REG - Tatton Asset Mgt PLC - Trading Update and Proposed Acquisition

Tatton Asset ManagementAnnouncement

20/04/2022 07:00

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RNS Number : 6500I  Tatton Asset Management PLC  20 April 2022

20 April 2022

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", the "Group" or the "Company")

TRADING UPDATE AND ACQUISITION

TRADING UPDATE, PROPOSED ACQUISITION AND NOTICE OF FINAL RESULTS

 

Tatton Asset Management plc (AIM: TAM), the investment management and IFA
support services group, today announces the following unaudited trading update
for the year ended 31 March 2022 ("FY22", the "Period" or the "Year"), which
shows strong organic growth in line with expectations. The Group's audited
Final Results are scheduled to be released on 15 June 2022.

 

TAM also announces that it has entered into a sale and purchase agreement
("SPA") to purchase (the "Proposed Acquisition") 50% of the issued share
capital of 8AM Global Limited ("8AM") for a total consideration of c.£7.0
million (the "Consideration"), with an option to acquire a further 50% in due
course. The transaction remains subject to regulatory approval.

 

TRADING UPDATE

Record net inflows have contributed to a strong performance in FY22 and the
Board is confident that the financial results for the year will be in line
with consensus market expectations.

 

Highlights

Assets under management ("AUM") increased by 26.1% over the year to £11.34
billion (2021: £8.99 billion). Tatton Investment Management maintained a
strong performance in the second half of the year with healthy net inflows of
£0.625 billion, an average of £106 million per month. The total inflows for
the year were £1.277 billion (2021: £0.755 billion), an increase of 14.2% on
the opening AUM. The acquisition of the Verbatim funds added £0.650 billion
and market returns contributed a further 4.7% or £0.420 billion.

                                    Total £bn
 Opening AUM 1 April 2021           8.99
 Organic Net flows                  1.28
 Acquisition (Verbatim)             0.65
 Market and investment performance  0.42
 Closing AUM 31 March 2022          11.34

 

Paradigm has performed well with Consulting member firms increasing to 421
(2021: 407) and Mortgage firms increasing to 1,674 (2021: 1,612). Mortgage
completions remained strong following the end of the government's stamp duty
reduction in September 2021 with over £6.0 billion of completions being
delivered in H2 FY22. Total completions for the year have increased by 13.3%
to £12.8 billion (2021: £11.3 billion) delivering a record year.

 

The Group ended the year with cash on the balance sheet of £21.7million.

 

THE PROPOSED ACQUISITION

8AM is an investment manager primarily focussed on delivering risk-profiled
model portfolios ("MPS") and a small range of multi-manager funds. Their model
portfolios and funds will complement TAM's existing proposition, further
demonstrating our commitment to supporting financial advisers in delivering
low-cost investment management and enhancing IFA client outcomes. The
proposed acquisition will provide our IFAs' clients access to an extended
range of risk profiled investments utilising 8AM's experience, investment
style and approach. On completion we anticipate 8AM's AUM to be in the region
of £0.8 billion.

 

Key highlights:

·      Contributes to the Group's "Roadmap to Growth" strategy adding
c.£0.8 billion of Assets Under Influence ("AUI") to TAM's existing AUM of
£11.3 billion;

·      Gives TAM access to a broader distribution base of UK financial
advisers;

·      Adds an ambitious and strong management team with a wealth of
industry experience;

·      The Consideration of c.£7.0 million represents 0.88% of AUI, and
comprises 50% or £3.5 million of initial consideration, payable through the
issue of new shares, and £3.5 million deferred consideration payable in equal
cash instalments against financial performance targets at the end of the first
year and second year post completion, with an option to acquire the remaining
50% of 8AM's share capital following the deferred consideration period; and

·      Expected to be earnings enhancing with contribution from the 50%
shareholding expected to generate adjusted operating profit of £0.7m in its
first full year

 

 

Commenting on the results for the financial year, Paul Hogarth, Chief
Executive Officer, said:

 

"The Group has delivered another good year of growth across both divisions and
I am particularly pleased with the significant increase in net new inflows to
the Group which underpins the organic growth opportunity that exists in our
market. The last quarter was a difficult environment from a geopolitical and
economic perspective, but we demonstrated the resilience of our business model
maintaining robust net inflows and finished the year strongly with £11.3
billion of AUM.

 

"Paradigm also delivered a pleasing year, in particular mortgage completions
remained strong despite the removal of Government incentives and a changing
market landscape."

 

Commenting on the Proposed Acquisition and outlook he added:

"I am also delighted to announce the proposed acquisition of 50% of the share
capital of 8AM Global Limited, an ambitious and growing DFM MPS business. The
business complements our existing offering and brings with it an experienced
and motivated management team who are well known to us and culturally aligned
to the values of the Group. We are very much looking forward to working with
them.

 

"Post completion, this will be the second acquisition in less than a year for
the Group, demonstrating that we are executing on our three year "Roadmap to
Growth" strategy. With a three-year target of £6.0 billion of growth in AUM,
at the end of the first year we remain on target to achieve this. This year we
have grown organically by £1.7 billion and acquisitions to date have
contributed a further £0.6 billion, a total contribution of £2.3 billion
towards the target and on completion 8AM will further enhance this number.

 

"We look forward with confidence as we make further progress and continue to
deliver against our strategic objectives."

 

Commenting on the proposed transaction, Managing Director of 8AM Global
Limited Jeremy Nunn said:

"We are delighted with the proposed sale of 50% of the share capital of 8AM to
Tatton Asset Management plc. The sale will allow 8AM to build on its success
and provide us with access to the know-how and expertise of one of the market
leaders in the MPS space. It will act as a springboard for the growth of our
assets under management and provide advisers and investors with the comfort
that the development and resilience of the 8AM products will continue to be at
the forefront of our plans."

 

 

For further information please contact:

 

 Tatton Asset Management PLC

 Paul Hogarth (Chief Executive Officer)

 Paul Edwards (Chief Financial Officer)

 Lothar Mentel (Chief Investment Officer)

                                                  +44 (0) 161 486 3441
 Zeus Capital - Nomad and Broker

 Martin Green

 Dan Bate

                                                  +44 (0) 20 3829 5000
 Singer Capital Markets- Joint Broker

 Peter Steel, Rachel Hayes (Investment Banking)   +44 (0) 20 7496 3000

 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                            +44 (0) 20 7139 1452

 Roddi Vaughan Thomas

 

For more information, please visit: www.tattonassetmanagement.com
(http://www.tattonassetmanagement.com)

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