REG - AssetCo PLC - 2023 Half-year Report
14/06/2023 07:00
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RNS Number : 6179C AssetCo PLC 14 June 2023
14 June 2023
AssetCo plc
("AssetCo" or the "Company")
2023 Half-year Report
for the six months ended 31 March 2023
Highlights
· Acquisition of Ocean Dial Asset Management announced, subject to
regulatory approvals, continuing the expansion of AssetCo's listed equity
platform:
o Brings emerging markets equity asset management capability in the
fast-growing Indian economy (AuM c.£139m at end May)
o Adds a third closed end fund client to the Group
o Earnings enhancing from outset (based on run rate revenues of c.£1.6m pa
as at end May)
· Steady progress made in underlying businesses:
o Improvements in assets under management and operating margins for the
active equities businesses despite industry outflows
o Net inflows of £28m for Saracen Global Income and Growth Fund making the
Group the 8th largest net asset gatherer out of 36 groups in the Global Income
sector
o Net inflows of $21m at Rize ETF over the period
o Improvement in profit, cashflows and balance sheet strength at Parmenion
which also completed its first acquisition in the period.
o Further cost reductions in active equities business: over £1m identified
in addition to those underway at year end, to deliver annualised cost
reductions of over £16m in aggregate since announcement of the acquisition of
River & Mercantile in January 2022
· Assets under management (AuM) as at 31 March 2023 were £13.8 bn (31
March 2022: £9.9bn), including AuM for Parmenion (£10.6bn)
· 86% of active equity mutual funds AuM in 1(st) or 2(nd) quartile in
investment performance terms, over 3 years when compared to competitor funds
in relevant Investment Association sectors
Underlying operational loss for the six months ended 31 March 2023 £4.1m
before exceptionals and other one-off costs, reflecting the introduction of
both River & Mercantile and SVM businesses since the previous half year
report. Overall loss £13.8m (31 March 2022: loss of £2.6m).
Campbell Fleming, Chief Executive Officer of AssetCo, commented:
"The six months to end March 2023 has been one of the toughest on record for
active equities businesses with a backdrop of relentless outflows across the
industry. Given that extremely challenging operating environment, I am
gratified to report a modest uptick in both assets under management and,
importantly, operating margin for our active equities businesses. At Rize, the
thematic focus of that ETF business has been out of favour in the market but
it is pleasing to report healthy net inflows over the reporting period.
Parmenion has gone from strength to strength over the period.
We were also delighted, in March, to announce the acquisition of Ocean Dial
Asset Management which is expected to enhance earnings from the outset and
provides welcome and valuable access to the long-term potential that India
offers. We see opportunities to add value by bringing that business together
with the other active equity businesses we are combining under the River and
Mercantile brand.
The further cost savings we have identified, when taken together with work
done to date and our continued strong investment performance showing as a
Group, make us well placed to benefit from improvement in investor sentiment.
The traction achieved for the Saracen Global Income and Growth Fund supported
by River and Mercantile's distribution capability demonstrates the potential
of bringing together strong operating companies."
For further information, please contact:
AssetCo plc Numis Securities Limited
Campbell Fleming, CEO Nominated adviser and joint broker
Gary Marshall, CFOO Giles Rolls / Charles Farquhar
Tel: +44 (0) 7958 005141 Tel: +44 (0) 20 7260 1000
Panmure Gordon (UK) Limited H/Advisors Maitland
Joint corporate broker Neil Bennett
Atholl Tweedie / Gabriel Hamlyn Rachel Cohen
Tel: +44 (0) 20 7886 2906 Tel: +44 (0) 20 7379 5151
For further details, visit the website, www.assetco.com
(http://www.assetco.com/)
Ticker: AIM: ASTO.L
CHAIRMAN'S STATEMENT
The six months ended 31 March 2023 saw a period of unrelenting market
pressure. Although most stock markets saw some uplift in value, investor
sentiment was weak and the collapse of Silicon Valley Bank, followed swiftly
by the rescue of Credit Suisse, did nothing to calm the nerves of investors.
Fund flows across the industry were consistently negative for the period, with
outflows from UK Equity funds (currently AssetCo's largest exposure) actually
increasing in Q1 2023 from what were already record levels in 2022. With
overall industry figures negative, the only respite from the gloom was in
Global Equity funds where inflows turned tentatively positive in Q1 2023.
The AssetCo Group of companies was sadly not immune from these pressures and
the Group generally suffered outflows over the period, when inflows had been
the expectation. The general rise in markets has cushioned the effect to some
extent, but it is fair to say that we remain behind where we want to be in
terms of asset growth. Thankfully the Global Equity asset class is one where
we have been bucking the trend for some time with the Saracen Global Income
and Growth Fund and the more supportive environment was welcome.
Progress has been made in delivering cost savings and the revenue pressures
have moved us to go further in this regard. Savings of over £1m have been
identified on top of those already targeted and being actioned at year end,
leading us to a projected run rate costs target of £15m for the active
equities business at River and Mercantile ("R&M"), which eliminates more
than £16m from the cost base inherited in the River and Mercantile
acquisition. We also reached agreement to sell River and Mercantile's
loss-making US business earlier this year. The deal completed at the end of
May and will result in a modest revenue share benefit for a period going
forward, while eliminating net losses which amounted to £0.4m in this
reporting period.
We intend to roll the Saracen business into SVM in the near future and the
ground is being laid for the full-scale integration of all of our active
equities businesses under the River and Mercantile brand. In the meantime,
cost savings at SVM aim to move that business (considered as a stand-alone) to
profitability on a run rate basis around financial year end, while Saracen is
expected to generate good revenues this year as its flagship Global Income and
Growth Fund continues to gather assets.
It has been encouraging to see net inflows into the Rize ETF business over the
period, which bucks the general trend in conventional fund markets and points
to the on-going potential for this product set. That said, the business
remains materially behind plan, its thematic focus having been set back by the
advent of war in Ukraine and subsequent market jitters. We have therefore
decided to take the prudent approach of writing down the holding value in our
balance sheet by c.£5m to £12m. We continue to see real potential in this
business, but it is emerging later and slower than we had hoped.
The market for infrastructure funds has been particularly challenging against
a backdrop of rising rates and a crisis for UK pension funds and insurers in
the Liability Driven Investment (LDI) market. This has proven particularly
unhelpful for River and Mercantile's own infrastructure fund as a UK only
income vehicle and new commitments have not been forthcoming as hoped,
although a pipeline of potential commitments is being actively developed.
Recognising this slower and later business development and taking a
conservative position, we have elected to make a provision of £1.7m against
assets held on the balance sheet for our infrastructure business which have
been advanced in expectation of future profits.
Financials
The Income Statement for the six months ended 31 March 2023 shows revenue of
£8.3m (31 March 2022: £1.3m) and a loss before taxation of £13.8m (31 March
2022: loss £2.6m).
As was the case with the previous full year's result, it is difficult to make
a direct comparison to the previous six-month period. The six months to 31
March 2022 did not include the businesses of River and Mercantile and SVM,
whereas (with the exception of the month of October in the case of SVM which
was acquired at the end of October) both businesses are fully included in the
six months to end March 2023. This brought an additional £11.7m of
administrative expenses into account for the current period, compared to the
six months ending 31 March 2022. Some £3m of expenses in the current period
were one-off costs, almost half relating to re-structuring.
We have elected to write down the holding value of Rize ETF (by £5m) and to
make a provision (of £1.7m) against certain assets held on the balance sheet
for River and Mercantile's infrastructure business. In both cases this
reflects the later and slower development of these otherwise attractive
businesses in the current market environment.
Total (balance sheet) assets at 31 March 2023 were £86.5m (31 March 2022:
£60.9m) which underlines the strength of our balance sheet. The Group held
cash of £27.5m and c.£4.8m in treasury shares at period end.
Continuing to Build the Business
We were pleased, at the beginning of March, to announce the acquisition of
Ocean Dial Asset Management Limited. Ocean Dial was established in 2005 and is
wholly owned by Avendus Capital Asset Management (UK) Limited. Ocean Dial's
current business is the management of the assets of the India Capital Growth
Fund Limited, which, as at end May 2023, had a net asset value in excess of
£139m and an annualised run rate revenue of £1.6m. The Acquisition is
expected to be earnings enhancing for the Group and it is anticipated that
further synergies will be achievable following completion. The acquisition is
notable both for the access it gives us to investment capability in the
world's most populous nation and the partnership it brings with the India
Capital Growth Fund Limited. We look forward to completing the transaction
later in the year (subject to receipt of the required regulatory approvals)
and welcoming the Ocean Dial team to the AssetCo Group.
The Group was delighted to welcome Michelle Dunne as Head of Institutional
Sales at River and Mercantile where she brings an outstanding reputation to
bear in asset raising, particularly in the area of private markets and
infrastructure, having worked at BlackRock for over 10 years and after that at
Neuberger Berman. We are pleased to be able to attract such talent to the
Group and to invest in the growth of our business in this way.
Outlook
While market conditions remain challenging, we remain on track to deliver
significant cost savings from the Group by year-end. This, combined with the
strong performance of many of our funds, our robust balance sheet and the fact
that we continue to see numerous avenues for profitable growth, give us
continuing confidence in the future of the business.
Board
Mark Butcher, previously independent non-executive director, stood down from
the Board at the Company's AGM on 30 March 2023 in light of his length of
service. I must re-iterate my thanks to Mark, both personally and on behalf of
the Board, for his support and contribution to the Company for over 10 years.
We wish him the very best for the future.
Martin Gilbert
Chairman
14 June 2023
BUSINESS REVIEW
The chart below shows the movement in active equities assets over the period
and includes, for this purpose, SVM assets under management at 30 September
even though the business was not actually acquired until end October 2022.
The single biggest detractor during the period was the River and Mercantile
loss of a New Zealand institutional mandate (where the client made an asset
allocation call away from the asset class in question). Otherwise, profit
taking in R&M's Global Recovery funds has been the somewhat frustrating
order of the day, together with unfortunately expected redemptions from the
poorly performing SVM UK Growth fund. On the plus side, additions to another
R&M US client's institutional mandate have been welcome, as has been the
fairly consistent level of net inflows to the Saracen Global Income and Growth
Fund.
Market movements have been helpful over the period, leaving the business
marginally ahead overall, in terms of AuM.
Investment performance for the Group's active equities funds has been
resilient over the period, with particularly strong showings over 10, 3 and 1
year periods. It is also worth noting that our flagship UK-domiciled European
fund is approaching its important third anniversary with a favourable track
record. All things continuing well, this should facilitate its wider promotion
in the market.
Assets under management have increased over the period, thanks mainly to rises
in market values, further draw down on infrastructure commitments and net
inflows in ETFs. We have been particularly encouraged by the rise in weighted
average fee rates for active equities where lower margin outflows have been
replaced by higher margin inflows (for example in institutional mandates and
with the inflows to the higher margin global equities fund in place of UK
equities outflows)
Annualised Revenue Breakdown by Business Type (as at 31 March 2023)
Business Type AuM (£m) Weighted average fee rate, net of rebates (bp) Gross annualised revenue net of rebates (£000s)
Wholesale (active equities) 2,181 58 12,640
Institutional (active equities) 585 37 2,138
Investment Trust (active equities) 68 73 501
Infrastructure 63 68 428
ETFs 363 47 1,700
Total 3,261 17,408
This table excludes the Group's structured 30% interest in Parmenion which had
AuM of £10.6bn at 31 March 2023, and generated revenues of £20.6m for the
period from 1 October 2022.
· Wholesale refers to the active equity assets which are held and managed
in mutual funds distributed by the Group.
· Institutional refers to the active equity assets which are held and
managed in separate accounts on behalf of institutional clients of the Group.
· Investment Trust refers to the active equity assets which are held and
managed in investment trusts which are clients of the Group.
Rize
The period between 1 October 2022 and 31 March 2023 was particularly tough for
the European thematic ETF market as a whole, with net outflow of USD 314
million across that market. Notwithstanding the outflow across the wider
thematic ETF market, Rize ETF enjoyed net inflows of $21 million in that
period, and spent much of that time building its next suite of ETFs and
expanding its marketing footprint across Europe. As part of that, Rize ETF has
been working with a number of key clients to develop its next suite of
sustainable thematic (Article 9) ETFs whilst also expanding the number of
target client firms that have onboarded its ETFs as a way of positioning
itself for the next wave of thematic allocations once interest rates and
inflation begin to normalise and larger allocations into thematic equities
begin to return in meaningful size. The Rize Environmental Impact 100 UCITS
ETF has been one of the top performing environment/climate-themed sustainable
thematic (Article 9) funds during the period with a return of 24.7 % between 1
October 2022 and 31 March 2023 and achieving $10 million in net inflows in the
period.
Parmenion
The six-month period from 1 October 2022 to 31 March 2023 saw Parmenion
generate revenues of £20.6m and an EBITDA of £9.1m. Platform AUM across the
group increased from £8.5bn to £10.6bn. (Note the numbers include ebi as
referenced below).
In December 2022, the business launched a new proposition, Advisory Models
Pro, which allows significantly more flexibility for adviser firms in building
their own models using our fund range and platform technology. This launch was
accompanied by an app which has streamlined the consent journey for clients,
along with providing more user-friendly reporting.
The platform offering was further enhanced with the addition of a number of
new external discretionary fund managers, to run alongside our in-house
portfolio investment management service.
At the end of the year, Parmenion was strengthened by the acquisition of ebi
Portfolios Limited, a Midlands-based DFM, with a reputation for strong ESG
credentials. Further M&A opportunities continue to be evaluated as they
arise.
Parmenion has improved cash generation in line with increased EBITDA. Cash
held at 31 March 2023 was £28.7m compared to £30.8m at the end of September
2022. This decrease reflects the payment of the initial consideration for ebi,
which was paid out of operational cash. Parmenion has continued to strengthen
its balance sheet with capital held well in excess of regulatory requirements.
In summary, Parmenion has continued to grow successfully despite the wider
economic challenges and has improved profit, cashflows and balance sheet
strength and completed its first acquisition in the period.
Key Performance Indicators
The following table summarises key performance indicators for the business,
illustrating the progression of the business over the period.
End March 2023 End Sept 2022 End March Movement March 2022 to March 2023
2022 (Sept 22 to March 23)
Total Assets under Management (excluding Parmenion) £3,261m £2,652m £503m +£2,758m
(+£609m)
Active Equities Assets under Management £2,766m £2,291m £113m +£2,653m
(+£475m)
Total (balance sheet) assets £86.5m £102.1m £60.9m +£25.6m
(-£15.6m)
Annualised revenue(1) £17.9m £12.9m £2.7m +£15.2m
(+£5m)
Profit/loss for the period -£13.8m -£9.3m -£2.6m -£11.2m
(n/a)
Investment performance(2) 62% 76% 0%(3) +62% points
(1 year) (-14% points)
Investment performance(2) 86% 53% 2%(3) +84% points
(3 year) (+33% points)
(1) Monthly recurring revenue at date shown, annualised (i.e. x 12)
(2) % active equity mutual fund AuM in 1(st) or 2(nd) quartile when compared
to competitor funds in relevant Investment Association sectors.
(3) Saracen only
Campbell Fleming, Chief Executive Officer
14 June 2023
AssetCo plc
Consolidated Income Statement
for the six months ended 31 March 2023
Six months ended Year ended
Notes Unaudited 31 March 2023 Unaudited31 March 2022 Audited 30 Sept 2022
£'000 £'000 £'000
Revenue 3 8,275 1,285 8,062
Cost of sales - (1,767) -
Gross (loss)/profit 8,275 (482) 8,062
Other income 4 1,788 - 1,977
Administrative expenses 5 (17,014) (5,261) (25,051)
Other gains/(losses) 6 (6,718) - (9,732)
Operating (loss) 3 (13,669) (5,743) (24,744)
Gain on bargain purchase 7 - - 3,227
Finance income 8 2 1,590 12,433
Finance costs (136) - (10)
Finance income (net) (134) 1,590 12,423
Share of result of associate 266 1,512 181
(Loss) before income tax (13,537) (2,641) (8,913)
Income tax credit/(expense) 9 148 - 59
Loss after tax from continuing operations (13,389) (2,641) (8,913)
Loss after tax from discontinued operation 10 (413) - (401)
(Loss) for the year (13,802) (2,641) (9,255)
(Loss) attributable to:
Owners of the parent (13,434) (2,252) (8,440)
Non-controlling interest (368) (389) (815)
(13,802) (2,641) (9,255)
Loss per Ordinary Share attributable to the owners of the parent during the Pence Pence(1) Pence
year
From continuing operations
Basic 11 (9.28) (2.67) (7.80)
Diluted 11 (9.28) (2.67) (7.80)
(1) Prior year loss per share has been re-stated to reflect the 10-1 share
split carried out by AssetCo in August 2022.
AssetCo plc
Consolidated Statement of Comprehensive Income
for the six months ended 31 March 2023
Six months ended Year ended
Unaudited 31 March 2023 Unaudited 31 March 2022 Audited 30 Sept 2022
£'000 £'000 £'000
(Loss) for the year (13,802) (2,641) (9,255)
Other comprehensive (loss)/income:
Currency translation differences - - -
Other comprehensive income (net of tax) - - -
Total comprehensive (loss) for the period (13,802) (2,641) (9,255)
Attributable to:
Owners of the parent (13,434) (2,252) (8,440)
Non-controlling interests (368) (389) (815)
Total comprehensive (loss) for the year (13,802) (2,641) (9,255)
AssetCo plc
Consolidated Statement of Financial Position
as at 31 March 2023
Notes Unaudited 31 March 2023 Unaudited 31 March 2022 Audited 30 Sept
£'000 £'000 2022
£'000
Assets
Non-current assets
Property, plant and equipment 42 27 32
Right-of-use assets 1,969 - 224
Goodwill and intangible assets 25,798 20,051 24,600
Investments accounted for using the equity method 22,318 23,383 22,052
Long-term receivables - - 1,208
Total non-current assets 50,127 43,461 48,116
Current assets
Trade and other receivables 7,596 636 9,700
Assets held for sale 10 56 - -
Financial assets at fair value through profit and loss 44 13,200 37
Current income tax receivable 1,173 3 1,173
Cash and cash equivalents 27,548 3,634 43,066
Total current assets 36,417 17,473 53,976
Total assets 86,544 60,934 102,092
Liabilities
Non-current liabilities
Deferred tax liabilities 1,000 49 1,070
Total non-current liabilities 1,000 49 1,070
Current liabilities
Trade and other payables 8,878 2,471 12,750
Liabilities held for sale 10 52 - -
Lease liability 2,049 - 294
Loan due to related party - 1,000 -
Loan notes 12 6,895 - -
Current income tax liabilities 1,566 1,437 1,437
Total current liabilities 19,440 4,908 14,481
Total liabilities 20,440 4,957 15,551
Equity attributable to owners of the parent
Share capital 1,493 843 1,493
Share premium 12 209 27,770 -
Capital redemption reserve 653 653 653
Merger reserve 43,063 2,762 43,063
Other reserves - 7,977 -
Retained earnings 22,148 16,640 42,426
67,566 56,645 87,635
Non-controlling interest (1,462) (668) (1,094)
Total equity 66,104 55,977 86,541
Total equity and liabilities 86,544 60,934 102,092
AssetCo plc
Consolidated Cash Flows
for the six months ended 31 March 2023
6 months ended Year ended
Unaudited 31 March Unaudited 31 March Audited
2023 2022 30 Sept
2022
£'000 £'000 £'000
Cash flows from operating activities
Cash (outflow) from operations (note 13) (8,759) (2,768) (17,916)
Cash outflows from discontinued operation (413) - (401)
Corporation tax paid - - (31)
Finance costs (33) - (10)
Net cash (outflow) from operating activities (9,205) (2,768) (18,358)
Cash flow from investing activities
Net cash received from acquisitions (note 12) 2,802 - 42,148
Payments to acquire associated undertakings - (21,871) (21,871)
Interest on loan notes held in associate - 1,977
Dividends received from financial assets held at fair value - 390 11,459
Finance income 2 - 974
Proceeds of disposal of investments at FV through P and L - - 1,017
Additions to right-of-use assets (2,176) - -
Purchase of property, plant and equipment (22) (14) (15)
Purchase of intangibles (6) (6) (12)
Net cash (outflow)/inflow from investing activities 600 (21,501) 35,677
Cash flow from financing activities
Costs of share issue - - (1,000)
Dividend paid to AssetCo shareholders (1,798) - -
New lease financing 2,176 - -
Lease payments (454) - (104)
Shares bought for treasury (6,837) - (51)
Short-term loan from related party - 1,000 -
Net cash used in financing activities (6,913) 1,000 (1,155)
Net change in cash and cash equivalents (15,518) (23,269) 16,164
Cash and cash equivalents at beginning of year 43,066 26,902 26,902
Cash and cash equivalents at end of year 27,548 3,633 43,066
AssetCo plc
Consolidated Statement of Changes in Equity
for the six months ended 31 March 2023
Share capital Share premium account Capital redemption reserve Merger reserve Other reserve Retained earnings Non-controlling interest Total equity
Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 October 2021 843 27,770 653 2,762 5,496 18,892 56,416 (279) 56,137
Comprehensive income
Loss for the period - - - - - (2,252) (2,252) (389) (2,641)
Total comprehensive loss - - - - - (2,252) (2,252) (389) (2,641)
Share-based payments - LTIP - - - - 2,481 - 2,481 - 2,481
At 31 March 2022 843 27,770 653 2,762 7,977 16,640 56,645 (668) 55,977
Comprehensive income
Loss for the period - - - - - (6,188) (6,188) (426) (6,614)
Other comprehensive income
Currency translation differences - - - - - - - - -
Total comprehensive (loss) - - - - - (6,188) (6,188) (426) (6,614)
Shares issued on acquisition 598 - - 41,301 - - 41,899 - 41,899
Costs of share issue - - - (1,000) - - (1,000) - (1,000)
Share-based payments - LTIP 52 4,255 - (7,977) - (3,670) - (3,670)
Share premium cancellation - (32,025) - - - 32,025 - - -
Shares bought for treasury - - - - - (51) (51) - (51)
At 30 September 2022 1,493 - 653 43,063 - 42,426 87,635 (1,094) 86,541
Comprehensive income
Loss for the period - - - - - (13,434) (13,434) (368) (13,802)
Total comprehensive (loss) - - - - - (13,434) (13,434) (368) (13,802)
Shares bought for treasury - - - - - (6,837) (6,837) - (6,837)
Treasury shares used to settle conversion of loan notes - 209 - - - 1,791 2,000 - 2,000
Dividends paid - - - - - (1,798) (1,798) - (1,798)
At 31 March 2023 1,493 209 653 43,063 - 22,148 67,566 (1,462) 66,104
NOTES FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
1. General information and basis of presentation
AssetCo Plc ("AssetCo" or the "Company") is a public limited company
incorporated and domiciled in England and Wales. The address of its
registered office is 30 Coleman Street, London, EC2R 5AL.
AssetCo is the Parent Company of a group of companies ("the Group") which
offers a range of investment services to private and institutional investors.
The financial information in the Half-year Report has been prepared using the
recognition and measurement principles of the UK-adopted International
Accounting standards and in conformity with the requirements of the Companies
Act 2006. The principal accounting policies used in preparing the Half-year
Report are those the Company expects to apply in its financial statements for
the year ending 30 September 2023 and are unchanged from those disclosed in
the Annual Report and Financial Statements for the year ended 30 September
2022.
The financial information for the six months ended 31 March 2023 and the six
months ended 31 March 2022 is unaudited and does not constitute the Group's
statutory financial statements for those periods. The comparative financial
information for the full year ended 30 September 2022 has, however, been
derived from the audited statutory financial statements for that period. A
copy of those statutory financial statements has been delivered to the
Registrar of Companies.
While the financial figures included in this Half-year Report have been
computed in accordance with IFRSs applicable to interim periods, this
Half-year Report does not contain sufficient information to constitute an
interim financial report as that term is defined in IAS 34.
The financial statements have been presented in sterling to the nearest
thousand pounds (£'000), except where otherwise indicated.
2. Going concern
The directors have considered the going concern assumption of the Group by
assessing the operational and funding requirements of the Group. The directors
have prepared financial projections along with sensitivity analyses of
reasonable plausible alternative outcomes. The forecasts demonstrate that the
directors have a reasonable expectation that the Group has adequate financial
resources to continue operating for a period of at least 12 months from the
date of signing these Interim Financial Statements. Therefore the directors
continue to adopt the going concern basis of accounting in preparing the
consolidated financial statements.
3. Segmental reporting
The core principle of IFRS 8 'Operating segments' is to require an entity to
disclose information that enables users of the financial statements to
evaluate the nature and financial effects of the business activities in which
the entity engages and the economic environments in which it operates.
Segment information is therefore presented in respect of the company's
commercial competencies, Active equities, Infrastructure asset management,
Exchange traded funds, Digital Platform and Head office. It should be noted
that the segment 'Exchange traded funds' was historically named 'High-growth
thematics'. There has been no change in allocation methodology or accounting
for this segment.
Active equities comprise RMG, SVM, Saracen and Revera; Infrastructure Asset
Management is the non-equities investment arm of RMG; Exchange Traded Funds is
Rize ETF and Digital Platforms represents the Group's investment in the
associated company, Parmenion.
Substantially all revenues are earned in the UK with a small amount generated
in the US. We have included a table below to show the split. The Directors
consider that the chief operating decision maker is the Board.
The amounts provided to the Board with respect to net assets are measured in a
manner consistent with that of the financial statements. The Company is
domiciled in the UK.
The segment information provided to the Board for the reportable segments is
as follows:
Period ended 31 March 2023 unaudited Active equities Infrastructure asset management Exchange traded funds Digital platform Head office Total
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 7,257 230 - - - 7,487
Management fees
Marketing fees - - 788 - - 788
Total revenue 7,257 230 788 - - 8,275
Operating (loss)/profit (5,702) (1,932) (6,245) - 210 (13,669)
Finance income 2 - - - - 2
Finance costs (30) - - - (106) (136)
Share of result of associate - - - 266 - 266
(Loss)/profit before tax (5,730) (1,932) (6,245) 266 104 (13,537)
Income tax 144 - 4 - - 132
(Loss)/profit for period (5,586) (1,932) (6,241) 266 104 (13,389)
47,570 645 12,819 - 25,510 86,544
Segment assets
Total assets
Total liabilities (4,781) (851) (319) - (14,489) (20,440)
Total net assets 42,789 (206) 12,500 - 11,021 66,104
Depreciation 11 - 3 - - 14
Impairment of goodwill - - 5,000 - - 5,000
Amortisation of intangible assets 365 - 6 - - 371
Amortisation of right-of-use assets 431 - - - - 431
Total capital expenditure 22 - 6 - - 28
Active equities Infrastructure asset management Digital platform Head office Total
Period ended 31 March 2022 unaudited Exchange traded funds
£'000 £'000 £'000 £'000 £'000 £'000
Revenue
Management fees 424 - - - - 424
Marketing fees - - 861 - - 861
Total revenue 424 - 861 - - 1,285
Operating (loss) (6) - (1,229) - (4,508) (5,743)
Finance income - - - - 1,590 1,590
Finance costs - - - - - -
Share of result of associate - - - 1,512 - 1,512
(Loss)/profit before tax (6) - (1,229) 1,512 (2,918) (2,641)
Income tax - - - - - -
(Loss)profit for period (6) - (1,229) 1,512 (2,918) (2,641)
Segment assets
Total assets 3,523 - 20,346 - 37,065 60,934
Total liabilities (48) - (304) - (4,605) (4,957)
Total net assets 3,475 - 20,042 - 32,460 55,977
Depreciation - - 3 - - 3
Amortisation of intangible assets 2 - 20 - - 22
Total capital expenditure - - 20 - - 20
Year ended 30 September 2022 audited Active equities Infrastructure asset management Exchange traded funds Digital platform Head office Total
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 6,259 79 - - - 6,338
Management fees
Marketing fees - - 1,724 - - 1,724
Total revenue 6,259 79 1,724 - - 8,062
Operating (loss)/profit (6,723) (151) (2,794) - (15,076) (24,744)
Gain on bargain purchase - - - - 3,227 3,227
Finance income 974 - - - 11,459 12,433
Finance costs (10) - - - - (10)
Share of result of associate - - - 181 - 181
(Loss)/profit before tax (5,759) (151) (2,794) 181 (390) (8,913)
Income tax 59 - - - - 59
(Loss)/profit for the year (5,710) (151) (2,794) 181 (390) (8,854)
56,826 1,706 19,324 - 24,236 102,092
Segment assets
Total assets
Total liabilities (12,157) (678) (461) - (2,255) (15,551)
Total net assets 44,669 1,028 18,863 - 21,981 86,541
Depreciation 9 - 5 - - 14
Amortisation of intangible assets 187 - 40 - - 227
Amortisation of right-of-use assets 187 - - - - 187
Total capital expenditure 1 - 26 - - 27
Geographical analysis of revenues Six months ended Year ended
Unaudited Unaudited Audited
31 March 31 March 2022 30 September 2022
2023 £'000 £'000
£'000
UK 8,275 1,285 6,905
US - - 1,270
8,275 1,285 8,175
4. Other income
Six months ended Year ended
Unaudited 31 March 2023 Unaudited 31 March 2022 Audited 30 September 2022
£'000 £'000 £'000
Interest on loan notes held in associate 1,788 - 1,977
The Group holds a 30% equity interest in Parmenion Capital Partners LLP
through a corporate entity, Shillay TopCo Limited. A large part of the Group's
total investment is held by way of loan notes. Shillay has the option to
settle interest by payment-in-kind and they have informed the Company that
they will do so for interest due at 30 June 2023. Accordingly they will issue
additional loan notes to AssetCo plc for the amount of interest due at that
date. We have in the 6 months to 31 March 2023 reflected £1,788,000 as
accrued income pending settlement of the full amount due in loan notes
immediately after 30 June. In the prior year the Group received £1,977,000 of
interest on those loan notes in cash.
5. Administrative expenses and exceptional items
Six months ended Year ended
Unaudited 31 March 2023 Unaudited 31 March 2022 Audited 30 September 2022
£'000 £'000 £'000
Restructuring costs 1,197 - 3,196
Costs of re-admission to AIM - 516 671
Exceptional items 1,197 516 3,867
Acquisition costs 197 530 1,116
Share-based payments - 2,453 3,250
Other administrative expenses 15,620 1,722 16,818
Total administrative expenses 17,014 5,261 25,051
Restructuring costs
RMG sold its UK Solutions business for £230 million on 31 January 2022, a
transaction which left RMG a much smaller business with overheads out of step
with its reduced size. AssetCo has usually bought businesses where the
strategy has mainly involved growth in revenue but in this instance a
significant project to right-size the acquired business has been needed
following acquisition by AssetCo on 15 June 2022. As part of the process the
Group has incurred one-off exceptional restructuring costs which including
termination payments, salary costs of those exiting the business and other
charges.
AssetCo completed the purchase of SVM at the end of October 2022 and the Group
has incurred some restructuring costs in respect of the integration of this
business as well.
Costs of re-admission to AIM
The Group has in the last two years twice had to apply for re-admission to
AIM; once in April 2021 when shareholders were asked to approve the change in
strategy to asset and wealth management, and again in June 2022 given the
nature and scale of the acquisition of RMG. These significant costs are in
relation to those exercises and were required because of the unusual nature of
the change in strategy and the relative size of AssetCo compared to the
acquisition target. Our strategy is now settled and, with the completion of
the acquisition of RMG, AssetCo is now at a scale where re-admission in order
to complete an acquisition is unlikely so the Directors consider that costs
such as this are not likely to recur.
Acquisition costs
Costs incurred in the 6 months to 31 March 2023 relate to the acquisition of
SVM Asset Management Limited. Costs incurred in the prior periods to 31 March
and 30 September 2022 all relate to the acquisition of RMG.
6. Other gains and losses
Six months ended Year ended
Unaudited 31 March 2023 Unaudited 31 March 2022 Audited 30 September 2022
£'000 £'000 £'000
Impairment of goodwill 5,000 - -
Impairment of long-term receivable 1,718 - -
Reduction in fair value of asset held for resale - - 9,750
Gain on disposal of fair value investments - - (18)
6,718 - 9,732
As referred to in the Chairman's statement the Rize ETF business is not
performing as we had hoped. Accordingly the board has reviewed the carrying
value of goodwill attributable to the business and concluded that an
impairment of £5 million is appropriate at 31 March 2023.
The Infrastructure business is still in its early stages and the Group is
committed to paying drawings in advance of profits to the partners of this
venture. In the last few months it has become clear that the timeline for
achieving profitability has slipped back and the board believe it is prudent
to make provision against the drawings advanced to date. The recoverability of
these amounts will be kept under review.
On 15 June 2022 the Group acquired the entire share capital of RMG. However
the Group had in 2021 bought 5,000,000 shares in RMG representing 5.85% of the
total issued share capital and this investment was carried on the 2021 balance
sheet at a fair value of £12,000,000. When calculating the overall
consideration for the whole of RMG the Group must assess the fair value of the
existing investment at the time of completion of the deal. Given the effect on
the RMG share price of normal market pricing and the significant return to
shareholders arising from the sale of the RMG Solutions business the fair
value was assessed at £2,250,000 leading to a reduction in fair value of
£9,750,000.
The Group acquired a small number of seed investments with the acquisition of
RMG in June 2022. One of those investments was sold before 30 September 2022
for sale proceeds of £1,017,000 realising a gain on disposal of £18,000.
7. Gain on bargain purchase
Six months ended Year ended
Unaudited 31 March 2023 Unaudited 31 March 2022 Audited 30
£'000 £'000 September 2022
£'000
Arising on acquisition of RMG - - 3,227
The calculation of the difference arising on acquisition of River and
Mercantile between the purchase consideration and the value of net assets
acquired gave rise to a negative amount of goodwill as the value of net assets
acquired was larger than the consideration. In accordance with accounting
standards the amount of £3,227,000 is treated as a credit to the income
statement.
8. Finance income
Six months ended Year ended
Unaudited Unaudited 31 March 2022 Audited 30 September 2022
31 March £'000 £'000
2023
£'000
Dividend income - 390 11,459
Gain on foreign exchange - - 927
Fair value gains on financial instruments classified as fair value through - 1,200 -
profit and loss
Interest income 2 - 47
2 1,590 12,433
9. Income tax (credit)/expense
Six months ended Year ended
Unaudited 31 March 2023 £'000 Unaudited 31 March 2022 £'000 Audited 30 September 2022 £'000
Current tax:
Current tax on loss for the period (16) - (13)
Total current tax (credit)/expense - - (13)
Deferred tax:
Arising from movement in deferred tax assets - (228) 16
Arising from movement in deferred tax liabilities (132) 228 (62)
Total deferred tax (credit)/expense (132) - (46)
Income tax (credit)/expense (148) - (59)
10. Discontinued operations
In January 2023 the Group reached agreement to sell its US-based ILC business.
The deal completed in the last week of May 2023. As required by IFRS 5 these
interim financial statements show the assets and liabilities of this business
as held for sale with the results of the business shown as discontinued
operations. Financial information relating to the discontinued operation is
set out below:
Statement of comprehensive income Six months ended Year ended
Unaudited 31 March 2023 Unaudited 31 March 2022 Audited 30 September 2022
£'000 £'000 £'000
Revenue 135 - 113
Administration costs (548) - (514)
Reported loss on discontinued activities (413) - (401)
At 31 March 2023 the carrying amount of assets and liabilities were
reclassified as held for sale. There was no gain or loss recognised as a
result of this reclassification.
Unaudited 31 March 2023
£'000
Assets
Cash and cash equivalents 6
Other receivables 50
Total assets 56
Liabilities
Trade and other payables 52
Total liabilities 52
Net assets 4
11. Loss per share
Basic loss per share is calculated by dividing the loss on continuing
operations attributable to equity owners of the parent by the
weighted average number of Ordinary Shares in issue during the period.
The weighted average number of shares is calculated by reference to the length
of time shares are in issue taking into account the issue date of new shares
and any buy-backs or usage of treasury shares.
Six months ended Year ended
Unaudited 31 March 2023 Unaudited 31 March 2022(1) Audited 30 September 2022
£000 £000 £000
Loss attributable to owners of the parent (13,434) (2,252) (8,440)
Less: amounts arising from discontinued operation 413 - 401
Loss on continuing operations attributable to owners of the parent (13,021) (2,252) (8,039)
Weighted average number of ordinary shares in issue before share split as - 8,424,847 -
reported
Basic (loss) per share as reported - (pence) - (26.73) -
Weighted average number of ordinary shares in issue post share split 140,307,124 84,248,470 103,017,624
Basic (loss) per share restated - (pence) (9.28) (2.67) (7.80)
(1) In August 2022 the Company effected a 10 for 1 share split. The prior year
share numbers and loss per share have been adjusted for this.
As the results in the periods under review are all losses diluted loss per
share is the same as basic loss per share. Under IAS 33 the effects of
anti-dilutive potential ordinary shares are ignored in calculating diluted
loss per share.
12. Acquisition of SVM and issue of shares from treasury
At the end of October 2022 AssetCo completed the acquisition of SVM Asset
Management Limited for a total fair value consideration of £11,044,000. Full
details of fair value of assets, liabilities and consideration will be set out
in the 2023 Annual Report and Accounts but the amounts included in these
interim financial statements at the date of acquisition are summarised below:
£'000
Cash at bank 5,019
Intangible assets 250
Net liabilities (excluding cash at bank and intangible assets) (564)
Net assets before goodwill on acquisition 4,705
Consideration 11,044
Goodwill recognised on acquisition 6,339
Consideration
Cash paid 2,217
Convertible loan notes at fair value 8,827
Total consideration 11,044
Cash at bank on acquisition 5,019
Cash paid on acquisition 2,217
Net cash on acquisition 2,802
The loan notes have a nominal value of £9 million, are unsecured and carry a
coupon of 1%. The first £2 million of loan notes were convertible into
AssetCo ordinary shares in certain circumstances, at market value, up to 31
December 2022 with the remainder convertible into AssetCo ordinary shares, at
£1.45 per share, up to 31 December 2023. If not converted the loan notes are
repayable at nominal value on 31 December 2023.
The reduction in nominal value of the loan notes represents a fair value
adjustment to reflect the difference in the 1% coupon and a market interest
rate. An amount of £173,000 will be amortised over the life of the loan notes
with an amount of £68,000 expensed by 31 March 2023.
As announced on 20 March 2023 the SVM vendors, following an extension of their
conversion option date to 28 February 2023, duly exercised their option to
convert the first £2 million of loan notes into AssetCo ordinary shares. The
market price agreed was 68.7p per share and led to the issue to the SVM
vendors of 2,911,208 AssetCo ordinary shares which were satisfied by the
transfer of shares from those held in treasury. As set out in Companies Act
2006 the difference between the average purchase price of these shares and the
agreed issue price is taken to share premium.
At 31 March 2023 following conversion and amortisation of the fair value
interest the balance on convertible loan notes is £6,895,000.
13. Cash generated by operations
Six months ended Year ended
Unaudited 31 March 2023 Unaudited 31 March 2022 Audited 30 September 2022
£'000 £'000 £'000
(Loss)/profit before tax for the period (13,537) (2,641) (8,913)
Share-based payments - LTIP - 2,481 2,749
Cash effect of LTIP - - (3,938)
Share of profits of associate (266) (1,512) (181)
Interest received from associate - - (1,977)
Increase in investments (7) (1,200) -
Reduction in fair value of investments - - 9,750
Gain on disposal of fair value investments - - (18)
Proceeds of assets held for resale 1,613 - 5,462
Bargain purchase - - (3,227)
Impairment of long-term receivable 1,718 - -
Impairment of goodwill 5,000 - -
Depreciation 14 3 14
Amortisation of intangible assets 386 22 227
Amortisation of right-of-use assets 431 - 187
Finance costs 136 - 10
Finance income (2) (390) (974)
Dividends from investment held at fair value - - (11,459)
(Increase)/decrease in receivables 612 (29) 928
(Decrease)/increase in payables (4,851) 498 (6,556)
Net cash (outflow)/inflow from operations (8,759) (2,768) (17,916)
14. Electronic communications
This Half-year Report is available on the Company's website www.assetco.com
(http://www.assetco.com) . News updates, regulatory news and financial
statements can be viewed and downloaded from the Company's website,
www.assetco.com (http://www.assetco.com) . Copies can also be requested, in
writing, from The Company Secretary, AssetCo plc, 30 Coleman Street, London
EC2R 5AL. The Company is not proposing to bulk print and distribute hard
copies of the Half-year Report unless specifically requested by individual
shareholders.
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. END IR NKNBDDBKBAADRecent news on Assetco
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