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Tatton Asset Management PLC  -  TAM   

Interim results

Released 07:00 05-Dec-2017

RNS Number : 3608Y
Tatton Asset Management PLC
05 December 2017
 

5 December 2017

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE INFORMATION STIPULATED UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA THE REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

FOR IMMEDIATE RELEASE

Tatton Asset Management plc ("Tatton" or the "Group")

Interim results for the six months ended 30 September 2017

Maiden results in-line with expectations, with strong period of organic growth; inaugural interim dividend announced

Tatton Asset Management plc (the "Group") (AIM: TAM), the on-platform discretionary fund management (DFM) and support services business for independent financial advisers (IFAs), today issues its maiden interim results for the six-month period ended 30 September 2017, following its Admission to Alternative Investment Market (AIM) in July 2017.

Financial Highlights

·     Discretionary assets under management ("AUM") within Tatton Capital up 15% since March 2017 to £4.44 billion at 30 September 2017 and up 33% over twelve months (March 2017: £3.85 billion; 1H16: £3.33 billion), with the run rate averaging over £80million per month

·     Group Revenue increased 31% to £7.3 million (1H16: £5.6 million)

·     Adjusted EBIT1 up 56% to £3.1 million (1H16: £2.0 million)

Adjusted EBIT1 margin of 42.2% (1H16:35.4%)

Adjusted EPS2 up 53% to 4.36 pence (1H16: 2.85 pence)

·     Reported Profit Before Tax decreased to £0.54 million (1H16: £1.86 million), after charging exceptional initial public offering (IPO) costs of £1.6 million and share option costs of £0.9 million, the latter arising from the group structuring that took place in order to deliver the IPO

·     Strong financial position, with net cash of £10.5 million (1H16: £0.1 million) and regulatory capital resources in significant surplus to requirements

·     The Group is pleased to announce an inaugural interim dividend since its IPO of 2.2 pence per share

Business Highlights

·     Successful IPO on AIM completed on 6 July 2017 raising £51.6 million, including £10m new money, followed by a strong period of organic growth, as the Group delivers against its strategic plan

·     The Group has three operating subsidiaries:  Tatton Capital Limited ("TCL"), Paradigm Partners Limited ("PPL") and Paradigm Mortgage Services LLP ("PMS")

·     TCL has continued to expand, delivering strong organic growth in AUM and also a significant increase in the number of advisory firms utilising the on-platform discretionary portfolio service for their clients. The number of firms has increased to 286 as at 30 September 2017 (1H16: 207)

·     TCL has also successfully taken over the previously outsourced investment management of the Tatton Oak fund range from August 2017 onwards

·     Testament to the development and performance of TCL over the period, the business was pleased to win the prestigious ILP Moneyfacts award for "Best Discretionary Fund Manager" in period in September 2017, beating well known wealth managers

·     PPL, the Group's compliance services business, continues to expand with member numbers increasing to 356 (1H16: 347) and revenues up 23% to £3.48 million (1H16: £2.82 million), driven by increases in Paradigm Wrap income 

·     PMS, the Group's mortgage and protection distribution business, has also performed strongly, with gross lending via its channels during the period of £2.99 billion (1H16: £2.35 billion), an increase of 27%. PMS now has 1,143 mortgage firms using its services (1H16: 1,016), a significant increase of 13% year-on-year.

Outlook and current trading:

Since 30 September 2017 the group continues to perform in line with management expectations, building upon the growth trends reported for the interim period

Footnotes:

1. Adjusted EBIT is defined as profit before tax after adding back net finance charges, exceptional items and IFRS2 share-based costs, being the Group's UK GAAP operating profit as adjusted by the items shown.

2. Adjusted EPS is defined as earnings per share, using earnings that have been adjusted to add back exceptional items and IFRS2 share-based costs (note 8).

Roger Cornick, Chairman, commented:

"I am pleased to report our maiden interim results following the successful IPO in July 2017, and to comment on the progress made by the Group in the months that have followed.

"All three divisions have delivered growth in revenues, as a result of which Adjusted EBIT, at £3.1 million for the six months ended 30 September 2017, have increased by 56% in comparison to the first half of the previous year.

"Discretionary funds under management, the number of advisory firms utilising the Group's compliance services, and gross lending through our mortgage and protection division, have all increased over the last six months.

Looking ahead, the encouraging level of engagement of our intermediary clients indicates a positive outlook, providing confidence for the next trading period and for our results for the year to March 2018."

Paul Hogarth, Chief Executive Officer, commented:

"The Group's IPO in July 2017 has been very well received by client firms supported by the Group.  A key metric for our growth is discretionary funds under management, which I am delighted to report has risen by 33% over the last twelve months to £4.44 billion. We are seeing unprecedented demand for a low-cost DFM service to the mass affluent market place served by the IFA sector, which the Group is ideally placed to capitalise on. Our unparalleled offer is challenging the existing off-platform, traditional incumbents, by providing the mass-affluent with the kind of investment portfolio management usually the preserve of the very wealthy. This is a game changer and has set us on a firm path of growth."

 

 

For further information please contact:

Tatton Asset Management plc

+44 (0) 161 486 3441

Paul Hogarth (Chief Executive Officer)

Lothar Mentel (Chief Investment Officer)

Noel Stubley (Chief Financial Officer)

 

 

 

Nomad and Broker

 

Zeus Capital

+44 (0) 20 3829 5000

Martin Green (Corporate Finance)

 

Dan Bate (Corporate Finance and QE)

Pippa Underwood (Corporate Finance)

 

 

 

Media Enquiries

 

Powerscourt

+44 (0) 20 7250 1446

Justin Griffiths

 

Mazar Masud

 

Roddi Vaughan-Thomas

 

 

Notes to editors

Tatton Asset Management offers a range of services to Directly Authorised financial advisers in the UK, including on-platform only discretionary fund management, regulatory, compliance and business consulting services, and a whole of market mortgage provision. This is achieved through three operating divisions: Tatton Capital, Paradigm Partners and Paradigm Mortgage Services.

On 6 July 2017, the Group was admitted to the Alternative Investment Market (AIM) of the London Stock Exchange, raising £51.6 million in an institutional placing.

For more information, please visit: www.tattonassetmanagement.com

 

Analyst presentation

An analyst briefing is being held at 9.00am on 5 December 2017 at the offices of Powerscourt, 1 Tudor Street, London, EC4Y 0AH.



 

Interim Business Review

Overview

The Group is pleased to announce its first results since its IPO in July 2017, which raised £51.6 million and has significantly helped increase our profile in the marketplace. We work with a large number of financial intermediary firms, such as independent financial advisers (IFAs) and mortgage brokers, and since the IPO we have had very positive messages of support from many of these client firms.

During the period, we have seen strong growth across all divisions, and as noted during our recent IPO, the key driver of improved profitability is within the Group's on-platform discretionary fund management (DFM) business, Tatton Capital Limited (TCL). In TCL, total funds under management have increased by 33% to £4.44 billion compared with £3.33 billion at the end of the interim period in 2016, driven by increasing demand for a low-cost DFM service to the mass affluent served by IFA sector.

Paradigm Partners Limited (PPL), the Group's IFA compliance services business, continues to grow and client member firms are up 3% year-on-year to 356 at September 2017. PPL's wrap platform has seen assets grow by 14% over the year to £3.26 billion at the half year.

Paradigm Mortgage Services LLP (PMS), the Group's mortgage and protection distribution business, has seen excellent member growth, up 13% to 1,143 since the prior year. This has helped drive good levels of gross lending through PMS' channel at £2.99 billion for the six-month period, which is 27% higher than 1H16 and above market growth of 8%.

Results and Business Performance

Group revenues have increased by 31% to £7.3 million, compared with £5.6 million for the interim period in 2016. Adjusted EBIT has increased by 56% to £3.1 million (1H16: £2.0 million).

 

Unaudited six months ended 30 Sept 2017

£'000

Unaudited six months ended 30 Sept 2016 £'000

Percentage change

%

Unaudited** year ended 31 March 2017 £'000

Revenue

7,298

5,586

31%

11,864

Adjusted* EBIT

3,080

1,978

56%

4,510

Adjusted* margin

42.2%

35.4%

6.8ppt

38.0%

IFRS2 share options

(892)

(38)

 

(75)

Exceptional charges

(1,632)

(58)

 

(2,412)

Profit before tax

542

1,863

(71%)

1,987

Adjusted Earnings per share

4.36 pence

2.85 pence

53%

6.45 pence

Reported Earnings per share

0.21 pence

2.67 pence

(92%)

2.06 pence

 

 

 

 

 

Cash position

10,520

69

 

(10)

 

* Adjusted EBIT is defined as profit before tax after adding back net finance charges, exceptional items and IFRS2 share-based costs. Adjusted Margin is Adjusted EBIT divided by Revenue.

** For the year ended 31 March 2017, while the underlying accounts of each subsidiary has been audited, the consolidated position since the IPO in July 2017 has not yet been audited.

Revenue growth of 31% has had contributions from all three divisions, with significant growth in TCL and PPL. TCL growth derives from the large increase in average AUM in the period, while PPL's revenue growth results primarily from increased wrap platform assets and an increased retention of its wrap platform income following the IPO. TCL revenue has increased by over 48% year on year, while PPL and PMS are up 23% and 15% respectively.

The strong revenue and profit growth has driven an improvement in margin of 6.8 percentage points overall, driven predominantly by improvements in the TCL business. TCL now represents 38% of the Group's revenues, compared with 34% in the first half of FY17.

Exceptional costs were £1.63 million, reflecting the full cost of pre-IPO restructuring and the cost of the IPO itself. The Group also saw a large share-based IFRS2 non-cash charge of £0.9 million, again resulting predominantly from the pre-IPO restructuring. The exceptional charges will impact the overall effective tax charge of the Group, as it is estimated that £1.5 million of these costs in the period are disallowable for tax purposes.

Net cash resources at the period end amounted to £10.5 million (1H16: £0.1 million) and the Group had no net borrowings as at 30 September 2017 (1H16: £nil). The Group raised £10.0 million from the new share issue to institutional investors, before exceptional charges, as part of the IPO in July 2017.

Tatton Capital Limited ("TCL")

The TCL division has continued to deliver a strong performance over the period. Revenues have increased 48% to £2.8 million and Adjusted EBIT has increased by 303% to £1.3 million.

 

Unaudited six months ended 30 Sept 2017

£'000

Unaudited six months ended 30 Sept 2016 £'000

Percentage change

%

Unaudited** year ended 31 March 2017 £'000

Revenue

2,779

1,872

48.5%

4,317

Adjusted* EBIT

1,280

318

303%

1,222

Adjusted* margin

46.1%

17.0%

29.1ppt

28.3%

Exceptional and IFRS2 charges

(45)

(49)

 

(233)

Profit before tax

1,235

269

359%

989

* Adjusted EBIT is defined as profit before tax after adding back net finance charges, exceptional items and IFRS2 share-based costs. Adjusted Margin is Adjusted EBIT divided by Revenue.

** For the year ended 31 March 2017, while the underlying accounts of each subsidiary has been audited, the consolidated position since the IPO in July 2017 has not yet been audited.

The strong performance stems from an increase in the number of IFAs advising their clients to utilise the leading discretionary model portfolio service and the associated increase in AUM over the period:

 

Six months ended 30 Sept 2017

 

Six months ended 30 Sept 2016

Percentage change

%

Year ended 31 March 2017

Number of DFM client accounts at period end

44,065

35,338

24.7%

39,610

IFAs utilising DFM portfolios

286

207

38.2%

237

 

 

 

 

 

Opening AUM (£m)

3,853

2,652

 

2,652

Net new inflows (£m)

510

396

28.8%

731

Investment performance (£m)

78

278

 

470

Closing AUM (£m)

4,441

3,326

33.5%

3,853

Average AUM for the period (£m)

4,235

3,031

39.7%

3,323

 

As noted above, we have expanded the number of firms using TCL to 286 at September 2017, which together with our existing IFAs, has contributed to strong net inflows of over £80 million per month and a significant increase in the number of client accounts being managed, which is up almost 25% year on year. Of the 49 IFA firms joining TCL's DFM services in the period, 36 are completely new to the Group, reflecting the increased focus on generating new business from outside existing PPL relationships. Over 100 of the firms using the TCL DFM service are now from outside the wider Group relationships.

TCL's platform based investment portfolios generated positive returns over the period. They continued to track their asset allocation benchmark proxies closely, with full period returns in line for the lower risk portfolios and pleasing outperformance for portfolios with higher equity allocations. The average return generated across key portfolios since launch are shown below:

 

Compared with the benchmark asset allocation, TCL portfolios' bond allocations were positioned towards a lower maturity profile and, over the summer, with a slight equity underweight. While these risk adverse positions, in anticipation of an adverse market impact on the onset of monetary tightening, were not value adding, the US and UK currency underweights over most of the period proved beneficial, as did the overweight to the Eurozone and Japan. Equity dominated portfolios with an active fund selection additionally benefitted from outperformance of Tatton's fund selection compared to the benchmark proxy portfolios. The index tracking fund portfolio styles did slightly better in the two lowest risk profiles, as active bond managers once again struggled to outperform index tracking funds.

During the period, TCL's portfolio range became available on the Fidelity FundsNetwork platform, which takes to ten the total number of platforms on which advisers can recommend to clients the use of Tatton's discretionary model portfolio management service.

TCL's AIM Portfolio Service performed encouragingly well during the 6 months ending 30 September 2017, returning 17.1% on a gross basis. As a reference, over the same period the FTSE All Share Index and the FTSE AIM Index returned 3.6% and 8.8%, respectively, on a total return basis.

In August, we brought in-house the investment management mandate for the four multi-manager Tatton Oak funds, totalling £217 million as at 30 September 2017, which had previously been outsourced to an external provider since being acquired in 2013.

We were also very pleased to be awarded the prestigious ILP Moneyfacts award for "Best Discretionary Fund Manager" for the period to September 2017, beating well known wealth managers to win the award.

Paradigm Partners Limited ("PPL")

PPL has delivered strong results in the period, with revenues up significantly by over 23% year on year. Member firms utilising our compliance services increased from 347 in 2016 to 356 at September 2017. We also have a pipeline of firms in the process of joining and we are assisting firms with their FCA applications as part of our onboarding process.

Strong growth in revenues is derived primarily from improved wrap platform income following good growth in asset under influence (AUI) and also a change in the revenue sharing arrangement as a result of the IPO, which saw previously distributed pre-RDR rebates now retained within the business.

 

Unaudited six months ended 30 Sept 2017

£'000

Unaudited six months ended 30 Sept 2016 £'000

Percentage change

%

Unaudited** year ended 31 March 2017 £'000

Revenue

3,475

2,816

23.4%

5,753

Adjusted* EBIT

1,780

1,412

26.1%

2,883

Adjusted* margin

51.2%

50.1%

1.1ppt

50.1%

Exceptional and IFRS2 charges

(599)

(47)

 

(448)

Profit before tax

1,171

1,345

(12.9)%

2,402

No. of Members

356

347

2.5%

352

Paradigm Wrap AUI (£m)

3,256

2,863

13.7%

3,106

* Adjusted EBIT is defined as profit before tax after adding back net finance charges, exceptional items and IFRS2 share-based costs. Adjusted Margin is Adjusted EBIT divided by Revenue.

** For the year ended 31 March 2017, while the underlying accounts of each subsidiary has been audited, the consolidated position since the IPO in July 2017 has not yet been audited.

We have seen strong growth in the platform assets, AUI, on the Paradigm Wrap, which increased by 14% from £2.86 billion at September 2016 to £3.26 billion at September 2017.

Interaction with our member firms has been strong within the period. In June we hosted an event at the Grosvenor Hotel in London attended by over 300 IFAs and their top clients and in April we hosted six well-attended regular events around the country for IFA principals to update them on key developments in the sector, regulations and products. We have a full program of events throughout the year.

Our technical and compliance teams continue to provide leading advice to firms, with a particular focus over the period on forthcoming regulations relating to MIFID2, which continues to dominate the agenda.

 

 

Paradigm Mortgage Services LLP ("PMS")

We are pleased with the continued growth of our mortgage and protection distribution business, PMS. The number of firms utilising the services saw growth month-on-month, with firms using our mortgage channel increasing 13% from 1,012 in September 2016 to 1,143 as at September 2017. We have also seen exceptional growth in the number of firms now using "Paradigm Protect", our protection insurance portal, with registered firms up 29% from 341 in September 2016 to 439 in September 2017.

The strong fundamentals have increased mortgage lending through the PMS channel to £3.0 billion over the six months, up 27% from the equivalent prior year period and protection sales up 10% to written premia of £5.9m. Revenues for PMS are up 15% overall, with improved profitability resulting from the top line growth.

 

Unaudited six months ended 30 Sept 2017

£'000

Unaudited six months ended 30 Sept 2016 £'000

Percentage change

%

Unaudited** year ended 31 March 2017 £'000

Revenue

1,032

898

14.9%

1,794

Adjusted* EBIT

531

465

14.2%

828

Adjusted* margin

51.5%

51.8%

(0.3)ppt

 

Exceptional and IFRS2 charges

-

-

 

(1,251)

Profit before tax

527

466

13.1%

(426)

 

 

 

 

 

Member firms

1,143

1,012

12.9%

1,069

Gross Lending

£2.99 bn

£2.36 bn

26.7%

£4.74 bn

* Adjusted EBIT is defined as profit before tax after adding back net finance charges, exceptional items and IFRS2 share-based costs. Adjusted Margin is Adjusted EBIT divided by Revenue.

** For the year ended 31 March 2017, while the underlying accounts of each subsidiary has been audited, the consolidated position since the IPO in July 2017 has not yet been audited.

While the housing market remains challenged on the supply side, with the number and selection of properties for sale remaining relatively subdued, market activity has been growing modestly throughout the year. The mix has shifted towards first-time buyers, away from cash and Buy-to-let (BTL) purchases. Although we note a quieter purchase market overall, this is more than compensated for in the intermediary space by the rise in both residential and BTL re-mortgage business and also the introduction of retention fees to intermediaries, which are now paid by the majority of lenders.

The prospect of interest rate rises may continue to prompt customers to reassess their current arrangements, particularly if the market continues to offer a range of competitive re-mortgage deals. The outlook for the mortgage market is supported by an estimated c£215bn in residential maturities due in 2018 and over £24bn in the BTL space, which typically generates greater margin for mortgage brokers.

Central costs

Central costs in the period were £2.39m (1H16: £0.22m), including exceptional charges and share based payments relating predominantly to the IPO in July 2017. Excluding exceptional and share based payments, the central costs for the period, which represent the leadership and support functions of the group, were £0.51m (1H16: £0.22m). The increase follows the investment in the board and associated PLC costs following the IPO.

Risks

The principle risks and uncertainties remain largely unchanged from the time of the Group's admission to AIM in July 2017. The following principal risk factors were noted in the admission document, all of which still apply, and a full list of all risk factors, including detailed descriptions, can be found in the admission document:

Business and strategic risk

·     The Group, and the investment management industry as a whole, is sensitive to adverse economic, political and market forces that are beyond the Group's control

·     The Group is exposed to risks related to the UK's termination of its membership of the European Union

·     The Group may be adversely affected by the failure of a platform provider

·     The Group may be adversely affected by the loss of strategic partners

·     The Group may be affected by a mortgage market slowdown

 

Operational risk

·     Systems failures and breaches of security could impact the Group's operations

·     Tatton Capital Limited (TCL) is reliant on third parties to which it has outsourced certain functions

·     Operational errors or a failure of systems and controls could have a material adverse effect on the TCL business

Regulatory risk

·     TCL operates in a highly regulated industry and any non-compliance or a change in regulations in the jurisdictions in which it operates could have a material adverse effect on TCL

·     Exposure to risks relating to future and anticipated regulation

 

A full assessment of all risks and uncertainties will be given in the annual report for the year ending 31 March 2018.

Strategy

The Group continues to focus on providing services to the directly authorised IFA sector and on the growing adviser wrap market, to provide cost-effective solutions to help bridge the advice-gap challenge for the mass affluent investor market.

The Group expects further organic opportunities from new relationships with advisory firms, in turn enhancing asset flows. It continues to invest in the sales and marketing capabilities of the business. The Group is also exploring further strategic partnership arrangements across the three divisions and will also consider relevant acquisition opportunities.

Dividends

The Board is pleased to recommend payment of an inaugural interim dividend of 2.2 pence per share (note 9). The dividend will be paid on 12 January 2018 to shareholders on the register at the close of business on 15 December 2017.

Roger Cornick
Non-Executive Chairman

Paul Hogarth
Chief Executive Officer

5 December 2017



 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 September 2017

 

Continuing Operations

Note

Six months ended 30 September 2017 (unaudited) £000

Six months ended 30 September 2016 (unaudited)

£000

Year ended 31 March 2017 (unaudited)

£000

Revenue............................................................................................


7,298

5,586

11,864

 

Administrative expenses.....................................................................

4

(4,204)

(3,595)

(7,330)

 

IFRS2 share based payments………………………………………………..

10

(892)

(38)

(75)

 

Share of results of joint venture..........................................................

13

(14)

(13)

(24)

 

Exceptional charges…………………………………………………………

6

(1,632)

(58)

(2,412)

 

Operating profit..............................................................................


556

1,882

2,023

 

Exceptional charges............................................................................

6

(1,632)

(58)

(2,412)

 

IFRS2 share based payments………………………………………………..

10

(892)

(38)

(75)

 

Operating profit before exceptional items and share based payments......................................................................................................


3,080

1,978

4,510

 

Net finance costs................................................................................

5

(14)

(19)

(36)

 

Profit before tax..............................................................................


542

1,863

1,987

 

7

(426)

(368)

(834)

 

Profit and total comprehensive income for the year..................


116

1,495

1,153

 

Earnings per share (pence)





 

Basic...................................................................................................

8

0.21

2.67

2.06

 

Adjusted……………………………………………………………………..

8

4.36

2.85

6.45

 

Diluted................................................................................................

8

0.19

2.67

2.06

 

 

The accompanying notes form an integral part of these condensed consolidated financial statements. There has been no other comprehensive income.

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

ASSETS

Note

As at 30 September 2017 (unaudited)

£000

As at 30 September 2016 (unaudited)

£000

As at 31 March

2017 (unaudited)

£000

Non-current assets





 

Goodwill.............................................................................................

12

4,917

4,917

4,917

 

Property, plant and equipment...........................................................

11

88

77

75

 

Investments in subsidiaries..................................................................


-

-

-

 

Interests in joint venture....................................................................

13

(46)

(20)

(31)

 

Total non-current assets.................................................................


4,960

4,973

4,961

 

Current assets





 

Trade and other receivables................................................................


2,037

4,753

3,048

 

Cash and bank balances.......................................................................


10,520

867

687

 

Total current assets.........................................................................


12,557

5,620

3,735

 

TOTAL ASSETS................................................................................


17,517

10,593

8,696

 

LIABILITIES





 

Current Liabilities





 

Trade and other payables....................................................................


3,704

2,379

4,165

 

Borrowings.........................................................................................

14

-

797

697

 

Current tax liabilities..........................................................................


1,302

368

761

 

Total current liabilities..................................................................


5,007

3,544

5,623

 

Non-current liabilities





 

Deferred tax liabilities.........................................................................


-

-

-

 

Total non-current liabilities..........................................................


-

-

-

 

TOTAL LIABILITIES........................................................................


5,007

3,544

5,623

 

NET ASSETS.....................................................................................


12,510

7,049

3,073

 

EQUITY





 

Share capital.......................................................................................

15

11,182

11,182

11,182

 

Share premium account.......................................................................

15

8,718

8,718

8,718

 

Retained earnings................................................................................


(436)

-

-

 

Other reserve………………………………………………..……………….


2,014

4,261

2,134

 

Merger reserve....................................................................................


(8,968)

(17,012)

(18,960)

 

TOTAL EQUITY


12,510

7,049

3,073

 

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Note

Share capital
£000

Share premium account
£000

Retained earnings
£000

 

 

 

 

 

Other reserve

£000

Merger reserve
£000

Total equity
£000

Balance at 1 April 2016 (unaudited)..............................


11,182

8,718

-

3,579

(17,112)

6,366

Profit and total comprehensive income for the year...........


-

-

-

1,495

-

1,495

Dividends............................................................................

9

-

-

-

(850)

-

(850)

Share based payments……………………………….

10

-

-

-

38

-

38

Balance at 30 September 2016 (unaudited)..................


11,182

8,718

-

4,261

(17,112)

7,049

Profit and total comprehensive income for the year...........


-

-

-

(343)

-

(343)

Share based payments……………………………….

10

-

-

-

37

-

37

Dividends............................................................................

9

-

-

-

(1,822)

-

(1,822)

Adjustments relating to merger accounting...……….


-

-

-

-

(1,848)

(1,848)

Balance at 31 March 2017 (unaudited)..........................


11,182

8,718

-

2,133

(18,960)

3,073

Issue of share capital...........................................................

15

-

-

-

-

10,000

10,000

Profit and total comprehensive income for the year...........


-

-

(482)

598

-

116

Share based payments……………………………….

10

-

-

46

846

-

892

Dividends............................................................................

9

-

-

-

(1,563)

-

(1,563)

Adjustments relating to merger accounting...……….


-

-

-

-

(8)

(8)

Balance at 30 September (unaudited)...........................


11,182

8,718

(436)

2,014

(8,968)

12,510

 

 



 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 September 2017

 

 

 

Note

Six months ended 30 September 2017 (unaudited) £000

Six months ended 30 September 2016 (unaudited)

£000

Year ended 31 March 2017 (unaudited)

£000

Net cash from operating activities................................................

16

1,034

1,874

3,624

Investing activities





Acquisition of subsidiary, net of cash acquired.....................................


-

-

-

Acquisition of joint venture, net of cash acquired................................


14

13

24

Purchase of property, plant and equipment.........................................

11

(37)

(31)

(51)

Net cash from investing activities………......................................


(23)

(18)

(27)

Financing activities





Proceeds from the issue of shares........................................................

15

10,000

-

-

Dividends paid....................................................................................


(481)

(850)

(2,672)

Repayment of borrowings...................................................................

14

-

-

-

Net cash from financing activities................................................


9,519

(850)

(2,672)






Net (decrease)/increase in cash and cash equivalents................


10,530

1,006

926

Net cash/(overdraft) at beginning of period.........................................


(10)

(936)

(936)

Net cash/(overdraft) at end of period.............................................


10,520

70

(10)






Cash


10,520

867

687

Overdraft


-

(797)

(697)

Net cash


10,520

70

(10)






 

 



 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the period ended 30 September 2017

 

1.     GENERAL INFORMATION AND BASIS OF PREPARATION

 

General Information

Tatton Asset Management Plc (formerly Tatton Asset Management Limited) (the "Company") is incorporated in the United Kingdom under the Companies Act 2006. The address of the registered office is Paradigm House, Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND. The principal activities of the Operating Company together with the subsidiaries listed below (the Group) are set out in note 3. The Group is the combination of the below listed entities.

 

Basis of preparation and consolidation

 

Prior to the IPO of Tatton Asset Management PLC (TAM) on 7 July 2017, the group traded as separate entities. These financial statements are the first consolidated financial statements reported by the group. Previously the entities were under common control and all comparative information is consolidated using merger accounting (see below).

 

The Condensed Consolidated Financial Statements have been prepared for the Group which comprises the following entities, which were brought together just prior to the IPO of the Group on 7 July 2017:

 

·      Tatton Asset Management Plc (formerly Tatton Asset Management Limited);

·      Nadal Newco Limited;

·      Paradigm Partners Limited;

·      Paradigm Mortgage Services LLP;

·      Tatton Capital Group Limited;

·      Tatton Capital Limited;

·      Tatton Investment Management Limited;

·      Tatton Oak Limited; and

·      Tatton Onshore Tax Strategies Limited.

 

Within the interim financial statements, the accounting policies and methods of computation that are followed can be found in the Admission document within note 2 of the Historical Financial Information (HFI). All transitional adjustments from FRS 102 to IFRS have been detailed within note 33 of the HFI in the Admission document.

 

The Directors to not consider the business to be a seasonal business.

International Financial Reporting Standards

 

The Group's condensed consolidated interim financial statements are prepared and presented in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union. They have been prepared on a going concern basis with reference to the accounting policies and methods of computation adopted by the Group on its IPO and conversion to IFRS accounting standards.

The information relating to the six months ended 30 September 2017 and six months ended 30 September 2016 is unaudited and does not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006. The results of the companies making up the group for the period ended 31 March 2017 have been audited and accounts delivered to the Registrar of Companies. The audit reports were unqualified and did not draw attention to any matters by way of emphasis. They contained no statement under section 498(2) or (3) of the Companies Act 2006.

 

2.     SIGNIFICANT ACCOUNTING POLICIES

 

Adoption of new and revised IFRSs in issue but not yet effective

 

At the date of the interim report, the Group has not applied the following new and revised IFRSs that have been issued but are not yet effective and in some cases, had not yet been adopted by the EU:

 

IFRS 9                                                      Financial Instruments

IFRS 15                                                    Revenue from Contracts with Customers

IFRS 16                                                    Leases

IFRS 2 (amendments)                               Classification and Measurement of Share-based Payment Transactions

IAS 7 (amendments)                                                Disclosure Initiative

IAS 12 (amendments)                              Recognition of Deferred Tax Assets for Unrealised Losses

IFRS 10 and IAS 28 (amendments)           Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

 

The Directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the Group in future periods, however IFRS 15 may have an impact on how revenue is measured and disclosed within the financial statements. The Directors are in the process of reviewing IFRS 15 in detail and considering its implications. Beyond this, it is not practicable to provide a reasonable estimate of the effect of these standards until the detailed review has been completed.

 

 

Merger accounting

 

In connection with the admission to AIM, the Group undertook a reorganisation of its corporate structure, which resulted in the Company becoming the ultimate holding party of the Group.     

The accounting treatment for group reorganisations of entities under common control is scoped out of IFRS3. Accordingly, as required under IAS8 Accounting Policies, Changes in Accounting Estimates and Errors the Group has referred to current UK GAAP to assist its judgement in identifying a suitable accounting policy. The introduction of the new holding company constitutes a Group reconstruction and has been accounted for using merger accounting principles. Therefore, the consolidated financial statements are presented as if Tatton Asset Management plc has always been the holding company for the Group and the share capital issued on this date treated as if issued in the earliest year presented.

The use of merger accounting principles has resulted in a balance on Group capital and reserves which has been classified as a merger reserve and included in the Group's shareholders' funds. The consolidated financial statements include the results of the Company and all its subsidiary undertakings made up to the same accounting date.

The Company has recognised the value of its investments in Paradigm Partners Limited, Paradigm Mortgage Services LLP and Tatton Capital Group Limited at fair-value based upon the initial share placing price on admission to AIM. This is a Level 2 valuation within the fair-value hierarchy. IFRS7 requires disclosure of fair value measurements of derivative financial instruments by level of the following fair value 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); and

·      Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

 

 

As permitted by 5612 of the Companies Act 2006 the amount attributable to share premium has been transferred to the merger reserve. The investment in the Company is recorded at fair-value.

 

 Going Concern

 

The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than twelve months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.

 

 

3.     OPERATING SEGMENTS

 

All of the Operating Group's revenue during the periods from 1 April 2016 to 30 September 2017 was derived from continuing operations. An analysis of the Operating Group's operations is as follows:

 

Services from which reportable segments derive their revenues

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 focussed on the type of revenue. The principal types of revenue are the provision of compliance and support services to independent financial advisors ("Paradigm Partners"), the provision of mortgage advisor support services ("Paradigm Mortgage Services") and the marketing and promotion of Tatton Oak funds and discretionary fund management ("Tatton").

 

The Group's reportable segments under IFRS8 are therefore Paradigm Partners, Paradigm Mortgage Services, Tatton and "Central" which contains the Operating Group's central overhead costs.

 

The principal activity of Tatton is that of Discretionary Fund Management ("DFM") of investments on-platform.

The principal activity of Paradigm Partners is that of provision of support services to Independent Financial Advisors ("IFAs").

The principal activity of Paradigm Mortgage Services is that of a mortgage and protection distributor.

 

 

The following is an analysis of the Group's revenue and results by reportable segment:

 

Six months ended 30 September 2017

Paradigm Partners
£000

Paradigm Mortgage Services
£000

Tatton
£000

Central
£000

Group
£000

Revenue.................................................................................

3,475

1,032

2,779

12

7,298

Administrative expenses...........................................................

(1,681)

(501)

(1,499)

(523)

(4,204)

IFRS2 share based payments………………………………………….

(845)

-

-

(47)

(892)

Share of results of joint venture................................................

(14)

-

-

-

(14)

Exceptional (charges)/income………………………………………...

246

-

(45)

(1,833)

(1,632)

Operating profit....................................................................

1,181

531

1,235

(2,391)

556

Exceptional (charges)/income………………………………………...

246

-

(45)

(1,833)

(1,632)

IFRS2 share based payments………………………………………….

(845)

-

-

(47)

(892)

Operating profit before exceptional items and share based payments

1,780

531

1,280

(511)

3,080

Finance costs............................................................................

(10)

(4)

-

-

(14)

Profit before tax....................................................................

1,171

527

1,235

(2,391)

542

 

Six months ended 30 September 2016

Paradigm Partners
£000

Paradigm Mortgage Services
£000

Tatton
£000

Central
£000

Group
£000

Revenue.................................................................................

2,816

898

1,872

-

5,586

Administrative expenses...........................................................

(1,391)

(433)

(1,554)

(217)

(3,595)

IFRS2 share based payments………………………………………….

(38)

-

-

-

(38)

Share of results of joint venture................................................

(13)

-

-

-

(13)

Exceptional charges…………………………………………………...

(9)

-

(49)

-

(58)

Operating profit....................................................................

1,365

465

269

(217)

1,882

Exceptional charges…………………………………………………...

(9)

-

(49)

-

(58)

IFRS2 share based payments………………………………………….

(38)

-

-

-

(38)

Operating profit before exceptional items and share based payments

1,412

465

318

(217)

1,978

Finance costs............................................................................

(20)

1

-

-

(19)

Profit before tax....................................................................

1,345

466

269

(217)

1,863

 

 

Year ended 31 March 2017

Paradigm Partners
£000

Paradigm Mortgage Services
£000

Tatton
£000

Central
£000

Group
£000

Revenue............................................................................

5,753

1,794

4,317

-

11,864

Administrative expenses......................................................

(2,846)

(966)

(3,095)

(423)

(8,107)

IFRS2 share based payments…………………………………….

(75)

-

-

-

(75)

Share of results of joint venture...........................................

(24)

-

-

-

(24)

Exceptional charges……………………………………………..

(373)

(1,251)

(233)

(555)

(2,412)

Operating profit...............................................................

2,435

(423)

989

(978)

2,023

Exceptional charges............................................................

(373)

(1,251)

(233)

(555)

(2,412)

IFRS2 share based payments…………………………………….

(75)

-

-

-

(75)

Operating profit before exceptional items and share based payments

2,883

828

1,222

(423)

4,510

Finance costs.......................................................................

(33)

(3)

-

-

(36)

Profit before tax...............................................................

2,402

(426)

989

(978)

1,987

 

 

 

4.     PROFIT FOR THE PERIOD

 

 

 

Note

Six months ended 30 September 2017 (unaudited) £000

Six months ended 30 September 2016 (unaudited)

£000

Year ended 31 March 2017 (unaudited)

£000

Continuing operations





Depreciation of property, plant and equipment..................................


24

22

43

Operating lease charges - plant, machinery & vehicles.......................


4

5

11

Operating lease charges - land and buildings........................................


96

96

179

Exceptional and non-recurring (income) / costs……….…………..........

6

2,524

96

2,487

 

 

 

 

5.     FINANCE COSTS


Six months ended 30 September 2017 (unaudited) £000

Six months ended 30 September 2016 (unaudited)

£000

Year ended 31 March 2017 (unaudited)

£000





Bank interest income..........................................................................

2

1

2

Bank charges......................................................................................

(16)

(20)

(38)

Total finance costs (net).................................................................

(14)

(19)

(36)

 

6.     EXCEPTIONAL AND NON- RECURRING (INCOME) / COSTS


Six months ended 30 September 2017 (unaudited) £000

Six months ended 30 September 2016 (unaudited)

£000

Year ended 31 March 2017 (unaudited)

£000

(i) One-off costs relating to corporate transactions............................

-

9

9

 

(ii) Product launch costs.....................................................................

-

49

143

 

(iii) Release of unused deferred income provision................................

(250)

-

-

 

(iv) IPO costs.....................................................................................

1,882

-

625

 

(v) Provisions against related entity loans..........................................

-

-

1,635

 

Total exceptional costs....................................................................

1,632

58

2,412

 

Share based payments

892

38

75

 

Total exceptional costs and share based payments

2,524

96

2,487

 

 

Exceptional and non-recurring items 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.

(i) Legal and other one-off costs incurred in connection with the following corporate transactions are shown as part of exceptional and non-recurring items within administrative expenses in the Combined Income Statement:

·      The acquisition of a shareholding in Adviser Cloud Limited in December 2015.

 

(ii) In December 2015, Tatton launched a series of funds as part of its discretionary funds management service. The costs directly associated with the launch of the funds including external consultancy costs and additional charges incurred during the launch period in 2016 are shown as part of exceptional and non-recurring items within administrative expenses in the Combined Income Statement.

(iii) In July 2017, amounts due to IFAs amounting to £250,000, which had originally been provided for as a deduction from revenue prior to 1 April 2016, were released in the Combined Income Statement as they were no longer required.

(iv) Various legal and professional costs incurred in relation to the IPO of the Group in July 2017 are shown as part of exceptional and non-recurring items within administrative expenses in the Combined Income Statement.

(v) At 31 March 2017, Paradigm Mortgage Services LLP made full provision of £1,251,000 against the recoverability of amounts due from Jargon Free Benefits LLP, an entity controlled by Paul Hogarth. Also, as at 31 March 2017, Paradigm Partners Limited made full provision of £350,000 against the recoverability of amounts due from Amber Financial Investments Limited, an entity controlled by Paul Hogarth.

 

7.     TAX

 

 

Six months ended 30 September 2017 (unaudited) £000

Six months ended 30 September 2016 (unaudited)

£000

Year ended 31 March 2017 (unaudited)

£000

Corporation tax:




Current period....................................................................................

426

368

834

Total tax expense.............................................................................

426

368

834

 

Corporation tax is calculated at 19 per cent for 2017 (2016: 20%) of the estimated taxable profit for the year.

The charge for the year can be reconciled to the profit in the income statement as follows:

 

 

Six months ended 30 September 2017 (unaudited) £000

Six months ended 30 September 2016 (unaudited)

£000

Year ended 31 March 2017 (unaudited)

£000

Profit before taxation: ...................................................................

542

1,863

1,987





Tax at UK corporation tax rate of 19% (2016: 20%).........................

103

373

397

Tax effect of expenses that are not deductible....................................

321

38

506

Capital allowances in excess of depreciation.......................................

-

(1)

(2)

LLP members of group not subject to corporation tax........................

-

(44)

(67)

Other adjustments...............................................................................

2

2

-

Tax expense for the year................................................................

834

 

8.     EARNINGS PER SHARE

 

 

The calculation of the basic and diluted earnings per share is based on the following:

 

Number of Shares

 

Six months ended 30 September 2017 (unaudited) Number

Six months ended 30 September 2016 (unaudited)

Number

Year ended 31 March 2017 (unaudited)

Number

Basic




Weighted average number of shares in issue in the period (note 15)

55,907,513

55,907,513

55,907,513

Diluted




Effect of weighted average number of options outstanding for the period

4,394,259

-

-

Diluted weighted average number of shares and options for the period

60,301,772

55,907,513

55,907,513






Six months ended 30 September 2017 (unaudited) £000

Six months ended 30 September 2016 (unaudited)

£000

Year ended 31 March 2017 (unaudited)

£000

Earnings attributable to ordinary shareholders




Basic and diluted profit for the period

116

1,495

1,153

Share based payments - IFRS2 option charges

892

38

75

Exceptional costs - see note 6

1,632

58

2,412

Tax impact of adjustments

(201)

-

(35)

Adjusted basic and diluted profits for the period and attributable earnings

2,439

1,591

3,605





Earnings per share (pence)




Basic

0.21

2.67

2.06

Diluted

0.19

2.67

2.06





Adjusted earnings per share (pence)




Basic

4.36

2.85

6.45

Diluted

4.04

2.85

6.45

 

 

9.     DIVIDENDS

 


Six months ended 30 September 2017 (unaudited) £000

Six months ended 30 September 2016 (unaudited)

£000

Year ended 31 March 2017 (unaudited)

£000





Amounts recognised as distributions to TAM shareholders in the period

-

-

-

Amounts paid to shareholders relating to pre-IPO period

1,563

850

2,672

Total dividends paid in the period

1,563

850

2,672

 

All dividends above relate to the period prior to the IPO of the group, which occurred on 7 July 2017. Included in the dividend for the period to 30 September 2017 is a non-cash element of £1,083,000, which relates to the clearing of earlier related party debtors arising in periods prior to the IPO. Dividends relate to ordinary shares.

 

An interim dividend of 2.2p per share was declared by the Board on 4 December 2017 and has not been included as a liability as at 30 September 2017. This interim dividend will be paid on 12 January 2018 to shareholders on the register at close of business on 15 December 2017 with an ex-dividend date of 14 December 2017.

 

 

10.   SHARE BASED PAYMENTS

 

During the period under review, a number of share based payment schemes and share options schemes have been utilised by the company, all but two of which ceased as a result of the IPO in July 2017. The remaining live schemes are described under "(a) Current Schemes", below, while those schemes ceasing as a result of the IPO are described under "(b) Schemes Closed prior to the IPO of Tatton Asset Management PLC", below.

 

(a) 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. A total of 3,022,733 options with a weighted average exercise price of £1.83 were granted during the period, each exercisable in July 2020. No options were forfeited or exercised or expired in the period. A total of 3,022,733 options remain outstanding at 30 September 2017, none of which are currently exercisable.

 

The options vest in July 2020 provided certain performance conditions and targets, set prior to grant, have been met. If the performance conditions are not met, the options lapse.

 

Within the accounts of the Company, the fair value at grant date is estimated using the Black Scholes methodology for 50% of the options and using the Monte Carlo modelling methodology for the remaining 50% of the options. Key valuation assumptions and the costs recognised in the accounts during the period are noted in (c) and (d) below respectively.

 

Six months ended 30 September 2017 (Unaudited)

Number of share options granted (number)

Weighted average price (£)

Outstanding at 1 April 2017

-

-

Granted during the period

3,022,733

1.83

Forfeited during the period

-

-

Exercised during the period

-

-

Outstanding at 30 September 2017

3,022,733

1.83

Exercisable at 30 September 2017

-

1.83







Six months ended 30 September 2016 (Unaudited)



Outstanding at 1 April 2016

-

-

Granted during the period

-

-

Forfeited during the period

-

-

Exercised during the period

-

-

Outstanding at 30 September 2016

-

-

Exercisable at 30 September 2016

-

-




 

 

(ii) Tatton Asset Management PLC Sharesave Scheme ("TAM Sharesave Scheme")

 

On 7 July 2017 the Group launched an all employee sharesave scheme for options over shares in Tatton Asset Management plc, administered by Yorkshire Building Society. Employees are able to save between £10 and £500 per month over a three-year life of the scheme to August 2020 at which point they each have the option to either acquire shares in the Company, or receive the cash saved.

 

Over the life of the Sharesave scheme it is estimated that, based on current saving rates, 253,376 share options will be exercisable at an exercise price of £1.70. No options have been exercised, forfeited or expired in the period.

 

Within the accounts of the Company, the fair value at grant date is estimated using the Black Scholes methodology for 100% of the options. Key valuation assumptions and the costs recognised in the accounts during the period are noted in (c) and (d) below respectively.

 

Six months ended 30 September 2017 (Unaudited)

Number of share options granted (number)

Weighted average price (£)

Outstanding at 1 April 2017

-

-

Granted during the period

14,076

1.70

Forfeited during the period

-

-

Exercised during the period

-

-

Outstanding at 30 September 2017

14,076

1.70

Exercisable at 30 September 2017

-

-







Six months ended 30 September 2016 (Unaudited)



Outstanding at 1 April 2016

-

-

Granted during the period

-

-

Forfeited during the period

-

-

Exercised during the period

-

-

Outstanding at 30 September 2016

-

-

Exercisable at 30 September 2016

-

-

 

 

(b) Schemes Closed prior to the IPO of Tatton Asset Management PLC

 

As a direct result of the corporate restructure that culminated in the IPO of Tatton Asset Management PLC in July 2017, the following share based schemes were finalised and options exercised where relevant:

 

(i) Tatton Capital Group Limited EMI Scheme ("TCGL EMI Scheme")

 

In October 2015, Tatton Capital Group Limited (TCGL), a subsidiary of the Company, launched an EMI share option scheme to enable senior management to participate in the equity of TCGL. A total of 1,580 options over F shares in TCGL with a weighted average exercise price of £1 were granted in October 2015, each exercisable upon sale of the company. Upon acquisition of TCGL during the restructuring ahead of the IPO in July 2017, all 1,580 options were exercised, and none remain outstanding.

 

Within the accounts of the Company, the fair value at grant date was estimated using the Black Scholes methodology for 100% of the options. Key valuation assumptions and the costs recognised in the accounts during the period are noted in (c) and (d) below respectively.

 

Six months ended 30 September 2017 (Unaudited)

Number of share options granted (number)

Weighted average price (£)

Outstanding at 1 April 2017

1,580

1.00

Granted during the period

-

-

Forfeited during the period

-

-

Exercised during the period

(1,580)

1.00

Outstanding at 30 September 2017

-

-

Exercisable at 30 September 2017

-

-







Six months ended 30 September 2016 (Unaudited)



Outstanding at 1 April 2016

1,580

1.00

Granted during the period

-

-

Forfeited during the period

-

-

Exercised during the period

-

-

Outstanding at 30 September 2016

1,580

1.00

Exercisable at 30 September 2016

-

-

 

(ii) Paradigm Partners Limited Employee Shareholder Scheme ("PPL ESS")

 

In March 2016, Paradigm Partners Limited (PPL) issued employee shareholder status shares to enable senior management to participate in the equity of that business. A total of 14,350 C shares in PPL, with a weighted average exercise price of £0.01 were granted in March 2016, each exercisable upon sale of the company. Upon acquisition of PPL during the restructuring ahead of the IPO in July 2017, all 14,350 shares were sold, and none remain outstanding.

 

Within the accounts of the Company, the fair value at grant date was estimated using the Black Scholes methodology for 100% of the shares, which for accounting purposes were treated as options under IFRS2. Key valuation assumptions and the costs recognised in the accounts during the period are noted in (c) and (d) below respectively.

 

(iii) Paradigm Partners Limited D Share Options ("PPL D Options")

 

In June 2017, Paradigm Partners Limited (PPL) issued to certain senior management options to acquired 2,500 D shares in Tatton Capital Group Limited (TCGL) to enable them to participate in the equity of that business. A total of 2,500 options over D shares in TCGL, with a weighted average exercise price of £1 were granted in June 2017, each exercisable upon sale of the company. Upon acquisition of PPL and TCGL during the restructuring ahead of the IPO in July 2017, all 2,500 options were exercised, and none remain outstanding.

 

Within the accounts of the Company, the fair value at grant date was estimated using the actual price paid for the shares of £826,728.

 

Six months ended 30 September 2017 (Unaudited)

Number of share options granted (number)

Weighted average price (£)

Outstanding at 1 April 2017

-

-

Granted during the period

2,500

1.00

Forfeited during the period

-

-

Exercised during the period

(2,500)

1.00

Outstanding at 30 September 2017

-

-

Exercisable at 30 September 2017

-

-







Six months ended 30 September 2016 (Unaudited)



Outstanding at 1 April 2016

-

-

Granted during the period

-

-

Forfeited during the period

-

-

Exercised during the period

-

-

Outstanding at 30 September 2016

-

-

Exercisable at 30 September 2016

-

-

 

 

(c) Valuation Assumptions

 

Assumptions used in the option valuation models to determine the fair value of options at the date of grant were as follows:

 


TAM EMI Scheme

TAM Sharesave Scheme

TCGL EMI Scheme

PPL ESS

Share price at grant (£)

1.89

1.89

1.56

55

Exercise price (£)

1.89

1.70

0

55

Expected volatility (%)

26

26

10

26

Expected life (years)

6.5

3.25

1.75

1.25

Risk free rate (%)

0.41

0.66

0.92

0.6

Expected dividend yield (%)

4.5

4.5

0

0

 

(d) IFRS2 Share based option costs

 


Six months ended 30 September 2017 (unaudited) £000

Six months ended 30 September 2016 (unaudited)

£000

Year ended 31 March 2017 (unaudited)

£000

TAM EMI Scheme

42

-

-

TAM Sharesave Scheme

4

-

-

TCGL EMI Scheme

-

-

-

PPL ESS

19

38

75

PPL D Options

827

-

-


892

38

75





 

11.   PROPERTY, PLANT AND EQUIPMENT

 

 

Computer, office equipment and motor £000

Fixtures and fittings

£000

Total

£000

Cost




Balance at 1 April 2016......................................................................

303

214

517

Additions............................................................................................

31

-

31

Balance at 30 September 2016.......................................................

334

214

548

Additions............................................................................................

19

-

19

Balance at 31 March 2017..............................................................

353

214

567

Additions............................................................................................

37

-

37

Balance at 30 September 2017.......................................................

390

214

604

 

Accumulated depreciation and impairment




Balance at 1 April 2016......................................................................

(235)

(214)

(449)

Charge for the period..........................................................................

(22)

-

(22)

Balance at 30 September 2016.......................................................    

(257)

(214)

(471)

Charge for the period..........................................................................

(21)

-

(21)

Balance at 31 March 2017..............................................................    

(278)

(214)

(492)

Charge for the period..........................................................................

(24)

-

(24)

Balance at 30 September 2017.......................................................    

(302)

(214)

(516)

 

Carrying amount




As at 30 September 2017................................................................

88

-

88

As at 31 March 2017........................................................................

75

-

75

As at 30 September 2016................................................................

77

-

77





 

12.   GOODWILL

 

 

Goodwill

 £000

Cost


Balance at 1 April 2016..................................................................

4,917

Adjustment for provisional fair value of consideration........................

-

Balance at 30 September 2016.......................................................

4,917

Adjustment for provisional fair value of consideration........................

-

Balance at 31 March 2017..............................................................

4,917

Adjustment for provisional fair value of consideration........................

-

Balance at 30 September 2017.......................................................

4,917

Carrying amount


As at 30 September 2017................................................................

4,917

As at 30 September 2016................................................................

4,917

As at 31 March 2017........................................................................

4,917

 

 

The goodwill of £4.9 million relates to £2.9m arising from the acquisition in 2014 of an interest in Tatton Oak Limited by Tatton Capital Limited consists of the future synergies and forecast profits of the Tatton Oak business and £2.0m arising from the acquisition in 2017 of an interest in Tatton Capital Group Limited. 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 an impairment charge is made. Such impairment is charged to the Combined Statement of Comprehensive Income.

Impairment testing                                                                                                                  

For the purpose of impairment testing, goodwill is allocated to the Group's operating companies which represents the lowest level within the Group at which the goodwill is monitored for internal management accounts purposes.                         

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) or group of units that are expected to benefit from that business combination. The Directors test goodwill annually for impairment, or more frequently if there are indicators that goodwill might be impaired. The Directors have considered the carrying value of goodwill at 30 September 2017 and do not consider that it is impaired.

 

13.   INVESTMENT IN JOINT VENTURES

 

The Operating Group, as at the date of this admission document, holds investments in the following joint venture:

 

Joint venture

Business Activity

Country of Incorporation

Voting power (%)

30 September 2017

Adviser Cloud Limited

Software company

England & Wales

50%

 

 

 

As at 30 September 2017 (unaudited)

£000

As at 30 September 2016 (unaudited)

£000

As at 31 March

2017 (unaudited)

£000

Carrying value




At beginning of period....................................................................

(31)

(7)

(7)

Share of retained (loss) for the period.................................................

(14)

(13)

(24)

At end of period...............................................................................

(45)

(20)

(31)

 

The historical cost of the joint venture was £1, when it was acquired in December 2015, and has not changed since.

 

14.   BORROWINGS

 

 

As at 30 September 2017 (unaudited)

£000

As at 30 September 2016 (unaudited)

£000

As at 31 March

2017 (unaudited)

£000

Borrowing at amortised cost - current




Bank overdrafts..................................................................................

-

797

697


-

797

697

Borrowing at amortised cost - non-current




Other loans.........................................................................................

-

-

-

Total liabilities................................................................................

-

797

697

 

Bank overdrafts are repayable on demand. The bank overdrafts are secured by a fixed and floating charge over all property and assets present and future including goodwill, book debts, uncalled capital, buildings, fixtures, fixed plant and machinery.

The average effective interest rate on bank overdrafts approximates 2.95 per cent per annum (1H17: 3.12 per cent; FY17: 3.03 per cent).

 

 

15.   SHARE CAPITAL

 

 

As at 30 September 2017 (unaudited)

Number

As at 30 September 2016 (unaudited)

Number

As at 31 March

2017 (unaudited)

Number

Authorised, issued and fully paid




£0.20 Ordinary shares - Tatton Asset Management PLC....................

55,907,513

55,907,513

55,907,513






55,907,513

55,907,513

55,907,513

 

 

 

As at 30 September 2017 (unaudited)

£000

As at 30 September 2016 (unaudited)

£000

As at 31

March 2017

(audited)

£000

Authorised, issued and fully paid




£0.20 Ordinary shares - Tatton Asset Management PLC....................

11,182

11,182

11,182






11,182

11,182

11,182

 

Each share in Tatton Asset Management PLC carries 1 vote and the right to a dividend. Of the shares in issue, 49,497, 257 were issued in June 2017 prior to the IPO in order to acquire the three trading divisions and the remaining 6,410,256 were issued at the IPO in July 2017.

As noted above, the 55,907,513 Ordinary shares were issued in the current period. See note 1 for an explanation of merger accounting treatment relating to earlier periods.

 

16.   NOTES TO THE COMBINED STATEMENT OF CASH FLOWS

Cash flow from operating activities

Six months ended 30 September 2017 (unaudited) £000

Six months ended 30 September 2016 (unaudited)

£000

Year ended 31 March 2017 (unaudited)

£000

Profit for the period before tax..........................................................

542

1,863

1,987

Depreciation of property, plant and equipment..................................

24

22

43

Finance costs......................................................................................

14

19

36

Share based payments………………………………………………….........

892

38

75

Operating cash flow before movements in working capital

1,472

1,942

2,141

(Increase)/decrease in receivables........................................................

(71)

(234)

1,470

(Decrease)/increase in payables...........................................................

(353)

185

180

Cash generated from continuing operations

1,048

1,893

3,791

Interest paid.......................................................................................

(14)

(19)

(36)

Corporation tax paid..........................................................................

-

-

(131)

Net cash generated from operating activities..............................

1,034

1,874

3,624

 

 

17.   EVENTS AFTER THE STATEMENT OF FINANCIAL POSITION DATE

 

There were no disclosable events occurring after the balance sheet date.

18.   RELATED PARTY TRANSACTIONS

 

Balances and transactions within the Group have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its associates and other related parties are disclosed below. During the period, Group companies entered into transactions with related parties who were not members of the Group as follows:


As at 30 September 2017 (unaudited)

£000

As at 30 September 2016 (unaudited)

£000

As at 31 March

2017 (unaudited)

£000

Related entity balances receivable/(payable)




Amounts owed from Jargon Free Benefits LLP...................................

-

1,170

-

Amounts owed from/(to) Amber Financial Investments Limited.........

21

(435)

-

Amounts owed (to) Paradigm Investment Management LLP..............

(1,282)

(1,861)

(1,456)

Amounts owed from Adviser Cloud Limited........................................

94

44

66

Amounts owed from Paradigm Management Partners LLP.................

1

2,635

-

Amounts owed from Perspective Financial Group Limited..................

433

460

467

Total..................................................................................................

(733)

1,278

(923)





Transactions with related entities




Fees paid to Perspective Financial Group Limited...............................

617

475

1,002

Fees and recharges earned from Perspective Financial Group Limited.

199

125

298





Directors and partners balances receivable/(payable)




Amounts owed from/(to) Paul Hogarth...............................................

35

752

476

Amounts owed from/(to) Noel Stubley................................................

-

3

3

Amounts owed from Robert Hunt

-

-

(125)

Amounts owed from Lothar Mentel....................................................

3

3

3

 

Jargon Free Benefits LLP, Amber Financial Investments Limited, Paradigm Investment Management LLP, Perspective Financial Group Limited and Paradigm Management Partners LLP are all entities under the common control of Paul Hogarth.

Adviser Cloud Limited is a joint venture, in which the Group holds a 50% interest.

Paul Hogarth, Noel Stubley, Robert Hunt and Lothar Mentel are all either directors or designated members of some or all of the entities during the periods.

Balances owed carry no fixed repayment terms, no security and no rate of interest.

 


This information is provided by RNS
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