REG - AssetCo PLC - Final Results
18/02/2022 07:16
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RNS Number : 0645C AssetCo PLC 18 February 2022
18 February 2022
Immediate Release
AssetCo plc
("AssetCo" or the "Company")
Preliminary results for the year ended 30 September 2021
Key highlights
· New strategy adopted focused on building and operating an asset and
wealth management business - from zero to £9.6 billion in Assets under
Management
· Equity stakes in four businesses - River and Mercantile, Saracen Fund
Managers, Rize ETF and Parmenion
· Improving the capital position from £32.3 million to £56.1 million
plus a tender offer returns £27 million to shareholders
· Profit before taxation of £16.1 million (2020: £3.4 million)
· During the 12-month period share price more than quadrupled to close
at £17.00 per share (2020: £4.11 per share)
Campbell Fleming, Chief Executive Officer of AssetCo plc, commented:
"I am immensely proud of the progress AssetCo has made over the past year.
Thanks to the hard work of our Chairman and Deputy Chairman, Martin Gilbert
and Peter McKellar, and the rest of the team, AssetCo has been transformed
into an agile asset and wealth management business, not burdened by legacy
issues, constraints or complexities.
"The asset and wealth management industry is going through a period of
significant change including technological advances, evolving investor needs
and habits. To address these structural shifts the businesses we have invested
in encompass four key areas - active management in both public and private
markets, high growth thematic investing, ESG and digital solutions. Saracen
Fund Managers, Rize ETF and Parmenion are well placed to take advantage of the
changing landscape to meet client needs.
"The potential acquisition of River and Mercantile, subject to shareholder and
regulatory approval, will augment our strategy and will become a core part of
our equity platform and the cornerstone of our private markets offering as
well as increasing our AuM to over £12 billion.
"I am confident that AssetCo has established the foundations to continue to
grow organically and through selective acquisitions and most importantly to
deliver for investors."
For further information, please contact:
AssetCo plc
Campbell Fleming, CEO
James Thorneley, Head of Communications
Tel: +44 (0) 7958 005 141
Arden Partners plc
Nominated adviser and broker
John Llewellyn-Lloyd / Louisa Waddell
Tel: +44 (0) 20 7614 5900
Maitland/AMO
Neil Bennett
Rachel Cohen
Tel: +44 (0) 7900 000 777 / +44 (0)7557 178 196
For further details, visit the website, www.assetco.com
(http://www.assetco.com/)
Ticker: AIM: ASTO.L
Market cap: £127 million
CHAIRMAN'S STATEMENT
A Year of Transformation
The twelve-month period ended 30 September 2021 was a transformational year
for AssetCo. The Company returned nearly £27 million to investors through a
tender offer, it adopted a new strategy focused on building and operating an
asset and wealth management business, and agreed to acquire equity stakes in
four firms.
On 2 October 2020 there was a successful conclusion to the Grant Thornton
litigation case. Grant Thornton informed the Company of its decision not to
appeal to the Supreme Court, thereby crystallising the award from the Court of
Appeal ruling on 31 January 2019 amounting to £30.5 million, including costs.
This formed the basis of returning £26.9 million to shareholders, by way of a
tender offer which was fully subscribed. The Company purchased 6.53 million
shares, equivalent to 50% of its then issued share capital, at £4.11 per
share.
In January 2021, the Company welcomed an investor group consisting of funds
managed by Toscafund Asset Management, Peter McKellar, various associates and
me who, in aggregate, acquired a 29.8% shareholding from existing shareholders
at £4.75 per share. Peter and I joined the Board as non-executive directors
on 25 January 2021.
We both have extensive experience of the asset and wealth management industry.
The industry is contending with significant structural shifts, including
technological advances, a reorientation of investment habits and evolving
client needs that will have a profound impact on the business models of many
existing asset management and wealth providers, their offerings and the
choices available to clients and savers. Following readmission to AIM and
approval by shareholders in April 2021 to change the business strategy, the
Company is committed to creating and managing an asset and wealth management
business that is fit for purpose in the 21(st) century.
At the same time as the change in strategy, I was appointed Chairman of
AssetCo. I would like to pay tribute to my predecessor, Tudor Davies, for
guiding the Company over the last 10 years. He played a crucial role in
AssetCo's development and its transition to an asset and wealth management
business.
Progress to Date
In January and February 2021, the Company acquired 5 million shares in River
and Mercantile Group PLC, an asset management business, at a total cost of
£10.4 million. We believed that River and Mercantile was significantly
undervalued, where the value of its two operating businesses was not properly
recognised and that the businesses were worth more on a stand-alone basis.
This belief has been borne out by the completed sale of its Solutions business
for significantly more than the total market capitalisation of River and
Mercantile when we invested.
In May 2021, the Company announced the acquisition of Saracen Fund Managers
for £3.44 million. Saracen is an active manager of listed equity portfolios,
an approach we believe will reward investors over the years to come, as
markets become increasingly volatile and investors seek targeted strategies.
Our aim is to build on Saracen's strong foundations by broadening the investor
base of its existing funds - Global Income and Growth, UK Alpha and UK Income
(total Assets under Management (AuM) £113.2 million) - and by expanding its
product range over time. We have already strengthened the investment team with
the recruitment of another fund manager. In addition, we are looking to build
our listed equities capabilities through further acquisitions.
In July 2021, the Company completed the acquisition of a 68% majority equity
interest (of which 5% is subject to certain near-term performance conditions)
in Rize ETF for £16.5 million and announced the acquisition of a 30% equity
stake in Parmenion for a total consideration of up to £27.8 million. The
acquisition of the stake in Parmenion completed on 1 October 2021.
Rize ETF is a provider of thematic investment strategies via Exchange Traded
Funds (ETFs). Thematic ETFs allow investors to invest in opportunities outside
of traditional sectors. According to Morningstar Research, total thematic
Assets under Management globally grew to $595 billion as of March 2021, from
$174 billion three years earlier, with Europe representing over half of the
AuM.
There is enormous growth potential in the area of thematic ETF investing.
Through a combination of AssetCo's support, and the Rize team's expertise and
product innovation, we believe we can significantly grow the business.
Currently Rize offers six the matic strategies with combined AuM of $514.1
million, with approximately $459.0 million of net inflows being achieved in
2021.
Rize's success and potential were recognised through a number of prestigious
awards that the team won during the year. Rize was named Best New Entrant at
the ETF Express European Awards. The Rize Sustainable Future of Food ETF was
named the most innovative sustainable and ESG ETF launch by Investment Week
and the most innovative ETF of the year at the ETF Stream Awards. Rize also
won the Best ESG Investment Fund (thematic) category at the ESG Investing
Awards.
Parmenion is a B2B fund investment and advisory platform for the UK wealth and
IFA sector, partnering with over 1,500 adviser firms helping them to deliver
investment solutions to over 80,000 underlying customers. The business is
benefiting from the digital transformation taking place within the asset and
wealth management industry.
Parmenion has positioned itself as an enabler to the wealth management
industry, with its proprietary technology platform enabling it to retain
control of customer propositions and hence continue to address the evolving
needs of its clients. This client focused approach, coupled with strong
service, has driven the growth of Parmenion's AuM significantly ahead of the
overall platform market.
Parmenion has been consistently ranked by financial advisers as number one for
platforms with AuM of less than £20 billion, and second for all
platforms. During the year, Parmenion won the Best Overall Service to
Paraplanners category at the Professional Paraplanner Awards and was named
best platform for advisers (Assets under Administration below £25 billion) at
the Professional Adviser awards. Currently, Parmenion has AuM of £9.3 billion
and, in response to client demand, is looking to broaden the range of
investment solutions it hosts on its platform.
In part, the investments in Rize ETF and Parmenion were financed by a
successful £25 million equity fund raising at £14.50 per share in July 2021
that attracted interest from both existing and new shareholders. We would like
to thank shareholders for their support. We also note and welcome the
increasing interest from analysts and investors generally in the Company and
its strategy.
Financials
It is pleasing to report that the Company made a profit before taxation of
£16.1 million during the twelve months ended 30 September 2021 (2020: £3.4
million). The sizeable year-on-year increase is largely due to the successful
conclusion of the litigation case against Grant Thornton. During the
twelve-month period the share price more than quadrupled to close at £17.00
per share (30 September 2020: £4.11 per share).
New Team
To lead the Company on its journey as an asset and wealth management business,
in September 2021 we announced the appointment of Campbell Fleming as Chief
Executive Officer from 2 October 2021. His experience and expertise within the
industry, together with his leadership qualities, means he is well placed to
build on AssetCo's strong foundations. He succeeds Peter McKellar, who due to
his other commitments agreed to be interim CEO until a long-term candidate was
identified. The Board and I are immensely grateful to Peter for all his hard
work and are delighted that he will remain on the Board as Deputy Chairman,
continuing to be involved in the Company's strategy and development.
Campbell is supported by a small team of distribution and communication
professionals - Gary Collins, Lucy Draper and James Thorneley - who all joined
the Company in 2021. The Board and I appreciate their hard work and efforts in
building a new business. They have also begun raising the profile of the
Company with clients and partners around the world and with the media. These
interactions are showing early promise as people are interested to learn more
about our strategy, plans and capabilities.
Finally, the Board and I would like to thank the teams in our underlying
businesses for their continued hard work. We are also grateful for the
continued support of customers, clients and shareholders who believe in the
products and services we offer and our focus on delivering for investors over
the long-term.
Outlook
Following the end of AssetCo's financial year, the Company announced a
possible offer to acquire River and Mercantile Group PLC, further to the
announcement of a sale of River and Mercantile Solutions division to Schroders
PLC. The acquisition of River and Mercantile's remaining business is a core
part of the Company's strategy; it strengthens our active equity capability
and importantly provides a foundation stone to building a private markets
business given its infrastructure investment team. It will complement our
existing presence in thematic investing with Rize ETF and our investment in
Parmenion, a digital platform for the financial planning sector.
The Company is being transformed and has successfully put in place some of
the building blocks required for it to become a 21(st) century asset and
wealth management business that delivers for investors and makes a difference.
We will look to develop these businesses and explore other opportunities.
Martin Gilbert, Chairman
18 February 2022
BUSINESS REVIEW
Our mission is to build a 21(st) century asset and wealth management business
that will deliver returns for investors and shareholders. The work to achieve
this began in 2021, as we reviewed the broader market for businesses that are
agile and that exhibit many of the key attributes, set out below that we
believe are critical to building relevance and value.
Importantly, all of the businesses, and associated capabilities, that we have
invested in to date exhibit many of the above characteristics. Our focus is to
develop these acquisitions through the provision of senior management
expertise and contacts, distribution and marketing support, and, where
required, additional capital. The intention is that, over time, the Company
develops between five to seven distinct and different asset management and
wealth capabilities in some of the fastest growing and/or under-valued areas
within the sector. The expectation is that in addition to building these
verticals, there will also be significant opportunities for the capabilities
to work together and deliver further growth.
Campbell Fleming, Chief Executive Officer
Peter McKellar, Deputy Chairman
18 February 2022
Active specialists - Saracen Fund Managers
Saracen Fund Managers was established in Edinburgh in 1997. It is an active
investment manager offering a range of UK and Global equity strategies. All of
the funds managed by Saracen are concentrated, differentiated portfolios.
A strict valuation framework is the cornerstone of the investment process.
Coupled with detailed fundamental analysis, and a worst-case analysis for
risk, the aim is to invest in high quality companies at an attractive price.
ESG analysis is also a core element of the investment process, and the team
are most interested in companies that can improve their ESG score over time,
with better disclosure and revised practices. This can contribute to a better
operating and financial performance at the relevant company, which can lead to
a rerating of the shares. This approach is based on supporting change, rather
than investing in the best in class.
"Saracen is a small fund management firm with great potential. The investment
team focuses on what we do best; giving us the freedom to invest with
conviction within a disciplined investment process, unhindered by
bureaucracy." - Bettina Edmondston, Investment Director at Saracen Fund
Managers
Digital platform - Parmenion
Since 2007, Parmenion's award-winning investment expertise and diverse range
of investment solutions has helped financial advice firms build their own
investment propositions.
Based in Bristol - one of the UK's fintech hubs - Parmenion's strength comes
from having built a powerful combination of an intelligent investment
capability, intuitive technology and a stellar service platform.
Trusting Parmenion to do the heavy lifting means financial advisers can reduce
risk and cost in their business, leaving them with more time; time that can be
spent on what matters most, developing stronger client relationships and
growing their business.
Parmenion's AuM is now £9.3 billion, with over 1,500 financial advice firms
partnering with them to deliver their chosen investment proposition to over
80,000 underlying clients.
"Parmenion has positioned itself as a forward-looking enabler to the UK wealth
management sector. Through a combination of proprietary technology, the
extensive knowledge and experience of our management team and a commitment to
understanding and responding to the needs of our clients, Parmenion has
delivered a service which has been consistently ranked in the top two every
quarter since 2016. Parmenion will continue to invest in the business to
ensure that we can help our clients better serve their customers and support
the growth in their business." - Martin Jennings, Chief Executive of Parmenion
High growth thematics - Rize ETF
Rize ETF is believed to be Europe's first specialist thematic ETF issuer and
one of the fastest growing providers in the rapidly growing thematic ETF
segment of the asset management industry. The business was founded in January
2019 by an experienced management team, with a proven track record in
establishing and scaling ETF businesses.
Thematic ETFs allow investors to invest in opportunities outside of
traditional sectors. According to Morningstar Research, total thematic fund
AuM globally grew to $595 billion as of March 2021, from $174 billion three
years earlier, with Europe representing over half of the AuM. AuM invested in
thematic funds represents 2.1% of all assets invested in equity funds
globally, up from 0.6% ten years ago. In Europe, total AuM allocated to
thematic ETFs is estimated at over $40 billion.
So far Rize ETF - which is headquartered in London - has launched six new and
innovative thematic ETFs, providing investors with access to transformational
megatrends in an accessible, transparent and purpose-built way. The strategies
include Cybersecurity and Data Privacy, Education Tech and Digital Learning,
Medical Cannabis and Life Sciences and Sustainable Future of Food.
Rize ETF currently has $455.7 million of AuM. Importantly, all six ETFs have a
Sustainable Finance Disclosure Regulation (SFDR) rating of 8 or 9. The ETFs
are marketed using traditional and digital mediums and distributed primarily
through wholesale channels, including IFAs, private banks, wealth managers,
fund of funds and discretionary asset managers.
Rize ETF has a strong pipeline of anticipated launches in 2022 and 2023,
underpinned by a focused research ethos and an approach to the development of
new investment strategies that leverage the best experts in an industry in
each of the relevant themes.
"Rize ETF is pioneering a new and better way to invest in the future, one that
we believe empowers investors to participate in the growth stories of
tomorrow, while remaining on the right side of history." - Rahul Bhushan,
Co-Founder and Director of Rize ETF Limited
Consolidated Income Statement
for the year ended 30 September 2021 Notes 2021 2020
£'000 £'000
Revenue 3 408 -
Cost of sales (536) -
Gross (loss)/profit (128) -
Other income 4 22,388 4,597
Administrative expenses (7,967) (1,192)
Operating profit 5 14,293 3,405
Investment income 1,844 18
Finance costs (8) (62)
Profit before income tax 16,129 3,361
Income tax charge 6 (1,442) -
Profit for the year 14,687 3,361
Profit attributable to:
Owners of the parent 14,796 3,361
Non-controlling interest (109) -
14,687 3,361
Earnings per Ordinary Share attributable to the owners of the parent during Pence Pence
the year
From continuing operations
Basic 7 180.57 27.52
Diluted 7 161.05 27.52
Consolidated Statement of Comprehensive Income 2021 2020
for the year ended 30 September 2021 £'000 £'000
Profit for the year 14,687 3,361
Other comprehensive income:
Currency translation differences (7) (871)
Other comprehensive income (net of tax) (7) (871)
Total comprehensive income for the year 14,680 2,490
Attributable to:
Owners of the parent 14,799 2,490
Non-controlling interests (109) -
Total comprehensive income for the year 14,680 2,490
Consolidated Statement of Financial Position Group 2021 Group
as at 30 September 2021 £'000 2020
£'000
Assets
Non-current assets
Property, plant and equipment 16 -
Intangible assets 20,067 -
Total non-current assets 20,083 -
Current assets
Trade and other receivables 607 4,683
Financial assets at fair value through profit and loss 12,000 -
Current income tax receivable 3 -
Cash and cash equivalents 26,902 27,860
Cash held in respect of bonds - 1,058
Total current assets 39,512 33,601
Total assets 59,595 33,601
Liabilities
Non-current liabilities
Deferred tax liabilities 49 -
Total non-current liabilities 49 -
Current liabilities
Trade and other payables 1,972 1,256
Current income tax liabilities 1,437 -
Total current liabilities 3,409 1,256
Total liabilities 3,458 1,256
Equity attributable to owners of the parent
Share capital 843 1,221
Share Premium 27,770 -
Capital redemption reserve 653 -
Merger reserve 2,762 -
Other reserves 5,496 -
Retained earnings 18,892 31,124
56,416 32,345
Non-controlling interest (279) -
Total equity 56,137 32,345
Total equity and liabilities 59,595 33,601
Consolidated Statement of Cash Flows Group Group
for the year ended 30 September 2021 2021 2020
£'000 £'000
Cash flow from operating activities
Cash generated by operations (note 8) 16,755 8,807
Cash released in respect of bonds 1,104 2,270
Finance costs (8) (62)
Net cash generated by operating activities 17,851 11,015
Cash flow from investing activities
Payments for acquisition of subsidiaries, net of cash acquired (16,460) -
Dividends received from financial assets held at fair value 194 -
Interest income - 18
Purchase of property, plant and equipment (8) -
Purchase of intangibles (1) -
Net cash generated by/(used in) investing activities (16,275) 18
Cash flow from financing activities
Proceeds from issuance of Ordinary shares 25,013 -
Costs of share issue (515) -
Payments for shares bought back (26,850) -
Buy-back transaction costs (171) -
Net cash used in financing activities (2,523) -
Net change in cash and cash equivalents (947) 11,013
Cash and cash equivalents at beginning of year 27,860 17,101
Exchange differences on translation (11) (274)
Cash and cash equivalents at end of year 26,902 27,860
Consolidated Statement of Changes in Equity Share capital Share premium account Capita 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 2019 25,474 64,941 - - - (60,560) 29,855 - 29,855
Comprehensive income
Profit for the year - - - - - 3,361 3,361 - 3,361
Other comprehensive income/(expense)
Currency translation differences - - - - - (871) (871) - (871)
Total comprehensive income - - - - - 2,490 2,490 - 2,490
Capital reconstruction (24,253) (64,941) - - - 89,194 - - -
At 30 September 2020 1,221 - - - - 31,124 32,345 - 32,345
Comprehensive income
Profit for the year - - - - - 14,796 14,796 (109) 14,687
Other comprehensive income
Currency translation differences - - - - - (7) (7) - (7)
Total comprehensive income - - - - - 14,789 14,789 (109) 14,680
Proceeds from share issue 173 24,840 - - - - 25,013 - 25,013
Costs of share issue - (515) - - - - (515) - (515)
Share buy-back (653) - 653 - - (26,850) (26,850) - (26,850)
Costs of share buy-back - - - - - (171) (171) - (171)
Shares issued on acquisition 17 - - 2,762 - - 2,779 - 2,779
Share-based payments
- LTIP - - - - 5,496 - 5,496 - 5,496
- success fee 85 3,445 - - - - 3,530 - 3,530
Non-controlling interest on acquisition - - - - - - - (170) (170)
At 30 September 2021 843 27,770 653 2,762 5,496 18,892 56,416 (279) 56,137
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
for the year ended 30 September 2021
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 Singleton Court Business Park, Wonastow Road, Monmouth,
Monmouthshire, NP25 5JA. The Company operates from an administrative office in
the UK as well as a site in UAE. In February 2021 the Company announced its
intention to change strategy to focus on developing an asset and wealth
management business. Following the successful re-admission of the AssetCo's
shares to AIM in April 2021 the Company has acquired two subsidiaries involved
in these activities.
The audited preliminary announcement has been prepared in accordance with the
Group's accounting policies as disclosed in the financial statements for the
year ended 30 September 2021 and international accounting standards in
conformity with the requirements of the Companies Act 2006 ('IFRS'), and the
applicable legal requirements of the Companies Act 2006. This preliminary
announcement was approved by the Board of Directors on 18 February 2022. The
preliminary announcement does not constitute statutory financial statements
within the meaning of section 434 of the Companies Act 2006. Statutory
accounts for the year to 30 September 2020 have been delivered to the
Registrar of Companies. The audit report for those accounts was unqualified
and did not contain statements under 498 (2) or (3) of the Companies Act 2006
and did not contain any emphasis of matter.
Certain statements in this announcement constitute forward-looking statements.
Any statement in this announcement that is not a statement of historical fact
including, without limitation, those regarding the Company's future
expectations, operations, financial performance, financial condition and
business is a forward-looking statement. Such forward-looking statements are
subject to risks and uncertainties that may cause actual results to differ
materially. These risks and uncertainties include, amongst other factors,
changing economic, financial, business or other market conditions. These and
other factors could adversely affect the outcome and financial effects of the
plans and events described in this announcement and the Company undertakes no
obligation to update its view of such risks and uncertainties or to update the
forward-looking statements contained herein. Nothing in this announcement
should be construed as a profit forecast.
While the financial information included in this preliminary announcement has
been prepared in accordance with the recognition and measurement criteria of
IFRS, this announcement does not itself contain sufficient information to
comply with IFRSs. The Company will publish its full financial statements for
the year ended 30 September 2021 by 30 April 2022, which will be available on
the Company's website at www.assetco.com (http://www.assetco.com) and at
the Company's registered office at Singleton Court Business Park, Wonastow
Road, Monmouth NP25 5JA. The Annual General Meeting will be held on Thursday
16 April 2022.
2. Going concern
The directors have considered the going concern assumption of the company,
AssetCo plc, by assessing the operational and funding requirements of the
Group.
As set out in the Chairman's statement the board has decided to pursue a new
strategy of developing an asset and wealth management business. The successful
conclusion of the claim against Grant Thornton has generated cash resources
and freed up management time which, together with the appointment of two new
directors with considerable experience of asset and wealth management, means
the company is well placed to make a success of this.
The directors have prepared financial projections along with sensitivity
analyses of reasonably plausible alternative outcomes. The forecasts
demonstrate that the directors have a reasonable expectation that the existing
Group has adequate financial resources to continue in operational existence
for the foreseeable future.
On 25 January 2022 the Company announced a formal bid to acquire 94.15% of
River and Mercantile Group Plc. As a result of its size, the Acquisition
constitutes a Reverse Takeover for AssetCo for the purposes of the AIM Rules.
In advance of the potential Acquisition, AssetCo will be required to undertake
a re-admission process and to publish a re-admission document and to seek the
approval of AssetCo Shareholders for the Acquisition at the AssetCo General
Meeting. The Acquisition will also be conditional on the approval of AssetCo
Shareholders to the granting of authorities necessary for the issuance of the
New AssetCo Shares, such authorities to be put to the AssetCo Shareholders at
the AssetCo General Meeting.
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 Specialists and High-Growth Thematics.
No secondary segmental information has been provided as, in the view of the
Directors, whilst there is a presence in UAE it is not material in the context
of the Group's new activities following the change in strategy to concentrate
on asset and wealth management. All revenues are earned in the UK. 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 and also operates out of a branch in UAE. Unallocated
comprises AssetCo including the UAE business.
The segment information provided to the Board for the reportable segments for
the year ended 30 September 2021 is as follows:
Active specialists High-growth thematics Unallocated Total
2021 £'000 £'000 £'000 £'000
135 - - 408
Revenue
Management fees
Marketing fees - 273 - 273
Total revenue to external customers 135 273 - 408
32 (347) 14,608 14,293
Operating profit/(loss)
Investment income - - 1,844 1,844
Finance costs - - (8) (8)
Profit/(loss) before tax 32 (347) 16,444 16,129
Income tax (6) 1 (1,437) (1,442)
Profit/(loss) for the year 26 (346) 15,007 14,687
3,518 21,712 34,335 59,595
Segment assets
Total assets
Total liabilities (85) (471) (2,902) (3,458)
Total net assets 3,433 21,271 31,433 56,137
Depreciation - 2 - 2
Amortisation 1 7 - 8
Total capital expenditure 3 5 - 8
Active specialists High-growth thematics Unallocated
Total
2020 £'000
Revenue
Management fees - - - -
Marketing fees - - - -
Total revenue to external customers - - - -
Operating profit - - 3,405 3,405
Investment income - - 18 18
Finance costs - - (62) (62)
Profit before tax - - 3,361 3,361
Income tax - - - -
Retained profit - - 3,361 3,361
Segment assets
Total assets - - 33,601 33,601
Total liabilities - - (1,256) (1,256)
Total net assets - - 32,345 32,345
Total capital expenditure - - - -
4. Other income
2021 2020
£'000 £'000
Grant Thornton litigation 25,918 4,597
Success fee (3,530) -
22,388 4,597
As referred to in the Chairman's statement the case against Grant Thornton was
concluded successfully on 2 October 2020. The total award came to £30.515
million of which £4.597 million was reflected in the 2020 full year accounts,
as it had been awarded by the Courts irrespective of the outcome of any
appeal. Other income shown in these accounts represents the balance of the
Court's award, less the success fee of 15% of claim proceeds excluding costs.
5. Operating profit
2021 2020
Operating profit is stated after charging the following: £000 £000
Depreciation of property plant and equipment 2 -
Amortisation of intangible assets 8 -
Foreign exchange differences 89 23
Fees payable to the company's auditors:
For the audit of the parent Company and the consolidated financial 132 45
statements
Employee benefit expense (see below) 7,014 425
▬▬▬▬ ▬▬▬▬
Employee expense includes a share-based charge of £5.496 million in respect
of the Company's LTIP (see note 9) plus a further £0.777 million charge in
employers' national insurance on the share awards to give a total charge
included above of £6.273 million.
6. Income tax charge
2021 2020
Group £'000 £'000
Current tax:
Current tax on profit for the year 1,437 -
Total current tax 1,437 -
Deferred tax:
Arising from movement in deferred tax assets (307) -
Arising from movement in deferred tax liabilities 312 -
Total deferred tax 5 -
Income tax charge 1,442 -
7. Earnings per share
(a) Basic
Basic earnings per share is calculated by dividing the profit attributable to
owners of the parent by the weighted average number of Ordinary Shares in
issue during the year.
2021 2020
£'000 £'000
Profit attributable to owners of the parent 14,796 3,361
Weighted average number of Ordinary Shares in issue 8,194,031 12,211,163
Basic profit per share - pence 180.57 27.52
(b) Diluted
Diluted earnings per share is calculated by adjusting the weighted average
number of Ordinary Shares outstanding assuming conversion of all dilutive
potential Ordinary Shares. The Company has one category of dilutive potential
ordinary shares being shares allocated to the LTIP pool.
2021 2020
£'000 £'000
Profit attributable to owners of the parent 14,796 3,361
Weighted average number of Ordinary Shares in issue 9,187,346 12,211,163
Diluted profit per share - pence 161.05 27.52
2021 2020
Weighted average number of Ordinary Shares in issue 8,194,031 12,211,163
Adjustment for:
- Assumed vesting of all shares in LTIP pool 993,315 -
Weighted average number of Ordinary Shares including potentially dilutive 9,187,346 12,211,163
shares
8. Cash generated by operations
Group Group
2021 2020
£'000 £'000
Profit before tax 16,129 3,361
Adjustments for:
Share-based payments
- LTIP 5,496 -
- Success fee 3,530 -
Depreciation 2 -
Amortisation 8 -
Finance costs 8 62
Investment income (194) (18)
Increase in investments (12,000) -
Changes in working capital
- Trade and other receivables 4,367 6,024
- Trade and other payables (591) (622)
Net cash generated by operations 16,755 8,807
9. Deferred shares - Long Term Incentive Plan
During the year the Group implemented a Long Term Incentive Plan ("LTIP")
which seeks to align the interests of shareholders and senior management by
focusing on the increase in market value of the group's shares. The
arrangement is such that participants receive a share of a pool value
equivalent to 20% of the total growth in market capitalisation for the
performance period, calculated under the agreed formula. In the ordinary
course of events, the award is settled one third in cash within 60 days of the
year end, and two thirds in shares over a vesting period of 5 years in equal
annual instalments. They automatically convert into one ordinary share each
on vesting, at an exercise price of nil. The executives do not receive any
dividends and are not entitled to vote in relation to the deferred shares
during the vesting period. If an executive ceases to be employed by the group
within this period, the rights will be forfeited, except in limited
circumstances that are approved by the board on a case-by-case basis.
For the LTIP award in respect of 2021 it has been agreed that the 1/3(rd)
element of the annual LTIP normally paid in cash would now be equity-settled
in order to fully align the interests of shareholders and the executives. The
2021 awards were granted on 28 September 2021 and has a performance period end
of 30 September 2021.
The fair value of deferred shares granted to employees for nil consideration
under the LTIP is recognised as an expense over the relevant service period,
being the year to which the bonus relates and the vesting period of the
shares. The fair value is measured at the grant date of the shares and is
recognised in equity in the share-based payment reserve.
We engage with external experts to undertake the valuation of the awards. The
performance condition for the equity-settled LTIP is a market-based
performance condition. As the grant date was 2 days before the end of the
first performance period, the fair value of the LTIP awards were calculated by
determining the Company's volume weighted average share price ("VWAP") for 18
out of the 20 dealing days required to determine the Award value. In this
case, we consider the 18-day average VWAP up to the grant date, plus the grant
date share price as an estimate of the final 2 days, to represent a fair
estimate for IFRS2 purposes. The fair value of the rights at grant date was
calculated as £16.72 per share.
The number of shares expected to vest is estimated based on the non-market
vesting conditions. The estimates are revised at the end of each reporting
period, and adjustments are recognised in profit or loss and the share-based
payment reserve. The group recognises a charge of £5,496,000 (2020: £nil) in
the Consolidated Income Statement in respect of the equity-settled LTIP.
The total number of shares to be issued under the 2021 LTIP based on the
actual award value calculated under the agreed formula at the end of the
performance period (£17.01 per share) is 993,315 of which 331,110 are due to
vest shortly after the signing of the 2021 financial statements.
There were no deferred shares at the beginning of the reporting period, and
those granted under the 2021 LTIP remained outstanding as at 30 September
2021. The weighted average remaining contractual life of the deferred shares
outstanding at the end of the period is 2.01 years.
When shares vest employers' national insurance is payable. A liability for the
relevant amount of employers' national insurance is recognised within
liabilities in the period to which the vesting equities relate. An accrual for
£777,000 (2020: £nil) has been recognised in liabilities in respect of the
2021 LTIP.
Net settlement feature for withholding tax obligations
Under UK tax law, AssetCo plc must withhold an amount for an employee's tax
obligation associated with a share-based payment and transfer that amount in
cash to the tax authority on the employee's behalf. The deferred shares
granted under the group's LTIP scheme include a net settlement feature under
which the Company withholds shares in order to settle the employee's tax
obligations.
10. Post balance sheet events
On 1 October 2021 the Company announced the acquisition of a 30% stake in
Parmenion Capital Partners LLP for a purchase price of £21.9 million.
On 25 January 2022 the Company announced a formal bid to acquire the 94.15% of
River and Mercantile Group Plc which was not already owned, with River and
Mercantile shareholders entitled to receive 0.07392 New AssetCo shares for
each River and Mercantile share held which, as at the date of the 2.7
announcement, corresponded to a total consideration of approximately £99
million.
There are no other post balance sheet events.
11. Annual general meeting
A notice convening the annual general meeting will be posted to shareholders
in due course.
12. Electronic communications
This Preliminary Announcement 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, Singleton Court Business
Park, Wonastow Road, Monmouth, Monmouthshire NP25 5JA. The company is not
proposing to bulk print and distribute hard copies of the Annual Report and
Financial Statements for the year ended 30 September 2021 unless specifically
requested by individual shareholders; it can be downloaded from the company's
website.
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