REG - AssetCo PLC - Prelim results for the year ended 30 Sept 2022
16/02/2023 07:00
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RNS Number : 1277Q AssetCo PLC 16 February 2023
LEI: 213800LFMHKVNTZ7GV45
16 February
2023
Immediate Release
AssetCo plc
Preliminary results for the year ended 30 September 2022
AssetCo plc ("AssetCo" or the "Company"), the agile asset and wealth
management company, today announces its results for the year ended 30
September 2022.
Highlights
· Assets under management (AuM) as at 30 September 2022 were £2.7
billion (2021: £113m); including SVM Asset Management which completed post
year end AuM was £3.1 billion
· Loss for the year £9.2m (2021: profit of £14.6m)
· Interim dividend of 1.3p per share declared and paid
· Significant cost reduction in listed equities business well underway
with £10m of annualised costs cut in River and Mercantile by 30 September
2022
· Invested over £40m in growth through acquisitions
· Considerable progress in building out our listed equity platform through
the acquisition of River and Mercantile Group, Revera Asset Management and SVM
Asset Management
Martin Gilbert, Chairman, said:
"We continue to seek out potential opportunities for further inorganic
expansion in relatively difficult trading conditions for asset management
businesses generally. This creates opportunities for the agile AssetCo in
its mission to acquire, improve and grow otherwise attractive businesses that
are experiencing challenges or whose true value is unrecognised. We are
particularly pleased, as an example, with Parmenion and remain strong
advocates of this very valuable business, the management team and believe that
the client led initiatives as well as industry interest over the past year
will deliver significant value for all its stakeholders.
We are relentlessly focussing on serving our clients, sustaining investment
performance, reducing costs, growing revenues and getting the group to
profitability as soon as possible whilst being ready to pursue opportunity."
Campbell Fleming, Chief Executive, said:
"Our loss for the year was in part driven by a combination of acquisition
costs and reorganisation costs as we right-size and integrate our acquired
businesses. We are delivering on our acquisitive growth strategy whilst
maintaining a focus on reducing costs across the business with a £10m
annualised cost saving in River and Mercantile achieved. AssetCo has now
successfully invested more than £40m in growing the business by completing
the acquisitions of River and Mercantile and Revera, taking revenues from less
than £0.5m last year to over £8m during the course of the year, with a
forward-looking run rate of £17m when the acquisition of SVM is also factored
in.
We are hugely grateful for the efforts of our investment, client and
operations teams as well the continued support from our clients and our
shareholders in what was a volatile, difficult and tough year for all."
For further information, please contact:
AssetCo plc Numis Securities Limited
Campbell Fleming, CEO Nominated adviser and joint broker
Peter McKellar, Deputy Chairman Giles Rolls / Charles Farquhar
Tel: +44 (0) 785 0464 301 Tel: +44 (0) 20 7260 1000
Panmure Gordon (UK) Limited H/Advisors Maitland
Joint broker Neil Bennett
Atholl Tweedie Rachel Cohen
Tel: +44 (0) 20 7886 2906 Tel: +44 (0) 20 7379 55151
For further details, visit the website, www.assetco.com
(http://www.assetco.com/)
Ticker: AIM: ASTO.L
CHAIRMAN'S STATEMENT
The financial year ended 30 September 2022 was an eventful one for AssetCo,
during which we made considerable progress in building out the Group's listed
equity platform, private markets capability and thematic ETF business. Our
objective is to build an agile asset and wealth management business that is
fit for purpose in the 21(st) century.
The acquisition of River and Mercantile Group completed successfully in June
2022 and of Revera Asset Management in August 2022. The acquisition of SVM
Asset Management, announced in June 2022, completed successfully shortly after
the financial year end. Together with established subsidiary Saracen, the
combination of this group of companies provides a complementary product set,
managed by a well respected team of managers based in the UK's two main
investment hubs of London and Edinburgh. We are now focusing on growing assets
under management and on profitability. We are making good headway towards
run rate profitability in our wholly owned subsidiary businesses, despite
difficult trading conditions. With the support of modest growth in equity
stock markets over the financial year, we are optimistic that we can achieve
sales growth and cost savings that will deliver a positive outcome for the
Group.
Investment markets have had a lot to cope with during the financial year: the
tragedy of war in Ukraine; continuing worldwide supply chain challenges;
energy price rises and continued pandemic disruption in China. The UK large
cap stock market was remarkably resilient, with the FTSE 100 losing only 2%
during the financial year. This masked a volatile and troubling set of market
events which undermined investor confidence and sparked outflows in assets
under management. The performance of world and mid-cap UK markets which lost
c.20% and c.25% respectively over the financial year are perhaps more
indicative of underlying sentiment and (in the case of world markets) balance
some of the special factors, such as Brexit-specific discounting, which
impacted companies operating solely or mainly in the UK.
Equity markets generally remained nervous during the year. The combination
of rising energy prices and shortages persisting as the global economy
recovered from Covid led to a sharp rise in inflation, which had been
relatively dormant since the early 1990's. Central banks have increased
interest rates to offset this challenge to economic stability, but this also
increases the chances of an economic slowdown and recession. All of this
makes for a challenging environment for most businesses, not least asset
management businesses which are exposed to the gearing effect of fluctuating
markets.
River and Mercantile has been exposed to the full force of those challenges.
Revenues in the River and Mercantile Group have been impacted by both market
conditions generally and by resulting client outflows, as clients typically
reduced equity exposure. While wholesale business outflows are lighter than
they might have been when compared to the experience of many of our
competitors, taken together with stock market falls they nonetheless impacted
revenues negatively by approximately £2m between acquisition and the
financial year end 2022, on an annualised basis. Stockmarkets continued to
exert downward pressure on revenues going into the new financial year.
Our mission to improve and grow otherwise attractive asset management
businesses began with tackling an initial cost base of £32m of annualised
costs at the point of announcing our acquisition in January 2022. This was cut
aggressively to £22.5m in annualised costs by the financial year end 2022,
after adjusting for pipeline committed savings. Nonetheless, it was the
principal driver of the loss made by the Group of £9m after interest and tax
for the year. An aggressive assault on continuing costs is on-going and
remains a key focus of the coming year.
In the financial year under review the Group has invested more than £40m in
growing the business through the acquisitions of River and Mercantile and
Revera. Those acquisitions take revenues from less than £0.5m last year to
over £8m during the course of the year, with a run rate of £17m annualised
as at end September 2022 when the acquisition of SVM in October 2022 is also
taken into account. Revenues for the Group for the financial year ended 30
September 2022 include those from River and Mercantile from 15 June 2022 and
from Revera from the beginning of August 2022.
Comparisons to the previous year are not particularly instructive as the
Company had little effective revenue during that year, other than the
successful Grant Thornton litigation which contributed net income of £22.4m
on a one-off basis. In December 2022 we announced that the four active equity
asset management subsidiaries of the Group will come together under the River
and Mercantile brand during the course of 2023. Much work remains to be done
to realise the significant potential inherent in combining these businesses,
and existing contractual commitments to third party suppliers, regulatory
approvals and client consents are all hurdles along the way. However, the
Group has considerable talent to draw on and considerable experience in
dealing with such challenges. Rationalisation plans are well advanced.
During the year we have been actively engaged in raising the profile of the
business both in the UK and internationally, seeking to broaden the
shareholder base. We have met with key asset allocators in the UK and abroad
and are exploring growth opportunities for the business with partners around
the world - both organically and where deeper partnerships might be mutually
attractive.
An interim dividend of 1.3p per share (equivalent to 13p per share before the
August 2022 share split) was declared towards the end of November 2022, as
foreshadowed in the Company's shareholder circular and AIM admission document
in March 2022. This is the first dividend paid by the Company since its
re-admission and sits alongside a share buy-back programme rolled out in the
closing quarter of the calendar year which, by end January 2023, had bought
back almost £6.9m of shares currently held as treasury stock. It is our
intention to pursue a progressive dividend policy where circumstances permit.
We continue to seek out potential opportunities for further inorganic
expansion. The relatively difficult trading conditions for asset management
businesses generally creates opportunities for AssetCo in its mission to
acquire, improve and grow otherwise attractive businesses that are
experiencing challenges.
Martin Gilbert - Chairman
16 February 2023
BUSINESS REVIEW
As at the end of the financial year to September 2022, the AssetCo Group
encompasses active equities asset management in three subsidiaries (which
became four with the acquisition of SVM asset management at the end of October
2022) an early stage infrastructure asset management business, a majority
equity interest in an exchange traded fund provider and a structured 30%
interest in a digital platform business.
Active Equities
The acquisition of the River and Mercantile Group in June 2022 brought useful
distribution capability to the Group in the UK as well as a wide range of
funds, taking Active Equities assets under management to £2,291m by September
2022 year end. SVM, acquired during October 2022, had assets under management
of £528m as at 30 September 2022.
Movement in assets under management from end September 2022 to end December
2022 may be summarised in the following chart, which includes SVM on a pro
forma basis:
Performance
The three months to end September 2022 have been particularly active for River
and Mercantile with the launch of two funds compliant with the EU's
sustainable finance disclosure Regulations (SFDR) and its inaugural
infrastructure fund. The launch of the two SFDR funds, European Change for
Better Fund (article 9 compliant) and Global Sustainable Opportunities Fund
(article 8 compliant), has been well received and both are highly rated by
independent and dedicated Sustainable Investment Advisor, Mainstreet Partners.
The funds follow an investment philosophy which incorporates sustainability
into the investment manager's long-established process, focusing on the
characteristics of Potential, Valuation and Timing. Launched with client seed
capital and backing, they invest in companies which the team believes can make
a significant improvement in their carbon footprint, as well as companies
which enable this improvement for others.
Investment performance of the River and Mercantile equities funds over the
three months to September 2022 has been encouraging given the prevailing
macro-economic headwinds. A number of funds have responded to the pick-up in
demand for a more 'value-orientated' investment approach and investors'
requirement for higher yielding investments. We believe that this trend has
much further to run. Saracen's Global Income and Growth Fund has also
performed well, and the shares are close to all-time highs.
It is pleasing to note that the acquisition has been achieved with minimal
disruption to clients and that the ongoing River and Mercantile funds saw less
in the way of outflows than many of their competitors, and no loss of market
share. River and Mercantile is well positioned for future growth.
Fund Performance: active equity funds managed by the Group as at end December
2022:
Our flagship range of mutual funds, across all of our active equities
subsidiaries, is showing strong investment performance over 1, 3, and 10 years
and since inception.
The information above is disclosed in order to allow shareholders to assess
the current performance of our investment strategies. While historical
investment performance is not an indicator of future investment performance,
the long term track records of our strategies give shareholders an indication
of the sustainability of our investment performance across different
investment cycles. Performance data is sourced from: FEAnalytics for IA Sector
Peer Group performance. B share class (net of management fees) performance is
used since share class launch for all funds except Revera UK Dynamic which is
Corporate class performance. For any fund performance prior to the launch of
these share classes, performance is chain linked with the next highest paying
fee share class back to the earliest date.
Costs
In addition to a focus on net new business in its growth plan, considerable
attention is being paid to reducing costs, in line with comments on right
sizing the organisation made at the time of acquisition. The sale of its UK
Solutions offerings, prior to River and Mercantile's acquisition by AssetCo,
followed by the sale of its US Solutions shortly thereafter, delivered a
business with a larger operating infrastructure than was necessary to run the
remaining active equities asset management business. Shrinking this operating
model to one more appropriate to River and Mercantile's reduced and simplified
business going forward has been a key focus. Since announcing the deal in
January 2022, River and Mercantile's full time headcount (excluding employees
who transferred with the Solutions sale) has been reduced by 22%, and the
annualised operating costs also by 22% by year end.
A new, lower cost target operating model has been designed with implementation
taking place over the 2023 calendar year to enable a stronger fit-for-purpose
business which is scalable for both organic growth and the acquisitive nature
of the Group. River and Mercantile's streamlined operating model is intended
to be the backbone of the active equities business for the Group, enabling
further consolidation of operations from other subsidiaries within the Group.
Further cost savings within River and Mercantile have been identified through
a combination of rationalising suppliers and downsizing operating platforms. A
detailed plan covering both transition and consolidation of the operating
model is in place and being carefully tracked, with cost reduction and
efficiency the clear focus throughout.
SVM Acquisition
In November 2022, the Group completed the acquisition of SVM Asset Management
(SVM) for £11.2m. SVM is an active manager of listed equities and is
the Authorised Corporate Director to its own ICVC fund range, whilst also
managing an Investment Trust and institutional client mandates. SVM is a
key component of AssetCo's plans to have a strong and dynamic asset
management hub in Edinburgh. Completion of the acquisition brought assets
managed by the AssetCo group companies in the Scottish capital to nearly
£700m.
The intention is that, over time and subject to appropriate regulatory
approvals and client consents, the majority of compliance,
operational, distribution and marketing resources will be shared within the
broader AssetCo group companies. At the same time, the
unique qualities and strengths for which SVM is well known will be preserved
to form a bedrock of growth for the future.
Integration
In December 2022, we announced the bringing together of the four active equity
businesses under the River and Mercantile brand which, given completion of the
SVM acquisition only a month before, was testament to AssetCo's ability to
find and augment complementary businesses. Our Edinburgh-based active equity
asset businesses (Saracen, Revera and SVM) are already working together
effectively using SVM's offices as a single base.
Infrastructure
During the year, the River and Mercantile Infrastructure Income Fund was
launched with a first series of shares to the value of £115m in committed
capital (representing £0.8m in annualised revenue when fully drawn) and made
its first investments. The first two investments (in Spring Fibre Limited and
Cohiba Communications Limited) are consistent with the fund's core theme of
supporting the "digital transition" in the UK - through financing the delivery
of full fibre-optic and fixed wireless technology infrastructure in selected
towns, giving residential and commercial customers next generation access to
the internet. Together these investee companies plan to provide ultra-fast
broadband connectivity to more than 2.5 million homes and, with many of these
homes in socially disadvantaged communities, aim to provide households and
businesses the affordable access to the internet required to fulfil their
potential. These "digital transition" investments, alongside the fund's focus
on supporting the UK's "energy transition", demonstrate positive tangible
Environmental, Social and Governance (ESG) characteristics for investors and
communities alike.
It is expected that this ESG-focused approach to investments will continue to
prove attractive and deliver fundraising success for the fund during the
coming year. The pipeline of interested investors is strong and, similarly,
we see a good supply of potential investments. We expect good growth potential
from this side of our business, despite recent headwinds in the sector.
Exchange Traded Funds
2022 was a challenging year for European thematic ETF providers, with the
economic headwinds, noted previously, coinciding with an increase in
competition.
Notwithstanding the foregoing, Rize ETF's market recognition as a leader in
thematic and impact thematic funds continues to flourish, with the firm
winning two further awards in 2022, including the "Best Food Investment Firm /
Europe" from International Investor in relation to the Rize Sustainable Future
of Food UCITS ETF (FOOD) and "Most Innovative Fund Launch - Passive" from ESG
Clarity for the Rize Environmental Impact 100 UCITS ETF (LIFE).
Rize ETF enjoyed net inflows of USD 108 million for the financial year to 30
September 2022, taking assets under management to £326m with attaching
annualised revenues of £1.5m pa as at that date. Rize ETF has been onboarded
(approved) by a number of major clients, including several major private banks
across Europe.
The firm's net flow for the financial year to 30 September 2022 was 1.9% of
the thematic market versus a 1% AUM market share, outpacing the broader
thematic ETF market in Europe. Whilst this is lower than originally projected
given the exceptional market conditions of 2022, Rize has nevertheless
outperformed the broader thematic ETF market and continues the trend of having
only had net inflow in each calendar year since the launch of its first two
ETFs in February 2020. Crucially, much of the net new asset allocations in
2022 came from new investors that approved the firm in 2022, illustrating the
effectiveness of the firm's distribution strategy and brand recognition and
also the potential for more significant top-up allocations once positive
sentiment returns to equity markets
Digital Platform
The development of Parmenion's business (30% of which was acquired by AssetCo
in October 2021) continued apace in 2022, with a number of important
initiatives launched to broaden and deepen its relationship with the UK
independent financial advice community. In response to customer feedback,
Parmenion extended its investment proposition by adding a number of new
discretionary fund managers to the platform, providing greater choice for
customers. It also launched the Advisory Models Pro which provides open
architecture access to advisers who want to build and run their own advisory
portfolios, thereby extending the reach of the firm. Finally, it completed the
acquisition of EBI Portfolios a Midlands-based business which administers
£1.9bn for 150 advisory firms. The EBI suite of 11 Earth model portfolios
will be fully integrated into the Parmenion platform's award-winning
investment proposition. Each of these initiatives should further drive growth
in assets under administration and collectively should contribute
significantly to Parmenion's growing reputation as a provider of choice for
the UK IFA community and their customers.
Parmenion was awarded UK Platform of the Year for 2022 at the Schroder's UK
Platform Awards. In addition, it has 20 Defaqto ratings covering all aspects
of the business from customer service to platform functionality and investment
proposition. This industry recognition has been driven by strong customer
service and this in turn is reflected in strong financial results for the
firm. In the year to 31 December 2022, revenues increased by over 12% to
£40.4m and EBITDA more than doubled to £15m. Assets under management
increased to £10.3bn, including the EBI Portfolios assets. We remain strong
advocates of the business and the management team and believe that the client
led initiatives over the past year will deliver significant value for all
stakeholders.
Annualised Revenue Breakdown by Business Type (as at 30 September 2022*)
Business Type AuM (£m) Weighted average fee rate, net of rebates (bp) Gross annualised revenue net of rebates (£000s)
Wholesale (active equities) 2,074 54 11,228
Institutional (active equities) 681 35 2,374
Investment Trust (active equities) 64 73 471
Infrastructure 35 68 237
ETFs 326 47 1,520
Total 3,180 15,830
* Even though SVM was not acquired until after the year end, this table
includes SVM data as at 30 September 2022 as if SVM had been acquired by this
date to illustrate annualised revenue for the Group on an ongoing basis.
This table excludes the Group's interest in Parmenion which (per above) had
AuM of £10.3bn, generating revenues of £40.4m as at 31 December 2022
(financial year end of Parmenion).
· 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.
Summary Performance Indicators:
The following table includes key performance indicators referenced in the
following Strategic Report and attempts to show the effect of including SVM at
end December 2022, including some additional alternative performance measures
for comparison purposes.
End Dec 2022 (inc SVM) End Sept 2022 End Sept 2021 Movement Sept 2021 to Sept 2022
(Sept 21 to Dec 22)
Active Equities Assets under Management £2,822m £2,291m £113m +£2,178m
(+£2,709m)
Total assets £96.5m £102.1m £59.6m +£42.5m
(+£36.9m)
Annualised revenue(1) £17.3m £12.9m £2.5m +£10.4m
(+£14.8m)
Profit for the year (to 30 Sept) -£9.3m £14.7m -£24m
Investment performance(2) (1 year) 77% 46% 100%(3) -54% points
(-23% points)
Investment performance(2) (3 year) 53% 53% 13%(3) +40% points
(+40% 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
Peter McKellar, Deputy Chairman
16 February 2023
STRATEGIC REPORT
Introduction
The Directors present their Strategic Report on the Group for the year ended
30 September 2022.
Review of the business
A review of the business is contained in the Chairman's statement on pages 3
to 4 and in the Business Review on pages 5 to 11 and is incorporated into this
report by cross-reference.
Strategy
The Group's strategy is to identify high-quality asset and wealth management
businesses which can be added to the AssetCo stable and improved by working
alongside our experienced management team to improve their capabilities,
distribution and reach.
Our key areas of focus include being a responsible company and manager,
meeting the needs of clients and investors and to expand through a combination
of selective acquisitions and organic growth.
Key performance indicators (KPIs)
The financial key performance indicators for the year ended 30 September 2022,
which has focused on growing the Group's asset management capabilities, were
as follows:
As at end September 2022 2021 Movement
Active Equities Assets under Management £2,291m £113m +£2,178m
Total assets £102.1m £59.6m +£42.5m
Annualised revenue(1) £12.9m £2.5m +£13.3m
Profit for the year (to 30 Sept) -£9.3m £14.7m -£24m
Investment performance(2) (1 year) 46% 100%(3) -54% points
Investment performance(2) (3 year) 53% 13%(3) +40% points
(1) Monthly 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
The key measurements for the asset and wealth management businesses under our
control or influence, include growth (in assets and revenue) and investment
performance.
Alternative Performance Measures
The Group uses non-GAAP APMs as detailed below to provide users of the annual
report and accounts with supplemental financial information that helps explain
its results, recognising the fact that certain acquired businesses have
contributed to the results for only part of the financial year.
APM Definition Reason for use
Annualised costs Costs incurred in the month concerned, annualised by multiplying by 12 Given that AssetCo has acquired and/or integrated businesses at different
points during the financial year, the full year's costs as disclosed in the
statutory accounts do not give a clear picture of what "business as usual"
might look like. Annualised costs, as defined, allow us to aggregate costs
across all business units and present a consolidated picture on a consistent
basis. In practice, the actual outturn is dependent upon actual business
experience during the year so this is not a forecast.
Annualised revenue Revenues incurred in the month concerned, annualised by multiplying by 12 Given that AssetCo has acquired and/or integrated businesses at different
points during the financial year, the full year's revenues as disclosed in the
statutory accounts do not give a clear picture of what "business as usual"
might look like. Annualised revenues, as defined, allow us to aggregate
revenues across all business units and present a consolidated picture on a
consistent basis. In practice, the actual outturn is dependent upon actual
business experience during the year so this is not a forecast.
Risk Management and internal controls
The Board is responsible for the Company's system of internal control and for
reviewing the effectiveness of the Group's risk management framework.
During the reporting period, the Board has taken steps to improve the
Company's risk management framework through the appointment of a Head of Risk,
Gordon Brough. The Company operates a risk register which assesses risks
facing the Group and sets out the mitigants to those risks. The Board reviewed
the risk register during the reporting period and obtained assurance from the
Executive Directors as to the effectiveness of the risk management framework.
The Group has been subject to significant change during the period and further
work will be undertaken to strengthen the risk management framework in 2023 as
part of the integration of the Group's operating businesses onto a new target
operating model. However, such a system is designed to manage rather than
eliminate the risk of failure to achieve business objectives and can provide
only reasonable and not absolute assurance against material misstatement or
loss.
The Directors review the internal control processes on a regular basis.
The Company has established procedures for planning and monitoring the
operational and financial performance of all businesses in the Group, as well
as their compliance with applicable laws and regulations. These procedures
include:
· clear responsibilities for financial controls and the production of
timely financial management information;
· the control of key financial risks through clearly laid down
authorisation levels and proper segregation of accounting duties;
· the review of business updates, cash flows and cash balances by
management and the Board.
Principal risks and uncertainties
The Directors continuously monitor the business and markets to identify and
deal with risks and uncertainties as they arise. Set out below are the
principal risks which we believe could materially affect the Group's ability
to achieve its strategy. The risks are not listed in order of significance.
Risk Responsibility and Principal Control
Profitability and Dividends - Profitability remains a key focus for the Group. Board/Executive Team:
Delays in profitability in the longer term could impact the Board's ability to
pay a progressive dividend as well as the Group's ability to fund Plans are being actively implemented to cut costs and focus distribution
acquisitions. efforts thereby increasing new business. The Group is focused on achieving
run-rate profitability at the earliest possible date. The Board monitors cash
management carefully.
Distribution - Corporate actions such as acquisitions and business Board/Distribution:
re-structuring risk disturbing existing clients and discouraging new ones.
The Group continually monitors and develops its product suite to ensure that
it remains competitive and attractive.
Distributors and markets are carefully targeted and the status of client
relationships monitored to identify risk of loss. Identified risks are
suitably addressed.
Loss of Key People - The Group has managed most departures on a planned basis Board/Remuneration Committee:
but going forwards will need to ensure continued retention of key staff if it
is to manage client, consultant and regulatory expectations . The Board regularly reviews succession planning for all senior executives.
All senior executives are subject to extended notice periods (between six and
twelve months).
The Group seeks to offer attractive terms as well as a flexible working
environment.
Consideration is being given to a replacement for the Company's cancelled
LTIP.
Economic Conditions - Adverse markets were a significant drag on performance Board/Executive Team:
in the last year. As an equity specialist the business remains vulnerable to
any material fall in equity markets. The Group seeks to manage an appropriate balance of fixed and variable costs.
In the event of sustained economic downturn, the Group would seek to take
early action to cut fixed costs.
Systems and Controls - Operating multiple systems across multiple subsidiary Board/Operations:
and associate companies increases the risk of control failure. Managing
multiple service providers also generates challenges. The Group has developed a detailed controls framework which is being rolled
out across operating subsidiaries to create a consistent, harmonised approach.
The Group is seeking to consolidate on to a single operating platform for
compatible businesses as an early priority, as well as seeking to rationalise
service providers.
ENVIRONMENTAL SOCIAL AND GOVERNANCE
In pursuing its strategy the Company is committed to a responsible business
approach that delivers positive outcomes and sustainable long term value to
its stakeholders. In this regard the Company has developed an Environmental
Social and Governance policy statement (the "ESG Policy").
This ESG Policy applies to AssetCo plc ("AssetCo"). AssetCo is a holding
company whose mission is to acquire, manage and operate asset and wealth
management activities and interests, together with other related services (our
"Mission").
In pursuing our Mission we are committed to a responsible business approach
that delivers positive outcomes and sustainable long term value to all our
stakeholders and particularly to our clients. At the heart of this is our
ESG Policy which is incorporated into all our decision-making processes.
In framing our ESG Policy we are, and will continue to be, focused on our
clients concerns and needs. We will endeavour to engage with our clients to
understand and accommodate their ESG requirements in terms of the services we
provide.
Our ESG Policy is not static, it will evolve as our business evolves and we
will continually look to improve our ESG Policy in the light of best market
practice and the expectations of our stakeholders.
Environmental
We will strive to reduce the impact of our business activities on the
environment. This will include reducing our energy, carbon, water and waste
footprint. In due course we intend to implement systems to track all our major
environmental impacts so that we might access the effectiveness of our
policies and report to our stakeholders.
Social
We intend to be a responsible member of the community and a force for positive
change. We will endeavour to contribute to the community through
philanthropic partnerships, paid internships and encouraging employee
volunteering.
Governance
Commensurate with the size of the AssetCo business, we embrace high standards
of integrity, transparency and corporate governance. We foster a culture of
inclusion, diversity of thought and background (including improving our gender
balance) and equal opportunity across our businesses. We treat our staff
with integrity and respect. We are a values led business and will look to
attract, develop and retain the best talent.
Membership and Reporting
Our ESG agenda is supported by the activities of our operating businesses.
This includes the adoption of the United Nations-backed Principles for
Responsible Investment by our subsidiaries and by becoming signatories to the
UK Stewardship Code, to which both River and Mercantile and SVM Asset
Management have been accepted by the FRC as signatories. A number of the
investment products managed by River and Mercantile and Rize have a clear ESG
focussed investment process. River and Mercantile is the investment manager of
an Article 9 SFDR Fund and an Article 8 SFDR Fund.
We are continuing to evolve our ESG policies across the Group with the
establishment of a Sustainability and Stewardship Committee under an
independent Chair to oversee progress in this area.
Acquisitions and Service Providers
Our Mission is largely predicated by an acquisition strategy. In terms of
businesses acquired we will look to ensure that they have or adopt policies
and initiatives which are consistent with our ESG Policy. Likewise we will
expect all significant service providers to AssetCo and its businesses to have
in place policies which are consistent with our ESG Policy.
Our stakeholders: S.172 STATEMENT
Duty to promote the success of the Company
Section 172(1) of the Companies Act 2006 requires Directors to act in the way
they consider, in good faith, would be most likely to promote the success of
the Company for the benefit of its members as a whole, and in doing so have
regard (amongst other matters) to:
· the likely consequences of any decision in the long-term;
· the interests of the Company's employees;
· the need to foster the Company's business relationships with
suppliers, customers and others;
· the impact of the Company's operations on the community and the
environment;
· the desirability of the Company maintaining a reputation for high
standards of business conduct; and
· the need to act fairly as between members of the Company.
This Section 172 Statement sets out how the Directors have discharged this
duty.
In order for the Company to succeed in the long-term, the Board must build and
maintain successful relationships with a wide range of stakeholders. The Board
recognises that the long-term success of the Company is dependent on how it
works with a number of important stakeholders.
The Board's decision-making process considers both risk and reward in the
pursuit of delivering the long-term success of the Company. As part of the
Board's decision-making process, the Board considers the interests of a broad
range of the Company's stakeholders. The Board considers that its primary
stakeholders are clients, employees, shareholders, suppliers and regulators.
The Board fulfils its duties in collaboration with the senior management team,
to which day-to-day management has been delegated. The Board seeks to
understand stakeholder groups' priorities and interests. The Board listens to
stakeholders through a combination of information provided by management and
also by direct engagement where appropriate. The following overview provides
further insight into how the Board has had regard to the interests of our
primary stakeholders, while complying with its duty to promote the success of
the Company in accordance with Section 172 of the Companies Act 2006.
Our primary stakeholders How we engage with them
Clients Our distribution teams have a busy client engagement schedule and maintain
contact with our clients through regular meetings, reporting and written
The Company through its subsidiaries aims to provide investment products that communication. This helps us to understand our clients' needs.
meet the needs of clients and put those needs first.
Members of the senior management team meet directly with key clients to
understand the views of our clients and to ensure that we continue to meet our
clients' expectations.
Client engagement feeds into our regulated subsidiaries assessment that their
products and services are fit for purpose and offer fair value.
Shareholders The Board engages with the Company's shareholders in a number of ways which
include the AGM and one-to-one meetings and telephone conversations. Our AGM
The ongoing support of our shareholders is vital in helping us deliver our allows shareholders the opportunity to engage directly with the Board.
long-term strategic objectives.
The Chairman, Deputy Chairman and CEO regularly meet (in person and virtually)
the Company's major shareholders to discuss the financial performance of the
Company.
Matters discussed with shareholders include strategy and its execution and
generating strong returns. The views of shareholders have been considered and
fed into the implementation of the cost reduction strategy across the Group.
Employees The senior management team engage regularly with employees through
face-to-face meetings where open discussion is encouraged. Our subsidiaries
The Company's employees are senior experienced professionals. It is of the have strong management teams and engage with their employees through regular
utmost importance to the Board that we have a culture that attracts and meetings and all employee calls.
retains talented employees.
We value our diverse workforce and seek inclusion at all levels.
The senior management team has focussed on the integration of newly acquired
businesses into the Group over the past year and the restructuring of certain
group functions to align with the business needs. During this process, due
consideration has been given to all stakeholders, including employees,
shareholders and our clients.
The Group is proud to support the development our employees through study
loans and paid study leave. Supported qualifications include the CFA and
accountancy qualifications.
Suppliers and service providers The Company is committed to the highest standards of business conduct.
The Company places reliance on external third party suppliers and service The selection process and engagement with these parties is undertaken by
providers for certain activities and services. senior management. We ensure that there is an appropriate framework of
oversight of our key third-party suppliers. Regular meetings are held with key
third-party service providers and issues escalated to senior management where
required. Material supplier selection is reported to the Board and
significant issues or risks related to suppliers will be escalated to the
Board.
As described above, a key focus has been on the integration of the newly
acquired businesses into the Group. Suppliers and service providers have been
reviewed by senior management during this period as part of this project.
Regulators
The Group operates in the UK and US and is subject to the oversight of various
regulators. We have a conduct-led culture that encourages our people to act
with integrity at all times.
The Company is AIM listed and complies with the AIM Rules. We engage with our
regulators through the Group's legal and compliance function by way of regular
mandatory reporting as well as any ad hoc interactions required by our
regulators.
Community and the environment
Due regard is given to the impact of the Company's operations on the community
and environment through the activities of its subsidiaries overseen by the
senior management team.
Sustainable investing is a key focus for the Group's businesses. During the
period, River and Mercantile launched an Article 8 SFDR Fund and Article 9
SFDR Fund. River and Mercantile, Rize, Saracen and SVM are signatories to
UNPRI. Both River and Mercantile and SVM are signatories to the FRC's
Stewardship Code.
The Group aims to make an impact within the communities it operates in through
supporting charitable activities undertaken by employees through a GAYE
payroll scheme and donation matching (subject to cap), participation in
charitable events and offering paid internships aimed at improving diversity.
Examples of specific activities include a paid internship at River and
Mercantile for two interns through the Girls Are INvestors ('GAIN') investment
internship programme aimed at improving diversity in asset management and
participation in City Hive's Fearless Women campaign where Campbell Fleming
was a panellist.
Pages [ ] to 17 constitute the strategic report which was approved by the
Board on [ ] February 2023 and signed on its behalf by:
Campbell Fleming
CEO
16 February
2023
Company Registration Number: 04966347
Consolidated Income Statement
for the year ended 30 September 2022 Notes 2022 2021
£'000 £'000
Revenue 3 8,175 408
Cost of sales - (536)
Gross profit/(loss) 8,175 (128)
Other income 4 1,977 22,388
Administrative expenses 5 (25,565) (7,967)
Other gains/(losses) 6 (9,732) -
Operating (loss)/profit 7 (25,145) 14,293
Gain on bargain purchase 8 3,227 -
Finance income 9 12,433 1,844
Finance costs (10) (8)
Finance income (net) 12,423 1,836
Share of result of associate 181 -
(Loss)/profit before income tax (9,314) 16,129
Income tax credit/(expense) 10 59 (1,442)
(Loss)/profit for the year (9,255) 14,687
(Loss)/profit attributable to:
Owners of the parent (8,440) 14,796
Non-controlling interest (815) (109)
(9,255) 14,687
(Loss)/earnings per Ordinary Share attributable to the owners of the parent Pence Pence(1)
during the year
From continuing operations
Basic 11 (8.19) 18.06
Diluted 11 (8.19) 16.10
(1) Prior year earnings per share has been re-stated to reflect the 10-1 share
split carried out by AssetCo in August 2022.
Consolidated Statement of Comprehensive Income 2022 2021
for the year ended 30 September 2022 £'000 £'000
(Loss)/profit for the year (9,255) 14,687
Other comprehensive income:
Currency translation differences - (7)
Other comprehensive (loss)/income (net of tax) - (7)
Total comprehensive (loss)/income for the year (9,255) 14,680
Attributable to:
Owners of the parent (8,440) 14,789
Non-controlling interests (815) (109)
Total comprehensive income for the year (9,255) 14,680
Group 2022 Group
Consolidated Statement of Financial Position £'000 2021
as at 30 September 2022 £'000
Assets
Non-current assets
Property, plant and equipment 32 16
Right-of-use assets 224 -
Goodwill and intangible assets 24,600 20,067
Investment in associates 22,052 -
Long-term receivables 1,208 -
Total non-current assets 48,116 20,083
Current assets
Trade and other receivables 9,700 607
Financial assets at fair value through profit and loss 37 12,000
Current income tax receivable 1,173 3
Cash and cash equivalents 43,066 26,902
Total current assets 53,976 39,512
Total assets 102,092 59,595
Liabilities
Non-current liabilities
Deferred tax liabilities 1,070 49
Total non-current liabilities 1,070 49
Current liabilities
Trade and other payables 12,750 1,972
Lease liability 294 -
Current income tax liabilities 1,437 1,437
Total current liabilities 14,481 3,409
Total liabilities 15,551 3,458
Equity attributable to owners of the parent
Share capital 1,493 843
Share Premium - 27,770
Capital redemption reserve 653 653
Merger reserve 43,063 2,762
Other reserves - 5,496
Retained earnings 42,426 18,892
87,635 56,416
Non-controlling interest (1,094) (279)
Total equity 86,541 56,137
Total equity and liabilities 102,092 59,595
Consolidated Statement of Cash Flows Group Group
for the year ended 30 September 2022 2022 2021
£'000 £'000
Cash flows from operating activities
Cash (outflow)/inflow from operations (note 12) (18,317) 16,755
Cash released in respect of bonds - 1,104
Corporation tax paid (31) -
Finance costs (10) (8)
Net cash (outflow)/inflow from operating activities (18,358) 17,851
Cash flow from investing activities
Net cash received from acquisitions 42,148 (16,460)
Payments for acquisition of associate (21,871) -
Interest on loan notes held in associate 1,977 -
Dividends received from financial assets held at fair value 11,459 194
Finance income 974 -
Proceeds of disposal of investments at FV through P and L 1,017 -
Purchase of property, plant and equipment (15) (8)
Purchase of intangibles (12) (1)
Net cash (outflow)/inflow from investing activities 35,677 (16,275)
Cash flow from financing activities
Shares issued for cash - 25,013
Costs of share issue (1,000) (515)
Payments for shares bought back - (26,850)
Buy-back transaction costs - (171)
Lease payments (104) -
Shares bought for treasury (51) -
Net cash used in financing activities (1,155) (2,523)
Net change in cash and cash equivalents 16,164 (947)
Cash and cash equivalents at beginning of year 26,902 27,860
Exchange differences on translation - (11)
Cash and cash equivalents at end of year 43,066 26,902
Share capital Share premium account Capita redemption reserve Merger reserve Other reserve Retained earnings Non-controlling interest Total equity
Total
Consolidated Statement of Changes in Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 September 2021 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
Comprehensive income
Loss for the year - - - - - (8,440) (8,440) (815) (9,255)
Other comprehensive income/(expense)
Currency translation differences - - - - - - - - -
Total comprehensive expense - - - - - (8,440) (8,440) (815) (9,255)
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 - - (5,496) - (1,189) - (1,189)
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
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
for the year ended 30 September 2022
1. General information and basis of presentation
AssetCo Plc ("AssetCo" or the "Company") is the Parent Company of a group of
companies ("the Group") which offers a range of investment services to private
and institutional investors. The Company is a public limited company,
incorporated and domiciled in the United Kingdom under the Companies Act 2006
and is listed on the Alternative Investment Market ("AIM") of the London Stock
Exchange. The address of its registered office is 30 Coleman Street, London,
EC2R 5AL.
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 2022 and international accounting standards ('IFRS'),
and the applicable legal requirements of the Companies Act 2006. This
preliminary announcement was approved by the Board of Directors on 15 February
2023. 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 2022 by 28 February 2023, 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 30 Coleman Street, London EC2R 5AL. The
Annual General Meeting will be held on Thursday 30 March 2023.
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.
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.
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, any overseas activities are not material. 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 for
the year ended 30 September 2022 is as follows:
Active specialists Exchange Traded Funds Infra- Digital platforms Head office Total
Structure investing
2022 £'000 £'000 £'000 £'000 £'000 £'000
6,372 - 79 - - 6,451
Revenue
Management fees
Marketing fees - 1,724 - - - 1,724
Total revenue to external customers 6,372 1,724 79 - - 8,175
(7,124) (2,794) (151) - (15,076) (25,145)
Operating (loss)/profit
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 (6,160) (2,794) (151) 181 (390) (9,314)
Income tax credit/expense 59 - - - - 59
(Loss)/profit for the year (6,101) (2,794) (151) 181 (390) (9,255)
56,826 19,324 1,706 - 24,236 102,092
Segment assets
Total assets
Total liabilities (12,157) (461) (678) - (2,255) (15,551)
Total net assets 44,669 18,863 1,028 - 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
Active specialists Exchange Traded Funds Head office
Total
£'000
2021
Revenue
Management fees 135 - - 135
Marketing fees - 273 - 273
Total revenue to external customers 135 273 - 408
Operating profit/(loss) 32 (347) 14,608 14,293
Investment income - - 1,844 1,844
Finance costs - - (8) (8)
Profit/(loss) before tax 32 (347) 16,444 16,129
Income tax expense (6) 1 (1,437) (1,442)
Retained profit/(loss) 26 (346) 15,007 14,687
Segment assets
Total assets 3,518 21,742 34,335 59,595
Total liabilities (85) (471) (2,902) (3,458)
Total net assets 3,433 21,271 31,433 56,137
Depreciation - 2 - 2
Amortisation of intangible assets 1 7 - 8
Total capital expenditure 3 5 - 8
4. Other income
2022 2021
£'000 £'000
Interest received on loan notes held in associate 1,977 -
Grant Thornton litigation - 25,918
Success fee - (3,530)
1,977 22,388
Interest on loan notes held in associate
The Group has acquired 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. During the financial year the
Group received £1,977,000 of interest on those loan notes and this is
reflected in other income.
Grant Thornton litigation
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. This item is considered exceptional as
it relates to a very specific issue from the history of the Group when it was
a very different business and the circumstances which gave rise to the need
for litigation are unlikely to occur again.
5. Administrative expenses
2022 2021
£'000 £'000
Restructuring costs 3,196 -
Costs of re-admission to AIM 671 360
Exceptional items 3,867 360
Acquisition costs 1,116 219
Share-based payments 3,250 6,273
Other administrative expenses 17,332 1,651
Total administrative expenses 25,565 8,503
Restructuring costs
RMG sold its UK Solutions business for £230 million on 25 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 including
termination payments and other charges.
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.
6. Other gains and losses
2022 2021
£'000 £'000
Reduction in fair value of asset held for resale 9,750 -
Gain on disposal of fair value investments (18) -
Total other gains and losses 9,732 -
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. Operating (loss)/profit
2022 2021
Operating (loss)/profit is stated after charging the following: £000 £000
Depreciation of property plant and equipment 2 2
Depreciation of right-of-use assets 187 -
Amortisation of intangible assets 227 8
Foreign exchange differences 25 89
Fees payable to the Company's auditors:
- For the audit of the parent Company and the consolidated financial 262 132
statements
- Audit fees re: subsidiaries 90 -
- Audit-related assurance services 10 -
- Tax advisory services 86 -
- Other non-audit services 471 -
Employee benefit expense (see below) 15,160 7,014
Expense relating to short-term and low value leases 66 36
▬▬▬▬ ▬▬▬▬
Employee expense includes a share-based charge of £2.749 million (2021:
£5.496 million) in respect of the Company's LTIP (see note 9) plus a further
£0.501 million (2021: £0.777 million) charge in employers' national
insurance on the share awards to give a total charge included above of £3.250
million (2021: £6.273 million).
8. Gain on bargain purchase
2022 2021
£'000 £'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.
9. Finance income
2022 2021
£'000 £'000
Dividend income 11,459 194
Gain on foreign exchange 927 -
Fair value gains on financial instruments classified as fair value through - 1,650
profit and loss
Interest income 47 -
Total finance income 12,433 1,844
10. Income tax charge
2022 2021
Group £'000 £'000
Current tax:
Current tax on (loss)/profit for the year (13) 1,437
Total current tax (credit)/expenses (13) 1,437
Deferred tax:
Arising from movement in deferred tax assets 16 (307)
Arising from movement in deferred tax liabilities (62) 312
Total deferred tax (credit)/expense (46) 5
Income tax (credit)/expense (59) 1,442
11. (Loss)/earnings per share
(a) Basic
Basic (loss)/earnings per share is calculated by dividing the (loss)/profit
attributable to owners of the parent by the weighted average number of
Ordinary Shares in issue during the year.
2022 2021(1)
£'000 £'000
(Loss)/profit attributable to owners of the parent (8,440) 14,796
Weighted average number of ordinary shares in issue before share split as - 8,194,031
reported - number
Basic earnings per share as reported - pence - 180.57
Weighted average number of Ordinary Shares in issue post share split - number 103,017,624 81,940,310
Basic (loss)/earnings per share - pence (8.19) 18.06
(b) Diluted
Diluted (loss)/earnings per share is calculated by adjusting the weighted
average number of Ordinary Shares outstanding assuming conversion of all
dilutive potential Ordinary Shares. In the prior year the Company had one
category of dilutive potential ordinary shares being shares allocated to the
LTIP pool. As at 30 September 2022 the LTIP scheme was discontinued therefore
there were no dilutive potential ordinary shares.
2022 2021(1)
£'000 £'000
(Loss)/profit attributable to owners of the parent (8,440) 14,796
Weighted average number of ordinary shares in issue before share split as - 9,877,346
reported - number
Diluted earnings per share as reported - pence - 161.05
Weighted average number of ordinary shares in issue post share split - number 103,017,624 91,873,460
Diluted (loss)/profit per share - pence (8.19) 16.10
2022 2021
No. No.
Weighted average number of Ordinary Shares in issue 103,017,624 81,940,310
Adjustment for:
- Assumed vesting of all shares in LTIP pool - 9,933,150
Weighted average number of Ordinary Shares including potentially dilutive 103,017,624 91,873,460
shares
Note 1: The number of shares in issue and earnings per share for 2021 have
been restated to reflect the 10-1 share split in August 2022.
12. Cash (outflow)/inflow from operations
Group Group
2022 2021
£'000 £'000
(Loss)/profit before tax (9,314) 16,129
Adjustments for:
Share-based payments
- LTIP 2,749 5,496
- Success fee - 3,530
Cash effect of LTIP (3,938) -
Share of profits of associate (181) -
Interest received from associate (1,977) -
Reduction in fair value of investments 9,750 -
Gain on disposal of fair value investments (18) -
Increase in investments - (12,000)
Proceeds of asset held for resale 5,462 -
Bargain purchase taken to other income (3,227) -
Depreciation 14 2
Amortisation of intangible assets 227 8
Amortisation of right-of-use assets 187 -
Finance costs 10 8
Finance income (974) -
Dividends from investment held at fair value (11,459) (194)
Changes in working capital
- Trade and other receivables 928 4,367
- Trade and other payables (6,556) (591)
Net cash (outflow)/inflow from operations (18,317) 16,755
13. Long Term Incentive Plan cancellation
On 29 September 2021 the Company announced that the Remuneration Committee was
conducting an ongoing review of the quantum, terms and form of the LTIP in
respect of periods beyond the first performance period (being the period from
8 January 2021 to 30 September 2021) (the "First Performance Period").
After concluding its review and after consultation with advisers and
Shareholders, the Remuneration Committee recommended, and the Board was in
agreement, that the LTIP would be cancelled in respect of periods beyond the
First Performance Period. The Company will take time to consult with its
advisers and Shareholders in terms of appropriate schemes/arrangements to
replace the LTIP and will make an announcement in due course.
The number of ordinary shares of 10p each in the Company ("Ordinary Shares"),
the subject of awards granted to participants under the LTIP ("Participants")
in respect of the First Performance Period was determined to be 993,315
Ordinary Shares being released over a five year deferral period subject to the
terms of the LTIP (the "Deferral Period"). As a consequence of the
cancellation of the LTIP, the Remuneration Committee has accelerated the
release to Participants of the Ordinary Shares which were due to be released
to them over the Deferral Period subject to the lock-in arrangements
detailed below. Further, the Remuneration Committee has determined that the
Participants' entitlements will be settled net of their National Insurance
Contributions and Pay as you Earn obligations which will be paid by the
Company, on behalf of the Participants, with a commensurate reduction in the
number of Deferred Ordinary Shares issued to Participants. The value of the
Deferred Ordinary Shares was determined at £8.30, the closing share price
subsequent to 5 July 2022, the effective date of cancellation of the LTIP.
As a result, the net total of Deferred Ordinary Shares issued to Participants
on 5 July 2022 was 518,909 Ordinary Shares. This represents a significant
reduction in the dilution to Shareholders which would have resulted in the
event that the total of 993,315 Ordinary Shares had been issued to
Participants.
The details of how the shares issuable under the LTIP were settled are set out
below:
Shares 2022
No. £000
Shares issued on 5 July 2022 at £8.30 each 518,909 4,307
Shares "retained" to fund cash payment of employees' PAYE and NI liability 474,406 3,938
993,315 8,245
The details of the charges reflected in the income statement over the life of
the LTIP until cancellation in the current year are set out below:
Total 2022 2021
£000 £000 £000
Shares issuable under LTIP 8,245 2,749 5,496
Employers' national insurance 1,278 501 777
Total share-based payment charge 9,523 3,250 6,273
Of the 518,909 shares issued on 5 July 2022 under the LTIP the following were
issued to Directors:
Name Shares 2022 2021
No. £000 £000
Martin Gilbert 160,920 784 1,649
Peter McKellar 126,029 653 1,374
Campbell Fleming 61,685 313 -
348,634 1,750 3,023
The Participants have entered into lock-in arrangements with the Company
whereby they are restricted from disposing of Deferred Ordinary Shares for the
period up to 30 September 2026.
14. Post balance sheet events
On 1 November 2022 AssetCo completed the acquisition of SVM Asset Management
Limited for an aggregate consideration of £11.2 million satisfied by the
issue of £9 million nominal of 1% fixed rate unsecured convertible loan notes
2023 in AssetCo plus £2.2 million in cash.
The loan notes may be converted into fully paid ordinary shares of 1p each in
the Company in certain circumstances. Up to £2 million in nominal value may
be converted on or before 28 February 2023 at the market price at the time of
conversion. Thereafter conversion will be at an effective price of £1.45 per
ordinary share. Unless converted the loan notes will be repaid on 31
December 2023. At the date of signing of the financial statements none of the
loan notes had been converted to shares.
This acquisition will be reflected in our 2023 results by which time the
initial acquisition accounting will have been completed.
On 20 October 2022 River and Mercantile Holdings Limited completed the renewal
of lease agreements for one and three years on the property at 30 Coleman
Street, London which is the registered office of AssetCo and from which all
non-Edinburgh based group companies operate. In its results for the subsequent
period the Group will recognise a right of use asset and lease liability for
the new lease agreement. The contractual maturities on the undiscounted
minimum lease payments under the new lease liability amount to £323,000 due
within one year and £1,122,000 due between one and three years, giving a
total commitment of £1,445,000.
On 24 November 2022 the Company announced that it would pay an interim
dividend of 1.3p per share, amounting to £1,798,000, on 23 December 2022.
There are no other post balance sheet events.
15. Annual general meeting
A notice convening the annual general meeting will be posted to shareholders
in due course.
16. 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, 30 Coleman Street, London
EC2R 5AL. 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 2022 unless specifically requested by individual shareholders; it
can be downloaded from the Company's website.
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