REG - Tatton Asset Mgt PLC - Audited Final Results - year ended 31 March 2022
15/06/2022 07:00
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RNS Number : 8887O Tatton Asset Management PLC 15 June 2022
15 June 2022
Tatton Asset Management PLC
("TAM plc", the "Group" or the "Company")
AIM: TAM
AUDITED FINAL RESULTS
For the year ended 31 March 2022
TAM plc, the investment management and IFA support services group, today
announces its audited final results for the year ended 31 March 2022 ("FY22"),
which show strong organic growth in line with expectations.
FINANCIAL HIGHLIGHTS
● Group revenue increased 25.7% to £29.356m (2021: £23.353m)
● Adjusted operating profit(1) up 27.4% to £14.526m (2021: £11.402m)
● Adjusted operating profit(1) margin 49.5% (2021: 48.8%)
● Adjusted fully diluted EPS(2) increased 26.3% to 18.62p (2021: 14.74p)
● Final dividend up 13.3% to 8.5p (2021: 7.5p), full year dividend of 12.5p
(2021: 11.0p)
● Strong financial liquidity position, with net cash of £21.710m (2021:
£16.934m)
● Strong balance sheet - Net assets increased 27.3% to £31.044m (2021:
£24.446m)
1 Operating profit before exceptional items, share-based payment charges and
amortisation of acquired intangibles
2 Adjusted fully diluted earnings per share is calculated by dividing the
adjusted operating profit less cash interest and less tax on operating
activities by the weighted average number of ordinary shares in issue during
the year plus potentially dilutive ordinary shares.
OPERATIONAL HIGHLIGHTS
● Assets Under Management ("AUM") increased £2.35bn or 26.2% to £11.341bn
(2021: £8.990bn). Current AUM at June 2022 c.£11.183bn
● Organic net inflows were £1.277bn (2021: £0.755bn), an increase of 14.2% of
opening AUM with an average run rate of £106m per month
● Acquisition of £650m Verbatim funds in September 2021 and a five-year
strategic distribution partnership with Fintel plc, providing access to 3,800
firms and over 6,000 users
● Recent acquisition of 8AM Global Limited (subject to regulatory approval) adds
a further c.£0.8bn of assets
● Tatton's Ethical portfolios increased 84.1% £812m AUM (2021: £441m)
● Tatton's non-Managed Portfolio Services ("MPS") propositions now account for
c.£1.2bn of AUM
● Tatton's IFA firms increased by 11.7% to 746 (2021: 668) and the number of
accounts increased 23.9% to 89,780 (2021: 72,450)
● Paradigm Mortgages completions up by 16.0% to £13.15bn (2021: £11.34bn).
Paradigm Mortgages member firms increased by 3.8% to 1,674 members (2021:
1,612 members)
● Paradigm Consulting increased its members by 3.4% to 421 (2021: 407)
Paul Hogarth, Chief Executive Officer, commented:
"I am delighted to report on yet another successful year for the Group, as we
continue to execute our stated strategy and deliver strong organic and
acquisitive growth for FY22. The geo-political and financial market volatility
of the past year has highlighted that both our divisions are resilient and
robust businesses with an attractive outlook as they continue to benefit from
a consistent and sustainable business platform.
"Client outcomes remain and will always be our key focus. This was the "raison
d'être" for the creation of Tatton back in 2013 and remains at the heart of
our DNA as a business. Since inception, we have built a strong track record of
delivering value and consistent investment returns at a market leading cost,
through the IFA community and exclusively on platform. We continue to go from
strength to strength, as we build on the strong organic net inflows, which
have been further enhanced by the recent acquisitions. Paradigm is also well
positioned to make further progress and support Group ambitions.
"As we look forward to FY23, our strategic emphasis will be to consolidate and
build on the gains we have made to date whilst further developing the business
to drive growth and long-term value creation. We continue to focus on and take
a disciplined approach to executing our strategy and I remain excited about
the opportunities that exist for the Group. While we remain conscious that
these are uncertain times, both from an economic and geo-political standpoint,
we are well positioned to make further progress in the year ahead and better
equipped than most to deal with any prevailing market headwinds."
For further information please contact:
Tatton Asset Management plc +44 (0) 161 486 3441
Paul Hogarth (Chief Executive Officer)
Paul Edwards (Chief Financial Officer)
Lothar Mentel (Chief Investment Officer)
Zeus - Nomad and Broker +44 (0) 20 3829 5000
Martin Green/Dan Bate (Investment Banking)
Singer Capital Markets - Joint Broker
Peter Steel (Investment Banking) +44 (0) 20 7496 3000
Rachel Hayes (Investment Banking)
Belvedere Communications - Financial PR
John West / Llew Angus (media) +44 (0) 7407 023147
Cat Valentine / Keeley Clarke (investors) +44 (0) 7715 769078
tattonpr@belvederepr.com (mailto:tattonpr@belvederepr.com)
Trade Media Enquiries
Roddi Vaughan Thomas +44 (0) 20 7139 1452
For more information, please visit: www.tattonassetmanagement.com
(http://www.tattonassetmanagement.com)
CHAIRMAN'S STATEMENT
A challenging climate… A team to meet the challenge
DEAR SHAREHOLDER
Against the background of a further challenging period, both nationally and
globally, I am happy to report that 2021/2022 has been another successful year
for the Group. The management team has remained focused on delivering the
strategy - developing products and services, through organic growth and Merger
and Acquisition ("M&A") activity, directed at Independent Financial
Advisers ("IFAs") - which has resulted in continued growth in Assets under
Management ("AUM"), further revenue growth, a strong underlying profit
performance, good cash generation and another lift in adjusted earnings per
share.
STRATEGY IN PROGRESS
The Group's strategic objectives have not changed. We retain our focus on
growth through the provision of products and services that are designed to
enable IFAs to better advise their clients. We are committed to taking an
increasing share of an expanding market, and to be the investment manager, and
partner of choice, for IFAs.
Looking in turn at products (largely Tatton Investment Management ("Tatton" or
"TIML")) and services ("Paradigm"), Tatton announced last year a "Roadmap to
Growth" with a three-year target of increasing AUM from £9.0bn to £15.0bn
through a combination of organic new net inflows and strategically aligned
acquisitions. In this first year, a period during which the confidence of
investors and savers was tested by national and global events, we have made
good progress and ended the year with £11.3bn of AUM - just over a third of
the way there. This growth was achieved following new organic net inflows of
£1.3bn, to which the acquisition of the Verbatim range of funds earlier this
year added £650m. We will continue to focus our efforts on delivering against
these targets and I am positively encouraged by the good progress made to
date.
Turning to Paradigm, against an uncertain backdrop in the year, we enjoyed a
very positive performance with involvement in record mortgage completions of
£13.15bn. While we continue to make good progress, with a significant number
of new firms and improved market penetration, we are mindful that the
government stimulus, particularly in the first half the year, contributed to a
strong lending environment, which may well have had a positive influence on
the overall performance. Nevertheless, the business remains well placed in its
markets and strongly positioned to take advantage of opportunities that lie
ahead.
FINANCIAL HIGHLIGHTS
Against the background outlined above, the Group has performed well. Group
revenue increased by 25.7% to £29.4m (2021: £23.4m), while adjusted
operating profit(1) rose by 27.4% to £14.5m (2021: £11.4m) and profit before
tax, after incurring exceptional costs and share-based payment charges,
improved further to £11.3m (2021: £7.3m). The impact of the above on fully
diluted adjusted earnings per share(1) was an increase of 26.3% to
18.62p (2021: 14.74p) while basic earnings per share was 15.92p (2021:
10.86p).
OUR PEOPLE
Recognising that the Group is essentially a people driven business, the Board
continues to position ethical values and appropriate behaviours at the centre
of our approach to HR, with a view to sustaining a culture that attracts and
retains the high calibre of employee necessary to meet the challenging
objectives that we set ourselves.
The success of the Group in its ability to grow and create value is totally
dependent on the talents and efforts of our employees working together towards
a common purpose. Their combined abilities, adaptability and resilience are
the key resource behind the results that we are now reporting. As ever, on
behalf of the Board, I would like to thank all the Group's employees for their
energy, commitment and dedication over the last financial year.
1. Alternative performance measures are detailed in note 23.
BOARD AND CORPORATE GOVERNANCE
TAM plc remains committed to the highest standards of corporate governance.
The Board understands that this commitment is necessary for managing our
business effectively and for maintaining investor confidence. Good governance
adds value and reduces risk, and in a business which continues to grow and
evolve, we look to sustain, develop and improve our governance arrangements
continually.
SECTION 172 STATEMENT
Section 172 of the Companies Act 2006 requires the Directors to act in the way
that 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. In doing this s.172
requires a Director to have regard, amongst other matters, to the likely
consequences of any decisions 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 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. Further information can be found on pages
42 to 45 of the 2022 Annual Report. The 2022 Annual Report is available at
www.tattonassetmanagement.com.
DIVIDENDS
This year's results reflect the steps being taken to deliver our strategy and
to create long term sustainable shareholder value. Given the continued
progress, the Board is proposing to increase the final dividend by 13.3% to
8.5p per share (see note 9), bringing the total ordinary dividend for the year
to 12.5p per share, an increase of 13.6%, which is 1.5 times covered by
adjusted earnings per share. Subject to shareholder approval at the
forthcoming Annual General Meeting, the dividend will be paid on 2 August 2022
to shareholders on the register on 24 June 2022. The ex-dividend date will be
23 June 2022.
OUTLOOK
Over the year under review the Group has delivered further progress, and we
have taken the necessary steps strategically, operationally and financially to
ensure that the Group is well positioned to continue to grow, and exploit both
those opportunities that already exist, and those that will arise. We are
clear at this point that, while we are immersed in a period of economic and
geopolitical uncertainty, we need to remain focused on our strategic path and,
notwithstanding the unpredictability of the current economic outlook, we
anticipate that in doing so we will continue to make progress and deliver
further value for our shareholders.
Roger Cornick
Chairman
CHIEF EXECUTIVE'S REVIEW
Creating the environment for growth
I am delighted to report on another successful year for the Group, as we
continued to execute our stated strategy and deliver strong organic and
acquisitive growth for FY22 in line with expectations.
The geo-political and financial market volatility of the past year has
highlighted that both our divisions are resilient and robust businesses with
an attractive outlook as they continue to benefit from a consistent and
sustainable business platform.
Tatton is at the forefront of a changing financial services and investment
landscape and our strategic aim remains to develop and grow AUM, as we
increasingly become the investment manager of choice for IFAs and their
clients.
Paradigm's Compliance, Mortgage and Protection propositions serve and champion
the Directly Authorised Financial Adviser ("DA") and intermediary community.
We continue to grow and improve both the number and the quality of firms, by
delivering a wider breadth of compliance and aggregation support combined with
excellent customer service to all our IFAs and intermediaries.
The clarity of strategy and focused execution have enabled the Group to build
on the strong growth it has achieved every year since flotation in 2017 and
deliver another record performance this financial year.
FINANCIAL AND OPERATIONAL PERFORMANCE
The Group continued to make excellent progress this year, delivering record
results as well as making excellent headway on our "Roadmap to Growth"
strategy set at the beginning of the year under review.
Group revenue increased by 25.7% to £29.4m and Group adjusted operating
profit(1) increased by 27.4% to £14.5m, with margins improving to 49.5%. Cash
generation was slightly ahead of expectations and we ended the year with
£21.7m of cash on the balance sheet.
Tatton revenue increased by 29.0% to £23.3m, underpinned by record new net
inflows of £1.277bn during the year, which contributed to strong growth in
AUM of 26.2% to £11.341bn at the end of the financial year. The growth
included a revenue contribution of £1.1m from the Verbatim funds that were
acquired in September 2021. Excluding these, the organic revenue growth was
strong at 22.7%. Tatton adjusted operating profit(1) increased by 27.5% to
£13.9m and margins were maintained at 60%, as investment to drive the future
growth of the business continued. Tatton income now accounts for 79.5% of
Group revenue and the majority, or 95.7%, of the trading profits.
AUM Movement £bn
Opening AUM 1 April 2021 8.990
Organic net flows 1.277
Acquisition (Verbatim) 0.650
Market and investment performance 0.424
Total AUM 31 March 2022 11.341
Paradigm revenue increased by 14.4% to £6.0m, on the back of a record year
from the Mortgage business as its involvement in mortgage completions exceeded
£13.0bn for the first time. This ultimately improved adjusted operating
profit(1) by 20.0% to £2.4m and with corresponding margin improvement up 1.9
points to 40.6%.
1. Alternative performance measures are detailed in note 23.
MARKET TRENDS, STRATEGY AND BUSINESS MODEL
Tatton
Our "Roadmap to Growth" strategy includes a three-year target of increasing
AUM by £6.0bn, from £9.0bn in FY21 to £15.0bn by FY24. One year on, we have
already delivered £2.3bn, or just under 40%, of the £6.0bn target, with AUM
at £11.34bn. This growth has been delivered through a combination of strong
organic growth and the acquisition of £650m of the Verbatim range of funds in
September 2021. The key elements and market trends underpinning this strategy
remain unchanged and include the following elements - Platforms, Ethical
Investment Solutions, Regulation and Distribution Footprint.
Platforms and Managed Portfolio Services ("MPS")
Client outcomes remain and will always be our key focus. This was the "raison
d'être" for the creation of Tatton back in 2013 and remains at the heart of
our DNA as a business. Since inception, we have built a strong track record of
delivering value and consistent investment returns at a market leading cost,
utilising MPS while operating exclusively on Retail Investment Platforms
("Platforms").
As the use of Platforms by IFAs continues to increase, with over £680bn of
assets now held on Platforms, we continue to see increased demand for MPS. The
combination of utilising both Platforms and MPS enables IFAs and their clients
to bring together their chosen technology platform and investment solution
under a single access point, which, in turn, is leading to an increasing share
of IFA/client assets being invested utilising these solutions.
As a result of this, the MPS market continues to mature, with the past 12
months bringing many new entrants but also seeing long-standing traditional
investment managers entering the MPS market, as well as promoting their
existing MPS propositions. This both helps promote and further validates the
broader MPS opportunity and proposition.
Tatton remains at the forefront of the MPS market, as the leader from a price,
proposition and service delivery perspective. This has enabled us to maintain
our position, with over £10bn of our total £11.3bn being MPS AUM, making us
the largest provider of MPS on-platform, nearly double the MPS AUM of our
nearest competitor.
Ethical investment solutions
Tatton operates a full range of risk-rated MPS solutions, all with long,
consistent investment track records. We consistently respond to IFAs'
feedback, evolving our proposition in line with their changing needs. We
launched our first Ethical models back in 2014, becoming a "first mover" in
this space. While initially the take-up was modest, sentiment has changed
markedly and recent investor interest and demand for Ethical solutions has
substantially increased, driving strong growth of inflows. In a further move
to satisfy this demand, we will launch our latest set of Ethical investment
solutions with a range of three risk-rated "ETHOS" Ethical funds. This will
leverage our proven track record and significant expertise in this space.
Regulation
Regulation continues to evolve, with consumer duty at the forefront of this
change. MPS remains perfectly positioned to respond to this by delivering
low-cost and competitive investment solutions for the client, whilst
supporting the IFA in meeting consumer duty obligations. As an MPS focused
investment manager, consumer duty plays to our strengths in placing the
adviser at the heart of the value chain and facilitating the delivery of
improved client outcomes.
Distribution footprint
Tatton has made great strides over the years in expanding its distribution
footprint. Initially, distribution was dependent on Paradigm members, who
remain important and loyal supporters of the service. However, over time, we
have developed our strategy by diversifying our distribution footprint beyond
Paradigm, winning new firms but also through the addition of a number of new
strategic partnerships such as those with Tenet Group and Fintel plc. This has
significantly broadened our base and now accounts for a significant portion of
new flows.
The combination of all these factors - market trends and growth in platforms;
regulatory direction of travel; increased distribution footprint; and a clear
and focused acquisition strategy - leaves the Group well placed to achieve the
goals set out in our "Roadmap to Growth" strategy.
Paradigm
Paradigm has made good progress this year, following the consolidation of the
Consulting and Mortgage operations under one "Paradigm" brand. The division
has improved structurally through integration and cross skill working.
Personnel are now better utilising their knowledge and experience to help the
growth and development of the broader proposition. Our aim is to make Paradigm
the number one choice for DAs seeking compliance and aggregation support,
while at the same time, making our service attractive and compelling to
Manufacturers (both lenders and providers) who seek the distributor with the
greatest ability to deliver their propositions to key DA participants in the
market.
This year has been very productive and we have continued to add new firms,
with Paradigm Consulting firms increasing to 421 (2021: 407) and Paradigm
Mortgage firms increasing to 1,674 (2021: 1,612). Additionally, Paradigm
Mortgages participated in a record £13.15bn (2021: £11.34bn) of mortgage
completions, a 16.0% increase on the previous year.
As the housing market continued to recover from the impact of COVID-19 in
2021, mortgage activity also improved. This demand was undoubtedly helped by
the government stamp duty holiday/incentive, as well as the underlying general
strength of the housing market continuing to improve. This has been driven by
a number of factors, with strong house price inflation increasing the average
size of mortgage coupled with the demand for new mortgages as consumers look
to either move or improve as a response to the new work from home and flexible
working trend, which appears to be a permanent shift in the way we work.
As a result, UK gross mortgage lending up to the end of 2021 increased to
£316bn (excluding product transfers). We finished the year strongly and
ultimately delivered £6.57bn in the second half the year in comparison to the
£6.58bn in the first.
As we look forward, there are undoubted headwinds to the mortgage market, such
as rising interest rates and the increased cost of living impacting
affordability. As a result, the level of UK gross lending is forecast to be
c.10% lower in 2022 at £281bn. We continue to concentrate on increasing our
market share through growing the number and size of our intermediary firms who
value the access and range of services we have to offer.
STRATEGIC GOALS AND PRIORITIES
As we look forward to FY23, our strategic emphasis will be to consolidate and
build on the gains we have made to date and further develop the business to
drive growth and long-term value creation. Specifically, we look to achieve
the following:
- Continue with the strong organic growth of new net inflows, utilising our
increasing range of firm distribution platforms: Paradigm, Tatton, Tenet and
Fintel;
- Deliver the next phase of our three-year "Roadmap to Growth" strategy,
taking us from £9.0bn in FY21 to £15.0bn by FY24. Building on the strong
performance in FY22, where we delivered £1.65bn through organic growth and
£0.65bn through acquisition, we need to add a minimum of £1.7bn in FY23 to
remain on track;
- Launch our new range of "ETHOS" Ethical funds in 2022 in response to
demand from the IFA community;
- Identify and execute on further acquisitions that contribute to the
"Roadmap to Growth" strategy but also, importantly, fulfil our basic criteria
of being complementary and earnings enhancing;
- Build on our recent success by delivering further strategic partnerships,
joint ventures and collaborations with larger IFA firms delivering enhanced
client outcomes; and
- Continue to grow the number of firms utilising Paradigm, specifically
taking a greater share of the available mortgage broker and intermediary
market, and growing the level of mortgage completions.
OUTLOOK AND SUMMARY
I am very pleased with the progress the Group has made this year. We have
continued on the path of strong growth across all our key metrics of new net
inflows, AUM, revenue, profits and improved margins. Tatton continues to go
from strength to strength, as it builds on the strong organic net inflows,
which have been further enhanced by the recent acquisitions. Paradigm is also
well positioned to make further progress and support the Group's ambitions.
We continue to focus on and take a disciplined approach to executing our
strategy and I am excited about the opportunities that exist for the Group.
While we remain conscious that these are uncertain times, both from an
economic and geo-political standpoint, we are well positioned to make further
progress in the year ahead and better equipped than most to deal with any
prevailing market headwinds.
CHIEF INVESTMENT OFFICER'S REPORT
Meeting capital markets' challenge
Tatton's investment and business model emerged very well from the "lockdown
years" and has built on the adaptations and enhancements we made during that
time. Flexible working practices - remote meetings and presentations - have
become established, with a welcome return of face-to-face meetings when it
matters. A real strength of Tatton's team is our ability to adapt quickly and
intuitively adopt new ways of working with advisers to suit their business.
In a more dynamic and price-driven market, we have remained true to the key
elements of our success, working hard to develop additions to our flagship MPS
for Financial Advisers to offer their clients - making it easy and cost
effective to do business with us and deliver strong investment outcomes. The
operational resilience we demonstrated during the lockdown years has evolved
into competitive advantage and resilience - we have enhanced our proposition
and services to improve our business scalability and relevance to Financial
Advisers by increasing access, adapting our products and embedding assets
under management gained through acquisition.
PROPOSITION DEVELOPMENT
Tatton's pricing structure remains very competitive, and we continually work
to remove barriers for advice firms to access our products. We operate on
three additional investment platforms and remain platform agnostic - working
seamlessly with advisers to fit into their business. Over the period, we made
considerable additions to the Tatton adviser portal - our proprietary online
client management system for advisers, which, at its heart, is a bridging
application between platforms, advisers and clients' appointed discretionary
investment manager - Tatton. It incorporates client management and reporting
functions for advisers, making it straightforward for firms to do business
with Tatton, and also directly embeds Tatton into the business operations of
adviser firms, building operational resilience.
Maintaining scalability is a key driver of our business model and we remain
focused as an MPS provider. We recognised that many advisers want the
flexibility to develop their own branded offerings and we have responded by
developing more White Label services, Appointed Investment Adviser ("AIA")
relationships and also joint ventures. Tatton's role is to facilitate client
access to sophisticated institutional-style Centralised Investment
Propositions, with Tatton becoming an integral part of an adviser business and
in turn making it more competitive.
Providing more investment choices for advisers has been demonstrated with the
successful transfer of the Verbatim Portfolio Growth Funds to the Tatton
stable of funds, enabling access to Tatton's portfolio investment management
through multi-asset funds, alongside our discretionary portfolios. Many
advisers want investment flexibility for their clients and Tatton should be
able to help where discretionary portfolio investments are not suitable or
accessible.
Additional choice for adviser firms creates more touch points with them,
highly relevant with the expansion of our distribution networks. New
relationships with Fintel/SimplyBiz and Sesame Bankhall are building on the
success of our relationship with Tenet, enhancing our visibility within the
day to day business of adviser firms that are yet to adopt an MPS solution for
their clients. This is further evidenced by the steady growth of our Bespoke
Portfolio Service ("BPS") that runs alongside our MPS, creating access to
additional client assets.
Our Ethical ("ESG") portfolios (launched in 2014) have continued on the growth
of the previous year, reflecting increased consumer interest in investing to
make a difference and our experience in the sector. This provides a clear
demonstration of our long-standing commitment to giving the clients of
financial advisers genuine choice in how their discretionary assets are
allocated.
Tatton's investment process has been tested during benign and volatile market
environments, and we are proud of our portfolio performance over the period.
Ensuring investors understand how global events impact or benefit their
investments is vital, and we have continued to deliver benchmark-setting
communications through video, webinar and the Tatton Weekly newsletter.
2021/2022 CAPITAL MARKETS AND RETURNS
The second year of managing global multi-asset investment portfolios under a
pandemic proved almost as littered with opportunities for missteps as the
first. While the first year rattled markets with the economic uncertainty of a
deep recession created by the economic shutdowns, the second was characterised
by uncertainty over the course and shape of the post-pandemic recovery -
firstly, over how to wean off all-encompassing policy support and then
recalibrate the supply and demand balance of goods while large amounts of
surplus liquidity further clouded the usual post-recession recovery path.
In capital market terms, the 12 months spanning TAM's financial year turned
into a period during which fast-changing concerns over the direction of bond
market yields dominated and determined market action.
Q2 of 2021 started our financial year on a more equal footing for returns
between the main asset classes of equities and bonds than had been the case in
Q1. This was welcome after the start of 2021 had seen the first scare over the
prospect of overheating economic conditions pushing up bond yields too rapidly
for comfort, even before the post-pandemic rebound had even happened. Despite
much talk and excitement over another "roaring twenties" decade, bond yields
fell back again in Q2 as central banks repeatedly pledged to maintain an
accommodative policy stance and look through rising inflation - viewed as only
transitory until supply chains had established a firm basis again. Tatton's
overweight to equities in portfolios with a specific short-term position in a
global small cap tracker at the expense of US large caps paid off for
investors as the cyclical recovery took hold.
Following the very rapid, and again unprecedented, rates of change - albeit
this time of economic growth - the recovery slowed markedly over the summer,
especially in the US and China. Yet, with corporate earnings still expanding
even faster than anticipated on the back of impressive margin improvements,
risk asset markets continued their rise as bond markets remained stable and
still assured by soothing words from central bankers. On/off style rotation
from Growth to Value and from US tech safe havens to the mid-cycle cyclical
sectors of Europe and the UK characterised this period, during which our Value
tilt in portfolios added value as did our UK large cap reorientation.
The relative bond market calm came to an end when China's excessive
residential property market growth claimed its first large victim in property
developer Evercore. Even though the spectre of a global financial crisis was
quickly dispelled by the concerted action of the Chinese authorities, bond
markets have since then again dominated market action - firstly, when central
bankers changed their mind about their stance on inflation and turned
decidedly hawkish, and then when Russia's invasion of Ukraine led to an
extension of elevated energy prices, which put downward pressure on corporate
earnings projections. The equity market correction in the first quarter of
2022 has been painful for investors, as most of the previous 12 months' gains
were reversed. Towards the end of the first quarter, both equity and bond
valuations recovered from the shock of the Ukraine war. This came despite an
increase in the three major headwinds of a slowing Chinese economy (Asia),
central banks' monetary tightening (US) and the cost of living pressures from
elevated energy and food prices (Europe). As a result, asset valuation felt
once again elevated and therefore vulnerable.
In a scenario of an as yet unresolved European armed conflict paired with
monetary tightening, the transition to an expansive mid-cycle market
environment is now much less certain and there is the possibility of yet
another short-term economic downturn before the longer-term growth trend
resumes.
OUTLOOK
Investor confidence for the remainder of the year depends not only on the
outcome of the war in Ukraine and the strength of its ripples through the
global economy, but also on the shape of the inflationary pressures it is
experiencing and if transitory does indeed become systematic inflation. The
impact of energy commodity price increases will decline in the summer but has
the potential for greater consequence as the northern hemisphere approaches
winter.
Tatton's strength is based around the ability of its team to understand and
anticipate market developments. The scalability of our model is maintained
through our operational efficiency, our flexibility and the strength of our
team in implementing our strategy. We have emerged from the pandemic years as
a bigger and better business, and despite the uncertainty of the new world
order, very well positioned to deliver for the clients of financial advisers
whatever economic environment develops through the remainder of 2022.
INVESTMENT PORTFOLIO RETURNS
1 April 2021 - 31 March 2022
Tatton investment returns (%) - core MPS product set (after discretionary fund
management ("DFM") charge and fund costs)
Tatton Managed Tatton Tracker Tatton Blended Tatton Ethical ARC PCI(1)
Defensive 0.0 0.1 0.0 (0.2) 1.8
Cautious 3.2 3.2 3.2 2.0 3.6
Balanced 5.5 5.4 5.4 3.9 3.6/5.1(2)
Active 8.1 7.4 7.8 6.0 5.1
Aggressive 10.2 10.0 10.1 7.9 5.6
Global Equity 10.6 10.4 10.5 8.5 5.6
Five years, 1 April 2017 - 31 March 2022
Tatton investment returns (%) - core MPS product set (annualised, after DFM
charge and fund costs)
Tatton Managed Tatton Tracker Tatton Blended Tatton Ethical(3) ARC PCI(1)
Defensive 2.6 2.6 2.6 - 2.6
Cautious 4.1 4.1 4.1 - 3.7
Balanced 5.1 5.0 5.1 6.6 3.7/5.0(2)
Active 6.4 6.1 6.2 - 5.0
Aggressive 7.4 7.2 7.3 - 6.1
Global Equity 10.2 10.0 10.1 - 6.1
1. ARC PCI - Asset Risk Consultants Private Client Indices ("PCI").
2. Balanced portfolios are measured against both ARC Balanced Asset PCI and
ARC Steady Growth PCI as in risk terms, the Balanced portfolios lie in the
middle of these Indices.
3. Only Tatton Ethical Balanced has existed for five years.
CHIEF FINANCIAL OFFICER'S REPORT
Resilience and long-term value creation
OVERVIEW
At the end of the 2021/2022 financial year, the Group reached the milestone of
achieving a five-year track record as a publicly listed business. Over that
period, the Group has delivered consistent and repeated growth across all the
key performance metrics. Revenue has grown at a compound annual growth rate of
19.8%, with adjusted operating profit(1) growing even more strongly at a
compound growth rate of 26.3%, as result of margins having increased over the
same period by an absolute 11.5% to 49.5% for the Group as a whole. Over that
period, Tatton, our asset management division, has become the dominant
division. AUM has grown to £11.3bn, an annual compound rate of 23.9%.
Investment-related income now accounts for 79.5% of the total Group revenue
and 95.7% of the adjusted operating profit(1) and, as a consequence of
existing market trends and a focused strategy, this dynamic is set to
continue.
REVENUE AND PROFITS
Revenue - Group reported revenue increased by 25.7% to £29.4m (2021:
£23.4m). Tatton revenue increased by 29.0% to £23.3m (2021: £18.1m). AUM
increased by 26.2% to reach £11.3bn (2021: £9.0bn). This increase in AUM
includes record net inflows of £1,277m, which reflects both the underlying
market trends that are driving the adoption of MPS and our expanding
distribution footprint. AUM was further improved by market returns which
contributed a further 4.7% or £424m, with a further £650m added on the
acquisition of the Verbatim range of funds in September 2021. Funds, or
non-MPS, AUM now accounts for £1.2bn of AUM (2021: £0.5bn) as we continue to
further expand our propositions beyond purely MPS.
Paradigm's revenue increased by 14.4% to £6.0m (2021: £5.2m). The number of
mortgage member firms increased to 1,674 (2021: 1,612) and Paradigm Consulting
member firms increased to 421 (2021: 407). In addition to the growth in firms,
the growth in revenue this year has been delivered partly as a result of a
soft comparator, as 2020/2021 had a difficult start to the financial year due
to the impact of COVID-19; however, more pertinently, mortgage completions
reached a record level of £13.15bn (2021: £11.34bn). The mix of mortgage
products also improved, increasing the rate of commission, and there has been
continued growth in other income streams such as protection premia.
Profit - The Group delivered adjusted operating profit(1) of £14.5m (2021:
£11.4m), an increase of 27.4%. Adjusted operating profit margin(1) increased
to 49.5% (2021: 48.8%). The prior year margin benefitted by c.2.5%, or
approximately £0.6m, of travel and other costs which were either reduced or
not incurred as a consequence of the pandemic. As restrictions were relaxed,
activity increased and at least 50% of these costs were incurred again this
year, and it is anticipated that there will be a return to normal historic
activity and level of cost in the coming years.
As a response to the inflationary environment, the Group has implemented an
average 5% annual salary increase, materially ahead of historical levels
(excludes Executive Directors(2)). We have also experienced a more competitive
marketplace for new recruits driving starting salaries upwards and both have
been reflected in our plans this year. While personnel costs are c.60% of the
Group total cost base, we do not anticipate that these increases will be
margin dilutive.
Group operating profit was £11.6m (2021: £7.5m), which includes the cost
impact of separately disclosed items of £2.9m (2021: £3.9m). Note 4 details
the segmental information, showing Tatton's adjusted operating profit(1)
increasing by 27.5% to £13.9m (2021: £10.9m) and its adjusted margin(1) was
59.6% (2021: 60.2%). Paradigm's adjusted operating profit(1) contributed
£2.4m (2021: £2.0m), with adjusted margin(1) of 40.6% (2021: 38.7%).
ACQUISITIONS
During the year, the Group acquired the range of Verbatim funds, which added
£650m of AUM. At the same time, we entered a five-year strategic distribution
partnership with Fintel plc, significantly enhancing our reach and
distribution. The consideration payable will be up to £5.8m, with £2.8m paid
on completion and the remaining £3.0m paid in three equal instalments over
years two, three and four. The payment of the deferred consideration is
dependent on the AUM remaining at or above £650m. On acquisition, the Group
has recognised goodwill of £3.1m, intangible assets of £2.9m, an associated
deferred tax liability of £0.7m and discounted contingent consideration of
£2.5m, see note 21.
SEPARATELY DISCLOSED ITEMS
Separately disclosed items include the cost of share-based payments of £2.4m,
amortisation of acquisition-related intangible assets of £0.3m and £0.2m of
acquisition-related fees, see note 6. Although some of these items may recur
from one period to the next, operating profit has been adjusted for these
items to give better clarity of the underlying performance of the Group. The
alternative performance measures ("APMs") are consistent with how the business
performance is planned and reported within the internal management reporting
to the Board. Some of these measures are also used for the purpose of setting
remuneration targets.
EARNINGS PER SHARE
Basic earnings per share increased to 15.92p (2021: 10.86p). Adjusted earnings
per share(1) increased by 23.2% to 19.87p (2021: 16.14p) and adjusted fully
diluted earnings per share(1) increased by 26.3% to 18.62p (2021: 14.74p),
full details are shown in note 9.
STATEMENT OF FINANCIAL POSITION AND CASH
The consistent growth year on year continues to strengthen the Group's balance
sheet. Net assets have increased 27.0% to £31.0m (2021: £24.4m) with cash on
the balance sheet contributing £21.7m (2021: £16.9m). Given the
capital-light nature of the Group's business model, Group net cash generated
from operating activities before exceptional items was £15.5m (2021: £10.9m)
or 106.6% of adjusted operating profit(1). The Group has paid out £2.8m in
relation to acquisitions and £6.6m in dividends during the year and, in
addition, has received £1.3m from the issue of new shares following the
exercise of employee share options.
DIVIDENDS
The Board is recommending a final dividend of 8.5p. When added to the interim
dividend of 4.0p, this gives a full year dividend of 12.5p. This proposed
dividend reflects both our cash performance in the period and our underlying
confidence in our business, and maintains our policy of paying a dividend
approximately 70% of the adjusted earnings and split on a one third/two third
basis between the interim period and year end. If approved at the Annual
General Meeting, the final dividend will be paid on 2 August 2022 to
shareholders on the register on 24 June 2022. The ex-dividend date will be 23
June 2022.
RISK MANAGEMENT
Risk is managed closely and is spread across our businesses and managed to
individual materiality. Our key risks have been referenced primarily on pages
30 and 31 of the 2022 Annual Report. We choose key performance indicators that
reflect our strategic priorities of investment, growth and profit, and these
are detailed on pages 26 and 27 of the 2022 Annual Report. The 2022 Annual
Report is available at www.tattonassetmanagement.com.
CHANGES IN REGULATORY REQUIREMENTS
In January 2022, the Investment Firms Prudential Regime ("IFPR") came into
effect and represents a significant change to risk management, prudential
capital rules, and revised remuneration and governance standards for
investment firms. IFPR applies to TIML, the only regulated entity within the
Group, and also as a result of the requirement to look at the Group's
consolidated position from a regulatory perspective, applies to the TAM Group.
As a result of these new rules, both TIML and the Group have reviewed their
risk management processes, capital resource requirements and liquidity
requirements, which has resulted in an increase of capital resources being
required to be held on a consolidated basis. This has in turn reduced the
amount of free cash available to the Group, as a larger amount of cash is
required to be held to meet the Group's capital requirements. The Group's cash
available for acquisitions is £8.2m out of total cash on the balance sheet of
£21.7m. This would be reduced by any interim dividend declared in FY23. The
impact of this is that, as the Group pursues its acquisition strategy, it is
likely to be restricted in how these transactions are funded. Utilising cash
to acquire intangible investment assets reduces the Group's capital resources
available to apply to its capital requirements as defined by the FCA. The
Group must ensure that it utilises cash as consideration for acquisitions only
where it has appropriate capital headroom available. Above this headroom,
alternative funding will be required, such as the issue of new shares. A
reconciliation of free cash available for acquisitions is analysed in the
table below.
£m
Cash on the balance sheet 21.7
Cash required for:
Deferred consideration (2.5)
Working capital (2.4)
Full year dividend of 8.5p (5.0)
Capital requirement (3.6)
Free cash available for acquisitions 8.2
The Strategic Report has been approved and authorised for issue by the Board
of Directors and signed on their behalf on 14 June 2022 by:
Paul Edwards
Chief Financial Officer
1. Alternative performance measures are detailed in note 23.
2. Executive Directors' salaries remain unchanged.
CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2022
Note 31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Revenue 29,356 23,353
Administrative expenses (17,726) (15,845)
Operating profit 11,630 7,508
- Share-based payment costs 6 2,399 3,740
- Amortisation of acquisition-related intangibles 6 266 120
- Exceptional items 6 231 34
Adjusted operating profit (before separately disclosed items)(1) 14,526 11,402
Finance costs 7 (355) (205)
Profit before tax 11,275 7,303
Taxation charge 8 (2,033) (1,192)
Profit attributable to shareholders 9,242 6,111
Earnings per share - Basic 9 15.92p 10.86p
Earnings per share - Diluted 9 15.17p 10.31p
Adjusted earnings per share - Basic(2) 9 19.87p 16.14p
Adjusted earnings per share - Diluted(2) 9 18.62p 14.74p
1. Adjusted for exceptional items, amortisation on acquisition-related
intangibles and share-based payments. See note 23.
2. Adjusted for exceptional items, amortisation on acquisition-related
intangibles and share-based payments and the tax thereon. See note 23.
All revenue, profit and earnings are in respect of continuing operations.
There were no other recognised gains or losses other than those recorded above
in the current or prior year and therefore a Statement of Other Comprehensive
Income has not been presented.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2022
Note 31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Non-current assets
Goodwill 11 9,337 6,254
Intangible assets 12 4,047 1,436
Property, plant and equipment 13 749 992
Deferred tax assets 16 841 1,420
Total non-current assets 14,974 10,102
Current assets
Trade and other receivables 14 3,805 4,302
Financial assets at fair value through profit or loss 17 152 163
Corporation tax 706 48
Cash and cash equivalents 21,710 16,934
Total current assets 26,373 21,447
Total assets 41,347 31,549
Current liabilities
Trade and other payables 15 (7,556) (6,587)
Total current liabilities (7,556) (6,587)
Non-current liabilities
Other payables 15 (2,747) (516)
Total non-current liabilities (2,747) (516)
Total liabilities (10,303) (7,103)
Net assets 31,044 24,446
Equity attributable to equity holders of the Company
Share capital 18 11,783 11,578
Share premium account 11,632 11,534
Own shares 19 - (1,969)
Other reserve 2,041 2,041
Merger reserve (28,968) (28,968)
Retained earnings 34,556 30,230
Total equity 31,044 24,446
The financial statements were approved by the Board of Directors on 14 June
2022 and were signed on its behalf by
Paul Edwards
Director
Company registration number: 10634323
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2022
Note Share Share Own Other Merger Retained Total
Capital Premium Shares Reserve Reserve Earnings Equity
(£'000) (£'000) (£'000) (£'000) (£'000) (£'000) (£'000)
At 1 April 2020 11,182 8,718 (996) 2,041 (28,968) 25,801 17,778
Profit and total comprehensive income - - - - - 6,111 6,111
Dividends 9 - - - - - (5,551) (5,551)
Share-based payments - - - - - 2,954 2,954
Deferred tax on share-based payments - - - - - 915 915
Issue of share capital on exercise of employee share options 396 2,816 - - - - 3,212
Own shares acquired in the year 19 - - (973) - - - (973)
At 31 March 2021 11,578 11,534 (1,969) 2,041 (28,968) 30,230 24,446
Profit and total comprehensive income - - - - - 9,242 9,242
Dividends 9 - - - - - (6,641) (6,641)
Share-based payments - - - - - 2,679 2,679
Deferred tax on share-based payments - - - - - 157 157
Current tax on share-based payments - - - - - 1,051 1,051
Issue of share capital on exercise of employee share options 205 98 - - - - 303
Own shares acquired in the year 19 - - (193) - - - (193)
Own shares utilised on exercise of options 19 - - 2,162 - - (2,162) -
At 31 March 2022 11,783 11,632 - 2,041 (28,968) 34,556 31,044
The other reserve and merger reserve were created on 19 June 2017 when the
Group was formed, where the difference between the Company's capital and the
acquired Group's capital was recognised as a component of equity being the
merger reserve. Both the other reserve and the merger reserve are
non-distributable.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2022
Note 31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Operating activities
Profit for the year 9,242 6,111
Adjustments:
Income tax expense 2,033 1,192
Finance costs 7 355 205
Depreciation of property, plant and equipment 13 377 351
Amortisation of intangible assets 12 536 341
Share-based payment expense 20 1,492 3,740
Changes in:
Trade and other receivables 309 (537)
Trade and other payables 907 (531)
Exceptional items 6 231 34
Cash generated from operations before exceptional items 15,482 10,906
Cash generated from operations 15,251 10,872
Income tax paid (1,612) (2,051)
Net cash from operating activities 13,639 8,821
Investing activities
Payment for the acquisition of a business combination, net of cash acquired (2,825) (160)
Purchase of intangible assets (211) (282)
Purchase of property, plant and equipment (74) (67)
Net cash used in investing activities (3,110) (509)
Financing activities
Interest paid (144) (36)
Transaction costs related to borrowings - (613)
Dividends paid 9 (6,641) (5,551)
Proceeds from the issue of shares 111 3,212
Purchase of own shares 19 - (973)
Proceeds from the exercise of options 1,230 -
Repayment of lease liabilities (309) (174)
Net cash used in financing activities (5,753) (4,135)
Net increase in cash and cash equivalents 4,776 4,177
Cash and cash equivalents at beginning of period 16,934 12,757
Net cash and cash equivalents at end of period 21,710 16,934
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 GENERAL INFORMATION
Tatton Asset Management plc (the "Company") is a public company limited by
shares. The address of the registered office is Paradigm House, Brooke Court,
Lower Meadow Road, Wilmslow, SK9 3ND. The registered number is 10634323.
The Group comprises the Company and its subsidiaries. The Group's principal
activities are discretionary fund management, the provision of compliance and
support services to independent financial advisers ("IFAs"), the provision of
mortgage adviser support services, and the marketing and promotion of
multi-manager funds.
News updates, regulatory news and financial statements can be viewed and
downloaded from the Group's website, www.tattonassetmanagement.com. Copies can
also be requested from: The Company Secretary, Tatton Asset Management plc,
Paradigm House, Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND.
The Company has taken advantage of the exemption in section 408 of the
Companies Act 2006 not to present its own income statement.
2 ACCOUNTING POLICIES
The principal accounting policies applied in the presentation of the annual
financial statements are set out below.
2.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in
accordance with International Financial Reporting Standards ("IFRSs") as
adopted by the United Kingdom and International Financial Reporting
Interpretations Committee ("IFRIC") interpretations issued by the
International Accounting Standards Board ("IASB") and the Companies Act 2006.
The financial statements of the Company have been prepared in accordance with
UK Generally Accepted Accounting Practice, including Financial Reporting
Standard 101 "Reduced Disclosure Framework" ("FRS 101").
The consolidated financial statements have been prepared on a going concern
basis and prepared on the historical cost basis.
The consolidated financial statements are presented in sterling and have been
rounded to the nearest thousand (£'000). The functional currency of the
Company is sterling as this is the currency of the jurisdiction where all of
the Group's sales are made.
The preparation of financial information in conformity with IFRSs requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Although these estimates are based on management's best knowledge of the
amount, event or actions, actual events may ultimately differ from those
estimates.
The accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in the consolidated financial
statements.
2.2 Going concern
These financial statements have been prepared on a going concern basis. The
Directors have prepared cash flow projections and are satisfied that the Group
has adequate resources to continue in operational existence for the
foreseeable future. The Group's forecasts and projections, which take into
account reasonably possible changes in trading performance, show that the
Group will be able to operate within the level of its current facilities.
Accordingly, the Directors continue to adopt the going concern basis in
preparing these financial statements.
2.3 Basis of consolidation
The Group's financial statements consolidate those of the Parent Company and
all of its subsidiaries as at 31 March 2022. The Parent controls a subsidiary
if it is exposed, or has rights, to variable returns from its involvement with
the subsidiary and has the ability to affect those returns through its power
over the subsidiary. All subsidiaries have a reporting date of 31 March.
All transactions between Group companies are eliminated on consolidation,
including unrealised gains and losses on transactions between Group companies.
Where unrealised losses on intra-group asset sales are reversed on
consolidation, the underlying asset is also tested for impairment from a Group
perspective. Amounts reported in the financial statements of subsidiaries have
been adjusted where necessary to ensure consistency with the accounting
policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or
disposed of during the year are recognised from the effective date of
acquisition, up to the effective date of disposal, as applicable.
2.4 Adoption of new and revised standards
NEW AND AMENDED IFRS STANDARDS THAT ARE EFFECTIVE FOR THE CURRENT YEAR
There have been no revised standards and interpretations which have had a
material impact on the financial statements of the Group.
STANDARDS IN ISSUE NOT YET EFFECTIVE
The following IFRS and IFRIC interpretations have been issued but have not
been applied by the Group in preparing the historical financial information,
as they are not yet effective. The Group intends to adopt these Standards and
Interpretations when they become effective, rather than adopt them early.
EFFECTIVE DATE 1 JANUARY 2023
IFRS 17 "Insurance Contracts"
In addition, the following standards each have amendments which will be
effective for accounting periods beginning on or after 1 January 2022:
IFRS 10 "Consolidated Financial Statements" IAS 28 "Investments in Associates
and Joint Ventures", IAS 1 "Presentation of Financial Statements", IFRS 3
"Business Combinations", IAS 8 "Accounting Policies, Changes in Accounting
Estimates and Errors", IAS 16 "Property, Plant and Equipment", IAS 37
"Provisions, Contingent Liabilities and Contingent Assets".
The Directors do not expect that the adoption of the new or revised Standards
listed above will have a material impact on the financial statements of the
Group in future periods.
2.5 Revenue
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for services provided in the
normal course of business, net of discounts, VAT and other sales-related
taxes. Revenue is reduced for estimated rebates and other similar allowances.
Revenue is recognised when control is transferred and the performance
obligations are considered to be met.
The Group's revenue is made up of the following principal revenue streams:
- Fees for discretionary fund management services in relation to on-platform
investment assets under management ("AUM"). Revenue is recognised daily based
on the AUM.
- Fees charged to IFAs for compliance consultancy services, which are
recognised when performance obligations are met.
- Fees for providing investment platform services. Revenue is recognised on
a daily basis, in line with the satisfaction of performance obligations, on
the assets under administration held on the relevant investment platform.
- Fees for mortgage-related services including commissions from mortgage and
other product providers and referral fees from strategic partners. Commission
is recognised when performance obligations are met.
- Fees for marketing services provided to providers of mortgage and
investment products, which is recognised when performance obligations are met.
2.6 Exceptional items
Exceptional items are disclosed and described separately in the financial
statements where it is necessary to do so to provide further understanding of
the underlying financial performance of the Group. These include material
items of income or expense that are shown separately due to the significance
of their nature and amount.
2.7 Interest income and interest expense
Finance income is recognised as interest accrued (using the effective interest
method) on funds invested outside the Group. Finance expense includes the cost
of borrowing from third parties and is recognised on an effective interest
rate basis, resulting from the financial liability being recognised on an
amortised cost basis.
2.8 Impairment
Assets which have an indefinite useful life are not subject to amortisation
and are tested for impairment at each Statement of Financial Position date.
Assets subject to depreciation and amortisation are reviewed for impairment
whenever events or circumstances indicate that the carrying amount may not be
recoverable. Impairment losses on previously revalued assets are recognised
against the revaluation reserve as far as this reserve relates to previous
revaluations of the same assets. Other impairment losses are recognised in the
Statement of Total Comprehensive Income based on the amount by which the
carrying value exceeds the recoverable amount. The recoverable amount is the
higher of the fair value less the costs to sell and the value in use.
Impairment losses recognised in respect of cash-generating units ("CGUs") are
allocated first to reduce the carrying amount of any goodwill allocated to
CGUs and then to reduce the carrying amount of other assets in the unit on a
pro rata basis.
2.9 Goodwill and intangible assets
Goodwill is initially recognised and measured as set out in note 2.11.
Goodwill is not amortised but is reviewed for impairment at least annually.
For the purpose of impairment testing, goodwill is allocated to each of the
Group's CGUs (or groups of CGUs) expected to benefit from the synergies of the
combination. CGUs to which goodwill has been allocated are tested for
impairment annually, or more frequently when there is an indication that the
unit may be impaired. If the recoverable amount of the CGU is less than the
carrying amount of the unit, the impairment loss is allocated first to reduce
the carrying amount of any goodwill allocated to the unit and then to the
other assets of the unit pro rata on the basis of the carrying amount of each
asset in the unit. An impairment loss recognised for goodwill is not reversed
in a subsequent period.
On disposal of a CGU, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
Following initial recognition, intangible assets are held at cost less any
accumulated amortisation and any provision for impairment. Assets that are
subject to amortisation are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset's fair value less costs to sell and value in use. For the purpose of
assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (CGUs).
Intangible assets acquired separately are measured on initial recognition at
cost.
Computer software licences acquired are capitalised at the cost incurred to
bring the software into use and are amortised on a straight-line basis over
their estimated useful lives, which are estimated as being three years. Costs
associated with developing or maintaining computer software programs that do
not meet the capitalisation criteria under IAS 38 are recognised as an expense
as incurred.
Intangible assets acquired in a business combination and recognised separately
from goodwill are recognised initially at their fair value at the acquisition
date (which is regarded as their cost). Subsequent to initial recognition, the
client relationship intangible assets and brand intangible assets have a
finite useful life and are carried at cost less accumulated amortisation and
accumulated impairment losses. Amortisation is calculated using the
straight-line method over their useful lives, estimated for both asset classes
at ten years.
Gains and losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the carrying
value of the asset. The difference is then recognised in the income statement.
An assessment is made at each reporting date as to whether there is any
indication that an asset in use may be impaired. If any such indication exists
and the carrying values exceed the estimated recoverable amount at that time,
the assets are written down to their recoverable amount. The recoverable
amount is measured as the greater of fair value less costs to sell and value
in use. Non-financial assets that have suffered impairment are reviewed for
possible reversal of the impairment at each reporting date.
The Directors have reviewed the intangible assets as at 31 March 2022 and as a
result of the review, it was determined that none of the assets are impaired
(2021: none).
2.10 Property, plant and equipment
Property, plant and equipment assets are stated at cost net of accumulated
depreciation and accumulated provision for impairment. Depreciation is charged
to the income statement on a straight-line basis over the estimated useful
lives of each part of an item of property, plant and equipment. Principal
annual rates are as follows:
- Computer, office equipment and motor vehicles - 20-33% straight-line.
- Fixtures and fittings - 20% straight-line.
The estimated useful lives, residual values and depreciation method are
reviewed at the end of each reporting period, with the effect of any changes
in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected to arise from the continued use of
the asset. The gain or loss arising on disposal or scrappage of an asset is
determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in income.
2.11 Business combinations
Acquisitions of subsidiaries and businesses are accounted for using the
acquisition method. The consideration transferred in a business combination is
measured at fair value, which is calculated as the sum of the acquisition-date
fair values of assets transferred to the Group, liabilities incurred by the
Group to the former owners of the acquiree and the equity interest issued by
the Group in exchange for control of the acquiree. Acquisition-related costs
are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities
assumed are recognised at their fair value at the acquisition date, except
that: deferred tax assets or liabilities and assets or liabilities related to
employee benefit arrangements are recognised and measured in accordance with
IAS 12 "Income Taxes" and IAS 19 "Employee Benefits" respectively; and assets
(or disposal groups) that are classified as held for sale in accordance with
IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations" are
measured in accordance with that Standard.
Goodwill is measured as the excess of the sum of the consideration
transferred, the amount of any non-controlling interests in the acquiree, and
the fair value of the acquirer's previously held equity interest in the
acquiree (if any) over the net of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed. If, after
reassessment, the net of the acquisition-date amounts of the identifiable
assets acquired and liabilities assumed exceeds the sum of the consideration
transferred, the amount of any non-controlling interests in the acquiree and
the fair value of the acquirer's previously held interest in the acquiree (if
any), the excess is recognised immediately in profit or loss as a bargain
purchase gain.
When the consideration transferred by the Group in a business combination
includes a contingent consideration arrangement, the contingent consideration
is measured at its acquisition-date fair value and included as part of the
consideration transferred in a business combination. Changes in fair value of
the contingent consideration that qualify as measurement period adjustments
are adjusted retrospectively, with corresponding adjustments against goodwill.
Measurement period adjustments are adjustments that arise from additional
information obtained during the "measurement period" (which cannot exceed one
year from the acquisition date) about facts and circumstances that existed at
the acquisition date.
The subsequent accounting for changes in the fair value of the contingent
consideration that do not qualify as measurement period adjustments depends on
how the contingent consideration is classified. Contingent consideration that
is classified as equity is not remeasured at subsequent reporting dates and
its subsequent settlement is accounted for within equity. Other contingent
consideration is remeasured to fair value at subsequent reporting dates with
changes in fair value recognised in profit or loss.
If the initial accounting for a business combination is incomplete by the end
of the reporting period in which the combination occurs, the Group reports
provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see
above), or additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as at the
acquisition date that, if known, would have affected the amounts recognised as
of that date.
2.12 Leases
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Group uses the definition of a
lease in IFRS 16.
The Group recognises a right-of-use ("ROU") asset and a lease liability at the
inception date of the lease. The ROU asset is initially measured at cost,
which comprises the initial amount of the lease liability adjusted for any
lease payments made at or before the commencement date, plus any initial
direct costs incurred and an estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on which it is
located, less any lease incentives received.
The ROU assets are subsequently depreciated on a straight-line basis over the
shorter of the expected life of the asset and the lease term, adjusted for any
remeasurements of the lease liability. At the end of each reporting period,
the ROU assets are assessed for indicators of impairment in accordance with
IAS 36.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate. The Group uses its
incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise the
following:
- fixed payments, including in-substance fixed payments;
- variable lease payments that depend on an index or a rate, initially
measured using the index or rate as at the commencement date;
- amounts expected to be payable under a residual value guarantee; and
- the exercise price under a purchase option that the Group is reasonably
certain to exercise, lease payments in an optional renewal period if the Group
is reasonably certain to exercise an extension option, and penalties for early
termination of a lease unless the Group is reasonably certain not to terminate
early.
The lease liability is subsequently measured by adjusting the carrying amount
to reflect the interest charge, the lease payments made and any reassessment
or lease modifications. The lease liability is remeasured if the Group changes
its assessment of whether it will exercise a purchase, extension or
termination option.
When the lease liability is remeasured in this way, a corresponding adjustment
is made to the carrying amount of the ROU asset, or is recorded in profit or
loss if the carrying amount of the ROU asset has been reduced to zero.
Where the Group is an intermediate lessor in a sub-lease, it accounts for its
interests in the head lease and the sub-lease separately. It assesses the
lease classification of a sub-lease with reference to the ROU asset arising
from the head lease, not with reference to the underlying asset.
2.13 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and call deposits. Bank
overdrafts that are repayable on demand and form an integral part of the
Group's cash management are included as a component of cash and bank balances
for the purpose only of the Consolidated Statement of Cash Flows.
2.14 Financial instruments
Financial assets and financial liabilities are recognised in the Statement of
Financial Position when the Group becomes a party to the contractual
provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair
value. Transaction costs that are directly attributable to the acquisition or
issue of financial assets and financial liabilities (other than financial
assets and financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction costs
directly attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised immediately in
profit or loss.
All financial assets are recognised and derecognised on a trade date where the
purchase or sale of a financial asset is under a contract whose terms require
delivery of the financial asset within the timeframe established by the market
concerned, and are initially measured at fair value, plus transaction costs,
except for those financial assets classified as at fair value through profit
or loss. Transaction costs directly attributable to the acquisition of
financial assets classified as at fair value through profit or loss are
recognised immediately in profit or loss.
Non-derivative financial instruments comprise investments in equity and debt
securities, trade and other receivables, cash and bank balances, loans and
borrowings, and trade and other payables.
FINANCIAL INVESTMENTS
Financial investments are classified as fair value through profit or loss if
they are either held for trading or specifically designated in this category
on initial recognition. Assets in this category are initially recognised at
fair value and subsequently remeasured, with gains or losses arising from
changes in fair value being recognised in the Statement of Comprehensive
Income.
Financial assets at fair value through profit or loss include investments in a
regulated open-ended investment company and an investment portfolio, which are
managed and evaluated on a fair value basis in line with the market value.
TRADE RECEIVABLES
Trade receivables do not carry interest and are stated at amortised cost as
reduced by appropriate allowances for estimated irrecoverable amounts. They
are recognised when the Group's right to consideration is only conditional on
the passage of time. Allowances incorporate an expectation of lifetime credit
losses from initial recognition and are determined using an expected credit
loss approach.
TRADE AND OTHER PAYABLES
Trade and other payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method,
where applicable or required. These amounts represent liabilities for goods
and services provided to the Group prior to the end of the financial period,
which are unpaid.
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS ("FVTPL")
Financial liabilities are classified as at FVTPL when the financial liability
is (i) contingent consideration of an acquirer in a business combination, (ii)
held for trading or (iii) designated as at FVTPL. Financial liabilities at
FVTPL are measured at fair value, with any gains or losses arising on changes
in fair value recognised in profit or loss.
INTEREST-BEARING BORROWINGS
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently stated at amortised cost; any difference
between the proceeds (net of transaction costs) and the redemption value is
recognised in profit or loss over the period of the borrowings using the
effective interest method.
2.15 Taxation
CURRENT TAX
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the Statement of Financial Position date.
DEFERRED TAX
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from the initial recognition of
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
where it is probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets arising from deductible temporary
differences associated with such investments and interests are only recognised
to the extent that it is probable that there will be sufficient taxable
profits against which to utilise the benefits of the temporary difference and
they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each Statement of
Financial Position date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or
part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised based on tax
laws and rates that have been enacted or substantively enacted at the
Statement of Financial Position date. Deferred tax is charged or credited in
the income statement, except when it relates to items charged or credited in
other comprehensive income, in which case the deferred tax is also dealt with
in other comprehensive income.
The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Group expects, at
the end of the reporting period, to recover or settle the carrying amount of
its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off the current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
CURRENT AND DEFERRED TAX FOR THE YEAR
Current and deferred tax are recognised in profit or loss, except when they
relate to items that are recognised in other comprehensive income or directly
in equity, in which case the current and deferred tax are also recognised in
other comprehensive income or directly in equity respectively. Where current
tax or deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the business
combination.
2.16 Retirement benefit costs
The Group pays into personal pension plans for which the amount charged to
income in respect of pension costs and other post-retirement benefits is the
amount of the contributions payable in the year. Payments to defined
contribution retirement benefit scheme are recognised as an expense when
employees have rendered service entitling them to the contributions.
Differences between contributions payable and paid are accrued or prepaid. The
assets of the plans are invested and managed independently of the finances of
the Group.
2.17 Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Group will
be required to settle that obligation and a reliable estimate can be made of
the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the Statement of Financial
Position date, taking into account the risks and uncertainties surrounding the
obligation. Where a provision is measured using the cash flows estimated to
settle the present obligation, its carrying amount is the present value of
those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are
expected to be recovered from a third party, a receivable is recognised as an
asset if it is virtually certain that reimbursement will be received and the
amount of the receivable can be measured reliably.
2.18 Equity, reserves and dividend payments
Share capital represents the nominal value of shares that have been issued.
Retained earnings include all current and prior period retained profits or
losses.
Dividend distributions payable to equity shareholders are included in other
liabilities when the dividends have been approved in a general meeting prior
to the reporting date.
2.19 Employee benefit trust
The Company provides finance to the EBT to purchase the Company's shares on
the open market in order to meet its obligation to provide shares when an
employee exercises awards made under the Group's share-based payment schemes.
Administration costs connected with the EBT are charged to the Statement of
Comprehensive Income. The cost of shares purchased and held by the EBT is
deducted from equity. The assets held by the EBT are consolidated into the
Group's financial statements.
2.20 Share-based payments
The Group issues equity-settled share-based payments to certain employees.
Equity-settled share-based payments are measured at fair value at the date of
grant. The fair value determined at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest.
Fair value is measured by use of the Black-Scholes model or Monte Carlo model
as appropriate.
2.21 Climate change
The Group is continually developing its assessment of the impact that climate
change has on the assets and liabilities recognised and presented in its
financial statements. The impact of climate change has been considered in the
preparation of these financial statements; however, as the Group does not hold
significant levels of property, plant and equipment and does not own its own
land and buildings, there is currently no material impact of climate change on
the results or values of assets and liabilities recognised and presented in
these financial statements.
2.22 Operating segments
The Group comprises the following two operating segments which are defined by
trading activity:
- Tatton - investment management services
- Paradigm - the provision of compliance and support services to IFAs and
mortgage advisers
The Board is considered to be the chief operating decision maker.
2.23 Critical accounting judgements and key sources of estimation uncertainty
In the process of applying the Group's accounting policies, which are
described above, management have made judgements and estimations about the
future that have an effect on the amounts recognised in the financial
statements. The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that period or
in the period of the revision and future periods if the revision affects both
current and future periods. Changes for accounting estimates would be
accounted for prospectively under IAS 8.
GOODWILL, CLIENT RELATIONSHIP AND BRAND INTANGIBLES
ESTIMATION UNCERTAINTY
Impairment of goodwill and client relationship and brand intangibles
Impairment exists when the carrying value of an asset or cash-generating unit
("CGU") exceeds its recoverable amount. The recoverable amount is the higher
of an asset's fair value less costs to sell and value in use. For the purposes
of impairment testing, the recoverable amount of goodwill is determined using
a discounted cash flow model, as detailed in note 11. The results of the
calculation indicate that goodwill, client relationship and brand intangibles
are not impaired.
BUSINESS COMBINATIONS
CRITICAL JUDGEMENT
Client relationship and brand intangibles purchased through corporate transactions
When the Group purchases client relationships and brands through transactions
with other corporate entities, a judgement is made as to whether the
transaction should be accounted for as a business combination or as a separate
purchase of intangible assets. In making this judgement, the Group assesses
the assets, liabilities, operations and processes that were the subject of the
transaction against the definition of a business combination in IFRS 3. In
particular, consideration is given to the scale of the operations subject to
the transaction and whether ownership of a corporate entity has been acquired,
among other factors.
TREATMENT AND FAIR VALUE OF CONSIDERATION TRANSFERRED
CRITICAL JUDGEMENT AND ESTIMATION UNCERTAINTY
On 14 September 2021, the group acquired the Verbatim funds business
("Verbatim") and the group accounted for the transaction as a business
combination. Business combinations and acquisitions require a fair value
exercise to be undertaken to allocate the purchase price to the fair value of
the identifiable assets acquired and the liabilities assumed. The
determination of the fair value of the asset and liabilities is based, to a
considerable extent, on management's judgement. The amount of goodwill
initially recognised as a result of a business combination is dependent on the
allocation of this purchase price to the identifiable assets and liabilities,
with any unallocated portion being recorded as goodwill. As described in note
21 to the financial statements, the purchase price payable for the acquisition
is split into a number of different parts. The payment of certain elements has
been deferred.
At 31 March 2022, there remained three elements of deferred consideration
unvested and subject to ongoing vesting conditions. The value of earn-out
consideration is variable, dependent on performance by the acquired business
against certain operational targets at the second, third and fourth
anniversaries of completion. The estimated discounted value of earn-out
consideration that will be payable at these dates is £2,486,000, based on
projections of the level of funds under management over that period.
Under the terms of the agreements, the maximum possible payment under the
remaining earn-out is capped at £3,000,000, which represents qualifying funds
under management of at least £650 million at each anniversary date, subject
to certain conditions.
SHARE-BASED PAYMENTS
ESTIMATION UNCERTAINTY
Given the significance of share-based payments as a form of employee
remuneration for the Group, share-based payments have been included as a
significant accounting estimate. The principal estimations relate to:
- forfeitures (where awardees leave the Group as "bad" leavers and therefore
forfeit unvested awards); and
- the satisfaction of performance obligations attached to certain awards.
These estimates are reviewed regularly and the charge to the Statement of
Total Comprehensive Income is adjusted accordingly (at the end of the relevant
scheme as a minimum). Based on the current forecasts of the Group, the charge
for the year is based on 100% of the options vesting for the element relating
to non-market-based performance conditions. A decrease of 10% in the vesting
assumptions would reduce the charge in the year by £129,000. In considering
the level of satisfaction of performance obligations, the Group's forecast has
been reviewed and updated for the expected impact of the various market
scenarios and management actions. This forecast has been used to estimate the
relevant vesting assumptions for the Enterprise Management Incentive ("EMI")
schemes in place.
There are no other judgements or assumptions made about the future, or any
other major sources of estimation uncertainty at the end of the reporting
period, that have a significant risk of resulting in a material adjustment to
the carrying amounts of assets and liabilities within the next financial year.
2.24 Alternative performance measures
In reporting financial information, the Group presents alternative performance
measures ("APMs") which are not defined or specified under the requirements of
IFRSs. The Group believes that these APMs provide users with additional
helpful information on the performance of the business. The APMs are
consistent with how the business performance is planned and reported within
the internal management reporting to the Board. Some of these measures are
also used for the purpose of setting remuneration targets. The APMs used by
the Group are set out in note 23 including explanations of how they are
calculated and how they can be reconciled to a statutory measure where
relevant. There is also further information on separately disclosed items in
note 6.
3 CAPITAL MANAGEMENT
The Group's objectives when managing capital are (i) to safeguard the Group's
ability to continue as a going concern so that it can continue to provide
returns for shareholders and benefits for other stakeholders; (ii) to maintain
a strong capital base and utilise it efficiently to support the development of
its business; and (iii) to comply with the regulatory capital requirements set
by the FCA. Capital adequacy and the use of regulatory capital are monitored
by the Group's management and Board. There is one active regulated entity in
the Group: Tatton Investment Management Limited, regulated by the FCA.
Regulatory capital is determined in accordance with the requirements of the
FCA's Investment Firms Prudential Regime which became effective on 1 January
2022 and the Capital Requirements Directive IV prescribed in the UK by the
FCA. The Directive requires continual assessment of the Group's risks which is
underpinned by the Group's Internal capital adequacy and risk assessment
("ICARA"). The ICARA considers the relevant current and future risks to the
business and the capital considered necessary to support these risks. The
Group actively monitors its capital base to ensure it maintains sufficient and
appropriate capital resources to cover the relevant risks to the business and
to meet consolidated and individual regulated entity regulatory and liquidity
requirements.
The FCA requires the Group to hold more regulatory capital resources than the
total capital resource requirement. The total capital requirement for the
Group is the higher of the Group's Own Funds Requirement, its Own Harm
requirement and Wind-down requirement. The total capital requirement for the
Group is £3.59 million (unaudited). As at 31 March 2022, the Group has
regulatory capital resources of £7.6 million (unaudited), significantly in
excess of the Group's total capital requirement. During the period, the Group
and its regulated subsidiary entities complied with all regulatory capital
requirements.
4 Segment Reporting
Information reported to the Board of Directors as the chief operating decision
maker ("CODM") for the purposes of resource allocation and assessment of
segmental performance is focused on the type of revenue. The principal types
of revenue are discretionary fund management and the marketing and promotion
of the funds run by the companies under Tatton Capital Limited ("Tatton") and
the provision of compliance and support services to IFAs and mortgage advisers
("Paradigm").
The Group's reportable segments under IFRS 8 are therefore Tatton, Paradigm,
and "Central" which contains the Operating Group's central overhead costs.
During the financial year, it was decided that centrally incurred overhead
costs should be allocated to the Tatton and Paradigm divisions on an
appropriate pro rata basis and this is how financial information is presented
to the Group's CODM.
The principal activity of Tatton is that of discretionary fund management
("DFM") of investments on-platform and the provision of investment wrap
services.
The principal activity of Paradigm is that of provision of support services to
IFAs and mortgage advisers.
For management purposes, the Group uses the same measurement policies used in
its financial statements.
The following is an analysis of the Group's revenue and results by reportable
segment:
Year ended 31 March 2022 Tatton Paradigm Central Group
(£'000) (£'000) (£'000) (£'000)
Revenue 23,345 5,995 16 29,356
Administrative expenses (9,939) (3,561) (4,226) (17,726)
Operating profit/(loss) 13,406 2,434 (4,210) 11,630
Share-based payments - - 2,399 2,399
Exceptional items 231 - - 231
Amortisation of acquisition-related intangible assets 266 - - 266
Adjusted operating profit/(loss) (before separately disclosed items)(1) 13,903 2,434 (1,811) 14,526
Finance costs (18) - (337) (355)
Profit/(loss) before tax 13,388 2,434 (4,547) 11,275
Year ended 31 March 2021 Tatton Paradigm Central Group
(£'000) (£'000) (£'000) (£'000)
Revenue 18,097 5,240 16 23,353
Administrative expenses (7,132) (3,212) (5,501) (15,845)
Operating profit/(loss) 10,965 2,028 (5,485) 7,508
Share-based payments - - 3,740 3,740
Exceptional items (184) - 218 34
Amortisation of acquisition-related intangible assets 120 - - 120
Adjusted operating profit/(loss) (before separately disclosed items)(1) 10,901 2,028 (1,527) 11,402
Finance costs (21) (4) (180) (205)
Profit/(loss) before tax 10,944 2,024 (5,665) 7,303
All turnover arose in the United Kingdom.
1. Alternative performance measures are detailed in note 23.
5 OPERATING PROFIT
The operating profit and the profit before taxation are stated after
charging/(crediting):
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Amortisation of software 270 221
Depreciation of property, plant and equipment 168 175
Depreciation of right-of-use assets 209 176
Loss/(gain) arising on financial assets designated as FVTPL 11 (35)
Separately disclosed items (note 6) 2,896 3,894
Services provided by the Group's auditor:
Audit of the statutory consolidated and Company financial statements of:
Tatton Asset Management plc 72 69
Audit of subsidiaries 70 66
Other fees payable to auditor:
Non-audit services 21 25
Total audit fees were £142,000 (2021: £135,000). Total non-audit fees
payable to the auditor were £21,000 (2021: £25,000).
6 SEPARATELY DISCLOSED ITEMS
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Acquisition-related expenses 231 218
(Gain)/loss arising on changes in fair value of contingent consideration - (184)
Total exceptional costs 231 34
Share-based payment charges 2,399 3,740
Amortisation of acquisition-related intangible assets 266 120
Total separately disclosed items 2,896 3,894
Separately disclosed items shown separately on the face of the Statement of
Total Comprehensive Income or included within administrative expenses reflect
costs and income that do not relate to the Group's normal business operations
and that are considered material (individually or in aggregate if of a similar
type) due to their size or frequency.
Exceptional items
During the period, the Group acquired £650 million of assets under management
in the Verbatim funds and entered into a long-term strategic distribution
partnership. The Group incurred professional fees of £231,000 during the
process, which have been treated as exceptional items.
Acquisition-related expenses in the prior year relate to professional fees
incurred as a result of the process whereby the Group pursued a potential
acquisition of a business. The Group incurred professional fees of £218,000
during the process, which have been treated as exceptional items.
During the prior financial year, the Group revalued its financial liability at
fair value through profit or loss relating to the deferred consideration on
the acquisition of Sinfonia. This has resulted in a credit from the change in
fair value of £184,000 being recognised in the prior year.
Share-based payments
Share-based payments is a recurring item, though the value will change
depending on the estimation of the satisfaction of performance obligations
attached to certain awards. It has been excluded from the core business
operating profit since it is a significant non-cash item. Underlying profit,
being adjusted operating profit, represents largely cash-based earnings and
more directly relates to the financial reporting period.
Amortisation of acquisition-related intangible assets
Payments made for the introduction of client relationships and brands that are
deemed to be intangible assets are capitalised and amortised over their useful
life, which has been assessed to be ten years. This amortisation charge is
recurring over the life of the intangible asset, though it has been excluded
from the core business operating profit since it is a significant non-cash
item. Underlying profit, being adjusted operating profit, represents largely
cash-based earnings and more directly relates to the financial reporting
period.
7 FINANCE COSTS
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Bank interest income - 1
Interest expense on lease liabilities (23) (25)
Interest payable in servicing of banking facilities (332) (181)
(355) (205)
8 TAXATION
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Current tax expense
Current tax on profits for the period 2,010 1,790
Adjustment for (over)/under-provision in prior periods (52) 13
1,958 1,803
Deferred tax expense
Current year charge/(credit) 261 (563)
Origination and reversal of temporary differences - 7
Adjustment in respect of previous years (30) (55)
Effect of changes in tax rates (156) -
Total tax expense 2,033 1,192
The reasons for the difference between the actual tax charge for the year and
the standard rate of corporation tax in the UK applied to profit for the year
are as follows:
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Profit before taxation 11,275 7,303
Tax at UK corporation tax rate of 19% (2021: 19%) 2,142 1,388
Expenses not deductible for tax purposes 45 63
Income not taxable 1 (34)
Adjustments in respect of previous years (82) (42)
Effect of changes in tax rates (94) -
Capital allowances in excess of depreciation 1 6
Share-based payments 20 (189)
Total tax expense 2,033 1,192
An increase in the UK corporation tax rate from 19% to 25% (effective 1 April
2023) was substantively enacted on 24 May 2021. This will increase the
company's future current tax charge accordingly. The deferred tax asset at 31
March 2022 has been calculated based on these rates, reflecting the expected
timing of reversal of the related temporary differences (31 March 2021: 19%).
9 EARNINGS PER SHARE AND DIVIDENDS
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares
during the year.
Number of shares
31-Mar 31-Mar
2022 2021
Basic
Weighted average number of shares in issue 58,424,150 56,835,807
Effect of own shares held by an EBT (373,774) (551,954)
58,050,376 56,283,853
Diluted
Effect of weighted average number of options outstanding for the year 2,875,504 2,966,507
Weighted average number of shares (diluted)(1) 60,925,880 59,250,360
Adjusted diluted
Effect of full dilution of employee share options which are contingently 1,042,011 2,370,976
issuable or have future attributable service costs
Adjusted diluted weighted average number of options and shares for the year(2) 61,967,891 61,621,336
1. The weighted average number of shares is diluted due to the effect of
potentially dilutive contingent issuable shares from share option schemes.
2. The dilutive shares used for this measure differ from that used for
statutory dilutive earnings per share; the future value of service costs
attributable to employee share options is ignored and contingently issuable
shares for long-term incentive plan options are assumed to fully vest. The
Directors have selected this measure as it represents the underlying effective
dilution by offsetting the impact to the calculation of basic shares of the
purchase of shares by the EBT to satisfy options.
Own shares held by an EBT represents the Company's own shares purchased and
held by the Employee Benefit Trust ("EBT"), shown at cost. In the year ended
31 March 2022, the EBT purchased 966,546 (2021: 361,746) of the Company's own
shares. The shares held by the EBT were fully used during the year to satisfy
the exercise of employee share options.
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Earnings attributable to ordinary shareholders
Basic and diluted profit for the period 9,242 6,111
Share-based payments - IFRS 2 option charges 2,399 3,740
Amortisation of acquisition-related intangible assets 266 120
Exceptional costs - see note 6 231 34
Tax impact of adjustments (602) (923)
Adjusted basic and diluted profits for the period and attributable earnings 11,536 9,082
Earnings per share (pence) - Basic 15.92 10.86
Earnings per share (pence) - Diluted 15.17 10.31
Adjusted earnings per share (pence) - Basic 19.87 16.14
Adjusted earnings per share (pence) - Diluted 18.62 14.74
Dividends
The Directors consider the Group's capital structure and dividend policy at
least twice a year ahead of announcing results and do so in the context of its
ability to continue as a going concern, to execute its strategy and to invest
in opportunities to grow the business and enhance shareholder value.
During the year, Tatton Asset Management plc paid the final dividend related
to the year ended 31 March 2021 of £4,284,000, representing a payment of 7.5p
per share. In addition, the Company paid an interim dividend of £2,357,000
(2021: £1,999,000) to its equity shareholders. This represents a payment of
4.0p per share (2021: 3.5p per share).
The Company's dividend policy is described in the Directors' Report on page 58
of the 2022 Annual Report. At 31 March 2022, the Company's distributable
reserves were £32.8 million (2021: £28.6 million). The 2022 Annual Report is
available at www.tattonassetmanagement.com.
10 STAFF COSTS
The staff costs shown below exclude key management compensation, which is
shown separately below.
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Wages, salaries and bonuses 5,676 4,971
Social security costs 671 619
Pension costs 250 200
Termination benefits - 54
Share-based payments 956 1,257
7,553 7,101
The average monthly number of employees during the year was as follows:
31-Mar 31-Mar
2022 2021
Administration 86 82
Key management 3 3
89 85
Key management compensation
The remuneration of the statutory Directors who are the key management of the
Group is set out below in aggregate for each of the key categories specified
in IAS 24 "Related Party Disclosures".
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Short-term employee benefits 1,758 1,730
Post-employment benefits 4 5
Other long-term benefits - 4
Share-based payments 1,460 2,483
3,222 4,222
In addition to the remuneration above, the Non-Executive Chairman and
Non-Executive Directors have submitted invoices for their fees as follows:
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Total fees 270 160
The Group incurred social security costs of £277,000 (2021: £235,000) on the
remuneration of the Directors and Non-Executive Directors.
The remuneration of the highest paid Director was:
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Total 644 794
The highest paid Director exercised 553,078 (2021: nil) share options in the
period. There were 25,000 (2021: 174,758) share options granted to the highest
paid Director in the year.
11 GOODWILL
Goodwill
(£'000)
Cost and carrying value at 31 March 2021 6,254
Recognised as part of a business combination 3,083
Cost and carrying value at 31 March 2022 9,337
The carrying value of goodwill includes £9.0 million allocated to the Tatton
operating segment and CGU. This is made up of £2.5 million arising from the
acquisition in 2014 of an interest in Tatton Oak Limited by Tatton Capital
Limited consisting of the future synergies and forecast profits of the Tatton
Oak business, £2.0 million arising from the acquisition in 2017 of an
interest in Tatton Capital Group Limited, £1.4 million of goodwill generated
on the acquisition of Sinfonia and £3.1m of goodwill generated on the
acquisition of the Verbatim funds. The carrying value of goodwill also
includes £0.4 million allocated to the Paradigm operating segment and CGU
relating to the acquisition of Paradigm Mortgage Services LLP.
None of the goodwill is expected to be deductible for income tax purposes.
Impairment loss and subsequent reversal
Goodwill is subject to an annual impairment review based on an assessment of
the recoverable amount from future trading. Where, in the opinion of the
Directors, the recoverable amount from future trading does not support the
carrying value of the goodwill relating to a subsidiary company then an
impairment charge is made. Such impairment is charged to the Statement of
Total Comprehensive Income.
Impairment testing
For the purpose of impairment testing, goodwill is allocated to the Group's
operating companies which represent the lowest level within the Group at which
the goodwill is monitored for internal management accounts purposes.
Goodwill acquired in a business combination is allocated, at acquisition, to
the CGUs or group of units that are expected to benefit from that business
combination. The Directors test goodwill annually for impairment, or more
frequently if there are indicators that goodwill might be impaired. The
Directors have reviewed the carrying value of goodwill at 31 March 2022 and do
not consider it to be impaired.
Growth rates
The value in use is calculated from cash flow projections based on the Group's
forecasts for the year ending 31 March 2023, which are extrapolated for a
further four years. The Group's latest financial forecasts, which cover a
three-year period, are reviewed by the Board. A terminal growth rate has been
applied to year five cash flows.
Discount rates
The pre-tax discount rate used to calculate value is 11.5% (2021: 10.8%). The
discount rate is derived from a benchmark calculated from a number of
comparable businesses.
Cash flow assumptions
The key assumptions used for the value in use calculations are those regarding
discount rate, growth rates and expected changes in margins. Changes in prices
and direct costs are based on past experience and expectations of future
changes in the market. The growth rate used in the calculation reflects the
average growth rate experienced by the Group and its industry.
The headroom compared to the carrying value of goodwill as at 31 March 2022 is
£380 million (2021: £245 million). From the assessment performed, there are
no reasonable sensitivities that result in the recoverable amount being equal
to the carrying value of the goodwill attributed to the CGU.
12 INTANGIBLE ASSETS
Computer Client Brand Total
Software Relationships (£'000) (£'000)
(£'000) (£'000)
Cost
Balance at 31 March 2020 537 1,196 - 1,733
Additions 282 - - 282
Balance at 31 March 2021 819 1,196 - 2,015
Additions 211 - - 211
Acquired as part of a business combination - 2,838 98 2,936
Disposals (24) - - (24)
Balance at 31 March 2022 1,006 4,034 98 5,138
Accumulated amortisation and impairment
Balance at 31 March 2020 (178) (60) - (238)
Charge for the period (221) (120) - (341)
Balance at 31 March 2021 (399) (180) - (579)
Charge for the period (270) (261) (5) (536)
Disposals 24 - - 24
Balance at 31 March 2022 (645) (441) (5) (1,091)
Net book value
As at 31 March 2020 359 1,136 - 1,495
As at 31 March 2021 420 1,016 - 1,436
As at 31 March 2022 361 3,593 93 4,047
All amortisation charges are included within administrative expenses in the
Statement of Total Comprehensive Income.
13 PROPERTY, PLANT AND EQUIPMENT
Computer, office Fixtures and Right-of-use Total
equipment and Fittings assets - (£'000)
motor vehicles (£'000) buildings and
(£'000) motor vehicles
(£'000)
Cost
Balance at 31 March 2020 588 691 689 1,968
Additions 67 - 242 309
Disposals (223) (214) - (437)
Balance at 31 March 2021 432 477 931 1,840
Additions 74 - 60 134
Disposals (161) - - (161)
Balance at 31 March 2022 345 477 991 1,813
Accumulated depreciation and impairment
Balance at 31 March 2020 (470) (326) (138) (934)
Charge for the period (80) (95) (176) (351)
Disposals 223 214 - 437
Balance at 31 March 2021 (327) (207) (314) (848)
Charge for the period (73) (95) (209) (377)
Disposals 161 - - 161
Balance at 31 March 2022 (239) (302) (523) (1,064)
Net book value
As at 31 March 2020 118 365 551 1,034
As at 31 March 2021 105 270 617 992
As at 31 March 2022 106 175 468 749
All depreciation charges are included within administrative expenses in the
Statement of Total Comprehensive Income.
The Group leases buildings, motor vehicles and IT equipment. The Group has
applied the practical expedient for low value assets and so has not recognised
IT equipment within ROU assets. The average lease term is five years. No
leases have expired in the current financial period.
All depreciation charges are included within administrative expenses in the
Statement of Total Comprehensive Income.
Right-of-use assets
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Amounts recognised in profit and loss
Depreciation on right-of-use assets (209) (176)
Interest expense on lease liabilities (23) (25)
Expense relating to short-term leases (30) (44)
Expense relating to low value assets - (1)
(262) (246)
At 31 March 2022, the Group is committed to £62,000 for short-term leases
(2021: £nil).
The total cash outflow for leases amounts to £339,000 (2021: £220,000).
14 TRADE AND OTHER RECEIVABLES
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Trade receivables 329 172
Amounts due from related parties - 29
Prepayments and accrued income 3,442 3,060
Other receivables 34 1,041
3,805 4,302
All trade receivable amounts are short term. The carrying value is considered
a fair approximation of their fair value. The Group applies the IFRS 9
simplified approach to measuring expected credit losses ("ECLs") for trade
receivables at an amount equal to lifetime ECLs. In line with the Group's
historical experience, and after consideration of current credit exposures,
the Group does not expect to incur any credit losses and has not recognised
any ECLs in the current year (2021: £nil).
The amounts due from related parties are net of provisions. At 31 March 2022,
the Group holds provisions with a carrying value of £1,311,000 (2021:
£1,311,000) against the recoverability of amounts due from Jargonfree
Benefits LLP.
Trade receivable amounts are all held in sterling.
15 TRADE AND OTHER PAYABLES
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Trade payables 855 294
Amounts due to related parties 235 236
Accruals 3,468 3,330
Deferred income 98 132
Contingent consideration 2,486 -
Other payables 3,161 3,111
10,303 7,103
Less non-current portion:
Contingent consideration (2,486) -
Other payables (261) (516)
Total non-current trade and other payables (2,747) (516)
Total current trade and other payables 7,556 6,587
The carrying values of trade payables, amounts due to related parties,
accruals and deferred income are considered reasonable approximation of fair
value.
Trade payable amounts are all held in sterling.
16 DEFERRED TAXATION
Deferred capital Share-based Acquisition Total
Allowances Payments Intangibles (£'000)
(£'000) (£'000) (£'000)
(Liability)/asset at 31 March 2020 (126) 236 (216) (106)
Income statement credit 25 563 23 611
Equity credit - 915 - 915
Asset/(liability) at 31 March 2021 (101) 1,714 (193) 1,420
Recognition as part of a business combination - - (708) (708)
Income statement (charge)/credit 38 (70) 5 (27)
Equity credit - 156 - 156
Asset/(liability) at 31 March 2022 (63) 1,800 (896) 841
17 FINANCIAL INSTRUMENTS
The Group's treasury activities are designed to provide suitable, flexible
funding arrangements to satisfy the Group's requirements. The Group uses
financial instruments comprising borrowings, cash and items such as trade
receivables and payables that arise directly from its operations. The main
risks arising from the Group's financial instruments are interest rate risks,
credit risks and liquidity risks. The Board reviews policies for managing each
of these risks and they are summarised below.
The Group finances its operations through a combination of cash resource and
other borrowings.
Fair value estimation
IFRS 7 requires disclosure of fair value measurements of financial instruments
by level of the following fair value measurement hierarchy:
- Quoted prices (unadjusted) in active markets for identical assets or
liabilities (level 1);
- Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (level 2);
- Inputs for the asset or liability that are not based on observable market
data (that is, unobservable inputs) (level 3).
All financial assets, except for financial investments, are categorised as
loans and receivables and are classified as level 1. Financial investments are
categorised as financial assets at fair value through profit or loss and are
classified as level 1 and the fair value is determined directly by reference
to published prices in an active market.
Financial assets at fair value through profit or loss (level 1)
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Financial investments in regulated funds or model portfolios 152 163
All financial liabilities except for contingent consideration are categorised
as financial liabilities measured at amortised cost and are also classified as
level 1. The only financial liabilities measured subsequently at fair value on
level 3 fair value measurement represent contingent consideration relating to
a business combination.
Financial liabilities at fair value through profit or loss (level 3)
Contingent consideration £'000
Balance at 1 April 2021 -
Recognition of contingent consideration as part of a business combination 2,486
Balance at 31 March 2022 2,486
Interest rate risk
The Group finances its operations through a combination of retained profits
and a bank facility which currently remains undrawn. The Group would have an
exposure to interest rate risk should this facility be drawn as it has a
floating rate above the base rate. The Group's cash and cash equivalents
balance of £21,710,000 was its only financial instrument subject to variable
interest rate risk. The impact of a 0.1% increase or decrease in interest rate
on the post-tax profit is not material to the Group. At 31 March 2022, total
borrowings were £nil (2021: £nil).
Credit risk
Credit risk is the risk that a counterparty will cause a financial loss to the
Group by failing to discharge its obligation to the Group. The financial
instruments are considered to have a low credit risk due to the mitigating
procedures in place. The Group manages its exposure to this risk by applying
Board-approved limits to the amount of credit exposure to any one
counterparty, and employs strict minimum creditworthiness criteria as to the
choice of counterparty, thereby ensuring that there are no significant
concentrations. The Group does not have any significant credit risk exposure
to any single counterparty or any group of counterparties having similar
characteristics. The maximum exposure to credit risk for receivables and other
financial assets is represented by their carrying amount.
The Group's maximum exposure to credit risk is limited to the carrying amount
of financial assets recognised at 31 March, as summarised below:
Classes of financial assets - carrying amounts: 31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Cash and cash equivalents 21,710 16,934
Trade and other receivables 3,016 3,808
24,726 20,742
The Group continuously monitors defaults of customers and other
counterparties, identified either individually or by the Group, and
incorporates this information into its credit risk controls. The Group's
policy is to deal only with credit worthy counterparties.
The Group's management consider that all of the above financial assets that
are not impaired or past due for each of the 31 March reporting dates under
review are of good credit quality.
At 31 March, the Group had certain trade receivables that had not been settled
by the contractual date but were not considered to be impaired. The amounts at
31 March, analysed by the length of time past due, are:
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Not more than 3 months 267 147
More than 3 months but not more than 6 months 5 16
More than 6 months but not more than 1 year 27 5
More than 1 year 5 4
Total 304 172
Trade receivables consist of a large number of customers within the UK. Based
on historical information about customer default rates, management consider
the credit quality of trade receivables that are not past due or impaired to
be good. The Group has rebutted the presumption in paragraph 5.5.11 of IFRS 9
that credit risk increases significantly when contractual payments are more
than 30 days past due.
The credit risk for cash and cash equivalents is considered negligible, since
the counterparties are reputable banks with high quality external credit
ratings.
Liquidity risk
Liquidity risk is the risk that companies within the Group will encounter
difficulty in meeting obligations associated with financial liabilities. To
counter this risk, the Group operates with a high level of interest cover
relative to its net asset value and no debt. In addition, it benefits from
strong cash flow from its normal trading activities. The Group manages its
liquidity needs by monitoring scheduled debt servicing payments for long-term
financial liabilities as well as forecast cash inflows and outflows due in day
to day business. The data used for analysing these cash flows is consistent
with that used in the contractual maturity analysis below.
The totals for each category of financial instruments, measured in accordance
with IFRS 9 and IFRS 7 as detailed in the accounting policies to this
historical financial information, are as follows:
At 31 March 2022, the Group's non-derivative financial liabilities have
contractual maturities (including interest payments where applicable) as
summarised below:
At 31 March 2022 Current Non-current
Within 6 6 to 12 1 to 5 Later than
Months Months Years 5 years
(£'000) (£'000) (£'000) (£'000)
Trade and other payables 7,203 - - -
Lease liabilities 135 135 269 -
Contingent consideration - - 2,856 -
Total 7,338 135 3,125 -
This compares with the maturity of the Group's non-derivative financial
liabilities in the previous reporting period as follows:
At 31 March 2021 Current Non-current
Within 6 to 12 1 to 5 Later than
6 months Months Years 5 years
(£'000) (£'000) (£'000) (£'000)
Trade and other payables 6,228 - - -
Lease liabilities 113 114 516 -
Total 6,341 114 516 -
The above amounts reflect the contractual undiscounted cash flows, which may
differ from the carrying values of the liabilities at the reporting date.
Market risk
The Group has made investments in its own managed funds and portfolios and the
value of these investments is subject to equity market risk, being the risk
that changes in equity prices will affect the Group's income or the value of
its holdings of financial instruments. If equity prices had been 5%
higher/lower, the impact on the Group's Statement of Comprehensive Income
would be £8,000 higher/lower due to changes in the fair value of financial
assets at fair value through profit or loss.
18 EQUITY
Number
Authorised, called-up and fully paid £0.20 ordinary shares
At 1 April 2021 57,889,065
Issue of share capital on exercise of employee share options 1,025,822
At 31 March 2022 58,914,887
Each share in Tatton Asset Management plc carries one vote and the right to a
dividend.
19 OWN SHARES
The following movements in own shares occurred during the year:
Number £'000
of shares
At 1 April 2021 775,157 1,969
Acquired in the year 966,546 193
Utilised on exercise of employee share options (1,741,703) (2,162)
At 31 March 2022 - -
Own shares represent the cost of the Company's own shares, either purchased in
the market or issued by the Company, that are held by an EBT to satisfy future
awards under the Group's share-based payment schemes (note 20). Following the
exercise of employee share options during the year, there are no shares held
in the EBT at 31 March 2022 (2021: 775,157).
20 SHARE-BASED PAYMENTS
During the year, a number of share-based payment schemes and share options
schemes have been utilised by the Company, described under 20.1 Current
schemes, below.
20.1 Current schemes
(I) TATTON ASSET MANAGEMENT PLC EMI SCHEME ("TAM EMI SCHEME")
On 7 July 2017, the Group launched an EMI share option scheme relating to
shares in Tatton Asset Management plc to enable senior management to
participate in the equity of the Company. 3,022,733 options with a weighted
average exercise price of £1.89 were granted, exercisable in July 2020. There
have been 650,933 options exercised during the period from this scheme.
The scheme was extended on 8 August 2018 with 1,720,138 zero cost options
granted. This scheme vested in August 2021 and 1,090,770 options were
exercised in the period. The scheme was extended again on 1 August 2019, 28
July 2020 and 15 July 2021 with 193,000, 1,000,000 and 279,858 zero cost
options granted in each respective year. These options are exercisable on the
third anniversary of the grant date. The options vest in August 2022, July
2023 or July 2024 provided certain performance conditions and targets, set
prior to grant, have been met. If the performance conditions are not met, the
options lapse.
A total of 2,726,026 options remains outstanding at 31 March 2022, 1,294,668
of which are currently exercisable. 30,000 options were forfeited in the
period (2021: none).
Within the accounts of the Company, the fair value at grant date is estimated
using the appropriate models including both the Black-Scholes and Monte Carlo
modelling methodologies.
Number of share Weighted
options granted average price
(number) (£)
Outstanding at 1 April 2020 4,755,737 1.15
Granted during the period 1,000,000 -
Exercised during the period (673,568) 1.70
Lapsed during the period (696,099) 1.83
Outstanding at 31 March 2021 4,386,070 0.66
Exercisable at 31 March 2021 1,522,617 1.89
Outstanding at 1 April 2021 4,386,070 0.66
Granted during the period 279,858 -
Exercised during the period (1,741,703) 0.71
Forfeited during the period (30,000) -
Lapsed during the period (168,199) -
Outstanding at 31 March 2022 2,726,026 0.60
Exercisable at 31 March 2022 1,294,668 1.27
(II) TATTON ASSET MANAGEMENT PLC SHARESAVE SCHEME ("TAM SHARESAVE SCHEME")
On 7 July 2017, 5 July 2018, 3 July 2019, 6 July 2020 and 2 August 2021, the
Group launched all employee Sharesave schemes for options over shares in
Tatton Asset Management plc, administered by Yorkshire Building Society.
Employees are able to save between £10 and £500 per month over a three-year
life of each scheme, at which point they each have the option to either
acquire shares in the Company or receive the cash saved.
Over the life of the 2019 TAM Sharesave scheme, it is estimated that, based on
current savings rates, 73,609 share options will be exercisable at an exercise
price of £1.79. Over the life of 2020 TAM Sharesave scheme, it is estimated
that, based on current savings rates, 115,797 share options will be
exercisable at an exercise price of £2.29. Over the life of 2021 TAM
Sharesave scheme, it is estimated that, based on current savings rates, 46,380
share options will be exercisable at an exercise price of £3.60. During the
period, 59,276 options have been exercised and 5,924 options have been
forfeited.
Within the accounts of the Company, the fair value at grant date is estimated
using the Black-Scholes methodology for 100% of the options. Share price
volatility has been estimated using the historical share price volatility of
the Company, the expected volatility of the Company's share price over the
life of the options and the average volatility applying to a comparable group
of listed companies. Key valuation assumptions and the costs recognised in the
accounts during the period are noted in 20.2 and 20.3 below respectively.
Number of share Weighted
options granted average price
(number) (£)
Outstanding at 1 April 2020 223,728 1.73
Granted during the period 70,894 2.08
Exercised during the period (189,833) 1.70
Forfeited during the period (2,940) 2.01
Outstanding at 31 March 2021 101,849 1.81
Exercisable at 31 March 2021 10,588 1.70
Outstanding at 1 April 2021 101,849 1.81
Granted during the period 77,868 2.28
Forfeited during the period (5,924) 2.22
Exercised during the period (59,276) 1.86
Outstanding at 31 March 2022 114,517 2.14
Exercisable at 31 March 2022 - -
20.2 Valuation assumptions
Assumptions used in the option valuation models to determine the fair value of
options at the date of grant were as follows:
EMI 2020 2019 2018 Sharesave 2020 2019 2018
Scheme Scheme
2021 2021
Share price at grant (£) 4.60 2.84 2.12 2.40 4.80 2.85 2.14 2.34
Exercise price (£) - - - - 3.60 2.29 1.79 1.90
Expected volatility (%) 33.76 34.80 30.44 28.48 33.76 34.80 30.44 28.48
Expected life (years) 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Risk free rate (%) 0.24 (0.06) 0.35 0.81 0.12 (0.06) 0.35 0.81
Expected dividend yield (%) 2.39 3.38 3.96 2.75 2.39 3.38 3.96 2.75
20.3 IFRS 2 share-based option costs
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
TAM EMI scheme 2,347 3,716
TAM Sharesave scheme 52 24
2,399 3,740
The Consolidated Statement of Cash Flows shows an adjustment to Net cash from
operating activities relating to share based payments of £1,492,000. This is
a charge in the year of £2,399,000 adjusted for cash paid relating to
national insurance contributions on the exercise of share options of
£907,000.
21 BUSINESS COMBINATION
On 14 September 2021, the Group acquired the Verbatim funds and the
acquisition has been treated as a business combination. The Verbatim funds
include six multi-asset and four multi-index funds, along with model
portfolios, and at acquisition included £650 million of AUM. The Verbatim
funds were acquired in order to complement Tatton's existing fund range and
give IFAs' clients further access to a range of investments balanced to
reflect a particular risk profile.
The amounts recognised in respect of the identifiable assets acquired and
liabilities assumed upon acquisition of Verbatim are set out in the table
below:
£'000
Identifiable intangible assets 2,936
Deferred tax liability (708)
Total identifiable assets 2,228
Goodwill 3,083
Total consideration 5,311
Satisfied by:
Cash 2,825
Contingent consideration arrangement 2,486
Total consideration transferred 5,311
Net cash outflow arising on acquisition 2,825
There were no financial assets or financial liabilities acquired with the
business.
The fair value of Verbatim's client relationship intangible assets and brand
have been measured using a multi-period excess earnings method or relief from
royalty valuation methodology, as appropriate for each asset. The model uses
estimates of client longevity and the level of activity driving commission
income to derive a forecast series of cash flows, which are discounted to a
present value to determine the fair value of the client relationships and
brand acquired. The useful economic life of the client relationships and the
brand has been determined to be ten years.
The goodwill of £3,083,000 arising from the acquisition consists of future
synergies and future income expected to be generated from the funds. None of
the goodwill is expected to be deductible for income tax purposes.
The contingent consideration arrangement requires the value of assets held in
the funds to meet specific criteria agreed between the parties. The potential
undiscounted amount of all future payments that the Group could be required to
make under the contingent consideration arrangement is between £nil and
£3,000,000.
The fair value of the contingent consideration arrangement of £2,486,000 was
estimated by calculating the expected future value of assets held in the
Verbatim funds and discounted to net present value. The liability of
£2,486,000 has been recognised in Other payables in the Consolidated
Statement of Financial Position.
Acquisition-related costs (included in administrative expenses and separately
disclosed in the Consolidated Statement of Total Comprehensive Income) amount
to £231,000.
Verbatim contributed £1,158,000 to revenue and £927,000 to the Group's
profit for the period between the date of acquisition and the reporting date.
22 RELATED PARTY TRANSACTIONS
Ultimate controlling party
The Directors consider there to be no ultimate controlling party.
Relationships
The Group has trading relationships with the following entities in which Paul
Hogarth, a Director, has a beneficial interest:
Entity Nature of transactions
Paradigm Investment Management LLP The Group incurs finance charges.
Suffolk Life Pensions Limited The Group pays lease rental payments on an office building held in a pension
fund by Paul Hogarth.
Related party balances
Terms and conditions 2022 2021
Value of Balance Value of Balance
income/ receivable/ income/(cost) receivable/
(cost) (payable) (£'000) (payable)
(£'000) (£'000) (£'000)
Paradigm Investment Management LLP Repayment on demand - (235) (2) (235)
Suffolk Life Pensions Limited Payable in advance (60) - (76) (1)
Hermitage Holdings (Wilmslow) Limited Repayment on demand (13) - (18) -
Balances with related parties are non-interest bearing.
Key management personnel remuneration
Key management includes Executive and Non-Executive Directors. The
compensation paid or payable to key management personnel is as disclosed in
note 10.
23 ALTERNATIVE PERFORMANCE MEASURES ("APMs")
APM Closest equivalent measure Reconciling items to their statutory measure Definition and purpose
Adjusted operating profit before separately disclosed items Operating profit Exceptional items, share-based payments and amortisation of An important measure where exceptional items distort the understanding of the
acquisition-related intangibles. operating performance of the business. Allows comparability between periods.
See note 6. See also note 2.24.
Adjusted profit before tax before separately disclosed items Profit before tax Exceptional items, share-based payments and amortisation of An important measure where exceptional items distort the understanding of the
acquisition-related intangibles. operating performance of the business. Allows comparability between periods.
See note 6. See also note 2.24.
Adjusted earnings per share - Basic Earnings per share - Basic Exceptional items, share-based payments and amortisation of An important measure where exceptional items distort the understanding of the
acquisition-related intangibles and the tax thereon. operating performance of the business. Allows comparability between periods.
See note 9. See also note 2.24.
Adjusted earnings per share - Diluted Earnings per share - Diluted Exceptional items, share-based payments and amortisation of An important measure where exceptional items distort the understanding of the
acquisition-related intangibles and the tax thereon. The dilutive shares for operating performance of the business. Allows comparability between periods.
this measure assume that all contingently issuable shares will fully vest. See also note 2.24.
See note 9.
Net cash generated from operations before separately disclosed items Net cash generated from operations Exceptional items, share-based payments and amortisation of Net cash generated from operations before exceptional costs. To show
acquisition-related intangibles. underlying cash performance. See also note 2.24.
See note 6.
Other measures
APM Closest equivalent measure Reconciling items to their statutory measure Definition and purpose
Tatton - assets under management ("AUM") and net inflows None Not applicable AUM is representative of the customer assets and is a measure of the value of
the customer base. Movements in this base are an indication of performance in
the year and growth of the business to generate revenues going forward. Net
inflows measure the net of inflows and outflows of customers assets in the
year.
Paradigm Consulting members and growth None Not applicable Alternative growth measure to revenue, giving an operational view of growth.
Paradigm Mortgages lending, member firms and growth None Not applicable Alternative growth measure to revenue, giving an operational view of growth.
Dividend cover None Not applicable Dividend cover (being the ratio of the proposed final dividend against diluted
earnings per share before exceptional items and share-based charges)
demonstrates the Group's ability to pay the proposed dividend.
Dividend yield None Not applicable Dividend yield represents the percentage of the Company's share price at the
financial year end paid out as dividends for the relevant financial year.
CAGR in AUM and CAGR in Tatton firm numbers None Not applicable The Cumulative Annual Growth Rate in AUM and Tatton firm numbers since the
Group listed on the AIM Stock exchange in July 2017.
Average annual net inflows None Not applicable The average annual net inflows since the Group listed on the AIM stock
exchange in July 2017.
24 POST BALANCE SHEET EVENTS
On 20 April 2022, TAM plc has entered into a sale and purchase agreement to
purchase 50% of the issued share capital of 8AM Global Limited. This
transaction has not yet completed as it remains subject to regulatory
approval.
25 CAPITAL COMMITMENTS
At 31 March 2022, the Directors confirmed there were no capital commitments
(2021: none) for capital improvements.
26 CONTINGENT LIABILITIES
At 31 March 2022, the Directors confirmed there were no contingent liabilities
(2021: none).
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2022
Note 31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Non-current assets
Investments in subsidiaries 5 77,216 77,216
Property, plant and equipment 11 13
Total non-current assets 77,227 77,229
Current assets
Trade and other receivables 11 12,214 9,397
Cash and cash equivalents 12 10,204 8,182
Total current assets 22,418 17,579
Total assets 99,645 94,808
Current liabilities
Trade and other payables 13 (2,461) (1,791)
Total current liabilities (2,461) (1,791)
Non-current liabilities
Deferred tax liability 15 (2) -
Total non-current liabilities (2) -
Total liabilities (2,463) (1,791)
Net assets 97,182 93,017
Equity attributable to equity holders of the Company
Share capital 14 11,783 11,578
Share premium account 11,632 11,534
Own shares 10 - (1,969)
Merger reserve 67,316 67,316
Retained earnings 6,451 4,558
Total equity 97,182 93,017
The Company generated a profit of £8,017,000 during the financial year (2021:
profit of £1,017,000).
The financial statements were approved by the Board of Directors on 14 June
2022 and were signed on its behalf by:
Paul Edwards
Director
Company registration number: 10634323
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2022
Share Share Own Merger Retained Total
Capital Premium Shares Reserve Earnings Equity
(£'000) (£'000) (£'000) (£'000) (£'000) (£'000)
At 1 April 2020 11,182 8,718 (996) 67,316 6,225 92,445
Profit and total comprehensive income - - - - 1,017 1,017
Dividends - - - - (5,551) (5,551)
Share-based payments - - - - 2,953 2,953
Deferred tax on share-based payments - - - - (86) (86)
Issue of share capital on exercise of employee share options 396 2,816 - - - 3,212
Own shares acquired in the year - - (973) - - (973)
At 31 March 2021 11,578 11,534 (1,969) 67,316 4,558 93,017
Profit and total comprehensive income - - - - 8,017 8,017
Dividends - - - - (6,641) (6,641)
Share-based payments - - - - 2,679 2,679
Deferred tax on share-based payments - - - - - -
Issue of share capital on exercise of employee share options 205 98 - - - 303
Own shares acquired in the year - - (193) - - (193)
Own shares utilised on exercise of options - - 2,162 - (2,162) -
At 31 March 2022 11,783 11,632 - 67,316 6,451 97,182
The merger reserve was created on 19 June 2017 when the Group was formed,
where the difference between the Company's capital and the acquired Group's
capital has been recognised as a component of equity being the merger reserve.
The merger reserve is non-distributable.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
1 AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH FRS 101
The financial statements of Tatton Asset Management plc for the year ended 31
March 2022 were authorised for issue by the Board of Directors on 14 June
2022. Tatton Asset Management plc is incorporated and domiciled in England and
Wales.
These financial statements were prepared in accordance with Financial
Reporting Standard 101 "Reduced Disclosure Framework" ("FRS 101") and in
accordance with applicable accounting standards. The Company's financial
statements are presented in sterling.
These financial statements have been prepared on a going concern basis and on
the historical cost basis. The principal accounting policies adopted by the
Company are set out in note 2.
2 ACCOUNTING POLICIES
2.1 Accounting policies
The accounting policies which follow set out those policies which apply in
preparing the financial statements for the year ended 31 March 2022.
The Company has taken advantage of the following disclosure exemptions under
FRS 101:
a) the requirement in paragraph 38 of IAS 1 "Presentation of Financial
Statements" to present comparative information in respect of:
1) Paragraph 79(a)(IV) of IAS 1;
2) Paragraph 73(e) of IAS 16 "Property, Plant and Equipment";
b) the requirements of paragraphs 10(d), and 134-136 of IAS 1 "Presentation of
Financial Statements" and the requirements of IAS 7 "Statement of Cash Flows";
c) the requirements of paragraphs 30 and 31 of IAS 8 "Accounting Policies,
Changes in Accounting Estimates and Errors";
d) the requirements of paragraph 17 of IAS 24 "Related Party Disclosures";
e) the requirements in IAS 24 "Related Party Disclosures" to disclose related
party transactions entered into between two or more members of a group,
provided that any subsidiary which is a party to the transaction is wholly
owned by such a member; and
f) the disclosure requirements of IFRS 7 "Financial Instruments:
Disclosures".
2.2 Investments
All investments are initially recorded at cost, being the fair value of
consideration given including the acquisition costs associated with the
investment. Subsequently, they are reviewed for impairment on an individual
basis if events or changes in circumstances indicate the carrying value may
not be fully recoverable.
2.3 Financial instruments
Non-derivative financial instruments comprise trade and other receivables,
cash and cash equivalents, and trade and other payables.
2.4 Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent
to initial recognition they are measured at amortised cost using the effective
interest method.
2.5 Trade and other payables
Trade and other payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method,
where applicable or required. These amounts represent liabilities for goods
and services provided to the Group prior to the end of the financial period,
which are unpaid.
2.6 Cash and cash equivalents
Cash and cash equivalents comprise long-and short-term deposits held with
banks by the Company, and are subject to insignificant risk of changes in
value.
2.7 Share-based payments
The Group issues equity-settled share-based payments to certain employees.
Equity-settled share-based payments are measured at fair value at the date of
grant. The fair value determined at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest.
Fair value is measured by use of the Black-Scholes model or Monte Carlo model
as appropriate.
2.8 Interest income and interest expense
Finance income is recognised as interest accrued (using the effective interest
method) on funds invested outside the Company. Finance expense includes the
cost of borrowing from third parties and is recognised on an effective
interest rate basis, resulting from the financial liability being recognised
on an amortised cost basis.
2.9 Taxation
CURRENT TAX
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the Statement of Total
Comprehensive Income because it excludes items of income or expense that are
taxable or deductible in other years and it further excludes items that are
never taxable or deductible. The Company's liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by
the Statement of Financial Position date.
DEFERRED TAX
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from the initial recognition of
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
where it is probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets arising from deductible temporary
differences associated with such investments and interests are only recognised
to the extent that it is probable that there will be sufficient taxable
profits against which to utilise the benefits of the temporary difference and
they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each Statement of
Financial Position date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or
part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised based on tax
laws and rates that have been enacted or substantively enacted at the
Statement of Financial Position date. Deferred tax is charged or credited in
the Statement of Total Comprehensive Income, except when it relates to items
charged or credited in other comprehensive income, in which case the deferred
tax is also dealt with in other comprehensive income.
The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Company expects,
at the end of the reporting period, to recover or settle the carrying amount
of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off the current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Company intends to settle its current tax assets and
liabilities on a net basis.
CURRENT AND DEFERRED TAX FOR THE YEAR
Current and deferred tax are recognised in profit or loss, except when they
relate to items that are recognised in other comprehensive income or directly
in equity, in which case the current and deferred tax are also recognised in
other comprehensive income or directly in equity respectively. Where current
tax or deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the business
combination.
2.10 Dividends
Dividend distributions payable to equity shareholders are included in other
liabilities when the dividends have been approved in a Board meeting prior to
the reporting date.
2.11 Retirement benefit costs
The Company pays into a personal pension plan for which the amount charged to
income in respect of pension costs and other post-retirement benefits is the
amount of the contributions payable in the year. Payments to the defined
contribution retirement benefit scheme are recognised as an expense when
employees have rendered service entitling them to the contributions.
Differences between contributions payable and paid are accrued or prepaid. The
assets of the plans are invested and managed independently of the finances of
the Company.
3 OPERATING PROFIT
The following items have been included in arriving at the operating profit for
continuing operations:
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Share-based payment charges (note 9) 2,399 3,740
Share-based payment charges relate to the provision made in accordance with
IFRS 2 "Share-based Payment" following the issue of share options to
employees.
4 SERVICES PROVIDED BY THE COMPANY'S AUDITOR
During the period, the Company obtained the following services provided by the
Company's auditor at the costs detailed below:
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Audit of the statutory financial statements of TAM plc 72 69
Services provided by the Company's auditor:
Non-audit services 13 18
5 INVESTMENTS
£'000
Cost and net book value at 1 April 2020, 31 March 2021 and 31 March 2022 77,216
The principal investments comprise shares at cost in the following companies:
Name of subsidiary Country of incorporation Holding Direct/Indirect
Nadal Newco Limited United Kingdom 100% Direct
Paradigm Partners Limited United Kingdom 100% Indirect
Paradigm Mortgage Services LLP United Kingdom 100% Indirect
Tatton Capital Group Limited* United Kingdom 100% Indirect
Tatton Capital Limited United Kingdom 100% Indirect
Tatton Investment Management Limited United Kingdom 100% Indirect
Tatton Oak Limited* United Kingdom 100% Indirect
Tatton Crown Investments Limited* United Kingdom 100% Indirect
Sinfonia Asset Management Limited* United Kingdom 100% Indirect
* Indicates that this subsidiary is entitled to exemption from audit under
section 479A of the Companies Act 2006 for the year ending 31 March 2022.
All entities above are included within the consolidated financial statements
for TAM plc and all have the same registered address as the Company.
6 DIRECTORS AND EMPLOYEES
The average number of persons employed by the Company (including Directors)
during each year was as follows:
31-Mar 31-Mar
2022 2021
Number Number
Administration 13 11
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Wages, salaries and bonuses 1,708 1,521
Social security costs 228 188
Pension costs 19 10
Share-based payment charges 2,399 3,740
4,354 5,459
The remuneration of the highest paid Director was:
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Total 644 794
7 ULTIMATE CONTROLLING PARTY
The Directors consider that there is no ultimate controlling party.
8 DIVIDEND PAID AND PROPOSED
During the year, Tatton Asset Management plc paid the final dividend related
to the year ended 31 March 2021 of £4,284,000 representing a payment of 7.5p
per share. In addition, the Company paid an interim dividend of £2,357,000
(2021: £1,999,000) to its equity shareholders. This represents a payment of
4.0p per share (2021: 3.5p per share).
In addition, the Directors are proposing a final dividend in respect of the
financial year ended 31 March 2022 of 8.5p (2021: 7.5p) per share which will
absorb an estimated £5.0 million (2021: £4.3 million) of shareholders'
funds. It will be paid on 2 August 2022 to shareholders who are on the
register of members on 24 June 2022.
9 SHARE-BASED PAYMENTS
Details of share-based payments are shown in note 20 to the consolidated
financial statements.
10 OWN SHARES
Details of own shares are shown in note 19 to the consolidated financial
statements.
11 TRADE AND OTHER RECEIVABLES
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Amounts due from related parties 11,420 8,821
Prepayments and accrued income 690 553
Other debtors 104 23
12,214 9,397
All trade receivable amounts are short term. All of the Company's trade and
other receivables have been reviewed for indicators of impairment and, where
necessary, a provision for impairment made. The carrying value is considered a
fair approximation of their fair value. At 31 March 2021, Tatton Asset
Management plc made full provision of £60,000 against the recoverability of
amounts due from a related party, Jargonfree Benefits LLP. There has been no
other provision made for impairment of receivable balances (2021: £nil).
Trade receivable amounts are all held in sterling.
12 CASH AND CASH EQUIVALENTS
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Cash at bank 10,204 8,182
13 TRADE AND OTHER PAYABLES
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Trade payables 505 55
Amounts due to related parties 122 110
Accruals 1,834 1,626
2,461 1,791
The carrying values of trade payables, amounts due to related parties,
accruals and deferred income are considered reasonable approximation of fair
value.
Trade payable amounts are all held in sterling.
14 EQUITY
Number
Authorised, called-up and fully paid £0.20 ordinary shares
At 1 April 2021 57,889,065
Issue of share capital on exercise of employee share options 1,025,822
At 31 March 2022 58,914,887
Each share in Tatton Asset Management plc carries one vote and the right to a
dividend.
15 DEFERRED TAXATION
Deferred capital Share-based Total
Allowances Payments (£'000)
(£'000) (£'000)
Asset at 31 March 2020 - 235 235
Income statement charge - (149) (149)
Equity charge - (86) (86)
Asset at 31 March 2021 - - -
Income statement charge (2) - (2)
Liability at 31 March 2022 (2) - (2)
16 CONTINGENT LIABILITIES
At 31 March 2022, the Directors confirmed there were no contingent liabilities
(2021: none).
17 CAPITAL COMMITMENTS
At 31 March 2022, the Directors confirmed there were no capital commitments
(2021: none) for capital improvements.
18 OPERATING LEASE COMMITMENTS
The Company as lessee had minimum lease payments under non-cancellable
operating leases as set out below:
31-Mar 31-Mar
2022 2021
(£'000) (£'000)
Not later than one year 60 60
Later than one year not later than five years 101 161
Later than five years - -
161 221
21 RELATED PARTY TRANSACTIONS
The Company has taken advantage of the exemption under paragraph 8(K) of FRS
101 not to disclose transactions with entities that are wholly owned
subsidiaries of TAM plc. There are no other related party transactions other
than those that have been disclosed in note 22 to the consolidated financial
statements.
21.1 Transactions with key management personnel
Other than the Directors and Officers of the Group (see note 22 to the
consolidated financial statements), no other key management personnel have
been identified.
22 EVENTS AFTER THE REPORTING PERIOD
On 20 April 2022, TAM plc has entered into a sale and purchase agreement to
purchase 50% of the issued share capital of 8AM Global Limited. This
transaction has not yet completed as it remains subject to regulatory
approval.
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