before separately disclosed
items)(1) 13,903 2,434 (1,811) 14,526
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Finance costs (18) - (337) (355)
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
Profit/(loss) before tax 13,388 2,434 (4,547) 11,275
---------------------------------------------------------------------- ---------- ---------- ---------- ----------
All turnover arose in the United Kingdom.
1. Alternative performance measures are detailed in note 17.
4 SEPARATELY DISCLOSED ITEMS
Audited year
ended 31-Mar 2022
Unaudited six months ended 30-Sep 2022 (GBP'000) Unaudited six months ended 30-Sep 2021 (GBP'000) (GBP'000)
Acquisition-related
expenses 352 187 231
-------------------- ------------------------------------------------ ------------------------------------------------ ------------------
Total exceptional
costs 352 187 231
-------------------- ------------------------------------------------ ------------------------------------------------ ------------------
Amortisation of
acquisition related
intangible assets 207 60 266
Share-based payment
costs 495 1,735 2,399
-------------------- ------------------------------------------------ ------------------------------------------------ ------------------
Total separately
disclosed costs 1,054 1,982 2,896
-------------------- ------------------------------------------------ ------------------------------------------------ ------------------
Separately disclosed items shown separately on the face of the
Consolidated Statement of Total Comprehensive Income or included
within administrative expenses reflect costs and income that do not
relate to the Group's normal business operations and that are
considered material individually, or in aggregate if of a similar
type, due to their size or frequency.
EXCEPTIONAL ITEMS
During the Period, the Group acquired 50% of the share capital
of 8AM Global Limited. The Group incurred professional fees of
GBP256,000 during the process which have been treated as
exceptional items.
The Group also incurred one-off costs relating to the
acquisition of the Verbatim funds in the period amounting to
GBP96,000. These costs have been treated as exceptional items.
Acquisition-related expenses in the prior year relate to
professional fees incurred as a result of the Group acquiring
GBP650 million of assets under management in the Verbatim
funds.
SHARE-BASED PAYMENT CHARGES
Share-based payments is a recurring item, though the value will
change depending on the estimation of the satisfaction of
performance obligations attached to certain awards. It has been
excluded from the core business operating profit since it is a
significant non-cash item. Underlying profit, being adjusted
operating profit, represents largely cash-based earnings and more
directly relates to the financial reporting period.
AMORTISATION OF ACQUISITION RELATED INTANGIBLE ASSETS
Payments made for the introduction of client relationships and
brands that are deemed to be intangible assets are capitalised and
amortised over their useful life, which has been assessed to be ten
years. This amortisation charge is recurring over the life of the
intangible asset, though has been excluded from the core business
operating profit since it is a significant non-cash item.
Underlying profit, being adjusted operating profit, represents
largely cash-based earnings and more directly relates to the
financial reporting period.
5 TAXATION
Audited year
ended 31-Mar 2022
Unaudited six months ended 30-Sep 2022 (GBP'000) Unaudited six months ended 30-Sep 2021 (GBP'000) (GBP'000)
Current tax
expense
Current tax on
profits for the
period 1,498 1,150 2,010
Share-based
payment costs (83) (487) -
Adjustment for
under-provision
in prior
periods - - (52)
---------------- ------------------------------------------------ ------------------------------------------------ ------------------
1,415 663 1,958
---------------- ------------------------------------------------ ------------------------------------------------ ------------------
Deferred tax
expense
Share-based
payment costs (101) 250 261
Origination and
reversal of
temporary
differences (23) 7 -
Adjustment in
respect of
previous years - - (30)
Effect of
changes in tax
rates - (31) (156)
---------------- ------------------------------------------------ ------------------------------------------------ ------------------
(124) 226 75
---------------- ------------------------------------------------ ------------------------------------------------ ------------------
Total tax
expense 1,291 889 2,033
---------------- ------------------------------------------------ ------------------------------------------------ ------------------
The reasons for the difference between the actual tax charge for
the period and the standard rate of corporation tax in the UK
applied to profit for the period are as follows:
Audited year
ended 31-Mar 2022
Unaudited six months ended 30-Sep 2022 (GBP'000) Unaudited six months ended 30-Sep 2021 (GBP'000) (GBP'000)
Profit before
taxation 6,624 4,787 11,275
Tax at UK
corporation tax
rate of 19%
(2021: 19%) 1,259 910 2,142
Expenses not
deductible for
tax purposes 49 44 45
Capital
allowances in
excess of
depreciation 42 32 1
Adjustments in
respect of
previous years - - (82)
Share-based
payments (59) (66) 20
Income not
taxable - - 1
Effect of
changes in tax
rates - (31) (94)
---------------- ------------------------------------------------ ------------------------------------------------ ------------------
Total tax
expense 1,291 889 2,033
---------------- ------------------------------------------------ ------------------------------------------------ ------------------
An increase in the UK corporation rate from 19% to 25%
(effective 1 April 2023) was substantively enacted on 24 May 2021.
This will increase the Company's future current tax charge
accordingly. The deferred tax asset at 30 September 2022 has been
calculated based on these rates, reflecting the expected timing of
reversal of the related temporary differences (31 March 2022:
25%).
6 EARNINGS PER SHARE AND DIVIDS
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares during the period.
NUMBER OF SHARES
Unaudited six months ended Unaudited six months ended Audited
Number of shares 30-Sep 2022 30-Sep 2021 year ended 31-Mar 2022
Basic
Weighted average number of
shares in issue 59,220,759 57,937,803 58,424,150
Effect of own shares held by
an EBT - (745,506) (373,774)
------------------------------ ----------------------------- ------------------------------ -----------------------
59,220,759 57,192,297 58,050,376
------------------------------ ----------------------------- ------------------------------ -----------------------
Diluted
Effect of weighted average
number of options outstanding
for the year 1,909,700 3,266,404 2,875,504
------------------------------ ----------------------------- ------------------------------ -----------------------
Weighted average number of
shares in issue (diluted)(1) 61,130,459 60,458,701 60,925,880
------------------------------ ----------------------------- ------------------------------ -----------------------
Adjusted diluted
Effect of full dilution of
employee share options which
are contingently issuable or
have
future attributable service
costs 1,305,290 1,429,271 1,042,011
------------------------------ ----------------------------- ------------------------------ -----------------------
Adjusted diluted weighted
average number of options and
shares for the year(2) 62,435,749 61,887,972 61,967,891
------------------------------ ----------------------------- ------------------------------ -----------------------
1. The weighted average number of shares is diluted due to the
effect of potentially dilutive contingent issuable shares from
share option schemes.
2. The dilutive shares used for this measure differ from those
used for statutory dilutive earnings per share; the future value of
service costs attributable to employee share options is ignored and
contingently issuable shares for Long-Term Incentive Plan ("LTIP")
options are assumed to fully vest. The Directors have selected this
measure as it represents the underlying effective dilution by
offsetting the impact to the calculation of basic shares of the
purchase of shares by the Employee Benefit Trust ("EBT") to satisfy
options.
Own shares held by an EBT represents the Company's own shares
purchased and held by the EBT, shown at cost. During the Period the
EBT was gifted 139,500 of the Company's own shares. These shares
were subsequently fully utilised during the Period to satisfy the
exercise of employees' EMI options. In the year ended 31 March 2022
the EBT purchased 966,546 of the Company's own shares which were
fully utilised during that year to satisfy the exercise of employee
share options.
Audited year
ended 31-Mar 2022
Unaudited six months ended 30-Sep 2022 (GBP'000) Unaudited six months ended 30-Sep 2021 (GBP'000) (GBP'000)
Earnings
attributable
to ordinary
shareholders
Basic and
diluted
profit for
the period 5,333 3,898 9,242
Share-based
payments -
IFRS 2
option
charges 495 1,735 2,399
Amortisation
of
acquisition
related
intangibles 207 60 266
Exceptional
costs (note
4) 352 187 231
Tax impact of
adjustments (401) (457) (602)
------------- ------------------------------------------------ ------------------------------------------------ ------------------
Adjusted
basic and
diluted
profits for
the period
and
attributable
earnings 5,986 5,423 11,536
------------- ------------------------------------------------ ------------------------------------------------ ------------------
Earnings per
share -
basic
(pence) 9.01 6.82 15.92
Earnings per
share -
diluted
(pence) 8.72 6.45 15.17
Adjusted
earnings per
share -
basic
(pence)(1) 10.43 9.48 19.87
Adjusted
earnings per
share -
diluted
(pence)(1) 9.89 8.76 18.62
------------- ------------------------------------------------ ------------------------------------------------ ------------------
1. Alternative performance measures are detailed in note 17.
DIVIDS
The Directors consider the Group's capital structure and
dividend policy at least twice a year ahead of announcing results
and do so in the context of its ability to continue as a going
concern, to execute the strategy and to invest in opportunities to
grow the business and enhance shareholder value.
In August 2022, Tatton Asset Management plc paid the final
dividend related to the year ended 31 March 2022 of GBP5,012,000
representing a payment of 8.5p per share.
In the year ended 31 March 2022, Tatton Asset Management plc
paid the final dividend related to the year ended 31 March 2021 of
GBP4,284,000 representing a payment of 7.5p per share.
In addition, the Company paid an interim dividend of
GBP2,357,000 (2021: GBP1,999,000) to its equity shareholders. This
represents a payment of 4.0p per share (2021: 3.5p per share).
7 GOODWILL
Intangible assets
(GBP'000)
Cost and carrying value at 31 March 2021 6,254
Recognised as part of a business combination 3,021
----------------------------------------------- -----------------
Balance at 30 September 2021 9,275
Recognised as part of a business combination 62
----------------------------------------------- -----------------
Balance at 31 March 2022 and 30 September 2022 9,337
----------------------------------------------- -----------------
IMPAIRMENT LOSS AND SUBSEQUENT REVERSAL
Goodwill is subject to an annual impairment review based on an
assessment of the recoverable amount from future trading. Where, in
the opinion of the Directors, the recoverable amount from future
trading does not support the carrying value of the goodwill
relating to a subsidiary company then an impairment charge is made.
Such impairment is charged to the Consolidated Statement of Total
Comprehensive Income.
GOODWILL IMPAIRMENT TESTING
For the purpose of impairment testing, goodwill is allocated to
the Group's operating companies, which represents the lowest level
within the Group at which the goodwill is monitored for internal
management accounts purposes.
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash-generating units ("CGUs") or group of
units that are expected to benefit from that business combination.
The Directors test goodwill annually for impairment, or more
frequently if there are indicators that goodwill might be impaired.
The Directors have considered the carrying value of goodwill at 30
September 2022 and do not consider that it is impaired.
GROWTH RATES
The value in use is calculated from cash flow projections based
on the Group's forecasts for the year ended 31 March 2023 which are
extrapolated for a further four years. The Group's latest financial
forecasts, which cover a three-year period, are reviewed by the
Board.
DISCOUNT RATES
The pre-tax discount rate used to calculate value is 11.5%
(2021: 10.8%). The discount rate is derived from a benchmark
calculated from a number of comparable businesses.
CASH FLOW ASSUMPTIONS
The key assumptions used for the value in use calculations are
those regarding discount rate, growth rates and expected changes in
margins. Changes in prices and direct costs are based on past
experience and expectations of future changes in the market. The
growth rate used in the calculation reflects the average growth
rate experienced by the Group for the industry.
From the assessment performed, there are no reasonable
sensitivities that result in the recoverable amount being equal to
the carrying value of the goodwill attributed to the CGU.
8. INVESTMENT IN JOINT VENTURES
Unaudited six months ended Unaudited six months ended Audited year ended
30-Sep 2022 (GBP'000) 30-Sep 2021 (GBP'000) 31-Mar 2022 (GBP'000)
Opening Investment - - -
Additions in the period 6,956 - -
Profit for the period after tax 40 - -
------------------------------- ----------------------------- ------------------------------ ----------------------
Closing Investment 6,996 - -
------------------------------- ----------------------------- ------------------------------ ----------------------
Additions in the Period relates to the acquisition of 50% of the
share capital of 8AM Global Limited for an initial consideration of
GBP3,838,000 followed by discounted deferred consideration of
GBP3,118,000 (undiscounted deferred consideration GBP3,501,000)
based on certain performance measures. The initial consideration
was paid by way of shares in Tatton Asset Management plc.
9 INTANGIBLES
Computer software Brand Total
(GBP'000) Client relationships (GBP'000) (GBP'000) (GBP'000)
Cost
Balance at 1 April 2021 819 1,196 - 2,015
Acquired as part of a business combination - 2,838 98 2,936
------------------------------------------- ----------------- ------------------------------ ---------- ----------
Balance at 30 September 2021 819 4,034 98 4,951
Additions 211 - - 211
Disposals (24) - - (24)
------------------------------------------- ----------------- ------------------------------ ---------- ----------
Balance at 31 March 2022 1,006 4,034 98 5,138
Additions 114 - - 114
------------------------------------------- ----------------- ------------------------------ ---------- ----------
Balance at 30 September 2022 1,120 4,034 98 5,252
------------------------------------------- ----------------- ------------------------------ ---------- ----------
Accumulated amortisation and impairment
Balance at 1 April 2021 (399) (180) - (579)
Charge for the period (150) (60) - (210)
------------------------------------------- ----------------- ------------------------------ ---------- ----------
Balance at 30 September 2021 (549) (240) - (789)
Charge for the period (120) (201) (5) (326)
Disposals 24 - - 24
------------------------------------------- ----------------- ------------------------------ ---------- ----------
Balance at 31 March 2022 (645) (441) (5) (1,091)
Charge for the period (123) (202) (5) (330)
------------------------------------------- ----------------- ------------------------------ ---------- ----------
Balance at 30 September 2022 (768) (643) (10) (1,421)
------------------------------------------- ----------------- ------------------------------ ---------- ----------
Carrying amount
At 1 April 2021 420 1,016 - 1,436
------------------------------------------- ----------------- ------------------------------ ---------- ----------
At 30 September 2021 270 3,794 98 4,162
------------------------------------------- ----------------- ------------------------------ ---------- ----------
At 31 March 2022 361 3,593 93 4,047
------------------------------------------- ----------------- ------------------------------ ---------- ----------
At 30 September 2022 352 3,391 88 3,831
------------------------------------------- ----------------- ------------------------------ ---------- ----------
All amortisation charges on intangible assets are included
within administrative expenses in the Consolidated Statement of
Total Comprehensive Income.
10 PROPERTY, PLANT AND EQUIPMENT
Computer, office
equipment and motor Fixtures and fittings Right-of-use assets Total
vehicles (GBP'000) (GBP'000) (GBP'000) (GBP'000)
Cost
Balance at 1 April 2021 432 477 931 1,840
Additions 17 - 60 77
-------------------------- ------------------------ ------------------------- ------------------------- ----------
Balance at 30 September
2021 449 477 991 1,917
Additions 57 - - 57
Disposals (161) - - (161)
-------------------------- ------------------------ ------------------------- ------------------------- ----------
Balance at 31 March 2022 345 477 991 1,813
Additions 31 3 - 34
-------------------------- ------------------------ ------------------------- ------------------------- ----------
Balance at 30 September
2022 376 480 991 1,847
-------------------------- ------------------------ ------------------------- ------------------------- ----------
Accumulated depreciation
and impairment (327) (207) (314) (848)
Balance at 1 April 2021 (327) (207) (314) (848)
Charge for the period (31) (48) (102) (181)
-------------------------- ------------------------ ------------------------- ------------------------- ----------
Balance at 30 September
2021 (358) (255) (416) (1,029)
Charge for the period (42) (47) (107) (196)
Disposals 161 - - 161
-------------------------- ------------------------ ------------------------- ------------------------- ----------
Balance at 31 March 2022 (239) (302) (523) (1,064)
Charge for the period (34) (48) (108) (190)
-------------------------- ------------------------ ------------------------- ------------------------- ----------
Balance at 30 September
2022 (273) (350) (631) (1,254)
-------------------------- ------------------------ ------------------------- ------------------------- ----------
Carrying amount
At 1 April 2021 105 270 617 992
-------------------------- ------------------------ ------------------------- ------------------------- ----------
At 30 September 2021 91 222 575 888
-------------------------- ------------------------ ------------------------- ------------------------- ----------
At 31 March 2022 106 175 468 749
-------------------------- ------------------------ ------------------------- ------------------------- ----------
At 30 September 2022 103 130 360 593
-------------------------- ------------------------ ------------------------- ------------------------- ----------
All depreciation charges are included within administrative
expenses in the Consolidated Statement of Total Comprehensive
Income.
The Group leases buildings, IT equipment and a car. The Group
has applied the practical expedient for low value assets and so has
not recognised IT equipment within right-of-use assets.
The average lease term is five years. No leases have expired in
the current financial Period.
RIGHT-OF-USE ASSETS
Audited year
ended 31-Mar 2022
Unaudited six months ended 30-Sep 2022 (GBP'000) Unaudited six months ended 30-Sep 2021 (GBP'000) (GBP'000)
Amounts
recognised in
profit and
loss
Depreciation
on
right-of-use
assets (108) (102) (209)
Interest
expense on
lease
liabilities (7) (11) (23)
Expense
relating to
short-term
leases (31) (15) (30)
Expense
relating to
low value
assets (1) (1) -
------------- ------------------------------------------------ ------------------------------------------------ ------------------
Total (147) (129) (262)
------------- ------------------------------------------------ ------------------------------------------------ ------------------
At 30 September 2022, the Group is committed to GBP59,000 (2021:
GBP14,000) for short-term leases. The total cash outflow for leases
amounts to GBP166,000 (2021: GBP190,000).
11 TRADE AND OTHER RECEIVABLES
Audited year
ended 31-Mar 2022
Unaudited six months ended 30-Sep 2022 (GBP'000) Unaudited six months ended 30-Sep 2021 (GBP'000) (GBP'000)
Trade
receivables 522 275 329
Prepayments
and accrued
income 3,348 3,165 3,442
Other
receivables 32 5,125 34
------------ ------------------------------------------------ ------------------------------------------------ ------------------
Total trade
and other
payables 3,902 8,565 3,805
------------ ------------------------------------------------ ------------------------------------------------ ------------------
All trade receivable amounts are short term. The carrying value
is considered a fair approximation of their fair value. The Group
applies the IFRS 9 simplified approach to measuring expected credit
losses ("ECLs") for trade receivables at an amount equal to
lifetime ECLs. In line with the Group's historical experience, and
after consideration of current credit exposures, the Group does not
expect to incur any credit losses and has not recognised any ECLs
in the current year (2021: GBPnil).
The amounts due from related parties are net of provisions. The
carrying value of the provisions as at 30 September 2022 was
GBP1,311,000 (2021: GBP1,311,000).
The decrease in Other receivables largely relates to the money
owed to the Group from the sale of shares on exercise of employee
share options in the period ended 30 September 2021 which was
settled shortly after that date. There are no such receivables in
the current Period.
Trade receivable amounts are all held in sterling.
12 TRADE AND OTHER PAYABLES
Audited year
ended 31-Mar 2022
Unaudited six months ended 30-Sep 2022 (GBP'000) Unaudited six months ended 30-Sep 2021 (GBP'000) (GBP'000)
Trade payables 913 458 855
Amounts due to
related
parties 234 231 235
Accruals 2,521 3,307 3,468
Deferred
income 155 92 98
Contingent
consideration 5,722 3,000 2,486
Other payables 2,939 6,635 3,161
-------------- ------------------------------------------------ ------------------------------------------------ ------------------
12,484 13,723 10,303
-------------- ------------------------------------------------ ------------------------------------------------ ------------------
Less
non-current
portion:
Contingent
consideration (5,722) (3,000) (2,486)
Other payables (129) (388) (261)
-------------- ------------------------------------------------ ------------------------------------------------ ------------------
Total
non-current
trade and
other
payables (5,851) (3,388) (2,747)
-------------- ------------------------------------------------ ------------------------------------------------ ------------------
Total current
trade and
other
payables 6,633 10,335 7,556
-------------- ------------------------------------------------ ------------------------------------------------ ------------------
The carrying values of trade payables, amounts due to related
parties, accruals and deferred income are considered reasonable
approximation of fair value. Trade payable amounts are all held in
sterling.
13 FINANCIAL INSTRUMENTS
The Group finances its operations through a combination of cash
resource and other borrowings. Short-term flexibility is satisfied
by overdraft facilities in Paradigm Partners Limited which are
repayable on demand.
FAIR VALUE ESTIMATION
IFRS 7 requires disclosure of fair value measurements of
financial instruments by level of the following fair value
measurement hierarchy:
-- Quoted prices (unadjusted) in active markets for identical
assets or liabilities (level 1).
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (level
2).
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level
3).
All financial assets except for financial investments are
categorised as Loans and receivables and are classified as level 1.
Financial investments are categorised as Financial assets at fair
value through profit or loss and are classified as level 1 and the
fair value is determined directly by reference to published prices
in an active market.
Financial assets at fair value through profit or loss (level
1)
Unaudited six months ended Unaudited six months ended Audited year
30-Sep 2022 (GBP'000) 30-Sep 2021 (GBP'000) ended 31-Mar 2022 (GBP'000)
---------------------------- ---------------------------- ---------------------------- ----------------------------
Financial investments in
regulated funds or model
portfolios 122 177 152
---------------------------- ---------------------------- ---------------------------- ----------------------------
All financial liabilities except for contingent consideration
are categorised as Financial liabilities measured at amortised cost
and are also classified as level 1. The only financial liabilities
measured subsequently at fair value on level 3 fair value
measurement represent contingent consideration relating to a
business combination.
Financial liabilities at fair value through profit or loss
(level 3)
Contingent consideration GBP'000
Balance at 1 April 2021 -
Recognised on acquisition 3,000
------------------------------------------------------ -------
Balance at 30 September 2021 3,000
Changes in fair value of contingent consideration (514)
------------------------------------------------------ -------
Balance at 31 March 2022 2,486
Recognised on acquisition 3,118
Changes in the fair value of contingent consideration 118
------------------------------------------------------ -------
Balance at 30 September 2022 5,722
------------------------------------------------------ -------
14 EQUITY
Number
Authorised, called up and fully paid
At 1 April 2021 55,889,065
Issue of share capital on exercise of employee share options 1,016,349
------------------------------------------------------------- ----------
At 30 September 2021 58,905,414
Issue of share capital on exercise of employee share options 9,473
------------------------------------------------------------- ----------
At 31 March 2022 58,914,887
Issue of share capital on exercise of employee share options 237,962
Issue of share capital as payment for an acquisition 877,737
------------------------------------------------------------- ----------
At 30 September 2022 60,030,586
------------------------------------------------------------- ----------
15 SHARE-BASED PAYMENTS
During the Period, a number of share-based payment schemes and
share options schemes have been utilised by the Company.
(A) SCHEMES
(I) Tatton Asset Management plc EMI Scheme ("TAM EMI
Scheme")
On 7 July 2017 the Group launched an EMI share option scheme
relating to shares in Tatton Asset Management plc to enable senior
management to participate in the equity of the Company. 3,022,733
options with a weighted average exercise price of GBP1.89 were
granted, exercisable in July 2021. There have been nil (2021:
650,933) options exercised during the Period from this scheme.
The scheme was extended on 8 August 2018, 1 August 2019, 28 July
2020, 15 July 2021 and 25 July 2022 with 1,720,138, 193,000,
1,000,000, 279,858 and 274,268 zero cost options granted in each
respective year. These options are exercisable on the third
anniversary of the grant date.
The options granted in 2018 vested and became exercisable in
August 2021. There have been 50,000 (2021: 1,090,770) options
exercised during the Period from this scheme. 168,201 of these
options lapsed in 2021.
The options granted in 2019 vested and became exercisable in
August 2022. There have been 139,500 options exercised during the
Period from this scheme.
The options granted in 2020, 2021 and 2022 vest in August 2023,
July 2024 and July 2025 respectively provided certain performance
conditions and targets, set prior to grant, have been met. If the
performance conditions are not met, the options lapse.
A total of 2,806,544 options remains outstanding at 30 September
2022, 1,256,668 of which are currently exercisable.
4,250 options were forfeited in the Period (2021: 30,000).
Within the accounts of the Company, the fair value at grant date is
estimated using the appropriate models including both the
Black-Scholes and Monte Carlo modelling methodologies.
Number of share options granted (number) Weighted average price (GBP)
Outstanding at 1 April 2021 4,386,070 0.66
Granted during the period 279,858 -
Forfeited during the period (30,000) -
Lapsed during the period (168,201) -
Exercised during the period (1,741,703) 1.70
--------------------------------- ---------------------------------------- ----------------------------
Outstanding at 30 September 2021 2,726,024 0.60
--------------------------------- ---------------------------------------- ----------------------------
Exercisable at 30 September 2021 1,294,668 1.27
--------------------------------- ---------------------------------------- ----------------------------
Outstanding at 1 October 2021 2,726,024 0.60
Granted during the period - -
Forfeited during the period - -
Exercised during the period - -
Lapsed during the period (2) -
--------------------------------- ---------------------------------------- ----------------------------
Outstanding at 31 March 2022 2,726,026 0.60
--------------------------------- ---------------------------------------- ----------------------------
Exercisable at 31 March 2022 1,294,668 1.27
--------------------------------- ---------------------------------------- ----------------------------
Outstanding at 1 April 2022 2,767,026 0.60
Granted during the period 274,268 -
Forfeited during the period (4,250) -
Lapsed during the period - -
Exercised during the period (189,500) 0.50
--------------------------------- ---------------------------------------- ----------------------------
Outstanding at 30 September 2022 2,806,544 0.59
--------------------------------- ---------------------------------------- ----------------------------
Exercisable at 30 September 2022 1,256,668 1.31
--------------------------------- ---------------------------------------- ----------------------------
(II) Tatton Asset Management plc Sharesave Scheme ("TAM
Sharesave Scheme")
On 7 July 2017, 5 July 2018, 3 July 2019, 6 July 2020, 2 August
2021 and 4 August 2022 the Group launched all employee Sharesave
schemes for options over shares in Tatton Asset Management plc,
administered by Yorkshire Building Society. Employees are able to
save between GBP10 and GBP500 per month over the three-year life of
each scheme, at which point they each have the option to either
acquire shares in the Company or receive the cash saved.
The 2019 TAM Sharesave scheme vested in August 2022 and 73,599
shares options became exercisable. Over the life of the 2020, 2021
and 2022 TAM Sharesave schemes it is estimated that, based on
current savings rates, 114,220, 42,880 and 60,667 share options
respectively will be exercisable. The exercise price for these
schemes is shown overleaf.
During the Period, 48,462 (2021: 49,803) options have been
exercised and 2,232 (2021: 4,070) options have been forfeited.
Within the accounts of the Company, the fair value at grant date
is estimated using the Black-Scholes methodology for 100% of the
options. Share price volatility has been estimated using the
historical share price volatility of the Company, the expected
volatility of the Company's share price over the life of the
options and the average volatility applying to a comparable group
of listed companies. Key valuation assumptions and the costs
recognised in the accounts during the Period are noted in (B) and
(C) overleaf respectively.
Number of share options granted (number) Weighted average price (GBP)
Outstanding at 1 April 2021 101,849 1.73
Granted during the period 60,779 2.17
Forfeited during the period (4,070) 2.13
Exercised during the period (49,803) 1.86
--------------------------------- ---------------------------------------- ----------------------------
Outstanding at 30 September 2021 108,755 2.03
--------------------------------- ---------------------------------------- ----------------------------
Exercisable at 30 September 2021 9,473 1.90
--------------------------------- ---------------------------------------- ----------------------------
Outstanding at 1 October 2021 108,755 2.03
Granted during the period 17,089 2.28
Forfeited during the period (1,854) 2.22
Exercised during the period (9,473) 1.86
--------------------------------- ---------------------------------------- ----------------------------
Outstanding at 31 March 2022 114,517 2.14
--------------------------------- ---------------------------------------- ----------------------------
Exercisable at 31 March 2022 - -
--------------------------------- ---------------------------------------- ----------------------------
Outstanding at 1 April 2022 114,517 2.14
Granted during the period 34,815 2.45
Forfeited during the period (2,232) 3.11
Exercised during the period (48,462) 1.79
--------------------------------- ---------------------------------------- ----------------------------
Outstanding at 30 September 2022 98,638 2.37
--------------------------------- ---------------------------------------- ----------------------------
Exercisable at 30 September 2022 25,137 1.79
--------------------------------- ---------------------------------------- ----------------------------
(B) VALUATION ASSUMPTIONS
Assumptions used in the option valuation models to determine the
fair value of options at the date of grant were as follows:
EMI scheme Sharesave scheme
2022 2021 2020 2019 2022 2021 2020 2019
Share price at grant (GBP) 4.03 4.60 2.84 2.12 4.25 4.80 2.85 2.14
Exercise price (GBP) - - - - 3.26 3.60 2.29 1.79
Expected volatility (%) 34.05 33.76 34.80 30.44 34.05 33.76 34.80 30.44
Expected life (years) 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Risk free rate (%) 1.71 0.24 (0.14) 0.35 1.71 0.12 (0.57) 0.35
Expected dividend yield (%) 3.11 2.39 3.38 3.96 3.11 2.39 3.38 3.96
---------------------------- ----- ----- ------ ----- ----- ----- ------ -----
(C) IFRS 2 SHARE-BASED OPTION COSTS
Unaudited six months ended Unaudited six months ended Audited year
30-Sep 2022 (GBP'000) 30-Sep 2021 (GBP'000) ended 31-Mar 2022 (GBP'000)
TAM EMI scheme 463 1,620 2,347
TAM Sharesave scheme 32 22 52
--------------------- ------------------------------- -------------------------------- ----------------------------
495 1,642 2,399
--------------------- ------------------------------- -------------------------------- ----------------------------
16 RELATED PARTY TRANSACTIONS
There have been no related party transactions that have taken
place during the Period that have materially affected the financial
position or the performance of the Group. There were also no
changes to related party transactions from those disclosed in the
2022 Annual Report and Financial Statements that could have a
material effect on the financial position or the performance of the
Group. Transactions between the Company and its subsidiaries have
been eliminated on consolidation and are not disclosed. There were
no other transactions with related parties which were not part of
the Group during the Period, with the exception of remuneration
paid to key management personnel.
17 ALTERNATIVE PERFORMANCE MEASURES ("APMs ")
INCOME STATEMENT MEASURES
Reconciling items to their
APM Closest equivalent measure statutory measure Definition and purpose
---------------------------- ---------------------------- ---------------------------- ----------------------------
Adjusted operating profit Operating profit Exceptional items, An important measure where
before separately disclosed share-based payments and exceptional items distort
items amortisation of acquisition the understanding of the
related intangibles. operating performance
See note 4. of the business.
Allows comparability between
periods. See also note 2.6.
---------------------------- ---------------------------- ---------------------------- ----------------------------
Adjusted operating profit Operating profit Exceptional items, An important measure where
margin before separately share-based payments and exceptional items distort
disclosed items amortisation of acquisition the understanding of the
related intangibles. operating performance
See note 4. of the business.
Allows comparability between
periods. See also note 2.6.
---------------------------- ---------------------------- ---------------------------- ----------------------------
Adjusted profit before tax Profit before tax Exceptional items, An important measure where
before separately disclosed share-based payments and exceptional items distort
items amortisation of acquisition the understanding of the
related intangibles. operating performance
See note 4. of the business.
Allows comparability between
periods. See also note 2.6.
---------------------------- ---------------------------- ---------------------------- ----------------------------
Adjusted earnings per share Earnings per share - basic Exceptional items, An important measure where
- basic share-based payments and exceptional items distort
amortisation of acquisition the understanding of the
related intangibles. operating performance
See note 4. of the business.
Allows comparability between
periods. See also note 2.6.
---------------------------- ---------------------------- ---------------------------- ----------------------------
Adjusted earnings per share Earnings per share - diluted Exceptional items, An important measure where
- diluted share-based payments and exceptional items distort
amortisation of acquisition the understanding of the
related intangibles operating performance
and the tax thereon. The of the business.
dilutive shares for this Allows comparability between
measure assume that all periods. See also note 2.6.
contingently issuable
shares will fully vest. See
note 6.
---------------------------- ---------------------------- ---------------------------- ----------------------------
Net cash generated from Net cash generated from Exceptional items, An important measure where
operations before separately operations share-based payments and exceptional items distort
disclosed items amortisation of acquisition the understanding of the
related intangibles. operating performance
See note 4. of the business.
Allows comparability between
periods. See also note 2.6.
---------------------------- ---------------------------- ---------------------------- ----------------------------
OTHER MEASURES
Reconciling items to their
APM Closest equivalent measure statutory measure Definition and purpose
----------------------------- -------------------------- ----------------------------- ----------------------------
Tatton - Assets under None Not applicable AUM is representative of the
management ("AUM") and net customer assets and is a
inflows measure of the value of the
customer
base. Movements in this base
are an indication of
performance in the year and
growth of the
business to generate
revenues going forward. Net
inflows measure the net of
inflows and outflows
of customers assets in the
year.
----------------------------- -------------------------- ----------------------------- ----------------------------
Tatton - Assets under None Not applicable AUI is representative of the
influence ("AUI") customers assets which are
not directly managed by
Tatton but
over which we hold
significant influence due to
our shareholding in the
company in which they
are managed. Movements in
this base are an indication
of our participation in the
performance
of the joint venture and its
growth in order to generate
Tatton's share of profits
going forward.
----------------------------- -------------------------- ----------------------------- ----------------------------
Paradigm Consulting members None Not applicable Alternative growth measure
and growth to revenue, giving an
operational view of growth.
----------------------------- -------------------------- ----------------------------- ----------------------------
Paradigm Mortgages lending, None Not applicable Alternative growth measure
member firms and growth to revenue, giving an
operational view of growth.
----------------------------- -------------------------- ----------------------------- ----------------------------
Dividend cover None Not applicable Dividend cover (being the
ratio of the proposed final
dividend against diluted
earnings per
share before exceptional
items and share-based
charges) demonstrates the
Group's ability to
pay the proposed dividend.
----------------------------- -------------------------- ----------------------------- ----------------------------
18 EVENTS AFTER THE REPORTING PERIOD
There were no material post balance sheet events.
19 CONTINGENT LIABILITIES
At 30 September 2022, the Directors confirmed there were
contingent liabilities of GBPnil (2021: GBPnil).
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END
IR BBBPTMTTTBJT
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November 22, 2022 02:00 ET (07:00 GMT)
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