REG - Tatton Asset Mgt PLC - Unaudited Interim Results
16/11/2023 07:00
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RNS Number : 6021T Tatton Asset Management PLC 16 November 2023
16 November 2023
Tatton Asset Management PLC
("TAM plc", the "Group" or the "Company")
AIM: TAM
UNAUDITED INTERIM RESULTS
For the six-month period ended 30 September 2023
"Strong net inflows underpin the Group's track record of consistent growth"
TAM plc, the investment management and IFA support services group, today
announces its interim results for the six-month period ended 30 September 2023
(the "Period").
FINANCIAL HIGHLIGHTS
● Group revenue increased 9.9% to £17.506m (Sep 2022: £15.934m)
● Adjusted operating profit(1) up 11.2% to £8.872m (Sep 2022: £7.982m)
● Adjusted operating profit(1) margin 50.7% (Sep 2022: 50.1%)
● Adjusted fully diluted EPS(2) increased 6.4% to 10.52p (Sep 2022: 9.89p)
● Strong financial liquidity position, with net cash of £24.222m (Mar 2023:
£26.494m)
● Interim dividend(3) up 77.8% to 8.0p (Sep 2022: 4.5p)
● Strong balance sheet with net assets £40.336m
(1) Operating profit before exceptional items, share-based payment charges and
amortisation of acquired intangibles.
(2) Adjusted fully diluted earnings per share is adjusted for exceptional items,
share-based payment charges, amortisation of acquired intangibles, the
unwinding of discount on deferred consideration and the tax thereon. The
dilutive shares for this measure assumes that all contingently issuable shares
will fully vest.
(3) A larger element of this year's total dividend has been brought forward, our
progressive dividend policy of paying c.70% of annual adjusted diluted
earnings per share remains unchanged.
OPERATIONAL HIGHLIGHTS
● Assets Under Management/Influence ("AUM/I") increased 19.8% to £14.784bn (Sep
2022: £12.343bn). AUM/I at 31 March 2023 £13.871bn, an annualised increase
of 13.2%
● Organic net inflows were £0.910bn (Sep 2022: £0.907bn), an annualised
increase of 13.1% of opening AUM/I with an average run rate of £152m per
month
● Tatton's IFA firms increased by 5.2% to 914 (Mar 2023: 869) and the number of
accounts increased 7.1% to 114,650 (Mar 2023: 107,010)
● Paradigm Mortgages completions reduced by 5.5% to £6.9bn (Sep 2022: £7.3bn).
Paradigm Mortgages member firms increased to 1,798 members (Mar 2023: 1,751
members)
● Paradigm Consulting members increased to 437 (Mar 2023: 431)
● Expansion of MPS range with the successful launch of Money Market risk profile
● Implementation of Consumer Duty regulation - strong alignment with Tatton's
MPS proposition and core values
Paul Hogarth, Chief Executive Officer, commented:
"The Group has delivered a solid first half result, successfully meeting our
strategic objectives and maintaining strong organic growth of revenue and
profits. While volatile markets continued to be a challenge, our Assets Under
Management/Influence (AUM/I) still reached £14.8 billion and we expect to
exceed our £15 billion "Roadmap to Growth" strategy by March 2024.
"I am delighted with the performance of Tatton, which has continued to perform
strongly by consistently delivering an average of £150 million net inflows
per month over the last eighteen months. This level of net inflow has
continued into the second half, reinforcing the attractiveness of the MPS
proposition and highlighting our ability to maintain consistent performance
even in difficult macroeconomic conditions.
"Paradigm has also delivered a resilient performance in the period, despite a
subdued housing market which has led to a changing mix of mortgage lending. We
anticipate that this trend will continue throughout the second half of the
year, with expectations for Paradigm to maintain its resilient performance.
"We look forward to making further progress over the rest of the year, while
remaining acutely aware of the continuing macroeconomic turbulence and market
volatility. The Board remains confident in the future prospects of the Group."
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 (Investment Banking)
Dan Bate (Investment Banking and QE)
Singer Capital Markets - Joint Broker
Peter Steel / Charles Leigh-Pemberton (Investment Banking) +44 (0) 20 7496 3000
Belvedere Communications - Financial PR
John West / Llew Angus (media) 44 (0) 20 7653 8705
Cat Valentine / Keeley Clarke (investors) +44 (0) 7715 769078
tattonpr@belvederepr.com
Trade Media Enquiries
Roddi Vaughan Thomas +44 (0) 7469 854 011
For more information, please visit: www.tattonassetmanagement.com
(http://www.tattonassetmanagement.com)
STRATEGIC REVIEW
The Group maintains a track record of steady growth
The Group has performed well in the Period and delivered continued growth
in revenue and profits, with strong net inflows reflecting high demand for
our services. We have continued to make substantial progress in line with our
strategic objectives, in what has been a difficult and volatile market,
demonstrating the effectiveness of our business model.
Group revenue for the Period increased by 9.9% to £17.506 million (Sep 2022:
£15.934 million). Adjusted operating profit(1) for the Period increased by
11.2% to £8.872 million (Sep 2022: £7.982 million), with adjusted operating
profit margin(1) at 50.7% (Sep 2022: 50.1%).
Pre-tax profit after the impact of amortisation of intangibles relating to
acquisitions and joint ventures, finance costs and share-based payment charges
increased to £7.693 million (Sep 2022: £6.624 million) and taxation charges
for the Period were £2.302 million (Sep 2022: £1.291 million). This gives an
effective tax rate of 29.9% when measured against profit before tax. Adjusting
for amortisation and share-based payments, the effective tax rate is 25.8%.
The basic earnings per share was 8.97p (Sep 2022: 9.01p). When adjusted for
amortisation of intangibles relating to acquisitions and joint ventures,
finance costs relating to the unwinding of discounts on deferred
consideration, and share-based payment charges, basic adjusted earnings per
share was 11.08p (Sep 2022: 10.43p). Adjusted earnings per share fully
diluted for the impact of share options was 10.52p (Sep 2022: 9.89p),
an increase of 6.4%.
Tatton
Tatton continues to perform strongly and has sustained strong organic net
inflows in an environment where, in general, asset managers have been
suffering redemptions. In the last six months, organic net inflows have
averaged £152 million per month and were in total £910 million (Sep 2022:
£907 million). In fact, over the last eighteen months we have now
consistently delivered an average of £150 million per month, which
reinforces both the attractiveness of the model portfolio services ("MPS")
proposition and our ability to maintain consistency of performance even in
difficult macroeconomic conditions.
The total AUM/AUI(1) at the end of the Period increased to £14.784 billion
(Mar 2023: £13.871 billion). As we enter the final leg of the journey in
our "Roadmap to Growth" strategy of delivering £15 billion AUM/AUI(1) by
March 2024, we remain very confident that we will exceed this amount by the
target date.
Platforum, the Financial Services research consultants, have maintained their
forecast that the MPS market is expected to grow at a rate of 25% per annum
and reach up to £200 billion by the end of 2026 (Platforum MPS Report: July
2023). The current level of MPS on platform is £103.5 billion (Dec 2021:
£81.4 billion). The Group has £14.784 billion, or 14.3% share of this
market (Mar 2023: 13.4%).
Through this market growth and our increased activity, Tatton's revenue has
increased by 13.4% to £14.451 million (Sep 2022: £12.738 million) and now
accounts for 82.5% of total Group revenue. Meanwhile, Tatton's adjusted
operating profit(1) grew by 17.3% to £8.986 million (Sep 2022: £7.663
million), delivering an adjusted operating profit margin(1) of 62.2% (Sep
2022: 60.2%).
This Period has also seen an expansion in our range of propositions. With the
changing shape of the economic landscape and the potential for investor
fatigue from market volatility coupled with rising interest rates, we launched
a new risk rating within our MPS range, the Money Market risk profile. Our
new risk profile offers the potential for clients to receive a return on cash
that tracks the Bank of England base rate more closely than most instant
access UK bank deposit accounts. While still early days, the initial uptake
has been encouraging as we continue to support IFAs and their clients by
providing products that meet their evolving needs.
Our strategy to promote and support the growth of the MPS market on platform
through a wide-ranging IFA education programme will continue. We also continue
to increase our market penetration through a broadened distribution base. As a
minimum, we aim to maintain our market share and continue to grow our
distribution footprint through meaningful strategic partnerships. In support
of this, we have been pleased to see our IFA firms continue to grow by over
5.2% to 914 (Mar 2023: 869) over this Period. We look forward to seeing these
close relationships continue to develop in the coming months as intensive
activity continues to further promote the Tatton service.
As we look ahead, we will keep the needs of the IFA at the heart of our
business as this remains central to all we do. This year we welcomed the
launch of Consumer Duty regulation and we continue to help and assist IFAs in
meeting the rising regulatory bar by continuing to build and strengthen
long-term partnerships. We aim to deliver a consistent high level of service,
investment performance and IFA support. Consequently, we were delighted to be
recognised as leaders in our field for a sixth year running by Moneyfacts,
this year winning both the "Best Investment Service" award for the second
consecutive year and also this year the "Best Ethical Fund Manager" - voted
for by IFAs across the UK.
As we head towards the end of our £15 billion three-year strategic growth
target by the end of March 2024, we have broadly delivered the target with six
months remaining. The business has made strong progress over this Period and
we look forward to making further progress in the coming years. Setting
targets keeps the Group focused and has served the Group well as we have
consistently met our goals. It has taken Tatton ten years to grow to £15
billion and we intend to set a new ambitious AUM/AUI(1) target following the
end of this financial year, March 2024. To do this, we will give careful
thought to the stability of the market environment at that time, but more
importantly, taking into consideration our leading position in the growing and
maturing MPS market, the strength of our brand and the quality
of the Tatton proposition.
Paradigm
Paradigm has delivered a resilient performance in the Period, delivering
revenue of £3.059 million (Sep 2022: £3.198 million) and adjusted operating
profit(1) of £0.959 million (Sep 2022: £1.352 million). Paradigm Mortgages
increased the number of mortgage firms utilising the services to 1,798 (Mar
2023: 1,751) and Paradigm Consulting increased its members to 437 (Mar 2023:
431).
Paradigm Consulting continues to perform in line with our expectations and
Paradigm Mortgages has continued to deliver a strong volume of completions in
a challenging economic climate, where lenders are predicting a gross market of
c.£220 billion in 2023, c.30% below 2022 volumes of £320 billion.
Intermediary channel share, as opposed to mortgages sold direct by banks,
continued to grow, reaching c.85% of all new sales and record product transfer
maturities despite significantly reduced residential purchases. New mortgage
and remortgage activity helped Paradigm Mortgages participate in completions
totalling £6.9 billion (Sep 2022: £7.3 billion), a 5.5% reduction, which
compares well with the total market and demonstrates the resilience of the
Paradigm business.
The ongoing cost of living issues, driven by the economic climate and
stubborn inflationary pressures, have negatively impacted mortgage
affordability and confidence of both sellers and buyers. As a consequence,
mortgage intermediaries have focused on maturities (Product Transfers) which,
for the first time on record, are likely to exceed the value of gross
mortgages. The impact of rising interest rates has also had a significant
impact on both the supply and confidence in both the residential and buy to
let mortgage market throughout 2023, and the nature and distribution of our
completions this Period has reflected the wider market and shifted towards
this lower margin product mix.
Looking forward, CACI, the retail finance benchmarking specialist, confirms
that there are c.£176 billion of maturities in the second half of the
calendar year 2023, with record peaks expected in both November and December.
These product transfer opportunities, combined with a more stable but subdued
house purchase market, improving consumer confidence and greater
affordability, suggests a similar volume and mix of completions for the
second half of our financial year.
There continues to be underlying demand for home ownership in the UK, albeit
lower levels of new build activity means stock remains stubbornly low.
However, on a point of optimism, subdued house prices and wage
increases/inflation have led to a fall of up to 10% in the house price to
income ratio, which has led to greater affordability in both consumer and
lender outlook.
Lenders are now delivering record levels of choice of available products and
rates continue to fall. In addition, with house price falls stabilising, we
believe that, once inflation is seen to be under control and rates begin to
fall further, pent up purchase activity will once again provide a strong
mortgage market.
Separately disclosed items
Share-based payment charges, amortisation of intangible assets relating to
acquisitions and joint ventures, and exceptional items 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 presented within the internal reporting
to the Board. Some of these measures are also used for the purpose
of setting remuneration targets.
Balance sheet
The Group's balance sheet remains healthy, with net assets at 30
September 2023 totalling £40.3 million (Sep 2022: £35.7 million) reflecting
the continued growth and profitability of the Group.
Cash resources
Cash generated from operations before exceptional costs was £8.3 million (Sep
2022: £7.3 million) and was 93% of adjusted operating profit(1). The Group
remains debt free, with closing net cash at the end of the Period of £24.2
million (Mar 2023: £26.5 million). The cash resources are after the purchase
of own shares of £2.6m, the payment of corporation tax of £2.2 million and
dividend payments of £6.0 million relating to the final dividend for the
year ended 31 March 2023.
Issue of new shares
In the Period, the Group issued 455,677 new shares, which were issued to
satisfy the exercise of options related to the Enterprise Management Incentive
("EMI") and Company's Save As You Earn ("SAYE") employee share option schemes.
Dividend proposal and capital adequacy
In this interim period, the Board recommends an increase in the interim
dividend to 8.0p (Sep 2022: 4.5p), an increase of 77.8%. A larger element of
this year's total dividend has been brought forward to the interim dividend
and reflects the confidence of the Board in the Group's financial performance,
high levels of cash and liquidity, and headroom over our regulatory capital
requirement. Our long-held progressive dividend policy of paying c.70% of
annual adjusted diluted earnings per share remains unchanged.
The interim dividend of 8.0p per share, totalling £4.8 million, will be paid
on 8 December 2023 to shareholders on the register at close of business on 24
November 2023 and will have an ex-dividend date of 23 November 2023. 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 2023 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 twelve months from the date
of this report. Accordingly, they continue to adopt the going concern basis in
preparing these condensed financial statements.
Summary and outlook
The Group has delivered a solid first half result, delivering against
our strategic objectives and maintaining strong organic growth of revenue
and profits. While volatile markets continued to remain a drag on asset
growth at the end of this Period, our AUM/AUI(1) still reached £14.8 billion
and we are pleased with the overall performance of the Group.
Net inflows remained very strong in the first six months and we remain focused
on continuing to deliver similar levels of flows but remain mindful of the
economic environment. However, we expect to exceed our £15 billion "Roadmap
to Growth" strategy by March 2024 and Paradigm should continue to perform
in line with the first half of the year.
In summary, we look forward to making further progress over the rest of the
year, while remaining acutely aware of the continuing macroeconomic turbulence
and market volatility. The Board remains confident in the future prospects of
the Group.
(1) Alternative performance measures are detailed in note 17
CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
For the six months ended 30 September 2023
Note Unaudited six months ended Unaudited six months ended
30-Sep 2023 30-Sep 2022 Audited year ended
(£'000) (£'000) 31-Mar 2023
(£'000)
Revenue 17,506 15,934 32,327
Share of profit from joint venture 257 - 160
Administrative expenses (10,030) (9,006) (15,877)
Operating profit 7,733 6,928 16,610
Share-based payment costs 4 829 495 1,511
Amortisation of acquisition-related intangibles 4 310 207 534
Gains arising on changes in fair value of contingent consideration 4 - - (2,651)
Exceptional items 4 - 352 398
Adjusted operating profit (before separately disclosed items)(1) 8,872 7,982 16,402
Finance costs (40) (304) (614)
Profit before tax 7,693 6,624 15,996
Taxation charge 5 (2,302) (1,291) (2,623)
Profit attributable to shareholders 5,391 5,333 13,373
Earnings per share - Basic 6 8.97p 9.01p 22.43p
Earnings per share - Diluted 6 8.66p 8.72p 21.70p
Adjusted earnings per share - Basic(2) 6 11.08p 10.43p 21.72p
Adjusted earnings per share - Diluted(2) 6 10.52p 9.89p 20.61p
(1) Adjusted for exceptional items, share-based payment charges and amortisation
of acquired intangibles. See note 17.
(2) Adjusted for exceptional items, share-based payment charges, amortisation of
acquired intangibles, the unwinding of discount on deferred consideration and
the tax thereon. The dilutive shares for this measure assumes that all
contingently issuable shares will fully vest. See note 17.
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 2023
Note Unaudited six months ended Unaudited six months ended Audited year ended
30-Sep 2023 30-Sep 2022 31-Mar 2023
(£'000) (£'000) (£'000)
Non-current assets
Investment in joint ventures 8 6,820 6,996 6,762
Goodwill 7 9,337 9,337 9,337
Intangible assets 9 3,405 3,831 3,615
Property, plant and equipment 10 328 593 454
Deferred tax assets 1,541 806 1,258
Other receivables 11 188 - -
Total non-current assets 21,619 21,563 21,426
Current assets
Trade and other receivables 11 4,078 3,902 3,782
Financial assets at fair value through profit or loss 13 175 122 123
Corporation tax 570 941 121
Cash and cash equivalents 24,222 21,622 26,494
Total current assets 29,045 26,587 30,520
Total assets 50,664 48,150 51,946
Current liabilities
Trade and other payables 12 (8,013) (6,633) (7,911)
Total current liabilities (8,013) (6,633) (7,911)
Non-current liabilities
Other payables 12 (2,315) (5,851) (2,254)
Total non-current liabilities (2,315) (5,851) (2,254)
Total liabilities (10,328) (12,484) (10,165)
Net assets 40,336 35,666 41,781
Equity attributable to equity holders of the entity
Share capital 12,102 12,006 12,011
Share premium account 15,487 15,219 15,259
Own shares (2,567) - -
Other reserve 2,041 2,041 2,041
Merger reserve (28,968) (28,968) (28,968)
Joint venture reserve 37 - (21)
Retained earnings 42,204 35,368 41,459
Total equity 40,336 35,666 41,781
The financial statements were approved by the Board of Directors on 15
November 2023 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 2023
Share capital (£'000) Share premium Own shares (£'000) Other reserve (£'000) Merger reserve (£'000) Joint venture reserve (£'000) Retained earnings Total equity (£'000)
(£'000) (£'000)
At 1 April 2022 11,783 11,632 - 2,041 (28,968) - 34,556 31,044
Profit and total comprehensive income - - - - - - 5,333 5,333
Dividends - - - - - - (5,012) (5,012)
Share-based payments - - - - - - 658 658
Tax on share-based payments - - - - - - (167) (167)
Issue of share capital on exercise of employee share options 47 77 (28) - - - - 96
Own shares utilised on exercise of options - - 28 - - - - 28
Issue of share capital on acquisition of a joint venture 176 3,510 - - - - - 3,686
At 30 September 2022 12,006 15,219 - 2,041 (28,968) - 35,368 35,666
Profit and total comprehensive income - - - - - 39 8,001 8,040
Dividends - - - - - - (2,702) (2,702)
Share-based payments - - - - - - 649 649
Tax on share-based payments - - - - - - 83 83
Issue of share capital on exercise of employee share options 5 40 - - - - - 45
Dividends received from joint venture - - - - - (60) 60 -
At 31 March 2023 12,011 15,259 - 2,041 (28,968) (21) 41,459 41,781
Profit and total comprehensive income - - - - - 178 5,213 5,391
Dividends - - - - - - (6,006) (6,006)
Share-based payments - - - - - - 521 521
Tax on share-based payments - - - - - - 897 897
Issue of share capital on exercise of employee share options 91 228 - - - - - 319
Own shares acquired in the Period - - (2,567) - - - - (2,567)
Dividends received from joint venture - - - - - (120) 120 -
At 30 September 2023 12,102 15,487 (2,567) 2,041 (28,968) 37 42,204 40,336
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 September 2023
Note Unaudited six months ended Unaudited six months ended Audited year ended
30-Sep 2023 30-Sep 2022 31-Mar 2023
(£'000) (£'000) (£'000)
Operating activities
Profit for the Period 5,391 5,333 13,373
Adjustments:
Income tax expense 5 2,302 1,291 2,623
Finance costs 40 304 614
Depreciation of property, plant and equipment 10 192 190 384
Amortisation of intangible assets 9 330 330 661
Share-based payment expense 4 829 495 1,420
Post-tax share of profits of joint venture less amortisation of related (153) (40) (39)
intangible assets
Changes in fair value of contingent consideration - - (2,651)
Changes in:
Trade and other receivables (619) (169) (146)
Trade and other payables (46) (751) (449)
Exceptional costs - 352 398
Cash generated from operations before exceptional costs 8,266 7,335 16,188
Cash generated from operations 8,266 6,983 15,790
Income tax paid (2,160) (1,620) (2,559)
Net cash from operating activities 6,106 5,363 13,231
Investing activities
Payment for the acquisition of subsidiary, net of cash acquired - - (152)
Purchase of intangible assets (120) (114) (229)
Purchase of property, plant and equipment (66) (34) (89)
Cost of underwriting shares - (152) -
Net cash used in investing activities (186) (300) (470)
Financing activities
Interest received/(paid) 146 (92) (186)
Dividends paid (6,006) (5,012) (7,714)
Dividends received from joint venture 120 - 60
Proceeds from the issue of shares 249 87 132
Purchase of own shares (2,567) - -
Repayment of the lease liabilities (134) (134) (269)
Net cash used in financing activities (8,192) (5,151) (7,977)
Net (decrease)/increase in cash and cash equivalents (2,272) (88) 4,784
Cash and cash equivalents at beginning of Period 26,494 21,710 21,710
Net cash and cash equivalents at end of Period 24,222 21,622 26,494
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 IFAs, the provision of mortgage adviser support services
and the marketing and promotion of multi-manager funds run by the companies
under Tatton Capital Limited.
The condensed consolidated interim financial statements for the six months
ended 30 September 2023 do not constitute statutory accounts as defined under
section 434 of the Companies Act 2006. The Annual Report and Accounts (the
"financial statements") for the year ended 31 March 2023 were approved by the
Board on 12 June 2023 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 2023 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 2023, 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 15 November 2023.
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 as this is the currency of the
jurisdiction where all 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 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 2023.
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 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 2024 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
2023, 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 2023.
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 17, 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 ("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. Centrally incurred overhead costs are allocated to the Tatton and
Paradigm divisions on a pro rata basis as this is how information is
presented to the Group's CODM.
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:
Tatton Paradigm Central Group
Period ended 30 September 2023 (£'000) (£'000) (£'000) (£'000)
Revenue 14,451 3,059 (4) 17,506
Share of post-tax profit from joint ventures 257 - - 257
Administrative expenses (6,032) (2,100) (1,898) (10,030)
Operating profit/(loss) 8,676 959 (1,902) 7,733
Share-based payment costs - - 829 829
Amortisation of acquisition-related intangibles 310 - - 310
Exceptional costs - - - -
Adjusted operating profit/(loss) (before separately disclosed items)(1) 8,986 959 (1,073) 8,872
Finance costs 43 (1) (82) (40)
Profit/(loss) before tax 8,719 958 (1,984) 7,693
Period ended 30 September 2022 Tatton Paradigm Central Group
(£'000) (£'000) (£'000) (£'000)
Revenue 12,738 3,198 (2) 15,934
Administrative expenses (5,634) (1,846) (1,526) (9,006)
Operating profit/(loss) 7,104 1,352 (1,528) 6,928
Share-based payment costs - - 495 495
Amortisation of acquisition-related intangibles 207 - - 207
Exceptional costs 352 - - 352
Adjusted operating profit/(loss) (before separately disclosed items)(1) 7,663 1,352 (1,033) 7,982
Finance costs (124) (1) (179) (304)
Profit/(loss) before tax 6,980 1,351 (1,707) 6,624
Year ended 31 March 2023 Tatton Paradigm Central Group
(£'000) (£'000) (£'000) (£'000)
Revenue 25,929 6,404 (6) 32,327
Share of post-tax profit from joint ventures 160 - - 160
Administrative expenses (8,540) (3,999) (3,338) (15,877)
Operating profit/(loss) 17,549 2,405 (3,344) 16,610
Share-based payment costs - - 1,511 1,511
Amortisation of acquisition-related intangibles 534 - - 534
Gain arising on changes in fair value of contingent consideration (2,651) - - (2,651)
Exceptional costs 398 - - 398
Adjusted operating profit/(loss) (before separately disclosed items)(1) 15,830 2,405 (1,833) 16,402
Finance costs (182) - (432) (614)
Profit/(loss) before tax 17,367 2,405 (3,776) 15,996
All turnover arose in the United Kingdom.
(1) Alternative performance measures are detailed in note 17
4. Separately Disclosed Items
Unaudited six months ended Unaudited six months ended Audited year ended
30-Sep 2023 30-Sep 2022 31-Mar 2023
(£'000) (£'000) (£'000)
Acquisition-related expenses - 352 398
Total exceptional costs - 352 398
Gain arising on changes in the fair value of contingent consideration - - (2,651)
Amortisation of acquisition-related intangible assets 310 207 534
Share-based payment costs 829 495 1,511
Total separately disclosed costs 1,139 1,054 (208)
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.
Amortisation of acquisition-related intangible assets
Amortisation of intangible assets relating to joint ventures is £104,000
(2022: £nil). This includes the acquisition of customer relationships and
brands. Amortisation of other customer relationships and brand intangible
assets is £206,000 (2022: £207,000).
Payments made for the introduction of customer relationships and brands that
are deemed to be intangible assets are capitalised and amortised over their
useful life, which has been assessed to be 10 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.
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.
Exceptional items
Acquisition-related expenses in the prior year relate to the Group acquiring
50% of the share capital of 8AM Global Limited and also relate to one-off
costs incurred on the acquisition of the Verbatim funds. These costs were
treated as exceptional items.
5. Taxation
Unaudited six months ended Unaudited six months ended Audited year ended
30-Sep 2023
30-Sep 2022
31-Mar 2023
(£'000) (£'000)
(£'000)
Current tax expense
Current tax on profits for the Period 2,215 1,498 3,159
Share-based payment costs 139 (83) -
Adjustment for under-provision in prior periods - - 14
2,354 1,415 3,173
Deferred tax expense
Share-based payment costs 83 (101) (371)
Origination and reversal of temporary differences (78) (23) -
Adjustment in respect of previous years - - (56)
Effect of changes in tax rates (57) - (123)
(52) (124) (550)
Total tax expense 2,302 1,291 2,623
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 2023 30-Sep 2022 31-Mar 2023
(£'000) (£'000) (£'000)
Profit before taxation 7,693 6,624 15,996
Tax at UK corporation tax rate of 25% (2022: 19%) 1,923 1,259 3,039
Expenses not deductible for tax purposes 44 49 93
Capital allowances in excess of depreciation 22 42 3
Adjustments in respect of previous years - - (41)
Share-based payments 370 (59) 184
Income not taxable - - (533)
Effect of changes in tax rates (57) - (122)
Total tax expense 2,302 1,291 2,623
An increase in the UK corporation tax rate from 19% to 25% became effective 1
April 2023 and has increased the Company's current tax charge accordingly. The
deferred tax asset at 30 September 2023 has been calculated based on these
rates, reflecting the expected timing of reversal of the related temporary
differences (31 March 2023: 25%).
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 2023 30-Sep 2022 31-Mar 2023
Basic
Weighted average number of shares in issue 60,127,572 59,220,759 59,608,203
Effect of own shares held by an EBT (60,761) - -
60,066,811 59,220,759 59,608,203
Diluted
Effect of weighted average number of options outstanding for the year 2,182,144 1,909,700 2,006,603
Weighted average number of shares in issue (diluted)(1) 62,248,955 61,130,459 61,614,806
Adjusted diluted
Effect of full dilution of employee share options which are contingently 1,012,719 1,305,290 1,192,528
issuable or have future attributable service costs
Adjusted diluted weighted average number of options and shares for the 63,261,674 62,435,749 62,807,334
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 Employee Benefit Trust ("EBT") to satisfy options.
Own shares held by an EBT represents the Company's own shares purchased and
held by the EBT, shown at cost. During the Period, the EBT was gifted 346,896
of the Company's own shares. These shares were fully utilised during the
Period to satisfy the exercise of employees' EMI options. The EBT subsequently
purchased a further 513,800 of the Company's own shares which remain
unutilised at the Period end. In the year ended 31 March 2023, the EBT
purchased 139,500 of the Company's own shares, which were fully utilised
during that year to satisfy the exercise of employee share options.
Unaudited Unaudited Audited year ended
six months ended six months ended 31-Mar 2023
30-Sep 2023 30-Sep 2022
Earnings attributable to ordinary shareholders
Basic and diluted profit for the Period 5,391 5,333 13,373
Share-based payments - IFRS 2 option charges 829 495 1,511
Amortisation of customer relationship intangibles 310 207 534
Exceptional costs (note 4) - 352 398
Gain arising on changes in the fair value of contingent consideration - - (2,651)
Unwinding of discount on deferred consideration 100 - 228
Tax impact of adjustments 27 (213) (447)
Adjusted basic and diluted profits for the Period and attributable earnings 6,657 6,174 12,946
Earnings per share - basic (pence) 8.97 9.01 22.43
Earnings per share - diluted (pence) 8.66 8.72 21.70
Adjusted earnings per share - basic (pence)(1) 11.08 10.43 21.72
Adjusted earnings per share - diluted (pence)(1) 10.52 9.89 20.61
1. Alternative performance measures are detailed in note 17.
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 2023, Tatton Asset Management plc paid the final dividend related to
the year ended 31 March 2023 of £6,006,000, representing a payment of 10.0p
per share.
In the year ended 31 March 2023, Tatton Asset Management plc paid the final
dividend related to the year ended 31 March 2022 of £5,012,000, representing
a payment of 8.5p per share.
In addition, the Company paid an interim dividend of £2,904,000 (2022:
£2,357,000) to its equity shareholders. This represents a payment of 4.5p per
share (2022: 4.0p per share).
7. Goodwill
Intangible
assets
(£'000)
Cost and carrying value at 31 March 2022, 30 September 2022, 9,337
31 March 2023 and 30 September 2023
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 Consolidated
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 2023 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 2024, 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 11.2% (2022: 11.5%). 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. Investment in Joint Ventures
Unaudited six months ended Unaudited six months ended Audited year ended
30-Sep 2023
30-Sep 2022
31-Mar 2023
(£'000) (£'000)
(£'000)
Opening Investment 6,762 - -
Additions in the Period - 6,956 6,765
Profit for the Period after tax 257 40 160
Amortisation of intangible assets relating to joint ventures (103) - (121)
Deferred tax credit on amortisation of intangible assets relating to joint 24 - 18
ventures
Distribution of profits (120) - (60)
Closing Investment 6,820 6,996 6,762
Additions in the prior period relates to the acquisition of 50% of the share
capital of 8AM Global Limited for an initial consideration of £3,838,000
followed by discounted deferred consideration of £3,118,000 (undiscounted
deferred consideration £3,501,000) based on certain performance measures. The
initial consideration was paid by way of shares in Tatton Asset Management.
9. Intangibles
Computer Client Brand Total
software relationships (£'000) (£'000)
(£'000) (£'000)
Cost
Balance at 1 April 2022 1,006 4,034 98 5,138
Additions 114 - - 114
Balance at 30 September 2022 1,120 4,034 98 5,252
Additions 115 - - 115
Balance at 31 March 2023 1,235 4,034 98 5,367
Additions 120 - - 120
Balance at 30 September 2023 1,355 4,034 98 5,487
Accumulated amortisation and impairment
Balance at 1 April 2022 (645) (441) (5) (1,091)
Charge for the Period (123) (202) (5) (330)
Balance at 30 September 2022 (768) (643) (10) (1,421)
Charge for the Period (124) (202) (5) (331)
Balance at 31 March 2023 (892) (845) (15) (1,752)
Charge for the Period (123) (202) (5) (330)
Balance at 30 September 2023 (1,015) (1,047) (20) (2,082)
Carrying amount
At 1 April 2022 361 3,593 93 4,047
At 30 September 2022 352 3,391 88 3,831
At 31 March 2023 343 3,189 83 3,615
At 30 September 2023 340 2,987 78 3,405
All amortisation charges on intangible assets are included within
Administrative expenses in the Consolidated Statement of Total Comprehensive
Income.
10. Property, Plant and Equipment
Computer, office equipment and Fixtures and Right-of-use Total
motor vehicles
fittings
assets
(£'000)
(£'000) (£'000) (£'000)
Cost
Balance at 1 April 2022 345 477 991 1,813
Additions 31 3 - 34
Balance at 30 September 2022 376 480 991 1,847
Additions 55 - - 55
Disposals (77) - - (77)
Balance at 31 March 2023 354 480 991 1,825
Additions 58 8 - 66
Balance at 30 September 2023 412 488 991 1,891
Accumulated depreciation and impairment
Balance at 1 April 2022 (239) (302) (523) (1,064)
Charge for the Period (34) (48) (108) (190)
Balance at 30 September 2022 (273) (350) (631) (1,254)
Charge for the Period (38) (48) (108) (194)
Disposals 77 - - 77
Balance at 31 March 2023 (234) (398) (739) (1,371)
Charge for the Period (40) (44) (108) (192)
Balance at 30 September 2023 (274) (442) (847) (1,563)
Carrying amount
At 1 April 2022 106 175 468 749
At 30 September 2022 103 130 360 593
At 31 March 2023 120 82 252 454
At 30 September 2023 138 46 144 328
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 2023
30-Sep 2022
31-Mar 2023
(£'000) (£'000)
(£'000)
Amounts recognised in profit and loss
Depreciation on right-of-use assets (108) (108) (216)
Interest expense on lease liabilities (3) (7) (14)
Expense relating to short-term leases (33) (31) (59)
Expense relating to low value assets (1) (1) -
Total (145) (147) (289)
At 30 September 2023, the Group is committed to £66,000 for short-term
leases. The total cash outflow for leases amounts to £168,000.
11. Trade and Other Receivables
Unaudited six months ended Unaudited six months ended Audited year ended
30-Sep 2023 30-Sep 2022 31-Mar 2023
(£'000) (£'000) (£'000)
Trade receivables 420 522 278
Prepayments and accrued income 3,597 3,348 3,457
Amounts due from related parties 2 - -
Other receivables 247 32 47
4,266 3,902 3,782
Less non-current portion:
Other receivables (188) - -
Total non-current trade and other receivables (188) - -
Total current trade and other receivables 4,078 3,902 3,782
The carrying value of trade receivables 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
(2022: £nil).
The amounts due from related parties are net of provisions. The Group holds no
provisions (2022: £1,311,000).
Trade receivable amounts are all held in sterling.
12. Trade and Other Payables
Unaudited six months ended Unaudited six months ended Audited year ended
30-Sep 2023
30-Sep 2022
31-Mar 2023
(£'000) (£'000)
(£'000)
Trade payables 720 913 397
Amounts due to related parties - 234 234
Accruals 3,434 2,521 3,301
Deferred income 121 155 138
Contingent consideration 3,089 5,722 2,989
Other payables 2,964 2,939 3,106
Total 10,328 12,484 10,165
Less non-current portion:
Contingent consideration (2,315) (5,722) (2,209)
Other payables - (129) (45)
Total non-current trade and other payables (2,315) (5,851) (2,254)
Total current trade and other payables 8,013 6,633 7,911
The carrying values of trade payables, amounts due to related parties,
accruals and deferred income are considered reasonable approximations of fair
value. Trade payable amounts are all held in sterling.
13. Financial Instruments
The Group finances its operations through a combination of cash resources and
other borrowings. Short-term flexibility could be satisfied if required by
overdraft facilities in Paradigm Partners Limited which are repayable on
demand.
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 2023 30-Sep 2022 31-Mar 2023
(£'000) (£'000) (£'000)
Financial investments in regulated funds or model portfolios 175 122 123
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 2022 2,486
Recognised on acquisition 3,118
Changes in the fair value of contingent consideration 118
Balance at 30 September 2022 5,722
Recognised on acquisition (192)
Unwinding of discount rate 228
Changes in the fair value of contingent consideration (2,769)
Balance at 31 March 2023 2,989
Unwinding of discount rate 100
Balance at 30 September 2023 3,089
14. Equity
Number
Authorised, called up and fully paid
At 1 April 2022 58,914,887
Issue of share capital on exercise of employee share options 237,962
Issue of share capital as payment for an acquisition 877,737
At 30 September 2022 60,030,586
Issue of share capital on exercise of employee share options 25,136
At 31 March 2023 60,055,722
Issue of share capital on exercise of employee share options 455,677
At 30 September 2023 60,511,399
15. 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. 3,022,735 options with a weighted
average exercise price of £1.89 were granted, exercisable in July 2020. There
have been nil (2022: nil) options exercised during the Period from this
scheme.
The scheme was extended on 8 August 2018, 1 August 2019, 28 July 2020, 15 July
2021, 25 July 2022 and 24 July 2023, with 1,709,498, 193,000, 1,000,001,
279,858, 274,268 and 204,523 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 50,000 (2022: 50,000) options exercised during the Period from
this scheme. 168,193 of these options lapsed in 2021.
The options granted in 2019 vested and became exercisable in August 2022.
There have been no options exercised during the Period from this scheme (2022:
139,500).
The options granted in 2020 vested and became exercisable in July 2023. There
have been 296,896 options exercised during the Period from this scheme. 27,919
of these options lapsed in the Period.
The options granted in 2021, 2022 and 2023 vest in July 2024, July 2025 and
July 2026 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 2,627,186 options remain outstanding at 30 September 2023,
1,878,861 of which are currently exercisable. 6,961 options were forfeited in
the Period (2022: 4,250). 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 2022 2,726,026 0.60
Granted during the Period 274,268 -
Forfeited during the Period (4,250) -
Lapsed during the Period - -
Exercised during the Period (189,500) -
Outstanding at 30 September 2022 2,806,544 0.59
Exercisable at 30 September 2022 1,256,668 1.31
Outstanding at 1 October 2022 2,806,544 0.59
Granted during the Period - -
Forfeited during the Period (2,105) -
Exercised during the Period - -
Lapsed during the Period - -
Outstanding at 31 March 2023 2,804,439 0.59
Exercisable at 31 March 2023 1,256,668 1.31
Outstanding at 1 April 2023 2,804,439 0.59
Granted during the Period 204,523 -
Forfeited during the Period (6,961) -
Lapsed during the Period (27,919) -
Exercised during the Period (346,896) -
Outstanding at 30 September 2023 2,627,186 0.63
Exercisable at 30 September 2023 1,878,861 0.88
(II) Tatton Asset Management plc Sharesave scheme ("TAM Sharesave scheme")
On 7 July 2017, 5 July 2018, 3 July 2019, 6 July 2020, 2 August 2021, 4 August
2022 and 25 August 2023, the Group launched all employee Sharesave schemes for
options over shares in Tatton Asset Management plc. Employees are able to save
between £10 and £500 per month over the 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 2020 TAM Sharesave scheme vested in August 2023 and 108,781 shares options
became exercisable. Over the life of the 2021, 2022 and 2023 TAM Sharesave
schemes it is estimated that, based on current savings rates, 39,160, 52,387
and 93,850 share options respectively will be exercisable. The exercise price
for these schemes is shown below.
During the Period, 108,781 (2022: 48,462) options have been exercised and
2,656 (2022: 2,494) 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) respectively.
Number of share options granted (number) Weighted average price (£)
Outstanding at 1 April 2022 140,077 2.14
Granted during the Period 38,185 2.52
Forfeited during the Period (2,494) 3.03
Exercised during the Period (48,462) 1.79
Outstanding at 30 September 2022 127,306 2.37
Exercisable at 30 September 2022 25,137 1.79
Outstanding at 1 October 2022 127,306 2.37
Granted during the Period 34,512 2.81
Forfeited during the Period (4,895) 2.55
Exercised during the Period (25,137) 1.79
Outstanding at 31 March 2023 131,786 2.57
Exercisable at 31 March 2023 - -
Outstanding at 1 April 2023 131,786 2.57
Granted during the Period 27,131 2.91
Forfeited during the Period (2,656) 3.07
Exercised during the Period (108,781) 2.29
Outstanding at 30 September 2023 47,480 3.47
Exercisable at 30 September 2023 - -
(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
2023 2022 2021 2020 2023 2022 2021 2020
Share price at grant (£) 4.74 4.03 4.60 2.84 4.91 4.25 4.80 2.85
Exercise price (£) - - - - 3.89 3.26 3.60 2.29
Expected volatility (%) 35.24 34.05 33.76 34.80 35.13 34.05 33.76 34.80
Expected life (years) 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Risk free rate (%) 4.64 1.71 0.24 (0.14) 4.74 1.71 0.12 (0.57)
Expected dividend yield (%) 3.06 3.11 2.39 3.38 2.95 3.11 2.39 3.38
(C) IFRS 2 share-based option costs
Unaudited six months ended Unaudited six months ended Audited year ended
30-Sep 2023
30-Sep 2022
31-Mar 2023
(£'000) (£'000)
(£'000)
TAM EMI scheme 797 463 1,446
TAM Sharesave scheme 32 32 65
829 495 1,511
16. 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 2023 Annual Report and Accounts 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.
17. Alternative Performance Measures
Income statement measures
APM Closest Reconciling items to their statutory measure Definition and purpose
equivalent measure
Adjusted operating profit Operating profit Exceptional items, share-based payments and amortisation of An important measure where exceptional items distort the understanding of the
before separately disclosed items
acquisition-related intangibles. operating performance of the business.
See note 4. Allows comparability between periods. See also note 2.6.
Adjusted operating profit Operating profit Exceptional items, share-based payments and amortisation of An important measure where exceptional items distort the understanding of the
margin before separately disclosed items acquisition-related intangibles. operating performance of the business.
See note 4. Allows comparability between periods. See also note 2.6.
Adjusted profit before tax Profit before tax Exceptional items, share-based payments and amortisation of An important measure where exceptional items distort the understanding of the
before separately disclosed items acquisition-related intangibles. operating performance of the business.
See note 4. Allows comparability between periods. See also note 2.6.
Adjusted earnings per Earnings per share - basic Exceptional items, share-based payments, amortisation of acquisition-related An important measure where exceptional items distort the understanding of the
share - basic intangibles and the unwinding of discount on deferred consideration. operating performance of the business.
See note 4. Allows comparability between periods. See also note 2.6.
Adjusted earnings per Earnings per share - diluted Exceptional items, share-based payments and amortisation of An important measure where exceptional items distort the understanding of the
share - diluted acquisition-related intangibles, the unwinding of discount on deferred operating performance of the business.
consideration and the tax thereon. The dilutive shares for this measure
assume that all contingently issuable shares will fully vest. See note 6. Allows comparability between periods. See also note 2.6.
Net cash generated from operations before separately disclosed items Net cash generated from operations 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.
See note 4. Allows comparability between periods. 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.
Tatton - assets under influence ("AUI") None Not applicable AUI is representative of the customer assets which are not directly managed
by Tatton but over which we hold significant influence due to our shareholding
in the company in which they are managed. Movements in this customer base are
an indication of our participation in the performance of the joint venture and
its growth in order to generate Tatton's share of profits going forward.
Paradigm Consulting members and growth None Not applicable Alternative growth measure to revenue, giving an operational view of growth.
Paradigm Mortgages completions, member firms and growth None Not applicable Alternative growth measure to revenue, giving an operational view of growth.
18. Events after the Reporting Period
There were no material post balance sheet events.
19. Contingent Liabilities
At 30 September 2023, the Directors confirmed there were contingent
liabilities of £nil (2022: £nil).
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