REG - Tatton Asset Mgt PLC - Unaudited Interim Results
13/11/2024 07:00
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RNS Number : 9788L Tatton Asset Management PLC 13 November 2024
13 November 2024
Tatton Asset Management plc
("TAM plc", the "Group" or the "Company")
AIM: TAM.L
UNAUDITED INTERIM RESULTS
For the six-month period ended 30 September 2024
"Record net Inflows continue to drive shareholder returns"
Tatton Asset Management plc, the investment management and IFA support
services group, today announces its interim results for the six-month period
ended 30 September 2024 (the "Period").
FINANCIAL HIGHLIGHTS
● Group revenue increased 23.7% to £21.660m (Sep 2023: £17.506m)
● Adjusted operating profit(1) up 22.8% to £10.894m (Sep 2023: £8.872m)
● Adjusted operating profit(1) margin 50.3% (Sep 2023: 50.7%)
● Adjusted fully diluted EPS(2) increased 30.0% to 13.67p (Sep 2023: 10.52p)
● Strong financial liquidity position, with net cash of £26.916m (Mar 2024:
£24.838m)
● Interim dividend up 18.8% to 9.5p (Sep 2023: 8.0p)
● Strong balance sheet with net assets of £47.386m
OPERATIONAL HIGHLIGHTS
● Assets Under Management/Influence ("AUM/I(3)") increased 34.9% to £19.948bn
(Sep 2023: £14.784bn). AUM/I(3) at 31 March 2024 £17.604bn, an annualised
increase of 26.6%
● Current (November 2024) AUM/I(3) is £20.605bn and year to date net inflows
are £2.221bn
● Organic net inflows were £1.832bn (Sep 2023: £0.910bn), an annualised
increase of 22.1% of opening AUM with an average run rate of £305m per month
● Tatton's IFA firms increased by 6.5% to 1,038 (Mar 2024: 975) and the number
of accounts increased by an annualised 10.4% to 139,330 (Mar 2024: 126,150)
● Paradigm Mortgages completions reduced by 4.3% to £6.6bn (Sep 2023: £6.9bn).
Paradigm Mortgages member firms increased to 1,930 members (Mar 2024: 1,916
members)
● Paradigm Consulting members increased to 437 (Mar 2024: 424)
● Launch of new range of Passive funds following demand from our IFAs
(1) Operating profit before share-based payment charges, amortisation of acquired
intangibles and operating loss relating to non-controlling interest.
(2) Adjusted fully diluted earnings per share is adjusted for 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 assume that all contingently issuable shares will fully vest.
(3) "AUM/I" is Assets under management and influence including 100% of 8AM Global
Limited AUM
Paul Hogarth, Chief Executive Officer of Tatton Asset Management, commented:
"We have delivered record net inflows of £1.8bn in the first half of the
year, which is an exceptional achievement for Tatton and I could not be more
delighted.
"Our record organic net inflows driven by our strong proposition, consistent
investment performance and market leading service have underpinned our
performance in this period. We continue to deliver against our strategic
objectives, positioning the business for long term growth on an organic basis
and we remain well positioned to execute our New Roadmap to Growth target of
£30bn AUM/I by March 2029. Looking to the future, the IFA sector remains in
good health and we will continue to seek further opportunities to support the
IFA community through creating a more holistic approach to our long-term
relationships. More widely, assets on platform continue to grow but
importantly, the Model Portfolio Service proposition continues to be a
strategic growth driver within the wealth management sector, all of which help
to support our long term growth ambitions.
"Paradigm continues to deliver stable and robust results given the wider UK
economy and political changes seen in the period.
"Macro and geopolitical uncertainty remains; however, I am confident that
Tatton's strong foundations will support our continued consistent growth.
While our net inflows in this period have been exceptional, we expect them to
return to more normal levels of c.£200m per month as we move into the second
half of the year.
"The Board is confident in the future prospects of the Group, and we remain on
track to meet the Board's expectations for the full year."
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 (Investment Banking) +44 (0) 20 7496 3000
Gracechurch Group - Financial PR and IR
Heather Armstrong / Henry Gamble / Rebecca Scott +44 (0) 20 4582 3500
tatton@gracechurchpr.com
Trade Media Enquiries
Roddi Vaughan Thomas +44 (0) 7469 854 011
For more information, please visit: www.tattonassetmanagement.com
(http://www.tattonassetmanagement.com)
OPERATIONAL REVIEW
Record net inflows continue to drive shareholder returns
The Group has made strong progress in the first half of this financial year,
delivering record net inflows of £1.832bn over the six months, which in turn
have driven continued growth in revenue and profits. Our AUM/I(1) has
increased from £17.604bn at 31 March 2024 to £19.948bn at 30 September 2024,
as we continue to drive the business towards the £30bn target by 31 March
2029 that we announced in our 2024 full year results.
Group revenue for the period increased by 23.7% to £21.660m (Sep 2023:
£17.506m). Adjusted operating profit(1) for the period increased by 22.8% to
£10.894m (Sep 2023: £8.872m), with adjusted operating profit margin(1) at
50.3% (Sep 2023: 50.7%).
Profit before tax, after the impact of share-based payment charges,
amortisation of intangibles relating to acquisitions, and net finance income,
increased to £10.102m (Sep 2023: £7.693m) and taxation charges for the
period were £2.382m (Sep 2023: £2.302m). This gives an effective tax rate of
23.6% when measured against profit before tax.
Basic earnings per share was 13.03p (Sep 2023: 8.97p). When adjusted for
share-based payment charges, amortisation of intangibles relating to
acquisitions, and finance costs relating to the unwinding of discounts on
deferred consideration, basic adjusted earnings per share(1) was 14.29p (Sep
2023: 11.08p). Adjusted earnings per share fully diluted for the impact of
share options(1) was 13.67p (Sep 2023: 10.52p), an increase of 30.0%.
Tatton
Overview of performance
Tatton continues to perform strongly with increased momentum of organic net
inflows driven by a strong proposition, consistent investment performance and
market leading service. These factors have ensured the continued support from
our independent financial advisers ("IFAs"). The total AUM/I(1) at the end of
the period increased to £19.948bn (Mar 2024: £17.604bn). In the last six
months, organic net inflows have averaged £305m per month and increased by
101% to £1.832bn (Sep 2023: £910m). We are particularly pleased with the
consistency of the level of net inflows seen over the last six months, which
have ranged between a high of £375m and a low of £260m per month. This
compares with an average of £192m per month delivered in the previous
financial year. The strong support and increase in net inflows continue to
come from both existing and new IFAs alike, and are supported by an increase
in the ratio of back book migrations as well as increasing the number of
white label,
co-branded propositions and appointed investment adviser ("AIA")
relationships. These relationships, coupled with the continued support across
the base of our firms, have helped to contribute to a record level of net
inflows in the first half of this financial year.
The strong growth in net inflows, investment returns and our increased
distribution activity have all contributed to Tatton's revenue, which has
grown by 28.1% to £18.508m (Sep 2023: £14.451m) and now accounts for 85.4%
of total Group revenue. Meanwhile, Tatton's adjusted operating profit(1) grew
by 30.3% to £11.712m (Sep 2023: £8.986m), delivering an adjusted operating
profit margin(1) of 63.3% (Sep 2023: 62.2%).
Tatton at the heart of the IFA community
The IFA sector remains in very good health and there has never been more
demand for its services. We remain a passionate supporter of IFAs and continue
to champion the sector at every opportunity and in turn, we remain thankful
for the continued support and loyalty shown to us by the IFA community, which
has been hard earned. Our business model focuses on keeping the IFA at the
heart of our business and at the centre of our value chain.
We continue to work closely with IFAs, supporting them in the services they
provide to meet their clients' needs. This allows us to develop a deep
understanding of our IFAs, which helps us to continue to develop and improve
our products and services. Accordingly, during this period, we were pleased to
launch a range of highly competitive Passive funds in response to demand from
our IFAs and their clients. These funds offer a low cost, diversified
investment option that aligns with the principles of long-term wealth
accumulation.
Managed Portfolio Services ("MPS") - long-term growth opportunity
While we are happy to offer new products and services, the core of our
strategy and product range will remain MPS, and we will continue to promote
and support the growth of the on-platform MPS market through wide-ranging IFA
engagement. As assets on platforms continue to increase, now at over £722bn
(Platforum July 2024), there remains a significant opportunity for providers
who have strong and high value propositions, which include having a broad
range of portfolios, a full service offering, strong customer service
and, importantly, consistent good long-term investment performance. We are
pleased to report that Tatton meets all these criteria.
In July 2024, there was £139bn invested in MPS on platform (Platforum July
2024) and the view remains that, by 2026, this is likely to increase to
over £200bn. Our goal in taking advantage of this growing market is to
continue to increase the momentum of 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 adding more new firms
and have a broader, more holistic relationship with the IFA community. In
support of this, we have been pleased to see our IFA firms grow by 6.5% to
1,038 (Mar 2024: 975) over this period. We look forward to seeing these close
relationships develop in the coming months as intensive activity continues to
further promote the Tatton service.
Our IFA centric ethos remains the cornerstone of our strategy. We remain
dedicated to enhancing our support of the IFA community, integrating our
propositions and where possible, taking a more holistic approach to our
relationships to support mutual growth of both IFA businesses and Tatton.
Finally, we wanted to provide an update on Perspective Financial Group
("Perspective"), an IFA consolidator in the UK which has been a founder firm
since Tatton's inception in 2013. We currently provide investment management
services to Perspective's fund management capability (Cambridge), supporting
c.£2.5bn of AUM and delivering consistent returns over the long term for
their underlying clients.
The existing contract is due to come to an end in January 2026 and although
discussions are ongoing, both parties may mutually agree to end the existing
relationship. This relationship delivered £385m of net inflows and
contributed revenue of £0.5m in this period and regardless of the outcome of
these discussions, we anticipate no impact to our revenue and earnings for the
current financial year FY25 and any potential impact on forecasts for FY26 and
onwards is expected to be negligible.
Summary
We are mindful of the impact that the recent Autumn Budget may have on
investor sentiment, however we do not believe that new measures materially
impact or change the MPS landscape and opportunity.
We continue to maintain our strong organic growth momentum into the second
half of the financial year and, regardless of the outcome of our discussions
with Perspective, we look forward with real confidence to meeting the target
of £30bn of AUM by FY29.
Paradigm
Overview of performance
Paradigm has delivered a steady and resilient performance in the period,
delivering revenue of £3.152m (Sep 2023: £3.059m) and adjusted operating
profit(1) of £0.915m (Sep 2023: £0.959m). Paradigm Mortgages increased
the number of mortgage firms utilising its services to 1,930 (Mar 2024:
1,916) and Paradigm Consulting increased its members to 437 (Mar 2024: 424).
As a whole, the Paradigm division now accounts for 14.6% of Group revenue.
Paradigm Consulting continues to perform very consistently and in line with
our expectations as it delivers best-in-class IFA compliance and support
services. It remains a strategically important part of the Group, giving
invaluable insight into the needs, wants and demands of the IFA community.
Paradigm Mortgages has delivered a resilient performance, delivering £6.6bn
(Sep 2023: £6.9bn) of mortgage completions and, while slightly behind the
first half of the prior financial year, it has seen a 6.5% increase on the
£6.2bn delivered in the second half of the prior financial year. The product
mix for the year to date has improved, with a shift away from less profitable
product transfers towards new purchase and remortgage lending, which has
contributed towards an increase in mortgage income despite the overall
completion levels being slightly behind the prior year.
Paradigm performing robustly against the wider Mortgage market
This activity is against the backdrop of UK Finance having previously
predicted a gross lending market of c.£215bn in 2024, a fall of 5% against
2023 volumes. However, the market has proved a little more resilient
and revised forecasts predict the market to potentially rise to c.£250bn in
2024. Encouragingly, the intermediary channel share of the wider mortgage
market, as opposed to mortgages sold directly by banks, continues to grow,
reaching c.88% of all new sales and record product transfer maturities. New
mortgage and remortgage activity helped Paradigm Mortgages participate in
completions totalling £6.6bn in the first six months of this financial
year, which compares well with the total market and demonstrates the
resilience of the Paradigm business.
Outlook - opportunities for Paradigm in an evolving market
Looking forward, the UK housing market continues to experience a mixture of
price growth and moderating activity, with several factors influencing the
overall outlook. It is generally expected that the Bank of England will reduce
interest rates faster than what was anticipated only months ago, boosted by
lower than predicted inflation trends. However, the reaction to the recent
Autumn Budget and other macroeconomic and geopolitical factors pose risks that
could affect this trajectory. That said, many commentators feel a further
25bps reduction is expected before the financial year end, which will be a
welcome stimulus to the market in general.
While mortgage rate reductions and price growth in certain areas are
supporting market activity, affordability remains a key issue. As such, a good
leading indicator for the health of the market is new mortgage applications.
Recent applications have seen a strong improvement, with September 2024 being
16% up on August 2024 and, importantly, 47% higher than September 2023. In the
second half of this financial year, we anticipate that market conditions will
improve and we are optimistic that, coupled with the increase in applications,
this will lead to a greater level of completions. As guidance, we anticipate
the second half of the year to be similar to the first, although there remains
potential for upside.
Longer term, supply constraints are expected to persist, continuing to
influence activity across the UK. However, the new Government's pledge to
almost double the rate of new builds in the next five years will potentially
ease some of the issues in the housing and corresponding mortgage sector, if
this is achieved. It will also provide opportunities for Paradigm's
longer-term growth.
Separately disclosed items and alternative performance measures
Alternative performance measures ("APMs") provide additional information to
investors and other external shareholders to support further understanding of
the Group's results of operations as supplemental measures of performance.
The APMs are used by the Board and management to analyse the business
and financial performance, track the Group's progress and help develop
long-term strategic plans. Some APMs are also used as key management
incentive metrics. Separately disclosed items are adjusting items to
operating profit and total £1.3m. These items include the cost
of share-based payments of £0.8m, in line with the prior year of £0.8m, and
amortisation of acquisition-related intangible assets of £0.3m. An adjustment
has also been made to remove the operating loss relating to the
non-controlling interest in Fintegrate Financial Solutions Limited
("Fintegrate") of £0.1m to reflect the adjusted operating profit(1)
attributable to shareholders of Tatton Asset Management plc.
Statement of financial position and cash
The Group's balance sheet remains strong, with net assets of £47.4m (Sep
2023: £40.3m) and cash of £26.9m (Mar 2024: £24.8m). The Group maintains a
strong operating cash conversion of 94%, with cash from operations being
offset by dividends of £4.7m paid in the period and corporation tax
payments of £2.7m. In addition, £1.0m was invested as seeding into our new
range of Passive funds and this will be repaid when the funds have reached an
appropriate scale. Our financial resources are kept under continual review,
ensuring that we have headroom over our regulatory capital requirements at
both a Group and entity level. We formally review and conduct comprehensive
stress and scenario testing on at least an annual basis. As at 30 September
2024, our total qualifying capital resources were £17.8m, being 390% of our
requirement of £4.6m.
Issue of new shares
In the period, the Group issued 37,480 new shares, which were issued to
satisfy the exercise of options related to the Company's Save As You Earn
("SAYE") employee share option schemes.
Dividend proposal
In this interim period, the Board recommends an increase in the interim
dividend to 9.5p (Sep 2023: 8.0p), an increase of 18.8%. This proposed
dividend follows the 50/50 split implemented in the prior year, maintaining
our policy of paying a dividend that is approximately 70% of adjusted
earnings. This dividend 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.
The interim dividend of 9.5p per share, totalling £5.7m, will be paid on 13
December 2024 to shareholders on the register at close of business on 22
November 2024 and will have an ex-dividend date of 21 November 2024. 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 2024 Annual Report
and Accounts (pages 23 and 24) 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
believe that the business is well placed to manage its business risk
successfully and are satisfied that the Group has adequate resources to
continue in operational existence for at least twelve months from the date
that the financial statements are authorised for issue. Accordingly, these
condensed financial statements have been prepared on a going concern basis.
Summary and outlook
The Group has delivered a record first half result, maintaining strong
organic growth of revenue and profits and delivering against our strategic
objectives. Positive markets helped support asset growth, with AUM/I(1)
reaching £19.948bn at the end of this period and we are very 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 consistent growth as we maintain our £30bn
AUM/I(1) forecast for 2029. We are, however, mindful of the ongoing
geopolitical and economic uncertainty and anticipate net inflows returning to
more normal levels in the second half of this financial year. 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
financial year and the Board remains confident in the future prospects of the
Group.
1. Alternative performance measures are detailed in note 27 of the 2024
Annual Report and Accounts.
Financial Statements
CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2024
Note Unaudited six months ended Unaudited six months ended Audited year ended
30-Sep 2024 (£'000)
30-Sep 2023 (£'000)
31-Mar 2024 (£'000)
Revenue 21,660 17,506 36,807
Share of post-tax (loss)/profit from joint venture (81) 257 (1,188)
Administrative expenses (11,939) (10,030) (19,155)
Operating profit 9,640 7,733 16,464
Share-based payment costs 5 843 829 1,458
Amortisation of acquisition-related intangibles 5 329 310 633
Operating loss relating to non-controlling interest 5 82 - 59
Gains arising on changes in fair value of contingent consideration - - (1,350)
Exceptional items - - 1,250
Adjusted operating profit (before separately disclosed items)(1) 10,894 8,872 18,514
Finance income 485 206 640
Finance costs (23) (246) (353)
Profit before tax 10,102 7,693 16,751
Taxation charge 6 (2,382) (2,302) (3,830)
Profit and total comprehensive income for the financial year 7,720 5,391 12,921
Profit and total comprehensive income attributable to the owners of the 7,806 5,391 12,986
Parent Company
Profit and total comprehensive income attributable to (86) - (65)
non-controlling interests
Earnings per share - Basic 7 13.03p 8.97p 21.39p
Earnings per share - Diluted 7 12.69p 8.66p 21.02p
Adjusted earnings per share - Basic(1) 7 14.29p 11.08p 23.73p
Adjusted earnings per share - Diluted(1) 7 13.91p 10.69p 23.32p
Adjusted earnings per share - Fully Diluted(1) 7 13.67p 10.52p 22.91p
1. See note 27 of the 2024 Annual Report and Accounts.
All revenue, profit and earnings are with respect to continuing operations.
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 2024
Note Unaudited six months ended Unaudited six months ended Audited year ended
30-Sep 2024 (£'000)
30-Sep 2023 (£'000)
31-Mar 2024 (£'000)
Non-current assets
Investment in joint ventures 9 5,298 6,820 5,352
Goodwill 10 9,796 9,337 9,796
Intangible assets 11 3,510 3,405 3,686
Property, plant and equipment 12 700 328 816
Deferred tax assets 3,174 1,541 2,571
Other receivables 13 - 188 188
Total non-current assets 22,478 21,619 22,409
Current assets
Trade and other receivables 13 5,268 4,078 5,108
Financial assets at fair value through profit or loss 15 1,132 175 106
Corporation tax 200 570 -
Cash and cash equivalents 26,916 24,222 24,838
Total current assets 33,516 29,045 30,052
Total assets 55,994 50,664 52,461
Current liabilities
Trade and other payables 14 (7,626) (8,013) (8,109)
Corporation tax - - (2)
Total current liabilities (7,626) (8,013) (8,111)
Non-current liabilities
Other payables 14 (982) (2,315) (1,016)
Total non-current liabilities (982) (2,315) (1,016)
Total liabilities (8,608) (10,328) (9,127)
Net assets 47,386 40,336 43,334
Equity
Share capital 12,110 12,102 12,102
Share premium account 15,614 15,487 15,487
Own shares (2,695) (2,567) (3,278)
Other reserve 2,041 2,041 2,041
Merger reserve (28,968) (28,968) (28,968)
Retained earnings 49,312 42,241 45,892
Equity attributable to equity holders of the entity 47,414 40,336 43,276
Non-controlling interest (28) - 58
Total equity 47,386 40,336 43,334
The financial statements were approved by the Board of Directors on 13
November 2024 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 2024
Share capital (£'000) Share premium (£'000) Own Shares (£'000) Other reserve (£'000) Merger reserve (£'000) Retained earnings (£'000) Total equity attributable to share-holders (£'000) Non-controlling interest (£'000) Total equity (£'000)
At 1 April 2023 12,011 15,259 - 2,041 (28,968) 41,438 41,781 - 41,781
Profit and total comprehensive income - - - - - 5,391 5,391 - 5,391
Dividends - - - - - (6,006) (6,006) - (6,006)
Share-based payments - - - - - 521 521 - 521
Deferred tax on share-based payments - - - - - 254 254 - 254
Current tax on share-based payments - - - - - 643 643 - 643
Issue of share capital on exercise of employee share options 91 228 - - - - 319 - 319
Own shares acquired in the period - - (2,567) - - - (2,567) - (2,567)
At 30 September 2023 12,102 15,487 (2,567) 2,041 (28,968) 42,241 40,336 - 40,336
Profit and total comprehensive income - - - - - 7,595 7,595 (65) 7,530
Acquisition of a subsidiary - - - - - - - 123 123
Dividends - - - - - (4,840) (4,840) - (4,840)
Share-based payments - - - - - 459 459 - 459
Deferred tax on share-based payments - - - - - 506 506 - 506
Own shares acquired in the year - - (780) - - - (780) - (780)
Own shares utilised on exercise of options - - 69 - - (69) - - -
At 31 March 2024 12,102 15,487 (3,278) 2,041 (28,968) 45,892 43,276 58 43,334
Profit and total comprehensive income - - - - - 7,806 7,806 (86) 7,720
Dividends - - - - - (4,740) (4,740) - (4,740)
Share-based payments - - - - - 438 438 - 438
Deferred tax on share-based payments - - - - - 574 574 - 574
Current tax on share-based payments - - - - - (75) (75) - (75)
Issue of share capital on exercise of employee share options 8 127 - - - - 135 - 135
Own shares utilised on exercise of options - - 583 - - (583) - - -
At 30 September 2024 12,110 15,614 (2,695) 2,041 (28,968) 49,312 47,414 (28) 47,386
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2024
Note Unaudited six months ended 30-Sep 2024 (£'000) Unaudited six months ended 30-Sep 2023 (restated*) Audited year ended 31-Mar 2024 (£'000)
(£'000)
Operating activities
Cash generated from operations 19 10,233 8,266 16,930
Corporation tax paid (2,715) (2,160) (3,740)
Net cash from operating activities 7,518 6,106 13,190
Investing activities
Payment for the acquisition of a joint venture, net of cash acquired - - (254)
Dividends received from joint venture - 120 255
Purchase of intangible assets 11 (125) (120) (249)
Purchase of property, plant and equipment 12 (36) (66) (115)
Payments for financial assets at fair value through profit or loss (1,000) - -
Interest received 510 210 640
Contingent consideration - - (937)
Net cash (used in)/from investing activities (651) 144 (660)
Financing activities
Interest paid - (64) (63)
Dividends paid 8 (4,740) (6,006) (10,846)
Proceeds from the issue of shares 88 249 249
Purchase of own shares - (2,567) (3,278)
Repayment of loan liabilities (19) - (18)
Repayment of lease liabilities (118) (134) (230)
Net cash used in financing activities (4,789) (8,522) (14,186)
Net increase/(decrease) in cash and cash equivalents 2,078 (2,272) (1,656)
Cash and cash equivalents at beginning of period 24,838 26,494 26,494
Net cash and cash equivalents at end of period 26,916 24,222 24,838
* See note 2.1 for details regarding the prior period restatement.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General Information
Tatton Asset Management plc (the "Company") is a public company limited by
shares. The address of the registered office is Paradigm House, Brooke Court,
Lower Meadow Road, Wilmslow, SK9 3ND. The registered number is 10634323.
The Group comprises the Company and its subsidiaries. The Group's principal
activities are discretionary fund management, the provision of compliance and
support services to independent financial advisers, the provision of mortgage
adviser support services and the marketing and promotion of multi-manager
funds.
The condensed consolidated interim financial statements for the six months
ended 30 September 2024 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 2024 were approved by the
Board on 17 June 2024 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. The accounting policies set out below
have, unless otherwise stated, been applied consistently to all periods
presented in the consolidated financial statements.
2.1 Basis of preparation
The unaudited condensed consolidated interim financial statements for the six
months ended 30 September 2024 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 2024, which have been
prepared in accordance with International Financial Reporting Standards as
adopted by the United Kingdom. The condensed consolidated interim financial
statements were approved for release on 13 November 2024.
The condensed consolidated financial statements have been prepared on a going
concern basis and prepared on a historical cost basis, except for financial
assets and financial liabilities measured at fair value. The consolidated
financial statements are presented in sterling and have been rounded to the
nearest thousand (£'000). The functional currency of the Company is sterling
as this is the currency of the jurisdiction wherein all of the Group's sales
are made.
The preparation of financial information in conformity with IFRSs requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Although these estimates are based on management's best knowledge of the
amount, event or actions, actual events may ultimately differ from those
estimates.
The key accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in the consolidated financial
statements.
A restatement has been made to the Consolidated Statement of Cash Flows for
the interim period ending 30 September 2023 to reflect dividends received from
joint ventures as cash flows from investing activities, whereas it was shown
as cash flows from financing activities in the prior year. This has reduced
cash flows used in investing activities and increased cash flows used in
financing activities by £120,000 in the interim period ended 30 September
2023. In addition, interest received of £210,000 in September 2023 has been
restated to be included within Net cash (used in)/from investing activities.
This has reduced Net cash used in financing activities by £210,000 in the
interim period ended 30 September 2023.
In the prior interim period, a separate Joint venture reserve of £37,000 was
presented in the Consolidated Statement of Financial Position. This has been
included within Retained earnings in the current year and the comparatives
restated.
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 2024.
2.2 Going concern
The Board has reviewed detailed papers prepared by management that consider
the Group's expected future profitability, dividend policy, capital position
and liquidity, both as they are expected to be and also under more stressed
conditions. In doing so, the Directors have considered the current economic
environment, with its high interest rates, high yet falling inflation, cost of
living pressures, and the impact of climate change.
Whilst macroeconomic conditions and the impact of climate change may affect
the Group, and are considered under the Group's principal risks, these are not
considered to impact the going concern basis of the Group - the Board is
satisfied that the business can operate successfully in these conditions but
will continue to monitor developments in these areas. The Board uses the
approved budget as its base case and then applies stress tests to this. In its
stress tests, the Board has considered a significant reduction in equity
market values, for example if there was a repeat of market impacts seen at the
start of COVID-19, or sudden and high volumes of outflows from AUM as a
result of a reputational, regulatory or performance issues. This would reduce
revenue and profitability, however the results of these tests show that there
are still sufficient resources to continue as a going concern. There are not
considered to be any plausible scenarios which would lead to the failure of
the Company. The Board closely monitors KPIs and reports from management
around investment performance, feedback from IFAs and key regulatory changes
or issues. Accordingly, the Directors continue to adopt the going concern
basis in preparing these financial statements.
2.3 Adoption of new and revised standards
New and amended IFRS standards that are effective for the current year
· Amendment to IFRS 16 "Lease Liability in a Sale and Leaseback"
· Amendment to IAS 1 "Classification of Liabilities as Current or
Non-current"
· Amendments to IAS 1 "Non-current Liabilities with Covenants"
· Amendments to IAS 7 and IFRS 7 "Supplier Finance Arrangements"
The Directors adopted the new or revised standards listed above, but they
have had no material impact on the financial statements of the Group.
Standards in issue but not yet effective
The following IFRS and IFRIC interpretations have been issued but have not
been applied by the Group in preparing these financial statements, as they are
not yet effective. The Group intends to adopt these standards and
interpretations when they become effective, rather than adopting them early.
Effective date 1 January 2025 or later:
· IFRS S1 "General Requirements for Disclosure of Sustainability-related
Financial Information" and IFRS S2
"Climate-related Disclosures"
· Amendments to IAS 21 "Lack of Exchangeability"
· IFRS 18 "Presentation and Disclosure in Financial Statements"
· Amendments to the Classification and Measurement of Financial Instruments
(Amendments to IFRS 9 "Financial Instruments" and IFRS 7 "Financial
Instruments: Disclosures")
· IFRS 19 "Subsidiaries without Public Accountability: Disclosures"
With the exception of the adoption of IFRS 18, the adoption of the above
standards and interpretations is not expected to lead to any changes to the
Group's accounting policies nor have any other material impact on the
financial position or performance of the Group. The impact of IFRS 18 on the
Group is currently being assessed and it is not yet practicable to quantify
the effect of this standard on these consolidated financial statements.
However, there is no impact on presentation for the Group in the current year
given the effective date - this will be applicable for the Group's 2027/28
Annual Report and Accounts.
2.4 Operating segments
The Board is considered to be the chief operating decision maker ("CODM"). The
Group comprises 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
Some centrally incurred overhead costs are allocated to the Tatton and
Paradigm divisions on an appropriate pro rata basis. There remain central
overhead costs within the Operating Group which have not been allocated to the
Tatton and Paradigm divisions which are classified as "Unallocated" within
note 4.
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
2024, management have made judgements and estimations about the future that
have an effect on the amounts recognised in the financial statements. The
estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods. Changes for accounting estimates would be accounted for
prospectively under IAS 8.
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 2024. Management have reviewed those key estimates which were
disclosed in the 31 March 2024 financial statements and are satisfied that the
methodology applied and criteria assessed are still appropriate.
3. Capital Management
The components of the Group's capital are detailed on the Consolidated
Statement of Financial Position and as at the reporting date the Group had
capital of £47,386,000 (Mar 2024: £43,334,000; Sep 2023: £40,366,000).
Capital generated from the business is both reinvested in the business to
generate future growth and returned to shareholders, principally in the form
of dividends.
The Group's objectives when managing capital are (i) to safeguard the Group's
ability to continue as a going concern so that it can continue to provide
returns for shareholders and benefits for other stakeholders; (ii) to maintain
a strong capital base and utilise it efficiently to support the development of
its business; and (iii) to comply with the regulatory capital requirements set
by the FCA. Capital adequacy and the use of regulatory capital are monitored
by the Group's management and Board. There is one active regulated entity in
the Group: Tatton Investment Management Limited, regulated by the FCA.
Regulatory capital is determined in accordance with the requirements of the
FCA's Investment Firms Prudential Regime and the Capital Requirements
Directive IV prescribed in the UK by the FCA. The Directive requires continual
assessment of the Group's risks that is underpinned by the Group's internal
capital adequacy and risk assessment ("ICARA"). The ICARA considers the
relevant current and future risks to the business and the capital considered
necessary to support these risks.
The Group actively monitors its capital base to ensure that it maintains
sufficient and appropriate capital resources to cover the relevant risks to
the business and to meet consolidated and individual regulated entity
regulations and liquidity requirements. The Group frequently assesses the
adequacy of its own funds on a consolidated and legal entity basis. This
includes continuous monitoring of "K-factor" variables, which captures the
variable nature of risk involved in the Group's business activities.
A regulatory capital update is additionally provided to senior management on
a monthly basis. In addition to this, the Group has implemented a number of
"Key Risk Indicators", which act as early warning signs with the aim of
notifying senior management if own funds misalign with the Group's risk
appetite and internal thresholds.
The FCA requires the Group to hold more regulatory capital resources than the
total capital resource requirement. The total capital requirement for the
Group is the higher of the Group's Own Funds requirement (based on 25% of
fixed overheads), its Own Harm requirement (based on the Group's requirement
for harms from ongoing activities as calculated in the ICARA) and Wind-down
requirement (capital requirement should the firm wind down). The
total capital requirement for the Group is £4.6 million, which is based on
the Group's fixed overhead requirement. As at 30 September 2024, the Group has
regulatory capital resources of £17.8 million, significantly in excess of the
Group's total capital requirement. During the period, the Group and its
regulated subsidiary entities complied with all regulatory capital
requirements.
4. Segment Reporting
Information reported to the Board of Directors as the chief operating decision
maker 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 and
Paradigm, with centrally incurred overhead costs applicable to the segments
being allocated to the Tatton and Paradigm divisions on an appropriate pro
rata basis. Unallocated central overhead costs of the Operating Group are
classified as "Unallocated" in the tables that follow to provide a
reconciliation of the segment information to the financial statements.
Unallocated costs include general corporate expenses, head office salaries,
and other administrative costs that are not directly attributable to the
operating segments. These costs are managed at the corporate level and are not
allocated to the segments for performance evaluation.
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 the provision of support
services to IFAs and mortgage advisers. The Paradigm division includes the
trading subsidiaries of Paradigm Partners Limited and Paradigm Mortgages
Services LLP, which operate as one operating segment as they have the same
economic characteristics, they are run and managed by the same management
team, and the methods used to distribute the products to customers are the
same.
For management purposes, the Group uses the same measurement policies as are
used in its financial statements. The information presented in this note is
consistent with the presentation for internal reporting. Total assets
and liabilities for each operating segment are not regularly provided
to the CODM.
Period ended 30 September 2024 Tatton Paradigm Unallocated Group
(£'000)
(£'000)
(£'000)
(£'000)
Revenue 18,508 3,152 - 21,660
Share of post-tax loss from joint ventures (81) - - (81)
Administrative expenses (7,209) (2,419) (2,311) (11,939)
Operating profit/(loss) 11,218 733 (2,311) 9,640
Share-based payment costs 183 82 578 843
Amortisation of acquisition-related intangibles assets 311 18 - 329
Non-controlling interest - 82 - 82
Adjusted operating profit/(loss)(1) 11,712 915 (1,733) 10,894
Period ended 30 September 2024 Tatton Paradigm Unallocated (£'000) Group
(£'000)
(£'000)
(£'000)
Statutory operating costs included the following:
Depreciation 97 47 8 152
Amortisation 385 20 - 405
1. Adjusted operating profit is one of the APMs that the business uses.
Full details of the KPIs and APMs that the key decision makers use are
detailed in note 27 of the 2024 Annual Report and Accounts.
Period ended 30 September 2023 Tatton Paradigm Unallocated Group
(£'000)
(£'000)
(£'000)
(£'000)
Revenue 14,451 3,059 (4) 17,506
Share of post-tax profit from joint ventures 257 - - 257
Administrative expenses (restated) (6,242) (2,186) (1,602) (10,030)
Operating profit/(loss) (restated) 8,466 873 (1,606) 7,733
Share-based payment costs (restated) 210 86 533 829
Amortisation of acquisition-related intangibles assets 310 - - 310
Adjusted operating profit/(loss)(1) 8,986 959 (1,073) 8,872
Period ended 30 September 2023 Tatton Paradigm Unallocated Group
(£'000)
(£'000)
(£'000)
(£'000)
Statutory operating costs included the following:
Depreciation 122 64 6 192
Amortisation 324 6 - 330
Note that the share-based payments costs in period to 30 September 2023 have
been restated to reflect the charge relating to employees of the relevant
divisions. This has reduced administrative expenses within "Unallocated", with
an increased charge being reflected in Tatton and Paradigm.
Year ended 31 March 2024 Tatton Paradigm Unallocated Group
(£'000)
(£'000)
(£'000) (£'000)
Revenue 30,864 5,943 - 36,807
Share of post-tax loss from joint ventures (1,188) - - (1,188)
Administrative expenses (11,092) (4,421) (3,642) (19,155)
Operating profit/(loss) 18,584 1,522 (3,642) 16,464
Share-based payment costs 340 186 932 1,458
Gain arising on changes in fair value of contingent consideration (1,350) - - (1,350)
Exceptional items 1,250 - - 1,250
Amortisation of acquisition-related intangibles assets 621 12 - 633
Non-controlling interest - 59 - 59
Adjusted operating profit/(loss)(1) 19,445 1,779 (2,710) 18,514
Year ended 31 March 2024 Tatton Paradigm Unallocated Group
(£'000)
(£'000)
(£'000)
(£'000)
Statutory operating costs included the following:
Depreciation 249 112 14 375
Amortisation 734 16 - 750
All turnover arose in the United Kingdom.
5. Separately Disclosed Items
Unaudited six months ended Unaudited six months ended Audited
30-Sep 2024
30-Sep 2023
year ended
(£'000)
(£'000)
31-Mar 2024
(£'000)
Share-based payments charges 843 829 1,458
Amortisation of acquisition-related intangible assets 329 310 633
Operating loss due to non-controlling interest 82 - 59
Gain arising on changes in the fair value of contingent consideration - - (1,350)
Exceptional items - - 1,250
Total separately disclosed costs 1,254 1,139 2,050
Separately disclosed items that are shown separately on the face of the
Statement of Total Comprehensive Income reflect costs and income that do not
reflect the Group's trading performance and may be considered material
(individually or in aggregate if of a similar type) due to their size or
frequency, and are adjusted to present adjusted operating profit so as to
ensure consistency between periods. The costs or income above are all included
within administrative expenses except for the Exceptional costs in March 2024
of £1,250,000, which is recognised within the Share of loss of joint
ventures.
Although some of these items may recur from one period to the next, operating
profit has been adjusted for these items to give better clarity regarding the
underlying performance of the Group. 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.
Share-based payment charges
Share-based payments is a recurring item, although the value will change
depending on the estimation of the satisfaction of performance obligations
attached to certain awards. It is an adjustment to operating profit since it
is a significant non-cash item. Adjusted operating profit represents largely
cash-based earnings and more directly relates to the trading performance of
the financial reporting period.
Amortisation of client relationship intangible assets
Payments made for the introduction of client relationships and brands that
are deemed to be intangible assets are capitalised and amortised over their
useful life, which has been assessed to be ten years. This includes £104,000
(Sep 2023: £104,000) of amortisation of the intangibles recognised on the
acquisition of 8AM Global Limited ("8AM"), where the amortisation charge is
included within the Share of profit from joint venture on the Consolidated
Statement of Total Comprehensive Income. This amortisation charge is recurring
over the life of the intangible asset, although it is an adjustment to
operating profit since it is a significant non-cash item. Adjusted operating
profit represents largely cash-based earnings and more directly relates to the
trading performance of the financial reporting period.
Operating loss due to non-controlling interest
There are £82,000 (2023: £nil) of losses within the Group's operating profit
relating to the non-controlling interest in Fintegrate Financial Solutions
Limited. This has been excluded from the Group's adjusted operating profit to
reflect the adjusted operating profit attributable to the Group.
Gain arising on changes in the fair value of contingent consideration
In the year ending 2024, the Group revalued its financial liability at fair
value through profit or loss relating to the contingent consideration on the
acquisition of the Verbatim funds business and 8AM Global Limited. This
resulted in a credit of £1,350,000 being recognised during the year. There
was no change in the fair value in the six month period to 30 September 2024.
Exceptional items
During the year ending March 2024, the Group reviewed the investment in the
8AM joint venture for impairment and recognised an impairment loss in the year
of £1,250,000. As the impairment of the investment is a non-cash item, there
are no cash flows from exceptional items included on the Consolidated
Statement of Cash Flows. No such impairment was identified at the interim
period to 30 September 2024.
6. Taxation
Unaudited six months ended Unaudited six months ended Audited
30-Sep 2024
30-Sep 2023
year ended
(£'000)
(£'000)
31-Mar 2024
(£'000)
Current tax
Current tax on profits for the period 2,609 2,354 4,798
Adjustment for under-provision in prior periods (173) - (290)
2,436 2,354 4,508
Deferred tax
Current year (credit)/charge (54) 5 (173)
Adjustment in respect of previous years - - (505)
Effect of changes in tax rates - (57) -
(54) (52) (678)
Total tax expense 2,382 2,302 3,830
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
30-Sep 2024
30-Sep 2023
year ended
(£'000)
(£'000)
31-Mar 2024
(£'000)
Profit before taxation 10,102 7,693 16,751
Tax at UK corporation tax rate of 25% (2023: 25%) 2,526 1,923 4,188
Expenses not deductible for tax purposes 51 44 462
Income not taxable - - (443)
Adjustments in respect of previous years (173) - (795)
Effect of changes in tax rates - (57) -
Capital allowances in excess of depreciation (12) 22 6
Deferred tax asset not recognised - - 142
Share-based payments (10) 370 270
Total tax expense 2,382 2,302 3,830
The deferred tax asset in both the current and prior year was calculated based
on the expected timing of reversal of the related temporary differences.
7. Earnings per Share
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 Unaudited six months ended Unaudited six months ended Audited
30-Sep 2024
30-Sep 2023
year ended
31-Mar 2024
Basic
Weighted average number of shares in issue(1) 60,517,749 60,127,572 61,064,870
Effect of own shares held by an Employee Benefit Trust ("EBT") (601,783) (60,761) (358,196)
59,915,966 60,066,811 60,706,674
Diluted
Effect of weighted average number of options outstanding for the year 1,607,132 2,182,144 1,075,124
Weighted average number of shares in issue (diluted)(2) 61,523,098 62,248,955 61,781,798
Fully diluted
Effect of full dilution of employee share options which are contingently 1,095,272 1,012,719 1,096,621
issuable or have future attributable service costs
Adjusted diluted weighted average number of options and shares for the 62,618,370 63,261,674 62,878,419
year(3)
Own shares held by an EBT represents the Company's own shares purchased and
held by the EBT, shown at cost. The EBT has not purchased any of the Company's
own share in the period (2023: 139,500). The Company utilised 117,084 (2023:
139,500) of the shares during the period to satisfy the exercise of employee
share options. At September 2024, there remained 541,716 (2023: nil) of the
Company's own shares being held by the EBT (2023: nil).
1. The weighted average number of shares in issue includes contingently
issuable shares where performance obligations have been met and there will be
little to no cash consideration, but the share options have yet to be
exercised.
2. The weighted average number of shares is diluted due to the
effect of potentially dilutive contingent issuable shares from share option
schemes.
3. 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 options are assumed to fully vest.
Unaudited six months ended Unaudited six months ended Audited
30-Sep 2024
30-Sep 2023
year ended
|(£'000)
(£'000)
31-Mar 2024
(£'000)
Earnings attributable to ordinary shareholders
Basic and diluted profit for the period 7,806 5,391 12,986
Share-based payments charge 843 829 1,458
Amortisation of acquisition-related intangible assets 329 310 633
Exceptional costs - - 1,250
Gain arising on changes in the fair value of contingent consideration - - (1,350)
Unwinding of discount on deferred consideration 23 100 201
Tax impact of adjustments (440) 27 (770)
Adjusted basic and diluted profits for the period and attributable earnings 8,561 6,657 14,408
Earnings per share (pence) - Basic 13.03 8.97 21.39
Earnings per share (pence) - Diluted 12.69 8.66 21.02
Adjusted earnings per share (pence) - Basic 14.29 11.08 23.73
Adjusted earnings per share (pence) - Diluted 13.91 10.69 23.32
Adjusted earnings per share (pence) - Fully Diluted 13.67 10.52 22.91
8. Dividends
The Directors consider the Group's capital structure and dividend policy at
least twice a year ahead of announcing results and do so in the context of
its ability to continue as a going concern, to execute its strategy and to
invest in opportunities to grow the business and enhance shareholder value.
The Company's dividend policy is described in the Directors' Report on pages
62 and 63 of the 2024 Annual Report and Accounts. As at 30 September 2024, the
Company's distributable reserves were £7,717,000 (March 2024: £7,761,000).
During the period, Tatton Asset Management plc paid the final dividend related
to the year ended 31 March 2024 of £4,740,000, representing a payment of 8p
per share.
During the year ended 31 March 2024, £6,006,000 was paid as the final
dividend related to the year ended 31 March 2023, representing 10p per share.
In addition, the Company paid an interim dividend of £4,840,000 relating to
the year ended 31 March 2024 (2023: £2,904,000) to its equity shareholders.
This represents a payment of 8.0p per share (2023: 4.5p per share).
The Directors are proposing an interim dividend with respect to the financial
year ended 31 March 2025 of 9.5p (2024: 8p) per share, which will absorb
£5,701,000 (2023: £4,840,000) of shareholders' funds. It will be paid on 13
December 2024 to shareholders who are on the register of members on 22
November 2024.
9. Investment in Joint Ventures
Unaudited six months ended Unaudited six months ended Audited
30-Sep 2024
30-Sep 2023
year ended
(£'000)
(£'000)
31-Mar 2024
(£'000)
Opening investment 5,352 6,762 6,762
Profit for the period after tax 23 257 269
Amortisation of intangible assets relating to joint ventures (104) (104) (207)
Deferred tax credit 27 25 33
Impairment loss - - (1,250)
Distribution of profits - (120) (255)
Closing investment 5,298 6,820 5,352
Impairment in the year ended March 2024 relates to an impairment review which
was carried out over the investment in 8AM Global Limited. A value in use
calculation was performed, with the recoverable amount being lower than the
carrying value of the investment. An impairment loss of £1,250,000 was
recognised within administrative expenses in the Consolidated Statement of
Total Comprehensive Income in the prior year.
10. Goodwill
Goodwill (£'000)
Cost and carrying value at 31 March 2023 and 30 September 2023 9,337
Recognised as part of a business combination 459
Cost and carrying value at 31 March 2024 and 30 September 2024 9,796
The carrying value of goodwill includes £9.0 million allocated to the Tatton
operating segment and cash-generating unit ("CGU"). This is made up of £2.5
million arising from the acquisition in 2014 of an interest in Tatton Oak
Limited by Tatton Capital Limited, consisting of the future synergies and
forecast profits of the Tatton Oak business, £2.0 million arising from the
acquisition in 2017 of an interest in Tatton Capital Group Limited, £1.4
million of goodwill generated on the acquisition of Sinfonia and £3.1 million
of goodwill generated on the acquisition of the Verbatim funds business.
The carrying value of goodwill also includes £0.8 million allocated to the
Paradigm operating segment and CGU, £0.4 million relating to the acquisition
of Paradigm Mortgage Services LLP and £0.4 million of goodwill generated on
the acquisition of 56.49% of Fintegrate Financial Solutions Limited
within the prior year.
Goodwill relating to 8AM Global Limited is shown within Investments in Joint
Ventures (see note 9).
None of the goodwill is expected to be deductible for income tax purposes.
Impairment loss and subsequent reversal
Goodwill is subject to an annual impairment review based on an assessment of
the recoverable amount from future trading. Where, in the opinion of the
Directors, the recoverable amount from future trading does not support the
carrying value of the goodwill relating to a subsidiary company, then an
impairment charge is made. Such an impairment is charged to the Statement of
Total Comprehensive Income.
Impairment testing
For the purpose of impairment testing, goodwill is allocated to the Group's
operating companies, which represent the lowest level within the Group at
which the goodwill is monitored for internal management accounts purposes.
Goodwill acquired in a business combination is allocated, at acquisition, to
the CGUs or group of units that are expected to benefit from that business
combination. The Directors test goodwill annually for impairment, or more
frequently if there are indicators that goodwill might be impaired. The
Directors do not consider there to be any indicators of impairment at 30
September 2024. The growth rates, discount rates and cash flow assumptions
used in the impairment review at 31 March 2024 are detailed in the 2024 Annual
Report and Accounts.
11. Intangibles
Computer software Client Brand Total
(£'000)
relationships
(£'000)
(£'000)
(£'000)
Cost
Balance at 1 April 2023 1,235 4,034 98 5,367
Additions 120 - - 120
Balance at 30 September 2023 1,355 4,034 98 5,487
Additions 129 - - 129
Acquired as a business combination 365 - - 365
Balance at 31 March 2024 1,849 4,034 98 5,981
Additions 125 - - 125
Balance at 30 September 2024 1,974 4,034 98 6,106
Accumulated amortisation and impairment
Balance at 1 April 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)
Charge for the period (6) (202) (5) (213)
Balance at 31 March 2024 (1,021) (1,249) (25) (2,295)
Charge for the period (95) (201) (5) (301)
Balance at 30 September 2024 (1,116) (1,450) (30) (2,596)
Carrying amount
At 1 April 2023 343 3,189 83 3,615
At 30 September 2023 340 2,987 78 3,405
At 31 March 2024 828 2,785 73 3,686
At 30 September 2024 858 2,584 68 3,510
All amortisation charges on intangible assets are included within
administrative expenses in the Consolidated Statement of Total Comprehensive
Income.
12. Property, Plant and Equipment
Computer and office equipment Fixtures Right-of-use Total
(£'000)
and fittings
assets
(£'000)
(£'000)
(£'000)
Cost
Balance at 1 April 2023 354 480 991 1,825
Additions 58 8 - 66
Balance at 30 September 2023 412 488 991 1,891
Additions 39 10 622 671
Disposals (104) - (689) (793)
Balance at 31 March 2024 347 498 924 1,769
Additions 26 10 - 36
Balance at 30 September 2024 373 508 924 1,805
Accumulated depreciation and impairment
Balance at 1 April 2023 (234) (398) (739) (1,371)
Charge for the period (40) (44) (108) (192)
Balance at 30 September 2023 (274) (442) (847) (1,563)
Charge for the period (46) (29) (108) (183)
Disposals 104 - 689 793
Balance at 31 March 2024 (216) (471) (266) (953)
Charge for the period (44) (9) (99) (152)
Balance at 30 September 2024 (260) (480) (365) (1,105)
Carrying amount
At 1 April 2023 120 82 252 454
At 30 September 2023 138 46 144 328
At 31 March 2024 131 27 658 816
At 30 September 2024 113 28 559 700
All depreciation charges are included within administrative expenses in the
Consolidated Statement of Total Comprehensive Income.
Right-of-use assets
The Group leases buildings, motor vehicles and IT equipment. The Group has
applied the practical expedient for short-term leases and so has not
recognised IT equipment within rights-of-use assets. The average lease term is
five years. One lease expired in the year ended March 2024 and a new lease was
entered into in its place. The future lease payments relating to lease
liabilities are fixed.
Unaudited six months ended Unaudited six months ended Audited
30-Sep 2024
30-Sep 2023
year ended
(£'000)
(£'000)
31-Mar 2024
(£'000)
Amounts recognised in profit and loss
Depreciation on right-of-use assets (99) (108) (216)
Interest expense on lease liabilities (27) (3) (6)
Expense relating to short-term leases (35) (33) (66)
Expense relating to low value assets (1) (1) -
(162) (145) (288)
At 30 September 2024, the Group is committed to £32,000 for short-term leases
(2023: £66,000).
The total cash outflow for all leases amounts to £156,000 (2023: £168,000).
The cash outflows for the principal portion of lease liabilities and for the
interest portion of lease liabilities is shown within financing activities in
the Consolidated Statement of Cash Flows. The cash outflows for the payments
of short-term leases are shown within operating activities in the Consolidated
Statement of Cash Flows.
13. Trade and Other Receivables
Unaudited six months ended Unaudited six months ended Audited
30-Sep 2024
30-Sep 2023
year ended
(£'000)
(£'000)
31-Mar 2024
(£'000)
Trade receivables 239 420 878
Amounts due from related parties - 2 -
Accrued income 3,874 2,837 3,427
Prepayments 673 760 756
Other receivables 482 247 235
5,268 4,266 5,296
Less non-current portion:
Contingent consideration - (188) (188)
Total non-current trade and other receivables - (188) (188)
Total current trade and other receivables 5,268 4,078 5,108
Trade and other receivables, excluding prepayments, are financial assets. The
carrying value of these financial assets is considered a fair approximation
of their fair value. Accrued income is made up of contract assets, which are
balances due from customers that arise when the Group delivers the service.
Payment for services is not due from the customer until the services are
complete and therefore a contract asset is recognised over the period in which
the services are performed to represent the entity's right to consideration
for the services transferred to date. This usually relates to providing
one month of investment management service prior to receiving the cash from
the customer in the following month.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses ("ECLs") for trade receivables and accrued income 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 (2023:
£nil).
Trade receivable amounts are all held in sterling.
14. Trade and Other Payables
Unaudited six months ended Unaudited six months ended Audited
30-Sep 2024
30-Sep 2023
year ended
(£'000)
(£'000)
31-Mar 2024
(£'000)
Trade payables 70 720 328
Accruals 4,675 3,434 4,389
Deferred income 111 121 238
Contingent consideration 926 3,089 903
Lease liabilities 569 130 659
Other payables 2,257 2,834 2,608
8,608 10,328 9,125
Less non-current portion:
Contingent consideration (425) (2,315) (402)
Lease liabilities (512) - (567)
Other payables (45) - (47)
Total non-current trade and other payables (982) (2,315) (1,016)
Total current trade and other payables 7,626 8,013 8,109
Trade payables, accruals, lease liabilities, contingent consideration
and other payables are considered financial liabilities. The Directors
consider that the carrying amount of trade payables approximates to their
fair value.
Within other payables, there is a loan of £31,000 (Mar 2024: £46,000) that
holds a fixed and floating charge over all present and future property and
undertakings of Fintegrate Financial Solutions Limited.
Trade payable amounts are all held in sterling.
15. Financial Instruments
The Group's treasury activities are designed to provide suitable, flexible
funding arrangements to satisfy the Group's requirements. The Group uses
financial instruments comprising borrowings, cash and items such as trade
receivables and payables that arise directly from its operations. The main
risks arising from the Group's financial instruments are interest rate risks,
credit risks and liquidity risks. The Board reviews policies for managing each
of these risks and they have been fully disclosed in the FY24 Annual Report
and Accounts. The Group finances its operations through a combination of cash
resource and other borrowings.
Fair value estimation
IFRS 7 requires the 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 held at amortised
cost and are classified as level 1. The carrying amount of these financial
assets are amortised at cost approximates to their fair value. 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
30-Sep 2024
30-Sep 2023
year ended
(£'000)
(£'000)
31-Mar 2024
(£'000)
Financial investments in regulated funds or model portfolios 1,132 175 106
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.
Contingent consideration has been valued using a discounted cash flow method
that was used to capture the present value arising from the contingent
consideration. The unobservable inputs at 31 March 2024 were:
· the risk-adjusted discount rate of 8.01%; and
· the probability-adjusted level of assets under management, which had a
range of £246,000,000 to £390,000,000.
Financial assets at fair value through profit or loss (level 3)
Contingent consideration £'000
Balance at 1 April 2023 2,989
Unwinding of discount rate 100
Balance at 30 September 2023 3,089
Contingent consideration paid (937)
Unwinding of discount rate 101
Changes in the fair value of contingent consideration (1,350)
Balance at 31 March 2024 903
Unwinding of discount rate 23
Balance at 30 September 2024 926
The unwinding of the discount rate and the changes in fair value of contingent
consideration have been recognised in the Consolidated Statement of Total
Comprehensive Income.
16. Equity
Number
Authorised, called up and fully paid
At 1 April 2023 60,055,722
Issue of share capital on exercise of employee share options 455,678
At 30 September 2023 and 31 March 2024 60,511,400
Issue of share capital on exercise of employee share options 37,480
At 30 September 2024 60,548,880
17. Share-based Payments
During the period, a number of share-based payment schemes and share option
schemes have been utilised by the Company.
(A) Schemes
(I) Tatton Asset Management plc EMI scheme ("TAM EMI scheme")
The options granted in 2021 vested and became exercisable in July 2024. There
have been 117,084 options exercised during the period from this scheme. The
weighted average share price at the date of exercise was £6.84. No options
lapsed in the six months to 30 September 2024 (2023: 27,919). A total of
2,508,861 options remain outstanding at 30 September 2024, 2,012,966 of which
are currently exercisable. 5,649 options were forfeited in the period (2023:
6,961). The weighted average contractual life for share options outstanding at
the end of the period was 5.10 years (March 2024: 5.55 years)
The vesting conditions for the scheme are detailed in the Remuneration
Committee Report on pages 58 to 61 of the 2024 Annual Report and Accounts. The
weighted average fair value of the options granted during the six months to
September 2024 was £6.55. Within the accounts of the Group, the fair value at
grant date is estimated using the appropriate models, including both the
Black-Scholes and Monte Carlo modelling methodologies. 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
are explained in notes 17(B) and 17(C) respectively.
Number Weighted
of share
average
options
price
granted
(£)
(number)
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
Outstanding at 1 October 2023 2,627,186 0.63
Forfeited during the period (57,556) -
Outstanding at 31 March 2024 2,569,630 0.64
Exercisable at 31 March 2024 1,878,861 0.88
Outstanding at 1 April 2024 2,569,630 0.64
Granted during the period 61,964 -
Forfeited during the period (5,649) -
Exercised during the period (117,084) -
Outstanding at 30 September 2024 2,508,861 0.66
Exercisable at 30 September 2024 2,012,966 0.82
(II) Tatton Asset Management plc Sharesave scheme ("TAM Sharesave scheme")
On 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, with the schemes in the periods 2020 and 2021 being
administered by Yorkshire Building Society and the schemes in 2022 and 2023
being administered by Link Group. 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 2021 TAM Sharesave scheme vested in August 2024 and 37,480 share options
vested, with 24,480 being exercised in the period to 30 September 2024. Over
the life of the 2022 TAM Sharesave scheme, it is estimated that, based on
current savings rates, 45,487 share options will be exercisable at an exercise
price of £3.26. Over the life of the 2023 TAM Sharesave scheme, it is
estimated that based on current savings rates, 88,529 share options will be
exercisable at an exercise price of £3.89. 24,480 options were exercised in
the year, at a weighted average share price at the date of exercise of
£3.60. The weighted average contractual life for share options outstanding
at the end of the period was 1.51 years (2023: 1.54 years).
Within the accounts of the Group, 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 are
explained in notes 17(B) and 17(C) respectively.
Number Weighted
of share
average
options
price
granted
(£)
(number)
Outstanding at 1 April 2023 95,095 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 10,789 3.47
Exercisable at 30 September 2023 - -
Outstanding at 1 October 2023 10,789 3.47
Granted during the period 63,342 2.93
Forfeited during the period (4,154) 3.22
Outstanding at 31 March 2024 69,977 3.53
Exercisable at 31 March 2024 - -
Outstanding at 1 April 2024 69,977 3.53
Granted during the period 23,233 3.63
Forfeited during the period (1,019) 3.59
Exercised during the period (24,480) 3.60
Outstanding at 30 September 2024 67,711 3.54
Exercisable at 30 September 2024 13,000 3.60
(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
2024 2023 2022 2023 2022
Share price at grant (£) 7.04 4.74 4.03 4.91 4.25
Exercise price (£) - - - 3.89 3.26
Expected volatility (%) 34.49 35.24 34.05 35.13 34.05
Expected life (years) 3.00 3.00 3.00 3.00 3.00
Risk free rate (%) 3.98 4.64 1.71 4.74 1.71
Expected dividend yield (%) 2.27 3.06 3.11 2.95 3.11
(C) IFRS 2 share-based option costs
Unaudited six months ended Unaudited six months ended Audited
30-Sep 2024
30-Sep 2023
year ended
(£'000)
(£'000)
31-Mar 2024
(£'000)
TAM EMI scheme 804 797 1,376
TAM Sharesave scheme 39 32 82
843 829 1,458
The Consolidated Statement of Cash Flows shows an adjustment to Net cash from
operating activities relating to share-based payments of £818,000 (2023:
£829,000). This is a charge in the year of £843,000 (2023: £829,000)
adjusted for cash paid relating to national insurance contributions on the
exercise of share options of £25,000 (2023: £nil). Of the charge of
£843,000, £438,000 is recognised through equity, with the remaining
£405,000 relating to the cost of national insurance contributions, which are
not accounted for through equity.
18. Related Party Transactions
Ultimate controlling party
The Directors consider there to be no ultimate controlling party.
Relationships
Balances and transactions between the Parent Company and its subsidiaries,
which are related parties, have been eliminated on consolidation and are not
disclosed in this note. The Group has trading relationships with the following
entities in which Paul Hogarth, a Director, has a beneficial interest:
Entity Nature of transactions
Suffolk Life Pensions Limited The Group pays lease rental payments on an office building held in a pension
fund by Paul Hogarth.
Hermitage Holdings (Wilmslow) Limited The Group incurs recharged costs from this entity relating to trading
activities.
30 September 2024 30 September 2023 31 March 2024
Entity Terms and conditions Income/ (cost) (£'000) Balance receivable/ (payable) (£'000) Income/ (cost) (£'000) Balance receivable/ (payable) (£'000) Income/ (cost) (£'000) Balance receivable/ (payable) (£'000)
Suffolk Life Pensions Limited Payable in advance (31) (15) (30) - (47) (15)
Hermitage Holdings (Wilmslow) Limited Repayment on demand - - (12) - (12) -
19. Reconciliation of operating profit to net cash inflow from operating activities
Note Unaudited six months ended 30-Sep 2024 (£'000) Unaudited six months ended 30-Sep 2023 (restated) (£'000) Audited year ended 31-Mar 2024 (£'000)
Profit for the period 7,720 5,391 12,921
Adjustments:
Corporation tax expense 6 2,382 2,302 3,830
Finance income (485) (206) (640)
Finance costs 23 246 353
Depreciation of property, plant and equipment 12 152 192 375
Amortisation of intangible assets 11 301 330 543
Share-based payment expense 17 818 829 1,236
Post-tax share of profits/(losses) of joint venture 81 (153) 1,188
Changes in fair value of contingent consideration - - (1,350)
Fair value gains on financial assets (26) - -
Changes in:
Trade and other receivables 74 (619) (1,576)
Trade and other payables (807) (46) 50
Cash generated from operations 10,233 8,266 16,930
20. Events after the Reporting Period
There were no material post balance sheet events.
21. Contingent Liabilities
At 30 September 2024, the Directors confirmed there were contingent
liabilities of £nil (2023: £nil).
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