TIDMTAM
RNS Number : 4690C
Tatton Asset Management PLC
13 June 2023
13 June 2023
Tatton Asset Management PLC
("TAM plc", the "Group" or the "Company")
AIM: TAM
AUDITED FINAL RESULTS
For the year ended 31 March 2023
TAM plc, the investment management and IFA support services
group, today announces its audited final results for the year ended
31 March 2023 ("FY23"), which show strong, double-digit growth
across all metrics in line with market expectations.
FINANCIAL HIGHLIGHTS
-- Group revenue increased 10.1% to GBP32.327m (2022: GBP29.356m)
-- Adjusted operating profit(1) up 12.9% to GBP16.402m (2022:
GBP14.526m)
-- Adjusted operating profit(1) margin 50.7% (2022: 49.5%)
-- Adjusted fully diluted EPS(2) increased 10.7% to 20.61p (2022:
18.62p)
-- Final dividend up 17.6% to 10.0p (2022: 8.5p), full year dividend
of 14.5p (2022: 12.5p)
-- Strong financial liquidity position, with net cash of GBP26.494m
(2022: GBP21.710m)
-- Strong balance sheet - Net assets increased 34.6% to GBP41.781m
(2022: GBP31.044m)
1 Operating profit before exceptional items, share-based payment
charges and amortisation of acquired intangibles and changes
in fair value of contingent consideration.
2 Adjusted fully diluted earnings per share is calculated by
dividing the adjusted operating profit less cash interest
and less tax on operating activities by the weighted average
number of ordinary shares in issue during the year plus potentially
dilutive ordinary shares.
OPERATIONAL HIGHLIGHTS
-- Assets Under Management ("AUM") increased 12.3% to GBP12.735bn
(2022: GBP11.341bn). Current AUM at June 2023 c.GBP13.204bn
(AUM/AUI: c.GBP14.325bn)
-- Organic net inflows were GBP1.794bn (2022: GBP1.277bn), an
increase of 15.8% of opening AUM with an average run rate
of GBP150m per month
-- Acquisition of 50% of the share capital of 8AM Global Limited
("8AM" or "8AM Global") adding assets under influence ("AUI")
of GBP1.136bn, resulting in AUM/AUI totalling GBP13.871bn
-- Tatton's non-Managed Portfolio Services ("MPS") propositions
now account for c.GBP1.2bn of AUM
-- Tatton's IFA firms increased by 16.5% to 869 (2022: 746) and
the number of accounts increased 19.2% to 107,010 (2022: 89,780)
-- Paradigm Mortgages completions up by 10.3% to GBP14.50bn (2022:
GBP13.15bn). Paradigm Mortgages member firms increased to
1,751 members (2022: 1,674 members)
-- Paradigm Consulting increased its members increased to 431
(2022: 421)
Paul Hogarth, Chief Executive Officer, commented:
"This is the 10(th) anniversary year for Tatton and I am
delighted with the progress we have continued to make throughout
that decade. It is fitting that in this 10(th) anniversary year, we
have raised the bar further, delivering our best performance to
date with record net inflows of GBP1.8bn, AUM/AUI of GBP13.9bn and
involvement in lending through Paradigm of GBP14.5bn.
"While it has been a difficult and volatile year for many asset
managers and businesses, we have continued to execute our strategy
and build on our strengths, leveraging our wide distribution
capability, deep industry expertise, robust long-term investment
performance and talented team across the whole business.
"As we look forward, we are mindful that we remain in uncertain
times, both from an economic and geo-political standpoint. While
not unaffected by these conditions, despite this uncertainty we are
optimistic about the Group's prospects. Assets on platform continue
to grow and our MPS proposition is becoming increasingly attractive
to IFAs and their clients. With our long-term consistent investment
track record rewarding and enhancing client outcomes, wide
distribution footprint and competitive market position we are well
placed to capitalise on these conditions and achieve our goal of
delivering long-term, sustainable growth for all our
stakeholders."
For further information please contact:
Tatton Asset Management plc
Paul Hogarth (Chief Executive Officer)
Paul Edwards (Chief Financial Officer)
Lothar Mentel (Chief Investment Officer) +44 (0) 161 486 3441
Zeus - Nomad and Broker
Martin Green/Dan Bate (Investment
Banking) +44 (0) 20 3829 5000
Singer Capital Markets - Joint Broker
Peter Steel / Charles Leigh-Pemberton
(Investment Banking) +44 (0) 20 7496 3000
Belvedere Communications - Financial
PR +44 (0) 7407 023147
John West / Llew Angus (media) + 44 (0) 7715 769078
Cat Valentine / Keeley Clarke (investors) tattonpr@belvederepr.com
Trade Media Enquiries
Roddi Vaughan Thomas +44 (0) 20 7139 1452
For more information, please visit:
www.tattonassetmanagement.com
CHAIRMAN'S STATEMENT
Teamwork and talent delivers results
DEAR SHAREHOLDER
The 12 month period ended 31 March 2023, in common with the
previous trading period, has been a challenging time for asset
management, with economic stimuli, both positive and negative,
constantly changing, while the political landscape, globally as
well as in the UK, has done little to brighten prospects. An
uncertain trading environment has encouraged the Group to sustain a
focus on our core strategies, so it is satisfying to be able to
report further progress with increases in assets under management,
revenues, profits and, as a result, the dividend.
Our strategic ambition continues to be growth centred on organic
development, augmented by appropriate M&A activity when
opportunities arise, and we aspire to be the provider of choice for
the independent financial adviser ("IFA") community as a result of
providing products and services that enable them to better advise
their clients.
In common with businesses globally, and throughout the UK, the
Group has been buffeted by economic and political shocks, the
pandemic, the war in Ukraine, and the economic consequences of
these events, which have led to widely reported volatility and
difficult trading conditions. Riding these storms measures the
resilience of any organisation, so it is gratifying to be able to
report that TAM finds itself, at the end of this financial year, a
larger and stronger organisation with record asset net inflows,
higher levels of assets managed and influenced, and with an
increasing number of IFAs and their clients supporting the
business.
A material factor behind the results that we are reporting now
is the significant growth in demand for Model Portfolio Services
("MPS") generally. As provision for income in later life becomes an
ever more important consideration in the minds of investors, the
combination of clarity, positive investment returns, and low
charges is fuelling an appetite for MPS products, leading to new
entrants and increasing inflows as the MPS concept becomes a
leading strategic pillar for investors and their advisers.
Increasing demand is growing the overall market and validating the
proposition.
In my statement last year, I highlighted our "Roadmap to Growth"
aspiration based on a three-year target, set in 2021, of assets
under management increasing from GBP9.0bn to GBP15.0bn by March
2024. Despite the difficult trading conditions alluded to above,
assets under management at 31 March 2023 stood at GBP12.735bn,
excluding the assets derived from the acquisition of 8AM Global Ltd
of GBP1.136bn.
Paradigm Consulting, our consultancy business, has performed in
line with expectations, delivering expert regulatory consulting to
the IFA community and is well positioned to continue to do so. The
Mortgage business enjoyed a very positive performance this year,
with involvement in record mortgage completions of GBP14.50bn
(2022: GBP13.15bn). While the results of Government policy on
interest rates over the trading period are still being felt, the
situation has stabilised, and rates and products have reverted to
near normal, although the mortgage market remains uncertain.
Nevertheless, we are confident that the business remains well
placed in its markets and strongly positioned to take advantage of
opportunities that will undoubtedly lie ahead.
FINANCIAL HIGHLIGHTS
Group revenue increased by 10.1% to GBP32.3m (2022: GBP29.4m),
while adjusted operating profit(1) rose by 12.9% to GBP16.4m (2022:
GBP14.5m) and profit before tax, after incurring exceptional costs
and share-based payment charges, improved further to GBP16.0m
(2022: GBP11.3m). The impact of the above on fully diluted adjusted
earnings per share(1) was an increase of 10.7% to 20.61p (2022:
18.62p), while basic earnings per share was 22.43p (2022:
15.92p).
OUR PEOPLE
As ever, we believe our people are the most important factor in
the successful delivery of the Group's strategy and the maintenance
of long-term growth and value creation. On behalf of the Board, I
would like to thank every member of staff for their outstanding
performance over the past year, which is behind the delivery of a
gratifying set of results.
It has been a difficult year for many businesses, more so for
many employees across the country with the increased cost of living
and the impact of acute energy issues. With this in mind, the Group
made a one-off "winter support" payment to all employees of
GBP1,000 in recognition of the pressures people have faced and to
reflect the hard work and dedication that our employees have shown
in difficult times.
1. Alternative performance measures are detailed in note 23.
ROLE OF THE BOARD AND ITS EFFECTIVENESS
My primary role as Chairman is to provide leadership to the
Board and to provide the right environment to enable each of the
Directors, and the Board as a whole, to perform effectively to
optimise the success of the Company for the benefit of its
shareholders and other stakeholders.
It is my view that the Board has an appropriate balance of
skills and is highly effective, with a thorough understanding of
the opportunities and threats facing the Group.
UK CORPORATE GOVERNANCE
TAM plc remains committed to the highest standards of corporate
governance. The Board understands that this commitment is necessary
for managing our business effectively and for maintaining investor
confidence. Good governance adds value and reduces risk, and in a
business which continues to grow and evolve, we look to sustain,
develop, and improve our governance arrangements continually.
Details of how we have approached and applied corporate governance
are provided throughout our Annual Report and detailed on pages 54
to 57 and to be published on 13 June 2023.
SECTION 172 STATEMENT
Section 172 ("s.172") of the Companies Act 2006 requires the
Directors to act in the way that they consider, in good faith,
would be most likely to promote the success of the Company for the
benefit of its members as a whole. In doing this, s.172 requires a
Director to have regard, amongst other matters, to the likely
consequences of any decisions in the long term; the interests of
the Company's employees; the need to foster the Company's business
relationships with suppliers, customers and others; the impact of
the Company's operations on the community and environment; the
desirability of the Company to maintain a reputation for high
standards of business conduct; and the need to act fairly between
members of the Company. Further information can be found on pages
48 to 51 of our Annual Report.
DIVIDS
We remain on track to deliver against our set strategic goals
and create long-term sustainable shareholder value. Given the
continued progress, the Board is proposing to increase the final
full year dividend by 17.6% to 10.0p per share (see note 9),
bringing the total ordinary dividend for the year to 14.5p per
share, an increase of 16.0%, which is 1.4 times covered by adjusted
earnings per share. Subject to shareholder approval at the
forthcoming Annual General Meeting, the dividend will be paid on 15
August 2023 to shareholders on the register on 7 July 2023. The ex
dividend date will be 6 July 2023.
OUTLOOK
While the general economic outlook for the year ahead looks no
better than the period under review, both nationally and
internationally, there are factors that promote some optimism.
Momentum is a very useful ally, and we have confidence in being
able to increase our market share in what is widely recognised as a
growing sector of the asset management world. By remaining focused
on our stated strategy over the past year, we have been able to
grow the business significantly, and sustaining this focus, while
remaining alert to other opportunities, should enable us to report
further progress at the end of the 12 month trading period in front
of us.
Roger Cornick
Chairman
CHIEF EXECUTIVE'S REVIEW
10 years of continued growth: Model portfolios have come of
age
This year has seen the Group continue its progress and deliver
another year of strong financial performance. We have also made
good progress against our Strategic Goals and Priorities which I
set out in detail last year.
We move closer to delivering our stated goal of GBP15.0bn of
assets under management ("AUM") by March 2024 and we have
complemented our strong organic growth of AUM with a successful
acquisition strategy. Acquisitions in prior years have not only
delivered improved AUM but also expanded our distribution
footprint, giving us greater access to more IFAs and potential new
flows. This year, we have continued this strategy through the
acquisition of a 50% share in 8AM Global Limited, which now
contributes GBP1.136bn of assets under influence ("AUI") and a
solid management team. We are enjoying working together and look
forward to developing the business further together in the coming
years.
FINANCIAL PERFORMANCE
This year has been a difficult year for many businesses against
the backdrop of war in Ukraine, global economic instability, high
inflation, labour shortages and major geo--political events that
have unsettled markets. While not wholly unaffected by these
issues, we have been able to make excellent progress this year
through a combination of our resilient markets, strong business
model, the strength of our distribution and quality of our
propositions that continue to resonate with our firms and their
clients.
Group revenue increased 10.1% to GBP32.3m (2022: GBP29.4m) and
Group adjusted operating profit(1) increased 12.9% to GBP16.4m,
with margins improving to 50.7% (2022: 49.5%). Cash generation
remains very strong and we ended the year with cash on the balance
sheet of GBP26.5m (2022: GBP21.7m).
Tatton revenue increased by 11.1% to GBP25.9m, further
underpinned by record organic new net inflows in the year of
GBP1.794bn or 15.8% of opening AUM, an average of GBP149.5m per
month. In addition to organic flows, we also added GBP1.136bn of
AUI in the year following the acquisition of 50% of 8AM Global.
While markets improved in the second half of the year, annually
they contracted, reducing AUM by GBP400m or 3.5%, which ultimately
delivered a total AUM/AUI of GBP13.871bn or a 22.3% increase on the
prior year.
AUM Movement GBPbn
---------------------------------- -------
Opening AUM 1 April 2022 11.341
Organic net flows 1.794
Market and investment performance (0.400)
---------------------------------- -------
Total AUM 31 March 2023 12.735
Acquisition 50% 8AM Global (AUI) 1.136
---------------------------------- -------
Total AUM/AUI 31 March 2023 13.871
---------------------------------- -------
Tatton adjusted operating profit(1) increased by 13.9% to
GBP15.8m and margins were maintained at 61.1%, as investment to
drive the future growth of the business continued. Tatton continues
to account for a greater proportion of the income and now stands at
80.2% of Group revenue and also 96.5% of the Group's trading
profits.
Paradigm revenue increased by 6.8% to GBP6.4m. The Paradigm
Mortgage business delivered a very good year, with involvement in
mortgage completions exceeding GBP14.5bn for the first time, a
10.3% increase in the year. Operating profit(1) remains in line
with the prior year at GBP2.4m following investment in our cost
base. Including new personnel and cost inflation, the corresponding
margin reduced to 37.6%.
1.Alternative performance measures are detailed in note 23.
STRATEGY, PROGRESS AND MARKET TRS
Tatton
We are delighted to celebrate the 10th Anniversary of the
incorporation of Tatton this year. The last 10 years have flown by
since we created the business and in all honesty I never envisaged
we would be so successful with a product that had yet to fully find
its place in the investment management market. There have been many
milestones on the way but our first billion of AUM to break even
and our AIM listing back in 2017, which has been very beneficial
for the business, remain the standout points. I am humbled by our
success and I would like to thank all our IFAs and firms that have
supported us over the years, and also every one of our employees
who have helped in this journey, as our success would not have been
possible without their contribution.
Over these last 10 years, Tatton has been at the forefront of a
changing financial services and investment landscape and, from a
standing start in January 2013, we have created a market leading
investment business which now manages over GBP12.7bn. This growth
has principally been through the creation and promotion of a range
of risk-rated model portfolios, which makes discretionary fund
management ("DFM") available to the mass affluent while delivering
value and consistent investment returns at a market leading cost,
exclusively on their chosen Retail Investment Platform
("Platform").
Strategic Goals and Priorities
As part of our stated Strategic Goals and Priorities, I want to
update you on our continued progress in delivering our "Roadmap to
Growth" strategy, a three-year target of increasing AUM by
GBP6.0bn, from GBP9.0bn in FY21 to GBP15.0bn by FY24, with 50%
growth delivered from organic net inflows and 50% of the growth
through acquisition. With one year to go or being two thirds of the
way through that journey, we have AUM/AUI of GBP13.9bn. We have
delivered 82% of the target, with approximately three quarters of
the target achieved through new organic flows. In fact, this year
alone we delivered record net inflows of GBP1.794bn (2022:
GBP1.277bn), a 40.5% increase on the prior year.
Market development
The assets held on platforms and in Model Portfolio Services
("MPS") are now the fastest growing area for wealth managers, with
a consistent growth rate of c.25% per annum. MPS now accounts for
over GBP81bn of advised assets on Platforms and accounts for 12% of
the GBP680bn total adviser platform assets. The level of advised
assets on platform is forecast to grow to over a trillion in the
next few years, with the proportion of MPS also anticipated to take
an increasing share of this total.
As previously highlighted, new entrants and competition,
including long-standing traditional investment managers, continue
to enter the MPS market. While these traditional discretionary fund
managers have seen redemptions and net outflows from funds and
bespoke products, they have conversely seen good inflows into their
MPS offering which has underpinned their asset flows. I believe
this validates my long-held view that MPS has now come of age. We
anticipate the trend for further MPS growth and adoption this year
will maintain the strong net inflows we have seen across the
competitive landscape in the last 12 months. While it is clear
competition is increasing, Tatton is very well placed to take
advantage of the above market opportunity.
Distribution footprint
As the largest DFM MPS provider, we keep the IFA at the heart of
our business. We believe it is important to support the IFA and we
maintain a position that we do not compete with our IFAs. Amongst
many other factors, we believe that this has enabled us to continue
to increase our distribution footprint; we have increased the
number of firms to 869 firms (2022: 746). Each year, we have
increased our distribution footprint organically through adding
more direct IFA relationships beyond the Paradigm members, which
was the initial base for Tatton. Importantly, the three
acquisitions we have made since September 2019 have also
contributed to this growth and enabled us to further expand our
reach, as have the range of strategic partnerships we hold and
maintain. As we look forward, there remains significant opportunity
to grow and deepen these relationships and get a greater share of
the IFAs' available assets. At the same time, we will also look to
continue to add further firms from existing partnerships but also
new firms beyond these, to obtain a greater share of the overall
market available, which continues to grow.
Regulation
As the new consumer duty regulation is now imminent,
preparations should be complete and the implications are now clear.
There is a clear difference between IFAs as distributors when using
a third party MPS solution compared with advisers running their own
portfolios, which potentially makes them "manufacturers",
increasing their regulatory burden. We have already seen, prior to
the regulation coming into effect, IFAs migrating away from
in-house managed portfolios to third party MPS providers. We
believe this trend is set to continue as the implications of
consumer duty become more widely understood. Third party MPS
remains perfectly positioned to respond to consumer duty regulation
by delivering low cost and competitive investment solutions for
clients, whilst supporting the IFA in meeting consumer duty
obligations. I continue to believe that, as an MPS focused
investment manager, consumer duty plays to our strengths in placing
the adviser at the heart of the value chain and facilitating the
delivery of improved client outcomes.
PARADIGM
2022/23 was a good year for Paradigm's membership division.
Revenue increased 6.8% to GBP6.4m (2022: GBP6.0m) with contribution
maintained at GBP2.4m (2022: GBP2.4m), delivering a contribution
margin of 37.6%. We have continued to grow and add new firms, with
Paradigm Consulting firms increasing to 431 (2022: 421) and
Paradigm Mortgage firms increasing to 1,751 (2022: 1,674). The
integration of Paradigm's compliance and mortgage and protection
aggregation entities into a single membership division has proved
successful as the FCA's regime and oversight moves further towards
a more consumer focused regulatory environment and we have seen the
continued growth in share of compliance contract sales within our
Mortgage firm broker base.
Paradigm Consulting business continued to make steady progress,
increasing new membership fees as well as other consultancy
services while also investing in new personnel to ensure our
service level remains the best in the market. 2022/23 was an
exceptional year for Paradigm's Mortgage business, certainly given
the context of the mortgage market which demonstrated relentless
uncertainty. This year has seen borrowers faced with a challenging
period of rising inflation and interest rates, which combined with
significant lender service issues arising from the continued
challenges of working from home, resulting in record process and
pipeline delays.
The resilience and value of brokers was never more evident
during this last year. This is clearly demonstrated as intermediary
share of all mortgages rose to c.85% as consumers turned to brokers
to help with affordability issues arising from rising interest
rates, an issue most modern-day borrowers had never experienced.
The second half of the year was affected by the fall out from
September's mini-budget, which resulted in mass lender product
withdrawals, with those remaining charging unaffordable rates.
Borrowing volumes, especially in the purchase market, fell to a
near stop; however, brokers moved swiftly to address record levels
of product transfer maturities and protection cross-sales to
maintain activities, and with calmer markets, lenders began again
to compete, introducing greater product choice and, critically,
lower, more affordable rates. Given this context, we are delighted
with the fact the Paradigm Mortgages participated in a record
GBP14.50bn (2022: GBP13.15bn) of mortgage completions, a 10.3%
increase on the previous year.
As we look to the new year, despite the cost of living
challenges ahead, a sense of calmness has returned to the mortgage
market. We anticipate another year of two halves, with initially a
quieter purchase market, fuelled by essential movers. As inflation
and rising interest rates surpass their peaks, the drive and
affordability for home ownership will return, underpinned by the
perennial issue whereby supply doesn't match demand. In the
meantime, record levels of loan maturities and remortgages continue
to be an area of focus where brokers' experience will shine.
STRATEGIC GOALS AND PRIORITIES
As we look forward to the new year, our strategic direction
remains unchanged.
We will continue to consolidate and build on the gains we have
made to date and further develop the business to drive growth and
long-term value creation. Specifically, we look to achieve the
following:
-- Continue with the strong organic growth of new net inflows,
utilising our increasing range of firm distribution platforms.
-- Deliver the final phase of our three-year "Roadmap to Growth"
strategy, taking us from GBP9.0bn in FY21 to GBP15.0bn
by FY24. Building on the strong performance in 2022/23,
where we delivered an additional GBP1.8bn of AUM through
organic growth and GBP1.1bn of AUI through acquisition.
We anticipate we will reach our goal this year with over
GBP1.0bn of organic net new inflows.
-- Identify and execute on further acquisitions that contribute
to the "Roadmap to Growth" strategy but also, importantly,
fulfil our basic criteria of being value enhancing, strategically
complementary and earnings enhancing.
-- Build on our recent success by delivering further strategic
partnerships, joint ventures and collaborations with larger
IFA firms, delivering enhanced client outcomes.
-- Continue to grow the number of firms utilising Paradigm,
specifically taking a greater share of the available mortgage
broker and intermediary market, and growing the level of
mortgage completions.
OUTLOOK AND SUMMARY
In summary, the Group has delivered another strong year of
growth in net inflows and AUM while demonstrating resilience,
adaptability, and unwavering commitment to our clients. We remain
ever more optimistic about the future prospects and continue to
build on our strengths, leveraging our wide distribution
capability, our deep industry expertise, robust long-term
investment performance and talented team to deliver our strategic
goals. Our continued focus will be to expand the number of IFAs we
work with while driving increased new flows to further strengthen
our position as the leading MPS asset management company and ensure
the long-term sustainability of our business.
Lastly, I would like to express my gratitude to our dedicated
employees, who have demonstrated resilience, creativity, and
adaptability during these challenging times. Their unwavering
commitment to our clients and their exceptional talent are the
driving force behind our success.
Paul Hogarth
Chief Executive Officer
Q&A WITH PAUL HOGARTH
CHIEF EXECUTIVE OFFICER
1. How will the new consumer duty rules and regulation impact
Tatton?
Unlike most industry commentators, I look forward to embracing
the new legislation. I categorise it as being as important as other
previous market defining regulation such as RDR (Retail
Distribution Review) and TCF (Treating Customers Fairly). For me,
the main focus of consumer duty is price, value and ultimately
client outcomes. These three attributes have always been at the
forefront of our philosophy here at Tatton. I know we have all
worked hard to be ready and compliant, but I believe this will all
be worthwhile in due course and we are better placed than most, and
it may even be a competitive advantage to us.
2. Why does Tatton adopt the approach of Reliance on Others as
opposed to Agent as Client in its business model?
We actually have been Reliance on Others from day one. We
believe that the IFA and their client need to have total control of
the suitability of the advice while we at Tatton remain responsible
for the safeguarding of the investment management of the portfolio
selected. Each end client should be contracted with us through the
DFM mandate making sure that all clients are invested exactly as
they should be. Our next big campaign is intended to raise
awareness with the IFA community of the differences between to the
two contractual relationships. Our position has since been
supported by the professional indemnity industry, which has
questioned the disclosure of Agent as Client and a number of our
competitors have since followed our lead.
3. Tatton is 10 years old - how do you see the next 10 years
developing for the business?
Now that's an interesting question. Undoubtedly, we are
incredibly well positioned for further growth in the DFM MPS
market. As a bare minimum, we anticipate maintaining our market
share as the MPS market continues to mature and grow. We constantly
review the other opportunities in the wealth management arena and
always come back to the same point, which is: there is nothing
better than the DFM MPS space right now here in the UK.
Undoubtedly, other territories will adopt the UK market leading
position on compliance and regulation, replicating our regulators'
concentration on the overall costs of investing. This opens up the
opportunity to further expand our footprint outside of the UK.
4. Do you think you benefit from being single channel i.e.
receiving business purely from the IFA community?
Here at Tatton, we have always championed the IFA sector and
that is evident throughout all our business. We believe the IFA
market is in rude health and we have been well rewarded for
supporting and remaining loyal to the IFA community. Most of our
competitors, as we know, are multi-channel and a quick visit to
their websites shows that the IFA is just one of their routes to
market. We have seen some interesting moves from market
protagonists over the last 12 months as they try to get closer to
the end client, effectively directly competing with the IFA as they
attempt to vertically integrate. We watch this space with
interest.
5. How will the current market volatility and general global
economic uncertainty affect Tatton?
Firstly, I would say the Group has managed to navigate its way
through the last three years and been able to make substantial
progress against its strategic goals in what has been a challenging
environment. In the current environment and as we look forward, we
are comfortable that we have a very clear strategy and direction, a
strong business model and, certainly with Tatton, we participate in
a market that is growing strongly. In terms of the latter, with our
competitive attributes of a strong track record, high value
competitive pricing and best-in-class service with continued focus,
we intend to take full advantage of that.
CHIEF INVESTMENT OFFICER'S REPORT
First 10 years builds foundation for the next
PROPOSITION DEVELOPMENT
The experience and understanding that we have developed as a
team means that we recognise the importance of listening to our
clients. By better understanding their needs, we have evolved our
service to further embed Tatton into their operating models. To
achieve this at ever greater scale, we have continued to invest in
our proprietary adviser facing and platform connecting IT platform,
the Tatton Portal, which is the operational engine room of our
success, and a key differentiator in the market we serve.
With online client portfolio and valuation information for
advisers (and Tatton), the portal embeds us operationally into
IFAs' day to day business, offering a wide range of IFA tools.
These include personalised investment proposals; E-signing; adviser
dashboards; as well as a document resource library; factsheets; and
white label and co-branded portal access.
Our Ethical (ESG) portfolios (launched in 2014) have continued
to grow, but compared with previous years had a more challenging
year, caused principally by the relative return headwinds of the
energy and resource price shock. We believe, however, that consumer
interest remains strong and our experience in the sector has been
built up over many years, with a long-standing commitment to giving
the clients of financial advisers genuine transparency in how their
discretionary assets are allocated.
Tatton's investment process has been tested during both benign
and volatile market environments, and we are proud of our portfolio
performance consistency over the last 10 years. Ensuring investors
understand how global events impact or benefit their investments is
vital to keep them on track and committed towards their long-term
investment goals. To achieve this aim, we have continued to deliver
benchmark-setting, investment and market communications of highest
relevance through video, webinar and the investment team's Tatton
Weekly market update. Post COVID, we have also adopted a hybrid
model of virtual and physical interaction with our clients, to best
suit their needs and preferences.
2022/23 CAPITAL MARKETS AND RETURNS
Tatton's strength is based around the ability of its team to
understand and anticipate market developments. In capital market
terms (and by nearly any measure), the early 2020s have been a
period of extraordinary challenge, making it even more remarkable
that our performance has remained consistent throughout. This is
testament to the fact that our investment team follows a clearly
defined, robust and repeatable investment process that draws on its
experience and expertise.
Inflation has dominated in terms of policy. Central banks, led
by the US Federal Reserve, have aggressively tightened policy,
seeking to ease inflation through monetary policy moves. These
measures included dramatic increases in the short-term target
interest rates and a substantial reduction in bond holdings.
In the UK, Truss' ill-advised fiscal policy boosted an uptrend
in bond yields that had been well underway since the beginning of
the year.
The return of inflation and increasing interest rates mark the
end of the 40 year bond bull market, as bond prices and interest
rates move in opposite directions in conventional bond securities.
This is undoubtedly leading to valuation pressures as a result of
higher yields, leading to a poor year for investors, despite the
economy remaining in growth mode and showing resilience to the
sharpest succession of interest rate hikes in a generation.
Higher rates also substantially alter the equity investment
landscape. Much investor confidence will now depend not only on the
outcome of the war in Ukraine and the strength of its ripples
through the global economy, but also on the shape of the
inflationary pressures it is experiencing and if transitory does
indeed become systematic inflation. The war in Ukraine certainly
exacerbates inflation, as well as accelerating the transition to a
non-carbon fuel economy, if nothing else, now out of sheer
necessity.
The impact of energy commodity price increases and the winter of
cold homes and discontent did not lead to a recession in the UK and
Europe, as predicted, pointing perhaps to a brighter environment
ahead, but equity markets are in a challenging period, reflecting a
transformation in the underlying economic environment. A
combination of rising interest rates and a persistent surge in the
inflation rate has created substantial headwinds for a wide swath
of the investment markets, equities included, with significant
"repricing" occurring in stock markets during 2022.
While the bond market suffered in 2022, so did the tech
stock-heavy Nasdaq 100, an index with greater potential for high
long-term returns. Present value calculations of future earnings
for equities are tied to assumptions about interest rates and
inflation. If investors anticipate higher rates in the future, it
reduces the present value of future earnings for equities. When
this occurs, prices tend to face more pressure. The hardest hit
stocks have primarily been those with premium price-to-earnings
("P/E") multiples. These included secular growth and technology
companies that enjoyed extremely strong performance since the
pandemic began. Our decision to remain (in the main) underweight in
these stocks and US equities more generally proved the right
decision. Moving forward, we see more decoupling of the global
economy and opportunities within Asian markets.
An additional factor that creates challenges for equity markets
is higher debt costs (resulting from elevated interest rates),
which can reduce corporate profits. Companies that have to roll
over debt in today's market must pay more for that debt. That opens
the door to the potential for reduced corporate earnings going
forward. Lower earnings are typically reflected in lower equity
prices.
It should be noted that a changing interest rate environment,
while creating more headwinds for equities, does not mean there is
not continued upside opportunity. The key is how well companies
perform. One of the variables we are watching is whether inflation
declines sufficiently so that equities valuations are still
considered reasonable given the underlying environment. A return to
lower inflation would generally benefit equities.
OUTLOOK
2023 is certainly tricky to forecast and valuation arguments are
never the best guide to short-term stock market performance.
However, valuations often guide how professional investors position
over the shorter term between asset classes. Being underweight,
equities seems to be a "crowded" trade, but the increasing
likelihood of a steep downturn in the US economy, combined with
valuations being at low levels, signals that now could be an
attractive time to (tentatively) invest in bonds. Increasing yields
and spreads have left many parts of the bond market far more
favourably priced.
For 2023, we do see a transition from pain to gain. While we
still see a bumpy road ahead, investors can lock in yields that
have not been this high in years. More stability in interest rates
and clarity on monetary policy should bring flows back into fixed
income.
Our investment philosophy and process are deeply founded on a
principle of portfolio stewardship. Stewardship, to us, means
keeping portfolios aligned to the desired long-term investment
objectives in the face of a constantly changing world. As such, we
offer clients a broad range of investment risk exposure and
investment strategies, always guarding against the unintended risks
that can arise when making such investments.
Invariably, if you chase performance, you end up shooting
yourself in the foot, and Tatton's approach has always been to
remain calm in the face of volatility, adopting a level headed
management of portfolios. Our performance highlighted in the table
above bears testament to that.
The scalability of our model is maintained through our
operational efficiency, our flexibility and the strength of our
team in implementing our strategy. We have emerged from the global
upheavals of recent years as a much bigger, better and more
resilient business.
We are extremely proud of our achievements during the last 10
years, but our focus is resolutely fixed on the next 10 years, as
we build on our strong foundations to continue to deliver for the
clients of financial advisers whatever economic environment
develops. We are perfectly placed to benefit from increased
investor interest and involvement, and a desire to have the more
"grown-up" investment approach that personal portfolios on platform
can undoubtedly provide.
Lothar Mentel
Chief Investment Officer
Q&A WITH LOTHAR MENTEL
CHIEF INVESTMENTOFFICER
1. As we reach Tatton's 10 year anniversary, which achievement
are you most proud of?
When we started, there were already several DFMs offering MPS
and everyone thought there was no opportunity for growth. RDR
forced independent financial advisers to change their approach. The
commission-based business model was replaced with a need to offer
true independent and effective discretionary wealth management
advice at an affordable cost.
The offerings from traditional wealth managers were unwieldy and
too expensive. But we created something different. We created a
business designed to generate consistent risk rated returns for
private investors while also benefiting the advice sector, this
remains at the heart of our product and service development. We
designed this around a low cost DFM fee of only 0.15%. Despite
industry wide scepticism, we now have AUM of GBP12.7 billion and
0.15% is fast becoming the industry standard.
2. Is there a particular ethos that has shaped your business
development since inception?
That of client service and communication. We have reformulated
the whole process of giving UK retail investors access to returns
and services which previously were only made available to HNWIs
(High Net Worth Individuals) with private banking and wealth
management access.
Where others have needed hundreds of employees and heavy
operational costs, we have a team of just over 50 individuals and
are providing more ongoing communications and information to
advisers than many of our competitors. Our operational
effectiveness is extraordinary, as is our client relationship
management.
3. What would you like to see in terms of progression in the
industry and in the business?
What excites me is to create investment solutions and services
that continue to democratise retail access to discretionary
portfolio management via platforms. We have already succeeded in
taking what was only available to HNWIs, and making that available
to a wider group of people. I would like that group to become even
larger.
With the market forecast to grow at a rate of 25% per annum and
reach up to GBP200 billion by the end of 2026, it would be great to
help IFAs continue to succeed and take a larger slice of a growing
market.
CHIEF FINANCIAL OFFICER'S REPORT
A resilient financial performance in challenging conditions
OVERVIEW
Recent years have presented a number of challenges for
businesses and unfortunately this year has been no different. The
war in Ukraine, disrupted supply chains, increased costs and the
highest inflation we have seen in a generation have all contributed
to significant economic uncertainty and volatile markets. Our
ability to adapt to these conditions is supported by a resilient
business model which has been crucial for us to navigate these
challenges and emerge stronger than ever. This year has seen the
Group deliver its strongest financial performance to date,
including double digit growth in revenue and adjusted operating
profits(1), improving margins and record net inflows, all while
maintaining a robust balance sheet and strong liquidity.
This year is the 10 year anniversary of the inception of Tatton
Investment Management Limited and six years since Tatton Asset
Management plc was publicly listed on AIM. Over this period, the
Group has seen significant development, strong organic growth and
three strategically aligned acquisitions which have resulted in
investment-related income now accounting for 80.2% of our total
Group revenue and 96.5% of adjusted operating profit(1), a trend
that is anticipated to continue thanks to our focused strategy and
current market trends.
Our revenue since listing on AIM, has achieved a compound annual
growth rate of 18.2%, with adjusted operating profit(1) growing
even more strongly, achieving a compound growth rate of 24.0%.
Margins over the same period have increased by 12.7% in absolute
terms, resulting in a Group margin this year of 50.7%.
REVENUE AND PROFITS
Revenue - Group reported revenue increased by 10.1% to GBP32.3m
(2022: GBP29.4m). Tatton revenue increased by 11.1% to GBP25.9m
(2022: GBP23.3m). While many asset managers have seen redemptions
and outflows this year, AUM increased by 12.3% to reach GBP12.7bn
(2022: GBP11.3bn) and while negative market performance impacted
growth by GBP400m, record net new inflows in the year of GBP1,794m,
or 15.8% of the opening AUM, more than compensated.
Our industry leading growth reflects the strength of the MPS
market and the underlying trends that are driving MPS adoption by
IFAs. As the leading MPS provider, our focused approach on this
market and increased distribution footprint, as we add to the
number of IFAs we work with, have enabled us to continue to take
advantage of these trends. Complementing this organic growth, this
year saw us make a strategic investment in another MPS provider,
further expanding our reach into the MPS market. In August 2022, we
acquired 50% of the share capital of 8AM Global Limited which
contributes AUI of GBP1.136bn, and when combined with the Group AUM
of GBP12.735bn results in a total AUM/AUI of GBP13.871bn.
Paradigm's revenue increased by 6.8% to GBP6.4m (2022: GBP6.0m).
The number of mortgage member firms increased to 1,751 (2022:
1,674) and Paradigm Consulting member firms increased to 431 (2022:
421). Paradigm Consulting maintained its steady performance while
Paradigm Mortgages delivered an impressive performance as
completions reached a record level of GBP14.50bn (2022:
GBP13.15bn), an increase of 10.3% on the prior year. There has been
a significant degree of uncertainty in the mortgage market for most
of this year, due to rising interest rates, consumer affordability
concerns and the removal of a large number of products towards the
end of the calendar year following the emergency budget in
September 2022. Given this context, the strong performance
demonstrates both the agility of the business and its firms, but
also the robustness of the business model to continue to grow both
the number of firms it works with and increase its market share.
The business's other income streams, such as protection premia,
continued to grow, further strengthening the division's overall
performance.
Profit - The Group delivered adjusted operating profit(1) of
GBP16.4m (2022: GBP14.5m), an increase of 12.9%. Adjusted operating
profit margin(1) increased to 50.7% (2022: 49.5%). This increase in
margin can be attributed to a combination of the Group's business
model and operational gearing but also the fact that we have
successfully navigated an inflationary cost environment while
continuing to make cost investments to help drive and support
future growth. In line with last year, and as a response to the
inflationary environment, the Group has implemented an average 5%
annual salary increase, materially ahead of historical levels
(excludes Executive Directors(2) ). While personnel costs remain at
c.60% of the Group's total cost base, we do not anticipate that
these increases will be margin dilutive.
1. Alternative performance measures are detailed in note 23.
2. Executive Directors' salaries remain unchanged
Tatton's adjusted operating profit(1) increased by 13.9% to
GBP15.8m (2022: GBP13.9m) and its adjusted operating profit
margin(1) increased to 61.1% (2022: 59.6%). Paradigm's adjusted
operating profit(1) remained in line with the prior year at
GBP2.4m, following re-investment in personnel costs to strengthen
the team, bringing the margin more in line with historical
performance but reducing the margin year on year to 37.6% (2022:
40.6%).
Group operating profit was GBP16.6m (2022: GBP11.6m), which
includes the cost impact of separately disclosed items of -GBP0.2m
(2022: GBP2.9m).
ACQUISITIONS
During the year, the Group acquired 50% of the share capital of
8AM Global Limited. The consideration payable is up to GBP7.3m,
with GBP3.8m paid on completion through the issuing of shares in
TAM plc. The remaining GBP3.5m is to be paid in two equal
instalments, after year one and two following completion, dependent
on the business hitting predetermined profitability targets.
On acquisition, the Group recognised goodwill of GBP5.1m and
intangible assets of GBP2.1m, as well as an associated deferred tax
liability of GBP0.5m and discounted contingent consideration of
GBP2.9m. At the year end, the deferred contingent consideration
liability recognised on completion was remeasured to fair value
based on the anticipated profitability against the deferred payment
profitability target.
It has been determined that the business is unlikely to meet the
stretching deferred payment profitability targets, and so the
deferred payment liability has been "fair valued" in line with the
anticipated payment value. The difference being GBP1.9m, between
the original deferred payment fair value on completion and the fair
value at the year end, which has been taken through the profit and
loss account and included as a separately disclosed item. The fair
value of the deferred contingent consideration relating to the
acquisition of the Verbatim funds in September 2021 has also been
reduced by GBP0.7m.
SEPARATELY DISCLOSED ITEMS
Separately disclosed items totaling GBP0.208m include the cost
of share-based payments of GBP1.511m, amortisation of
acquisition-related intangible assets of GBP0.534m and GBP0.398m of
acquisition-related fees, see note 6. These costs have been offset
by a credit of GBP2.651m relating to the fair value adjustment of
contingent consideration payments.
Although some of these items may recur from one period to the
next, operating profit has been adjusted for these items to give
better clarity of the underlying performance of the Group. The
alternative performance measures ("APMs") are consistent with how
the business performance is planned and reported within the
internal management reporting to the Board. Some of these measures
are also used for the purpose of setting remuneration targets.
Earnings per share
Basic earnings per share increased to 22.43p (2022: 15.92p).
Adjusted earnings per share(1) increased by 9.3% to 21.72p (2022:
19.87p) and adjusted fully diluted earnings per share(1) increased
by 10.7% to 20.61p (2022: 18.62p), full details are shown in note
9.
1. Alternative performance measures are detailed in note 23.
Statement of financial position and cash
The Group's balance sheet remains strong as net assets increased
34.6% to GBP41.8m (2022: GBP31.0m), with cash on the balance sheet
contributing GBP26.5m (2022: GBP21.7m). Return on capital employed
was 36.7% (2022: 43.0%). The Group has issued shares valued at
GBP2.8m in relation to acquisitions and paid GBP7.7m in dividends
during the year. Our financial resources are kept under continual
review, incorporating comprehensive stress and scenario testing
which is formally reviewed and agreed at least annually.
Year ended Year ended
31 March 31 March
2023 2022
------------------------------- ---------- ----------
Total Shareholder funds 41,781 31,044
Less: Foreseeable dividend (6,000) (5,100)
Less: Non-Qualifying assets (20,972) (14,225)
Total qualifying capital
resources 14,809 11,719
Less capital requirement (4,400) (4,100)
Surplus Capital 10,409 7,619
------------------------------- ---------- ----------
% Capital resource requirement
held 337% 286%
------------------------------- ---------- ----------
In January 2022, the Investment Firms Prudential Regime ("IFPR")
came into effect focusing prudential requirements on the potential
harm the firm can pose to consumers and markets, whilst introducing
a basic liquidity requirement for all investment firms. Over the
year, the Group has maintained a healthy surplus over our
regulatory capital resource requirement and maintained very strong
liquidity.
Dividends
The Board is recommending a final dividend of 10.0p. When added
to the interim dividend of 4.5p, this gives a full year dividend of
14.5p (2022: 12.5p), an increase of 16.0% on the prior year. This
proposed dividend reflects both our cash performance in the period
and our underlying confidence in our business and maintains our
policy of paying a dividend approximately 70% of the adjusted
earnings and split on a one third two third basis between the
interim period and year end. If approved at the Annual General
Meeting, the final dividend will be paid on 15 August 2023 to
shareholders on the register on 7 July 2023.
Risk management
Risk is managed closely and is spread across our businesses and
managed to individual materiality. In our Annual Report and
Accounts published on 13 June 2023, our key risks have been
referenced primarily on pages 32 and 33 of the Annual Report. We
choose key performance indicators that reflect our strategic
priorities of investment, growth and profit, and these are detailed
on pages 28 and 29. In addition, the Strategic Report found on
pages 1 to 51 has been approved and authorised for issue by the
Board of Directors and signed on their behalf on 12 June 2023
by:
Paul Edwards
CHIEF FINANCIAL OFFICER
Consolidated Statement of Total Comprehensive Income
FOR THE YEARED 31 MARCH 2023
31-Mar 31-Mar
Note 2023 (GBP'000) 2022 (GBP'000)
--------------------------------------------------------- ---- --------------- ---------------
Revenue 32,327 29,356
Share of profit from joint venture 160 -
Administrative expenses (15,877) (17,726)
--------------------------------------------------------- ---- --------------- ---------------
Operating profit 16,610 11,630
--------------------------------------------------------- ---- --------------- ---------------
Share-based payment costs 6 1,511 2,399
Amortisation of acquisition-related intangibles 6 534 266
Gains arising on changes in fair value of contingent
consideration (2,651) -
Exceptional items 6 398 231
--------------------------------------------------------- ---- --------------- ---------------
Adjusted operating profit (before separately
disclosed items)(1) 16,402 14,526
--------------------------------------------------------- ---- --------------- ---------------
Unwinding of the discount rate on deferred consideration (228) -
--------------------------------------------------------- ---- --------------- ---------------
Other finance costs (386) (355)
--------------------------------------------------------- ---- --------------- ---------------
Finance costs 7 (614) (355)
--------------------------------------------------------- ---- --------------- ---------------
Profit before tax 15,996 11,275
Taxation charge 8 (2,623) (2,033)
--------------------------------------------------------- ---- --------------- ---------------
Profit attributable to shareholders 13,373 9,242
--------------------------------------------------------- ---- --------------- ---------------
Earnings per share - Basic 9 22.43p 15.92p
Earnings per share - Diluted 9 21.70p 15.17p
Adjusted earnings per share - Basic(1) 9 21.72p 19.87p
Adjusted earnings per share - Fully Diluted(2) 9 20.61p 18.62p
--------------------------------------------------------- ---- --------------- ---------------
1. Adjusted for exceptional items, amortisation on
acquisition-related intangibles, changes in the fair value of
contingent consideration and share -- based payments and the tax
thereon. See note 23.
2. Adjusted for exceptional items, amortisation on
acquisition-related intangibles, unwinding of discount on deferred
consideration, changes in the fair value of contingent
consideration and share-based payments and the tax thereon. See
note 23.
All revenue, profit and earnings are in respect of continuing
operations.
There were no other recognised gains or losses other than those
recorded above in the current or prior year and therefore a
Statement of Other Comprehensive Income has not been presented.
Consolidated Statement of Financial Position
AS AT 31 MARCH 2023
31-Mar 31-Mar
Note 2023 (GBP'000) 2022 (GBP'000)
---------------------------------------------- ---- --------------- ---------------
Non-current assets
Investments in joint ventures 11 6,762 -
Goodwill 12 9,337 9,337
Intangible assets 13 3,615 4,047
Property, plant and equipment 14 454 749
Deferred tax assets 17 1,258 841
---------------------------------------------- ---- --------------- ---------------
Total non-current assets 21,426 14,974
---------------------------------------------- ---- --------------- ---------------
Current assets
Trade and other receivables 15 3,782 3,805
Financial assets at fair value through profit
or loss 18 123 152
Corporation tax 121 706
Cash and cash equivalents 26,494 21,710
---------------------------------------------- ---- --------------- ---------------
Total current assets 30,520 26,373
---------------------------------------------- ---- --------------- ---------------
Total assets 51,946 41,347
---------------------------------------------- ---- --------------- ---------------
Current liabilities
Trade and other payables 16 (7,911) (7,556)
---------------------------------------------- ---- --------------- ---------------
Total current liabilities (7,911) (7,556)
---------------------------------------------- ---- --------------- ---------------
Non-current liabilities
Other payables 16 (2,254) (2,747)
---------------------------------------------- ---- --------------- ---------------
Total non-current liabilities (2,254) (2,747)
---------------------------------------------- ---- --------------- ---------------
Total liabilities (10,165) (10,303)
---------------------------------------------- ---- --------------- ---------------
Net assets 41,781 31,044
---------------------------------------------- ---- --------------- ---------------
Equity attributable to equity holders of the
Company
Share capital 19 12,011 11,783
Share premium account 15,259 11,632
Own shares 20 - -
Other reserve 2,041 2,041
Merger reserve (28,968) (28,968)
Joint venture reserve (21) -
Retained earnings 41,459 34,556
---------------------------------------------- ---- --------------- ---------------
Total equity 41,781 31,044
---------------------------------------------- ---- --------------- ---------------
The financial statements were approved by the Board of Directors
on 12 June 2023 and were signed on its behalf by:
Paul Edwards
Director
Company registration number: 10634323
Consolidated Statement of Changes in Equity
FOR THE YEARED 31 MARCH 2023
Joint
Share Share Other Merger venture Retained Total
capital premium Own shares reserve reserve reserve earnings equity
Note (GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000)
---------------- ---- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
At 1 April 2021 11,578 11,534 (1,969) 2,041 (28,968) - 30,230 24,446
---------------- ---- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Profit and total
comprehensive
income - - - - - - 9,242 9,242
Dividends 9 - - - - - - (6,641) (6,641)
Share-based
payments - - - - - - 2,679 2,679
Deferred tax on
share-based
payments - - - - - - 157 157
Current tax on
share-based
payments - - - - - - 1,051 1,051
Issue of share
capital
on exercise of
employee
share options 205 98 - - - - - 303
Own shares
acquired
in the year 20 - - (193) - - - - (193)
Own shares
utilised
on exercise of
options 20 - - 2,162 - - - (2,162) -
---------------- ---- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March 2022 11,783 11,632 - 2,041 (28,968) - 34,556 31,044
---------------- ---- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Profit and total
comprehensive
income - - - - - 39 13,334 13,373
Dividends 9 - - - - - - (7,714) (7,714)
Share-based
payments - - - - - - 1,307 1,307
Deferred tax on
share-based
payments - - - - - - 18 18
Current tax on
share-based
payments - - - - - - (102) (102)
Issue of share
capital
on exercise of
employee
share options 52 117 - - - - - 169
Own shares
acquired
in the year 20 - - (28) - - - - (28)
Own shares
utilised
on exercise of
options 20 - - 28 - - - - 28
Issue of share
capital
on acquisition
of
a joint venture 176 3,510 - - - - - 3,686
Dividends
received
from joint
venture - - - - - (60) 60 -
---------------- ---- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March 2023 12,011 15,259 - 2,041 (28,968) (21) 41,459 41,781
---------------- ---- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
The other reserve and merger reserve were created on 19 June
2017 when the Group was formed, where the difference between the
Company's capital and the acquired Group's capital was recognised
as a component of equity being the merger reserve. Both the other
reserve and the merger reserve are non-distributable. The joint
venture reserve represents the Group's share of post-tax profits
yet to be received (for example, in the form of dividends or
distributions), less amortisation of related intangible assets.
Consolidated Statement of Cash Flows
FOR THE YEARED 31 MARCH 2023
31-Mar 31-Mar
Note 2023 (GBP'000) 2022 (GBP'000)
------------------------------------------------------ ---- --------------- ---------------
Operating activities
Profit for the year 13,373 9,242
Adjustments:
Income tax expense 2,623 2,033
Finance costs 7 614 355
Depreciation of property, plant and equipment 14 384 377
Amortisation of intangible assets 13 661 536
Share-based payment expense 21 1,420 1,492
Post tax share of profits of joint venture less
amortisation of related intangible assets 11 (39) -
Changes in fair value of contingent consideration 6 (2,651) -
Changes in:
Trade and other receivables (146) 309
Trade and other payables (449) 907
------------------------------------------------------ ---- --------------- ---------------
Exceptional items 6 398 231
------------------------------------------------------ ---- --------------- ---------------
Cash generated from operations before exceptional
items 16,188 15,482
------------------------------------------------------ ---- --------------- ---------------
Cash generated from operations 15,790 15,251
------------------------------------------------------ ---- --------------- ---------------
Income tax paid (2,559) (1,612)
------------------------------------------------------ ---- --------------- ---------------
Net cash from operating activities 13,231 13,639
------------------------------------------------------ ---- --------------- ---------------
Investing activities
Payment for the acquisition of a business combination
and joint venture,
net of cash acquired (152) (2,825)
Purchase of intangible assets (229) (211)
Purchase of property, plant and equipment (89) (74)
------------------------------------------------------ ---- --------------- ---------------
Net cash used in investing activities (470) (3,110)
------------------------------------------------------ ---- --------------- ---------------
Financing activities
Interest paid (186) (144)
Dividends paid 9 (7,714) (6,641)
Dividends received from joint venture 60 -
Proceeds from the issue of shares 132 111
Purchase of own shares 20 - -
Proceeds from the exercise of options - 1,230
Repayment of lease liabilities (269) (309)
------------------------------------------------------ ---- --------------- ---------------
Net cash used in financing activities (7,977) (5,753)
------------------------------------------------------ ---- --------------- ---------------
Net increase in cash and cash equivalents 4,784 4,776
Cash and cash equivalents at beginning of period 21,710 16,934
------------------------------------------------------ ---- --------------- ---------------
Net cash and cash equivalents at end of period 26,494 21,710
------------------------------------------------------ ---- --------------- ---------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 General Information
Tatton Asset Management plc (the "Company") is a public company
limited by shares. The address of the registered office is Paradigm
House, Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND. The
registered number is 10634323.
The Group comprises the Company and its subsidiaries. The
Group's principal activities are discretionary fund management, the
provision of compliance and support services to independent
financial advisers ("IFAs"), the provision of mortgage adviser
support services, and the marketing and promotion of multi-manager
funds.
News updates, regulatory news and financial statements can be
viewed and downloaded from the Group's website,
www.tattonassetmanagement.com . Copies can also be requested from:
The Company Secretary, Tatton Asset Management plc, Paradigm House,
Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND.
The Company has taken advantage of the exemption in section 408
of the Companies Act 2006 not to present its own income
statement.
2 Accounting Policies
The principal accounting policies applied in the presentation of
the annual financial statements are set out below.
2.1 Basis of preparation
The consolidated financial statements of the Group have been
prepared in accordance with International Financial Reporting
Standards ("IFRSs") as adopted by the United Kingdom and
International Financial Reporting Interpretations Committee
("IFRIC") interpretations issued by the International Accounting
Standards Board ("IASB") and the Companies Act 2006. The financial
statements of the Company have been prepared in accordance with UK
Generally Accepted Accounting Practice, including Financial
Reporting Standard 101 "Reduced Disclosure Framework" ("FRS
101").
The consolidated financial statements have been prepared on a
going concern basis and prepared on the historical cost basis.
The consolidated financial statements are presented in sterling
and have been rounded to the nearest thousand (GBP'000). The
functional currency of the Company is sterling as this is the
currency of the jurisdiction where all of the Group's sales are
made.
The preparation of financial information in conformity with
IFRSs requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Although these estimates
are based on management's best knowledge of the amount, event or
actions, actual events may ultimately differ from those
estimates.
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in the
consolidated financial statements.
2.2 Going concern
These financial statements have been prepared on a going concern
basis. The Directors have prepared cash flow projections and are
satisfied that the Group has adequate resources to continue in
operational existence for the foreseeable future. The Group's
forecasts and projections, which take into account reasonably
possible changes in trading performance, show that the Group will
be able to operate within the level of its current resources.
Accordingly, the Directors continue to adopt the going concern
basis in preparing these financial statements.
2.3 Basis of consolidation
The Group's financial statements consolidate those of the Parent
Company and all of its subsidiaries and joint ventures as at 31
March 2023. The Parent controls a subsidiary if it is exposed, or
has rights, to variable returns from its involvement with the
subsidiary and has the ability to affect those returns through its
power over the subsidiary. All subsidiaries have a reporting date
of 31 March. In the case of joint ventures, those entities are
presented as a single line item in the Consolidated Statement of
Total Comprehensive Income and Consolidated Statement of Financial
Position.
All transactions between Group companies are eliminated on
consolidation, including unrealised gains and losses on
transactions between Group companies. Where unrealised losses on
intra-group asset sales are reversed on consolidation, the
underlying asset is also tested for impairment from a Group
perspective. 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 subsidiaries
acquired or disposed of during the year are recognised from the
effective date of acquisition, up to the effective date of
disposal, as applicable.
2.4 Adoption of new and revised standards
New and amended IFRS Standards that are effective for the
current year
IFRS 10 "Consolidated Financial Statements" IAS 28 "Investments
in Associates and Joint Ventures", IAS 1 "Presentation of Financial
Statements", IFRS 3 "Business Combinations", IAS 8 "Accounting
Policies, Changes in Accounting Estimates and Errors", IAS 16
"Property, Plant and Equipment", IAS 37 "Provisions, Contingent
Liabilities and Contingent Assets".
The Directors adopted the new or revised Standards listed above
but they have had no material impact on the financial statements of
the Group.
Standards in issue not yet effective
The following IFRS and IFRIC interpretations have been issued
but have not been applied by the Group in preparing the historical
financial information, as they are not yet effective. The Group
intends to adopt these Standards and Interpretations when they
become effective, rather than adopt them early.
Effective date 1 January 2023
IFRS 17 "Insurance Contracts", IAS 1 "Presentation of Financial
Standards", IAS 12 "Income Taxes", IAS 8 "Accounting Policies,
Changes in Accounting Estimates and Errors".
Effective date 1 January 2024
IFRS 16 "Leases", IAS 1 "Presentation of the Financial
Statements".
2.5 Revenue
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for
services provided in the normal course of business, net of
discounts, VAT and other sales-related taxes. Revenue is reduced
for estimated rebates and other similar allowances. Revenue is
recognised when control is transferred and the performance
obligations are considered to be met.
The Group's revenue is made up of the following principal
revenue streams:
- Fees for discretionary fund management services in relation
to on-platform investment assets under management ("AUM").
Revenue is recognised daily based on the AUM.
- Fees charged to IFAs for compliance consultancy services,
which are recognised when performance obligations are met.
- Fees for providing investment platform services. Revenue
is recognised on a daily basis, in line with the satisfaction
of performance obligations, on the assets under administration
held on the relevant investment platform.
- Fees for mortgage-related services including commissions
from mortgage and other product providers and referral
fees from strategic partners. Commission is recognised
when performance obligations are met.
- Fees for marketing services provided to providers of mortgage
and investment products, which is recognised when performance
obligations are met.
2.6 Exceptional items
Exceptional items are disclosed and described separately in the
financial statements where it is necessary to do so to provide
further understanding of the underlying financial performance of
the Group. These include material items of income or expense that
are shown separately due to the significance of their nature and
amount.
2.7 Interest income and interest expense
Finance income is recognised as interest accrued (using the
effective interest method) on funds invested outside the Group.
Finance expense includes the unwinding of discounts on deferred
consideration liabilities, the cost of borrowing from third parties
and is recognised on an effective interest rate basis, resulting
from the financial liability being recognised on an amortised cost
basis.
2.8 Impairment
Assets which have an indefinite useful life are not subject to
amortisation and are tested for impairment at each Statement of
Financial Position date. Assets subject to depreciation and
amortisation are reviewed for impairment whenever events or
circumstances indicate that the carrying amount may not be
recoverable.
Impairment losses on previously revalued assets are recognised
against the revaluation reserve as far as this reserve relates to
previous revaluations of the same assets. Other impairment losses
are recognised in the Statement of Total Comprehensive Income based
on the amount by which the carrying value exceeds the recoverable
amount. The recoverable amount is the higher of the fair value less
the costs to sell and the value in use.
Impairment losses recognised in respect of cash-generating units
("CGUs") are allocated first to reduce the carrying amount of any
goodwill allocated to CGUs and then to reduce the carrying amount
of other assets in the unit on a pro rata basis.
2.9 Goodwill and intangible assets
Goodwill is initially recognised and measured as set out in note
2.11.
Goodwill is not amortised but is reviewed for impairment at
least annually. For the purpose of impairment testing, goodwill is
allocated to each of the Group's CGUs (or groups of CGUs) expected
to benefit from the synergies of the combination. CGUs to which
goodwill has been allocated are tested for impairment annually, or
more frequently when there is an indication that the unit may be
impaired. If the recoverable amount of the CGU is less than the
carrying amount of the unit, the impairment loss is allocated first
to reduce the carrying amount of any goodwill allocated to the unit
and then to the other assets of the unit pro rata on the basis of
the carrying amount of each asset in the unit. An impairment loss
recognised for goodwill is not reversed in a subsequent period.
On disposal of a CGU, the attributable amount of goodwill is
included in the determination of the profit or loss on
disposal.
Following initial recognition, intangible assets are held at
cost less any accumulated amortisation and any provision for
impairment. Assets that are subject to amortisation are reviewed
for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss
is recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset's fair value less costs to sell and value in
use. For the purpose of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
flows (CGUs).
Intangible assets acquired separately are measured on initial
recognition at cost.
Computer software licences acquired are capitalised at the cost
incurred to bring the software into use and are amortised on a
straight-line basis over their estimated useful lives, which are
estimated as being three years. Costs associated with developing or
maintaining computer software programs that do not meet the
capitalisation criteria under IAS 38 are recognised as an expense
as incurred.
Intangible assets acquired in a business combination and
recognised separately from goodwill are recognised initially at
their fair value at the acquisition date (which is regarded as
their cost). Subsequent to initial recognition, the client
relationship intangible assets and brand intangible assets have a
finite useful life and are carried at cost less accumulated
amortisation and accumulated impairment losses. Amortisation is
calculated using the straight-line method over their useful lives,
estimated for both asset classes at 10 years.
Gains and losses arising from derecognition of an intangible
asset are measured as the difference between the net disposal
proceeds and the carrying value of the asset. The difference is
then recognised in the income statement.
An assessment is made at each reporting date as to whether there
is any indication that an asset in use may be impaired. If any such
indication exists and the carrying values exceed the estimated
recoverable amount at that time, the assets are written down to
their recoverable amount. The recoverable amount is measured as the
greater of fair value less costs to sell and value in use.
Non--financial assets that have suffered impairment are reviewed
for possible reversal of the impairment at each reporting date.
The Directors have reviewed the intangible assets as at 31 March
2023 and as a result of the review, it was determined that none of
the assets are impaired (2022: none).
2.10 Property, plant and equipment
Property, plant and equipment assets are stated at cost net of
accumulated depreciation and accumulated provision for impairment.
Depreciation is charged to the income statement on a straight-line
basis over the estimated useful lives of each part of an item of
property, plant and equipment. Principal annual rates are as
follows:
- Computer, office equipment and motor vehicles - 20-33%
straight-line.
- Fixtures and fittings - 20% straight-line.
The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period, with the
effect of any changes in estimate accounted for on a prospective
basis.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. The gain or loss arising on
disposal or scrappage of an asset is determined as the difference
between the sales proceeds and the carrying amount of the asset and
is recognised in income.
2.11 Business combinations
Acquisitions of subsidiaries and businesses are accounted for
using the acquisition method. The consideration transferred in a
business combination is measured at fair value, which is calculated
as the sum of the acquisition-date fair values of assets
transferred to the Group, liabilities incurred by the Group to the
former owners of the acquiree and the equity interest issued by the
Group in exchange for control of the acquiree. Acquisition-related
costs are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and
the liabilities assumed are recognised at their fair value at the
acquisition date, except that: deferred tax assets or liabilities
and assets or liabilities related to employee benefit arrangements
are recognised and measured in accordance with IAS 12 "Income
Taxes" and IAS 19 "Employee Benefits" respectively; and assets (or
disposal groups) that are classified as held for sale in accordance
with IFRS 5 "Non-current Assets Held for Sale and Discontinued
Operations" are measured in accordance with that Standard.
Goodwill is measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer's
previously held equity interest in the acquiree (if any) over the
net of the acquisition-date amounts of the identifiable assets
acquired and the liabilities assumed. If, after reassessment, the
net of the acquisition-date amounts of the identifiable assets
acquired and liabilities assumed exceeds the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree and the fair value of the acquirer's
previously held interest in the acquiree (if any), the excess is
recognised immediately in profit or loss as a bargain purchase
gain.
When the consideration transferred by the Group in a business
combination includes a contingent consideration arrangement, the
contingent consideration is measured at its acquisition-date fair
value and included as part of the consideration transferred in a
business combination. Changes in fair value of the contingent
consideration that qualify as measurement period adjustments are
adjusted retrospectively, with corresponding adjustments against
goodwill. Measurement period adjustments are adjustments that arise
from additional information obtained during the "measurement
period" (which cannot exceed one year from the acquisition date)
about facts and circumstances that existed at the acquisition
date.
The subsequent accounting for changes in the fair value of the
contingent consideration that do not qualify as measurement period
adjustments depends on how the contingent consideration is
classified. Contingent consideration that is classified as equity
is not remeasured at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Other contingent
consideration is remeasured to fair value at subsequent reporting
dates with changes in fair value recognised in profit or loss.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the
items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period (see above), or
additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as
at the acquisition date that, if known, would have affected the
amounts recognised as of that date.
2.12 Joint ventures
Joint ventures are entities in which the Company has an
investment where it, along with one or more other shareholders, has
contractually agreed to share control of the business and where the
major decisions require the unanimous consent of the joint
partners. The Company initially records the investment at the fair
value of the purchase consideration. The Company's income statement
reflects its share of the entity's profit or loss after tax and
amortisation of intangible assets.
The Statement of Financial Position subsequently records the
Company's share of the net assets of the entity plus any goodwill
and intangible assets that arose on purchase less subsequent
amortisation. The Statement of Changes in Equity records the
Company's share of other equity movements of the entity. At each
reporting date, the Company applies judgement to determine whether
there is any indication that the carrying value of joint ventures
may be impaired.
The joint ventures reserve in the Statement of Changes in Equity
represents the Company's share of profits in its investments yet to
be received (for example, in the form of dividends or
distributions), less any amortisation of intangible assets. Certain
associates are held within financial assets at fair value through
profit or loss where permitted by the accounting standards (see
note 11). Information about the Company's principal associates
measured at fair value is disclosed within this note.
2.13 Leases
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or 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. To assess whether a contract conveys the right to
control the use of an identified asset, the Group uses the
definition of a lease in IFRS 16.
The Group recognises a right-of-use ("ROU") asset and a lease
liability at the inception date of the lease. The ROU 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 initial direct costs
incurred and an estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on
which it is located, less any lease incentives received.
The ROU assets are subsequently depreciated on a straight-line
basis over the shorter of the expected life of the asset and the
lease term, adjusted for any remeasurements of the lease liability.
At the end of each reporting period, the ROU assets are assessed
for indicators of impairment in accordance with IAS 36.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate. The Group uses its incremental borrowing rate as
the discount rate.
Lease payments included in the measurement of the lease
liability comprise the following:
- fixed payments, including in-substance fixed payments;
- variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the commencement
date;
- amounts expected to be payable under a residual value guarantee;
and
- the exercise price under a purchase option that the Group
is reasonably certain to exercise, lease payments in an
optional renewal period if the Group is reasonably certain
to exercise an extension option, and penalties for early
termination of a lease unless the Group is reasonably certain
not to terminate early.
The lease liability is subsequently measured by adjusting the
carrying amount to reflect the interest charge, the lease payments
made and any reassessment or lease modifications. The lease
liability is remeasured if the Group changes its assessment of
whether it will exercise a purchase, extension or termination
option.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the ROU
asset, or is recorded in profit or loss if the carrying amount of
the ROU asset has been reduced to zero.
Where the Group is an intermediate lessor in a sub-lease, it
accounts for its interests in the head lease and the sub-lease
separately. It assesses the lease classification of a sub-lease
with reference to the ROU asset arising from the head lease, not
with reference to the underlying asset.
2.14 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and call
deposits. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a
component of cash and bank balances for the purpose only of the
Consolidated Statement of Cash Flows.
2.15 Financial instruments
Financial assets and financial liabilities are recognised in the
Statement of Financial Position when the Group becomes a party to
the contractual provisions of the instrument.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or
deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets
or financial liabilities at fair value through profit or loss are
recognised immediately in profit or loss.
All financial assets are recognised and derecognised on a trade
date where the purchase or sale of a financial asset is under a
contract whose terms require delivery of the financial asset within
the timeframe established by the market concerned, and are
initially measured at fair value, plus transaction costs, except
for those financial assets classified as at fair value through
profit or loss. Transaction costs directly attributable to the
acquisition of financial assets classified as at fair value through
profit or loss are recognised immediately in profit or loss.
Non-derivative financial instruments comprise investments in
equity and debt securities, trade and other receivables, cash and
bank balances, loans and borrowings, and trade and other
payables.
Financial investments
Financial investments are classified as fair value through
profit or loss if they are either held for trading or specifically
designated in this category on initial recognition. Assets in this
category are initially recognised at fair value and subsequently
remeasured, with gains or losses arising from changes in fair value
being recognised in the Statement of Comprehensive Income.
Financial assets at fair value through profit or loss include
investments in a regulated open-ended investment company and an
investment portfolio, which are managed and evaluated on a fair
value basis in line with the market value.
Trade receivables
Trade receivables do not carry interest and are stated at
amortised cost as reduced by appropriate allowances for estimated
irrecoverable amounts. They are recognised when the Group's right
to consideration is only conditional on the passage of time.
Allowances incorporate an expectation of lifetime credit losses
from initial recognition and are determined using an expected
credit loss approach.
Trade and other payables
Trade and other payables are recognised initially at fair value
and subsequently measured at amortised cost using the effective
interest method, where applicable or required. These amounts
represent liabilities for goods and services provided to the Group
prior to the end of the financial period, which are unpaid.
Financial liabilities at fair value through profit or loss
("FVTPL")
Financial liabilities are classified as at FVTPL when the
financial liability is (i) contingent consideration of an acquirer
in a business combination, (ii) held for trading or (iii)
designated as at FVTPL. Financial liabilities at FVTPL are measured
at fair value, with any gains or losses arising on changes in fair
value recognised in profit or loss.
Interest-bearing borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently stated at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in profit
or loss over the period of the borrowings using the effective
interest method.
2.16 Taxation
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the Statement of Financial
Position date.
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, and is accounted for using the
balance sheet liability method. 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. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences where it is probable that the temporary difference will
not reverse in the foreseeable future. Deferred tax assets arising
from deductible temporary differences associated with such
investments and interests are only recognised to the extent that it
is probable that there will be sufficient taxable profits against
which to utilise the benefits of the temporary difference and they
are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each
Statement of Financial Position 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 based on tax laws and rates that have been enacted or
substantively enacted at the Statement of Financial Position date.
Deferred tax is charged or credited in the income statement, except
when it relates to items charged or credited in other comprehensive
income, in which case the deferred tax is also dealt with in other
comprehensive income.
The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in which the
Group expects, at the end of the reporting period, to recover or
settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off the 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.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss,
except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case the
current and deferred tax are also recognised in other comprehensive
income or directly in equity respectively. Where current tax or
deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the
business combination.
2.17 Retirement benefit costs
The Group pays into personal pension plans for which the amount
charged to income in respect of pension costs and other
post-retirement benefits is the amount of the contributions payable
in the year. Payments to defined contribution retirement benefit
scheme are recognised as an expense when employees have rendered
service entitling them to the contributions. Differences between
contributions payable and paid are accrued or prepaid. The assets
of the plans are invested and managed independently of the finances
of the Group.
2.18 Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that the Group will be required to settle that
obligation and a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the
Statement of Financial Position date, taking into account the risks
and uncertainties surrounding the obligation. Where a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash
flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, a
receivable is recognised as an asset if it is virtually certain
that reimbursement will be received and the amount of the
receivable can be measured reliably.
2.19 Equity, reserves and dividend payments
Share capital represents the nominal value of shares that have
been issued. Retained earnings include all current and prior period
retained profits or losses.
Dividend distributions payable to equity shareholders are
included in other liabilities when the dividends have been approved
in a general meeting prior to the reporting date.
2.20 Employee Benefit Trust
The Company provides finance to the EBT to purchase the
Company's shares on the open market in order to meet its obligation
to provide shares when an employee exercises awards made under the
Group's share-based payment schemes. Administration costs connected
with the EBT are charged to the Statement of Comprehensive Income.
The cost of shares purchased and held by the EBT is deducted from
equity. The assets held by the EBT are consolidated into the
Group's financial statements.
2.21 Share-based payments
The Group issues equity-settled share-based payments to certain
employees. Equity-settled share-based payments are measured at fair
value at the date of grant. The fair value determined at the grant
date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest. Fair value is
measured by use of the Black-Scholes model or Monte Carlo model as
appropriate.
2.22 Climate change
The Group is continually developing its assessment of the impact
that climate change has on the assets and liabilities recognised
and presented in its financial statements. The impact of climate
change has been considered in the preparation of these financial
statements; however, as the Group does not hold significant levels
of property, plant and equipment and does not own its own land and
buildings, there is currently no material impact of climate change
on the results or values of assets and liabilities recognised and
presented in these financial statements.
2.23 Operating segments
The Group comprises the following two operating segments which
are defined by trading activity:
- Tatton - investment management services
- Paradigm - the provision of compliance and support services
to IFAs and mortgage advisers
The Board is considered to be the chief operating decision
maker.
2.24 Critical accounting judgements and key sources of
estimation uncertainty
In the process of applying the Group's accounting policies,
which are described above, management have made judgements and
estimations about the future that have an effect on the amounts
recognised in the financial statements. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in
the period of the revision and future periods if the revision
affects both current and future periods. Changes for accounting
estimates would be accounted for prospectively under IAS 8.
CLIENT RELATIONSHIP AND BRAND INTANGIBLES
Estimation uncertainty
Impairment of client relationship and brand intangibles
Impairment exists when the carrying value of an asset or
cash-generating unit exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less
costs to sell and value in use. For the purposes of impairment
testing, the cash generating potential of brand and customer
relationships is determined using a discounted cash flow model
which assesses sensitivity to operating margins, discount rates and
AUM growth rates, as detailed in note 12. The results of the
calculation indicate that client relationship and brand intangibles
are not impaired.
BUSINESS COMBINATIONS
Critical judgement
Client relationship and brand intangibles purchased through
corporate transactions
When the Group purchases client relationships and brands through
transactions with other corporate entities, a judgement is made as
to whether the transaction should be accounted for as a business
combination or as a separate purchase of intangible assets. In
making this judgement, the Group assesses the assets, liabilities,
operations and processes that were the subject of the transaction
against the definition of a business combination in IFRS 3. In
particular, consideration is given to the scale of the operations
subject to the transaction and whether ownership of a corporate
entity has been acquired, among other factors.
TREATMENT AND FAIR VALUE OF CONSIDERATION TRANSFERRED
Critical judgement and estimation uncertainty
On 15 August 2022 the Group acquired 50% of the issued share
capital 8AM Global Limited ("8AM") which has been treated by Tatton
as a joint venture and, as such, the equity accounting method has
been used to recognise this investment. This has resulted in the
recognition of a single line on the balance sheet for the
investment at fair value cost which will change with the ongoing
impact on the income statement as a result of the share of profits
and intangible assets.
A fair value exercise was undertaken to determine the allocate
the purchase price to the fair value of the identifiable assets
acquired and the liabilities assumed. The determination of the fair
value of the asset and liabilities is based, to a considerable
extent, on management's judgement. The amount of goodwill initially
recognised is dependent on the allocation of this purchase price to
the identifiable assets and liabilities, with any unallocated
portion being recorded as goodwill. The total value of these assets
has been recognised in one line on the face of the balance
sheet.
The valuation of customer relationships included estimates on
AUM growth or attrition rates which were based on whether advisor
firms had a pre-existing relationship with the Group, management
judgment around the use of discount rates and estimates of the
future profitability of 8AM Global Limited. The valuation of brand
included estimates of the future profitability of 8AM Global
Limited and brand royalty rates.
At 31 March 2023, there remained two elements of deferred
consideration unvested and subject to ongoing vesting conditions.
The value of earn-out consideration is variable, dependent on
performance by the business against certain operational targets at
the second and third anniversaries of completion. The estimated
discounted value of earn-out consideration that will be payable at
these dates is GBP1,063,000.
The total payable is dependent on meeting certain operating
profit targets. Management have estimated the likelihood of certain
levels of operating profit being achieved which are based on
projections of the levels of AUM, revenue and operating cost. It is
reasonably possible, on the basis of existing knowledge, that
outcomes within the next financial year that are different from the
estimates used could require a material adjustment to the carrying
amount of the liability.
On 14 September 2021, the Group acquired the Verbatim funds
business ("Verbatim") and the Group accounted for the transaction
as a business combination. Business combinations and acquisitions
require a fair value exercise to be undertaken to allocate the
purchase price to the fair value of the identifiable assets
acquired and the liabilities assumed. The determination of the fair
value of the asset and liabilities is based, to a considerable
extent, on management's judgement. The amount of goodwill initially
recognised as a result of a business combination is dependent on
the allocation of this purchase price to the identifiable assets
and liabilities, with any unallocated portion being recorded as
goodwill. The purchase price payable for the acquisition is split
into a number of different parts. The payment of certain elements
has been deferred.
At 31 March 2023, there remained three elements of deferred
consideration unvested and subject to ongoing vesting conditions.
The value of earn-out consideration is variable, dependent on
performance by the acquired business against certain operational
targets at the second, third and fourth anniversaries of
completion. The estimated discounted value of earn-out
consideration that will be payable at these dates is GBP1,927,000,
based on projections of the level of funds under management over
that period.
It is reasonably possible, on the basis of existing knowledge,
that outcomes within the next financial year that are different
from the estimates used could require a material adjustment to the
carrying amount of the liability.
Under the terms of the agreements, the maximum possible payment
under the remaining earn-out is capped at GBP3,000,000, which
represents qualifying funds under management of at least GBP650
million at each anniversary date, subject to certain
conditions.
SHARE-BASED PAYMENTS
Estimation uncertainty
Given the significance of share-based payments as a form of
employee remuneration for the Group, share-based payments have been
included as a significant accounting estimate. The principal
estimations relate to:
- forfeitures (where awardees leave the Group as "bad" leavers
and therefore forfeit unvested awards); and
- the satisfaction of performance obligations attached to
certain awards.
These estimates are reviewed regularly and the charge to the
Statement of Total Comprehensive Income is adjusted accordingly (at
the end of the relevant scheme as a minimum). Based on the current
forecasts of the Group, the charge for the year is based on 100% of
the options vesting for the element relating to non-market-based
performance conditions. A decrease of 10% in the vesting
assumptions would reduce the charge in the year by GBP66,000. In
considering the level of satisfaction of performance obligations,
the Group's forecast has been reviewed and updated for the expected
impact of the various market scenarios and management actions. This
forecast has been used to estimate the relevant vesting assumptions
for the Enterprise Management Incentive ("EMI") schemes in
place.
There are no other judgements or assumptions made about the
future, or any other major sources of estimation uncertainty at the
end of the reporting period, that have a significant risk of
resulting in a material adjustment to the carrying amounts of
assets and liabilities within the next financial year.
2.25 Alternative performance measures
In reporting financial information, the Group presents
alternative performance measures ("APMs") which are not defined or
specified under the requirements of IFRSs. The Group believes that
these APMs provide users with additional helpful information on the
performance of the business. The APMs are consistent with how the
business performance is planned and reported within the internal
management reporting to the Board. Some of these measures are also
used for the purpose of setting remuneration targets. The APMs used
by the Group are set out in note 23 including explanations of how
they are calculated and how they can be reconciled to a statutory
measure where relevant. There is also further information on
separately disclosed items in note 6.
3 Capital Management
The Group's objectives when managing capital are (i) to
safeguard the Group's ability to continue as a going concern so
that it can continue to provide returns for shareholders and
benefits for other stakeholders; (ii) to maintain a strong capital
base and utilise it efficiently to support the development of its
business; and (iii) to comply with the regulatory capital
requirements set by the FCA. Capital adequacy and the use of
regulatory capital are monitored by the Group's management and
Board. There is one active regulated entity in the Group: Tatton
Investment Management Limited, regulated by the FCA.
Regulatory capital is determined in accordance with the
requirements of the FCA's Investment Firms Prudential Regime which
became effective on 1 January 2022 and the Capital Requirements
Directive IV prescribed in the UK by the FCA. The Directive
requires continual assessment of the Group's risks which is
underpinned by the Group's Internal capital adequacy and risk
assessment ("ICARA"). The ICARA considers the relevant current and
future risks to the business and the capital considered necessary
to support these risks. The Group actively monitors its capital
base to ensure it maintains sufficient and appropriate capital
resources to cover the relevant risks to the business and to meet
consolidated and individual regulated entity regulatory and
liquidity requirements.
The FCA requires the Group to hold more regulatory capital
resources than the total capital resource requirement. The total
capital requirement for the Group is the higher of the Group's Own
Funds Requirement, its Own Harm requirement and Wind-down
requirement. The total capital requirement for the Group is GBP4.40
million. As at 31 March 2023, the Group has regulatory capital
resources of GBP14.81 million, significantly in excess of the
Group's total capital requirement. During the period, the Group and
its regulated subsidiary entities complied with all regulatory
capital requirements.
4 Segment Reporting
Information reported to the Board of Directors as the chief
operating decision maker ("CODM") for the purposes of resource
allocation and assessment of segmental performance is focused on
the type of revenue. The principal types of revenue are
discretionary fund management and the marketing and promotion of
the funds run by the companies under Tatton Capital Limited
("Tatton") and the provision of compliance and support services to
IFAs and mortgage advisers ("Paradigm").
The Group's reportable segments under IFRS 8 are therefore
Tatton, Paradigm, and "Central" which contains the Operating
Group's central overhead costs. Centrally incurred overhead costs
are allocated to the Tatton and Paradigm divisions on an
appropriate pro rata basis.
The principal activity of Tatton is that of discretionary fund
management ("DFM") of investments on-platform and the provision of
investment wrap services.
The principal activity of Paradigm is that of provision of
support services to IFAs and mortgage advisers.
For management purposes, the Group uses the same measurement
policies used in its financial statements.
The following is an analysis of the Group's revenue and results
by reportable segment:
Tatton Paradigm Central Group
Year ended 31 March 2023 (GBP'000) (GBP'000) (GBP'000) (GBP'000)
----------------------------------------------- ---------- ---------- ---------- ----------
Revenue 25,929 6,404 (6) 32,327
Share of post tax profit from joint ventures 160 - - 160
Administrative expenses (8,540) (3,999) (3,338) (15,877)
----------------------------------------------- ---------- ---------- ---------- ----------
Operating profit/(loss) 17,549 2,405 (3,344) 16,610
----------------------------------------------- ---------- ---------- ---------- ----------
Share-based payments - - 1,511 1,511
Exceptional charges 398 - - 398
Gain arising on changes in fair value
of contingent consideration (2,651) - - (2,651)
Amortisation of acquisition-related intangible
assets 534 - - 534
----------------------------------------------- ---------- ---------- ---------- ----------
Adjusted operating profit/(loss) (before
separately disclosed items)(1) 15,830 2,405 (1,833) 16,402
----------------------------------------------- ---------- ---------- ---------- ----------
Finance costs (182) - (432) (614)
----------------------------------------------- ---------- ---------- ---------- ----------
Profit/(loss) before tax 17,367 2,405 (3,776) 15,996
----------------------------------------------- ---------- ---------- ---------- ----------
Tatton Paradigm Central Group
Year ended 31 March 2022 (GBP'000) (GBP'000) (GBP'000) (GBP'000)
----------------------------------------------- ---------- ---------- ---------- ----------
Revenue 23,345 5,995 16 29,356
Administrative expenses (9,939) (3,561) (4,226) (17,726)
----------------------------------------------- ---------- ---------- ---------- ----------
Operating profit/(loss) 13,406 2,434 (4,210) 11,630
----------------------------------------------- ---------- ---------- ---------- ----------
Share-based payments - - 2,399 2,399
Exceptional items 231 - - 231
Amortisation of acquisition-related intangible
assets 266 - - 266
----------------------------------------------- ---------- ---------- ---------- ----------
Adjusted operating profit/(loss) (before
separately disclosed items)(1) 13,903 2,434 (1,811) 14,526
----------------------------------------------- ---------- ---------- ---------- ----------
Finance costs (18) - (337) (355)
----------------------------------------------- ---------- ---------- ---------- ----------
Profit/(loss) before tax 13,388 2,434 (4,547) 11,275
----------------------------------------------- ---------- ---------- ---------- ----------
All turnover arose in the United Kingdom.
1. Alternative performance measures are detailed in note 23.
5 Operating Profit
The operating profit and the profit before taxation are stated
after charging/(crediting):
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
---------------------------------------------------------- ---------- ----------
Amortisation of software 247 270
Depreciation of property, plant and equipment 168 168
Depreciation of right-of-use assets 216 209
Loss arising on financial assets designated as FVTPL 28 11
Separately disclosed items (note 6) (208) 2,896
Services provided by the Group's auditor:
Audit of the statutory consolidated and Company financial
statements of:
Tatton Asset Management plc 121 72
Audit of subsidiaries 66 70
Other fees payable to auditor:
Non-audit services 8 21
---------------------------------------------------------- ---------- ----------
Total audit fees were GBP187,000 (2022: GBP142,000). Total
non-audit fees payable to the auditor were GBP8,000 (2022:
GBP21,000).
6 Separately Disclosed Items
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
------------------------------------------------------ ---------- ----------
Acquisition-related expenses 398 231
------------------------------------------------------ ---------- ----------
Total exceptional costs 398 231
------------------------------------------------------ ---------- ----------
Gain arising on changes in fair value of contingent
consideration (2,651) -
Share-based payment charges 1,511 2,399
Amortisation of intangible assets relating to joint
ventures 121 -
Amortisation of acquisition-related intangible assets 413 266
------------------------------------------------------ ---------- ----------
Total separately disclosed items (208) 2,896
------------------------------------------------------ ---------- ----------
Separately disclosed items shown separately on the face of the
Statement of Total Comprehensive Income or included within
administrative expenses reflect costs and income that do not relate
to the Group's normal business operations and that are considered
material (individually or in aggregate if of a similar type) due to
their size or frequency.
Exceptional items
During the period, the Group acquired 50% of the share capital
of 8AM Global Limited. The Group incurred professional fees of
GBP229,000 during the process, which have been treated as
exceptional items. The Group has also incurred other one-off costs
of GBP169,000 during the period including costs in relation to the
prior year acquisition of the Verbatim funds.
Acquisition-related expenses in the prior year relate to
professional fees incurred as a result of the acquisition of the
Verbatim funds in September 2021. The Group incurred professional
fees of GBP231,000 during the process, which have been treated as
exceptional items.
During the period, the Group revalued its financial liability at
fair value through profit or loss relating to the deferred
consideration on the acquisition of the Verbatim funds and 8AM
Global Limited. This has resulted in a credit from the change in
fair value of GBP2,651,000 being recognised in the year.
Share-based payments
Share-based payments is a recurring item, though the value will
change depending on the estimation of the satisfaction of
performance obligations attached to certain awards. It has been
excluded from the core business operating profit since it is a
significant non-cash item. Underlying profit, being adjusted
operating profit, represents largely cash-based earnings and more
directly relates to the financial reporting period.
Amortisation of acquisition-related intangible assets
Payments made for the introduction of client relationships and
brands that are deemed to be intangible assets are capitalised and
amortised over their useful life, which has been assessed to be ten
years. This amortisation charge is recurring over the life of the
intangible asset, though it has been excluded from the core
business operating profit since it is a significant non-cash item.
Underlying profit, being adjusted operating profit, represents
largely cash-based earnings and more directly relates to the
financial reporting period.
7 Finance Costs
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
---------------------------------------------------- ----------- ----------
Bank interest income 6 -
Unwinding of the discount on deferred consideration (228) -
Interest expense on lease liabilities (14) (23)
Interest payable in servicing of banking facilities (378) (332)
---------------------------------------------------- ----------- ----------
(614) (355)
---------------------------------------------------- ----------- ----------
8 Taxation
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
------------------------------------------------------- ----------- ----------
Current tax expense
Current tax on profits for the period 3,159 2,010
Adjustment for under/(over) provision in prior periods 14 (52)
------------------------------------------------------- ----------- ----------
3,173 1,958
------------------------------------------------------- ----------- ----------
Deferred tax expense
Current year (credit)/charge (371) 261
Adjustment in respect of previous years (56) (30)
Effect of changes in tax rates (123) (156)
------------------------------------------------------- ----------- ----------
Total tax expense 2,623 2,033
------------------------------------------------------- ----------- ----------
The reasons for the difference between the actual tax charge for
the year and the standard rate of corporation tax in the UK applied
to profit for the year are as follows:
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
-------------------------------------------------- ----------- ----------
Profit before taxation 15,996 11,275
-------------------------------------------------- ----------- ----------
Tax at UK corporation tax rate of 19% (2022: 19%) 3,039 2,142
Expenses not deductible for tax purposes 93 45
Income not taxable (533) 1
Adjustments in respect of previous years (41) (82)
Effect of changes in tax rates (122) (94)
Capital allowances in excess of depreciation 3 1
Share-based payments 184 20
-------------------------------------------------- ----------- ----------
Total tax expense 2,623 2,033
-------------------------------------------------- ----------- ----------
An increase in the UK corporation tax rate from 19% to 25%
(effective 1 April 2023) was substantively enacted on 24 May 2021.
This will increase the Company's future current tax charge
accordingly. The deferred tax asset in both the current and prior
year was calculated based on these rates, reflecting the expected
timing of reversal of the related temporary differences.
9 Earnings Per Share and Dividends
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares during the year.
Number of shares
31-Mar 31-Mar
2023 2022
--------------------------------------------------------- ---------- ----------
Basic
Weighted average number of shares in issue 59,608,203 58,424,150
Effect of own shares held by an EBT - (373,774)
--------------------------------------------------------- ---------- ----------
59,608,203 58,050,376
Diluted
Effect of weighted average number of options outstanding
for the year 2,006,603 2,875,504
--------------------------------------------------------- ---------- ----------
Weighted average number of shares (diluted)(1) 61,614,806 60,925,880
Adjusted diluted
Effect of full dilution of employee share options which
are contingently issuable or have future attributable
service costs 1,192,528 1,042,011
--------------------------------------------------------- ---------- ----------
Adjusted diluted weighted average number of options
and shares for the year(2) 62,807,334 61,967,891
--------------------------------------------------------- ---------- ----------
1. The weighted average number of shares is diluted due to the
effect of potentially dilutive contingent issuable shares from
share option schemes.
2. The dilutive shares used for this measure differ from that
used for statutory dilutive earnings per share; the future value of
service costs attributable to employee share options is ignored and
contingently issuable shares for long-term incentive plan options
are assumed to fully vest. The Directors have selected this measure
as it represents the underlying effective dilution by offsetting
the impact to the calculation of basic shares of the purchase of
shares by the EBT to satisfy options.
Own shares held by an EBT represents the Company's own shares
purchased and held by the Employee Benefit Trust ("EBT"), shown at
cost. In the year ended 31 March 2023, the EBT purchased 139,500
(2022: 966,546) of the Company's own shares. The shares held by the
EBT were fully used during the year to satisfy the exercise of
employee share options.
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
------------------------------------------------------ ---------- ----------
Earnings attributable to ordinary shareholders
Basic and diluted profit for the period 13,373 9,242
Share-based payments - IFRS 2 option charges 1,511 2,399
Amortisation of acquisition-related intangible assets 534 266
Exceptional costs - see note 6 398 231
Gain arising on changes in fair value of contingent
consideration (2,651) -
Unwinding of discount on deferred consideration - see
note 6 228 -
Tax impact of adjustments (447) (602)
------------------------------------------------------ ---------- ----------
Adjusted basic and diluted profits for the period and
attributable earnings 12,946 11,536
------------------------------------------------------ ---------- ----------
Earnings per share (pence) - Basic 22.43 15.92
------------------------------------------------------ ---------- ----------
Earnings per share (pence) - Diluted 21.70 15.17
------------------------------------------------------ ---------- ----------
Adjusted earnings per share (pence) - Basic 21.72 19.87
------------------------------------------------------ ---------- ----------
Adjusted earnings per share (pence) - Fully Diluted 20.61 18.62
------------------------------------------------------ ---------- ----------
Dividends
The Directors consider the Group's capital structure and
dividend policy at least twice a year ahead of announcing results
and do so in the context of its ability to continue as a going
concern, to execute its strategy and to invest in opportunities to
grow the business and enhance shareholder value.
During the year, Tatton Asset Management plc paid the final
dividend related to the year ended 31 March 2022 of GBP4,810,000,
representing a payment of 8.5p per share. In addition, the Company
paid an interim dividend of GBP2,904,000 (2022: GBP2,357,000) to
its equity shareholders. This represents a payment of 4.5p per
share (2022: 4.0p per share).
The Company's dividend policy is described in the Directors'
Report on page 64 of the 2023 Annual Report. At 31 March 2023, the
Company's distributable reserves were GBP39.6 million (2022:
GBP32.8 million).
10 Staff Costs
The staff costs shown below exclude key management compensation,
which is shown separately below.
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
---------------------------- ----------- ----------
Wages, salaries and bonuses 6,790 5,676
Social security costs 872 671
Pension costs 283 250
Share-based payments 835 956
---------------------------- ----------- ----------
8,780 7,553
---------------------------- ----------- ----------
The average monthly number of employees during the year was as
follows:
31-Mar 31-Mar
2023 2022
--------------- ------ ------
Administration 94 86
Key management 3 3
--------------- ------ ------
97 89
--------------- ------ ------
Key management compensation
The remuneration of the statutory Directors who are the key
management of the Group is set out below in aggregate for each of
the key categories specified in IAS 24 "Related Party
Disclosures".
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
----------------------------- ---------- ----------
Short-term employee benefits 1,164 1,758
Post-employment benefits 4 4
Share-based payments 676 1,460
----------------------------- ---------- ----------
1,844 3,222
----------------------------- ---------- ----------
In addition to the remuneration above, the Non-Executive
Chairman and Non-Executive Directors have submitted invoices for
their fees as follows:
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
----------- ---------- ----------
Total fees 270 270
----------- ---------- ----------
The Group incurred social security costs of GBP195,000 (2022:
GBP277,000) on the remuneration of the Directors and Non-Executive
Directors.
The remuneration of the highest paid Director was:
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
------ ----------- ----------
Total 424 644
------ ----------- ----------
The highest paid Director exercised nil share options in the
period (2022: 553,078). There were 30,000 share options granted to
the highest paid Director in the year (2022: 25,000).
11 Investments in Joint Ventures Accounted for using the Equity
Method
(GBP'000)
------------------------------------------------------------------ ---------
At 1 April 2022 -
Additions 6,765
Profit for the year after tax 160
Amortisation of intangible assets relating to joint ventures (121)
Deferred tax credit on amortisation of intangible assets relating
to joint ventures 18
Distributions of profit (60)
------------------------------------------------------------------ ---------
At 31 March 2023 6,762
------------------------------------------------------------------ ---------
NAME OF JOINT PRINCIPAL PLACE PERCENTAGE OWNED
VENTURE NATURE OF BUSINESS OF BUSINESS CLASS OF SHARE BY THE GROUP
------------------- ---------------------- ---------------- ---------------- ----------------
8AM Global Limited Investment Management United Kingdom Ordinary Shares 50.0%
------------------- ---------------------- ---------------- ---------------- ----------------
31-Mar 31-Mar
2023 2022
('000) ('000)
--------------------------------------------------------- ------- -------
Non-current assets 35 -
Current assets 934 -
Non-current liabilities - -
Current liabilities (502) -
--------------------------------------------------------- ------- -------
Total equity 467 -
--------------------------------------------------------- ------- -------
Group's share of net assets 224 -
Goodwill and intangible assets 7,009 -
Deferred tax liability (471) -
--------------------------------------------------------- ------- -------
Carrying value held by the Group 6,762 -
--------------------------------------------------------- ------- -------
Profit for the year 320 -
--------------------------------------------------------- ------- -------
Group's share of profit for the year before amortisation 160 -
--------------------------------------------------------- ------- -------
Amortisation (121) -
--------------------------------------------------------- ------- -------
Group's share of profit for the year 39 -
--------------------------------------------------------- ------- -------
8AM Global Limited has a reporting date of 30 June. The net
asset position shown in the table above is as at 31 March to align
with the Group's own reporting.
12 Goodwill
Goodwill
(GBP'000)
------------------------------------ ----------
Cost and carrying value at 31 March
2022 and 31 March 2023 9,337
------------------------------------ ----------
The carrying value of goodwill includes GBP9.0 million allocated
to the Tatton operating segment and CGU. This is made up of GBP2.5
million arising from the acquisition in 2014 of an interest in
Tatton Oak Limited by Tatton Capital Limited consisting of the
future synergies and forecast profits of the Tatton Oak business,
GBP2.0 million arising from the acquisition in 2017 of an interest
in Tatton Capital Group Limited, GBP1.4 million of goodwill
generated on the acquisition of Sinfonia and GBP3.1 million of
goodwill generated on the acquisition of the Verbatim funds. The
carrying value of goodwill also includes GBP0.4 million allocated
to the Paradigm operating segment and CGU relating to the
acquisition of Paradigm Mortgage Services LLP. Goodwill relating to
8AM Global Limited is shown within the Investments in Joint
Ventures (see note 11).
None of the goodwill is expected to be deductible for income tax
purposes.
Impairment loss and subsequent reversal
Goodwill is subject to an annual impairment review based on an
assessment of the recoverable amount from future trading. Where, in
the opinion of the Directors, the recoverable amount from future
trading does not support the carrying value of the goodwill
relating to a subsidiary company then an impairment charge is made.
Such impairment is charged to the Statement of Total Comprehensive
Income.
Impairment testing
For the purpose of impairment testing, goodwill is allocated to
the Group's operating companies which represent the lowest level
within the Group at which the goodwill is monitored for internal
management accounts purposes.
Goodwill acquired in a business combination is allocated, at
acquisition, to the CGUs or group of units that are expected to
benefit from that business combination. The Directors test goodwill
annually for impairment, or more frequently if there are indicators
that goodwill might be impaired. The Directors have reviewed the
carrying value of goodwill at 31 March 2023 and do not consider it
to be impaired.
Growth rates
The value in use is calculated from cash flow projections based
on the Group's forecasts for the year ending 31 March 2024, which
are extrapolated for a further four years. The Group's latest
financial forecasts, which cover a three-year period, are reviewed
by the Board. A terminal growth rate has been applied to year five
cash flows.
Discount rates
The pre-tax discount rate used to calculate value is 11.2%
(2022: 11.5%). The discount rate is derived from a benchmark
calculated from a number of comparable businesses.
Cash flow assumptions
The key assumptions used for the value in use calculations are
those regarding discount rate, growth rates and expected changes in
margins. Changes in prices and direct costs are based on past
experience and expectations of future changes in the market. The
growth rate used in the calculation reflects the average growth
rate experienced by the Group and its industry.
The headroom compared to the carrying value of goodwill as at 31
March 2023 is GBP390 million (2022: GBP380 million). From the
assessment performed, there are no reasonable sensitivities that
result in the recoverable amount being equal to the carrying value
of the goodwill attributed to the CGU.
13 Intangible Assets
Computer Client
software relationships Brand Total
(GBP'000) (GBP'000) (GBP'000) (GBP'000)
------------------------------------------- ---------- -------------- ----------- ----------
Cost
Balance at 31 March 2021 819 1,196 - 2,015
Additions 211 - - 211
Acquired as part of a business combination - 2,838 98 2,936
Disposals (24) - - (24)
------------------------------------------- ---------- -------------- ----------- ----------
Balance at 31 March 2022 1,006 4,034 98 5,138
Additions 229 - - 229
------------------------------------------- ---------- -------------- ----------- ----------
Balance at 31 March 2023 1,235 4,034 98 5,367
------------------------------------------- ---------- -------------- ----------- ----------
Accumulated amortisation and impairment
Balance at 31 March 2021 (399) (180) - (579)
Charge for the period (270) (261) (5) (536)
Disposals 24 - - 24
------------------------------------------- ---------- -------------- ----------- ----------
Balance at 31 March 2022 (645) (441) (5) (1,091)
Charge for the period (247) (404) (10) (661)
------------------------------------------- ---------- -------------- ----------- ----------
Balance at 31 March 2023 (892) (845) (15) (1,752)
------------------------------------------- ---------- -------------- ----------- ----------
Net book value
As at 31 March 2021 420 1,016 - 1,436
------------------------------------------- ---------- -------------- ----------- ----------
As at 31 March 2022 361 3,593 93 4,047
------------------------------------------- ---------- -------------- ----------- ----------
As at 31 March 2023 343 3,189 83 3,615
------------------------------------------- ---------- -------------- ----------- ----------
All amortisation charges are included within administrative
expenses in the Statement of Total Comprehensive Income.
14 Property, Plant and Equipment
Computer, Right-of-use
office assets
equipment - buildings
and motor Fixtures and motor
vehicles and fittings vehicles Total
(GBP'000) (GBP'000) (GBP'000) (GBP'000)
---------------------------------------- ---------- ------------- ------------ ----------
Cost
Balance at 31 March 2021 432 477 931 1,840
Additions 74 - 60 134
Disposals (161) - - (161)
---------------------------------------- ---------- ------------- ------------ ----------
Balance at 31 March 2022 345 477 991 1,813
Additions 86 3 - 89
Disposals (77) - - (77)
---------------------------------------- ---------- ------------- ------------ ----------
Balance at 31 March 2023 354 480 991 1,825
---------------------------------------- ---------- ------------- ------------ ----------
Accumulated depreciation and impairment
Balance at 31 March 2021 (327) (207) (314) (848)
Charge for the period (73) (95) (209) (377)
Disposals 161 - - 161
Balance at 31 March 2022 (239) (302) (523) (1,064)
Charge for the period (72) (96) (216) (384)
Disposals 77 - - 77
---------------------------------------- ---------- ------------- ------------ ----------
Balance at 31 March 2023 (234) (398) (739) (1,371)
---------------------------------------- ---------- ------------- ------------ ----------
Net book value
As at 31 March 2021 105 270 617 992
---------------------------------------- ---------- ------------- ------------ ----------
As at 31 March 2022 106 175 468 749
---------------------------------------- ---------- ------------- ------------ ----------
As at 31 March 2023 120 82 252 454
---------------------------------------- ---------- ------------- ------------ ----------
All depreciation charges are included within administrative
expenses in the Statement of Total Comprehensive Income.
The Group leases buildings, motor vehicles and IT equipment. The
Group has applied the practical expedient for low value assets and
so has not recognised IT equipment within ROU assets. The average
lease term is five years. No leases have expired in the current
financial period.
Right-of-use assets
31-Mar 31-Mar
2023 (GBP'000) 2022 (GBP'000)
-------------------------------------- --------------- ---------------
Amounts recognised in profit and loss
Depreciation on right-of-use assets (216) (209)
Interest expense on lease liabilities (14) (23)
Expense relating to short-term leases (59) (30)
Expense relating to low value assets - -
-------------------------------------- --------------- ---------------
(289) (262)
-------------------------------------- --------------- ---------------
At 31 March 2023, the Group is committed to GBP80,000 for
short-term leases (2021: GBP62,000).
The total cash outflow for leases amounts to GBP339,000 (2022:
GBP339,000).
15 Trade and Other Receivables
31-Mar 31-Mar
2023 (GBP'000) 2022 (GBP'000)
------------------------------- --------------- ---------------
Trade receivables 278 329
Prepayments and accrued income 3,457 3,442
Other receivables 47 34
------------------------------- --------------- ---------------
3,782 3,805
------------------------------- --------------- ---------------
All trade receivable amounts are short term. The carrying value
is considered a fair approximation of their fair value. The Group
applies the IFRS 9 simplified approach to measuring expected credit
losses ("ECLs") for trade receivables at an amount equal to
lifetime ECLs. In line with the Group's historical experience, and
after consideration of current credit exposures, the Group does not
expect to incur any credit losses and has not recognised any ECLs
in the current year (2022: GBPnil).
The amounts due from related parties are net of provisions. At
31 March 2023, the Group holds no provisions (2022: GBP1,311,000
against the recoverability of amounts due from Jargonfree Benefits
LLP).
Trade receivable amounts are all held in sterling.
16 Trade and Other Payables
31-Mar 31-Mar
2023 (GBP'000) 2022 (GBP'000)
------------------------------------------- --------------- ---------------
Trade payables 397 855
Amounts due to related parties 234 235
Accruals 3,301 3,468
Deferred income 138 98
Contingent consideration 2,989 2,486
Other payables 3,106 3,161
------------------------------------------- --------------- ---------------
10,165 10,303
------------------------------------------- --------------- ---------------
Less non-current portion:
Contingent consideration (2,209) (2,486)
Other payables (45) (261)
------------------------------------------- --------------- ---------------
Total non-current trade and other payables (2,254) (2,747)
------------------------------------------- --------------- ---------------
Total current trade and other payables 7,911 7,556
------------------------------------------- --------------- ---------------
The carrying values of trade payables, amounts due to related
parties, accruals and deferred income are considered reasonable
approximation of fair value.
Trade payable amounts are all held in sterling.
17 Deferred Taxation
Deferred
capital Share-based Acquisition
allowances payments intangibles Total
(GBP'000) (GBP'000) (GBP'000) (GBP'000)
--------------------------------------------- ----------- ----------- ------------ ----------
Asset/(liability) at 31 March 2021 (101) 1,714 (193) 1,420
Recognised as part of a business combination - - (708) (708)
Income statement (charge)/credit 38 (70) 5 (27)
Equity credit - 156 - 156
--------------------------------------------- ----------- ----------- ------------ ----------
Asset/(liability) at 31 March 2022 (63) 1,800 (896) 841
--------------------------------------------- ----------- ----------- ------------ ----------
Income statement credit/(charge) 49 251 99 399
Equity credit - 18 - 18
--------------------------------------------- ----------- ----------- ------------ ----------
Asset/(liability) at 31 March 2023 (14) 2,069 (797) 1,258
--------------------------------------------- ----------- ----------- ------------ ----------
18 Financial Instruments
The Group's treasury activities are designed to provide
suitable, flexible funding arrangements to satisfy the Group's
requirements. The Group uses financial instruments comprising
borrowings, cash and items such as trade receivables and payables
that arise directly from its operations. The main risks arising
from the Group's financial instruments are interest rate risks,
credit risks and liquidity risks. The Board reviews policies for
managing each of these risks and they are summarised below.
The Group finances its operations through a combination of cash
resource and other borrowings.
Fair value estimation
IFRS 7 requires disclosure of fair value measurements of
financial instruments by level of the following fair value
measurement hierarchy:
- Quoted prices (unadjusted) in active markets for identical
assets or liabilities (level 1).
- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from
prices) (level 2).
- Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs) (level 3).
All financial assets, except for financial investments, are
categorised as loans and receivables and are classified as level 1.
Financial investments are categorised as financial assets at fair
value through profit or loss and are classified as level 1 and the
fair value is determined directly by reference to published prices
in an active market.
Financial assets at fair value through profit or loss (level
1)
31-Mar 31-Mar
2023 (GBP'000) 2022 (GBP'000)
------------------------------------------------------------- --------------- ---------------
Financial investments in regulated funds or model portfolios 123 152
------------------------------------------------------------- --------------- ---------------
All financial liabilities except for contingent consideration
are categorised as financial liabilities measured at amortised cost
and are also classified as level 1. The only financial liabilities
measured subsequently at fair value on level 3 fair value
measurement represent contingent consideration relating to a
business combination.
Financial liabilities at fair value through profit or loss
(level 3)
Contingent consideration GBP'000
-------------------------------------------------------------- -------
Balance at 1 April 2021 -
Recognition of contingent consideration as part of a business
combination 2,486
-------------------------------------------------------------- -------
Balance at 31 March 2022 2,486
Recognition of contingent consideration as part of a business
combination 2,926
Unwinding of discount rate 228
Changes in fair value of contingent consideration (2,651)
-------------------------------------------------------------- -------
Balance at 31 March 2023 2,989
-------------------------------------------------------------- -------
Interest rate risk
The Group finances its operations through a combination of
retained profits and a bank facility which currently remains
undrawn. The Group would have an exposure to interest rate risk
should this facility be drawn as it has a floating rate above the
base rate. The Group's cash and cash equivalents balance of
GBP26,494,000 was its only financial instrument subject to variable
interest rate risk. The impact of a 0.1% increase or decrease in
interest rate on the post-tax profit is not material to the Group.
At 31 March 2023, total borrowings were GBPnil (2022: GBPnil).
Credit risk
Credit risk is the risk that a counterparty will cause a
financial loss to the Group by failing to discharge its obligation
to the Group. The financial instruments are considered to have a
low credit risk due to the mitigating procedures in place. The
Group manages its exposure to this risk by applying Board-approved
limits to the amount of credit exposure to any one counterparty,
and employs strict minimum creditworthiness criteria as to the
choice of counterparty, thereby ensuring that there are no
significant concentrations. The Group does not have any significant
credit risk exposure to any single counterparty or any group of
counterparties having similar characteristics. The maximum exposure
to credit risk for receivables and other financial assets is
represented by their carrying amount.
The Group's maximum exposure to credit risk is limited to the
carrying amount of financial assets recognised at 31 March, as
summarised below:
31-Mar 31-Mar
2023 2022
Classes of financial assets - carrying amounts: (GBP'000) (GBP'000)
------------------------------------------------ ----------- ----------
Cash and cash equivalents 26,494 21,710
Trade and other receivables 2,938 3,016
------------------------------------------------ ----------- ----------
29,432 24,726
------------------------------------------------ ----------- ----------
The Group continuously monitors defaults of customers and other
counterparties, identified either individually or by the Group, and
incorporates this information into its credit risk controls. The
Group's policy is to deal only with credit worthy
counterparties.
The Group's management consider that all of the above financial
assets that are not impaired or past due for each of the 31 March
reporting dates under review are of good credit quality.
At 31 March, the Group had certain trade receivables that had
not been settled by the contractual date but were not considered to
be impaired. The amounts at 31 March, analysed by the length of
time past due, are:
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
---------------------------------------------- ----------- ----------
Not more than 3 months 233 267
More than 3 months but not more than 6 months 30 5
More than 6 months but not more than 1 year 6 27
More than 1 year 8 5
---------------------------------------------- ----------- ----------
Total 277 304
---------------------------------------------- ----------- ----------
Trade receivables consist of a large number of customers within
the UK. Based on historical information about customer default
rates, management consider the credit quality of trade receivables
that are not past due or impaired to be good. The Group has
rebutted the presumption in paragraph 5.5.11 of IFRS 9 that credit
risk increases significantly when contractual payments are more
than 30 days past due.
The credit risk for cash and cash equivalents is considered
negligible, since the counterparties are reputable banks with high
quality external credit ratings.
Liquidity risk
Liquidity risk is the risk that companies within the Group will
encounter difficulty in meeting obligations associated with
financial liabilities. To counter this risk, the Group operates
with a high level of interest cover relative to its net asset value
and no debt. In addition, it benefits from strong cash flow from
its normal trading activities. The Group manages its liquidity
needs by monitoring scheduled debt servicing payments for long-term
financial liabilities as well as forecast cash inflows and outflows
due in day to day business. The data used for analysing these cash
flows is consistent with that used in the contractual maturity
analysis below.
The totals for each category of financial instruments, measured
in accordance with IFRS 9 and IFRS 7 as detailed in the accounting
policies to this historical financial information, are as
follows:
At 31 March 2023, the Group's non-derivative financial
liabilities have contractual maturities (including interest
payments where applicable) as summarised below:
Current Non-current
---------------------- ----------------------
Within 6 to 12 1 to 5 Later than
6 months months years 5 years
At 31 March 2023 (GBP'000) (GBP'000) (GBP'000) (GBP'000)
------------------------- ---------- ---------- ---------- ----------
Trade and other payables 6,775 - - -
Lease liabilities 134 88 46 -
Contingent consideration 807 - 2,527 -
------------------------- ---------- ---------- ---------- ----------
Total 7,716 88 2,573 -
------------------------- ---------- ---------- ---------- ----------
This compares with the maturity of the Group's non-derivative
financial liabilities in the previous reporting period as
follows:
Current Non-current
---------------------- ----------------------
Within 6 to 12 1 to 5 Later than
6 months months years 5 years
At 31 March 2022 (GBP'000) (GBP'000) (GBP'000) (GBP'000)
------------------------- ---------- ---------- ---------- ----------
Trade and other payables 7,203 - - -
Lease liabilities 135 135 269 -
Contingent consideration - - 2,856 -
------------------------- ---------- ---------- ---------- ----------
Total 7,338 135 3,125 -
------------------------- ---------- ---------- ---------- ----------
The above amounts reflect the contractual undiscounted cash
flows, which may differ from the carrying values of the liabilities
at the reporting date.
Market risk
The Group has made investments in its own managed funds and
portfolios and the value of these investments is subject to equity
market risk, being the risk that changes in equity prices will
affect the Group's income or the value of its holdings of financial
instruments. If equity prices had been 5% higher/lower, the impact
on the Group's Statement of Comprehensive Income would be GBP6,000
higher/lower due to changes in the fair value of financial assets
at fair value through profit or loss.
19 Share Capital
Number
------------------------------------------------------------- ----------
Authorised, called-up and fully paid GBP0.20 ordinary shares
At 1 April 2022 58,914,887
Issue of share capital on exercise of employee share options 263,098
Issue of share capital on purchase of a joint venture 877,737
------------------------------------------------------------- ----------
At 31 March 2023 60,055,722
------------------------------------------------------------- ----------
Each share in Tatton Asset Management plc carries one vote and
the right to a dividend.
20 Own Shares
The following movements in own shares occurred during the
year:
Number
of shares GBP'000
----------------------------------------------- ---------- -------
At 1 April 2022 - -
Acquired in the year 139,500 28
Utilised on exercise of employee share options (139,500) (28)
----------------------------------------------- ---------- -------
At 31 March 2023 - -
----------------------------------------------- ---------- -------
Own shares represent the cost of the Company's own shares,
either purchased in the market or issued by the Company, that are
held by an EBT to satisfy future awards under the Group's
share-based payment schemes (note 21). Following the exercise of
employee share options during the year, there are no shares held in
the EBT at 31 March 2023 (2022: nil).
21 Share-Based Payments
During the year, a number of share-based payment schemes and
share options schemes have been utilised by the Company, described
under 21.1 Current schemes, below.
21.1 Current schemes
(i) Tatton Asset Management plc EMI Scheme ("TAM EMI
Scheme")
On 7 July 2017, the Group launched an EMI share option scheme
relating to shares in Tatton Asset Management plc to enable senior
management to participate in the equity of the Company. 3,022,733
options with a weighted average exercise price of GBP1.89 were
granted, exercisable in July 2020. There have been nil (2022:
650,933) options exercised during the period from this scheme.
The scheme was extended on 8 August 2018, with 1,720,138 zero
cost options granted. This scheme vested in August 2021 and 50,000
options were exercised in the period (2022: 1,090,770). The scheme
was extended again on 1 August 2019, 28 July 2020, 15 July 2021 and
25 July 2022, with 193,000, 1,000,000, 279,858 and 274,268 zero
cost options granted in each respective year. These options are
exercisable on the third anniversary of the grant date.
The options granted in 2019 vested and became exercisable in
August 2022. There have been 139,500 options exercised during the
period from this scheme.
A total of 2,804,439 options remain outstanding at 31 March
2023, 1,256,668 of which are currently exercisable. 6,355 options
were forfeited in the period (2022: 30,000).
Within the accounts of the Company, the fair value at grant date
is estimated using the appropriate models, including both the
Black-Scholes and Monte Carlo modelling methodologies.
Number
of share
options Weighted
granted average
(number) price (GBP)
----------------------------- ----------- ------------
Outstanding at 1 April 2021 4,386,070 0.66
Granted during the period 279,858 -
Exercised during the period (1,741,703) 0.71
Forfeited during the period (30,000) -
Lapsed during the period (168,199) -
----------------------------- ----------- ------------
Outstanding at 31 March 2022 2,726,026 0.60
----------------------------- ----------- ------------
Exercisable at 31 March 2022 1,294,668 1.27
----------------------------- ----------- ------------
Outstanding at 1 April 2022 2,726,026 0.60
Granted during the period 274,268 -
Exercised during the period (189,500) -
Forfeited during the period (6,355) -
Lapsed during the period - -
----------------------------- ----------- ------------
Outstanding at 31 March 2023 2,804,439 0.59
----------------------------- ----------- ------------
Exercisable at 31 March 2023 1,256,668 1.31
----------------------------- ----------- ------------
(ii) Tatton Asset Management plc Sharesave scheme ("TAM
Sharesave scheme")
On 7 July 2017, 5 July 2018, 3 July 2019, 6 July 2020, 2 August
2021 and 4 August 2022, the Group launched all employee Sharesave
schemes for options over shares in Tatton Asset Management plc,
administered by Yorkshire Building Society. Employees are able to
save between GBP10 and GBP500 per month over a three-year life of
each scheme, at which point they each have the option to either
acquire shares in the Company or receive the cash saved.
The 2019 TAM Sharesave scheme vested in August 2022 and 73,599
share options became exercisable. Over the life of the 2020 TAM
Sharesave scheme, it is estimated that, based on current savings
rates, 109,504 share options will be exercisable at an exercise
price of GBP2.29. Over the life of the 2021 TAM Sharesave scheme,
it is estimated that, based on current savings rates, 40,880 share
options will be exercisable at an exercise price of GBP3.60. Over
the life of the 2022 TAM Sharesave scheme, it is estimated that,
based on current savings rates, 55,147 share options will be
exercisable at an exercise price of GBP3.26. During the period,
73,599 options have been exercised.
Within the accounts of the Company, the fair value at grant date
is estimated using the Black-Scholes methodology for 100% of the
options. Share price volatility has been estimated using the
historical share price volatility of the Company, the expected
volatility of the Company's share price over the life of the
options and the average volatility applying to a comparable group
of listed companies. Key valuation assumptions and the costs
recognised in the accounts during the period are noted in 21.2 and
21.3 below respectively.
Number
of share
options Weighted
granted average
(number) price (GBP)
----------------------------- --------- ------------
Outstanding at 1 April 2021 101,849 1.81
Granted during the period 77,868 2.28
Exercised during the period (5,924) 2.22
Forfeited during the period (59,276) 1.86
----------------------------- --------- ------------
Outstanding at 31 March 2022 114,517 2.14
----------------------------- --------- ------------
Exercisable at 31 March 2022 - -
----------------------------- --------- ------------
Outstanding at 1 April 2022 114,517 2.14
Granted during the period 60,538 2.53
Forfeited during the period (6,361) 2.66
Exercised during the period (73,599) 1.79
----------------------------- --------- ------------
Outstanding at 31 March 2023 95,095 2.57
----------------------------- --------- ------------
Exercisable at 31 March 2023 - -
----------------------------- --------- ------------
21.2 Valuation assumptions
Assumptions used in the option valuation models to determine the
fair value of options at the date of grant were as follows:
EMI scheme Sharesave scheme
2022 2021 2020 2019 2022 2021 2020 2019
--------------------------- ----- ----- ------ ----- ----- ----- ------ -----
Share price at grant (GBP) 4.03 4.60 2.84 2.12 4.25 4.80 2.85 2.14
Exercise price (GBP) - - - - 3.26 3.60 2.29 1.79
Expected volatility (%) 34.05 33.76 34.80 30.44 34.05 33.76 34.80 30.44
Expected life (years) 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Risk free rate (%) 1.71 0.24 (0.06) 0.35 1.71 0.12 (0.06) 0.35
Expected dividend yield
(%) 3.11 2.39 3.38 3.96 3.11 2.39 3.38 3.96
--------------------------- ----- ----- ------ ----- ----- ----- ------ -----
21.3 IFRS 2 share-based option costs
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
--------------------- ----------- ----------
TAM EMI scheme 1,446 2,347
TAM Sharesave scheme 65 52
--------------------- ----------- ----------
1,511 2,399
--------------------- ----------- ----------
The Consolidated Statement of Cash Flows shows an adjustment to
Net cash from operating activities relating to share based payments
of GBP1,420,000. This is a charge in the year of GBP1,511,000
adjusted for cash paid relating to national insurance contributions
on the exercise of share options of GBP91,000
22 Related Party Transactions
Ultimate controlling party
The Directors consider there to be no ultimate controlling
party.
Relationships
The Group has trading relationships with the following entities
in which Paul Hogarth, a Director, has a beneficial interest:
Entity Nature of transactions
---------------------------------- ----------------------------------------
Paradigm Investment Management LLP The Group incurs finance charges.
---------------------------------- ----------------------------------------
The Group pays lease rental payments
on an office building held in a pension
Suffolk Life Pensions Limited fund by Paul Hogarth.
---------------------------------- ----------------------------------------
Related party balances
2023 2022
------------------------ ------------------------
Value of Balance Value of
income/ receivable/ income/
Balance
(cost) (payable) (cost) receivable/
(payable)
Terms and conditions (GBP'000) (GBP'000) (GBP'000) (GBP'000)
---------------------- --------------------- ---------- ------------ ---------- ------------
Paradigm Investment
Management LLP Repayment on demand - (234) - (235)
Suffolk Life Pensions
Limited Payable in advance (61) - (60) -
Hermitage Holdings
(Wilmslow) Limited Repayment on demand (12) 1 (13) -
---------------------- --------------------- ---------- ------------ ---------- ------------
Balances with related parties are non-interest bearing.
Key management personnel remuneration
Key management includes Executive and Non-Executive Directors.
The compensation paid or payable to key management personnel is as
disclosed in note 10.
23 Alternative Performance Measures ("APMs")
Reconciling items
Closest equivalent to their statutory
APM measure measure Definition and purpose
--------------------- ------------------ -------------------------- ----------------------------------
Adjusted operating Operating profit Exceptional items, An important measure where
profit before share-based payments, exceptional items distort the
separately disclosed changes in the understanding of the operating
items fair value of performance of the business.
contingent consideration Allows comparability between
and amortisation periods. See also note 2.25.
of acquisition-related
intangibles.
See note 6.
--------------------- ------------------ -------------------------- ----------------------------------
Adjusted profit Profit before Exceptional items, An important measure where
before tax before tax share-based payments, exceptional items distort the
separately disclosed changes in the understanding of the operating
items fair value of performance of the business.
contingent consideration Allows comparability between
and amortisation periods. See also note 2.25.
of acquisition-related
intangibles.
See note 6.
--------------------- ------------------ -------------------------- ----------------------------------
Adjusted earnings Earnings per Exceptional items, An important measure where
per share - Basic share - Basic share-based payments, exceptional items distort the
changes in the understanding of the operating
fair value of performance of the business.
contingent consideration Allows comparability between
and amortisation periods. See also note 2.25
of acquisition-related
intangibles and
the tax thereon.
See note 9.
--------------------- ------------------ -------------------------- ----------------------------------
Adjusted earnings Earnings per Exceptional items, An important measure where
per share - Diluted share - Diluted share-based payments exceptional items distort the
and amortisation understanding of the operating
of acquisition-related performance of the business.
intangibles, Allows comparability between
changes in the periods. See also note 2.25.
fair value of
contingent consideration,
undwinding of
discounts on
deferred consideration
and the tax thereon.
The dilutive
shares for this
measure assume
that all contingently
issuable shares
will fully vest.
See note 9.
--------------------- ------------------ -------------------------- ----------------------------------
Net cash generated Net cash generated Exceptional items, Net cash generated from operations
from operations from operations share-based payments, before exceptional costs. To
before separately changes in the show underlying cash performance.
disclosed items fair value of See also note 2.25.
contingent consideration
and amortisation
of acquisition-related
intangibles.
See note 6.
--------------------- ------------------ -------------------------- ----------------------------------
OTHER MEASURES
Reconciling items
Closest equivalent to their statutory
APM measure measure Definition and purpose
------------------- ------------------ ------------------- ---------------------------------------
Tatton - assets None Not applicable AUM is representative of the
under management customer assets and is a measure
("AUM") and net of the value of the customer
inflows base. Movements in this base
are an indication of performance
in the year and growth of the
business to generate revenues
going forward. Net inflows
measure the net of inflows
and outflows of customers assets
in the year.
------------------- ------------------ ------------------- ---------------------------------------
Tatton - assets None Not applicable AUI is representative of the
under influence customer assets which are not
("AUI") directly managed by Tatton
but over which we hold significant
influence due to our shareholding
in the company in which they
are managed, and is a measure
of the value of the customer
base. Movements in this base
are an indication of our participation
in the joint venture and its
growth in order to generate
Tatton's share of profits going
forward.
------------------- ------------------ ------------------- ---------------------------------------
Paradigm Consulting None Not applicable Alternative growth measure
members and growth to revenue, giving an operational
view of growth.
------------------- ------------------ ------------------- ---------------------------------------
Paradigm Mortgages None Not applicable Alternative growth measure
lending, member to revenue, giving an operational
firms and growth view of growth.
------------------- ------------------ ------------------- ---------------------------------------
Dividend cover None Not applicable Dividend cover (being the ratio
of the proposed final dividend
against diluted earnings per
share before exceptional items
and share-based charges) demonstrates
the Group's ability to pay
the proposed dividend.
------------------- ------------------ ------------------- ---------------------------------------
Dividend yield None Not applicable Dividend yield represents the
percentage of the Company's
share price at the financial
year end paid out as dividends
for the relevant financial
year.
------------------- ------------------ ------------------- ---------------------------------------
CAGR in AUM and None Not applicable The Cumulative Annual Growth
CAGR in Tatton Rate in AUM and Tatton firm
firm numbers numbers since the Group listed
on the AIM Stock exchange in
July 2017.
------------------- ------------------ ------------------- ---------------------------------------
Average annual None Not applicable The average annual net inflows
net inflows since the Group listed on the
AIM stock exchange in July
2017.
------------------- ------------------ ------------------- ---------------------------------------
24 Post Balance Sheet Events
There have been no post balance sheet events.
25 Capital Commitments
At 31 March 2023, the Directors confirmed there were no capital
commitments (2022: none) for capital improvements.
26 Contingent Liabilities
At 31 March 2023, the Directors confirmed there were no
contingent liabilities (2022: none).
Company Statement of Financial Position
AS AT 31 MARCH 2023
31-Mar 31-Mar
2023 2022
Note (GBP'000) (GBP'000)
--------------------------------------------- ---- ----------- ----------
Non-current assets
Investments in subsidiaries 6 77,216 77,216
Investments in joint ventures 5 6,762 -
Property, plant and equipment 14 11
--------------------------------------------- ---- ----------- ----------
Total non-current assets 83,992 77,227
--------------------------------------------- ---- ----------- ----------
Current assets
Trade and other receivables 12 11,158 12,214
Cash and cash equivalents 13 12,293 10,204
--------------------------------------------- ---- ----------- ----------
Total current assets 23,451 22,418
--------------------------------------------- ---- ----------- ----------
Total assets 107,443 99,645
--------------------------------------------- ---- ----------- ----------
Current liabilities
Trade and other payables 14 (2,857) (2,461)
--------------------------------------------- ---- ----------- ----------
Total current liabilities (2,857) (2,461)
--------------------------------------------- ---- ----------- ----------
Non-current liabilities
Contingent consideration 14 (962) -
Deferred tax liability 16 (3) (2)
--------------------------------------------- ---- ----------- ----------
Total non-current liabilities (965) (2)
--------------------------------------------- ---- ----------- ----------
Total liabilities (3,822) (2,463)
--------------------------------------------- ---- ----------- ----------
Net assets 103,621 97,182
--------------------------------------------- ---- ----------- ----------
Equity attributable to equity holders of the
Company
Share capital 15 12,011 11,783
Share premium account 15,259 11,632
Own shares 11 - -
Merger reserve 67,316 67,316
Joint venture reserve (21) -
Retained earnings 9,056 6,451
--------------------------------------------- ---- ----------- ----------
Total equity 103,621 97,182
--------------------------------------------- ---- ----------- ----------
The Company generated a profit of GBP8,991,000 during the
financial year (2022: profit of GBP8,017,000).
The financial statements were approved by the Board of Directors
on 12 June 2023 and were signed on its behalf by:
Paul Edwards
Director
Company registration number: 10634323
Company Statement of Changes in Equity
FOR THE YEARED 31 MARCH 2023
Joint
Share Share Merger venture Retained Total
capital premium Own shares reserve reserve earnings equity
(GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000)
---------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
At 1 April 2021 11,578 11,534 (1,969) 67,316 - 4,558 93,017
---------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Profit and total comprehensive
income - - - - - 8,017 8,017
Dividends - - - - - (6,641) (6,641)
Share-based payments - - - - - 2,679 2,679
Deferred tax on share-based
payments - - - - - - -
Issue of share capital on exercise
of employee share options 205 98 - - - - 303
Own shares acquired in the year - - (193) - - - (193)
Own shares utilised on exercise
of options - - 2,162 - - (2,162) -
---------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March 2022 11,783 11,632 - 67,316 - 6,451 97,182
---------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Profit and total comprehensive
income - - - - 39 8,952 8,991
Dividends - - - - - (7,714) (7,714)
Share-based payments - - - - - 1,307 1,307
Issue of share capital on exercise
of employee share options 52 117 - - - - 170
Own shares acquired in the year - - (28) - - - (28)
Own shares utilised on exercise
of options - - 28 - - - 28
Transfers - - - - (60) 60 -
Issue of share capital on
acquisition 176 3,510 - - - - 3,686
---------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March 2023 12,011 15,259 - 67,316 (21) 9,056 103,621
---------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
The merger reserve was created on 19 June 2017 when the Group
was formed, where the difference between the Company's capital and
the acquired Group's capital has been recognised as a component of
equity being the merger reserve. The merger reserve is
non-distributable. The joint venture reserve represents the Group's
share of post-tax profits yet to be received (for example, in the
form of dividends or distributions), less amortisation of related
intangible assets.
Notes to the Company Financial Statements
1 Authorisation of Financial Statements and Statement of
Compliance with FRS 101
The financial statements of Tatton Asset Management plc for the
year ended 31 March 2023 were authorised for issue by the Board of
Directors on 12 June 2023. Tatton Asset Management plc is
incorporated and domiciled in England and Wales.
These financial statements were prepared in accordance with
Financial Reporting Standard 101 "Reduced Disclosure Framework"
("FRS 101") and in accordance with applicable accounting standards.
The Company's financial statements are presented in sterling.
These financial statements have been prepared on a going concern
basis and on the historical cost basis. The principal accounting
policies adopted by the Company are set out in note 2.
2 Accounting Policies
2.1 Accounting policies
The accounting policies which follow set out those policies
which apply in preparing the financial statements for the year
ended 31 March 2023.
The Company has taken advantage of the following disclosure
exemptions under FRS 101:
a) the requirement in paragraph 38 of IAS 1 "Presentation
of Financial Statements" to present comparative information
in respect of:
1) Paragraph 79(a)(IV) of IAS 1 and
2) Paragraph 73(e) of IAS 16 "Property, Plant and Equipment";
b) the requirements of paragraphs 10(d), and 134-136 of IAS
1 "Presentation of Financial Statements" and the requirements
of IAS 7 "Statement of Cash Flows";
c) the requirements of paragraphs 30 and 31 of IAS 8 "Accounting
Policies, Changes in Accounting Estimates and Errors";
d) the requirements of paragraph 17 of IAS 24 "Related Party
Disclosures";
e) the requirements in IAS 24 "Related Party Disclosures"
to disclose related party transactions entered into between
two or more members of a group, provided that any subsidiary
which is a party to the transaction is wholly owned by
such a member; and
f) the disclosure requirements of IFRS 7 "Financial Instruments:
Disclosures".
2.2 Investments
All investments are initially recorded at cost, being the fair
value of consideration given including the acquisition costs
associated with the investment. Subsequently, they are reviewed for
impairment on an individual basis if events or changes in
circumstances indicate the carrying value may not be fully
recoverable.
2.3 Joint ventures
Joint ventures are entities in which the Company has an
investment where it, along with one or more other shareholders, has
contractually agreed to share control of the business and where the
major decisions require the unanimous consent of the joint
partners. The Company initially records the investment at the fair
value of the purchase consideration. The Company's income statement
reflects its share of the entity's profit or loss after tax and
amortisation of intangible assets.
The Statement of Financial Position subsequently records the
Company's share of the net assets of the entity plus any goodwill
and intangible assets that arose on purchase less subsequent
amortisation. The Statement of Changes in Equity records the
Company's share of other equity movements of the entity. At each
reporting date, the Company applies judgement to determine whether
there is any indication that the carrying value of joint ventures
may be impaired.
The joint ventures reserve in the Statement of Changes in Equity
represents the Company's share of profits in its investments yet to
be received (for example, in the form of dividends or
distributions), less any amortisation of intangible assets. Certain
associates are held within financial assets at fair value through
profit or loss where permitted by the accounting standards (see
note 5). Information about the Company's principal associates
measured at fair value is disclosed within this note.
2.4 Financial instruments
Non-derivative financial instruments comprise trade and other
receivables, cash and cash equivalents, and trade and other
payables.
2.5 Trade and other receivables
Trade and other receivables are recognised initially at fair
value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method.
2.6 Trade and other payables
Trade and other payables are recognised initially at fair value
and subsequently measured at amortised cost using the effective
interest method, where applicable or required. These amounts
represent liabilities for goods and services provided to the Group
prior to the end of the financial period, which are unpaid.
2.7 Cash and cash equivalents
Cash and cash equivalents comprise long- and short-term deposits
held with banks by the Company, and are subject to insignificant
risk of changes in value.
2.8 Share-based payments
The Group issues equity-settled share-based payments to certain
employees. Equity-settled share-based payments are measured at fair
value at the date of grant. The fair value determined at the grant
date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest. Fair value is
measured by use of the Black-Scholes model or Monte Carlo model as
appropriate.
2.9 Interest income and interest expense
Finance income is recognised as interest accrued (using the
effective interest method) on funds invested outside the Company.
Finance expense includes the cost of borrowing from third parties
and is recognised on an effective interest rate basis, resulting
from the financial liability being recognised on an amortised cost
basis.
2.10 Taxation
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
Statement of Total Comprehensive Income because it excludes items
of income or expense that are taxable or deductible in other years
and it further excludes items that are never taxable or deductible.
The Company's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the
Statement of Financial Position date.
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, and is accounted for using the
balance sheet liability method. 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. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences where it is probable that the temporary difference will
not reverse in the foreseeable future. Deferred tax assets arising
from deductible temporary differences associated with such
investments and interests are only recognised to the extent that it
is probable that there will be sufficient taxable profits against
which to utilise the benefits of the temporary difference and they
are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each
Statement of Financial Position 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 based on tax laws and rates that have been enacted or
substantively enacted at the Statement of Financial Position date.
Deferred tax is charged or credited in the Statement of Total
Comprehensive Income, except when it relates to items charged or
credited in other comprehensive income, in which case the deferred
tax is also dealt with in other comprehensive income.
The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in which the
Company expects, at the end of the reporting period, to recover or
settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off the current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Company intends to settle
its current tax assets and liabilities on a net basis.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss,
except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case the
current and deferred tax are also recognised in other comprehensive
income or directly in equity respectively. Where current tax or
deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the
business combination.
2.11 Dividends
Dividend distributions payable to equity shareholders are
included in other liabilities when the dividends have been approved
in a Board meeting prior to the reporting date.
2.12 Retirement benefit costs
The Company pays into a personal pension plan for which the
amount charged to income in respect of pension costs and other
post-retirement benefits is the amount of the contributions payable
in the year. Payments to the defined contribution retirement
benefit scheme are recognised as an expense when employees have
rendered service entitling them to the contributions. Differences
between contributions payable and paid are accrued or prepaid. The
assets of the plans are invested and managed independently of the
finances of the Company.
3 Operating Profit
The following items have been included in arriving at the
operating profit for continuing operations:
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
-------------------------------------- ----------- ----------
Share-based payment charges (note 10) 1,511 2,399
-------------------------------------- ----------- ----------
Share-based payment charges relate to the provision made in
accordance with IFRS 2 "Share-based Payment" following the issue of
share options to employees.
4 Services Provided by the Company's Auditor
During the period, the Company obtained the following services
provided by the Company's auditor at the costs detailed below:
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
------------------------------------------------------- ----------- ----------
Audit of the statutory financial statements of TAM plc 121 72
Services provided by the Company's auditor:
Non-audit services - 13
------------------------------------------------------- ----------- ----------
5 Investments in Joint Ventures Accounted for using the Equity
Method
(GBP'000)
----------------------------------------------------------------- ---------
At 1 April 2022 -
Additions 6,765
Profit for the year after tax 160
Amortisation of intangible assets relating to the joint ventures (121)
Deferred tax relating to joint ventures 18
Distributions of profit (60)
----------------------------------------------------------------- ---------
At 31 March 2023 6,762
----------------------------------------------------------------- ---------
Name of joint PRINCIPAL place Percentage owned
venture Nature of business of business Class of share by the Group
------------------- ---------------------- ---------------- ---------------- ----------------
8AM Global Limited Investment Management United Kingdom Ordinary Shares 50.0%
------------------- ---------------------- ---------------- ---------------- ----------------
31-Mar 31-Mar
2023 2022
('000) ('000)
--------------------------------------------------------- ------- -------
Non-current assets 35 -
Current assets 934 -
Current liabilities (502) -
--------------------------------------------------------- ------- -------
Total equity 467 -
--------------------------------------------------------- ------- -------
Group's share of net assets 224 -
Goodwill and intangible assets 7,009 -
Deferred tax liability (471) -
--------------------------------------------------------- ------- -------
Carrying value held by the Group 6,762 -
--------------------------------------------------------- ------- -------
Profit for the year 320 -
--------------------------------------------------------- ------- -------
Group's share of profit for the year before amortisation 160 -
--------------------------------------------------------- ------- -------
Amortisation (121) -
--------------------------------------------------------- ------- -------
Group's share of profit for the year 39 -
--------------------------------------------------------- ------- -------
8AM Global Limited has a reporting date of 30 June. The net
asset position shown in the table above is as at 31 March to align
with the Company's own reporting.
6 Investments in Subsidiaries
GBP'000
-------------------------------------------------------------- -------
Cost and net book value at 1 April 2021, 31 March 2022 and 31
March 2023 77,216
-------------------------------------------------------------- -------
The principal investments comprise shares at cost in the
following companies:
Direct/
Name of subsidiary Country of incorporation Holding Indirect
------------------------------------ ------------------------ ------- ---------
Nadal Newco Limited United Kingdom 100% Direct
------------------------------------ ------------------------ ------- ---------
Paradigm Partners Limited United Kingdom 100% Indirect
------------------------------------ ------------------------ ------- ---------
Paradigm Mortgage Services LLP United Kingdom 100% Indirect
------------------------------------ ------------------------ ------- ---------
Tatton Capital Group Limited* United Kingdom 100% Indirect
------------------------------------ ------------------------ ------- ---------
Tatton Capital Limited United Kingdom 100% Indirect
------------------------------------ ------------------------ ------- ---------
Tatton Investment Management Limited United Kingdom 100% Indirect
------------------------------------ ------------------------ ------- ---------
Tatton Oak Limited* United Kingdom 100% Indirect
------------------------------------ ------------------------ ------- ---------
Tatton Crown Investments Limited* United Kingdom 100% Indirect
------------------------------------ ------------------------ ------- ---------
Sinfonia Asset Management Limited* United Kingdom 100% Indirect
------------------------------------ ------------------------ ------- ---------
*Indicates that this subsidiary is entitled to exemption from
audit under section 479A of the Companies Act 2006 for the year
ending 31 March 2023.
All entities above are included within the consolidated
financial statements for TAM plc and all have the same registered
address as the Company.
7 Directors and Employees
The average number of persons employed by the Company (including
Directors) during each year was as follows:
31-Mar 31-Mar
2023 2022
Number Number
--------------- ------- -------
Administration 15 13
--------------- ------- -------
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
---------------------------- ---------- ----------
Wages, salaries and bonuses 1,717 1,708
Social security costs 211 228
Pension costs 26 19
Share-based payment charges 1,511 2,399
---------------------------- ---------- ----------
3,465 4,354
---------------------------- ---------- ----------
The remuneration of the highest paid Director was:
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
------ ----------- ----------
Total 424 644
------ ----------- ----------
8 Ultimate Controlling Party
The Directors consider that there is no ultimate controlling
party.
9 Dividend Paid and Proposed
During the year, Tatton Asset Management plc paid the final
dividend related to the year ended 31 March 2022 of GBP4,811,000
representing a payment of 8.5p per share. In addition, the Company
paid an interim dividend of GBP2,903,000 (2022: GBP2,357,000) to
its equity shareholders. This represents a payment of 4.5p per
share (2022: 4.0p per share).
In addition, the Directors are proposing a final dividend in
respect of the financial year ended 31 March 2023 of 10.0p (2022:
8.5p) per share which will absorb an estimated GBP6 million (2022:
GBP5 million) of shareholders' funds. It will be paid on 15 August
2023 to shareholders who are on the register of members on 7 July
2023.
10 Share-Based Payments
Details of share-based payments are shown in note 21 to the
consolidated financial statements.
11 Own Shares
Details of own shares are shown in note 20 to the consolidated
financial statements.
12 Trade and Other Receivables
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
--------------------------------- ----------- ----------
Amounts due from related parties 10,562 11,420
Prepayments and accrued income 475 690
Other debtors 121 104
--------------------------------- ----------- ----------
11,158 12,214
--------------------------------- ----------- ----------
All trade receivable amounts are short term. All of the
Company's trade and other receivables have been reviewed for
indicators of impairment and, where necessary, a provision for
impairment made. The carrying value is considered a fair
approximation of their fair value. At 31 March 2021, Tatton Asset
Management plc made full provision of GBP60,000 against the
recoverability of amounts due from a related party, Jargonfree
Benefits LLP. This provision was released against the write-off of
the debt balance in the year. There has been no other provision
made for impairment of receivable balances (2022: GBPnil).
Trade receivable amounts are all held in sterling.
13 Cash and Cash Equivalents
31-Mar 31-Mar
2023 2022
GBP'000) (GBP'000)
------------- ---------- ----------
Cash at bank 12,293 10,204
------------- ---------- ----------
14 Trade and Other Payables
31-Mar 31-Mar
2023 (GBP'000) 2022 (GBP'000)
------------------------------------------- --------------- ---------------
Trade payables 23 505
Amounts due to related parties 754 122
Accruals 1,979 1,834
Contingent consideration 1,063 -
------------------------------------------- --------------- ---------------
3,819 2,461
------------------------------------------- --------------- ---------------
Less non-current portion:
Contingent consideration 962 -
------------------------------------------- --------------- ---------------
Total non-current trade and other payables 962 -
------------------------------------------- --------------- ---------------
Total current trade and other payables 2,857 2,461
------------------------------------------- --------------- ---------------
The carrying values of trade payables, amounts due to related
parties, accruals and deferred income are considered reasonable
approximation of fair value.
Trade payable amounts are all held in sterling.
15 Equity
Number
------------------------------------------------------------- ----------
Authorised, called-up and fully paid GBP0.20 ordinary shares
At 1 April 2022 58,914,887
Issue of share capital on exercise of employee share options 263,098
Issue of share capital on purchase of a joint venture 877,737
------------------------------------------------------------- ----------
At 31 March 2023 60,055,722
------------------------------------------------------------- ----------
Each share in Tatton Asset Management plc carries one vote and
the right to a dividend.
16 Deferred Taxation
Deferred
capital
allowances Total
(GBP'000) (GBP'000)
--------------------------- ----------- ----------
Liability at 31 March 2021 - -
Income statement charge (2) (2)
Liability at 31 March 2022 (2) (2)
Income statement charge (1) (1)
--------------------------- ----------- ----------
Liability at 31 March 2023 (3) (3)
--------------------------- ----------- ----------
17 Contingent Liabilities
At 31 March 2023, the Directors confirmed there were no
contingent liabilities (2022: none).
18 Capital Commitments
At 31 March 2023, the Directors confirmed there were no capital
commitments (2022: none) for capital improvements.
19 Operating Lease Commitments
The Company as lessee had minimum lease payments under
non-cancellable operating leases as set out below:
31-Mar 31-Mar
2023 2022
(GBP'000) (GBP'000)
-------------------------------------------------- ---------- ----------
Not later than one year 60 60
Later than one year but not later than five years 41 101
Later than five years - -
-------------------------------------------------- ---------- ----------
101 161
-------------------------------------------------- ---------- ----------
20 Related Party Transactions
The Company has taken advantage of the exemption under paragraph
8(K) of FRS 101 not to disclose transactions with entities that are
wholly owned subsidiaries of TAM plc. There are no other related
party transactions other than those that have been disclosed in
note 22 to the consolidated financial statements.
20.1 Transactions with key management personnel
Other than the Directors and Officers of the Group (see note 22
to the consolidated financial statements), no other key management
personnel have been identified.
21 Events After the Reporting Period
There have been no material post balance sheet events.
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END
FR UUOWROBUNAAR
(END) Dow Jones Newswires
June 13, 2023 02:00 ET (06:00 GMT)
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