REG - Tatton Asset Mgt PLC - Interim results for the six months to 30 Sept 2021
17/11/2021 07:05
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RNS Number : 5964S Tatton Asset Management PLC 17 November 2021
17 November 2021
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.
Tatton Asset Management PLC
("TAM plc", the "Group" or the "Company")
AIM: TAM
Interim results for the six month period ended 30 September 2021
"Continued strong trading momentum delivers record AUM of £10.8 billion"
TAM plc, the investment management and IFA support services group, today
announces its interim results for the six-month period ended 30 September 2021
(the "Period").
FINANCIAL HIGHLIGHTS
- Group revenue increased 26.4% to £13.8m (Sep 2020: £11.0m)
- Adjusted operating profit(1) up 37.9% to £6.9m (Sep 2020: £5.0m)
- Adjusted operating profit(1) margin 50.1% (Sep 2020: 45.9%)
- Adjusted fully diluted EPS(2) increased 33.7% to 8.76p (Sep 2020: 6.55p)
- Interim dividend up 14.3% to 4.0p (Sep 2020: 3.5p)
- Strong financial liquidity position, with net cash of £14.7m
- Strong balance sheet - Net assets increased 37.5% to £27.5m (Sep 20:
£20.0m)
1. Adjusted for exceptional items,
share-based payment costs and amortisation
2. Adjusted for exceptional items,
share-based payment costs, amortisation and potentially dilutive shares
OPERATIONAL HIGHLIGHTS
- Assets Under Management ("AUM") increased £1.8bn or 20% to £10.8bn (Mar
2021: £9.0bn)
- Current AUM at 12 November 2021 c.£11.2bn
- Organic net inflows £652m (Sep 20: £321m), an increase of 7.3% of AUM -
Average run rate of £109m per month
- Acquisition of £650m Verbatim funds and a five-year strategic
distribution partnership with Fintel plc, providing access to 3,800 firms and
over 6,000 users
- Tatton's non-MPS propositions account for over £1.2bn of AUM as at the
end of the Period
- Tatton's IFA firms increased by 12.7% to 703 (Sep 2020: 624) and the
number of accounts increased 19.1% to 81,600 (Sep 2020: 68,500)
- Tenet continues to develop well with AUM reaching £740m (Mar 2021:
£541m)
- Paradigm mortgage completions up by 31.6% to £6.6bn (Sep 2020: £5.0bn).
Paradigm Mortgages member firms increased by 3.5% to 1,646 members (Sep 2020:
1,591 members)
- Paradigm Consulting increased its members by 3.5% to 418 (Sep 2020: 404)
Trading momentum has continued since the last market update and post Period
end and, as a result, we now anticipate that trading for the current financial
year will be ahead of the Board's previous expectations.
Paul Hogarth, Chief Executive Officer, commented:
"I am delighted to report that the Group has delivered a solid first half
result, delivering against our strategic objectives and maintaining strong
growth across all our key metrics of AUM, revenue and profits.
During the Period, Tatton exceeded the milestone of £10 billion AUM from pure
organic growth while also expanding our distribution footprint by entering
into new long term strategic partnerships and we were thrilled to have reached
£10.8 billion at the end of September 2021. Paradigm also delivered a record
level of mortgage completions of £6.6 billion in the six month Period.
Trading momentum has continued since the last market update and post Period
end and, as a result, we now anticipate that trading for the current financial
year will be ahead of the Board's previous expectations.
The IFA remains at the heart of our business, and our breadth of services,
propositions and engagement ensures we maintain existing client relationships
while enhancing our ability to attract new firms. Accordingly, as we look
forward, we are confident we will continue to make progress and take advantage
of the opportunities ahead."
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 Capital - Nomad and Broker +44 (0) 20 3829 5000
Martin Green (Corporate Finance)
Dan Bate (Corporate Finance and QE)
+44 (0) 20 7496 3000
Singer Capital Markets - Joint Broker
Peter Steel, Rachel Hayes, Amanda Gray (Investment Banking)
Belvedere Communications - Financial PR +44 (0) 7407 023147
John West / Llew Angus (media) +44 (0) 7715 769078
Cat Valentine / Keeley Clarke (investors) tattonpr@belvederepr.com (mailto:tattonpr@belvederepr.com)
+44 (0) 7469 854 011
Trade Media Enquiries
Roddi Vaughan Thomas (Head of Communications)
For more information, please visit: www.tattonassetmanagement.com
(http://www.tattonassetmanagement.com)
Strategic Review
TATTON DELIVERS CONTINUED GROWTH
At the end of last year, we set out a roadmap for growth, which targeted an
increase in the Group's AUM from £9.0 billion to £15.0 billion over the next
three years through a combination of organic growth and acquisition. After the
first six months we have made excellent progress against this plan and we
were delighted to reach £10.787 billion (31 March 2021: £8.990 billion) of
AUM at the end of September 2021. This progress has been delivered through a
combination of strong organic growth of 12.8% and the acquisition of the
Verbatim funds announced towards the end of the Period, which added a further
£0.650 billion to the total.
Group revenue for the Period increased 26.4% to £13.847 million (2020:
£10.956 million). Adjusted operating profit(1) for the Period increased 37.9%
to £6.934 million (2020: £5.030 million) with adjusted operating profit
margin(1) increasing to 50.1% (2020: 45.9%).
Pre-tax profit after the impact of exceptional items, amortisation of customer
relationship intangibles, finance costs and share-based payment charges
increased to £4.787 million (2020: £3.074 million) and taxation charges for
the Period were £0.889 million (2020: £0.414 million). This gives an
effective tax rate of 18.6% when measured against profit before tax. Adjusting
for exceptional costs and share-based payments the effective tax rate is
19.9%.
The basic earnings per share were 6.82p (2020: 4.77p). When adjusted for
exceptional items and share-based payment charges, basic adjusted earnings
per share were 9.48p (2020: 7.25p). Adjusted earnings per share fully diluted
for the impact of share options were 8.76p (2020: 6.55p), an increase of
33.7%.
TATTON
Tatton has continued to grow strongly over the last six months and maintains
its position as a leading provider of on-platform Managed Portfolio Services
("MPS") and fund solutions. We continue to grow and prosper by driving revenue
and profitability, which is underpinned by our expanding distribution
footprint and diversified proposition. The IFA remains at the heart of our
business, and our breadth of services, propositions and engagement maintains
existing client relationships and enhances our ability to attract new firms.
TAM continues to execute its strategy successfully, growing AUM both
organically and through acquisition in the Period. Total AUM increased by
20.0%, or £1.797 billion, to £10.787 billion (Mar 2021: £8.990 billion) in
the Period with organic growth contributing 12.8%. The number of firm
relationships also increased to 703 (Mar 2021: 668), an increase of 5.2%, and
client accounts increased to 81,600 (Mar 2021: 72,450), an increase of 12.6%.
Tatton net inflows were £0.652 billion, increasing 98.8% compared with the
same Period last year (Sep 2020: £0.328 billion). In addition, strong
investment performance increased AUM by over 5.0%, adding £0.495 billion, and
the recent Verbatim acquisition contributed a further £0.650 billion.
Towards the end of the Period the Group acquired £650 million of Verbatim
funds, a range of multi-index and multi-asset funds that complement and
extend our current fund range and further enhance the proposition to IFAs.
Our AUM across all our Open-Ended Investment Companies ("OEICs"), including
the Verbatim funds, Sinfonia funds and Blended funds, now accounts for over
£1.0 billion of our total AUM and continues to grow.
In addition to the acquisition, we also entered into a five-year strategic
distribution partnership with Fintel plc providing access to over 3,800 new
financial intermediary firms and its 6,000 Defaqto users. In the same Period
we are delighted to commence strategic partnerships with Threesixty Services
following a robust due diligence process and we are also excited to begin our
engagement with Sesame Bankhall Group.
Alongside the Verbatim acquisition, these new relationships significantly
enhance our reach and distribution - both proactively and in response to
market demand for access to Tatton's suite of services. Broadening our adviser
base will further contribute to the growth of our AUM, demonstrating our
strategy in action alongside our ability to execute it in the timeframe set
out.
Tatton's revenue, which accounts for 78.6% of Group revenue, grew 26.5% to
£10.885 million (2020: £8.605 million) and adjusted operating profit(1) grew
34.2% to £6.673 million (2020: £4.971 million(2)), increasing the adjusted
operating profit margin(1) to 61.3% (2020: 57.8%(2)).
PARADIGM
Paradigm has performed well in the Period, growing revenue over the same
period last year by 26.1% to £2.954 million (2020: £2.343 million) and
adjusted operating profit(1) by 96.2% to £1.254 million (2020: £0.639
million(2)).
Paradigm Consulting services increased its members to 418 (March 2021: 407).
The business saw an increase in additional consulting and contracted
compliance days as we continue to leverage the benefits of integrating the
Paradigm businesses.
Paradigm Mortgage Services, the Group's mortgage distribution and support
services business, contributed strongly to the growth and delivered a very
good first half performance. The number of mortgage firms utilising the
services increased to 1,646 (March 2021: 1,612) and the improved activity and
momentum built up at the start of the year have continued throughout the
Period. This was driven fundamentally by an active housing market which has
been underpinned by increasing demand with record mortgage applications,
maturities and the UK Government's stamp duty stimulus. The number of mortgage
products made available by lenders has significantly improved and the
constraints we experienced in the market this time last year have eased. While
face to face engagement with our clients has taken longer than anticipated to
return to pre-pandemic levels, we are recently experiencing a more normal
historical level. The net effect is that mortgage completions in the Period
reached a record of £6.6 billion (2020: £5.0 billion), an increase on the
prior year of 31.6%. As we look forward, we anticipate buyer demand will
steady and a stable trend in completions will be the result.
ACQUISITION
On 14 September 2021 the Group acquired the Verbatim range of funds ("Verbatim
funds") for a cash consideration of up to £5.8 million. The consideration is
made up of £2.8 million paid in cash on completion with the remainder
also payable in cash over the next four years, subject to certain performance
conditions. Over the remainder of FY22, the transaction, which includes both
the acquisition of the funds and a five-year strategic distribution
partnership agreement, is expected to generate adjusted operating profit(1) of
c.£0.6 million, with adjusted operating profit(1) of c.£1.5 million
expected in FY23, the first full financial year.
SEPARATELY DISCLOSED ITEMS
Exceptional items, along with share-based payment charges and amortisation of
customer relationship intangible assets, are reported separately to give
better clarity of the underlying performance of the Group. The alternative
performance measures ("APMs") are consistent with how the business performance
is planned and reported within the internal reporting to the Board. Some of
these measures are also used for the purpose of setting
remuneration targets.
The Group incurred exceptional costs of £0.2 million related to the
acquisition of the Verbatim range of funds.
BALANCE SHEET
The Group's balance sheet remains healthy with net assets at 30 September 2021
totalling £27.5 million (2020: £20.0 million) reflecting the continued
growth and profitability of the Group. Property, plant and equipment
has decreased slightly to £0.9 million (2020: £1.1 million). Intangible
assets, including goodwill, of £13.4 million have been recognised (2020:
£7.7 million), an increase of £5.7 million largely relating to
the acquisition of the Verbatim funds.
CASH RESOURCES
Cash generated from operations was £6.8 million, £7.0 million before
exceptional items (2020: £4.4 million) and was 138% of operating profit. The
Group remains debt free with closing net cash at the end of the Period of
£14.7 million (2020: £13.3 million). The cash resources are after the
payment of £2.8 million for the acquisition of Verbatim, corporation tax
of £1.6 million and dividend payments of £4.3 million relating to the final
dividend for the year ended 31 March 2021.
ISSUE OF NEW SHARES
In the Period, the Group issued 966,546 shares to the Employee Benefit Trust
("EBT"). The EBT subsequently held 1,741,703 shares which were utilised in
full to satisfy the exercise of both 2017 and 2018 Enterprise Management
Incentive ("EMI") options which had met a proportion of the vesting criteria.
The Group also issued 49,803 shares to employees who elected to exercise
their options pursuant to the Company's Save As You Earn ("SAYE") employee
share scheme.
DIVIDEND PROPOSAL AND CAPITAL ADEQUACY
The Board is pleased to recommend an interim dividend of 4.0p per share, an
increase of 14.3% on the prior period interim dividend. This level of dividend
reflects our cash performance and underlying confidence in the business,
while at the same time ensuring that appropriate levels of capital resources
are maintained within the Group. On 1 January 2022, the FCA is introducing a
new prudential regime for MiFID investment firms, the Investment Firms
Prudential Regime ("IFPR"). As a result of these new rules, the Group will
face an increased level of requirement as to the level of capital resources
held across the Group, with restrictions in utilising cash or debt to
fund acquisitions.
The interim dividend of 4.0p per share, totalling £2.4 million, will be paid
on 17 December 2021 to shareholders on the register at close of business on 26
November 2021 and will have an ex-dividend date of 25 November 2021. In
accordance with International Financial Reporting Standards ("IFRSs"), the
interim dividend has not been included as a liability in this
interim statement.
BUSINESS RISK
The Board identified principal risks and uncertainties which may have a
material impact on the Group's performance in the Group's 2021 Annual Report
and Accounts (pages 32 and 33) and believes that the nature of these risks
remains largely unchanged at the half year. The Board will continue to monitor
and manage identified principal risks throughout the second half of the year.
POST BALANCE SHEET EVENTS
There have been no post balance sheet events.
GOING CONCERN
As stated in note 2.2 of these condensed financial statements, the Directors
are satisfied that the Group has sufficient resources to continue in operation
for the foreseeable future, a period not less than 12 months from the date of
this report. To form this view, the Directors have also considered the impact
of the current COVID-19 pandemic and the resulting economic uncertainty.
Accordingly, they continue to adopt the going concern basis in preparing
these condensed financial statements.
SUMMARY AND OUTLOOK
In summary the Group has delivered a solid first half result, delivering
against our strategic objectives and maintaining strong growth across all our
key metrics of AUM, revenue and profits. During the Period, Tatton exceeded
the milestone of £10 billion AUM from pure organic growth while also
expanding our distribution footprint by entering into new long term strategic
partnerships. Towards the end of the Period we completed the acquisition of
the Verbatim range of funds which strategically were a strong fit to our
existing propositions. Paradigm also delivered a record level of mortgage
completions of £6.6 billion in the six month Period.
As we look forward to the second half of the year, we do so with the knowledge
that the Group's business model has successfully navigated a difficult 18
months and continued to deliver against our strategic objectives, growing our
AUM both organically and through acquisition and further developing our
propositions for the IFA community. We are currently experiencing a return to
face-to-face engagement and expect this to continue throughout the remainder
of this financial year which is a very positive step for our business. This
will bring with it new opportunities and also the additional costs associated
with this increased engagement which we have anticipated in our plans.
As we look forward, we are confident we will continue to make progress and
take advantage of the opportunities ahead.
1. Alternative performance measures are detailed in note 15.
2. Restated for the allocation of central overhead costs in the
period ended September 2020.
Financial Statements
CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021
Note Unaudited six months ended Unaudited six months ended 30-Sep 2020 (£'000) Audited
year ended 31-Mar 2021 (£'000)
30-Sep 2021 (£'000)
Revenue 13,847 10,956 23,353
Administrative expenses (8,895) (7,847) (15,845)
Operating profit 4,952 3,109 7,508
Share-based payment costs 4 1,735 1,642 3,740
Amortisation of intangibles - customer relationships 4 60 60 120
Exceptional items 4 187 219 34
Adjusted operating profit 6,934 5,030 11,402
(before separately disclosed items)(1)
Finance costs (165) (35) (205)
Profit before tax 4,787 3,074 7,303
Taxation charge 5 (889) (414) (1,192)
Profit attributable to shareholders 3,898 2,660 6,111
Earnings per share - Basic 6 6.82p 4.77p 10.86p
Earnings per share - Diluted 6 6.45p 4.58p 10.31p
Adjusted earnings per share - Basic(2) 6 9.48p 7.25p 16.14p
Adjusted earnings per share - Diluted(2) 6 8.76p 6.55p 14.74p
1 Adjusted for exceptional items, amortisation of customer
relationship intangibles and share-based payment costs. See note 15.
2 Adjusted for exceptional items, amortisation of client
relationship intangibles and share-based payment costs and the tax thereon.
See note 15.
There were no other recognised gains or losses other than those recorded above
in the current or prior period and therefore a statement of other
comprehensive income has not been presented.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2021
Note Unaudited six months ended 30-Sep 2021 Unaudited six months ended Audited
year ended
(£'000) 30-Sep 2020 (£'000)
31-Mar 2021 (£'000)
Non-current assets
Intangible assets 7 13,437 7,693 7,690
Property, plant and equipment 8 888 1,133 992
Deferred tax assets 1,414 614 1,420
Total non-current assets 15,739 9,440 10,102
Current assets
Trade and other receivables 9 8,565 4,503 4,302
Financial assets at fair value through profit or loss 11 177 132 163
Corporation tax 2,043 3 48
Cash and cash equivalents 14,747 13,328 16,934
Total current assets 25,532 17,966 21,447
Total assets 41,271 27,406 31,549
Current liabilities
Trade and other payables 10 (10,335) (6,571) (6,587)
Total current liabilities (10,335) (6,571) (6,587)
Non-current liabilities
Other payables (3,388) (802) (516)
Total non-current liabilities (3,388) (802) (516)
Total liabilities (13,723) (7,373) (7,103)
Net assets 27,548 20,033 24,446
Equity attributable to equity holders of the entity
Share capital 11,781 11,352 11,578
Share premium account 11,617 9,997 11,534
Own shares - (996) (1,969)
Other reserve 2,041 2,041 2,041
Merger reserve (28,968) (28,968) (28,968)
Retained earnings 31,077 26,607 30,230
Total equity 27,548 20,033 24,446
The financial statements on pages 10 to 34 of the Interim Report were approved
by the Board of Directors on 17 November 2021 and were signed on its behalf
by:
Paul Edwards
Director
Company registration number: 10634323
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021
Share Share premium (£'000) Own shares Other Merger Retained earnings (£'000) Total
capital (£'000)
reserve (£'000)
reserve (£'000)
equity
(£'000)
(£'000)
At 1 April 2020 11,182 8,718 (996) 2,041 (28,968) 25,801 17,778
Profit and total comprehensive income - - - - - 2,660 2,660
Dividends - - - - - (3,579) (3,579)
Share-based payments - - - - - 1,374 1,374
Tax on share-based payments - - - - - 351 351
Issue of share capital on exercise of employee share options 170 1,279 - - - - 1,449
At 30 September 2020 11,352 9,997 (996) 2,041 (28,968) 26,607 20,033
Profit and total comprehensive income - - - - - 3,451 3,451
Dividends - - - - - (1,972) (1,972)
Share-based payments - - - - - 1,580 1,580
Tax on share-based payments - - - - - 564 564
Issue of share capital on exercise of employee share options 226 1,537 - - - - 1,763
Own shares acquired in the period - - (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 - - - - - 3,898 3,898
Dividends - - - - - (4,284) (4,284)
Share-based payments - - - - - 2,130 2,130
Tax on share-based payments - - - - - 1,265 1,265
Issue of share capital on exercise of employee share options 203 83 (193) - - - 93
Own shares utilised on exercise of options - - 2,162 - - (2,162) -
At 30 September 2021 11,781 11,617 - 2,041 (28,968) 31,077 27,548
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021
Note Unaudited six months ended 30-Sep 2021 (£'000) Unaudited six months ended Audited
year ended
30-Sep 2020 (£'000)
31-Mar 2021 (£'000)
Operating activities
Profit for the period 3,898 2,660 6,111
Adjustments:
Income tax expense 5 889 414 1,192
Finance costs 165 35 205
Depreciation of property, plant and equipment 8 181 165 351
Amortisation of intangible assets 7 210 161 341
Share-based payment expense 4 1,735 1,642 3,740
Changes in:
Trade and other receivables (3,146) (659) (537)
Trade and other payables 2,879 (240) (531)
Exceptional costs 4 187 219 34
Cash generated from operations before exceptional costs 6,998 4,397 10,906
Cash generated from operations 6,811 4,178 10,872
Income tax paid (1,612) (985) (2,051)
Net cash from operating activities 5,199 3,193 8,821
Investing activities
Payment for the acquisition of subsidiary, net of cash acquired - - (160)
Purchase of intangible assets (2,957) (105) (282)
Purchase of property, plant and equipment (17) (22) (67)
Net cash used in investing activities (2,974) (127) (509)
Financing activities
Interest (paid)/received (47) 1 (36)
Transaction costs related to borrowings - (316) (613)
Dividends paid (4,284) (3,579) (5,551)
Proceeds from the issue of shares 93 1,449 3,212
Purchase of own shares - - (973)
Repayment of the lease liabilities (174) (50) (174)
Net cash used in financing activities (4,412) (2,495) (4,135)
Net (decrease)/increase in cash and cash equivalents (2,187) 571 4,177
Cash and cash equivalents at beginning of period 16,934 12,757 12,757
Net cash and cash equivalents at end of period 14,747 13,328 16,934
The accompanying notes are an integral part of the interim financial
statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Tatton Asset Management plc (the "Company") is a public company limited by
shares.
The address of the registered office is Paradigm House, Brooke Court, Lower
Meadow Road, Wilmslow, SK9 3ND, United Kingdom. The registered number is
10634323.
The Group comprises the Company and its subsidiaries. The Group's principal
activities are discretionary fund management, the provision of compliance and
support services to independent financial advisers ("IFAs"), the provision of
mortgage adviser support services and the marketing and promotion of the funds
run by the companies under Tatton Capital Limited.
The condensed consolidated interim financial statements for the six months
ended 30 September 2021 do not constitute statutory accounts as defined under
section 434 of the Companies Act 2006. The Annual Report and Financial
Statements (the "financial statements") for the year ended 31 March 2021 were
approved by the Board on 14 June 2021 and have been delivered to the Registrar
of Companies. The Auditor, Deloitte LLP, reported on these financial
statements; its report was unqualified, did not contain an emphasis of matter
paragraph and did not contain statements under section 498 (2) or (3) of the
Companies Act 2006.
News updates, regulatory news and financial statements can be viewed and
downloaded from the Group's website, www.tattonassetmanagement.com. Copies can
also be requested from: The Company Secretary, Tatton Asset Management plc,
Paradigm House, Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND.
2. ACCOUNTING POLICIES
The principal accounting policies applied in the presentation of the interim
financial statements are set out below.
2.1 BASIS OF PREPARATION
The unaudited condensed consolidated interim financial statements for the six
months ended 30 September 2021 have been prepared in accordance with IAS 34
'Interim Financial Reporting' as adopted by the United Kingdom. The condensed
consolidated interim financial statements should be read in conjunction with
the financial statements for the year ended 31 March 2021, which have been
prepared in accordance with International Financial Reporting Standards
("IFRSs") as adopted by the United Kingdom. The condensed consolidated interim
financial statements were approved for release on 17 November 2021.
The condensed consolidated interim financial statements have been prepared on
a going concern basis and prepared on the historical cost basis.
The condensed consolidated interim financial statements are presented in
sterling and have been rounded to the nearest thousand (£'000). The
functional currency of the Company is sterling.
The preparation of financial information in conformity with IFRSs requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting Period.
Although these estimates are based on management's best knowledge of
the amount, event or actions, actual events may ultimately differ from those
estimates.
The key accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in the consolidated financial
statements. The accounting policies adopted by the Group in these interim
financial statements are consistent with those applied by the Group in its
consolidated financial statements for the year ended 31 March 2021.
2.2 GOING CONCERN
These financial statements have been prepared on a going concern basis. The
Directors have prepared cash flow projections and are satisfied that the
Group has adequate resources to continue in operational existence for the
foreseeable future. To form the view that the consolidated financial
statements should continue to be prepared on an ongoing basis in light of the
current COVID-19 pandemic and the resulting economic uncertainty, the
Directors have assessed the outlook of the Group by considering various market
scenarios and management actions. This review has allowed management to assess
the potential impact on income, costs, cash flow and capital and the ability
to implement effective management actions that may be taken to mitigate the
impact. Accordingly, the Directors continue to adopt the going concern basis
in preparing these financial statements.
2.3 NEW ACCOUNTING STANDARDS
There have been a number of amendments to standards which have been adopted in
the Period but these have not had a significant impact on the Group's
financial results or position.
A number of new standards are effective for annual periods beginning after 1
April 2021 and earlier application is permitted; however, the Group has not
early adopted the new or amended standards in preparing these condensed
consolidated financial statements.
None of the standards not yet effective are expected to have a material impact
on the Group's financial statements.
2.4 OPERATING SEGMENTS
The Group comprises the following two operating segments which are defined by
trading activity:
· Tatton - investment management services.
· Paradigm - the provision of compliance and support services to IFAs and
mortgage advisers.
The Board is considered to be the chief operating decision maker.
2.5 SIGNIFICANT JUDGEMENTS, KEY ASSUMPTIONS AND ESTIMATES
In the process of applying the Group's accounting policies, which are
described in the consolidated financial statements for the year ended 31 March
2021, management have made judgements and estimations about the future that
have an effect on the amounts recognised in the financial statements. The
estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period. If the revision
affects both current and future periods, it is revised in the period of the
revision and in future periods. Changes for accounting estimates would be
accounted for prospectively under IAS 8.
The judgements, estimates and assumptions applied in the interim financial
statements, including the key sources of estimation uncertainty, were the same
as those applied in the Group's last annual financial statements for the year
ended 31 March 2021. The only exceptions relate to the contingent
consideration recognised in the period and the estimated average annual
effective income tax rate applied to the pre-tax income of the interim period.
During the Period, the Group made an acquisition of the Verbatim funds. As
at 30 September 2021, the accounting for the acquisition has yet to be
completed and therefore the Group has provisionally accounted for the
acquisition within intangible assets and a creditor representing the
contingent consideration payable. The value of the earnout consideration is
variable dependent on performance conditions. Management will perform a
further assessment of the valuation of certain assets acquired and liabilities
assumed within the acquisition for inclusion in the financial statements for
the period ending 31 March 2022.
Management have reviewed the estimates for the satisfaction of the performance
obligations attached to certain awards in the share-based payment schemes. It
is currently estimated that 100% of the options in the existing schemes will
vest.
2.6 ALTERNATIVE PERFORMANCE MEASURES
In reporting financial information, the Group presents alternative performance
measures ("APMs") which are not defined or specified under the requirements of
IFRSs. The Group believes that these APMs provide users with additional
helpful information on the performance of the business. The APMs are
consistent with how the business performance is planned and reported within
the internal management reporting to the Board. Some of these measures are
also used for the purpose of setting remuneration targets. All the APMs used
by the Group are set out in note 15 including explanations of how they are
calculated and how they can be reconciled to a statutory measure where
relevant.
3 SEGMENT REPORTING
Information reported to the Board of Directors as the chief operating decision
maker 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.
The principal activity of Tatton is that of discretionary fund management of
investments on-platform and the provision of investment wrap services.
The principal activity of Paradigm is that of provision of support services to
IFAs and mortgage advisers.
For management purposes, the Group uses the same measurement policies used in
its financial statements.
The following is an analysis of the Group's revenue and results by reportable
segment:
Period ended 30 September 2021 Tatton Paradigm Central Group
(£'000) (£'000) (£'000) (£'000)
Revenue 10,885 2,954 8 13,847
Administrative expenses (4,272) (1,700) (2,923) (8,895)
Operating profit/(loss) 6,613 1,254 (2,915) 4,952
Share-based payment costs - - 1,735 1,735
Amortisation of client relationship intangibles 60 - - 60
Exceptional costs - - 187 187
Adjusted operating profit/(loss) (before separately disclosed items)(1) 6,673 1,254 (993) 6,934
Finance costs (9) - (156) (165)
Profit/(loss) before tax 6,604 1,254 (3,071) 4,787
1. Alternative performance measures are detailed in note 15.
Period ended 30 September 2020(2) Tatton Paradigm Central Group
(£'000) (£'000) (£'000) (£'000)
Revenue 8,605 2,343 8 10,956
Administrative expenses (3,694) (1,704) (2,449) (7,847)
Operating profit/(loss) 4,911 639 (2,441) 3,109
Share-based payment costs - - 1,642 1,642
Amortisation of client relationship intangibles 60 - - 60
Exceptional costs - - 219 219
Adjusted operating profit/(loss) (before separately disclosed items)(1) 4,971 639 (580) 5,030
Finance costs (10) - (25) (35)
Profit/(loss) before tax 4,901 639 (2,466) 3,074
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 payment costs - - 3,740 3,740
Amortisation of client relationship intangibles 120 - - 120
Exceptional items (184) - 218 34
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 15.
2. Administrative expenses in September 2020 have been restated to
include an allocation of central overhead costs to aid comparability with the
current year.
4 SEPARATELY DISCLOSED ITEMS
Unaudited six months ended 30-Sep 2021 (£'000) Unaudited six months ended 30-Sep 2020 (£'000) Audited
year ended 31-Mar 2021 (£'000)
Acquisition-related expenses 187 219 218
Gain arising on changes in fair value of contingent consideration - - (184)
Total exceptional costs 187 219 34
Amortisation of client relationship intangible assets 60 60 120
Share-based payment costs 1,735 1,642 3,740
Total separately disclosed costs 1,982 1,921 3,894
Separately disclosed items shown separately on the face of the Consolidated
Statement of Total Comprehensive Income or included within administrative
expenses reflect costs and income that do not relate to the Group's normal
business operations and that are considered material individually, or in
aggregate if of a similar type, due to their size or frequency.
EXCEPTIONAL ITEMS
During the Period, the Group acquired £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 £187,000 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. These costs 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 year.
SHARE-BASED PAYMENT CHARGES
Share-based payments is a recurring item, though the value will change
depending on the estimation of the satisfaction of performance obligations
attached to certain awards. It has been excluded from the core business
operating profit since it is a significant non-cash item. Underlying profit,
being adjusted operating profit, represents largely cash-based earnings
and more directly relates to the financial reporting period.
AMORTISATION OF CLIENT RELATIONSHIP INTANGIBLE ASSETS
Payments made for the introduction of customer relationships that are deemed
to be intangible assets are capitalised and amortised over their useful life,
which has been assessed to be ten years. This amortisation charge is recurring
over the life of the intangible asset, though has been excluded from the core
business operating profit since it is a significant non-cash item. Underlying
profit, being adjusted operating profit, represents largely cash-based
earnings and more directly relates to the financial reporting period.
5 TAXATION
Unaudited six months ended 30-Sep 2021 (£'000) Unaudited six months ended 30-Sep 2020 (£'000) Audited
year ended 31-Mar 2021 (£'000)
Current tax expense
Current tax on profits for the period 1,150 821 1,790
Share-based payment costs (487) - -
Adjustment for under-provision in prior periods - - 13
663 821 1,803
Deferred tax expense
Share-based payment costs 250 (386) (563)
Origination and reversal of temporary differences 7 (21) 7
Adjustment in respect of previous years - - (55)
Effect of changes in tax rates (31) - -
226 (407) (611)
Total tax expense 889 414 1,192
The reasons for the difference between the actual tax charge for the period
and the standard rate of corporation tax in the UK applied to profit for the
period are as follows:
Unaudited six months ended Unaudited six months ended Audited
year ended
30-Sep 2021 (£'000) 30-Sep 2020 (£'000)
31-Mar 2021 (£'000)
Profit before taxation 4,787 3,074 7,303
Tax at UK corporation tax rate of 19% (2020: 19%) 910 584 1,388
Expenses not deductible for tax purposes 44 50 63
Capital allowances in excess of depreciation 32 - 6
Adjustments in respect of previous years - - (42)
Share-based payments (66) (220) (189)
Income not taxable - - (34)
Effect of changes in tax rates (31) - -
Total tax expense 889 414 1,192
An increase in the UK corporation rate from 19% to 25% (effective 1 April
2023) was substantively enacted on 24 May 2021. This will increase the
company's future current tax charge accordingly. The deferred tax asset at 30
September 2021 has been calculated based on these rates, reflecting the
expected timing of reversal of the related temporary differences
(31 March 2021: 19%).
6 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 period.
NUMBER OF SHARES
Number of shares Unaudited six months ended Unaudited six months ended Audited
year ended
30-Sep 2021 30-Sep 2020
31-Mar 2021
Basic
Weighted average number of shares in issue 57,937,803 56,126,791 56,835,807
Effect of own shares held by an EBT (745,506) (413,411) (551,954)
57,192,297 55,713,380 56,283,853
Diluted
Effect of weighted average number of options outstanding for the year 3,266,404 2,307,336 2,966,507
Weighted average number of shares in issue (diluted)(1) 60,458,701 58,020,716 59,250,360
Adjusted diluted
Effect of full dilution of employee share options which are contingently 1,429,271 3,579,201 2,370,976
issuable or have future attributable service costs
Adjusted diluted weighted average number of options and shares for the 61,887,972 61,599,917 61,621,336
year(2)
1 The weighted average number of shares is diluted due to the
effect of potentially dilutive contingent issuable shares from share option
schemes.
2 The dilutive shares used for this measure differ from those used
for statutory dilutive earnings per share; the future value of service costs
attributable to employee share options is ignored and contingently issuable
shares for Long-Term Incentive Plan ("LTIP") options are assumed to fully
vest. The Directors have selected this measure as it represents the
underlying effective dilution by offsetting the impact to the calculation of
basic shares of the purchase of shares by the EBT to satisfy options.
Own shares held by an Employee Benefit Trust ("EBT") represents the Company's
own shares purchased and held by the EBT. During the Period the EBT bought
966,546 of the Company's own shares, resulting in a total of 1,741,703. These
shares were subsequently fully utilised during the Period to satisfy the
exercise of employees' EMI options. In the year ended 31 March 2021 the EBT
purchased 361,746 of the Company's own shares.
Unaudited six months ended 30-Sep 2021 (£'000) Unaudited six months ended 30-Sep 2020 (£'000) Audited
year ended 31-Mar 2021
(£'000)
Earnings attributable to ordinary shareholders
Basic and diluted profit for the period 3,898 2,660 6,111
Share-based payments - IFRS 2 option charges 1,735 1,642 3,740
Amortisation of customer relationship intangibles 60 60 120
Exceptional costs (note 4) 187 219 34
Tax impact of adjustments (457) (544) (923)
Adjusted basic and diluted profits for the period and attributable earnings 5,423 4,037 9,082
Earnings per share - basic (pence) 6.82 4.77 10.86
Earnings per share - diluted (pence) 6.45 4.58 10.31
Adjusted earnings per share - basic (pence)(1) 9.48 7.25 16.14
Adjusted earnings per share - diluted (pence)(1) 8.76 6.55 14.74
1. Alternative performance measures are detailed in note 15.
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 the strategy and to invest
in opportunities to grow the business and enhance shareholder value.
In August 2021, 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 the year ended 31 March 2021, Tatton Asset Management plc paid the final
dividend related to the year ended 31 March 2020 of £3,552,000 representing
a payment of 6.4p per share. In addition, the Company paid an interim dividend
of £1,999,000 (2020: £1,789,000) to its equity shareholders. This represents
a payment of 3.5p per share (2020: 3.2p per share).
7 INTANGIBLES
Intangible assets
(£'000)
Cost
Balance at 1 April 2020 7,987
Additions 105
Balance at 30 September 2020 8,092
Additions 177
Balance at 31 March 2021 8,269
Additions 5,957
Balance at 30 September 2021 14,226
Accumulated amortisation and impairment
Balance at 1 April 2020 (238)
Charge for the period (161)
Balance at 30 September 2020 (399)
Charge for the period (180)
Balance at 31 March 2021 (579)
Charge for the period (210)
Balance at 30 September 2021 (789)
Carrying amount
At 1 April 2020 7,749
At 30 September 2020 7,693
At 31 March 2021 7,690
At 30 September 2021 13,437
The carrying value of intangibles includes goodwill, customer relationship
intangible assets and software.
All amortisation charges on intangible assets are included within
administrative expenses in the Consolidated Statement of Total Comprehensive
Income.
£5,825,000 of the additions in the Period relate to the acquisition of the
Verbatim funds. No deferred tax on intangible assets has yet been recognised.
This will be recognised once the valuation assessment of the intangible
assets has been completed.
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.
GOODWILL IMPAIRMENT TESTING
For the purpose of impairment testing, goodwill is allocated to the Group's
operating companies, which represents the lowest level within the Group at
which the goodwill is monitored for internal management accounts purposes.
Goodwill acquired in a business combination is allocated, at acquisition, to
the cash-generating units ("CGUs") or group of units that are expected to
benefit from that business combination. The Directors test goodwill annually
for impairment, or more frequently if there are indicators that goodwill
might be impaired. The Directors have considered the carrying value of
goodwill at 30 September 2021 and do not consider that it is impaired.
GROWTH RATES
The value in use is calculated from cash flow projections based on the Group's
forecasts for the year ended 31 March 2021 which are extrapolated for a
further four years. The Group's latest financial forecasts, which cover a
three-year period, are reviewed by the Board.
DISCOUNT RATES
The pre-tax discount rate used to calculate value is 10.8% (2020: 7.7%). The
discount rate is derived from a benchmark calculated from a number of
comparable businesses.
CASH FLOW ASSUMPTIONS
The key assumptions used for the value in use calculations are those regarding
discount rate, growth rates and expected changes in margins. Changes in prices
and direct costs are based on past experience and expectations of future
changes in the market. The growth rate used in the calculation reflects the
average growth rate experienced by the Group for the industry.
From the assessment performed, there are no reasonable sensitivities that
result in the recoverable amount being equal to the carrying value of the
goodwill attributed to the CGU.
8 PROPERTY, PLANT AND EQUIPMENT
Computer, office equipment and motor vehicles Fixtures and fittings Right-of-use assets Total
(£'000) (£'000) (£'000) (£'000)
Cost
Balance at 1 April 2020 588 691 689 1,968
Additions 22 - 242 264
Balance at 30 September 2020 610 691 931 2,232
Additions 45 - - 45
Disposals (223) (214) - (437)
Balance at 31 March 2021 432 477 931 1,840
Additions 17 - 60 77
Balance at 30 September 2021 449 477 991 1,917
Accumulated depreciation and impairment
Balance at 1 April 2020 (470) (326) (138) (934)
Charge for the period (38) (48) (79) (165)
Balance at 30 September 2020 (508) (374) (217) (1,099)
Charge for the period (42) (47) (97) (186)
Disposals 223 214 - 437
Balance at 31 March 2021 (327) (207) (314) (848)
Charge for the period (31) (48) (102) (181)
Balance at 30 September 2021 (358) (255) (416) (1,029)
Carrying amount
At 1 April 2020 118 365 551 1,034
At 30 September 2020 102 317 714 1,133
At 31 March 2021 105 270 617 992
At 30 September 2021 91 222 575 888
All depreciation charges are included within administrative expenses in the
Consolidated Statement of Total Comprehensive Income.
The Group leases buildings, IT equipment and a car. The Group has applied the
practical expedient for low value assets and so has not recognised IT
equipment within right-of-use assets.
The average lease term is five years. No leases have expired in the current
financial period.
RIGHT-OF-USE ASSETS
Unaudited six months ended Unaudited six months ended Audited
year ended
30-Sep 2021 (£'000) 30-Sep 2020 (£'000)
31-Mar 2021 (£'000)
Amounts recognised in profit and loss
Depreciation on right-of-use assets (102) (79) (176)
Interest expense on lease liabilities (11) (11) (25)
Expense relating to short-term leases (15) (36) (44)
Expense relating to low value assets (1) (1) (1)
At 30 September 2021, the Group is committed to £14,000 for short-term
leases. The total cash outflow for leases amounts to £190,000.
9 TRADE AND OTHER RECEIVABLES
Unaudited six months ended Unaudited six months ended Audited
year ended
30-Sep 2021 (£'000) 30-Sep 2020 (£'000)
31-Mar 2021 (£'000)
Trade receivables 275 - 172
Amounts due from related parties - 214 29
Prepayments and accrued income 3,165 3,069 3,060
Other receivables 5,125 1,220 1,041
8,565 4,503 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 (2020: £nil).
The amounts due from related parties are net of provisions. The carrying value
of the provisions as at 30 September 2021 was £1,311,000 (2020: £1,601,000).
The increase in Other receivables largely relates to the money owed to the
Group from the sale of shares on exercise of employee share options. This was
settled shortly after the balance sheet date.
Trade receivable amounts are all held in sterling.
10 TRADE AND OTHER PAYABLES
Unaudited six months ended Unaudited six months ended Audited
year ended
30-Sep 2021 (£'000) 30-Sep 2020 (£'000)
31-Mar 2021 (£'000)
Trade payables 458 582 294
Amounts due to related parties 231 361 236
Accruals 3,307 3,354 3,330
Deferred income 92 93 132
Contingent consideration 3,000 344 -
Other payables 6,635 2,639 3,111
13,723 7,373 7,103
Less non-current portion:
Contingent consideration (3,000) (172) -
Other payables (388) (630) (516)
Total non-current trade and other payables (3,388) (802) (516)
Total current trade and other payables 10,335 6,571 6,587
The increase in Other payables largely relates to an increase in payroll taxes
owed following the exercise of employee share options. This was settled
shortly after the balance sheet date.
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.
11 FINANCIAL INSTRUMENTS
The Group finances its operations through a combination of cash resource and
other borrowings. Short-term flexibility is satisfied by access to a £10m
revolving credit facility.
FAIR VALUE ESTIMATION
IFRS 7 requires disclosure of fair value measurements of financial instruments
by level of the following fair value measurement hierarchy:
· Quoted prices (unadjusted) in active markets for identical assets or
liabilities (level 1).
· Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (level 2).
· Inputs for the asset or liability that are not based on observable market
data (that is, unobservable inputs) (level 3).
All financial assets except for financial investments are categorised as Loans
and receivables and are classified as level 1. Financial investments are
categorised as Financial assets at fair value through profit or loss and are
classified as level 1 and the fair value is determined directly by reference
to published prices in an active market.
Financial assets at fair value through profit or loss (level 1)
Unaudited six months ended Unaudited six months ended Audited
year ended
30-Sep 2021 (£'000) 30-Sep 2020 (£'000)
31-Mar 2021 (£'000)
Financial investments in regulated funds or model portfolios 177 132 163
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 2020 and 30 September 2020 344
Paid in the period (160)
Changes in fair value of contingent consideration (184)
Balance at 31 March 2021 -
Recognised on acquisition 3,000
Balance at 30 September 2021 3,000
12 EQUITY
Number
Authorised, called up and fully paid
At 1 April 2020 55,907,513
Issue of share capital on exercise of employee share options 852,813
At 30 September 2020 56,760,326
Issue of share capital on exercise of employee share options 10,588
Issue of share capital on exercise of share warrant 1,118,151
At 31 March 2021 57,889,065
Issue of share capital on exercise of employee share options 1,016,349
At 30 September 2021 58,905,414
13 SHARE-BASED PAYMENTS
During the Period, a number of share-based payment schemes and share options
schemes have been utilised by the Company.
(A) SCHEMES
(I) Tatton Asset Management plc EMI Scheme ("TAM EMI Scheme")
On 7 July 2017 the Group launched an EMI share option scheme relating to
shares in Tatton Asset Management plc to enable senior management to
participate in the equity of the Company. 3,022,733 options with a weighted
average exercise price of £1.89 were granted, exercisable in July 2020. There
have been 650,933 (2020: 673,568) options exercised during the Period from
this scheme.
The scheme was extended on 8 August 2018, 1 August 2019, 28 July 2020 and 15
July 2021 with 1,720,138, 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 granted in 2018 vested and became
exercisable in August 2021. There have been 1,090,770 options exercised during
the Period from this scheme and 168,201 of these options lapsed.
The options granted in 2019, 2020 and 2021 vest in August 2022, July 2023 and
July 2024 respectively provided certain performance conditions and targets,
set prior to grant, have been met. If the performance conditions are not
met, the options lapse.
A total of 2,726,024 options remains outstanding at 30 September 2021,
1,294,668 of which are currently exercisable. 30,000 options were forfeited
in the Period (2020: 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 options granted (number) Weighted average price (£)
Outstanding at 1 April 2020 4,755,737 1.15
Granted during the period 1,000,000 -
Forfeited during the period - -
Exercised during the period (673,568) 1.70
Outstanding at 30 September 2020 5,082,169 0.85
Exercisable at 30 September 2020 1,522,617 1.89
Outstanding at 1 October2020 5,082,169 0.85
Granted during the period - -
Forfeited during the period - -
Exercised during the period - -
Lapsed during the period (696,099) 1.83
Outstanding at 31 March 2021 4,386,070 0.66
Exercisable at 31 March 2021 2,196,185 1.89
Outstanding at 1 April 2021 4,386,070 0.66
Granted during the period 279,858 -
Forfeited during the period (30,000) -
Lapsed during the period (168,201) -
Exercised during the period (1,741,703) 1.70
Outstanding at 30 September 2021 2,726,024 0.60
Exercisable at 30 September 2021 1,294,668 1.27
(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.
The 2018 TAM Sharesave scheme vested in August 2021 and 48,688 shares options
became exercisable. Over the life of the 2019, 2020 and 2021 TAM Sharesave
schemes it is estimated that, based on current savings rates, 75,610, 122,866
and 47,380 share options respectively will be exercisable. The exercise price
for these schemes in shown overleaf.
During the Period, 49,803 (2020: 189,833) options have been exercised and
4,070 (2020: 2,940) options have been forfeited.
Within the accounts of the Company, the fair value at grant date is estimated
using the Black-Scholes methodology for 100% of the options. Share price
volatility has been estimated using the historical share price volatility of
the Company, the expected volatility of the Company's share price over the
life of the options and the average volatility applying to a comparable group
of listed companies. Key valuation assumptions and the costs recognised
in the accounts during the Period are noted in (B) and (C) overleaf
respectively.
Number of share options granted (number) Weighted average price (£)
Outstanding at 1 April 2020 223,728 1.73
Granted during the period 48,727 1.85
Forfeited during the period (1,412) 1.70
Exercised during the period (179,245) 1.70
Outstanding at 30 September 2020 91,798 1.75
Exercisable at 30 September 2020 21,176 1.70
Outstanding at 1 October 2020 91,798 1.75
Granted during the period 22,167 1.95
Forfeited during the period (1,528) 2.29
Exercised during the period (10,588) 1.70
Outstanding at 31 March 2021 101,849 1.70
Exercisable at 31 March 2021 10,588 1.70
Outstanding at 1 April 2021 101,849 1.73
Granted during the period 60,779 2.17
Forfeited during the period (4,070) 2.13
Exercised during the period (49,803) 1.86
Outstanding at 30 September 2021 108,755 2.03
Exercisable at 30 September 2021 9,473 1.90
(B) VALUATION ASSUMPTIONS
Assumptions used in the option valuation models to determine the fair value of
options at the date of grant were as follows:
EMI scheme Sharesave scheme
2021 2020 2019 2018 2021 2020 2019 2018
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 (0.14) 0.35 0.81 0.12 (0.57) 0.35 0.81
Expected dividend yield (%) 2.39 3.38 3.96 2.75 2.39 3.38 3.96 2.75
(C) IFRS 2 SHARE-BASED OPTION COSTS
Unaudited six months ended 30-Sep 2021 (£'000) Unaudited six months ended 30-Sep 2020 (£'000) Audited
year ended 31-Mar 2021 (£'000)
TAM EMI scheme 1,707 1,620 3,716
TAM Sharesave scheme 28 22 24
1,735 1,642 3,740
14 RELATED PARTY TRANSACTIONS
There have been no related party transactions that have taken place during the
Period that have materially affected the financial position or the
performance of the Group. There were also no changes to related party
transactions from those disclosed in the 2021 Annual Report and Financial
Statements that could have a material effect on the financial position or the
performance of the Group. Transactions between the Company and its
subsidiaries have been eliminated on consolidation and are not disclosed.
There were no other transactions with related parties which were not part of
the Group during the Period, with the exception of remuneration paid to key
management personnel.
15 ALTERNATIVE PERFORMANCE MEASURES ("APMs")
INCOME STATEMENT MEASURES
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 client An important measure where exceptional items distort the understanding of the
relationship intangibles. See note 4. operating performance of the business. Allows comparability between periods.
See also note 2.6.
Adjusted operating profit margin before separately disclosed items Operating profit Exceptional items, share-based payments and amortisation of client An important measure where exceptional items distort the understanding of the
relationship intangibles. See note 4. operating performance of the business. Allows comparability between periods.
See also note 2.6.
Adjusted profit before tax before separately disclosed items Profit before Exceptional items, share-based payments and amortisation of client An important measure where exceptional items distort the understanding of the
tax relationship intangibles. See note 4. operating performance of the business. Allows comparability between periods.
See also note 2.6.
Adjusted earnings per share - basic Earnings per share - basic Exceptional items, share-based payments and amortisation of client An important measure where exceptional items distort the understanding of the
relationship intangibles and the tax thereon. See note 6. operating performance of the business. Allows comparability between periods.
See also note 2.6.
Adjusted earnings per share - diluted Earnings per share - diluted Exceptional items, share-based payments and amortisation of client An important measure where exceptional items distort the understanding of the
relationship intangibles and the tax thereon. The dilutive shares for this operating performance of the business. Allows comparability between periods.
measure assume that all contingently issuable shares will fully vest. See note See also note 2.6.
6.
Net cash generated from operations before separately disclosed items Net cash generated from operations Exceptional items, share-based payments and amortisation of client Net cash generated from operations before exceptional costs. To show
relationship intangibles. See note 4. underlying cash performance. See also note 2.6.
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.
16 EVENTS AFTER THE REPORTING PERIOD
There were no material post balance sheet events.
17 CONTINGENT LIABILITIES
At 30 September 2021, the Directors confirmed there were contingent
liabilities of £nil (2020: £nil).
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