REG - Team PLC - Final Results
10/01/2023 07:00
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RNS Number : 1589M Team PLC 10 January 2023
10 January 2023
TEAM plc
(" TEAM " or the " Company ")
Final Results
TEAM plc (AIM: TEAM), the wealth, asset management and complementary financial
services group, announces its final results for the year to 30 September 2022.
Financial Highlights
· Revenues increased 44% to £2.1 m (FY 21: £1.5m)
· Adjusted EBITDA a loss of £0.8m (FY 21: £0.8m)
· Net assets increased by 15% to £8.6 million (FY21: £7.4 million)
· Group assets under management / advice up 94% at £575m (FY 21:
£297m)
· Annualized revenue run rate of £3.7m, as at 30 September 2022
Operational Highlights
· Increased headcount to 33 up from 16 at the outset of the year
· Completion of strategic acquisitions, now full set of capabilities in
Jersey
· Starting to realising cost and revenue synergies
· Recurring asset inflows improved, while markets and outflows not
expected to recur
· Good pipeline of acquisition opportunities
Commenting on the results Mark Clubb, Executive Chairman of TEAM, said:
"Our ambition remains to become a leading wealth and asset management business
and these results reflect good progress towards this aim. In May we raised a
further £2.7m to fund acquisitions and working capital. We have completed the
acquisitions of Omega and Concentric both of which have bedded down well and
our annualised revenues are now up to £3.7m. We have established a good base
in Jersey and have an excellent pipeline of opportunities ahead of us as we
enter 2023. We look forward to further developing our business in the coming
year."
For further information, please contact:
Team plc Tel: +44 (0) 1534 877210
Mark Clubb / Matthew Moore
Shore Capital (Nominated Advisor & Broker) Tel: +44 20 7408 4090
Tom Griffiths / Iain Sexton (Corporate Advisory)
Guy Wiehahn (Corporate Broking)
Hannam & Partners (Financial Advisor to TEAM) Tel: +44 20 7907 8500
Giles Fitzpatrick / Ernest Bell / Richard Clarke
Novella Communications (Financial PR) Tel: +44 20 3151 7008
Tim Robertson / Safia Colebrook team@novella-comms.com
About TEAM plc
TEAM plc is building a new wealth, asset management and complementary
financial services group. With a focus on the UK, Crown Dependencies and
International Finance Centres, the strategy is to build local businesses of
scale around TEAM plc's core skill of providing investment management
services. Growth will be achieved via targeted and opportunistic acquisitions,
team and individual hires, collaboration with suitable partners, and by
organic growth and expansion.
TEAM plc has three principal activities, Investment and Fund Management,
Treasury Services and Financial Advice.
Investment and Fund Management provides discretionary investment management
services, model portfolios, bespoke portfolios and fund management services
via fixed income and equity fund vehicles. Total assets managed as at 30
September 2022 were £249m (FY21: £297m).
Treasury Services focused on improving the return and mitigating the risks
associated with the management of cash for institutions, professional
advisers, trustees and high net worth individuals.
Financial advice - primarily for individuals resident in Jersey, and
investment consultancy services to wealthy individuals and trusts.
The Group's income is predominantly derived from activities conducted in
Jersey, Channel Islands, with a number of retail, high net worth, family
office, sovereign, institutional and corporate clients.
At the year end, the Group had 33 staff (FY21: 16), with 1 in the UK and 32 in
Jersey (FY21: 1 and 15 respectively).
Executive Chairman's Statement
Progress
I am pleased to present the second set of full year results of TEAM plc (the
"Company") as a public quoted company. At the time of admission to trading
on AIM in March 2021, we set out our ambition to become a leading wealth and
asset management business. I am delighted to confirm that we continue to make
significant progress towards this goal in spite of the market turbulence seen
this year.
Savers and investors alike have been confronted with higher inflation and
higher interest rates, coupled with geopolitical and domestic tensions. Our
investment process, which is based on a systematic approach, diversification
and active management, has demonstrated its value as we navigate these
challenging markets and we are proud of our investor returns in the year. It
is testament to the expertise and discipline of our Investment Committee,
headed by Jason Jones, but more specifically, Craig Farley, our Head of Multi
Assets.
Results
Our financial results reflect the contribution made to the business from the
first full year's consolidation of JCAP as well as two months of contributions
from Omega and Concentric. Group assets under management/advice for the year
were up 94% from £297 million to £575 million. Results also mirror a period
of sustained market turbulence which led to some net asset outflows. Group
revenues increased by 44% from £1.5 million to £2.1 million and adjusted
EBITDA, our preferred measure of profitability, was unchanged at a loss of
£0.8 million, as contributions from acquisitions were offset by a decline in
revenues in investment management. Net assets increased by 15% to £8.6
million (FY21: £7.4 million) and we are well placed to continue with our
growth plans.
Investment and Fund Management
In 2022, our investment management business launched its model portfolio
service across four platforms (Morningstar, 7IM, Quilter International and
Novia Global). The investment track record continues to build with our
multi-asset portfolios outperforming the MPI peer group across all four
strategies.
This strong relative performance reflects the dedicated research efforts
undertaken by the investment team during the first half of 2021 to overhaul
TEAM's investment philosophy and framework. Central to the process is that the
financial market landscape during the next twenty-five years is highly
unlikely to resemble that of the past twenty-five years which was an
extraordinary period of history, defined by little-to-no inflation, zero
interest rates, globalisation, and expanding central bank balance sheets. This
is now behind us, with profound consequences for asset allocation. TEAM has
responded by expanding our allocation menu to provide more sources of capital
growth and income for our clients, whilst always seeking out genuine
diversification. We have side-stepped a lot of volatility and downside this
year by holding: -
a) Far less equity risk than our peers;
b) Zero conventional sovereign and investment grade bonds until Q4 2022 (until
that point they represented 'return-free risk');
c) Consistent exposure to energy commodities, the standout sector of 2022; and
d) Healthy levels of cash, which has re-emerged as a strategic asset class
after years in the wilderness.
Whilst TEAM Asset Management remains loss making, the path to break even is
clear. Additional fee revenue will not require significant increases in costs.
I am confident, given the investment performance and more focused and
resourced business development, that we can achieve this. A Group Revenue
committee has been established and we are encouraged by the asset flows coming
from new and existing IFA clients.
With our entrepreneurial culture, we expect to continue to attract
relationship managers as well as to identify further acquisition
opportunities. The business is well placed to scale as it benefits from
building its performance track record and attracts new clients and talent.
We look forward to better opportunities ahead in 2023.
Treasury Services
JCAP, our Treasury Services business, has benefited from increased focus on
cash advisory services as interest rates have increased. The Bank of England
raised interest rates 9 times since December 2021 and the base rate now stands
at 3.5%. It is forecast to increase further and rates are expected to remain
elevated in the UK, Eurozone and US into 2024.
We continue to extend our client base into the institutional and particularly
Jersey trust market and have identified a number of significant opportunities,
all helped by the "tailwind" of higher interest rates.
Financial Advice and Consultancy
Concentric and Omega are significantly integrated into the Group as we had
been working closely with the respective teams and jointly planning projects
as we awaited regulatory approvals. Much of the work to identify revenue and
costs synergies, improve controls and improve client outcomes within these
businesses has been started. There are clear revenue synergies and clients
will be able to benefit from group investment management services. We
anticipate that recruitment to meet both client demand and succession planning
will be one of the biggest challenges that we need to address. However, we
think that the entrepreneurial business environment we offer will be appealing
to experienced practitioners and experienced staff have already been brought
into the business.
Acquisitions
Part of our growth strategy is to identify both targeted and opportunistic
acquisitions to enhance the range and quality of services that we offer. In
August 2022, we were able to complete the acquisition of Omega, a Jersey-based
IFA specialising in retirement planning, mortgage advice, life assurance and
bespoke investment advisory services for a headline consideration of £4
million. Somewhat frustrating was the time it took to receive regulatory
approval which impacted the Group's financial results for the year ended 30
September 2022. We are working through a remediation exercise over certain
historic control and management matters identified by the Jersey Financial
Services Commission ("JFSC"). Against this, Omega has continued to deliver
strong financial results, but unfortunately we were only able to include two
months' trading in these results.
In the same month, we completed the acquisition of Concentric, a Jersey based
financial planning and investment consultancy business focused on higher
net-worth individuals both in Jersey and internationally. It is a very well
managed business with strong processes and procedures, particularly regarding
compliance, which will be used to strengthen the operating models of Omega and
potentially other advisory businesses that we may acquire internationally.
ESG
Turning to ESG, our growing collaboration with BlackRock, a globally
recognised analytics and reporting provider, has been very well received by
existing and potential clients. BlackRock gives TEAM point-in-time analytics
and reporting capabilities for our investment models. In addition to stand
alone risk reporting and scenario analysis that seeks to measure the potential
impact of disruptive events on our models, a key feature is our ability to
extract an overall ESG score for each model, in addition to standalone 'E',
'S', and 'G' scores. For clients with specific ESG preferences or needs that
may deviate slightly from TEAM's core investment model offering, we can build
tailored solutions and provide an external reporting capability to ensure
expectations are being met.
TEAM Plc is a Jersey based company and we look to contribute to our community
in a meaningful manner. This year we again supported the Jersey Action Against
Rape fundraising competition, and the "Borrow a Bucket" initiative showing
Jersey as an environmentally friendly destination that also has "Impact"
initiatives.
Ambition
TEAM is building a new wealth, asset management and complementary financial
services group. With a focus on the UK, Crown Dependencies and International
Finance Centres, our strategy is to build local businesses of scale around our
core skill of providing investment management services. In May 2022, we raised
£2.7m from new and existing shareholders to fund acquisitions and working
capital. The acquisitions of Omega and Concentric have enhanced our range of
products and broadened our financial advice services increasing the scale of
our addressable market. We will continue to look to grow our adviser presence
organically by recruitment and via acquisition. We have been and are
actively engaged in many conversations. The Group continues to aim for its
target of completing two acquisitions per financial year, of increasing scale,
and I am confident that this will be achieved.
I believe that we have a settled, experienced management team with depth, and
are at the beginning of our "path to progress." I very much look forward to
making further progress in the coming year while remaining mindful of the
continuing macro-economic turbulence and market volatility. I remain confident
in the Group's longer-term prospects and the value we are building.
Looking forward
Since our IPO, and in keeping with the commitments that we made at that time,
we have taken every opportunity to develop and grow our business to enhance
our services for clients.
We will continue to seek opportunities to enable us to work towards our goal
to become a leading wealth and asset management business both in Jersey as
well as internationally. We have deep experience as a management team on
integrating acquisitions and identifying ways to enhance revenue growth across
the Group. Our ethos is entrepreneurial - our team is energetic and excited
by the potential of being involved at the inception of a fast-growing future
leader in the sector. I would like to thank the team for their commitment
and hard work over the period and look forward to continued collaboration and
success.
We expect to bring potential acquisitions to enhance TEAM and deliver the
business plan to our shareholders, and further equity funding will be required
to complete these transactions, and to fund the expected working capital
requirements we forecast in the coming 12 months.
We look to build resilience, be courageous in our ambitions, establish new
clients and business lines, continue to grow and improve our technology
resources in a fast-moving world, and lastly develop, and grow our existing
and new potential colleagues. Staff retention is about providing opportunity
and support. We look to offer fulfilling careers across a diverse range of
candidates and roles.
I very much look forward to the coming year while remaining mindful of the
continuing macro-economic turbulence and market volatility. I remain confident
in the Group's longer-term prospects and the value we are building. This
confidence has been, and will continue to be, evidenced by my ongoing purchase
of TEAM Plc shares.
Mr J M Clubb
Executive Chair
9 January 2023
Performance and Strategic Report
Introduction
The Directors present their Strategic Report on the Group for the year ended
30 September 2022.
Overview
The Directors' aim is to provide long term capital appreciation for
Shareholders by building a profitable and sustainable business. Growth will be
sought through winning new clients and targeted acquisitions, underpinned by
investment in the support infrastructure.
The overall strategy is to promote the continued development of the Group into
a leading wealth and asset management business. It is expected that the
Group's growth will be achieved through:
· an acquisition driven strategy to bring into the Group complementary
offshore and onshore wealth and asset management businesses;
· a focus on delivering revenue and cost synergies, leveraging our
increasing scale and breadth of services to gain a greater share of client
wallet and economies of scale for clients and the Group.
· identifying complementary services such as specialist funds, cash
management, and corporate services.
· the expansion into complementary locations - onshore UK, Crown
Dependencies, other International Finance Centres, and
· AUM growth through team and selective hires and targeted business
development.
The Directors believe that the successful execution of a buy and build
strategy to acquire incremental scale is likely to have the most meaningful
impact on the future value of the Group. The Directors believe that there are
a number of asset managers who are significantly underperforming due to a
variety of factors, including poor management, poor investment performance,
increased regulatory and technology requirements, lack of capital and
strategic vision.
Key Performance Indicators (KPIs)
As TEAM is in the initial stages of delivering the strategic plan for the
business, the Board has yet to set longer term measures for the assessment of
the performance of the business.
The key targets for the Directors are to:
· manage the business with a high standard of corporate governance;
· improve the operating performance of the Group to a cashflow positive
position;
· build the business to scale within Jersey, which we define as AUM of
over £500m and an operating surplus;
· integrate and deliver the cost and revenue synergies identified in
the acquired businesses, and
· build and convert our pipeline of acquisition opportunities. This
will enable the Directors to reapproach the shareholder base and potential
investors for further funding to continue the Group's inorganic growth plans.
A necessary part of further acquisitions will be raising additional financing,
which is expected to be required for any further acquisitions to be made by
the Group.
These measures, along with revenue, cost and profitability measures, will be
developed into longer term KPIs for the business, to which future Board
remuneration will be aligned.
Principal risks and uncertainties
Risk appetite is established, reviewed, and monitored by the Board. The Group, through the operation of its Committee structure, considers all relevant risks and advises the Board as necessary. The Group and each operating entity maintains a comprehensive risk register as part of its risk management framework encouraging a risk-based approach to the internal controls and management of the Group.
The Group seeks to ensure that its risk management framework and control environment is continuously evolving which the Board monitors on an ongoing basis.
Liquidity and capital risk: the Group's focus is on bringing the business to a positive cash flow position, whilst implementing its growth strategy. Before this goal is reached, the availability of sufficient liquid resources to meet the operating requirements of the business, and any deferred payments due to vendors of businesses to the Group, are closely monitored and a key element of any investment decisions taken.
Operational risk: operational risk is the risk of loss to the Group resulting from inadequate or failed internal processes, people, and systems, or from external events. Each trading entity conducts a business risk assessment to identify all risks faced, and to put in place effective mitigating controls and procedures. These are reviewed regularly.
Business continuity risk: the risk that serious damage or disruption may be
caused as a result of a breakdown or interruption, from either internal or
external sources, to the business of the Group. This risk is mitigated in part
by the Group having business continuity and disaster recovery arrangements.
Credit risk: the Board takes active steps to minimise credit losses, including the close supervision of credit limits and exposures, and the proactive management of any overdue accounts. Additionally, risk assessments are performed on an ongoing basis on all deposit taking banks and custodians and our outsourced relationships.
Non-compliance with laws and regulations risk: the Group has Compliance and
Operations functions resourced with appropriately qualified and experienced
individuals. The Directors monitor changes and developments in the regulatory
environment and ensure that sufficient resources are available for the Group
to implement any required changes.
S.172 Statement
As a Jersey company, TEAM plc does not fall under the UK Companies Act 2006
(the "CA 2006"), but we do follow the requirements under section 172 CA 2006
by which the Directors have a duty to promote the success of the Company for
the benefit of shareholders as a whole. In doing so, the Directors have
regard to the likely consequences of any decision in the long-term; the
desirability of the Company for maintaining a reputation for high standards of
business conduct; and the need to act fairly as between members of the
Company.
In this context, the Company is proposing to seek new revenue opportunities in
developing an asset and wealth management business. The Board considers that
its primary stakeholders are shareholders, employees, clients, suppliers and
regulators. We set out below how we engage with our stakeholders:-
Shareholders - contact with our shareholders is through a number of avenues
which include the Annual Report, Annual General Meeting, one-to-one meetings
and telephone conversations. Matters under discussion include strategy and its
execution and generating strong returns.
Employees - the Board engages with employees through a variety of methods,
including regular face-to--face meetings with the management teams of the
operating entities. The executive Directors are more actively engaged with the
relatively small number of staff, all of whom (bar the CFO) live and work on
Jersey, and are known personally to the management team.
Clients - the Company through its subsidiaries aims to provide investment
products and advisory services that meet the needs of its clients. The
Company's subsidiary management teams update the Board on a regular basis on
matters of client service and performance, and new client requirements.
Suppliers - the Company places reliance on external third party providers for
certain activities and services. The selection process and engagement with
these parties is undertaken by senior management to ensure the smooth
operation and delivery of services to the Company.
Regulators - three of the Company's subsidiaries are regulated by the JFSC.
Regular ongoing communication with the JFSC is maintained by the boards of the
respective operating companies, and regular management information is supplied
as required. All Board members and key individuals of the regulated entities
are approved in their roles by the JFSC.
The Performance and Strategic Report on pages 9 - 11 has been approved by the
Board and signed on its behalf.
Mr M C Moore
CFO and COO
9 January 2023
Financial Overview
A summary of the Group's performance for the financial year is set out below:
Year to Year to
30 Sep 2022 30 Sep 2021
£'000 £'000
Revenues 2,120 1,469
Cost of sales (414) (267)
Operating expenses (3,271) (2,994)
Operating loss (1,565) (1,742)
Operating loss before exceptional items (1,436) (1,052)
Exceptional items (129) (690)
Operating loss after exceptional item (1,565) (1,742)
Other income and charges (23) (9)
Loss before tax (1,588) (1,751)
Tax 64 45
Loss after tax (1,524) (1,706)
Adjusted EBITDA, excluding exceptional items, is set out below:
Year to Year to
30 Sep 2022 30 Sep 2021
£'000 £'000
Loss after tax (1,524) (1,706)
Interest 23 9
Tax (64) (45)
Depreciation 81 60
Amortisation of intangible assets 543 104
EBITDA (941) (1,488)
IPO related expenses* - 449
Acquisition related expenses** 129 241
Adjusted EBITDA (812) (798)
Notes:
*On 8 March 2021 TEAM plc shares were admitted to trading on AIM, costs
relating to this exercise are treated as exceptional.
** These are third party charges relating to the acquisitions of Omega and
Concentric in 2022 and Theta, JCAP and Omega and the potential offer for
Tavistock plc in 2021.
Financial analysis
The results for the year to 30 September 2022 when compared to the prior year
are as follows:
Revenues
Total revenues rose 44% to £2.1m (FY 21: £1.5m) with a significant increase
from the first full year of contribution from JCAP and two months'
contributions from Omega and Concentric. Team's run rate revenue (the
annualised revenues the Group would report if the AUM and fee rates remained
static at the level shown at 30 September 2022) was £3.7m (FY 21: £2.0m),
with a run rate revenue margin of 0.58% (the ratio of annualised revenues
excluding Treasury Services to client assets) (FY 21: 0.44%).
Investment and fund management revenues decreased from £1.3m to £1.0m due to
lower market values and net outflows principally due to the loss of one large
mandate.
Treasury services revenues in 2022 were £0.8m (FY 21: £0.2m for three months
only), which on an annualised basis was down from the £1.0m recorded in the
12 months to 30 September 2021. This reduction arose as one-off project fees
and brokerage fees received from a partner bank in 2021 did not recur in FY
2022. Additionally, JCAP has raised a claim with a client for non-payment of
fees, which is expected to be successful, but until this is settled it is not
accruing for fees due.
The two financial advice and consultancy businesses (Omega Financial Services
(Jersey) and Concentric Group Limited) were acquired in August 2022 and the
revenues of £0.3m (FY21: nil) reflect only two months of income. New business
activity was lower than that recorded in previous years by the acquired
businesses, reflecting that it was the quieter summer months that were
consolidated in Team's audited final results for the year ended 30 September
2022, and that new client activity was low against a background of negative
economic and political news.
Year to Year to
30 Sep 2022 30 Sep 2021
£'000 £'000
Investment and Fund Management 1,025 1,283
Financial advice and consultancy 305 -
Treasury services 789 180
Other 1 6
Total 2,120 1,469
Client assets
Total client assets increased year-on-year by 94% from £297m to £575m as at
30 September 2022. This was primarily through the inclusion of the two
acquired financial advice businesses.
Investment Fund Financial advice & consultancy Total
management management
£'m £'m £'m £'m
As at 30 Sept 2021 202 94 - 297
Inflows 41 32 - 73
Outflows (75) (14) - (89)
From acquired businesses - 0 326 326
Other including market performance (18) (14) - (32)
Total AUM at 30 Sept 2022 151 98 326 575
Investment management
Fees and commission are earned from investment management services for
individuals, trusts, sovereign agencies and corporations. The majority of
investment management clients are managed on the Pershing CI platform, with
some historic relationships with other third party custodians.
Growth in this division will come from attracting new clients from
intermediaries, both from TEAM group companies and external gatekeepers,
primarily trustees and third-party financial advisers, and from referrals from
existing clients. We also expect to continue to recruit relationship managers
with existing client relationships and execute further corporate acquisitions
of suitable investment management businesses on Jersey and onshore.
The total Investment Management AUM as at 30 September 2022 was £151m (FY21:
£202m), a 25% decrease on the year, of which 9% was asset price related, and
the balance from client outflows.
The change in AUM reflected the departure of one client with £40m under
management, albeit at a low fee. Client wins of £41m (20% of the opening
balance) were pleasing, and a significant increase on FY 2021 (£12m) with
increased traction in the larger pools of capital within the Jersey market and
with overseas financial advisers.
During the year, we launched our model portfolio services on three retail
platforms, and now manage clients' investments via our models on each of
these. We have started to see a flow of client assets from our advisory
businesses into TEAM models, helped by the increased availability of the
portfolios and the strong performance of the models, especially against the
peer group. As at 30 September 2022, assets advised and managed within the
Group totalled £3m.
Fund management
TEAM manages a range of Liechtenstein domiciled corporate bond funds (the Keox
funds), the TEAM International Equity Fund (TIEF), which is a Dublin domiciled
UCITS, and the Diversified Multi Asset Income Fund, a Liechtenstein domiciled
unitised version of our income model portfolio (DMAIF) that was launched this
year. These are managed by the same investment team who manage the investment
clients' portfolios.
The FUM of the Keox funds, fell from £90m at 30 September 2021 to £80m at
the year end, despite attracting gross inflows of £16m, and a net inflow of
more than £2m. The fall in value reflects the difficult year for the asset
class which was negatively impacted by higher inflation and interest rates.
The share price of the main KEOX ESG Bonds fund declined by 14%, outperforming
both its benchmark and the majority of its peer group over the year. The
relative outperformance reflects the more defensive duration stance of the
fund at a time when bond yields rose sharply.
TIEF was launched in May 2021 and is a long-only global equity fund, managed
by Mark Clubb. the Company's Executive Chair. FUM grew to £5m as at 30
September 2022 from £4m as at 30 September 2021, an increase of 35%. The
share price of the fund declined by 8%, versus a benchmark fall of 3%, during
the 12 months, but outperformed the majority of its global large-cap equity
fund peer group. The fund manager's active, high conviction style aims to
outperform over the medium-term and does not seek to track a benchmark.
The Diversified Multi Asset Income fund was launched in July 2022 to give a
unitised version of our model portfolio, which better suits some clients'
requirements. FUM was £12m as at 30 September 2022 (FY 21: nil).
TEAM does not charge fund management fees where investment clients hold funds
managed by TEAM.
Financial advice & consultancy
The financial advice and investment consultancy businesses were acquired in
August 2022, and client assets recorded only at the quarter end, so the £326m
of client assets are reported as acquired. In future years, we will be able to
report on inflows and outflows and market effects.
Expenses
Total expenses rose by 13% to £3.6m (FY 21: £3.2m) with the inclusion of
JCAP for a full year (three months in 2021) and Omega and Concentric for two
months (nil for 2021).
Year to Year to
30 Sep 2022 30 Sep 2021
£'000 £'000
Cost of sales 414 267
Staff costs 1,678 1,335
Non-staff costs 1,722 2,299
Adjusted total costs 3,814 3,901
IPO related expenses - (449)
Acquisition related expenses (129) (241)
Total 3,685 3,211
As at 30 September 2022, the total staff in TEAM was 33, up from 16 at 30
September 2021, and staff costs were up 26% to £1.7m (FY 21: £1.3m). Costs
of sales, primarily the cost of the Pershing CI platform in investment
management, were 55% higher at £0.4m (FY 21: £0.3m), reflecting a full year
of use having started incurring costs in Q3 2021. Non-staff costs, excluding
IPO and acquisition related expenses, were flat at £1.6m (FY21 £1.6m),
reflecting the focus on cost management across the Group and the delivery of
cost synergies from the three acquired businesses.
Omega is subject to enhanced monitoring and review by the JFSC, following the
identification of certain historic shortfalls in management controls prior to
its acquisition by TEAM. These shortfalls are being remediated, at the cost of
the vendor shareholders, by the strengthened management team, and through the
roll-out of the operating model used by Concentric.
Exceptional Items
Acquisition related expenses included the legal, regulatory and financial advice fees on the two completed transactions in 2022 and one unsuccessful bid, and legal advice on the revised management incentive plan.
Profits
EBITDA adjusted for IPO and acquisition related expenses was a loss of £0.8m (FY 21: loss £0.8m), an increase of 2%, as the lower revenues in investment management offset the contributions from the full year of ownership of treasury services, and two months' ownership of the financial advice businesses. The run rate adjusted EBITDA at the yearend is a loss of £0.6m (FY 21: £1.4m loss).
Tax
Regulated financial services businesses in Jersey pay a flat corporation tax
rate of 10%. The treasury services business is not regulated and has a nil tax
rate. The increased tax recovery in the year reflects the higher taxable
losses in the period.
Earnings per share
The headline loss per share decreased to 7.9p from 15.2p, a 48% reduction. The
adjusted loss per share decreased 42% to 4.2p from 7.1p.
Cash Flows
Cash decreased to £1.7m (FY21: £4.9m) as cash operating losses of £1.1m
were funded (FY 21: £1.5m) and cash payments of £3.5m (FY 21: £1.6m) were
made for acquired businesses.
Statement of Financial Position
Net assets increased by 15% to £8.5m (FY 21: £7.4m), following the issue of
new shares for £2.7m (FY 21: £9.6m) less the £1.5m of retained losses (FY
21: £1.7m).
Going concern
The Directors have prepared financial projections along with sensitivity
analyses of reasonably plausible alternative outcomes, covering clients and
assets, cost inflation and take up of group services. The forecasts
demonstrate that the Directors have a reasonable expectation that the Group
will require additional financial resources to meet the cash-settled deferred
consideration liabilities due in the financial year ending 30 September 2023
(£0.8m). This liquidity position has been exacerbated by the challenging
market conditions, with falls in asset prices, and cost inflation, especially
in salaries, moving the business away from generating a cash profit from the
current operations of the Group. The requirement for additional fundraising
has been highlighted as a feature of the business model for TEAM in the
initial years on the business plan. The placing and subscription in May 2022
which raised £2.7m for the acquisition of Concentric saw a high level of
follow on investment from the Company's institutional and private
shareholders, and certain Board members. It is this support from the current
shareholders, and the expectation that further earnings enhancing acquisitions
will be brought to current and potential shareholders for equity financing in
the coming financial year, that gives the Board sufficient confidence to
consider the financial position to not meet the test for material uncertainty,
and for the going concern basis to be appropriate for the accounts.
Dividends
The Board does not propose to pay a dividend in respect of the financial year ended 30 September 2022 (FY 21: £nil).
Mr M C Moore
CFO and COO
9 January 2023
Corporate Governance
The Board recognises the importance of sound corporate governance and has
adopted the Corporate Governance Guidelines for Smaller Quoted Companies
published in 2018 by the Quoted Companies Alliance (the "QCA Code"). The
Directors anticipate that whilst the Company will continue to comply with the
QCA Code, given the Group's size and plans for the future, it will also
endeavour to have regard to the provisions of the UK Corporate Governance Code
as best practice guidance to the extent appropriate for a company of its size
and nature.
Below are the 10 key governance principles as defined in the QCA Code and
details of how TEAM plc addresses each of these principles.
1. Establish a strategy and business model which promotes long-term value for shareholders
How it should be applied:
The Board must be able to express a shared view of the Company's purpose,
business model and strategy. It should go beyond the simple description of
products and corporate structures and set out how the Company intends to
deliver shareholder value in the medium to long-term. It should demonstrate
that the delivery of long-term growth is underpinned by a clear set of values
aimed at protecting the Company from unnecessary risk and securing its
long-term future.
How the Company applies it:
The Board is responsible for the Group's strategy. The operation of the Board
is documented in a formal schedule of matters reserved for its approval which
is reviewed annually. This includes the Group's strategic aims and objectives.
Further, the Group's strategy is explained fully within our Strategic
Report.
2. Seek to understand and meet shareholder needs and expectations
How it should be applied:
Directors must develop a good understanding of the needs and expectations of
all elements of the Company's shareholder base.
The Board must manage shareholders' expectations and should seek to understand
the motivations behind shareholder voting decisions.
How the Company applies it:
The Board is committed to regular shareholder dialogue with both its
institutional and retail shareholders.
The principal opportunity for the Board to meet shareholders is at the
Company's AGM, which shareholders are encouraged to attend.
The Company also has a dedicated email address which investors can use to
contact the Company. The CEO is responsible for reviewing all communications
received from shareholders and determining the most appropriate response.
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
How it should be applied:
Long-term success relies upon good relations with a range of different
stakeholder groups both internal (workforce) and external (suppliers,
customers, regulators and others). The Board needs to identify the Company's
stakeholders and understand their needs, interests and expectations.
Where matters that relate to the Company's impact on society, the communities
within which it operates or the environment have the potential to affect the
Company's ability to deliver shareholder value over the medium to long-term,
then those matters must be integrated into the Company's strategy and business
model.
Feedback is an essential part of all control mechanisms. Systems need to be in
place to solicit, consider and act on feedback from all stakeholder groups.
How the Company applies it:
The Directors believe that, in addition to its shareholders, the main
stakeholders of the Company are its clients, its employees, the communities in
which it operates and its two regulatory bodies (the London Stock
Exchange, and the Jersey Financial Services Commission).
The Company acts with integrity, focuses on creating results and importantly
values people - from its members of staff to those who form the communities it
engages with.
The Company dedicates significant time to understanding and acting on the
needs and requirements of each of these Groups by way of meetings dedicated to
obtain feedback.
The Directors are available to discuss any matter stakeholders might wish to
raise.
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
How it should be applied
The Board needs to ensure that the Company's risk management framework
identifies and addresses all relevant risks in order to execute and deliver
strategy; companies need to consider their extended business, including the
Company's supply chain, from key suppliers to end-customer.
Setting strategy includes determining the extent of exposure to the identified
risks that the Company is able to bear and willing to take (risk tolerance and
risk appetite).
How the Company applies it
The Board is responsible for determining the nature and extent of significant
risks that may have an impact on the Group's operations, and for maintaining a
risk management framework. The Board is responsible for the management of risk
and regularly carries out a robust assessment of the principal risks and
uncertainties affecting the Group's business, discussing how these could
affect operations, performance and solvency and what mitigating actions, if
any, can be taken. There is an annual review of the business risk
assessments.
5. Maintain the Board as a well-functioning, balanced team led by the Chairman
How it should be applied
The Board members have a collective responsibility and legal obligation to
promote the interests of the Company and are collectively responsible for
defining corporate governance arrangements. Ultimate responsibility for the
quality of, and approach to, corporate governance lies with the Chairman of
the Board.
The Board (and any Committees) should be provided with high quality
information in a timely manner to facilitate proper assessment of the matters
requiring a decision or insight.
The Board should have an appropriate balance between executive and
non-executive Directors and should have at least two independent non-
executive Directors. Independence is a Board judgement.
The Board should be supported by Committees (e.g. audit, remuneration,
nomination) that have the necessary skills and knowledge to discharge their
duties and responsibilities effectively.
How the Company applies it
The Board is responsible for the overall management of the Group including the
formulation and approval of the Group's long-term objectives and strategy, the
approval of budgets, the oversight of Group operations, the maintenance of
sound internal control and risk management systems and the implementation of
Group strategy, policies and plans. While the Board delegates specific
responsibilities, there is a formal schedule of matters specifically reserved
for decision by the Board. Such reserved matters include, amongst other
things, approval of significant capital expenditure, material business
contracts and major corporate transactions. The Board meets regularly to
review performance.
The QCA Code recommends at least two members of the Board comprise
Non-executive Directors determined by the Board to be independent. The Board
is comprised of five Directors, of whom two are executive and three are
non-executive. The Board considers all three of the Non-executives, to be
independent and, as such, the Company complies with the requirements of the
QCA Code in this regard.
The Board recognises that the QCA states that save in exceptional
circumstances, a chairman should not also fulfil the role of chief executive.
The Company does not have a Chief Executive, but relies on Mr J M Clubb as
Executive Chair and Mr M C Moore as Chief Financial Officer and Chief
Operating Officer to fulfil the duties of a Chief Executive. The Board
believes this is appropriate due to the Company having limited financial and
operational scale at present. The role and responsibilities of Mr J M Clubb
and Mr M C Moore are supported by shareholders. The Board however intends to
appoint a Chief Executive in the future, at the appropriate moment, and the
role of Mr J M Clubb as an executive Director will be reviewed. The Company is
committed to having a majority of independent Directors at all times.
With effect from Admission, the Board has established an audit and risk
Committee (the "Audit and Risk Committee"), a nomination Committee (the
"Nomination Committee") and a remuneration Committee (the "Remuneration
Committee") with formally delegated responsibilities.
6. Ensure that between them the Directors have the necessary up-to-date experience, skills, and capabilities
How it should be applied
The Board must have an appropriate balance of sector, financial and public
markets skills and experience, as well as an appropriate balance of personal
qualities and capabilities. The Board should understand and challenge its own
diversity, including gender balance, as part of its composition.
The Board should not be dominated by one person or a group of people. Strong
personal bonds can be important but can also divide a Board.
As companies evolve, the mix of skills and experience required on the Board
will change, and Board composition will need to evolve to reflect this
change.
How the Company applies it
The experience and knowledge of each of the Directors gives them the ability
to constructively challenge strategy and to scrutinise performance.
Mr J M Clubb brings leadership, sector expertise and experience of
substantially growing small businesses. Mr M C Moore brings sector expertise,
financial and operational leadership, and experience of acquisition led growth
strategies. Mr L P C Taylor, Mr M M Gray and Mr D J K Turnbull bring
additional strategic, regulatory, commercial, transaction and leadership
experience which will be invaluable as the Board pursues the Company's growth
strategy and continues to develop the Group.
Directors are expected to attend all meetings of the Board, which will all be
held in Jersey, and the Committees on which they sit, and to devote
sufficient time to the Group's affairs to enable them to fulfil their duties
as Directors. In the event that Directors are unable to attend a meeting,
their comments on papers to be considered at the meeting will be discussed in
advance with the Chair so that their contribution can be included in the wider
Board/Committee discussion.
The Company Secretary ensures that all Directors are kept abreast of changes
in relevant legislation and regulations, with the assistance of the Company's
advisers where appropriate. The Executive Directors are subject to the
Company's performance development review process through which their
performance against predetermined objectives is reviewed and their personal
and professional development needs considered. The Directors are encouraged to
raise any personal development or training needs with the Chair.
7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
How it should be applied
The Board should regularly review the effectiveness of its performance as a
unit, as well as that of its Committees and the individual Directors.
The Board performance review may be carried out internally or, ideally,
externally facilitated from time to time.
The review should identify development or mentoring needs of individual
Directors or the wider senior management team.
It is healthy for membership of the Board to be periodically refreshed.
Succession planning is a vital task for Boards. No member of the Board should
become indispensable.
How the Company applies it
A process of formal annual Board evaluation took place during the period. In
addition, the Non-executive Directors met, without the Chair present, to
evaluate his performance.
The Nomination Committee is required to give recommendations to the Directors
where there are vacancies or where it is felt that additional Directors should
be appointed. For new appointments the search for candidates is conducted, and
appointments are made, on merit, against objective criteria and with due
regard for the benefits of diversity on the Board.
8. Promote a corporate culture that is based on ethical values and behaviours
How it should be applied
The Board should embody and promote a corporate culture that is based on sound
ethical values and behaviours and use it as an asset and a source of
competitive advantage.
The policy set by the Board should be visible in the actions and decisions of
the Chief Executive and the rest of the management team. Corporate values
should guide the objectives and strategy of the Company.
The culture should be visible in every aspect of the business, including
recruitment, nominations, training and engagement. The performance and reward
system should endorse the desired ethical behaviours across all levels of the
company.
The corporate culture should be recognisable throughout the disclosures in the
Annual Report, website and any other statements issued by the Company.
How the Company applies it
The Board monitors and promotes a healthy corporate culture and has considered
how that culture is consistent with the Company's objectives, strategy and
business model and with the description of principal risks and
uncertainties.
The Board has considered and assessed the culture as being inclusive,
transparent and collaborative with appropriate behaviours. The Group has a
Code of Conduct, an Anti-bribery and Corruption Policy, and policies and
procedures relating to whistleblowing stating the Company's commitment to
conducting its business with honesty and integrity, its expectation that staff
will maintain high standards, and encouraging prompt disclosure of any
suspected wrongdoing. All such policies are available to view in the staff
handbook.
The terms of reference of the Audit Committee include reviewing the adequacy
and security of the Company's arrangements for its employees and contractors
to raise concerns, in confidence, about possible wrongdoing in financial
reporting or other matters and keeping under review the Company's procedures.
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
How it should be applied
The Company should maintain governance structures and processes in line with
its corporate culture and appropriate to its:
· size and complexity; and
· capacity, appetite, and tolerance for risk.
The governance structures should evolve over time in parallel with its
objectives, strategy, and business model to reflect the development of the
Company.
How the Company applies it
The Board has an established Audit, Remuneration, Risk and Nomination
Committees which meet regularly in accordance with their terms of reference.
The details of these Committees, including their terms of reference and
composition, are set out in our website. This detail also includes the roles
and responsibilities of each of the Directors.
The matters reserved for the Board, are set out in the Board Terms of
Reference, and can be summarised as follows:
· Reviewing, approving, and guiding corporate
strategy, major plans of action, risk appetite and policies, annual budgets
and business plans; setting performance objectives; monitoring.
· Implementation and corporate performance; and
overseeing major capital expenditures, acquisitions and disposals.
· Monitoring the effectiveness of the Company's
governance arrangements and practices, making changes as needed to ensure the
alignment of the Company's governance framework with current
best practices.
· Ensuring that appointments to the Board or its
Committees are effected in accordance with the appropriate governance
process.
· Monitoring and managing potential conflicts of
interest of management, Board members, shareholders, external advisors, and
other service providers, including misuse of corporate assets and abuse in
related party transactions; and overseeing the process of external disclosure
and communications.
· The Board is also responsible for all other
matters of such importance as to be of significance to the Group as a whole
because of their strategic, financial, or reputational implications or
consequences.
At this stage the Board believes that the governance framework is appropriate
for a Company of its size, but it continues to keep this under review.
10. Communicate how the Company is governed and is performing by maintaining a
dialogue with shareholders and other relevant stakeholders
How it should be applied
A healthy dialogue should exist between the Board and all of its stakeholders,
including shareholders, to enable all interested parties to come to informed
decisions about the Company.
In particular, appropriate communication and reporting structures should exist
between the Board and all constituent parts of its shareholder base. This will
assist:
· the communication of shareholders' views to the
Board; and
· the shareholders' understanding of the unique
circumstances and constraints faced by the
Company.
It should be clear where these communication practices are described (Annual
Report or website).
How the Company applies it
The Company is committed to open dialogue with all its stakeholders. The
Executive Chair liaises with the Company's principal shareholders, regulators
and, where appropriate, clients and relays their views to the wider Board.
On the Company's website, www.teamplc.co.uk, shareholders can find all
historical regulatory announcements, Interim Reports and Annual Reports.
Annual General Meeting Circulars are posted directly to all registered
shareholders or nominees and results of Annual General Meeting votes are also
published on the Company's website. As described earlier, the Company also
maintains email and phone contacts which shareholders can use to make
enquiries or requests.
The Non-executive Directors are available to discuss any matter stakeholders
might wish to raise, and the Executive Chair and Non-executive Directors will
attend meetings with investors and analysts as required.
Following the Company's AGM, the results of all votes will be made available
on its website.
By order of the Board
Mr M C Moore
CFO and COO
9 January 2023
The Board and its Committees
The Board is responsible for the overall management of the Group including the
formulation and approval of the Group's long-term objectives and strategy, the
approval of budgets, the oversight of Group operations, the maintenance of
sound internal control and risk management systems and the implementation of
Group strategy, policies and plans. While the Board may delegate specific
responsibilities, there will be a formal schedule of matters specifically
reserved for decision by the Board. Such reserved matters will include,
amongst other things, approval of significant capital expenditure, material
business contracts and major corporate transactions. The Board meets regularly
to review performance.
The QCA Code recommends at least two members of the Board comprise
Non-executive Directors determined by the Board to be independent. The Board
is comprised of five Directors, of whom two are executive and three are
non-executive. The Board considers all three of the Non-executive Directors to
be independent and, as such, the Company complies with the requirements of the
QCA Code in this regard.
The Board recognises that the QCA states that save in exceptional
circumstances, a Chairman should not also fulfil the role of Chief Executive.
The Company does not have a Chief Executive, but relies on Mr J M Clubb as
Executive Chair and Mr M C Moore as Chief Financial Officer and Chief
Operating Officer to fulfil the duties of a Chief Executive. The Board
believes this is appropriate due to the Company having limited financial and
operational scale at present. The roles and responsibilities of Mr J M Clubb
and Mr M C Moore are supported by shareholders. The Board, however, intends to
appoint a Chief Executive in the future, at the appropriate moment, and the
role of Mr J M Clubb as an executive Director will be reviewed. The Company is
committed to having a majority of independent Directors at all times.
The Board has established an audit and risk Committee (the "Audit and Risk
Committee"), a nomination Committee (the "Nomination Committee") and a
remuneration Committee (the "Remuneration Committee") with formally delegated
responsibilities. The reports of the chairs of these Committees are as
follows:
The Audit and Risk Committee
The Audit and Risk Committee is chaired by Philip Taylor. Its other members
are Michael Gray and David Turnbull, with Matthew Moore in attendance.
The Committee has primary responsibility for monitoring the quality of
internal controls and ensuring that the financial performance of the Company
is properly measured and reported on.
The Committee received and reviewed reports from the Company's management and
auditor for the annual accounts and the accounting and internal control
systems in use throughout the Group. Further, the Committee advises the Board
on the Group's overall risk appetite and strategy, the risk assessment
processes, including in relation to compliance functions, and assisting in
overseeing implementation of the adopted strategy.
The Committee meets at least three times a year at appropriate intervals in
the financial reporting and audit cycle and otherwise as required. The
Committee has unrestricted access to the Company's auditor.
The principal areas of focus during the year included the following items:
1. Reviewed the terms of reference for the Committee to monitor the
Committee's compliance.
2. Reviewed the internal control and compliance procedures, including
monitoring of progress on matters requiring improvement.
3. Review of the Interim and Annual Report and financial statements.
4. Approval of the management representation letter.
5. Review of the financial projections and related funding requirements
of the Group.
6. Review of the independence of the auditor, their fees and engagement
letter.
7. The Committee discussed the Audit Plan, the auditor's report and
significant issues arising during the audit with the auditor.
Role of the external auditor
The Committee monitored the relationship with the external auditor, Grant
Thornton Channel Islands, to ensure their independence and objectivity. Based
on that assessment, the Committee recommended to the Board the re-appointment
of Grant Thornton Channel Islands. In assessing independence and objectivity,
the Committee considered the level and nature of services provided by Grant
Thornton Channel Islands as well as confirmation from them that they have
remained independent within the meaning of the IESBA Code of Ethics.
The auditor did not carry out any non-audit services during the year.
Audit process
The external auditor prepared an Audit Plan for the Committee's review and
audit of the full year financial statements. The audit plan set out the scope
of the audit, areas to be tested and audit timetable. Following the audit, the
auditor presented their findings to the Audit Committee. No major areas of
concern were highlighted by the auditor during the year.
Internal audit
The Group assessed the need for an internal audit function and considered that
in the light of the existing control environment within the business, there is
currently no requirement for a separate internal audit function
Mr L P C Taylor
Chairman of the Audit & Risk Committee
9 January 2023
Nomination Report
The Nomination Committee is chaired by David Turnbull and its other members
are Philip Taylor, Michael Gray and Mark Clubb. Matthew Moore acts as its
Secretary.
The Nomination Committee assists the Board in discharging its responsibilities
relating to the composition of the Board. It is responsible for, and
evaluates, the balance of skills, experience, independence and knowledge of
the Board, its size, structure and composition, retirements and appointments
of additional and replacement Directors, and will make appropriate
recommendations to the Board on such matters. The Nomination Committee also
considers succession planning, taking into account the skills and expertise
that will be beneficial to the Board in the future.
The Committee met in October 2022. It reviewed the terms of reference then
discussed and confirmed the individual and collective suitability of Board
members. It was agreed that the Board had operated effectively, that the
Executive had performed well and that the Non-Executives had provided
appropriate challenge and guidance. It was also agreed that the size of the
Board was commensurate with the current size of the business and that the
composition provides TEAM with a balanced, experienced, knowledgeable and
informed group of Directors who bring strategic experience, foresight and
challenge to the Executive and, as such, no changes were necessary at this
time to its membership. The Committee reviewed succession planning and agreed
that the current plan was sensible and appropriate, but that it must be
reviewed on a regular basis as the Group grows. The Committee noted that it
takes into account the diversity or otherwise of the Board and will continue
to do so.
The Annual Board Effectiveness review was introduced and conducted in the form
of a confidential questionnaire completed by each Director. This provided an
opportunity for each of the Directors to comment anonymously on various
themes, including Board composition, function and capabilities, strategy,
performance of the Company and individuals, governance and organisation, team
dynamics and alignment of the Board and Executive team, the processes and
procedures of the Board and the performance of themselves and their
colleagues. The responses were mostly positive and consistent with the
findings at the Committee meeting. However, there are areas that should be
enhanced as the Company grows, particularly Group risk assessment, including
worst case scenario and crisis management, long term succession planning and
Board composition as current Board members approach their reappointment date.
The feedback was collated by the Chairman of the Nomination Committee, will be
discussed in detail at the next Board Meeting and an action plan agreed to
address the issues.
Mr D J K Turnbull
Chairman of the Nomination Committee
9 January 2023
Remuneration Report
The Directors present the Directors' Remuneration Report (the "Remuneration
Report") for the financial year ended 30 September 2022.
Composition and Role of the Remuneration Committee
As detailed within the Corporate Governance report, the Board has established
a Remuneration Committee which currently consists of all the Non-Executive
Directors, chaired by Mr M M Gray.
The Committee determines and agrees with the Board the framework and policy of
Executive remuneration and the associated costs to the Group and is
responsible for the implementation of that policy. The Committee determines
the specific remuneration packages for each of the Executive Directors and no
Director or Senior Executive is involved in any decisions as to their own
remuneration. The Committee has access to information and advice provided by
the Executive Chairman and the CFO and has access to independent advice where
it considers it appropriate. The Committee meets at least twice a year.
This report explains how the Group has applied its policy on remuneration paid
to Executive Directors.
Framework and Policy on Executive Directors' Remuneration
The Group's remuneration policy is designed to provide competitive rewards for
its Executive Directors, taking into account the performance of the Group and
the individual Executives, together with comparisons to pay conditions
throughout the markets in which the Group operates. It is the aim of the
Committee to attract, retain and motivate high calibre individuals with a
competitive remuneration package. It is common practice in the industry for
total remuneration to be significantly influenced by bonuses.
The Committee takes the remuneration and employment conditions of its broader
employee population into account when setting the remuneration policy for its
Executive Directors. The Committee also considers its responsibilities to its
shareholders and wider economic environment and market developments.
The remuneration packages are constructed to provide a balance between fixed
and variable rewards. Therefore, remuneration packages for Executive Directors
normally include basic salary, bonuses, benefits in kind and share based
rewards. In agreeing the level of basic salaries and annual bonuses, the
Committee takes into consideration the total remuneration that Executives
could receive.
Basic Salary
Basic salaries are reviewed on an annual basis or following a significant
change in responsibilities. The Committee seeks to establish a basic salary
for each Executive determined by individual responsibilities and performance,
cognisant of comparable salaries for similar positions in companies of a
similar size in the same market.
Incentive Arrangements
Bonuses
These are designed to reflect the Group's performance, taking into account the
performance of its peers, the market in which the Group operates and the
Executive's contribution to that performance.
Performance related contractual incentive scheme
These are designed to reward performance by the Executive Directors.
Share based rewards
The Group does not have any options nor an Employee Share Ownership Trust
(ESOT).
Other Employee Benefits
Depending on the terms of their contract, the Executive Directors are entitled
to a range of benefits, including contributions to individual personal pension
plans, private medical insurance and life assurance.
Service Contracts and Notice Periods
The Executive Directors are employed on rolling contracts subject to six
months' notice from either the Executive or the Group, given at any time.
Service contracts do not provide explicitly for termination payments or
damages, but the Group may make payments in lieu of notice. For this purpose,
pay in lieu of notice would consist of basic salary and other relevant
emoluments for the relevant notice period excluding any bonus.
External Appointments undertaken by Executive Directors
In the Committee's opinion, experience of other companies' practices and
challenges is valuable for the personal development of the Group's Executive
Directors and for the Company. It is therefore the Group's policy to allow
Executive Directors to accept Non-Executive Directorships at other companies,
provided the time commitment does not interfere with the Executive Directors'
responsibilities within the Group. Fees are retained by the individual
Executive Director.
Non-Executive Directors
All Non-Executive Directors have a letter of appointment for an initial period
of thirty six months and thereafter on a rolling basis subject to three
months' notice by either the Non-Executive Director or the Group, given at any
time.
In the event of termination of their appointment, they are not entitled to any
compensation.
Non-Executive Directors' fees are determined by the Executive Directors having
regard to the need to attract high calibre individuals with the right
experience, the time and responsibilities entailed, and comparative fees paid
in the market in which the Group operates. They are not eligible for pensions.
Management Incentive Plan ("MIP")
On 12 May 2022. the Company set up the TEAM plc MIP in order to ensure
selected employees of the Company are well motivated and identify closely with
the success of the Group. The Company's remuneration Committee committed to
make decisions about participation, size and timing of awards following the
IPO of the Company.
Following consultation with major shareholders, the Remuneration Committee
agreed to proceed with grants under the MIP, but with amended participation,
size and timing from that set out at the IPO. In summary the grants will be as
follows:
- Matthew Moore, CFO and COO, 650 shares, equivalent to 6.5% of the
issued capital in TEAM Midco Limited.
- One-third of the MIP will be set with reference to the TEAM plc
share price, with full pay out where the share price is twice the Subscription
Price of 60p.
- Two-thirds of the scheme will be set with reference to the TEAM
plc market capitalisation, with full pay out where the market capitalisation
is equal to or exceeds £40m.
- A holding period of 12 months is required for any Ordinary Shares
issued under the MIP. Previously, there were no holding periods under the MIP.
Directors' Emoluments
The remuneration of each Director as listed on page 54, in the Company
Information section, during the year ended 30 September 2022 is set out below:
Pension Pension
Contribution Contribution
Year ended Year ended year ended Year ended
Salary Benefits Bonus 30 Sept 2022 30 Sept 2021 30 Sept 2022 30 Sept 2021
£ £ £ £ £ £ £
Executive
J M Clubb 118,750 3,322 20,000 142,072 89,436 9,500 4,667
M Moore * 160,000 8,468 40,000 208,468 138,270 12,792 7,467
Non-Executive
L P C Taylor * 25,000 - - 25,000 14,581 - -
M M Gray * 25,000 - - 25,000 14,581 - -
D J K Turnbull * 25,000 - - 25,000 14,581 -
L Smith *** - - - - 3,750 - -
L Trevellyan ** - - - - 4,166 - -
A Stanton *** - - - - 2,085 - -
353,750 11,790 60,000 425,540 281,450 22,292 12,134
Notes:
* appointed 1 March 2021
** resigned 27 January 2021
*** resigned 1 March 2021
The highest paid Director for 2022 was Mr M C Moore receiving emoluments of
£208,468 (FY21: M C Moore £138,270).
Mr J M Clubb has a salary of £250,000, of which he has elected to waive half,
ahead of the Group generating a positive cash flow.
Directors' Interests in Management Incentive Plan shares
Total Total
30 Sept 2022 30-Sep-21
Director No. No.
J M Clubb - 375
M C Moore 650 438
650 813
The management incentive plan does not qualify as an employee share option
scheme as the shares were purchased at fair value. There are no voting rights
attached to these shares.
Directors' Report for the year ended 30 September 2022
Introduction
The Directors present their report and the consolidated financial statements
for TEAM plc (the "Company") and its subsidiaries (the "Group") for the year
ended 30 September 2022.
Results
The financial statements are set out on pages 42 to 66.
Dividend
The Directors do not propose to pay a dividend for the year ended 30 September
2022 (FY21: £nil).
Capital Structure
Full details of the issued share capital, along with movements during the
year, are set out in note 16 on page 61.
Incorporation
The Company was incorporated on 4 July 2019. The Company is a registered
public company limited by share capital and was incorporated and registered in
Jersey, Channel Islands. The Company registration number is 129405.
Directors' Shareholdings
The Directors who held office during the year and their interest in the shares
of the Company were as follows:
30 Sept 2022 30 Sept 2021
Appointed Number of shares Number of shares
J M Clubb 4 July 2019 3,768,750 3,432,500
M C Moore* 1 March 2021 - -
M M Gray 1 March 2021 47,727 22,727
D J K Turnbull 1 March 2021 33,645 17,045
L P C Taylor 1 March 2021 33,645 17,045
Further details of Directors' service contracts, remuneration, share interests
and interests in options over the Company's shares can be found in the
Remuneration Report on page 27.
*Mr Moore holds shares in the Management Incentive Plan, see note 5 on page 54
for further details.
Major Shareholdings
At the date of publication of this report, the Company had been notified of
the following shareholdings of 3% or more of its issued share capital:
Ordinary shares % of issued share capital
Mark Clubb 3,780,500 17.20
Schroders plc 2,069,284 9.42
Canaccord Genuity (Marlborough Funds) 1,706,626 7.77
Lance Trevellyan 839,844 3.82
Metropolitan Guarantee Limited 763,502 3.47
Political Contributions
The Group and Company did not make any political donations or incur any
political expenditure during the year (FY21: nil)
Going concern
The Directors have prepared financial projections along with sensitivity
analyses of reasonably plausible alternative outcomes. The forecasts
demonstrate that the Directors have a reasonable expectation that the existing
Group will require additional financial resources to meet the cash-settled
deferred consideration liabilities due in the coming financial year (£0.8m).
This liquidity position has been exacerbated by the challenging market
conditions, with falls in asset prices, and cost inflation, especially in
salaries, moving the business away from generating a cash profit from the
current operations of the Group. The requirement for additional fundraising
has been highlighted as a feature of the business model for TEAM in the
initial years in the business plan. The placing and subscription in May 2022
saw a high level of follow on investment from the institutional and private
shareholders, and the Board members. It is this support from the current and
potential shareholder base, and the expectation that further earnings
enhancing acquisitions will be brought to current and potential shareholders
for financing in the coming financial year, that gives the Board sufficient
confidence to consider the financial position to not meet the test for
material uncertainty, and for the going concern basis to be appropriate for
the accounts.
Certain activities of the Group are regulated by the Jersey Financial Services
Commission, the statutory regulator for financial services business in Jersey
which has responsibility for policy, monitoring and discipline for the
financial services industry. The JFSC requires the regulated entities' capital
resources to be adequate; that is sufficient in terms of quantity, quality and
availability, in relation to its regulated activities. The Directors monitor
the regulatory capital resources on a regular basis. Theta Asset Management is
however expected to generate ongoing losses, that will require further capital
allocations to maintain the required capital adequacy of the business. These
losses will be funded by the positive cashflow made in other group entities,
however these positive cashflows are not expected to be sufficient to also
cover the ongoing costs of the plc entity. As at the date of signing this
report, further capital will be required within the coming financial year to
maintain the liquidity of the Group, while the capital position of the
regulated businesses within the Group are expected to remain sufficient.
Likely future developments
The Directors are focused on bringing the Group to a cashflow positive
position, and able to cover deferred acquisition payments from Group
resources. In the early years of the Team business plan, this was not
expected, nor has it been the outcome. This was due to the costs associated
with running a plc entity with a listing on the AIM market, together with the
losses made in the investment management division. The Board is actively
pursuing a pipeline of earnings enhancing acquisitions, in Jersey, other Crown
Dependencies, and in the UK, and in delivering the revenue and cost synergies
from the acquired subsidiaries. These developments, where supported by
raising further share capital, are expected to move the Group into cash flow
positive trading.
Events after the Reporting Period
No events occurred after the statement of financial position date that are
required to be disclosed.
Annual General Meeting (AGM)
The resolutions being proposed at the AGM include usual resolutions dealing
with the ordinary business of the AGM. A description of all the resolutions is
set out within the Notice of AGM document being posted separately.
Statement of Directors' Responsibilities
The Directors acknowledge their responsibilities for preparing the Annual
Report and the consolidated financial statements in accordance with applicable
law and regulations.
Companies (Jersey) Law 1991 requires the Directors to prepare consolidated
financial statements for each financial year. Under that law. the Directors
have elected to prepare the financial statements in accordance with the
requirements of International Financial Reporting Standards ('IFRS') as issued
by the International Accounting Standards Board ('IASB'). Under Companies
(Jersey) Law 1991, the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and Group and of the profit or loss of the Company and
Group for that period. In preparing these financial statements, the Directors
are required to:
· select suitable accounting policies and apply them consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether applicable Accounting Standards have been followed,
subject to any material departures disclosed and explained in the financial
statements; and
· prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Company and Group will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
(Jersey) Law 1991. They are also responsible for safeguarding the assets of
the Company and Group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Disclosure of information to the auditors
Each of the persons who are Directors at the time that this Directors' Report
is approved has confirmed that:
· so far as that Director is aware, there is no relevant audit
information of which the Company's and the Group's auditor is unaware, and
· that Director has taken all the steps that ought to have been taken
as a Director in order to be aware of any relevant information and to
establish that the Company's and the Group's auditor is aware of that
information.
This report was approved by the Board on 9 January 2023 and signed on its
behalf by:
Mr J M Clubb
Mr
M C Moore
Executive
Chair
CFO and COO
Directors' Biographies
Jonathan Mark Gordon Clubb
EXECUTIVE CHAIRMAN
Mark began his 27 year career in investment banking at Hoare Govett and has
held various senior management roles at UBS Philips and Drew and BZW (latterly
Credit Suisse First Boston). In 1997 Mark, together with six partners, founded
London-based investment banking boutique, Altium Capital Partners. Following a
management buyout of Altium Capital Partners in 2008, Mark returned to Jersey
and has spent the last 12 years in investment management, including at private
client stockbroker, Collins Stewart, later acquired by Canaccord Genuity Inc.
Matthew Charles Moore
CHIEF FINANCIAL OFFICER & CHIEF OPERATING OFFICER
Matthew is a chartered accountant with a wealth of experience in senior
leadership and financial roles, having been CFO at Close Investments, CFO and
COO at Origen Financial Services (an Aegon group company) and CFO and COO at
Ascot Lloyd, a vertically integrated UK wealth management firm founded by
Oaktree, a leading private equity investor. Matthew adds significant
acquisition and integration expertise to TEAM. He was responsible for
acquisitions at Bellpenny, and subsequently Ascot Lloyd, and previously worked
in the acquisitions team at Close Wealth Management, prior to which he held
various roles in M&A at Commerzbank Securities and ING Barings.
Louis Philip Chetwynd Taylor
INDEPENDENT NON-EXECUTIVE DIRECTOR & SENIOR INDEPENDENT DIRECTOR
Philip has over 40 years' experience in the finance industry, beginning his
career at PwC in London. Philip is currently a lay member of the States of
Jersey Public Accounts Committee and as a Director of a property development
company. Philip was the Senior Partner of PwC Channel Islands and a Global
Leader of the PwC Quality Assurance Programme. Philip has previously served as
Chairman of the States of Jersey Treasury Advisory Company a Commissioner of
the JFSC, as a Member of the Conduct and Case Management Committees of the UK
Financial Reporting Council, as a Member of Jersey Financial Services Advisory
Board and as Director of number of listed and other financial services
companies.
David James Ker Turnbull
INDEPENDENT NON-EXECUTIVE DIRECTOR
He is currently Chairman of Fiduciary Settlements Ltd and a Non-Executive
Director of mnAI Data Solutions Ltd.
David was previously a Managing Director at Salomon Brothers (now Citigroup)
where he held various senior positions within the firm including Global
Co-Head of Japanese Equities and Global Head of European Equities. David also
served on the European Management Committee, Global Equity Committee and
Global Business Practices Committee. Prior to Salomon Brothers, David worked
for Rowe and Pitman in London and Tokyo. In 1999 David cofounded and was Chief
Operating Officer of Antfactory, a global technology investment firm; in
addition, he founded and acted as Chief Executive of its Japanese subsidiary,
Ant Capital.
From 2002 to 2010, David was a fund manager focused on Asia, first at Prodigy
Capital, where he was a Founding Partner, and then at Morant Wright. David is
a former Senior Advisor to the Industrial and Commercial Bank of China, has
advised several other companies, particularly in the financial sector, and
served on several company boards including Whittard of Chelsea.
Michael Mckenzie Gray
INDEPENDENT NON-EXECUTIVE DIRECTOR
Michael has over 20 years' management experience in banking. Michael founded MMG Consulting Ltd in 2015, an advisory consultancy firm based in Jersey.
Currently, Michael serves as a non-executive director for Triton Investment
Management Limited (a Swedish private equity group), GCP Infrastructure
Investments Limited (a FTSE 250 listed company), J-Star Jersey Company Limited
(a Japanese private equity group), Foresight Enterprise VCT plc (a listed
venture capital fund), Jersey Finance Limited (a Jersey finance
not-for-profit), JTC plc (a FTSE 250 listed trust and corporate services
company) and EPE Special Opportunities Limited.
Independent Auditor's Report
To the members of TEAM Plc
Opinion
We have audited the consolidated financial statements of TEAM Plc (the
"Company") and its subsidiaries (the "Group"), which comprise the Consolidated
Statement of Comprehensive Income, Consolidated Statement of Financial
Position, Consolidated Statement of Changes in Equity, Consolidated Statement
of Cash Flows for the year then ended and Notes to the consolidated financial
statements, including a summary of significant accounting policies. The
consolidated financial statements framework that has been applied in their
preparation is applicable law and International Financial Reporting Standards
(IFRSs) as issued by the International Standards Board (IASB).
In our opinion, the consolidated financial statements:
· give a true and fair view of the state of the Group's affairs as
at 30 September 2022 and of the Group's loss for the year then ended;
· are in accordance with IFRSs as issued by the International
Standards Board (IASB); and
· comply with the Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(ISAs) and applicable law. Our responsibilities under those standards are
further described in the 'Auditor's responsibilities for the audit of the
consolidated financial statements' section of our report. We are independent
of the Group in accordance with the International Ethics Standards Board for
Accountants' International Code of Ethics for Professional Accountants
(including International Independence Standards) (IESBA Code), together with
the ethical requirements that are relevant to our audit of the consolidated
financial statements in Jersey, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Our approach to the audit
Overview
Materiality
Overall materiality was £420,000 which represents 5% of the Group's net
assets (2021: 5% of the Group's net assets, £389,977).
Audit scope
· We conducted our audit of the consolidated financial statements based
on information provided by the appointed service providers to the Group to
whom the directors have delegated the provision of certain functions,
including bookkeeping and financial statements preparation.
· Our audit opinion covers the consolidated financial statements of the
Group only. We have not been engaged to provide individual statutory opinions
on the financial statements of the Company.
The Company is a Jersey-incorporated company which is listed on the
Alternative Investment Market (AIM).
Key audit matters
· There is a risk that the purchase of the subsidiary companies was
not in accordance with the requirements of IFRS 3, Business Combinations.
· TEAM Plc acquired Omega and Concentric resulting in a recognition
of intangible assets (customer contracts and goodwill) in the consolidated
financial statements. There is a risk of inadequate impairment for these new
and existing intangible assets.
Audit scope
As part of designing our audit, we determined materiality and assessed the
risks of material misstatement in the consolidated financial statements. In
particular, we considered where the Directors made subjective judgements; for
example, in respect of significant accounting estimates that involved making
assumptions and considering future events that are inherently uncertain. As in
all of our audits, we also addressed the risk of the Directors override of
internal controls, including among other matters, consideration of whether
there was evidence of bias that represented a risk of material misstatement
due to fraud.
We tailored the scope of our audit in order to perform sufficient work to
enable us to provide an opinion on the consolidated financial statements as a
whole, taking into account the structure of the Group, the accounting
processes and controls, and the industry in which the Group operates.
Materiality
The scope of our audit was influenced by our application of materiality. An
audit is designed to obtain reasonable assurance as to whether the
consolidated financial statements are free from material misstatement.
Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of the consolidated
financial statements.
Based on our professional judgement, we determined certain quantitative
thresholds for materiality, including the overall Group materiality for the
consolidated financial statements as a whole as set out in the table below.
These, together with qualitative considerations, helped us to determine the
scope of our audit and the nature, timing and extent of our audit procedures
and to evaluate the effect of misstatements, both individually and in
aggregate on the consolidated financial statements as a whole.
Overall group materiality £420,000 (2021: £389,977)
How we determined it 5% (2021: 5%) of the Group's net assets
Rationale for the materiality benchmark We believe that net assets is a primary measure used by the shareholders in
assessing the performance of the Group. It is also a generally accepted
measure used for companies in this industry. Our measurement percentage is
consistent with prior year.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the consolidated financial statements of
the current period. These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
The key audit matter How the matter was addressed in our audit
There is a risk that the acquisition of the subsidiaries were not accounted We evaluated the design and implementation of controls around the preparation,
for in accordance with the requirements of IFRS 3, Business Combinations. review and accounting for acquisitions;
We confirmed the extracted information from the sale and purchase agreement
into the goodwill and intangible assets calculation and valuation. We
verified, based on the purchase agreements and the agreements under company
law as well as the criteria defined in IFRS 10, the assessment made by the
management with regard to the control over the shares acquired in the
consolidated financial statements, assessed the methodical approach in
identifying the assets acquired and liabilities assumed at the acquisition
date, verified the measurement methods applied and examined the determination
of the identifiable assets acquired as well as the liabilities and contingent
liabilities assumed. We examined the disclosures regarding the acquisition
made in the notes to the financial statements to assess compliance with the
requirements of IFRS 3.
We traced the cash consideration paid to bank statements and tested the
accuracy of the acquired assets and liabilities fair value assessment by
referencing to Omega Financial Services (Jersey) Limited and Concentric Group
Limited accounting records and completion accounts.
We assessed the reasonableness of management's inputs, assumptions and
estimates regarding the intangible asset valuation calculations. We have
reviewed the reasonableness of the excess earning model used in the
calculation by comparing the basis for it with the actual amounts incurred in
the current period.
We reviewed the transaction-related disclosures in the financial statements in
accordance with IFRS 3, Business Combination and other relevant standards.
Key Observations
We have not identified any issues in respect of the calculation, accounting
treatment and disclosures relating to the acquisition of subsidiaries during
the year.
The key audit matter How the matter was addressed in our audit
Impairment of Goodwill
The two acquisitions made by the group have generated a significant amount of We evaluated the design and implementation of controls, inputs and assumptions
goodwill being recognised on the consolidated statement of financial position. around the preparation and review of the impairment assessments;
The initial allocation of goodwill is determined at the acquisition date.
Management is required to perform annual impairment of assessments in respect We evaluated the inputs and assumptions in the forecast used by management in
of the carrying value of goodwill on a cash-generating unit ("CGU") basis. determining the value in use for each of the CGUs, including the
appropriateness of the basis of the forecast. We challenged management's
judgement and tested the underlying value in use calculation, as follows;
The annual impairment assessment performed by management was considered We compared the discount rates used by management in their discounted cash
significant to our audit due to judgements and estimations applied by flows to externally available benchmarks;
management when determining the assumptions included in the assessment. These
assumptions are based on estimates that are affected by expected future We compared the prior year's management forecasts to actual performance and
economic and market conditions. factored in forward looking considerations of the Group to assess
reasonableness of management forecasts. We have also tested reasonableness of
the growth rate by comparing it to average forecasted growth rate of the
financial services market.
Accounting policies and disclosures relating to impairment of goodwill are set
out in note 2 of the consolidated financial statements We performed sensitivity analysis to identify the key assumptions within the
value in use calculations and determined the extent to which a reduction or
increase in the key assumption would result in goodwill impairment. In doing
so, we noted the future forecast revenues, and the discount rate are the most
sensitive assumptions. We ascertained the extent of changes that individually,
or in combination, would be required for the assets to be impaired.
We assessed the mathematical accuracy of each discounted cash flow model; and
We performed an evaluation of the key assumptions used in the impairment
assessment calculation in order to assess whether there are any indications of
management bias.
Key Observations
As a result of the testing performed, we have not identified any material
issue in respect of the impairment of goodwill
Impairment of Intangible assets We evaluated the design and implementation of the controls and the inputs and
the assumptions around the preparation and review of the impairment
Subsidiary acquisitions resulted in recognition of an intangible assets in the assessments;
consolidated financial statements. There is a risk that these intangible
assets are impaired. We evaluated the inputs and assumptions in the forecasts used by management in
determining the recoverable amount, including the appropriateness of the basis
of the forecasts. We challenged management's judgement and tested the
underlying recoverable amount calculation;
We compared the discount rates used by management in their discounted cash
flows to externally available benchmarks;
We compared the prior year's management forecast to actual performance and
factored in forward looking considerations of the Group to assess the
reasonableness of management forecast. We tested reasonableness of the growth
rate by comparing it to average forecasted growth rate of the financial
services market. We assessed the reasonableness of the lost client attrition
rate by comparison to lost client data and comparable company in the financial
services industry.
We performed sensitivity analysis to identify the key assumptions within the
recoverable amount calculations and determined the extent to which a reduction
or increase in the key assumption would result in intangible asset impairment.
In doing so we noted the lost client attrition rate, and the discount rate are
the most sensitive assumptions. We ascertained the extent of changes that
individually, or in combination, would be required for the assets to be
impaired.
We assessed the mathematical accuracy of each discounted cash flow model; and
We performed an evaluation of the key assumptions used in the recoverable
amount calculation in order to assess whether there are any indications of
management bias
Key Observations
As a result of the testing performed, we have not identified any material
issue in respect of the impairment of intangible assets.
Other information in the Annual Report
The Directors are responsible for the other information. The other information
comprises the information included in the 'Annual Report and Audited
Consolidated Financial Statements', other than the consolidated financial
statements and our auditor's report thereon. Our opinion on the consolidated
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. In connection with our audit of the
consolidated financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is
materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to
which the Companies (Jersey) Law, 1991 requires us to report to you if, in our
opinion:
· proper accounting records have not been kept by the Group; or
· the Group financial statements are not in agreement with the
accounting records; or
· we have not received proper returns adequate for our audit from
branches not visited by us; or
· we have not obtained all the information and explanations, which
to the best of our knowledge and belief, are necessary for the purposes of our
audit.
Responsibilities of the directors for the consolidated financial statements
As explained more fully in the Statement of Directors' Responsibilities set
out on page 32, the Directors are responsible for the preparation of the
consolidated financial statements which give a true and fair view in
accordance with IFRSs as issued by the International Standards Board (IASB),
and for such internal control as the Directors determine is necessary to
enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs will
always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with ISAs, we exercise professional judgment
and maintain professional scepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
control.
· Obtain an understanding of internal control relevant to the audit in
order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Group's internal control.
· Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
Directors.
· Conclude on the appropriateness of the Directors' use of the going
concern basis of accounting and, based on the audit evidence obtained, whether
a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention
in our auditor's report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor's report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
· Evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures, and whether the
consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with
them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated with the directors, we determine those matters
that were of most significance in the audit of the consolidated financial
statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor's report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Use of our report
This report is made solely to the Company's members, as a body, in accordance
with Section 113A of the Companies (Jersey) Law 1991. Our audit work has been
undertaken so that we might state to the Company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Jason Richard Lees-Baker
For and on behalf of Grant Thornton Limited
Chartered Accountants
St Helier
Jersey
Date:
Consolidated Statement of Comprehensive Income for the Year Ended 30 September 2022
Year to Year to
30 Sept 2022 30 Sept 2021
Note £'000 £'000
Revenues 3 2,120 1,469
Cost of sales (414) (267)
Operating expenses 4,5 (3,271) (2,944)
Operating loss (1,565) (1,742)
Operating loss before exceptional items (1,436) (1,052)
Exceptional 20 (129) (690)
items
Operating loss after exceptional item (1,565) (1,742)
Other income and charges 7 (23) (9)
Loss on ordinary activities before tax (1,588) (1,751)
Taxation 8 64 45
Loss for the year and total comprehensive (1,524) (1,706)
loss
Loss per share (basic and diluted) 20 £(0.08) £(0.15)
Consolidated Statement of Financial Position as at 30 September 2022
30 Sep 2022 30 Sep 2021
Note £'000 £'000
Non-current assets
Intangible assets 9 9,276 3,745
Property, plant & equipment 10 737 528
Deferred tax 8 156 89
Long term deposit 12 63 50
10,232 4,412
Current assets
Trade, other receivables and prepayments 13 910 561
Cash and cash equivalents 1,747 4,921
2,657 5,482
Trade and other payables: amounts falling due within one year 14 (2,640) (2,032)
Net current assets 17 3,450
Total assets less current liabilities 10,249 7,862
Trade and other payables: amounts falling due after one (1,592) (424)
Year
14
Net assets 8,657 7,438
Equity
Stated Capital 16 12,349 9,606
Retained loss (3,692) (2,168)
Total Equity 8,657 7,438
The consolidated financial statements on pages 42 to 66 were approved and
authorised for issue by the Board of Directors on the 9 January 2023 and were
signed on its behalf by:
Mr J M
Clubb
Mr M C Moore
Executive
Chair
CFO and COO
Consolidated Statement of Changes in Equity for the Year Ended 30 September 2022
Share Share Stated Retained
capital premium capital loss Total
£'000 £'000 £'000 £'000 £'000
At 1 October 2021 - - 9,606 (2,168) 7,438
New share Capital - - 2,743 - 2,743
Loss for the year - - - (1,524) (1,524)
At 30 September 2022 - - 12,349 (3,692) 8,657
Share Share Stated Retained
capital premium capital loss Total
£'000 £'000 £'000 £'000 £'000
At 1 October 2020 9 1,823 - (462) 1,370
New share Capital - 163 553 - 716
Cost of shares issued through IPO - (443) - - (443)
Conversion of shares (9) (1,543) 1,552 - -
Share premium received from IPO - - 7,501 - 7,501
Loss for the year - - - (1,706) (1,706)
At 30 September 2021 - - 9,606 (2,168) 7,438
Consolidated Statement of Cash Flows for the Year Ended 30 September 2022
Year to Year to
30 Sept 2022 30 Sept 2021
Note £'000 £'000
Cash flows from operating activities
Loss for the year before tax (1,588) (1,751)
Adjustments to cash flows from non-cash items:
Depreciation and amortisation 6 624 254
Finance costs 7 23 9
Trade and other receivables (net of effects from acquisition of subsidiaries) (362) (107)
Trade and other payables (net of effects from acquisition of subsidiaries) (61) 139
Net cash outflow from operating activities (1,364) (1,456)
Cash flows from investing activities
Acquisition of subsidiary net of cash acquired (3,496) (1,659)
Payment of deferred consideration (1,534) -
Acquisition of property, plant and equipment (15) (53)
Net cash outflow from investing activities (5,045) (1,712)
Cash flows from financing activities
Lease liability paid (85) (57)
Issue of share capital 2,743 7,221
Net cash flow from financing activities 2,658 7,164
Net (decrease)/increase in cash and cash equivalents (3,751) 3,996
Cash and cash equivalents at beginning of year 4,921 253
Cash and cash equivalents from subsidiaries at acquisition 577 672
Cash and cash equivalents at end of year 1,747 4,921
The consolidated statement of cash flow of the Group for the year ended 30
September 2022 is set out above. The only changes in liabilities other than
from financing cash flows are in respect of leases. Details of additions and
disposals of which are given in note 9.
Non-cash items:
During the year, Omega Financial Services (Jersey) Limited was acquired for a
total consideration of £3,815,558, which comprised of cash consideration of
£3,385,558 (£1,385,558 payable post yearend) and share capital exchange of
£430,000. The cash flow as shown in the acquisition of subsidiary line is
netted off by the cash acquired of £297,838.
During the year, Concentric Group Limited was acquired for a total
consideration of £2,329,562, which comprised cash consideration of
£1,496,229 and share capital exchange of £833,333. The cash flow of
acquisition of subsidiary above is netted off by the cash acquired of
£278,591.
Notes to the Consolidated Financial Statements for the year ended 30 September 2022
1. General information
TEAM plc (the "Company") is a Registered Public Company limited by share
capital incorporated and registered in Jersey, Channel Islands on 4 July 2019.
The registered Company number is 129405. The principal place of business is 6
Caledonia Place, St Helier, Jersey, JE2 3NG.
The principal activity of the Group is the provision of investment management
services.
These financial statements are presented in Pound Sterling (£), rounded to
the nearest thousand (£'000), which is the currency of the primary economic
environment in which the Group operates.
2. Accounting policies
Summary of significant accounting policies and key accounting estimates
The principal accounting policies adopted in the preparation of these
financial statements are set out below. These policies have been consistently
applied to the period presented, unless otherwise stated.
Statement of compliance
These consolidated financial statements have been prepared in accordance with
the requirements of International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board (IASB) and the
requirements of the Companies (Jersey) Law 1991. The Group's consolidated
financial statements have been prepared under the historical cost convention,
with the exception of financial instruments, which are stated in accordance
with IFRS 9 Financial Instruments: recognition and measurement.
The preparation of financial statements in compliance with IFRS requires the
use of certain critical accounting estimates. It also requires The Directors
to exercise judgement in applying the Group's accounting policies. The areas
where significant judgements and estimates have been made in preparing the
financial statements are disclosed in more detail under the critical
accounting judgements policy.
Basis of consolidated financial statements
The Group's financial statements consolidate those of the parent company and
all its subsidiaries as at 30 September 2022. Control is achieved where the
Company is exposed, or has rights, to variable returns from its involvement
with an investee company and has the ability to affect those returns through
its power over the other entity; power generally arises from holding a
majority of voting rights.
All transactions and balances between Group companies are eliminated on
consolidation, including unrealised gains and losses on transactions between
Group companies. Amounts reported in the financial statements of subsidiaries
have been adjusted where necessary to ensure consistency with the accounting
policies adopted by the Group.
Profit or loss and other comprehensive income of the subsidiaries acquired or
disposed of during the year are recognised from the effective date of
acquisition, or up to the effective date of disposal, as applicable.
The Group attributes total comprehensive income or loss of subsidiaries
between the owners of the parent given all subsidiaries are 100% owned.
New standards and interpretations not yet adopted
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning 1 January
2023:
· IFRS 17 Insurance Contracts
· Classification of Liabilities as Current or Non-Current - Amendments
to IAS 1
· Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS
Practice Statement 2
· Definition of Accounting Estimates - Amendments to IAS 8
· Deferred Tax related to Assets and Liabilities arising from a Single
Transaction - Amendments to IAS 12
The Group does not believe that the standards not yet effective, will have a
material impact on the consolidated financial statements.
For Annual Reporting periods beginning on or after 1 January 2022, the
following are newly effective requirements:
· Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16);
· Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS
1, IFRS 9, IFRS 16 and IAS 41); and
· References to Conceptual Framework (Amendments to IFRS 3).
· Onerous Contracts - Cost of Fulfilling a Contract Amendments to IAS
37
Going concern
The Directors have prepared financial projections along with sensitivity
analyses of reasonably plausible alternative outcomes. The forecasts
demonstrate that the Directors have a reasonable expectation that the existing
Group will require additional financial resources to meet the cash-settled
deferred consideration liabilities due in the coming financial year (£0.8m).
This liquidity position has been exacerbated by the challenging market
conditions, with falls in asset prices, and cost inflation, especially in
salaries, moving the business away from generating a cash profit from the
current operations of the Group. The requirement for additional fund raising
has been highlighted as a feature of the business model for TEAM in the
initial years on the business plan. The placing and subscription in May 2022
saw a high level of follow on investment from the institutional and private
shareholders, and the Board members. It is this support from the current and
potential shareholder base, and the expectation that further earnings
enhancing acquisitions will be brought to current and potential shareholders
for financing in the coming financial year, that gives the Board sufficient
confidence to consider the financial position to not meet the test for
material uncertainty, and for the going concern basis to be appropriate for
the accounts.
Critical accounting estimates and judgements
The Group makes certain estimates and assumptions in the preparation of
financial statements. Estimates and judgements are continually evaluated based
on historical experience and other factors, including expectations of future
events that are believed to be reasonable that best reflects the conditions
and circumstances that exist at the reporting date.
The principal estimates and judgements that could have an effect upon the
Group's financial results are the useful economic lives of property, plant and
equipment, the impairment of trade receivables and intangible assets and the
provision for income and deferred taxes. Further details of these estimates
and judgements are set out in the related notes to the consolidated
financial statements for these items.
Revenue recognition
The Group has applied IFRS15 - Revenue from Contracts with Customers. IFRS 15
establishes the principles that an entity applies when reporting information
about the nature, amount,
timing and uncertainty of revenue and cash flows from a contract with a
customer. Applying IFRS 15, an entity recognises revenue to depict the
transfer of promised services to the customer in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those
services.
The Group recognises revenue on the transfer of services in accordance with
the contractual terms entered into with clients. Fees and commissions are
received on a variety of different payment terms.
· Commission: Trading and foreign exchange commission income is
recognised on a trade date basis
· Management Fees: Portfolio and investment management, introductory
and sponsor fees are recognised on an accrual basis over time.
· Treasury services: Treasury fees are recognised on an accrual basis
over time.
· Financial advice services: These are recognised on an accrual basis
over time.
Exceptional costs
Costs which are material either because of their size or their nature, are
highlighted separately on the face of the consolidated statement of profit or
loss. The separate reporting of exceptional costs helps provide a better
picture of the Group's underlying performance. Items which may be included
within the exceptional category include, inter alia, acquisition and
restructuring costs and other particularly significant or unusual items.
Exceptional items are excluded from the headline profit measures used by the
Group and are highlighted separately in the consolidated statement of profit
or loss as management believe that they need to be considered separately to
gain an understanding of the underlying profitability of the trading
businesses.
Segment reporting
IFRS 8 requires that an entity disclose financial and descriptive information
about its reportable segments, which are operating segments or aggregations of
operating segments. Operating segments are identified on the basis of internal
reports that are regularly reviewed by the Board to allocate resources and to
assess performance. Using the Group's internal management reporting as a
starting point the single reporting segment set out in note 3 has been
identified.
Foreign currency transactions and balances
In preparing the financial statements of the Group, transactions in currencies
other than the entity's functional currency (foreign currencies) are recorded
at the rates of exchange prevailing on the dates of the transactions. At each
reporting date, monetary assets and liabilities that are denominated in
foreign currencies are retranslated at the rates prevailing on the balance
sheet date.
Exchange differences arising on the settlement of monetary items, and on the
retranslation of monetary items are included in statement of total
comprehensive income in operating expenses.
Tax
The tax expense for the period represents the sum of the tax currently payable
and the deferred tax.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised.
The carrying amount of deferred tax assets are reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered. Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled, or the asset is realised.
Deferred tax assets and liabilities are offset where there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
Property, plant and equipment
Property, plant and equipment are stated in the Statement of Financial
Position at cost, less any subsequent accumulated depreciation and subsequent
accumulated impairment losses. Assets are recognised when it is probable that
the future economic benefits associated with the asset will flow to the entity
and the cost can be measured reliably. Cost includes expenditure that is
directly attributable to the acquisition of items.
Fully depreciated assets are retained in the cost and the related accumulated
depreciation until they are removed from service. In the case of disposals,
assets and related depreciation are removed from the financial statements at
the net amount. Proceeds from disposal are charged or credited to the
statement of income.
Depreciation
Depreciation is charged so as to write off the cost or valuation of assets
over their useful economic lives, using the straight-line method
Asset
class
Depreciation rate
Computer hardware
5 years
Equipment
4 years
Leasehold Improvements 5 years
Right of use assets
Over the term of the lease
Business combinations
The acquisition of subsidiaries is accounted for using the purchase method.
The cost of acquisition is measured as the aggregate of the fair values, at
the date of exchange, of the assets given, liabilities incurred or assumed,
and equity instruments issued by the Group in exchange for control of the
acquiree. The acquiree's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3 are
recognised at their fair value at the acquisition date.
Intangible assets
The value of the customer relationships has been calculated using the excess
earnings approach discounted using the Group's estimated cost of capital. The
average life of a customer relationship has been set based on the customer
base and represents both the period over which the value of such relationships
have been calculated and the amortisation period of the intangible asset
arising. The Group amortises intangible assets over the following periods:
Customer
relationships
5 -10 years
At each reporting date, the Group reviews the carrying amounts of its
intangible assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent
of the impairment loss (if any).
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised as an expense immediately.
Goodwill
Goodwill represents the future economic benefits arising from a business
combination that are not individually identified and separately recognised.
Goodwill is not amortised but it is tested for impairment annually, or more
frequently if events or changes in circumstances indicate that it might be
impaired, and is carried at cost less accumulated impairment losses.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other
short-term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an
insignificant risk of change in value. Such investments are those with
original maturities of three months or less.
Trade receivables
Trade and other receivables are recognised initially at fair value. They are
subsequently measured at amortised cost using the effective interest method,
less provision for impairment.
A provision for the impairment of trade receivables is based on the lifetime
expected credit loss and past and forward-looking information.
Payables
Payables are obligations to pay for goods or services that have been acquired
in the ordinary course of business. Trade and other payables are measured at
initial recognition at fair value and are subsequently measured at amortised
cost using the effective interest rate method
Leases
Under IFRS 16, the Group recognises right-of-use assets and liabilities for
significant leases.
The Group has elected and applied the exemption not to recognise right-of-use
assets and lease liabilities for short-term leases of equipment. The Group
recognises the lease payments associated with these leases as an expense on a
straight-line basis over the lease term.
At inception of a contract under IFRS 16, the Group assesses whether a
contract is, or contains a lease. A contract contains a lease if the contract
conveys the right to control the use of an identified asset for a period of
time in exchange for consideration.
The Group recognises a right-to-use asset and lease liability at the lease
commencement date.
The right-to-use asset is initially measured at cost, which comprises the
initial amount of the lease liability adjusted for any lease payments made at
or before the commencement date, plus any direct costs incurred and an
estimate of costs to restore the underlying asset, less any incentives
received.
The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement date to the end of the lease term.
The lease liability is initially measured at the present value of the lease
payments that are not paid, discounted using the interest rate implicit in the
lease, or if that rate cannot be readily determined, the Group's incremental
borrowing rate.
The lease liability is subsequently measured at amortised cost using the
effective interest rate method.
The Group presents right-of-use assets in property, plant and equipment and
lease liabilities in loans and borrowings in the Statement of Financial
Position.
Financial instruments
The Group has adopted IFRS 9 in respect of financial instruments.
Financial assets, including trade and other receivables and cash and bank
balances, are initially recognised at transaction price, unless the
arrangement constitutes a financing transaction, where the transaction is
measured at the present value of the future receipts discounted at a market
rate of interest. Such assets are subsequently carried at amortised cost using
the effective interest method. At the end of each reporting period financial
assets measured at amortised cost are assessed for lifetime expected credit
losses based on past and forward-looking information. If an asset is impaired
the impairment loss is the difference between the carrying amount and the
present value of the estimated cash flows discounted at the asset's original
effective interest rate. The impairment loss is recognised in the Statement of
Comprehensive Income. If there is a decrease in the impairment loss arising
from an event occurring after the impairment was recognised, the impairment is
reversed. The reversal is such that the current carrying amount does not
exceed what the carrying amount would have been had the impairment not
previously been recognised. The impairment reversal is recognised in the
Statement of Comprehensive Income.
Financial assets are derecognised when (a) the contractual rights to the cash
flows from the asset expire or are settled, or (b) substantially all the risks
and rewards of the ownership of the asset are transferred to another party or
(c) despite having retained some significant risks and rewards of ownership,
control of the asset has been transferred to another party who has the
practical ability to unilaterally sell the asset to an unrelated third party
without imposing additional restrictions.
Basic financial liabilities, including trade and other payables, bank loans,
loans from fellow group companies and preference shares that are classified as
debt, are initially recognised at transaction price, unless the arrangement
constitutes a financing transaction, where the debt instrument is measured at
the present value of the future payments discounted at a market rate of
interest.
Debt instruments are subsequently carried at amortised cost, using the
effective interest rate method.
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Accounts payable
are classified as current liabilities if payment is due within one year or
less. If not, they are presented as non-current liabilities. Trade payables
are recognised initially at transaction price and subsequently measured at
amortised cost using the effective interest method. Financial liabilities are
derecognised when the liability is extinguished, that is when the contractual
obligation is discharged, cancelled or expires.
Stated capital
Ordinary shares are classified as equity. Equity instruments are measured at
the fair value of the cash or other resources received or receivable, net of
the direct costs of issuing the equity
instruments. If payment is deferred and the time value of money is material,
the initial measurement is on a present value basis.
Share premium reserves
Share premium reserves represents the excess of the value received for shares
issued over their nominal value less transaction costs and amounts used to
fund bonus issues.
Retained losses
Retained losses represent the cumulative earnings or losses of the Group, less
any dividends declared.
3. Operating Segments
Following the acquisitions of the subsidiaries, the Group now identifies two
principal operating segments, Investment and Fund Management (IFM) and
Advisory and Consultancy (AC), and a number of operating activities that
have been aggregated into one operating segment.
IFM provides investment management services for individuals, trusts, sovereign
agencies and corporations, and fund management services to for a range of fund
vehicles. AC provides personal financial advice, investment consulting, and
treasury advisory services. Both segments are located in Jersey, Chanel
Islands.
No customer represents more than 10% of group revenues (FY 21: nil)
The following table represents revenue and cost information for the Group's
business segments
Investment and fund management Advisory and consultancy Group and consolidation adjustments Group
£'000 £'000 £'000 £'000
Revenue 1,025 1,334 (239) 2,120
Direct Cost (386) - (28) (414)
Contribution 639 1,334 (267) 1,706
Indirect Costs (1,255) (847) (416) (2,518)
Underlying profit before tax (616) 487 (683) (812)
Acquisition related costs - - (129) (129)
Amortisation of an acquired clients relationships - - (543) (543)
Changes in fair value - - (23) (23)
Net changes in the value of non-current asset - - (81) (81)
Profit before tax (616) 487 (1,459) (1,588)
Tax 67 (3) - 64
Profit/loss for the year (549) 484 (1,459) (1,524)
4. Staff costs
The aggregate payroll costs (including Directors' remuneration) were as
follows:
Year to Year to
30 Sep 2022 30 Sep 2021
£'000 £'000
Wages and salaries 1,678 1,335
1,678 1,335
The average number of employees (including Directors) during the year was 22
(FY21: 14).
5. Directors' remuneration
The Directors' remuneration for the year was as follows:
Year to Year to
30 Sep 2022 30 Sep 2021
£'000 £'000
Executive
J M Clubb 142 89
M C Moore 208 138
Non-Executive
L P C Taylor 25 15
M M Gray 25 15
D J K Turnbull 25 15
L Smith* - 4
L Trevellyan* - 4
A Stanton* - 2
425 281 **
* Resigned in previous year ** rounding difference
Directors' Interests in Management Incentive Plan shares
Total Total
30 Sept 2022 30 Sept21
Director No. No.
J M Clubb - 375
M C Moore 650 438
650 813
On 12(th) May 2022 the Company set up the TEAM plc MIP to replace the previous
MIP. Mr Clubb chose not to participate in the new plan, and Mr Moore was
awarded 650, with two other non-Directors of Team plc being awarded 100 shares
each.
The maximum dilution under the MIP has been reduced from 12.5% to 8.5%.
One-third of the MIP will be set with reference to the TEAM plc share price,
with full pay out where the share price is twice the Subscription Price.
Two-thirds of the scheme will be set with reference to the TEAM plc market
capitalisation, with full pay out where the market capitalisation is equal to
or exceeds £40m. A hold period of 12 months is required for any Ordinary
Shares issued under the MIP. Previously, there were no hold periods under the
MIP.
6. Operating loss
Is stated after charging:
Year to Year to
30 Sep 2022 30 Sep 2021
£'000 £'000
Auditors' remuneration - audit fees 48 27
Costs relating to the admission of the shares - 449
Amortisation of intangibles 543 194
Depreciation of property, plant and equipment 17 10
Depreciation of right of use asset 64 50
Interest on right of use asset 30 5
7. Interest payable and similar expenditure
Year to Year to
30 Sep 2022 30 Sep 2021
£'000 £'000
Interest payable - Right of use asset 30 5
Pershing deposit - Fair value (8) 2
Other interest payable 1 2
23 9
8. Taxation
Year to Year to
30 Sep 2022 30 Sep 2021
£'000 £'000
Deferred tax
Deferred tax charge (64) (45)
(64) (45)
The Group is liable for taxation in Jersey at the standard rate of 0% for none
regulated businesses, (FY21: 0%) and 10% for regulated businesses (FY21: 10%).
The differences are reconciled below Year to Year to
30 Sep 2022 30 Sep 2021
£'000 £'000
Loss before tax applicable to financial service companies from date of (643) (458)
acquisition to year end
Tax for financial service companies at 10% (64) (45)
Effect of permanent expense not deductible in determining taxable profit (tax 18 9
loss)
Effect of temporary expense not deductible in determining taxable profit (tax - 1
loss)
Tax increase from effect of unrelieved tax losses carried forward 46 35
Total tax decrease - -
Deferred tax assets and liabilities
Year to Year to
30 Sep 2022 30 Sep 2021
£'000 £'000
Losses carried forward 153 86
Capital allowances 3 3
Deferred tax asset 156 89
9. Intangible assets
The value of the customer relationships for TEAM Limited has been calculated
using the excess earnings approach discounted using the incremental borrowing
rate of 11.25%. The discount rate of 11.25% is based on the Group's weighted
average cost of capital (WACC) as estimated from the WACCs for comparable
listed companies operating in the same sector (FY21: 10.26% as based on
borrowing rates), which is believed to be a more appropriate method.
The average life of a customer relationship has been set at ten years and
represents both the period over which the value of such relationships have
been calculated and the amortisation period of the intangible asset arising.
Based on management's assessment, the intangible assets recoverable value is
higher than its carrying amount as at 30 September 2022, hence the intangible
asset is not impaired.
On 31 July 2022, TEAM plc acquired the entire share capital of Omega Financial
Services Limited ("Omega"), a trading company incorporated and registered in
Jersey, Channel Islands. The total consideration paid for Omega was
£3,815,558 which comprises of cash of £3,385,558 and shares amounting to
£430,000. Included in the Statement of Comprehensive Income are £34,879 in
transaction costs relating to this acquisition.
On 8 August 2022, TEAM plc acquired the entire share capital of Concentric
Group Limited ("CGL"), a holding company incorporated and registered in
Jersey, Channel Islands which is the parent company for the Concentric group
companies of Concentric Financial Services Limited and Concentric Analytics
Limited. The total consideration paid for CGL was £2,329,562 which comprises
of cash of £1,496,229 and shares amounting to £833,333. Included in the
Statement of Comprehensive Income are £55,782 in transaction costs relating
to this acquisition.
The value of the customer relationships for both acquisitions has been
calculated using the excess earnings approach discounted using the weighted
average cost of capital of 11.25% based on management review. The average life
of a customer relationship has been set at ten years and represents both the
period over which the value of such relationships has been calculated and the
amortisation period of the intangible asset arising. Based on management's
assessment, the intangible assets recoverable value is higher than its
carrying amount as at 30 September 2022, hence the intangible asset is not
impaired.
Any goodwill arising through business combinations is allocated to individual
assets of its subsidiaries including identified intangible assets. A summary
of the fair values of each major class of consideration in relation to Omega
& Concentric Group Limited is listed in the next tables:
As at
31 July 2022
£'000
Categorisation of assets: Omega Financial Services Limited
Intangible asset: customer contracts 3,279
Goodwill 524
Cash and cash equivalents 298
Trade and other receivables 31
Trade and other payables (316)
3,816
As at
8 August 2022
£'000
Categorisation of assets: Concentric Group Limited
Intangible asset: customer contracts 2,091
Goodwill 168
Non-current fixed asset 9
Cash and cash equivalents 279
Trade and other receivables 261
Trade and other payables (478)
2,330
Total Total
TEAM JCAP Omega CG customer intangible
Limited Limited Limited Limited relationships Goodwill assets
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 October 2021 1,059 1,759 - - 2,818 1,191 4,009
Acquired through business combinations - - 3,279 2,091 5,370 704 6,074
At 30 September 2022 1,059 1,759 3,279 2,091 8,188 1,895 10,083
Amortisation
At 1 October 2021 176 88 - - 264 - 264
Charge for the year 106 352 55 30 543 - 543
At 30 September 2022 282 440 55 30 807 - 807
Carrying Amount
At 30 September 2022 777 1,319 3,224 2,061 7,381 1,895 9,276
At 30 September 2021 883 1,671 - - 2,554 1,191 3,745
10. Property, plant and equipment
Right of Equipment Computer Leasehold
use assets and fixtures Hardware Improvements Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 October 2021 491 37 45 - 573
Additions 266 14 8 2 290
Disposals - - (1) - (1)
At 30 September 2022 757 51 52 2 862
Depreciation
At 1 October 2021 22 4 19 - 45
Disposals - - (1) - (1)
Charge for the year 64 10 7 - 81
At 30 September 2022 86 14 25 - 125
Carrying Amount
At 30 September 2022 671 37 27 2 737
At 30 September 2021 469 33 26 - 528
The right-to-use asset balance is made up of three properties across the
Group. The three properties are:
- 6 Caledonia Place, St Helier, Jersey, JE2 3NG. The lease term ends
on 30 April 2030.
- Ground Floor, 3 Mulcaster Street, St Helier, Jersey, JE2 3NJ. The
lease term ends on 23 March 2026.
- Third Floor, Conway House, St Helier, Jersey, JE2 3NT. The lease
terms ends on 31 October 2027.
11. Subsidiary undertakings
Proportion held by Group Proportion held by Subsidiary Proportion held by Group Proportion held by Subsidiary
Undertakings Country of incorporation Holding 30-Sep-22 30-Sep-22 30-Sep-21 30-Sep-21
TEAM Midco Limited Jersey Ordinary 100% 0% 100% 0%
JCAP Limited Jersey Ordinary 100% 100% 100% 100%
TEAM Limited Jersey Ordinary 100% 100% 100% 100%
TEAM (UK) Management Services Limited U.K. Ordinary 100% 100% 100% 100%
TEAM Nominees Limited Jersey Ordinary 100% 100% 100% 100%
Omega Financial Services Limited Jersey Ordinary 100% 100% 0% 0%
Concentric Group Limited Jersey Ordinary 100% 100% 0% 0%
Concentric Financial Services Limited Jersey Ordinary 100% 100% 0% 0%
Concentric Analytics Limited Jersey Ordinary 100% 100% 0% 0%
100% of the share capital of Omega and the Concentric Group were acquired
during the year in line with the strategy of the group to become a leading
wealth manager on the island of Jersey.
Since being acquired at 31(st) July 2022, Omega has earned revenue of
£195,818 and a profit of £120,258 for the two-month period ended 30
September 2022. If acquired at the start of the reporting period, Omega would
have earned revenue of £1,268,089 and a profit of £444,988.
Since being acquired at 8(th) August 2022, CGL has earned revenue of £109,575
and a loss of £30,514 for the shortened two-month period ended 30 September
2022. If acquired at the start of the reporting period, CGL would have earned
revenue of £1,011,9334 and a loss of £130,059.
12. Long-term deposit
On 6 August 2020, the Company entered into a client agreement with Pershing
(Channel Islands) Limited ("Pershing"), whereby Pershing is to provide the
company with the following services:
§ clearing and settlement services in relation to permitted investments;
§ execution of transactions to permitted investments and foreign exchange
transactions in connection with executed trades; and
§ custody and nominee services.
The total amount held by Pershing on a deposit account, on behalf of the
Company during the year was £100,000 (FY21: £100,000). The client agreement
shall be binding for a period of 7 years from the 6 August 2020 and may be
terminated by way of written notice of not less than 180 days following the
end of the 7 years' period.
The Company has opted to classify its Pershing deposit under the amortised
cost, given that there isn't a fair value methodology to determine the market
value of the deposit.
The present value of the deposit at the 30 September 2022 was £63,208 (FY21:
£49,490) based on a discount rate of 11.25% (FY21: 10.26%).
13. Trade and other receivables
30 Sep 2022 30 Sep 2021
£'000 £'000
Due within one year
Trade receivables 403 330
Accrued income 247 156
Prepayments and other receivables 260 75
910 561
Impairment of receivables
30 Sep 2022 30 Sep 2021
£'000 £'000
Trade receivables - -
At the year ended 30 September 2022, the value of invoices that were past due
was approximately £90,000 relating to the dispute between JCAP and a client
on non-payment of fees due (2021: £nil).
14. Trade and other payables
30 Sep 2022 30 Sep 2021
Note £'000 £'000
Due within one year
Lease liability 15 102 43
Payables 353 158
Social security and other taxes 79 39
Other Payables 1,833 1,494
Accruals 273 298
2,640 2,032
Due greater than one year
Lease liability 15 592 424
Other Payables 1,000 -
1,592 424
Included in other payables due within one year is £1,648,891 of deferred
consideration in relation to the purchase of Omega and CGL (FY21: deferred
consideration for purchase of JCAP of £1,493,726). This is the maximum
amount payable under the acquisition agreement.
Included in other payable dues greater than one year is £1,000,000 of
deferred consideration in relation to the purchase of Omega (FY21: £nil).
This is the maximum amount payable under the acquisition agreement.
Deferred Consideration 30 Sep 2022 30 Sep 2021
Opening balance 1,493,726 -
Additions in year 2,648,891 1,493,726
Additional consideration due from prior years 40,625 -
Deferred consideration paid in year (1,534,351) -
Closing balance 2,648,891 1,493,726
15. Lease liabilities
The amount of interest on the lease liabilities recognised as an expense
during the year was £29,843 (FY21: £5,400). Due to the acquisitions of Omega
and CGL during the year, the Group now occupies three properties. 1) 6
Caledonia Place, St Helier, Jersey, JE2 3NG. The lease repayments are £70,000
per annum. The lease term ends on 30 April 2030. 2) Ground Floor, 3 Mulcaster
Street, St Helier, Jersey, JE2 3NJ. The lease repayments are £30,000 per
annum. The lease term ends on 23 March 2026. 3) Third Floor, Conway House, St
Helier, Jersey, JE2 3NT. The lease repayments are £40,680 per annum. The
lease terms ends on 31 October 2027.
30 Sep 2022 30 Sep 2021
£'000 £'000
Maturity analysis
Not later than one year 102 43
Between one and five years 426 145
Greater than 5 years 166 279
694 467
16. Stated capital
30 Sep 2022 30 Sep 2021
No. No.
Allotted, called and fully paid shares
Ordinary shares* 21,976,145 17,299,795
*all shares hold equal voting rights of 1 vote each, the board can issue new
shares up to the limit specified in the ordinary resolution.
30 Sep 2022 30 Sep 2021
£'000 £'000
Allotted, called and fully paid share capital
Opening balance - 9
Transferred - (9)
- -
30 Sep 2022 30 Sep 2021
£'000 £'000
Share Premium
Opening balance - 1,823
Premium in year - 163
Cost of shares issued through IPO - (443)
Transferred - (1,543)
- -
30 Sep 2022 30 Sep 2021
£'000 £'000
Stated capital
Opening balance 9,606 -
Transferred - 1,552
Share premium received from IPO - 7,501
New Capital subscribed 2,743 553
12,349 9,606
17. Related party transactions
Key management personnel are the same as the Directors. Remuneration of the
Directors is disclosed in note 5 to the financial statements.
There are no further related party transactions to be disclosed during the
year.
18. Financial instruments
30 Sep 2022 30 Sept 2021
£'000 £'000
Categorisation of financial instruments
Financial assets measured at amortised cost: 403 330
Trade receivables
Cash and cash equivalents 1,747 4,921
2,150 5,251
Financial liabilities measured at amortised cost: (353) (158)
Trade payables
Other payables (2,833) (1,494)
Lease liability (694) (467)
(3,880) (2,119)
19. Capital management
The Group's objectives when managing capital are to safeguard their ability to
continue as a going concern, so that they can continue to provide returns for
shareholders and benefits for other stakeholders and maintain an optimal
capital structure to reduce the cost of capital. In order to maintain or
adjust the capital structure, the Group may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares or sell
assets to reduce debt.
Certain activities of the Group are regulated by the JFSC which is the
regulator for financial services businesses in Jersey and has responsibility
for policy, monitoring and discipline for the financial services industry. The
JFSC requires the regulated entities' resources to be adequate, that is
sufficient in terms of quantity, quality and availability.
Credit risk management
The maximum exposure to credit risk at the end of the reporting period is the
carrying amount of each class of financial assets mentioned above. Revenue is
generated daily and cash is received in arrears, typically within 30 days from
the month or quarter end. The Group does not believe there is significant
credit risk. In addition, the financial assets are neither past due or
impaired.
Foreign currency risk management
The Group is exposed to foreign exchange risk as it manages client assets in
Euro, US Dollar and Swiss Francs. Change in the exchange rate will have an
impact on the fees earned when translated into Sterling.
Market risk management
The Group is mainly exposed to market risk in respect of variations in
customer asset values and therefore the management fees that the Group
receives. There has been no material change to the Group's exposure to market
risks or the manner in which it manages and measures the risks.
Interest risk management
The Group has no borrowings exposed to variable interest rates and is
therefore not exposed to interest rate risk in that respect.
Liquidity risk management
The Group manages liquidity risk by maintaining adequate reserves and by
continuously monitoring the capital requirements of the Group. As at 30
September 2022, the deficit of financial assets over financial liabilities was
£1,730,000 (FY21: surplus of £3,132,000).
Remaining maturities of financial liabilities:
Less than Between Greater than
one year 2-5 years 5 years Total
£'000 £'000 £'000 £'000
Trade payables 353 - - 353
Other payables 1,833 1,000 - 2,833
Lease liabilities 102 426 166 694
At 30 September 2022 2,288 1,426 166 3,880
Less than Between Greater than
one year 2-5 years 5 years Total
£'000 £'000 £'000 £'000
Trade payables 158 - - 158
Other payables 1,494 - - 1,494
Lease liabilities 43 145 279 467
At 30 September 2021 1,695 145 279 2,119
20. Earnings per share
The Group has calculated the weighted-average number of outstanding ordinary
shares for the period as follows:
Weighted Average Number of Shares 2022 Date Number of shares Time weighting Weighted average number of shares
1 October 2021 - balance brought forward 01-Oct-21 17,299,795 12/12 17,299,795
28 February - 31 March 2022 31-Mar-22 259,683 7/12 151,482
May 2022 - Project Sword 01-May-22 4,416,667 5/12 1,840,278
21,976,145 12 months 19,291,555
Weighted Average Number of Shares 2021 Date Number of shares Time weighting Weighted average number of shares
Balance brought forward 01-Oct-20 93,000 12/12 93,000
Shares issued 19-Oct-20 3,600 12/12 3,600
Shares issued 06-Jan-21 900 9/12 675
Bonus issue of 82 for 1 06-Jan-21 7,897,500 9/12 5,923,125
Shares issued 06-Jan-21 41,000 9/12 30,750
Initial Public Offering 08-Mar-21 8,523,334 7/12 4,971,945
Shares issued 02-Jul-21 740,461 3/12 185,015
17,299,795 12 months 11,208,210
Loss per share 30 Sep 2022 30 Sep 2021
£ £
Loss per share
Loss for the financial period and total comprehensive loss (1,523,624) (1,706,309)
Weighted average number of shares 19,291,555 11,208,210
(0.079) (0.152)
The Parent Company does not have any contingent issuable shares as at year
end, hence diluted loss per share is the same as the basic loss per share
Adjusted Loss per share Year to Period to
30 Sep 2022 30 Sept 2021
£'000 £'000
Loss after tax (1,524) (1,706)
Interest 23 9
Tax (64) (45)
Depreciation 81 60
Amortisation of intangible assets 543 194
EBITDA (941) (1,488)
IPO related expenses - 449
Acquisition related expenses 129 241
Adjusted EBITDA (812) (798)
30 Sep 2022 30 Sep 2021
£ £
Adjusted loss per share
Adjusted EBITDA (812,000) (798,000)
Weighted average number of shares 19,291,555 11,208,210
(0.042) (0.071)
21. Ultimate controlling party
In the opinion of the Directors, there is no single ultimate controlling
party.
22. Events after the statement of financial position date
No events occurred after the statement of financial position date that are
required to be disclosed.
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