TIDMARP
RNS Number : 3489I
Ashcourt Rowan PLC
02 July 2013
Ashcourt Rowan Plc: PRELIMINARY GROUP AUDITED RESULTS FOR THE
YEAR ENDED 31 MARCH 2013
2 July 2013
Delivering underlying profit growth
Ashcourt Rowan plc (AIM:ARP.L), the UK wealth management group,
today announces its Group audited results for the year ended 31
March 2013.
Commenting, Jonathan Polin, Group chief executive officer,
said:
"We have returned the Company to solid underlying profitability
with cost reduction targets achieved ahead of schedule and
significant improvement in our operating margins in the second
half. We have readied the business for future growth by completing
the move to a single, scalable operating platform and refocusing on
core activities.
"We have a clear strategy to position the business as a premier
provider to the growing UK mass affluent market of integrated
financial planning and investment management services to meet the
wealth management and pension needs of private clients, charities
and corporates."
Operational and financial highlights
-- Consolidated return of Group to underlying EBITDA*
profitability: GBP2.8m achieved during the year, a marked
improvement on GBP0.3m in 2011/12.
-- Underlying EBITDA margin for full year at 8% (H2: 14%).
-- Total funds under management and influence at GBP3.7bn, of
which GBP1.6bn discretionary or managed.
-- Cost reduction targets met and exceeded faster than expected - over GBP7 million annualised.
-- Very solid balance sheet position: no debt and cash at GBP8.0 million.
-- Loss after tax improved to GBP(2.1)m from GBP(2.6)m in 2011/12.
-- Loss before tax stable at GBP(2.5)m, reflecting investments
in Change Management Programme, restructuring costs and accelerated
depreciation of legacy systems being decommissioned.
-- Integration of core asset management businesses completed.
-- Sale of the non-core pension administration business after year end**.
-- Integration of discretionary investment management on a single outsourced platform.
-- RDR compliant proposition launched well in advance of deadline.
-- Investment in central investment process and dedicated research team.
-- Reorganisation of regional office presence.
-- Strengthened board and senior management team with key hires
including Hugh Ward as non-executive chairman, Gaius Jones as head
of financial planning and Harry Burnham as investment director.
-- Rebuild of ICT infrastructure.
*Profit before interest, tax, depreciation, amortisation,
impairments, exceptionals and share-based payment costs.
** Treated as non-continuing as business held for sale at year
end.
Financial statistics - continuing operations
(GBP million unless specified)
Full year Six months Full year
31 March ended 31 March
2013 30 Sept 2012
2012
---------------------------------------------------- ---------- ----------- ----------
Total funds under management and influence GBP3.7 GBP3.8 GBP4.1
billion billion billion
---------------------------------------------------- ---------- ----------- ----------
Discretionary assets under management GBP1.6 GBP1.6 GBP1.6
billion billion billion
---------------------------------------------------- ---------- ----------- ----------
Revenue 32.6 15.7 35.7
---------------------------------------------------- ---------- ----------- ----------
Continuing underlying EBITDA: Profit
before interest, tax, depreciation, amortisation,
impairments, exceptionals and share-based
payment costs 2.8 0.4 0.3
---------------------------------------------------- ---------- ----------- ----------
Loss before interest, tax, depreciation,
amortisation and impairments and share
based costs (0.3) (0.5) (1.0)
---------------------------------------------------- ---------- ----------- ----------
Loss before tax (2.5) (1.3) (2.5)
---------------------------------------------------- ---------- ----------- ----------
EPS (continuing operations) (8.74) (11.02)
---------------------------------------------------- ---------- ----------- ----------
*Profit before interest, tax, depreciation, amortisation,
impairments, exceptionals and share-based payment costs.
Nature of announcement
This Annual Results Release was approved by the directors on 1
July 2013.
The financial information set out in this Annual Results Release
does not constitute the company's statutory accounts for 2013 or
2012. Statutory accounts for the years ended 31 March 2013 and 31
March 2012 have been reported on by the Independent Auditor. The
Independent Auditor's Reports on the Annual Report and Financial
Statements for 2013 and 2012 were unqualified, did not draw
attention to any matters by way of emphasis, and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006.
Statutory accounts for the year ended 31 March 2012 have been filed
with the Registrar of Companies. The statutory accounts for the
year ended 31 March 2013 will be delivered to the Registrar
following the Company's annual general meeting.
-Ends-
Ashcourt Rowan plc
Ashcourt Rowan aims to be the premier provider of integrated
financial planning and investment management services in the UK,
delivering holistic financial advice and investment solutions to
meet the wealth management and pension needs of private clients,
charities and corporates.
-- Understanding clients' financial priorities
-- Providing high-quality advice
-- Delivering tailored plans
Ashcourt Rowan is quoted on the Alternative Investment Market
and has around 260 staff in 13 offices nationwide.
www.ashcourtrowan.com
For further information please contact:
Maitland
Andrea Coleman/ Daniel Yea
Tel: 020 7379 5151
Email: ashcourtrowan@maitland.co.uk
Ashcourt Rowan
Emily Morris, group head of
marketing
Tel: 020 7871 7250
Email: emilymorris@ashcourtrowan.com
Katy Moore, marketing manager
- communications
Tel: 020 7871 7252
Email: katymoore@ashcourtrowan.com
Key Performance and Financial Indicators - March 2013
Six Months to Year end
---------------------------------- ----------------
Underlying EBITDA Sep-11 Mar-12 Sep-12 Mar-13 Mar-12 Mar-13
------- ------- ------- ------- ------- -------
Total Including Pension
Administration (0.24) 0.69 0.51 2.47 0.45 2.98
------- ------- ------- ------- ------- -------
Continuing Business (Excluding
Pension Administration) (0.33) 0.59 0.37 2.39 0.26 2.76
------- ------- ------- ------- ------- -------
Six Months to Year end
---------------------------------- ----------------
Sep-11 Mar-12 Sep-12 Mar-13 Mar-12 Mar-13
------- ------- ------- ------- ------- -------
Underlying EBITDA Margin -2% 3% 2% 14% 1% 8%
------- ------- ------- ------- ------- -------
Note: H2 results including year end adjustments
Six Months to Year end
---------------------------------- ----------------
Revenue GBPm Sep-11 Mar-12 Sep-12 Mar-13 Mar-12 Mar-13
------- ------- ------- ------- ------- -------
Total Including Pension
Administration 18.38 18.01 16.07 17.22 36.39 33.29
------- -------
Continuing Business (Excluding
Pension Administration) 18.03 17.69 15.72 16.88 35.72 32.60
------- ------- ------- ------- ------- -------
Six Months to Year end
---------------------------------- ----------------
Continuing Business Revenue
by Type GBPm Sep-11 Mar-12 Sep-12 Mar-13 Mar-12 Mar-13
------- ------- ------- ------- ------- -------
Recurring Revenue 10.78 10.69 10.91 10.59 21.47 21.50
------- -------
Non-Recurring Revenue 7.25 7.00 4.82 6.28 14.25 11.10
------- ------- ------- ------- ------- -------
Continuing Business (Excluding
Pension Administration) 18.03 17.69 15.73 16.87 35.72 32.60
------- ------- ------- ------- ------- -------
Six Months to Year end
---------------------------------- ----------------
Cost Base Development*
- Continuing Business Sep-11 Mar-12 Sep-12 Mar-13 Mar-12 Mar-13
------- ------- ------- ------- ------- -------
Staff costs (including
incentives and bonus
accruals) 12.4 11.6 10.3 9.8 24.0 20.1
------- ------- ------- ------- ------- -------
Other costs 6.16 5.5 5.0 4.7 11.5 9.7
------- ------- ------- ------- ------- -------
Total Costs 18.56 17.1 15.3 14.5 35.5 29.8
------- ------- ------- ------- ------- -------
* Excludes exceptional, includes staff related
costs (healthcare, etc) and certain consultant
costs
Total Headcount
----------------------------------
Headcount Sep-11 Mar-12 Sep-12 Mar-13
------- ------- ------- -------
Revenue Generators 114 108 103 79
------- ------- ------- -------
Support and
Others 259 233 219 201
------- ------- ------- -------
Total 373 341 322 280
------- ------- ------- -------
Note: Includes temporary project resources
and consultants (FTEs respectively)
Year end
----------------------------------------------------
Mar-11 Mar 12 restated Mar 13 Continuing
--------- ------------------ ---------------------
Loss before Tax (GBPm) (5.8) (2.5) (2.5)
--------- ------------------ ---------------------
Note: 2012/13 number include accelerated depreciation of legacy
systems (GBP0.8m) in addition to recurring amortisation and depreciations
and exceptional
Year end
-------------------------------------------------
Mar-11 Mar 12 restated Mar 13 Continuing
--------- ----------------- -------------------
EPS (p/share) - continuing (28.73) (11.02) (8.74)
--------- ----------------- -------------------
Note: 2012/13 number include accelerated depreciation of legacy
systems (GBP0.8m) in addition to recurring amortisation and depreciations
and exceptionals
Mar-11 Sep-11 Mar-12 Sep-12 Mar-13
------- ------- ------- ------- -------
Discretionary and Managed
Advisory AUM GBPbn 1.66 1.46 1.62 1.57 1.60
------- ------- ------- ------- -------
ARAM Advisory and Execution
Only AUM GBPbn 0.45 0.49 0.50 0.29 0.28
------- ------- ------- ------- -------
ARFP Funds under Influence 2.35 1.98 1.97 1.90 1.85
------- ------- ------- ------- -------
Funds under management
and Influence GBPbn 4.46 3.93 4.09 3.76 3.73
Note: Fund under influence restated at September 2011, reducing
funds by GBP315m
* Includes all revenues except non-recurring Financial Planning
advice and implementation fees
Year end
----------------
AuM Breakdown (%) Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Mar-12 Mar-13
------- ------- ------- ------- ------- ------- -------
Discretionary and
Managed Advisory 37% 37% 39% 42% 43% 39% 43%
------- ------- ------- ------- ------- ------- -------
Non-Managed Advisory
and Execution Only 10% 13% 12% 8% 7% 12% 7%
------- ------- ------- ------- ------- ------- -------
Funds under Influence 53% 50% 49% 50% 50% 48% 50%
------- ------- ------- ------- ------- ------- -------
Overview
Report of the chairman
I am delighted to report the results of your Company, Ashcourt
Rowan Plc, for the 12 months ended 31 March 2013. This is my first
report as, having joined the Board in July last year, I assumed the
role of chairman on the 1st January 2013.
The past year has been one of significant and positive
transformation for the Company and led by chief executive officer
Jonathan Polin we have sought to build on the major progress that
has been achieved and establish a firm strategy for growth over the
coming year.
Not only has this been a year of great change and challenge for
us, but it has been one for the financial services industry in
general. The New Year heralded the introduction of the Retail
Distribution Review (RDR) which, while providing great opportunity,
also created a challenging environment with ever-increasing
regulatory and market pressures. It is, however, extremely
encouraging to see some return of investor confidence developing in
markets during the period and an increasing appetite to seek
investment returns once more, albeit against an uncertain economic
background.
Financial results
As you will read in the chief executive's report, the Company
has achieved financial results which show a more positive outcome
with underlying EBITDA of GBP2.8 million for the year
This more positive outcome has been achieved whilst making
significant investment in our infrastructure, operating platform
and staff, thereby clearly establishing the building blocks
required for our future growth. Significant cost savings have been
made in line with the broad plan and the Company maintains a strong
financial position with a balance sheet displaying net cash in
excess of GBP8 million and total net assets excluding assets held
for sale, goodwill and intangibles of GBP9.8 million against
regulatory capital of GBP5.4 million.
Despite the significant exceptional costs incurred in the
transformation of the company and the accelerated depreciation of
legacy systems now redundant the loss for the year attributable to
equity holders has reduced to GBP(2.1) million from GBP(2.6)
million in 2011/12.
Year of transformation
I have referred to the significant change in the operating
environment of the Company. Post the year end the sale of our
pension administration business completed just after year end
allows us to focus our full attention on our core asset management
and financial planning businesses. Two further events underpin our
ambitions; most notably the outsourcing of our operating platform
bringing all our asset management activities onto a single
platform, and the development of a clearly articulated,
centralised, investment research and asset management
proposition.
The year ahead
Our vision is clearly stated as to be the premier, strong leader
in the wealth management industry in the UK. We now have in place
the tools required to move forward positively with enhanced
revenues and growth in all aspects of our business. At the heart of
our culture must lie the desire to provide the highest level of
service to our valued clients and with recent developments we are
now well-placed to achieve this aim.
One of the most rewarding aspects of my early months as chairman
has been the passion, ambition and commitment demonstrated by the
executive team and all our valuable personnel. We are fortunate to
have an outstanding team in place and the recent edition of some
significant appointments, most notably Harry Burnham as a key
investment director and Gaius Jones as chief executive of our
financial planning business, have added to our pool of talent.
This year is all about exploiting the opportunities for growth,
both organic and inorganic, supported by a far stronger and more
positive operating environment. The tireless commitment of the team
must not go unrecognised and I would like to thank Jonathan Polin,
his executive team and each employee at Ashcourt Rowan for the
commitment that has allowed us to achieve such a change in
fortune.
Lastly, and most importantly, I would like to thank our clients
and shareholders who are at the heart of every decision we take; it
is our desire to reward the faith they have shown in us with
continued progress and by seeking to enhance shareholder value in
the year ahead.
Hugh Ward
Non-Executive Chairman
1 July 2013
Business review
Report of the chief executive officer
I am delighted to deliver this, my second annual report, against
the backdrop of significant progress in your Company. The 20 months
since my arrival have been focused on fixing the business from a
financial, operations, integration, regulatory and proposition
point of view. I am able to tell all our stakeholders that the
re-organisation phase is complete and the Company is ready for
growth.
This year's financial outturn, as reported, of an underlying
EBITDA profitability of GBP2.8 million is above both our and the
market's expectations and, combined with the delivery of a 14%
underlying operating margin in the second half of the year,
endorses the progress the Company has made in a relatively short
period of time. In my report last year, I outlined the key drivers
of our Change Management Programme and I am pleased to report our
progress against those metrics:
Reduce cost base by GBP5.2 million
On an annualised basis we have reduced our cost base by over
GBP7 million, compared to a target of GBP5.2 million and continue
to keep a tight control on all costs. This financial year will
allow a small amount of further cost reductions as we reap the
rewards of completing our transition to an outsourced wealth
operating platform for our investment management business. I am
determined to advance the business to an operating profit margin of
25% or more over the medium term.
Achieve increased run rate profitability on continuing
operations
I am delighted that we have delivered a vast improvement on the
underlying profitability outturn this year of GBP2.8 million
compared to last year's result of GBP0.45 million or GBP0.26
million on a continuing like-for-like basis. We have also made
significant investment into our Company over the last 12 months,
which has been funded by cash flows, in the main, demonstrating the
sustainability of our financial position. Alfio Tagliabue, chief
financial officer, has worked tirelessly to power the financial
re-engineering of your business, which could not have been achieved
without his drive and expertise.
Operating platform
A strategic imperative for me on joining was to modernise our
asset management operating platform and I am delighted to report
that the transition is now substantially complete. This has been a
huge task for the Group in transitioning and integrating three
operating platforms across to TD Wealth's system and I would like
to thank Richard Sinclair, chief operating officer, under whose
stewardship and focused leadership this project has been delivered.
He has been supported by a fantastic project team and all members
of the investment management business have worked hard to ensure
its success, delivered on budget and on time.
Integration of funds under influence (FUI) on to our wider
advisory platform
The integration of FUI on to our financial planning advisory
platform has been slower than I would have liked for a number of
reasons. First, the ability of all our product providers to deliver
the clean RDR-ready share classes was beset with technical issues,
delaying our efforts. Secondly, the advised process for our clients
under the new replacement business rules was also slower than I had
anticipated. However, the project is now well underway and although
it will take a number of years to complete, the outcome will be
worth the additional effort as we will enable our clients to see
all of their assets in one place.
Over the period we have also focused the business on its core
competencies. We have merged the Savoy and Ashcourt Rowan Asset
Management businesses to form one vibrant and streamlined asset
management business. We took the decision to sell Ashcourt Rowan
Administration Limited's self-invested personal pension and small
self-administered (pension) scheme business at the end of the
financial year. This subscale business was poorly equipped to deal
with the modern market place and a total consideration of up to
GBP1.325 million including deferred was an excellent price for the
business.
Both the disposal of Ashcourt Rowan Administration Limited and
the integration of Savoy have resulted in us being able to simplify
our structure by soon reducing our regulated entities from four to
two. This has created a small reduction in our capital adequacy
requirements. We are now focused on our core businesses and
specialisms, and have created the right structure for success.
We have continued to re-size the business to compete, but our
efficiency programme has ensured that headcount has been kept under
tight control. Today the Group has 257 permanent full time
employees against 373 in September 2011. This number includes the
recruitment of some significant hires who are already making a very
positive impact across the Group. In December, Emily Morris joined
as our group head of marketing, which will be a pivotal role as we
aim to achieve organic growth across both our investment management
and financial planning businesses. In January, David Palmer joined
us as business director of Ashcourt Rowan Asset Management, a key
role for the Group. Steven Midgley joined us in June to hold the
same role for the financial planning business. We have also
recently recruited Niral Parekh to head up group risk and Kevin
Norman as head of investment management middle office.
In August, Gaius Jones arrives to assume the position of chief
executive of Ashcourt Rowan Financial Planning from Towry where he
was a main board director. In October, Harry Burnham will join us
from Brewin Dolphin where he was an investment director. He will
join the Board of Ashcourt Rowan Asset Management and help steer
the business to growth in the high net worth market place. I am
delighted we have been able to persuade individuals of their
standing in the industry to join us.
These hires are testament not only to the huge improvements we
have achieved in your Company but also the perception and high
regard the Group is now held in amongst our peer group. These key
hires have a halo effect upon the business and, as a result, there
are a number of high-quality investment managers and financial
planners who wish to join the Group over this financial year.
Key market opportunities
This industry is in a state of flux and the advent of RDR will
shake out the winners and losers. I have believed for some time
that wealth management will be the most exciting sub-sector of
financial services over the next three years and there will be huge
opportunities to drive change and effect consolidation in the
industry. By meeting and exceeding the demands of regulation, not
only will we deliver a sustainable and growing business, we will
also assist in developing a proper professional services industry
in the delivery of high-quality financial planning and investment
management.
For too long this industry has been dominated by subscale
cottage industry and lifestyle businesses, and now their time has
run out. Consolidation opportunities are currently high and I
believe will only accelerate over the next 36 months. It has been
imperative for me to ensure that your Company has the systems,
operating platform, regulatory robustness and culture to allow it
to be capable of acquiring and driving change and scale.
In addition to pursuing organic growth opportunities, the
Company is now in a position to drive additional growth through
acquisition. However, we will be focused in the targets we approach
and robust in ensuring we create shareholder value. We are creating
a financial services company with a broad waterfront that delivers
multiple entry points for clients whilst allowing different client
types alternative ways of engaging with us. Our acquisition policy
will not just be about gathering assets but a directed strategy
based on delivering these aims and thus shareholders value.
Investment management business update
During this reporting period we have made significant progress
in our investment management business. I am pleased with the
progress managing director David Esfandi and his team have made in
reorganising our central investment proposition. They have
developed a robust research process and investment models, and
provided the intellectual rigour required to address and deliver
better outcomes for our clients. This new research process has
contributed to the excellent returns seen in our managed portfolio
service.
We are, through the legacy issues we inherited in the old Savoy
business and in Ashcourt Rowan Asset Management, close to
completing the re-papering of 10,000 clients and re-assessing their
risk requirements and investment objectives. This has been a huge,
but necessary, project and will ensure that all our clients are
well serviced by the Group.
We have also worked hard on re-defining our discretionary
portfolio management services for IFAs. This is a significantly
growing market and I am keen that we increase our market share.
As with all businesses, there are still areas we need to improve
over the coming months, but these enhancements in service and
proposition are business as usual tasks that will enrich our
proposition and augment our service offering.
Our investment management is a key driver of growth for your
Company. I believe we have a sound and marketable proposition, and
the key metrics for the year ahead will be delivering asset growth
and revenue.
Financial planning update
Our financial planning business is the principal mechanism for
attracting new clients into the Group. I believe passionately in
the need for holistic financial advice and see the growth in our
core market of the mass affluent as the key opportunity.
The regulatory changes of the Retail Distribution Review have
enabled us to upscale our talent pool and deliver appropriate
transparent charging and a more detailed proposition to our
clients. I fundamentally believe that RDR has been good for our
clients and for the industry. We have developed a compelling
proposition that gives clients the choice of our full advice
service and options to do some less complex tasks, such as choosing
an ISA themselves, via our advisory platform. I believe that giving
clients choice and flexibility of offering will be fundamental to
developing trust, and attracting clients from all segments of the
advice spectrum.
I was delighted that the Group was chosen from a wide range of
our peers to be awarded the exclusive rights to advise the current
and potential clients of Care UK. Care UK is one of the UK's
largest providers of long term care. In addition we have formed an
important and valuable relationship with PMI, a large corporate
benefits business, to advise, where required, their clients on
corporate pensions. We are investigating with PMI further areas
where we can extend our relationship.
Focus for 2013/14
Over this financial year I want to see further growth in our
corporate pensions business. I believe corporate pensions and
workplace savings will be a key driver of business both for our
financial planning business and our investment management
solutions.
As part of our mission to clean up the business, we reviewed
revenue generators that were unable to meet the requirements of our
model, cultural or otherwise. This led, as reported in our interim
results, to the removal of assets, clients and the revenue
allocated to them. Having spent the majority of the year developing
the platform, our key focus for 2013/14 is on building the revenue
line.
We will achieve this via the following:
I. The delivery of our new discretionary investment management solutions for external IFAs.
II. Continuing to offer our existing financial planning clients
access to our new advisory platform, allowing them to see all their
assets in one place with 24/7/365 valuations.
III. Developing our corporate pensions business further and
growing our share in a vibrant market.
IV. Developing our joint venture businesses and delivering our
proposition to more of their clients.
V. Creating new relationships with professional introducers, controlled and managed centrally.
VI. Providing a greater range of services to our clients through
our relationships with complementary businesses that give us a
greater product suite but, more importantly, add greater value for
our clients.
VII. Ensuring all of our financial planning clients are
transferred to our new adviser charging model as trail commission
is removed from the business.
VIII. Recruitment of new investment managers and financial
planners that meet our exacting standards.
IX. Building on acquisitions, either small businesses or teams,
in both asset management and financial planning, that can be fully
integrated into our model and operating platform.
X. Looking at appropriate larger M&A activity that can act
as an accelerator of growth and deliver competencies that the Group
is looking to build on - for example, corporate pensions.
In summary, this has been a hugely challenging year for your
Company, yet it is one that has exceeded expectations and delivered
on all its promises to shareholders. This financial year is about
proving to our shareholders that your Company can also be
successful in growing revenues.
I have been fortunate to lead a group of committed and
determined individuals - a team that is dedicated to winning and
delivering value. I would like to thank all of our staff for their
hard work, fortitude and belief, without which I would have been
unable to deliver the achievements we have made.
I am hugely confident in our ability to meet the challenge of
growth and believe passionately in our ability to take advantage of
the opportunities that our sector presents. I look with excitement
to the year ahead and I am committed to lead the company to deliver
value to our shareholders through focused execution of our
vision.
Jonathan Polin
Group Chief Executive Officer
1 July 2013
Business review
Financial review
Review in brief
-- Consolidated return of Group to underlying profitability:
GBP2.8 million in underlying EBITDA
-- Exceeded cost reduction targets: Recurring costs reduced from
GBP18.4 million in first half of 2011/12 to GBP14.5million in the
second half of 2012/13*
-- Returned to revenue growth in second half after expected
reduction due to planned exit of selected revenue generators
-- Solid balance sheet position: no debt and cash at GBP8.0 million
-- A simplified business focusing on core investment management
and financial planning activities
-- Loss before tax stable at GBP(2.5)m, reflecting investments
in Change Management Programme, restructuring costs and accelerated
depreciation of legacy systems being decommissioned
* Note: excluding costs in pension administration business held
for sale at year end.
2012/13 has been a year of significant change, advancement and
achievement for your Company from many perspectives, and I am
pleased to say that is reflected in financial outcomes for the last
12 months.
Profitability
We look at underlying EBITDA (earnings before interest, tax,
depreciation, amortisation, exceptional and share-based payment
costs) as the key measure of operating profitability. On a
continuing basis, the business delivered underlying EBITDA of
GBP2.8 million for the full year 2012/13, a marked increase over
the GBP0.3 million (GBP0.4 million including the pension
administration business held for sale) delivered in the last
financial year. Particularly pleasing is the strong progress made
during the second half, with underlying EBITDA of GBP2.4 million in
addition to the GBP0.4 million reported in the six months to
September 2012, restated to exclude business held for sale.
While seasonal profile and year end adjustments have an impact,
it is important that we achieved double digit underlying EBITDA
margin during the second half of 2012/13, ahead of expectations and
previous guidance to shareholders, with 8% margin for the year as a
whole. Our aim is to continue this progress over the next two years
to deliver margins in line with both our successful peers and the
sector potential.
Despite significant planned investments in the new operating
platform and Change Management Programme, the vast majority of
which have been expensed as costs rather than capitalised, EBITDA
after exceptionals was just below breakeven at GBP(0.3)m, a marked
improvement to the GBP(1.0)m loss recorded in the previous
financial year.
The above numbers are stated excluding a profit from
non-continuing operations of GBP0.2 million for the year, including
provisions for potential costs relating to client remediation. This
relates to our pension administration business being sold. Since
the transaction completed on 22 April 2013, after the reporting
date, the business has been treated as held for sale at year end
and hence as a discontinued business.
Loss after tax stood at GBP(2.1) million an improvement on
GBP(2.6) million in 2011/12. In addition to exceptionals, this
includes amortisation and depreciation charges, and was impacted by
the accelerated depreciation charge (a total of GBP1 million for
the year) related to the legacy Tercero system that is becoming
redundant with the move to the new single operating platform.
Cost reduction
In the strategic plan articulated to shareholders in late 2011
we identified cost savings as a key requirement to return the Group
to a sustainable footing and to build robust foundations for our
organic and non-organic growth strategy.
We are pleased to report that we have exceeded the aggressive
target (GBP5.2m run-rate) we set ourselves both in terms of the
size of cost savings delivered and the timeframe in which we
delivered them.
Total operating costs, including discontinued businesses
(excluding exceptional, depreciation, amortisation and share-based
payments), stood at GBP30.3 million for the year (GBP29.8 million
if discontinued operations are excluded), a reduction of GBP5.7
million from GBP36 million operating costs in 2011/12. As
importantly, the total operating costs on a continuing basis for
the six months to 31 March 2013 were GBP14.5 million, a GBP3.9
million reduction (or GBP7.8 million annualised) relative to
GBP18.4 million in the first half of 2011/12 before the
implementation of our cost reduction programme.
The above achievements are even more pleasing given the
significant reinvestment in areas key to the future growth of the
business, including our central research and investment capability.
We continue to focus on cost discipline and controls, and to look
at areas where we can deliver further efficiencies to reinvest in
supporting our growth plans.
Group headcount stood at 280 at the end of March 2013 including
full-time, part-time and temporary employees, with full time
equivalent permanent employees at 257. This is a substantial
reduction from 341 at the start of the financial year and 373 in
September 2011.
Revenue performance
Group total revenues in 2012/13 were GBP33.3 million or GBP32.6
million excluding Ashcourt Rowan Administration Limited, the
pension administration business disposed after the year end.
Overall revenue was down against the previous year primarily due
to the loss of revenue from the planned exit from the business of a
number of revenue generators. It is also a result of weaker
non-recurring fee generation from our financial planning subsidiary
as the consequence of both preparing for RDR during 2012 and
unprofitable revenue generators being exited from the business.
We can, however, report an increase in second half revenue to
GBP17.2 million (GBP16.9 million excluding discontinued business),
a GBP1.1 million increase on first half reported revenue of GBP16.1
million (GBP15.7 million excluding discontinued business).
Importantly, recurring revenue remained solid during the year at
GBP21.5 million (2011/12: GBP21.5 million) excluding discontinued
business. Recurring revenue represented 66% of total revenue in
2012/13. Our strong focus going forward is on increasing revenue,
from management fees and recurring revenue and thus quality and
predictability of earnings.
Funds under management and influence
During the year, total assets under management and influence
decreased, as expected, to GBP3.7 billion from GBP4.1 billion in
March 12 and GBP3.8 billion in September 12, primarily as the
result of the already reported planned exit of a number of revenue
generators.
During the year we attracted subscriptions by new clients of
around GBP138 million into our asset management business which now
manages, or advises, on GBP1.88 billion of assets. The combination
of new client inflows and performance growth resulted in
discretionary and managed assets remaining broadly flat at GBP1.6
billion, offsetting the reduction from departing investment
managers. As a result, discretionary or managed assets - a primary
driver of value - represent over 85% of the total assets within
investment management and 43% of assets under management or
influence in the group, a 4% increase over 39% at 31 March 12.
Assets under influence remained broadly stable at around GBP1.85
billion. Our current focus is on transferring legacy assets under
influence to the most suitable service agreement and platform for
our clients. In doing so we believe there will be significant
opportunities to provide additional value to our clients, while
strengthening our recurring revenue base.
Capital and cash position
The Group maintains a solid balance sheet with virtually no debt
and a strong cash position at GBP8 million and net assets of GBP9.8
million, excluding goodwill, intangibles and assets held for sale.
The quick actions taken on the cost base have enabled us to
maintain a strong cash position despite the significant investment
in the Change Management Programme. Given the stronger underlying
operating cash generation position and the completion of the Change
Management Programme during the first half of the new financial
year, we expect our capital position to strengthen, increasing our
ability to invest organically and non-organically to support
growth.
Regulatory capital requirement for continuing business across
the Group at year end was around GBP5.4 million.
A simplified business
During the year we have worked to simplify the business to allow
sharper focus on the activities that are core to our strategy and
the delivery of our growth potential.
-- A core premise of our Change Management Programme has been to
harmonise and simplify processes throughout the business. The
transition to a single outsourced operating platform for the
investment management business is a fundamental step in this
direction.
-- We have continued in our efforts to simplify our legacy Group
structure and remove subsidiaries no longer needed.
-- Of particular notice is the integration of the Savoy business
into Ashcourt Rowan Asset Management, both simplifying the business
and ensuring we have one single set of strong processes to support
it.
-- The disposal of our personal pension administration business,
accounting for around 2% of total group revenues, reduces both
distraction and risk in a highly-regulated sector with the prospect
of increasing capital requirement.
The above will result in reducing the number of regulated
entities within the Group from four to two once the FCA permissions
are formally removed.
Outlook and key risks
The financial year just ended has been a period of enormous
transformation in the industry and in our Company.
During the year we have invested significant time and resources
to address legacy regulatory issues and strengthen systems and
controls. Included in our exceptional expenditure for the year is
the GBP412,000 regulatory fine we reported in our interim statement
relating to our legacy Savoy business that has now been integrated
into Ashcourt Rowan Asset Management. We are completing a past
business review across the Savoy book of business and we have
provisioned in this year's accounts for potential client
compensation to the extent not covered by professional
insurance.
The cost of compliance with regulation in the sector is
increasing and so is the risk - financial, operational and
reputational - of non-compliance. With that in mind we continue to
put our governance, controls and compliance - in particular client
suitability - at the centre of what we do. We believe that
ultimately this will be an opportunity rather than a threat to the
business as we go forward.
While the industry is undergoing significant changes that will
result and have resulted in challenges for all the participants, we
believe the substantial progress made during the last 12 months
puts us in an ideal position to benefit from the opportunities the
industry transformation will bring and to deliver value to our
shareholders.
We would like to thank both you, our shareholders, for your
support in embarking in this exciting journey and our staff for the
hard work and commitment to delivering this transformation.
Alfio Tagliabue
Group Chief Financial Officer
1 July 2013
Business review
Operational review
As Jonathan explained in the chief executive's report, the past
year has been one of transformation for your business. If last
year's chief operating officer's report was characterised by the
planning of a detailed Change Management Programme, this year's
report is about its delivery and the exciting changes to the
business that have resulted.
Operations platform
One of the key priorities outlined last year was the need for a
single operating platform and, for the past year, this is where the
bulk of the change team's efforts have been focused. I am delighted
that these efforts have been fruitful and we have delivered the new
investment management operating platform; an outsourced portfolio,
settlement and custody service. The platform is based on JHC's
Figaro software, powered by expert operations staff from TD Wealth
Institutional. The platform has been delivered in three phases:
development of a platform for new clients; migration of Ashcourt
Rowan clients who had been using an in-sourced operating model; and
finally, migration of those clients into Ashcourt Rowan, following
the integration of Savoy Investment Management.
This new system has already begun to pay dividends for the
investment managers who, fully trained, are able to take advantage
of modern investment management tools. Similarly, the operating
platform will also deliver significant operational leverage. The
centralisation and aggregation of assets on it has made operational
support simpler and significantly cheaper to expand assets under
management.
Controls and governance
In tandem with the development of the operating platform, we
have delivered a past book review, and also completed a new set of
operating procedures. These new procedures are in place to ensure
that our controls and governance mechanisms are aligned with the
demands of the industry's new regulatory environment - specifically
with regard to the changes around the Retail Distribution Review,
which took effect at the beginning of the year.
Operations restructure
Delivery of the operating platform has also allowed for a
reduction of our operational costs immediately. The back-office hub
in Kings Hill has been closed reducing our occupancy and staff
costs although the core of our experienced team has relocated to
London, to form a new, combined middle office.
Disposal of Ashcourt Rowan Administration Limited
Similarly, the administration of our clients' pension assets has
also been simplified significantly, following the sale of our
pensions trustees companies - Ashcourt Rowan Pension Trustees
Limited and Robinson Gear (Management Services) Limited - to
Mattioli Woods. The additional benefit of this transaction is a
tangible increase in the management's focus on the core parts of
our business.
ICT
Of course, all of the technology developments rest on our ICT
infrastructure. This was recognised in the Change Management
Programme which detailed an ICT stabilisation and build phase,
covering most aspects of our technology platform. Subcomponents of
that plan included: improvements in security; provision of greater
bandwidth; faster remote access provisions; contingency planning
and disaster recovery capability, with service delivery
improvements to all system users.
Our highly-skilled ICT team has completed the stabilisation and
build phase, creating a new virtual private cloud. This new
infrastructure has already demonstrated exponential improvements
across several technology metrics but, most importantly, a
noticeably improved user-experience and much greater system
availability. Better still, it is a design built to be
scalable.
Marketing and business development
Shareholders will hopefully have noticed an upturn in our
external profile particularly that of our investment research
department. This is related to the rebuilding of our marketing team
and as well as telling our message to the outside world, we
continue to improve communication on change internally to support
the change programme and refocusing of our business.
An improved marketing resource will increase our capacity to
support organic growth through the acquisition of new clients
directly and via important external professional groups such as
solicitors, accountants and financial planners.
Facilities
The facilities team has been providing great support; casting a
professional, determined eye on to rationalisation of the estate
and occupancy costs. There have been several notably successful
rent rebates delivered. This diligence has allowed us to reduce the
number of offices from 18 to 13 but, as importantly, create
consistency across the branding in all of our regional offices.
Your team is now able to give the best possible advice locally, in
an environment that is optimised for its purpose, with an increase
in occupancy density and a concurrent reduction in costs.
Core functions
None of these many changes would have been possible without the
support of the core functions team; which has enabled the business
and provided enduring support to it, throughout the omnipresent
diet of change. Great examples of improvement can be found in the
HR team which has reduced our administration burden, and Alfio's
finance team which has significantly increased productivity,
management information and controls.
Looking forward
Over the next year, there will still be very much to do,
although the focus will switch from delivering an exceptional
change program, to delivery of continuous improvement, refinement,
and support of revenue-growth initiatives. For example, while the
ICT team will continue to support the business, adding to the
positive user experiences, they have transitioned into an
enablement phase. This will see the introduction of new ICT
services, focused at the point of sale and in client-support more
generally. Similarly, the financial planning operations team is
further developing the functionality of the client's advisory
platform. Meanwhile, the asset management operations team is
working with our partners to fine tune its use of the new operating
platform, streamlining the client on-boarding process.
Your operating team has had a demanding year of change, but
importantly, together, we have been effective in changing the
working culture of your business. Now, we have very competitive
tools at our disposal, and a motivated, focused team. We are
eagerly anticipating reaping the rewards of our investment in
infrastructure, to deliver support on this year's drive for growth.
Thank you all for the support on the climb.
Richard Sinclair
Group Chief Operating Officer
1 July 2013
Business review
Performance monitoring and review of key risks
Key performance indicators
Historically the Group has used a number of financial
performance measures to monitor its achievements throughout the
year. These financial key performance indicators (KPIs), which were
used for the period under review, are measured and reported to
management on a monthly basis. These include, amongst others,
consolidated and segmental full P&Ls, aged debt position, cash
and capital position overall and against regulatory requirements,
and movements in funds under management and influence.
In addition, other performance indicators used by the Group to
monitor its activities in the year under review include:
-- levels of new client business;
-- investment performance;
-- levels of dealing activity;
-- staff training requirements;
-- compliance and regulatory issues; and
-- client satisfaction.
The Group is continuing to review its management information and
KPIs to ensure it continues to enhance its ability to monitor its
activity and to support decision making.
A business plan and budgets are prepared for the Group each year
and progress against these are monitored throughout the year by the
Board.
Risk management
The Group reviews its risk management framework routinely in
order to ensure that it meets the business needs and regulatory
requirements of the new economic environment that has now
developed. There is a Group Risk Committee, which has terms of
reference and whose activities are summarised within the Corporate
Governance section of this report. The principal risks that face
the Group are described below. These principal risks and
uncertainties have not changed materially since the 2012 Annual
Report.
Financial risks
The principal financial risks that the Group faces together with
the policies and procedures for the monitoring and management of
those risks are set out in Note 28 to the consolidated financial
statements.
Other/operational risks
Financial regulations
The Group's operations are subject to financial regulations in
each of the jurisdictions in which it operates. The Group conducts
its businesses subject to ongoing regulation and associated
regulatory risks, including the effects of changes in the laws,
regulations, policies, voluntary codes of practice and
interpretations in the UK and the other markets in which it
operates. The Group is subject to the risks inherent in all
regulated financial businesses of having insufficient resources to
meet the minimum regulatory capital requirements. In addition,
these minimum regulatory requirements may increase in the future.
Future changes in regulatory, fiscal or other policies are
unpredictable and beyond the control of the Group. Alterations to
the regulatory requirements in any other jurisdiction may adversely
affect the Group's performance. In addition, any breach of relevant
regulatory requirements may result in regulatory sanction. The
Group is exposed to various forms of legal and regulatory risk,
including the risk of acting in breach of legal or regulatory
principles or requirements, any of which could have a negative
impact on its results and/or its relations with its clients.
As part of its Change Management Programme the Group has put
specific emphasis on a control and governance stream to ensure our
controls are robust and our model is compliant and future proof, in
particular with reference to changes following the introduction of
RDR. The compliance teams regularly engage with the management and
staff to ensure the Group is kept updated with regulatory changes.
Furthermore the Group management strongly believes in the virtues
of a proactive, transparent and collaborative engagement with the
regulators to mitigate risk and adapt to future requirements in a
changing industry.
Global economic conditions
The Group's businesses are subject to inherent risks arising
from general and sector specific economic conditions in the global
markets in which they operate. Unfavourable developments, such as
the ongoing difficulties in the financial sector and slow or
negative economic growth rates, have adversely affected the Group's
financial performance in the past and could continue to impact its
profitability.
Over the majority of the past five years, the global economy and
the global financial system have been experiencing a period of
significant turbulence and uncertainty and in particular there has
been disruption of the financial markets around the world and
related problems at many large global and UK commercial banks,
investment banks, asset and fund managers, insurance companies and
other financial and related institutions.
A general economic deterioration in the UK and/or other major
economies, including, but not limited to, business and consumer
confidence, unemployment trends, the state of the housing market,
the commercial real estate sector, equity markets, bond markets,
foreign exchange markets, counterparty risk, inflation, the
availability and cost of credit, lower transaction volumes in key
markets, the liquidity of the global financial markets and market
interest rates, could reduce the level of demand for, and supply
of, the Group's products and services.
While it is not possible for the Group to control global
economic conditions, it manages and mitigates the risk through
review of its strategy, assessment of potential impact of ongoing
economic factors on Group's business and, importantly, of its
services and cost base.
Key employees
The success of the Group depends upon the support and experience
of its employees and, in particular, senior management and
investment managers. The loss of key employees from the Group could
have a material adverse effect on its results or operations,
financial condition, performance or prospects.
The Group faces intense competition from within the financial
services industry and from businesses outside the financial
services industry for qualified employees. The future success of
the Group will depend upon its ability to attract and retain
highly-skilled and qualified personnel. The failure to attract or
retain sufficient numbers of personnel could seriously impede the
Group's financial plans and other objectives, and ultimately lead
to a reduction in funds under management.
The Group mitigates this risk through a combination of profit
driven incentive structures for key revenue generators, developing
staff internally, fostering an attractive working environment and
looking at effective models to attract new advisers and investment
managers to expand its revenue base.
Client relationships
Should certain key clients elect to reduce or liquidate their
investments managed by the Group, this would lead to a material
impact on the financial performance of the Group.
The risk is mitigated through diversification - with no single
client or relationship currently accounting for a significant
proportion of the Group revenue base - and through continued
emphasis on service delivery to clients.
Political or economic instability
Political or economic instability, terrorist acts, other acts of
war or hostility, natural disasters, geopolitical, pandemic or
other such events and responses to those acts/events may create
economic and political uncertainties, which could have a negative
impact on UK and international economic conditions generally and
more specifically on the business and results of the Group in ways
that cannot necessarily be predicted.
While difficult to mitigate the risk overall, the Group
maintains business continuity and disaster recovery plans.
Market counterparties
The Group may from time to time have exposure to market
counterparties whose creditworthiness or perceived creditworthiness
is deteriorating as a consequence of deterioration of the value of
underlying assets. Although the Group tries to limit and manage
direct exposure to market counterparties, indirect exposure may
exist through other financial arrangements. The Group may also be
exposed to the credit risk of the counterparties with respect to
payments under derivative instruments. Failure by a counterparty to
make payments due under a derivative instrument may reduce the
Group's income and adversely affect its results.
The risk is mitigated through review of key counterparties and
selection and due diligence on new counterparties.
Asset classes losing appeal
The Group manages investments in a range of asset classes,
including UK and Continental European equities and fixed interest.
Net inflows into the Group's assets under management are, in part,
determined by the relative attractiveness to investors of the
different asset classes that it manages. In the event of a
prolonged period of weak investment performance from an asset class
as a whole or if a particular asset class goes out of favour with
investors for any other reason, there may be reduced sales and/or
increased redemptions from specific funds represented by that asset
class or relevant institutional mandates may be withdrawn, either
of which could have a material adverse effect on the Group's
business, growth prospects, sales, results of operations and/or
financial condition.
The Group does not specialise in a single asset class. The risk
is mitigated through the ability to invest in a range of
traditional and alternative asset classes, and investment in funds
across a wide range of assets.
Pressure on margins caused by competition and changes to
distribution channels
The Group competes with global, national and local asset
management companies, including banks and other financial services
companies. If the market environment becomes more competitive or
there are changes to the Group's distribution channels, there may
be increased pressure on revenue margins.
A failure by the Group to compete effectively in this
environment may result in the loss of existing clients and their
business, each of which could have a material adverse effect on the
Group's business, growth prospects, sales, results of operations
and/or financial condition.
The risk is mitigated by direct access to clients, minimising
its value chain compression risk. Ultimately, the risk is mitigated
through quality of service together with efficient and cost
effective delivery.
Loss of business reputation or negative publicity
The Group is vulnerable to adverse market perception since it
operates in an industry where integrity and customer trust and
confidence are paramount. In addition, any negative publicity
(whether well-founded or not) associated with the business or
operations of the Group could result in a loss of clients and/or
mandates by the Group. Accordingly, any mismanagement, fraud or
failure to satisfy fiduciary responsibilities, or the negative
publicity resulting from such activities or any allegation of such
activities, could have a material adverse effect on the Group's
business, growth prospects, sales, results of operations and/or
financial condition.
The risk is mitigated through strong governance, monitoring and
controls. The system and operating platform compliance and
monitoring support elements are an important component in the Group
selection of its operating platform partners.
Exposure to litigation
Because of the extent and complexity of the regulatory
environment in which the Group operates and the types of products
and services that it offers, many aspects of the Group's business
are exposed to the substantial risks of litigation. If any
litigation is brought in the future against any member of the
Group, it could have a material adverse affect on the Group's
business growth prospects, sales, and results of operations and/or
financial condition.
The Group's insurance may not necessarily cover all or any of
the claims that clients or others may bring against the Group or
may not be adequate to protect it against all liability in respect
of a claim or claims.
Loss of business continuity
The Group's business operations, information systems and
processes are vulnerable to damage or interruption from fires,
floods, chemical spillage, power loss, telecommunication failures,
bomb threats, explosions or other forms or terrorist activity and
other natural and man-made disasters. These systems may also be
subject to sabotage, vandalism, theft and similar misconduct. The
same is true of third party providers on which the Group depends.
The Group's core businesses have in place disaster recovery plans
covering current business requirements. The Board understands that
key suppliers of administration, information technology services
and other back office functions have disaster recovery plans and
business continuity plans. If, however, the disaster recovery plans
of the Group or key suppliers are found to be inadequate there
could be an adverse impact on the Group's business, growth
prospects, sales, results of operations and/or financial
condition.
Inadequacy of systems and controls
The Group's financial and management controls have been reviewed
and updated due to changes to the Group's funds under management,
its target market and legal and regulatory requirements affecting
the Group. Any disruption in the further development of these
systems or processes, or issues that emerge in relation to their
implementation, may result in additional costs and may negatively
impact the Group's ability to execute its strategy and to analyse
in a timely and efficient manner its financial and other business
information, and may ultimately have a material adverse effect on
the Group business, growth prospects, sales results of operations
and/or financial condition.
The Group's ability to maintain financial controls and provide a
high-quality service to customers depends, in part, on the
efficient and uninterrupted operation of its management information
systems, including its computer systems. Any damage to, or failure
of, its management information systems could result in
interruptions to the Group's financial controls and customer
service. Such interruptions could have a material adverse effect on
the Group's business, growth prospects, sales, results of
operations and/or financial condition.
This risk is mitigated by developing policies and processes that
identify, measure, monitor and control risks incurred by the Group,
maintaining an organisational structure that clearly assigns
responsibility, authority and reporting relationships, ensuring
delegated responsibilities are carried out and monitoring the
adequacy and effectiveness of the internal control system.
Acquisition risk
The Group has undertaken a significant number of acquisitions in
the past with 11 acquisitions having been completed since September
2005 when Ashcourt Rowan was admitted to AIM. Failure to carry out
sufficient due diligence, ineffective warranties and cultural
mismatch of new employees could result in anticipated value to the
Group not being achieved.
The Group is primarily focusing on building on its existing
client base, growing organically and ensuring it has a robust
platform to integrate previous acquisitions, but also providing a
strong and controlled framework to integrate future acquisition.
The management teams manage and mitigate this risk by identifying
external consultancy firms to perform due diligence on specialist
areas, in conjunction with internal subject matter resources, and
setting up internal governance structure to review and assess the
findings against the overall fit with the Group's culture, growth
ambitions and working practices.
Governance
Board of directors
Non-executive
Hugh Ward
Non-executive chairman
Hugh Ward has worked in the investment services industry since
1973, holding senior positions with Schroders, Capital House and
Invesco, where he was chief executive of the Group's UK and
offshore business, and a member of the Invesco Group Executive
Board.
Hugh has experience leading significant corporate restructuring
and development activities, and currently acts as a non-executive
and a consultant for a number of companies in the investment,
property and technology sectors. As a former chief executive of
Invesco UK, and a key architect of the merger between Invesco and
Perpetual, Hugh is a significant asset to the Ashcourt Rowan group
following his recent appointment to the board of the Company as
on-executive chairman.
Steve Haines
Non-executive director
Steve joined the Company in August 2011, having worked in the
asset management sector at Dwyer since 2009. A qualified
accountant, he had previously spent 20 years in the property and
residential development industry, holding a range of board
positions, reflecting general management, operational and financial
responsibilities. He is a member of the Chartered Institute of
Management Accountants, Steve brings a detailed knowledge of
business infrastructure and control systems alongside his broad
commercial experience. Steve is chairman of the Company's audit
committee.
James Roberts
Non-executive director
Jim Roberts is a qualified actuary and has nearly 40 years'
experience in the life insurance industry. He spent 26 years at
Skandia Group, including positions as appointed actuary, finance
director and, from 1992 to 2006, Group investment director. He has
substantial experience of investment management and in particular
the retail investment market. He is currently a non-executive
director of Sarasin & Partners LLP, which operates a broad
range of institutional, charity, private client and retail
products, and MGM Advantage, a mutual life assurance company
specialising in the annuity market. He is an adviser to Simply Biz,
a broker service provider and also chairman of the investment
committee of Verbatim Investment Management.
Executive
Jonathan Polin
Group chief executive officer
As Group chief executive, Jonathan Polin is responsible to the
Board for the development and delivery of the group strategy.
Jonathan joined the Company on 2 September 2011 having
previously been sales and marketing director at Ignis Asset
Management. During Jonathan's time at Ignis he was responsible for
building their third party business in institutional, wholesale and
retail markets in the UK, Europe, Asia and the US. He was also the
architect of the highly-successful joint venture strategy. Jonathan
was on the Board of Ignis and each of the joint venture businesses
and offshore companies.
He began his financial services career with Prudential in 1992,
having spent the previous 12 years in the Army. In 1994 Jonathan
took up the position of managing director UK, European and Middle
Eastern sales at Aberdeen Asset Management. During his tenure he
moved Aberdeen into the No1 slot in the UK retail market and built
the distribution businesses in Europe and the Middle East.
Richard Sinclair MBE
Group chief operating officer
Richard Sinclair joined Ashcourt Rowan in January 2012 as Group
chief operating officer. Previously, he was in telecoms as Ofcom's
delivery director, responsible for the electromagnetic spectrum
required for the London 2012 Games. He was also a member of its
operations board, leadership steering group, and a mentor to
developing leaders. He is a Fellow of the Chartered Institute of
Logistics and Transport.
Earlier, Richard had an exciting career in the British Army,
beginning with a commission into the Scots Guards and including
operations in the Middle East and Central Asia. He was decorated
with an MBE in 2008. He has an MSc from Cranfield University; an
MA, with merit, from Kings College London; and an honours degree in
Immunology, from the University of Glasgow.
Alfio Tagliabue
Group chief financial officer
Alfio is the Group chief financial officer, responsible for the
finance function and strategic planning across the Group.
Alfio joined the Company in January 2012 having spent the
previous 12 years as a board level consultant to the investment and
wealth management industry, advising on strategy, corporate
development, corporate transactions, strategic and financial
planning, and operational and organisational issues.
Prior to that, from 1995 to 2000 Alfio was an engagement
director at Mars & Co, an international strategy consultancy,
advising global clients at board level on a wide range of strategic
projects. He started his career in London in 1992 with Frost &
Sullivan, a sector analysis consultancy. An Italian national, Alfio
holds a first class degree in accounting, economics and business
administration from Bocconi University.
Governance
Directors' report
The Directors present their report and the audited financial
statements for the year ended 31 March 2013.
Principal activities
The principal activity of the Group is that of providing wealth
management and investment management services to a diverse range of
private clients, charities, trusts and institutions.
The chairman's report, the CEO report, the finance review,
operations report and the business review provide a review of the
Group's activities during the year, including a consideration of
key performance indicators and risk management policies. The CEO
report also provides details of the Group's planned future
developments.
Results and dividends
The results of the Group for the year show a loss after tax of
GBP2.1 million (2012: GBP2.6 million). No dividends have been paid
or proposed.
Capital structure
The Company's share capital is comprised of one class of
ordinary shares of GBP0.2 each. At 31 March 2013, 26,994,487 shares
were in issue (2012: 26,938,473 shares of GBP0.2). The shares carry
no rights to fixed income and each share carries the right to one
vote at general meetings. All shares are fully paid.
There are no specific restrictions within the Company's Articles
of Association or Memorandum on the size of a shareholding or on
the transfer of shares which are both covered by the provisions of
the Articles of Association and prevailing legislation. However,
the Company is an owner of certain UK Financial Conduct Authority
regulated companies and, as such, there is a requirement upon
"controlling shareholders" to seek permission from the Financial
Conduct Authority for holdings of 10% or more of the Company's
share capital.
Voting rights of shares held by the trustees of the Company's
Share Incentive Plan (SIP) are not exercised unless the trustee is
directed to vote by the employee SIP participant.
Regarding the appointment and replacement of Directors, the
Company is governed by the Company's Articles of Association, the
Companies Acts and related legislation. Amendment of the Articles
of Association requires a Special Resolution of shareholders.
Directors and their interests
The Directors who served during the year were:
Jonathan Polin
Stephen Haines
Alfio Tagliabue
Jim Roberts
Richard Sinclair (appointed 1 April 2012)
Hugh Ward (appointed 9 July 2012)
Ranil Perera (resigned 1 April 2012)
Kenneth West (resigned 31 December 2012)
The beneficial interests of the directors in the shares, share
options and long-term incentives of Ashcourt Rowan plc at 31 March
2013 were:
Ashcourt Rowan plc Beneficial Beneficial
- ordinary shares of holdings at holdings at
GBP0.20p 31 March 2013 31 March 2012
----------------------- --------------- ---------------
Jonathan Polin 231,645 200,000
----------------------- --------------- ---------------
In addition to the above, directors have interest in shares of
the Company through the GSOP described in the remuneration report
as follows, provided that the average share price on the 20 days
before 1 September 2016 is above GBP2.50:
Final Share Price
------------------------------------------------------------------------------------------------------------------------
GBP2.50 GBP3.00 GBP3.50 GBP4.00 GBP6.00
------------------------ -------------------- ---------------------- ---------------------- ------------------------
Number % of Number % of Number % of Number % of Number % of
of current of current of current of current of Ordinary current
Ordinary issued Shares issued Ordinary issued Ordinary issued Shares issued
Shares ordinary ordinary Shares ordinary Shares ordinary ordinary
share share share share share
capital capital capital capital capital
----------- ---------- ------------ -------- ---------- ---------- ---------- ---------- ---------- ------------ ----------
Jonathan
Polin 428,753 1.4 750,317 2.5 1,071,882 3.4 1,500,634 4.7 2,143,763 6.4
----------- ---------- ------------ -------- ---------- ---------- ---------- ---------- ---------- ------------ ----------
Alfio
Tagliabue 98,909 0.3 173,091 0.6 247,273 0.8 346,182 1.1 494,545 1.5
----------- ---------- ------------ -------- ---------- ---------- ---------- ---------- ---------- ------------ ----------
Richard
Sinclair 83,636 0.3 146,363 0.5 209,091 0.7 292,727 0.9 418,181 1.2
----------- ---------- ------------ -------- ---------- ---------- ---------- ---------- ---------- ------------ ----------
Corporate and social responsibility
The Group is committed to conducting its business in a socially
responsible manner and to respect the needs of employees,
investors, customers, suppliers, regulators and other stakeholders.
The Group is also committed to being a responsible employer and to
promoting values, standards and policies designed to assist our
employees in their conduct, working and business relationships.
Group charity partner
For the first time, the Group has recently nominated a charity
partner, Together for Short Lives. The research and nomination
process commenced in December 2012 and was carried out by a group
of volunteers, the charity working group. All employees
participated in selecting their preferred charity partner from a
short list of three. As well as raising funds for an extremely
worthwhile charity, it is hoped that this initiative will foster
employee engagement through collective efforts across all our
employees and office locations. The Group will support employees'
efforts through a financial contribution as well as paid time-off
to undertake specific activities.
Environment
The most significant impact on the environment resulting from
the Group's activities is the emission of greenhouse gases as a
result of running the Group's offices, associated travel and the
recycling of waste. The consolidation of some of our offices in
similar locations has helped reduce footprint. The Group is also
committed to minimising the amount of travel that its employees
undertake and to recycling as much of the Group's waste as
possible.
Employees as at 31 March 2013
The Group as a whole had 280 employees at 31 March 2013,
equating to 268 employees on a full time equivalent (FTE) basis.
This compares to 340 for the previous year.
The Company had 115 employees including three executive
directors as at 31 March 2013, compared to 46 the previous year.
Three non-executive directors were also appointed as at this date.
The increase in headcount is mainly due to the transfer of
employment of operations staff from the subsidiary companies to the
Group. The Group's subsidiary companies had a total 166 employees
(161 FTE), compared to 294 for the previous year. Again, this
change is partly due to employees transferring to the Group.
Overall for the Group staff costs and incentives were 59% of
revenue during the year (2012: 64.3%).
During the year, all permanent employees were given awards under
the Group's long-term incentive schemes.
Employee involvement
In addition to the charity working group, there are various
Group and subsidiary Company committees in place. The CEO has an
advisory council which informs group policies. Group roadshows are
held at least annually, either at one or two central locations or
by senior management delivering the updates in regional offices.
Over 200 employees attended the last Group roadshow held in London
in December 2012.
Equal opportunities and dignity at work
The Group is an equal opportunities employer and is committed to
equal opportunities in its employment and recruitment practices.
The Group's Equal Opportunities and Dignity at Work Policy ensures
that no potential or existing employee or worker receives less
favourable treatment than another on the grounds of disability,
their age, sex, gender reassignment, pregnancy, maternity, race
(which includes colour, nationality, and ethnic or national
origins), sexual orientation, religion or belief, or if someone is
married or is in a civil partnership.
The Equal Opportunities and Dignity at Work Policy applies to
all workers and the Group also aims to encourage co-operation from
consultants, contractors, suppliers and others engaged by the
Group.
Health and safety
The Group has a health and safety policy which is also approved
by the subsidiary boards and owned by the subsidiary chief
executive officers. However, all managers have a responsibility to
ensure that a healthy and safe working environment is in place for
all employees. Annual workstation assessments are carried out for
all employees. As the employees work in office environments, there
are no significant areas of risk on which to report.
Charitable and political contributions
No charitable or political donations were made during the
period, although this will change going forward, now that we have a
nominated charity partner.
Supplier payment policy
The Group's policy concerning the payment of its trade creditors
is to pay on the basis of the agreed terms established with each
supplier, providing that all terms and conditions have been
complied with and in accordance with the Group's financial control
procedures.
The Group's average credit period (expressed as creditor days)
during the year ended 31 March 2013 was 30 days (2012: 40
days).
Substantial shareholdings
At 28 March 2013, the issued share capital of the Company was
26,994,487 ordinary shares of GBP0.2 each (2012: 26,938,473 of
GBP0.2 each) and the following notification of shareholdings had
been notified to the Company as holding 3% or more of the Company's
share capital:
Name of holder No of shares % of total
---------------------------- ------------- -----------
Jodi One Trust 4,463,798 16.54
---------------------------- ------------- -----------
ACP Octagon Ltd 3,450,898 12.78
---------------------------- ------------- -----------
La Galera Corporation 3,422,637 12.68
---------------------------- ------------- -----------
Henderson Global Investors 2,730,493 10.12
---------------------------- ------------- -----------
Artemis Investment
Management LLP 2,150,000 7.96
---------------------------- ------------- -----------
Kestrel Partners LLP 1,679,490 6.22
---------------------------- ------------- -----------
Al Ain Capital 1,644,916 6.09
---------------------------- ------------- -----------
Mr Victor Haghani 1,110,760 4.11
---------------------------- ------------- -----------
Micro Trading Capital 1,032,433 3.82
---------------------------- ------------- -----------
Financial instruments and risk management
The risk management objectives and policies of the Group are set
out in Note 28 to the consolidated financial statements.
Directors' qualifying third party indemnity provisions
The Group has made qualifying third party indemnity provisions
in favour of the Directors against liability in respect of
proceedings brought by third parties and these remain in force as
at the date of this Directors' Report.
Annual General Meeting
Notice of the Annual General Meeting will be sent to
shareholders with the Annual Report.
It is anticipated that all directors, including the chairman of
the Audit, Remuneration and Risk Committees, will be at the Annual
General Meeting and available to answer questions.
In accordance with the Company's Articles of Association,
Jonathan Polin and Steve Haines retire by rotation and being
eligible offer themselves for re-election.
Shareholders will see that they are also being asked to consider
and if thought fit, pass one Ordinary Resolution and one Special
Resolution regarding the allotment and purchase of shares.
A further Special Resolution is being proposed to allow the
Company to purchase up to 10% of the Company's issued ordinary
shares in the market.
Each of the above authorities will expire at the Annual General
Meeting of the Company to be held in 2014 or 15 months from the
date of the resolution (whichever is earlier).
Disclosure of information to auditors
The directors who held office at the date of approval of this
directors' report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company's
auditors are unaware and each director has taken all the steps that
he/she ought to have taken as a director to make himself/herself
aware of any relevant audit information and to establish that the
Company's auditors are aware of that information.
Auditors
BDO LLP have expressed their willingness to continue in office
and a resolution to reappoint them will be proposed at the annual
general meeting in accordance with section 485 of the Companies Act
2006.
By order of the Board
Alfio Tagliabue
Company secretary
1 July 2013
Corporate governance
As an Alternative Investment Market ("AIM") quoted Company,
compliance with the Financial Reporting Council's UK Corporate
Governance Code (the "Code") is not mandatory. However, the Board
is committed to maintaining appropriate standards of corporate
governance and has adopted a "comply or explain" approach as has
been recommended within the 2012 update of the Code.
Statement of compliance
The Board considers that given the size and nature of its
activities it does not intend to comply with the Code in respect of
certain items listed below. This is considered by the Board to be
reasonable and does not compromise the overall principles of
corporate governance which the Board strongly supports:
-- The Remuneration Committee, in deciding on remuneration at
its annual review, it takes into account the performance of the
Group as a whole and that of the individual Directors. However, the
nature of this performance evaluation is not specified in the
Annual Report (Code B.6.1)).
-- Where the Board permits the executive directors to serve in
roles with other companies, as long as they do not compromise the
individual's ability to perform those services to the Group, the
earnings from such roles are not disclosed to the Board nor paid to
the Group (Code D.1.2).
-- The Board has not created a Nominations Committee (Code B.2.1
and B.2.4) as it believes that with the current number of Directors
being relatively small, the full Board should be included in the
process for making Board appointments. The recommendations within
the Code regarding the appointment of new Directors to the Board
(Code B.2.2, B.2.3 and B.3.1) are complied with by the Board.
-- Shareholders have not previously been invited to specifically
approve all new long-term incentive schemes and significant changes
to existing schemes (Code D.2.4).
The Board considers that the remuneration of Executive Directors
should include a performance related element which is almost
entirely based on the award of GSOP shares or other share-based
incentives as recommended by the Remuneration Committee and details
are set out in the Directors' Report and in the Remuneration
Committee Report.
Board of Directors
The Board of Directors has overall responsibility for the
Group.
The Board comprises of a non-executive chairman ("chairman"), a
Group chief executive director, two non-executive directors and two
further executive directors. The chairman receives fees as a
non-executive director. The Board is satisfied that it has an
appropriate mix of independence and experience in its non-executive
directors but is aware that it may be necessary in the future to
seek to appoint an additional non-executive director to provide
further specialist knowledge and experience. The roles of chairman
and chief executive are intended to remain separate.
The chairman provides strategic and operational guidance
bringing to bear his extensive experience of the fund management
industry. He also oversees the duties performed by the Group chief
executive and ensures that they are in line with Board
expectations. The Group chief executive manages the day-to-day
running and strategic direction of the Company in line with policy
decisions given by the Board and shareholder expectations.
The Board retains full control of the Group with day-to-day
operational control delegated by the Board to the executive
directors. The full Board meets bi-monthly and on any other
occasions it considers necessary. During the year there were 15
meetings of the Board of which nine full Board meetings, four
meetings of the Remuneration Committee, four meetings of the Audit
Committee and four meetings of the Group Risk Committee. All full
meetings were fully attended by their constituent directors.
The senior independent director at 31 March 2013 is James
Roberts. The Board considers that Hugh Ward and James Roberts were
independent for the purposes of the Code. Copies of the terms and
conditions of the appointment of non-executive directors are
available on request from the Company's registered office.
The Board is responsible for approving interim and annual
financial statements, formulating and monitoring Group strategy,
approving financial plans and reviewing performance, as well as
complying with legal, regulatory and corporate governance matters.
There is a schedule of matters reserved for the Board.
Ashcourt Rowan is committed to the training and development of
all staff to ensure professional standards are maintained and
enhanced. All directors are required to dedicate a certain number
of hours to their own training and development. Training and
development includes activities to keep up to date with the
Company's specific issues and industry, market and regulatory
changes.
Committees of the Board
The Board has three existing standing committees, the Risk
Committee, Audit Committee and the Remuneration Committee. The
Audit and Remuneration Committees have written terms of reference,
which were last reviewed in June 2006 and approved by the Board.
The Risk Committee was formed more recently and its terms of
reference were reviewed and adopted by the Board on 25 September
2009. Membership of the committees is set out below. Copies of the
terms of reference are available on request from the Company's
registered office and on the Group's website at
www.ashcourtrowan.com.
Remuneration Committee
The Remuneration Committee met formally four times to discuss
remuneration and bonus arrangements.
The Remuneration Committee's mandate is to assist the directors
in fulfilling their oversight responsibilities with respect to
developing compensation and human resource policies and developing
and assessing executive management compensation, development and
succession. The Committee is chaired by Hugh Ward and comprises
Steve Haines and Jonathan Polin (Group chief executive officer)
both appointed on 2 September 2011.
Audit Committee
The Audit Committee was established on 15 June 2006 and meets at
least twice a year. Steve Haines is the chairman of the Audit
Committee. Other members of the Audit Committee are Hugh Ward and
James Roberts. During the financial year the Audit Committee met
formally on four occasions.
The Audit Committee's mandate is to assist the directors in
fulfilling their responsibilities with respect to the Company's
financial statements and other financial information required to be
disclosed by the Company to the public, the Company's compliance
with legal and regulatory requirements, and the performance of the
Company's external auditors. In addition the Audit Committee has
oversight responsibility for the Group's Internal Audit function,
which is supported by external specialist auditors, Kingston Smith
Consulting LLP. The Audit Committee meets as required and
specifically to review the Interim Report and Annual Report and to
consider the suitability and monitor the effectiveness of the
internal control processes. The Audit Committee reviews the
findings of the external auditors and reviews accounting policies
and material accounting judgements.
The independence of the auditors is considered by the Audit
Committee. The Audit Committee (with no executive director present)
meets at least once per financial year with the auditors to discuss
independence and objectivity, the Annual Report, any issues
arising, internal control processes and any other appropriate
matters. As well as providing audit related services the auditors
also provide taxation and other professional advice. The fees in
respect of audit and other services are disclosed in Note 7 to the
Group's financial statements. Fees for non-audit services paid to
the auditors and their associates have been considered and, with
the work having been carried out by a separate team of tax
specialists and there were no subjective judgements involved, the
Audit Committee considers that the objectivity and independence of
the auditors is safeguarded.
The Audit Committee is responsible for reviewing external audit
arrangements and for any recommendation to the Board regarding
change of audit firm. The last audit services contract tender
process was conducted in 2010, which led to the appointment of BDO
as auditors. The Audit Committee plan to undertake an audit
services contract tender process again before the fifth anniversary
of their appointment.
Internal audit
The Board is responsible for establishing and maintaining the
Group's system of internal control and for reviewing its
effectiveness. The system of internal control is designed to
manage, rather than eliminate, the risk of failure of the
achievement of business objectives and procedures and can only
provide reasonable but not absolute assurance against material
misstatement or loss. The Audit Committee continues to monitor and
review the effectiveness of the system of internal control and
report to the Board when appropriate with recommendations. During
the financial year ended 31 March 2010 the Audit Committee
recommended, and the Board accepted, that an internal audit
function be created. In order to expedite the creation of such a
function, the Group has employed a third party consultant to assist
the Board in the creation of the internal audit function and to
carry out a number of reviews. This arrangement has continued with
the internal audit work being carried out by the third party
consultancy firm, reporting its findings to the Audit Committee.
The responses of the Audit Committee to the reports submitted to
date have been varied, depending upon the findings reported.
The main features of the Group's internal control are outlined
below:
-- a control environment exists through the close management of
the business by the executive directors and senior management. The
Group has a defined organisational structure with delineated
approval limits. Controls are implemented by the executive
directors and monitored by the Risk Committee and Internal
Audit;
-- the Board has a schedule of matters expressly reserved for
its consideration and the schedule includes acquisitions and
disposals, major capital projects, treasury and risk management
policies and approval of budgets;
-- the Group utilises a detailed budgeting and forecasting
process. Detailed budgets are prepared annually by each subsidiary
Company, business unit and function before submission to the Board
for approval. Forecasts are updated to reflect changes in the
business and are monitored by the Board including cash flow and
projections. Actual results are monitored against annual budgets in
detail on a monthly basis, with variances highlighted for the
Board;
-- financial risks are identified and evaluated for each major
transaction for consideration by the Board and senior management;
and
-- standard financial control procedures operate throughout the
Group to ensure that the assets of the Group are safeguarded and
that proper accounting records are maintained.
Risk Committee
The Risk Committee was established on 29 July 2009 and met
formally four times during the financial year. James Roberts is the
chairman of the Group Risk Committee having taken over from Ranil
Perera on 22 February 2012. The other participants in the Group
Risk Committee are Jonathan Polin, Group CEO; Alfio Tagliabue,
Group chief financial officer; Richard Sinclair, Group chief
operating officer; and Mark Smith, Group head of compliance.
The Risk Committee's mandate is to assist the Directors with
identifying all actual and potential material risks to which the
Group's businesses are exposed and to assess whether reported risks
fall within the tolerance of the Group as determined by the Group's
risks and governance policies.
Conflicts of interest
A director has a duty under the Companies Act 2006 ("the Act")
to avoid a situation where he or she has, or can have, a direct or
indirect interest that conflicts or possibly may conflict with the
Company's interests. The Act allows the Board to authorise a
Director's conflict or potential conflict of interest where the
Articles of Association contain a provision to this effect and also
allows the Articles of Association to contain other provisions for
dealing with Directors' conflicts of interest to avoid a breach of
duty. Shareholders approved the necessary changes to the Company's
Articles of Association at the Annual General Meeting on 25
September 2008.
A register of actual or potential conflicts notified and
authorised is reviewed and maintained regularly by the Board.
Relationship with shareholders
The Company places great emphasis on the importance of regular
communication with shareholders. The Group's website has undergone
extensive review over the last year and we will continually review
this important method of Group information dissemination. The
Group's websites will be kept up to date covering all corporate
activity. The Company welcomes all shareholders to its Annual
General Meeting with the opportunity to ask questions formally at
the meeting or more informally afterwards. In addition the
chairman, Group chief executive officer and Group chief financial
officer have met directly with a variety of existing major
shareholders during the course of the year under review in order to
ensure that the Board as a whole has a well developed understanding
of the views of its major shareholders about the Group. The Board
also takes into consideration the views of its advisers, through
whom a number of shareholders are also encouraged to provide
feedback.
The Group reports formally to shareholders in its Interim Report
and Annual Report setting out details of its activities. In
addition the Group keeps shareholders informed of events and
progress through the issue of regulatory news in accordance with
the AIM Rules of the London Stock Exchange. In addition the Group
issues trade orientated press releases in order to ensure that
customers and suppliers are kept informed of relevant activities by
Ashcourt Rowan and its subsidiary companies.
Where possible the Annual Report is made available to
shareholders at least 20 business days before the Annual General
Meeting. Directors are required to attend Annual General Meetings
of the Company unless unable to do so for personal reasons or due
to pressing commercial commitments. Shareholders are provided with
the opportunity to vote on each separate resolution. The Company
counts all proxy votes and will indicate the level of proxies
lodged for each resolution.
Going concern
As disclosed under Note 2 to the financial statements, the Group
financial statements have been prepared on a going concern basis as
the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future and at least 12 months from the date of approval
of the accounts.
Other Board issues
The Group has appropriate insurance cover in place in respect of
legal action against its directors.
Any director has access to the advice and services of the
company secretary and may seek independent professional advice, if
necessary, at the Company's expense.
Governance
Remuneration committee report
Composition and terms of reference
The Group's Remuneration Committee was established on 15 June
2006 and is comprised of the non-executive chairman, Hugh Ward,
Steve Haines, James Roberts and Jonathan Polin, the Group CEO. The
Committee is chaired by Hugh Ward.
The purpose of the Remuneration Committee is to ensure that the
executive directors and other senior executives are fairly rewarded
for their individual contribution to the overall performance of the
Company. The Committee considers and recommends to the Board the
remuneration of the executive directors and is kept informed of the
remuneration packages of senior staff and invited to comment on
them.
The Board retains responsibility for overall remuneration
policy. The Remuneration Committee operates within agreed terms of
reference.
Policy on executive directors' remuneration
Executive remuneration packages are designed to attract and
retain executives of the necessary skill and calibre to run the
Company successfully but avoiding paying more than is necessary.
The Remuneration Committee recommends to the Board remuneration
packages by reference to individual performance and uses the
knowledge and experience of the non-executive directors. The
Remuneration Committee has responsibility for recommending any
long-term incentive schemes.
The Board determines whether or not executive directors are
permitted to serve in roles with other companies. Such permission
is only granted where a role is on a strictly limited basis, where
there are no conflicts of interest or competing activities and
providing there is not an adverse impact on the commitments
required to the Group.
There are potentially five main elements of the remuneration
package for executive directors and senior employees:
(i) Basic salaries and benefits in kind
Basic salaries are recommended to the Board by the Remuneration
Committee, taking into account the performance of the individual
and the rates for similar positions in comparable companies.
Benefits in kind include death in service insurance, permanent
health insurance and private medical insurance. Benefits in kind
are not pensionable.
(ii) Share Incentive Plan
Ashcourt Rowan operates an authorised Group share incentive plan
for employees, whereby the Group will match the number of shares
acquired by the employee under the scheme up to a maximum of
GBP1,500 per annum. These matching shares vest after three
years.
(iii) Discretionary bonus
The Group operates a discretionary bonus scheme and awards were
made to employees in line with the Group High Performance Culture
Review System. In parallel to the discretionary bonus scheme,
operating subsidiaries of the Group had formulaic bonus schemes in
place during the financial year for revenue-generating staff based
on sharing in a proportion of revenues, contribution or funds under
management.
(iv) Long-term incentive plan (LTIP)
The maximum number of shares available to be awarded under the
plan is limited to 20% of the issued share capital of the Company
over the life of the plan. The awards are also conditional upon the
achievement of individual targets by the employee.
The LTIP is overseen by the Remuneration Committee which
recommends to the Board the individual grant of shares to senior
management and executive directors and the quantity of the awards
for other employees of the Group, all based on Group and personal
performance targets and specifying the terms under which eligible
individuals may be invited to participate.
The total number of shares over which LTIP and deferred share
bonus awards have been made at the beginning and end of the
financial year is as follows:
Deferred share
LTIP awards bonus Total
------------------------------------ ------------ -------------- ------------
At 31 March 2011 147,890,669 21,689,581 169,580,250
Awards exercised during the year (14,007,330) (11,991,281) (25,998,611)
Awards forfeited during the year (82,885,002) (1,408,500) (84,293,502)
------------------------------------ ------------ -------------- ------------
At 31 March 2012 pre-consolidation 50,998,337 8,289,800 59,288,137
------------------------------------ ------------ -------------- ------------
At 31 March 2012 post-consolidation 509,983 82,898 592,881
------------------------------------ ------------ -------------- ------------
Awards exercised during the year (21,333) (27,292) 48,625
Awards forfeited during the year (139,605) (4,702) (144,307)
Awarded during the year 803,000 - 803,000
------------------------------------ ------------ -------------- ------------
At 31 March 2013 1,152,045 50,904 707,318
------------------------------------ ------------ -------------- ------------
Growth Securities Ownership Plan
On 6 March 2013 the Company awarded ordinary shares to employees
of the Group under a Growth Securities Ownership Plan ("GSOP"), in
exchange for their continued service to the Group. The number of
shares to be awarded is calculated based on a fixed multiplier,
which varies based on the average share price in the 20 days before
the settlement date of 1 September 2016. The maximum potential
number of shares to be awarded under the GSOP is approximately 4.76
million.
The Group has the option to settle the shares in cash or equity,
under the terms and conditions of the Plan. The Group has made the
judgement that the shares should be accounted for as equity-settled
share-based payments, which vest on the settlement date, subject to
the share price related vesting conditions described above. The
fair value of these awards is based on the market value at the date
of grant and has been calculated on the likelihood of successful
completion of the vesting conditions and has been charged to the
income statement over the vesting period of the awards. These have
been valued using a Monte Carlo simulation model, with expected
volatility of 37%, dividend yield of 3.1% and risk free rate of
0.5%. The fair value at the grant date calculated using these
assumptions is GBP971,968.
In the period between the grant date and 31 March 2013, no
shares have been forfeited, exercised or have lapsed. A charge of
GBP19,000 has been recognised in the income statement (2012:
nil).
(v) Pensions
The Group pays a defined contribution to the pension scheme of
executive directors and employees or may offer a cash alternative
in particular cases. The individual pension schemes are private and
their assets are held separately from those of the Group.
Salaries and benefits were reviewed between March and June 2012
to cover the year from 1 April 2012 to 31 March 2013 and in June
2013 to cover the year from 1 April 2013 to 31 March 2014. Future
reviews will continue to be on an annual basis.
Service contracts
Executive directors are employed under service contracts
requiring a maximum of 12 months notice by either party. The
non-executive chairman, Hugh Ward, and the non-executive directors,
James Roberts and Steve Haines, receive payments under appointment
letters which are terminable by up to 12 months' notice from either
party.
Policy on non-executive directors' remuneration
The chairman and the non-executive directors each receive a fee
for their services. The fee is approved by the Board, mindful of
the time commitment and responsibilities of their roles and of
current market rates for comparable organisations and appointments.
The non-executive directors and the chairman are reimbursed for
travelling and other minor expenses incurred.
The emoluments of the individual directors who served during the
year were as follows:
Salary Compensation Benefits Sharebased Pension Total
or fees for loss in kind payments GBP GBP
GBP of office GBP GBP
GBP
------------- --------- ------------- --------- ----------- -------- ----------
Executive Directors
-------------------------------------------------------------------------------------
J Polin 350,000 - 2,257 - 35,000 387,257
------------- --------- ------------- --------- ----------- -------- ----------
A Tagliabue 200,000 - - - - 200,000
------------- --------- ------------- --------- ----------- -------- ----------
R Sinclair 200,000 - 2,257 - 20,000 222,257
------------- --------- ------------- --------- ----------- -------- ----------
Non-Executive Directors
-------------------------------------------------------------------------------------
H Ward** 49,103 - - - - 49,103
------------- --------- ------------- --------- ----------- -------- ----------
K West* 63,750 - - - - 63,750
------------- --------- ------------- --------- ----------- -------- ----------
S Haines 54,167 - - - - 54,167
------------- --------- ------------- --------- ----------- -------- ----------
J Roberts 50,000 - - - - 50,000
------------- --------- ------------- --------- ----------- -------- ----------
Total 967,020 - 4,514 - 55,000 1,026,534
------------- --------- ------------- --------- ----------- -------- ----------
* For period to resignation from the Ashcourt Rowan plc Board of
Directors
** For period from appointment to Ashcourt Rowan plc Board
GBP54,750 of the fees for Kenneth West were paid to Fernshaw
Development Group Limited
In addition to their emoluments, directors received
reimbursement for expenses directly incurred on Group business.
Pension contributions are in respect of defined contribution
arrangements.
Hugh Ward
Chairman of the Remuneration Committee
1 July 2013
Governance
Statement of directors' responsibilities in respect of the
directors' report and the financial statements.
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have elected to prepare the Group and Company financial statements
in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union. Under company law the
directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the Group and Company and of the profit or loss of the
Group for that period. The directors are also required to prepare
financial statements in accordance with the rules of the London
Stock Exchange for companies trading securities on the Alternative
Investment Market.
In preparing these financial statements, the directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with
IFRSs as adopted by the European Union, subject to any material
departures disclosed and explained in the financial statements;
and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the directors are also
responsible for preparing a directors' report, directors'
remuneration report and corporate governance report that complies
with that law and those regulations.
Website publication
The directors are responsible for ensuring the Annual Report and
the financial statements are made available on a website. Financial
statements are published on the Company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the directors.
The directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein.
Consolidated income statement
for the year ended 31 March 2013
2012
Note 2013 restated
------------------------------------------------------ ---------- ------------ ------------
Continuing operations GBP'000s GBP"000s
Revenue [6] 32,597 35,723
Cost of sales (11,471) (15,818)
------------------------------------------------------------------ --------- ---------
Gross profit 21,126 19,905
Other administrative expenses (18,363) (19,644)
Amortisation and depreciation (2,154) (1,439)
Share-based payments [26] (96) (95)
Exceptional costs [7] (4,221) (1,445)
Exceptional receipts [7] 1,148 180
----------------------------------------------------- ----------- --------- ---------
Total administrative expenses (23,686) (22,443)
------------------------------------------------------------------ --------- ---------
Loss from operations [7] (2,560) (2,538)
Finance income [9] 62 26
Other gains and losses [10] - 26
Finance costs [11] (9) (18)
----------------------------------------------------- ----------- --------- ---------
Loss before tax (2,507) (2,504)
Taxation [12],[19] 148 188
----------------------------------------------------- ----------- --------- ---------
Loss for the year from continuing operations (2,359) (2,316)
Profit/(loss) for the year from discontinued
operations, net of tax [5] 214 (288)
----------------------------------------------------- ----------- --------- ---------
Loss for the year attributable to the equity holders of the
parent (2,145) (2,604)
------------------------------------------------------------------ --------- ---------
Loss per share - continuing operations
Basic [13] (8.74)p (11.02)p
---------------------------------------- ------ -------- ---------
Diluted [13] (8.74)p (11.02)p
---------------------------------------- ------ -------- ---------
Loss per share - total operations
Basic [13] (7.95)p (12.39)p
---------------------------------------- ------ -------- ---------
Diluted [13] (7.95)p (12.39)p
---------------------------------------- ------ -------- ---------
Note:
GBP'000s GBP'000s
Profit before Interest, Tax, Depreciation,
Amortisation, Exceptional Costs and
Share-based payments on a continuing
basis 2,763 261
-------------------------------------------- --------- ---------
Consolidated statement of comprehensive income
for the year ended 31 March 2013
GBP'000s GBP'000s
--------------------------------------------------------------- --------- ---------
Loss for the year (2,145) (2,604)
Other comprehensive income:
Unrealised currency (loss)/gain recognised directly in equity - -
--------------------------------------------------------------- --------- ---------
Total comprehensive income for the year (2,145) (2,604)
--------------------------------------------------------------- --------- ---------
Attributable to:
Equity holders of the parent (2,145) (2,604)
--------------------------------------------------------------- --------- ---------
The notes set out in the subsequent pages of this report form
part of these financial statements.
Consolidated statement of financial position
as at 31 March 2013
2013 2012
GBP'000s GBP'000s
--------------------- ---------
Non-current assets
Goodwill [14] 34,448 34,836
Other intangible assets [15] 1,857 2,522
Property, plant and equipment [16] 1,189 2,225
Available-for-sale investments [17] 146 146
----------------------------------------------------- ------ --------------------- ---------
Total non-current assets 37,640 39,729
------------------------------------------------------------- --------------------- ---------
Current assets
Trade and other receivables [18] 6,620 8,238
Taxation 60 120
Cash and cash equivalents 8,036 9,117
------------------------------------------------------------- --------------------- ---------
Total current assets 14,716 17,475
Assets of a disposal held for sale [5] 546 -
----------------------------------------------------- ------ --------------------- ---------
Total assets 52,902 57,204
------------------------------------------------------------- --------------------- ---------
Current liabilities
Trade and other payables [20] (5,875) (8,291)
Loans and deferred consideration [21] (30) (30)
Short-term provisions [22] (204) (30)
----------------------------------------------------- ------ --------------------- ---------
Total current liabilities (6,109) (8,351)
------------------------------------------------------------- --------------------- ---------
Non-current liabilities
Deferred tax liabilities [19] (161) (313)
Long-term provisions [22] - (42)
----------------------------------------------------- ------ --------------------- ---------
Total non-current liabilities (161) (355)
Liabilities of a disposal held for sale [5] (183) -
----------------------------------------------------- ------ --------------------- ---------
Total liabilities (6,453) (8,706)
------------------------------------------------------------- --------------------- ---------
Net assets 46,449 48,498
------------------------------------------------------------- --------------------- ---------
Equity
Share capital [23] 5,399 5,388
Share premium account [24] 28,697 28,697
Equity reserve [25] 1,560 1,464
Retained earnings [27] 10,793 12,949
----------------------------------------------------- ------ --------------------- ---------
Equity attributable to equity holders of the parent 46,449 48,498
------------------------------------------------------------- --------------------- ---------
The notes set out in the subsequent pages of this report form
part of these financial statements.
J Polin A Tagliabue
Group Chief Executive Officer Group Chief Financial Officer
1 July 2013 1 July 2013
Consolidated statement of changes in equity
for the year ended 31 March 2013
Share
Share premium Equity Retained
capital reserve reserve earnings
(Note [23]) (Note [24]) (Note [25]) (Note [27]) Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
-------------------------------------------------- ------------ ------------ ------------ ------------ ----------
At 31 March 2011 3,621 72,522 1,369 (34,380) 43,132
Total comprehensive income for the year:
Loss for the year - - - (2,604) (2,604)
Transactions with owners recorded directly in
equity:
Share-based payments - - 95 - 95
Transfer to equity reserve in respect of shares
distributed
by the Employee Benefit Trust 67 - - (67) -
Issue of shares from placing (net of costs) 1,700 6,175 - - 7,875
Share premium reduction - (50,000) - 50,000 -
-------------------------------------------------- ------------ ------------ ------------ ------------ ----------
At 31 March 2012 5,388 28,697 1,464 12,949 48,498
Total comprehensive income for the year:
Loss for the year - - - (2,145) (2,145)
Transactions with owners recorded directly in
equity:
Share-based payments [note 26] - - 96 - 96
Transfer to share capital in respect of shares
distributed by the Employee Benefit Trust 11 - - (11) -
-------------------------------------------------- ------------ ------------ ------------ ------------ ----------
At 31 March 2013 5,399 28,697 1,560 10,793 46,449
-------------------------------------------------- ------------ ------------ ------------ ------------ ----------
Share capital represents the nominal value of shares subscribed
for. The share premium reserve represents the total amount
subscribed for shares in excess of the nominal value, net of costs
and net of amounts reduced on a court sanctioned reduction of the
share premium account with credit to a distributable reserve which
will be able to be applied in any manner in which the Company's
profits available for distribution are able to be applied. The
equity reserve represents the total amount charged, less any
credits, in respect of share-based payments charged to the
statement of comprehensive income. Retained earnings include all
other gains and losses and transactions with owners not recognised
elsewhere.
The notes set out in the subsequent pages of this report form
part of these financial statements.
Consolidated statement of cash flows
for the year ended 31 March 2013
2013 2012 restated
--------------------------------------------------------------- ------
Note GBP'000s GBP'000s
--------------------------------------------------------------- ------ --------- --------------
Operating activities
Loss for the year (2,145) (2,604)
Adjustments for:
(Profit) / Loss from discontinued operations (214) 288
Depreciation of property, plant and equipment [7] 1,518 853
Amortisation of intangible assets [7] 642 586
Share-based payments 96 95
Finance income [9] (62) (26)
Finance costs [11] 9 18
Other gains and losses [10] - (26)
Corporation tax credit [12] (148) (188)
--------------------------------------------------------------- ------ --------- --------------
Operating cash outflow before movements in working capital (304) (1,004)
Decrease in receivables 1,341 963
Decrease in payables (2,234) (2,568)
Increase/(Decrease) in provisions 132 (27)
----------------------------------------------------------------------- --------- --------------
Cash outflow from operations (1,065) (2,636)
Tax received 60 -
Interest received [9] 62 26
Interest paid [11] (9) (18)
Net cash outflow from operating activities (952) (2,628)
----------------------------------------------------------------------- --------- --------------
Investing activities
Purchases of property, plant and equipment [16] (482) (1,252)
Sales of subsidiaries (EPIC including deferred consideration) 353 (90)
Cash balance transferred on sale of EPIC - (320)
Proceeds from liquidation of investment [10] - 26
--------------------------------------------------------------- ------ --------- --------------
Net cash used in investing activities (129) (1,636)
----------------------------------------------------------------------- --------- --------------
Financing activities
Proceeds of share issues [23] - 8,500
Costs of share issues [23] - (625)
Repayments of subordinated loans - (100)
----------------------------------------------------------------------- --------- --------------
Net cash from financing activities - 7,775
----------------------------------------------------------------------- --------- --------------
Net (decrease)/increase in cash and cash equivalents (1,081) 3,511
Cash and cash equivalents at beginning of year 9,117 5,606
----------------------------------------------------------------------- --------- --------------
Cash and cash equivalents at end of year 8,036 9,117
----------------------------------------------------------------------- --------- --------------
The notes set out in the subsequent pages of this report form
part of these financial statements.
Notes to the financial statements
for the year ended 31 March 2013
1. General information
Ashcourt Rowan Plc ("Ashcourt Rowan" or the "Company") is a
company incorporated in the United Kingdom under the Companies Act
2006. The address of the registered office is given at the end of
this report. The nature of the Ashcourt Rowan Group's ("the Group")
operations and its principal activities are set out in the
Chairman's Report and the Report of the Chief Executive Officer,
Finance review, Operational review and in the Business review.
These financial statements are presented in pounds sterling
because that is the currency of the primary economic environment in
which the Group operates.
2. Significant accounting policies
Basis of accounting
Both the parent company financial statements and the Group
financial statements have been prepared and approved by the
Directors in accordance with International Financial Reporting
Standards as adopted by the European Union ("Adopted IFRSs") and
the Companies Act 2006 applicable to companies reporting under
IFRS. On publishing the parent company financial statements here
together with the Group financial statements, the Company is taking
advantage of the exemption in section 408 of the Companies Act 2006
not to present its individual income statement and related notes
that form a part of these approved financial statements. The
Company reported a loss for the year of GBP3.48 million (2012:
GBP0.25 million).
The financial statements have been prepared on the historical
cost basis except for available-for-sale financial assets which are
included at fair value. The principal accounting policies adopted
are set out below and have been applied consistently to all periods
presented in these financial statements.
New standards and interpretations
None of the new standards effective for the current period have
any material impact to the group. The following new standards have
not been applied in these financial statements, will or may have an
effect on the Group's future financial statements:
IFRS 9 Financial Instruments: IFRS 9 will eventually replace IAS
39 in its entirety. However, the process has been divided into
three main components (classification and measurement; impairment;
and hedge accounting) and it is considered unlikely that the new
standard will be endorsed until all of these components are in
their final form. While the current standard is largely incomplete,
its eventual adoption may result in changes to the classification
and measurement of the Group's financial instruments, including any
impairment thereof.
IFRS 10: Consolidated Financial Statements: establishes
principles for the preparation and presentation of consolidated
nancial statements when a reporting entity controls one or more
investees. The standard was published to deal with divergence in
practice when applying IAS 27 Consolidated and Separate Financial
Statements and SIC-12 Consolidation - Special Purpose Entities. The
Standards eventual adoption is unlikely to result in changes to the
preparation and presentation of the Group's financial subsidiaries,
associates or Limited Partnerships.
IFRS 13: Fair Value Measurement: IFRS 13 establishes a single
framework for all fair value measurements when fair value is
required or permitted by IFRS. It does not change when an entity is
required to use fair value, but rather, describes how to measure
fair value under IFRS when it is required or permitted. The
Standard's adoption results in changes to the valuation of the
Group's assets. IFRS 13 is effective for annual periods beginning
on or after 1 January 2013.
None of the other new standards, interpretations and amendments
not yet effective are expected to have a material effect on the
Group's future financial statements.
Going concern
The financial statements have been prepared on a going concern
basis which the Directors believe to be appropriate for the
following reasons. At 31 March 2013 the Group reported net current
assets of GBP8.6 million (2012: net current assets of GBP9.2
million). The Directors have reviewed profit budgets and cash flow
forecasts for the coming year and expect the Group to strengthen
its operating profitability before exceptional, depreciation,
impairment and amortisation and to produce operating cash flow
sufficient to fund the Business Transformation investments being
carried out by the Group to move to its target operating model.
The Directors consider that the Group is sufficiently
diversified and has no over reliance on any one customer or
supplier.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) as of and for the year ended 31 March 2013.
Control is achieved where the Company has the power to govern the
financial and operating policies of an investee entity so as to
obtain benefits from its activities.
On acquisition, the assets and liabilities and contingent
liabilities of a subsidiary are measured at their fair values. Any
excess of the cost of acquisition over the fair values of the
identifiable net assets acquired is recognised as goodwill.
The results of subsidiaries acquired during the period are
included in the consolidated income statement from the date that
control commences.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
Goodwill
Goodwill represents the excess of the cost of a business
combination over, in the case of business combinations completed
prior to 1 April 2010, the Group's interest in the fair value of
identifiable assets, liabilities and contingent liabilities
acquired and, in the case of business combinations completed on or
after 1 April 2010, the total acquisition date fair value of the
identifiable assets, liabilities and contingent liabilities
acquired.
For business combinations completed prior to 1 April 2010, cost
comprises the fair value of assets given, liabilities assumed and
equity instruments issued, plus any direct costs of acquisition.
Changes in the estimated value of contingent consideration arising
on business combinations completed by this date are treated as an
adjustment to cost and, in consequence, result in a change in the
carrying value of goodwill.
For business combinations completed on or after 1 April 2010,
cost comprised the fair value of assets given, liabilities assumed
and equity instruments issued, plus the amount of any
non-controlling interests in the acquiree plus, if the business
combination is achieved in stages, the fair value of the existing
equity interest in the acquiree. Contingent consideration is
included in cost at its acquisition date fair value and, in the
case of contingent consideration classified as a financial
liability, re-measured subsequently through profit or loss. For
business combinations completed on or after 1 April 2010, direct
costs of acquisition are recognised immediately as an expense.
Goodwill is capitalised as an intangible asset with any
impairment in carrying value being charged to the consolidated
statement of comprehensive income. Where the fair value of
identifiable assets, liabilities and contingent liabilities exceeds
the fair value of consideration paid, the excess is credited in
full to the consolidated statement of comprehensive income on the
acquisition date.
On disposal of a subsidiary, the amount of goodwill attributable
is included in the determination of the profit or loss on
disposal.
Other intangible assets
Other intangible assets comprise client relationships, unit
trust management and investment trust contracts recognised upon the
acquisition of subsidiaries. Such assets are assessed and
capitalised when it is probable that future economic benefits
attributable to the assets will flow to the Group and the cost of
the assets can be measured reliably.
(a) Client relationships
Acquired client relationships are capitalised at fair value
based on management's estimate of expected future cash flows to be
generated over their expected useful lives. The capitalised amounts
are amortised on a straight line basis over the expected useful
lives, estimated to be ten years.
(b) Unit trust and investment trust management contracts
Acquired unit trust management and investment trust contracts
are capitalised at fair value based on management's estimate of the
expected future cash flows that these contracts will generate over
their useful lives. The capitalised amounts are amortised on a
straight line basis over the expected useful lives, estimated to be
ten years or the life of the trust.
Property, plant and equipment
Fixtures and equipment are stated at cost less accumulated
depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation
of assets over their estimated useful lives, using the straight
line method, on the following bases:
Fixtures and equipment 10%-33%
Assets held under finance leases are depreciated over their
expected useful lives on the same basis as owned assets or, where
shorter, over the term of the relevant lease.
Impairment of tangible and intangible assets including
goodwill
At each balance sheet date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss. Where the asset does not generate cash
flows that are independent from other assets, the Group estimates
the recoverable amount of the cash-generating unit to which the
asset belongs.
The recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted. If
the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount
of the asset is reduced to its recoverable amount. An impairment
loss is recognised as an expense immediately, unless the relevant
asset is carried at a revalued amount, in which case the impairment
loss is treated as a revaluation decrease.
Revenue recognition
Portfolio and other management advisory and service fees are
recognised on a straight line basis over the period the service is
provided. Asset management fees are recognised pro rata over the
period the service is provided.
Dealing commissions are recognised as net amount due on trade
date.
Initial commissions receivable and commission rebates payable
are recognised in the period in which the services are
provided.
Trail and renewal commissions are accounted for on an ongoing
basis when the receipt is virtually certain.
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate
applicable, which is the rate that discounts estimated future cash
receipts through the expected life of the financial asset to that
asset's net carrying amount.
Dividend income from investments is recognised when the
shareholders' rights to receive payment have been established.
Cost of sales
Cost of sales comprises the direct employment costs associated
with front office staff plus any payments to third parties in
respect of revenue share arrangements, accounted for on an accruals
basis.
Leasing
Leases are classified as finance leases when the terms of the
lease transfer substantially all the risks and rewards of ownership
to the lessee. All other leases are classified as operating
leases.
Assets held under finance leases are recognised as assets of the
Group at their fair value or, if lower, at the present value of the
minimum lease payments. The corresponding liability to the lessor
is included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance charges and
reduction of the lease obligation so as to achieve a constant rate
of interest on the remaining balance of the liability. Finance
charges are charged directly against income.
Rentals payable under operating leases are charged to income on
a straight line basis over the term of the relevant lease. Benefits
received and receivable as an incentive to enter into an operating
lease are also spread on a straight line basis over the lease
term.
Profit from operations
Profit from operations represents the result from trading
activities after charging any restructuring costs and aborted
acquisition costs, but before investment income and finance
costs.
Exceptional costs and receipts
Exceptional items are non-recurring items which are either
outside the normal scope of the Group's ordinary activities or by
their nature they could distort the group's underlying annual
earnings. In accordance with IAS 1 (Presentation of Financial
Statements) such items are disclosed separately on the face of the
consolidated income statement within the financial statements to
enhance understanding of the entity's financial performance.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are
charged as an expense as they fall due. Payments made to
state-managed retirement benefit schemes are dealt with as payments
to defined contribution schemes where the Group's obligations under
the schemes are equivalent to those arising in a defined
contribution retirement benefit scheme. The Group does not operate
a defined benefit retirement scheme.
Taxation
The tax charge or credit represents the sum of the tax currently
payable on Group results and deferred tax.
The taxable result differs from net result as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other periods and it further
excludes items that are never taxable or deductible. Any liability
for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
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 goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the tax result nor the accounting
result.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries except where the
Group is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse
in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the income
statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt
with in equity.
Classification of financial instruments issued by the
Company
Financial instruments issued by the Company are treated as
equity only to the extent that they meet the following two
conditions:
-- they include no contractual obligations upon the Company to
deliver cash or other financial assets or to exchange financial
assets or financial liabilities with another party under conditions
that are potentially unfavourable to the Company; and
-- where the instrument will or may be settled in the Company's
own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the Company's own
equity instruments or is a derivative that will be settled by the
Company's exchanging a fixed amount of cash or other financial
assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of
issue are classified as a financial liability. Where the instrument
so classified takes the legal form of the Company's own shares, the
amounts presented in these financial statements for called up share
capital and share premium account exclude amounts in relation to
those shares.
Non-derivative financial instruments
Financial assets and financial liabilities are recognised on the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Trade receivables
Trade receivables are measured at initial recognition at fair
value and are subsequently measured at amortised cost using the
effective interest rate method. Appropriate allowances for
estimated irrecoverable amounts are recognised in profit or loss
when there is objective evidence that the asset is impaired.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits and other short-term highly liquid investments that are
readily convertible into a known amount of cash and are subject to
an insignificant risk of changes in value.
Available-for-sale investments
These are measured at fair value based on bid prices where there
is an active market and Directors' estimate for unquoted holdings.
Investments in equity investments that do not have a quoted market
price in an active market and whose fair value cannot be reliably
determined are measured at cost.
Borrowings
Interest-bearing loans are recorded on initial recognition at
their fair value and are subsequently measured at amortised cost,
using the effective interest rate method. Finance charges,
including premiums payable on settlement or redemption and direct
issue costs, are accounted for on an accruals basis to the income
statement using the effective interest method and are added to the
carrying amount of the instrument to the extent that they are not
settled in the period in which they arise.
Trade payables
Trade payables are initially measured at their fair value and
are subsequently measured at amortised cost, using the effective
interest rate method.
Equity instruments
Equity instruments issued by the Company are recorded as the
amount of proceeds received, net of direct issue costs.
Provisions
Provisions are recognised when the Group has a present
obligation as the result of a past event, when it is probable that
the Group will be required to settle that obligation. Provisions
are recognised at the Directors' best estimate of the expenditure
required to settle the Group's liability.
Share-based payments
The Company issues equity-settled share-based payments to
certain employees of the Group. Equity-settled share-based payments
are measured at fair value at the date of grant. Where market
related vesting conditions exist the fair value is determined using
the Black-Scholes model at the grant date or a Monte Carlo
simulation model and is expensed on a straight line basis over the
vesting period, based on the Group's estimate of shares that will
eventually vest and adjusted for the effect of non-market based
vesting conditions. Where options that are currently in issue are
modified during the period, the Company recognises the incremental
increase in the fair value of the new options compared to the old
options at the modification date and expenses this increase over
the life of the modified award as well as the original expense.
The valuation models used together with the assumptions used on
expected volatility, risk free rates, expected dividend yields and
expected forfeiture rates are disclosed in Note 26.
The Company issued a warrant to certain advisers for services
provided in a previous period in connection with an acquisition
made. These warrants were measured at fair value in an equity
reserve using the Black-Scholes model.
The Company awarded ordinary shares to employees of the Group
under a Growth Securities Ownership Plan ("GSOP"), in exchange for
their continued service to the Group. The number of shares to be
awarded is calculated based on a fixed multiplier, which varies
based on the average share price in the 20 days before the
settlement date of 1 September 2016.
The Company has issued the option to settle the shares in cash
or equity, under the terms and conditions of the Plan. The Group
has made the judgement that the shares should be accounted for as
equity-settled share-based payments, which vest on the settlement
date, subject to the share price related vesting conditions
described above. The fair value of these awards is based on the
market value at the date of grant and has been calculated on the
likelihood of successful completion of the vesting conditions and
has been charged to the income statement over the vesting period of
the awards. These have been valued using a Monte Carlo simulation
model.
Deferred and contingent consideration
Deferred consideration due in respect of acquisitions, where the
amount due is uncertain and contingent on future events, is
included in provisions at the fair value of the Directors' estimate
of amounts due. Where deferred consideration is a fixed amount this
is included at fair value in loans and deferred consideration.
Segment reporting
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to
transactions with any of the Group's other components. All
operating segments' operating results are reviewed regularly by the
Group's CEO to make decisions about resources to be allocated to
the segment and assess its performance, and for which discrete
financial information is available.
Discontinued operations
A discontinued operation is a component of the Group's business
that represents a separate major line of business or geographical
area of operations that has been disposed of or is held for sale,
or is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs upon disposal or
when the operation meets the criteria to be classified as held for
sale, if earlier. When an operation is classified as a discontinued
operation, the comparative statement of comprehensive income is
represented as if the operation had been discontinued from the
start of the comparative period.
3. Critical accounting judgements and key areas of
uncertainty
Critical judgements in applying the Group's accounting
policies
In adopting IFRSs as the basis of selecting and applying
appropriate Group accounting policies management has had regard to
critical judgements and also key sources of estimation uncertainty.
Key sources of critical judgements and estimation uncertainty have
been identified as follows:
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation
of the fair value less costs of sell and the value in use of the
cash-generating units (CGUs) to which goodwill has been allocated.
The value in use calculation requires the entity to estimate the
future cash flows expected to arise from the cash-generating unit
and a suitable discount rate in order to calculate present value.
Details of the goodwill in cash-generating units are contained in
Note 14.
Other intangible assets
Acquired client relationships, unit trust management and
investment trust contracts are capitalised on the basis of the net
discounted expected revenues and costs over their estimated lives.
The Directors' estimates are based on historical rates of client
and contract retention and revenue generation. Client
relationships, investment trust management and unit trust
management contracts are valued at GBP1.82 million, GBP0.04 million
and GBPnil (2012: GBP2.42 million, GBP0.05 million and GBP0.03
million) respectively at the balance sheet. The Directors'
estimated useful lives for the client relationships and the unit
trust management contracts are ten years and for the investment
trust contract five years, being the life of the contract.
Provisions
The Directors have estimated provisions in respect of onerous
property leases and potential client compensation, totalling GBP0.2
million (2012: GBP0.1 million), which would be dependent on
achieving certain key performance indicators, based upon
information available at the balance sheet date (see Note 22). In
estimating these provisions the Directors have made key assumptions
regarding the timeframe of the expected cash outflows. For the
onerous lease provision, a discount rate of 5% has been used to
value the expected future cash flows.
4. Operating segments
During the year the Group had three reportable segments, as
described below, which are the Group's strategic business units.
The strategic business units offer a different mix of products and
services and are managed separately. For each of the strategic
business units the Group's CEO reviews internal management reports
on at least a monthly basis.
Information regarding the results of each reportable segment is
included below. Performance is measured based on segment profit
before tax, as included in the internal management reports that are
reviewed by the Group's CEO. Segment profit is used to measure
performance as management believes that such information is the
most relevant in evaluating the results of certain segments
relative to other entities that operate within these industries.
Inter-segment pricing is determined on an arm's length basis. The
Group has no other operating segments other than those shown
below.
Investment Financial Institutional
Management Planning Pension Administration Management
(continuing) (continuing) (discontinued) (discontinued) Total
2012 2012 2012 2012 2012
2013 restated 2013 restated 2013 restated 2013 restated 2013 restated
----------------
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------- --------- ---------- --------- ---------- --------- ------------ --------- ---------- --------- ---------
External
revenues 25,442 26,568 7,155 9,155 687 674 - 165 33,284 36,562
Inter-segment
revenues - 4,843 6,500 - - - 4,843 6,500
Total revenue 25,442 26,568 11,998 15,655 687 674 - 165 38,127 43,062
---------------- --------- ---------- --------- ---------- --------- ------------ --------- ---------- --------- ---------
External cost
of sales (4,909) (5,762) (6,562) (10,056) (3) (1) - (101) (11,474) (15,920)
Inter-segment
cost of sales (4,633) (6,500) - - (211) - - - (4,844) (6,500)
Total cost
of sales (9,542) (12,262) (6,562) (10,056) (214) (1) - (101) (16,318) (22,420)
---------------- --------- ---------- --------- ---------- --------- ------------ --------- ---------- --------- ---------
Gross profit 15,900 14,306 5,436 5,599 473 673 - 64 21,809 20,642
Administration
Expenses (8,909) (6,753) (7,263) (4,572) (412) (309) - (177) (16,584) (11,811)
Share Based
Payments (38) (49) (19) - - - - (57) (49)
Net exceptional
(costs) /
receipts (254) 5 20 - (190) 192 - (232) 5
Amortisation
& Depreciation (500) (507) (549) (549) (6) (6) - - (1,055) (1,062)
Total
administrative
expenses (9,701) (7,304) (7,811) (5,121) (608) (315) 192 (177) (17,928) (12,917)
---------------- --------- ---------- --------- ---------- --------- ------------ --------- ---------- --------- ---------
Operating
profit 6,199 7,002 (2,375) 478 (135) 358 192 (113) 3,881 7,725
Finance income 45 13 5 2 7 6 - - 57 21
Finance expense (2) (11) (6) (5) - - - - (8) (16)
Other gains
and losses - 35 - - - - - - 35
Management
charges
payable (1,686) (6,086) (542) (600) (65) (230) - - (2,293) (6,916)
Reportable
segment
(loss)/profit
before tax 4,556 953 (2,919) (125) (192) 134 192 (113) 1,637 849
---------------- --------- ---------- --------- ---------- --------- ------------ --------- ---------- --------- ---------
Segment assets 46,761 38,647
---------------- --------- ---------- --------- ---------- --------- ------------ --------- ---------- --------- ---------
Segment
liabilities (10,063) (28,409)
---------------- --------- ---------- --------- ---------- --------- ------------ --------- ---------- --------- ---------
Fixed asset
additions 0 20
---------------- --------- ---------- --------- ---------- --------- ------------ --------- ---------- --------- ---------
Inter-segment revenue of GBP211,000, included within continuing
operating segments above, has been netted against discontinued
operations results for the purpose of consolidated continuing
operations reporting .
Reconciliations of reportable segment revenues, profit or
loss
2012
2013 restated
GBP'000s GBP'000s
Revenues
Total revenue for reportable segments 38,127 43,062
Less intra-segment revenue (4,843) (6,500)
Less revenue from discontinuing operations (687) (839)
-------------------------------------------------- --------- ---------
Consolidated revenue from continuing operations 32,597 35,723
-------------------------------------------------- --------- ---------
2012
2013 restated
GBP'000s GBP'000s
---------------------------------------------------------------------- --------- ---------
Other administrative expenses
Total administrative expenses for reportable segments (17,928) (12,917)
Less unallocated items:
Amortisation and depreciation 1,055 1,056
Head office costs and costs of parent company (7,229) (11,074)
Administrative expenses for discontinuing operations 416 492
---------------------------------------------------------------------- --------- ---------
Consolidated other administrative expenses for continuing operations (23,686) (22,443)
---------------------------------------------------------------------- --------- ---------
2013 2012 restated
----------------------------------------------------------
GBP'000s GBP'000s
---------------------------------------------------------- --------- --------------
Profit or loss before tax
Total profit before tax for reportable segments 1,637 849
Unallocated amounts:
Management fees paid to parent 2,293 6,916
Head office costs and costs of parent company (7,014) (10,224)
Amortisation and depreciation 400 457
Loss on disposal of subsidiary - (309)
Share-based payments (39) 95
Add loss before tax on discontinuing segments (Note [5]) 214 (288)
---------------------------------------------------------- --------- --------------
Consolidated loss before tax (2,507) (2,504)
---------------------------------------------------------- --------- --------------
Reportable Adjustments
segment relating Consolidated
total to parent totals
GBP'000s GBP'000s GBP'000s
---------------------------------------------- ---------- ----------- ------------
Other material items 2013
Investment income - continuing 50 12 62
Investment income - discontinued (Note [5]) 7 - 7
Finance expense - continuing (8) (1) (9)
Finance expense - discontinued (Note [5]) - - -
Amortisation and depreciation - continuing (1,049) (1,105) (2,154)
Amortisation and depreciation - discontinued (6) - (6)
---------------------------------------------- ---------- ----------- ------------
2012
2013 restated
GBP'000s GBP'000s
-------------------------------------- --------- ---------
Reconciliation of total assets
Total assets for reportable segments 46,761 38,647
Elimination of intra segment loans (2,119) (1,323)
Unallocated assets 8,258 19,880
-------------------------------------- --------- ---------
Consolidated total assets 52,901 57,204
-------------------------------------- --------- ---------
Unallocated assets represent goodwill, other intangibles assets,
cash and trade and other receivables held by the parent.
2012
2013 restated
GBP'000s GBP'000s
------------------------------------------- --------- ---------
Reconciliation of total liabilities
Total liabilities for reportable segments (10,063) (28,409)
Elimination of intra segment loans 1,020 20,275
Unallocated liabilities 2,590 (572)
------------------------------------------- --------- ---------
Consolidated total liabilities (6,453) (8,706)
------------------------------------------- --------- ---------
Unallocated liabilities represent trade and other payables due
by the parent.
2012
2013 restated
GBP'000s GBP'000s
----------------------------------------- --------- ---------
Reconciliation of fixed asset additions
Total additions for reportable segments - 20
Additions in parent 482 1,232
----------------------------------------- --------- ---------
Consolidated fixed asset additions 482 1,252
----------------------------------------- --------- ---------
5. Discontinued operations
On 22 April 2013, after the end of the reporting period, the
Group entered into an agreement to sell the business, intangible
client relation assets and certain working capital assets of its
wholly-owned subsidiary Ashcourt Rowan Administration Limited,
carrying out personal pension administration. In addition the Group
entered on the same date into an agreement to sell its wholly-owned
subsidiaries Ashcourt Rowan Pension Trustee Limited and Robinson
Gear Management Services Limited, carrying out trustee services for
personal pension administration. The transactions completed on 22
April 2013.
The business disposed has been treated as held for sale at 31
March 2013 and as such treated as a non-continuing business. The
consideration for the subsidiaries and business disposed has been
agreed as a combination of cash consideration at closing, the buyer
assuming a level of liabilities for post deal costs and negative
net working capital transferred and two tranches of contingent
deferred consideration over a two and five year period
respectively.
The maximum consideration due for the disposal is as
follows:
GBP'000's
Cash consideration at closing 700
Contingent deferred consideration at 12 and 24
months after completion 300
Contingent deferred consideration between year
3 and 5 from completion 325
Less cost of sale (including redundancy costs) (129)
------------------------------------------------- ----------
Maximum Total Consideration net of cost of sale 1,196
------------------------------------------------- ----------
The business disposed has been treated as held for sale at 31
March 2013 and as such treated as a non-continuing business
Capital of the business disposed at 31 March 2013;
GBP'000s
Goodwill (see note 14) 388
Intangibles (see note 15) 23
Trade and other receivables 135
Trade and other payables (21)
Provisions (see note 22) (162)
------------------------------------------------------ ---------
Net assets transferred 363
------------------------------------------------------ ---------
Summary of profit after tax for discontinued operations:
2013 2012
GBP'000s GBP'000s
Ashcourt Rowan Administration Limited (loss)/profit before tax (192) 134
Tax credit 4 -
Elimination of intergroup cost of sales 211 -
Net deferred consideration credit for EPIC Asset Management Limited 192 -
Reportable segment loss (EPIC Asset management Limited) - (113)
Loss on sale of discontinued operations - (309)
Other adjustment (1) -
--------------------------------------------------------------------- ---------- ----------
Profit/(loss) for the year from discontinued operations, net of tax 214 (288)
--------------------------------------------------------------------- ---------- ----------
6. Revenue
2012
2013 restated
GBP'000s GBP'000s
-------------------------------------------------- --------- ---------
Continuing operations
Wealth management and financial planning services 32,597 35,723
-------------------------------------------------- --------- ---------
No material revenue from continuing operations was generated
outside of the UK.
2012
2013 restated
GBP'000s GBP'000s
------------------------------ --------- ---------
Discontinuing operations
Pension Administration 687 674
Institutional fund management - 165
------------------------------ --------- ---------
687 839
------------------------------ --------- ---------
No material revenue was generated outside of the UK and the
Channel Islands.
7. Loss/profit from operations
Loss/profit from operations has been arrived at after charging:
Continuing
-----------------------------------------------------------------------------------
operations
GBP'000s
----------------------------------------------------------------------------------- -----------
Year ended 31 March 2013
Depreciation of property, plant and equipment (see Note 16) 1,518
Staff costs (see Note 8) 19,122
Auditors' remuneration in respect of the statutory audit of the group (next page) 116
Amortisation of intangible assets (see Note 15) 636
Exceptional costs (next page) 4,221
Exceptional receipts (next page) (1,148)
----------------------------------------------------------------------------------- -----------
Continuing
operations
GBP'000s
------------------------------------------------------------ -----------
Year ended 31 March 2012
Depreciation of property, plant and equipment (see Note 16) 853
Staff costs (see Note 8) 23,408
Auditors' remuneration (next page) 116
Settlement of cancelled software contract (188)
Amortisation of intangible assets (see Note 15) 586
Exceptional costs (next page) 1,445
Exceptional receipts (next page) (180)
------------------------------------------------------------ -----------
The analysis of auditors' remuneration is as follows:
2013 2012 restated
GBP'000s GBP'000s
------------------------------------------------------------------------------------------- --------- --------------
Annual audit fee in respect of the statutory audit of the Group for the current financial
year:
Audit of these financial statements 25 25
Audit of subsidiaries pursuant to legislation 103 103
------------------------------------------------------------------------------------------- --------- --------------
128 128
Audit of discontinued operations (12) (12)
------------------------------------------------------------------------------------------- --------- --------------
116 116
------------------------------------------------------------------------------------------- --------- --------------
Fees payable to the Company's auditors and their associates for other services to the Group
are as follows:
2013 2012 restated
-------------------------------------------------------------------------------------------
GBP'000s GBP'000s
------------------------------------------------------------------------------------------- --------- --------------
Tax compliance services 15 15
Review of interim financial information 12 12
VAT partial exemption review 185 -
------------------------------------------------------------------------------------------- --------- --------------
212 27
------------------------------------------------------------------------------------------- --------- --------------
2013 2012
Net exceptional costs GBP'000's GBP'000's
---------------------------------------------------------------------------- ---------------- -------------------
Change management programme:
Operating Model (outsourcing of systems and back office) 1,053 68
ICT Project (restructuring and stabilisation of infrastructure) 330 -
Asset Management (integration of ARAM and Savoy) 357 -
Financial Planning (advisory platform and RDR proposal) 300 -
Governance & Controls (system and control review and past business review) 930 57
Corporate restructuring and redundancies 378 972
Irrecoverable VAT on projects 166 -
Regulatory fines 412 -
Occupancy restructuring costs 82 223
FSCS levy (interim levy) 130 124
Prior Year Bad Debts 33 -
Provision for compensation payments 50 -
---------------------------------------------------------------------------- ---------------- -------------------
Total exceptional costs 4,221 1,445
---------------------------------------------------------------------------- ---------------- -------------------
Net proceeds from Walker Crips agreement 371 -
Net Irrecoverable VAT credit relating to 2011/12 727 -
Reversal of unused provisions brought forward 50 180
---------------------------------------------------------------------------- ---------------- -------------------
Total exceptional receipts 1,148 180
---------------------------------------------------------------------------- ---------------- -------------------
Net exceptional costs 3,073 1,265
---------------------------------------------------------------------------- ---------------- -------------------
8. Staff costs, including Directors' remuneration
The average monthly number of employees (including Executive Directors) was:
Continuing Discontinued
----------------------------------------------------------
operations operations Total
Number Number Number
---------------------------------------------------------- ---------------- --------------- -------
Year ended 31 March 2013
Administration staff 204 4 208
Fund managers and investment advisers 92 0 92
Directors and other managers 11 0 11
---------------------------------------------------------- ---------------- --------------- -------
307 4 311
---------------------------------------------------------- ---------------- --------------- -------
Continuing Discontinued Restated
---------------------------------------
operations operations Total
Number Number Number
--------------------------------------- ----------- ------------- ---------
Year ended 31 March 2012
Administration staff 242 8 250
Fund managers and investment advisers 100 0 100
Directors and other managers 13 0 13
--------------------------------------- ----------- ------------- ---------
355 8 363
--------------------------------------- ----------- ------------- ---------
Their aggregate remuneration comprised:
Continuing
---------------------------------------------------------------
operations
GBP'000s
--------------------------------------------------------------- -------------------
Year ended 31 March 2013
Wages and salaries 16,702
Social security costs 1,589
Other pension costs paid to defined contribution arrangements 735
Share-based payments 96
--------------------------------------------------------------- -------------------
19,122
--------------------------------------------------------------- -------------------
Continuing
operations
GBP'000s
-------------------------------------------------------------- -----------
Year ended 31 March 2012
Wages and salaries 20,106
Social security costs 2,300
Other pension costs paid to defined contribution arrangements 907
Share-based payments 95
-------------------------------------------------------------- -----------
23,408
-------------------------------------------------------------- -----------
The average staff numbers have reduced in 2013 as a result of
cost reduction initiatives, restructuring, and simplification of
the operation of the company including the planned exit of a number
of revenue generators and their support staff.
Aggregate Directors' emoluments included above comprised:
2013 2012 restated
---------------------------------
GBP'000s GBP'000s
--------------------------------- ------------------- --------------
Emoluments 972 938
Pension contributions 55 44
Share-based payments - -
Compensation for loss of office - 325
--------------------------------- ------------------- --------------
1,027 1,307
--------------------------------- ------------------- --------------
The emoluments and pension contribution for the highest paid
Director were GBP350,000 and GBP35,000 respectively (2012:
GBP474,229 and GBPnil).
9. Finance income
2013 2012 restated
GBP'000s GBP'000s
---------------- --------------------- --------------
Finance income 62 26
---------------- --------------------- --------------
10. Other gains and (losses)
2012
2013 restated
GBP'000s GBP'000s
---------------------------------------- --------- ---------
Proceeds from liquidation of investment - 26
---------------------------------------- --------- ---------
11. Finance costs
2013 2012 restated
GBP'000s GBP'000s
------------------- -------------------- --------------
Interest on loans 9 18
------------------- -------------------- --------------
12. Taxation
2013 2012 restated
GBP'000s GBP'000s
-------------------------------------------------- --------- --------------
Current tax (4) 50
Over provision in prior periods (-) (3)
-------------------------------------------------- --------- --------------
(4) 47
Deferred tax credit (see Note 19) 152 141
-------------------------------------------------- --------- --------------
Total tax credit on continuing operations 148 188
Current tax on discontinued operations (Note 5) 4 (50)
Deferred tax on discontinued operations (Note 5) - -
-------------------------------------------------- --------- --------------
152 138
-------------------------------------------------- --------- --------------
Corporation tax is calculated at 24% (2012: 26%) of the
estimated assessable result for the year. The current charge for
the year can be reconciled to the result per the income statement
as follows:
2013 2012 restated
GBP'000s GBP'000s
------------------------------------------------------ --------- --------------
Loss on continuing operations before tax in the year (2,508) (2,504)
------------------------------------------------------ --------- --------------
Tax credit at 24% (2012: 26%) thereon 602 651
Expenses not deductible for tax (274) (92)
Other allowances (188) (222)
Losses utilised/carried forward 8 (146)
Under provision in prior periods - (3)
148 188
------------------------------------------------------ --------- --------------
13. Loss per share
The calculation of the basic and diluted loss per share is based
on the following data:
2013 2012 restated
-----------------------------------------------------------------------------------------
GBP'000s GBP'000s
----------------------------------------------------------------------------------------- ----------- --------------
Loss on continuing operations for the purposes of basic and diluted loss per share on
continuing
operations (2,359) (2,316)
(Loss)/profit on discontinued operations 214 (288)
----------------------------------------------------------------------------------------- ----------- --------------
Loss for the purposes of basic and diluted loss per share being loss attributable to
equity
holders of the parent (2,145) (2,604)
----------------------------------------------------------------------------------------- ----------- --------------
2013 2012
-----------------------------------------------------------------------------------------
Number Number
----------------------------------------------------------------------------------------- ----------- --------------
Weighted average number of ordinary shares for the purposes of fully diluted earnings
per
share 26,980,368 21,015,794
----------------------------------------------------------------------------------------- ----------- --------------
The denominator for the purposes of calculating basic and
diluted earnings per share has been adjusted to reflect the share
issues which took place in the year. In the year the potential
ordinary shares under the options and long-term incentive plan
would have the effect of reducing the loss per share and therefore
are anti-dilutive. The total number of shares over which awards
have been made but have not yet been issued is 1,222,949 (2012:
640,165).
14. Goodwill
GBP'000s
--------------------------------------------- ---------
Cost
As at 31 March 2011 and 2012 34,836
Goodwill on business held for sale (Note 5) (388)
--------------------------------------------- ---------
As at 31 March 2013 34,448
--------------------------------------------- ---------
Goodwill arising in a business combination is allocated to the
cash-generating unit (CGU) which is expected to benefit from the
acquisition. As a result of the restructuring of the group in the
year including the transfer of the Savoy business into Ashcourt
Rowan Asset Management, goodwill has been reallocated between
investment management and financial planning CGUs. In the prior
year goodwill was allocated between the Ashcourt and Savoy CGUs
(GBP27,412,000 and GBP7,424,000 respectively). The carrying amount
of goodwill has been allocated as follows:
2013 2012 restated
GBP'000s GBP'000s
--------------------------------- ------------------- ---------------------
Investment Management 22,724 22,724
Financial Planning 11,724 11,724
Pension Administration (Note 5) - 388
--------------------------------- ------------------- ---------------------
Total 34,448 34,836
--------------------------------- ------------------- ---------------------
Goodwill in Pension Administration CGU has been included in as
an asset held for disposal as at 31 March 2013 (see note 5).
The Group tests for impairment in the period of acquisition and
annually thereafter unless there are indications that goodwill may
be impaired such that earlier assessment is required. The
recoverable amounts of CGUs are derived from the higher of fair
value less cost of sale and value in use calculations.
The key assumptions used in arriving at a fair value less cost
of sale are those around valuations based on earnings and revenue
multiples and values based on assets under management. These have
been arrived at by looking at market valuations of similar
businesses. Management has used a range of conservative multiples
resulting in an average of 1.6x 2012/13 revenue, 1.7% of
discretionary assets under management and 0.8% of assets under
advice, 8.2x 2012/13 Underlying EBITDA (if above zero), 7.1x
2013/14 Budget Underlying EBITDA (if above zero) to arrive at an
assessment of fair value.
The key assumptions used in respect of value in use calculations
are those regarding growth rates and anticipated changes to
revenues and costs during the period covered by the calculations.
Changes to revenue and costs are based upon management's
expectation. The Group prepares its budget annually for each CGU
and five-year cash flow forecasts are derived there from and
thereafter extrapolates using a terminal growth rate of 0% (2012:
0%), which management considers conservative against industry
average long-term growth rates.
Management estimates discount rates using pre-tax rates which
reflect current market estimates of the time value of money and
risks specific to the CGUs. The rate used to discount the forecast
cash flows from all CGUs is 11.25% (2012: 11%). This rate is also
broadly similar to rates which management has observed in use by
other groups operating in the wealth management sector.
The carrying amount of goodwill at the balance sheet date was
GBP34.44 million (2012: GBP34.84 million). Out of the total
goodwill GBP388,000 relate to the pension administration CGU
treated as held for sale at year end and as a discontinued business
as a result. No impairment has been made for the goodwill relating
to the pension administration CGUs as the agreed net consideration
for the business less cost to sell is higher than its carrying
value at 31 March 2013.
Both value-in-use and fair value less cost to sell estimations
result in amounts higher than the carrying value of goodwill for
each of the Group's continuing CGUs. As the Director's estimate of
value-in-use for each continuing CGU is higher than fair value less
cost to sell, the recoverable amount for the purpose of final
impairment testing was determined on the basis of value-in-use.
The excess of recoverable amount over carrying value of goodwill
and intangible assets for continuing CGUs is estimated as
follows:
31 March 2013 (Continuing CGUs) GBP'000s
----------------------------------------------------------------------------------------------
Carrying Value of CGU* Recoverable Amount 2012/13 Impairment Excess over Carrying
(Value in Use) Charge Value
---------------------- ---------------------- ------------------ ------------------------ ------------------------
Investment Management 23,828 44,412 - 20,584
Financial Planning 12,481 22,940 - 10,459
---------------------- ---------------------- ------------------ ------------------------ ------------------------
* Includes Goodwill and Intangibles
A number of sensitivities were carried out to test level at
which an impairment charge would need to be recognised, supporting
the conclusion that no impairments should be made. Key
sensitivities are as follows:
Sensitivities: Value required to result in Impairment (tested
individually)
------------------------------------------------------------------------
Value in Use: Key Assumptions Used Investment Management Financial Planning
----------------------------------- ------- ----------------------------------- -----------------------------------
Discount Rate 11.25% 23.0% 19.2%
Terminal Value 0% na - prudent assumption
Recurring revenue growth in years 8% pa (1%) pa 2% pa
2 to 5 (including market growth)
Cost base growth 3% 10% pa 7% pa
----------------------------------- ------- ----------------------------------- -----------------------------------
In addition in case of the above sensitivity threshold values
being surpassed, fair value less cost to sell would have to reduce
to a level below carrying value. We have tested the sensitivity of
the fair value less cost to sell to individual valuation metrics
and concluded that overall valuation is not significantly dependent
on any single metric. Valuation metrics and multiples used would
have to reduce by (24)% in Investment Management and (26)% in
Financial Planning for fair value less cost to sell to fall below
carrying value.
As a result of the above no impairments have been made during
the year (2012: GBPnil) based upon the Directors' review.
15. Other intangible assets
Acquired Acquired Acquired Acquired Total
--------------------
client Client unit trust investment trust
management management
relationships Relationships contracts contracts
-------------------- ------------------- -------------------- -------------------- ---------
Investment Pension Investment
Management Financial Planning Administration Management
-------------------- ------------------- -------------------- -------------------- ---------
Cost GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
-------------------- -------------------- ------------------- -------------------- -------------------- ---------
At 31 March 2011 4,205 2,152 62 589 7,008
Disposal (644) - - (442) (1,086)
-------------------- -------------------- ------------------- -------------------- -------------------- ---------
At 31 March 2012 3,561 2,152 62 147 5,922
Transfer of
business held for
sale - - (62) - (62)
-------------------- -------------------- ------------------- -------------------- -------------------- ---------
At 31 March 2013 3,561 2,152 - 147 5,860
-------------------- -------------------- ------------------- -------------------- -------------------- ---------
Amortisation
At 31 March 2011 2,379 965 27 523 3,894
Charge for the year 356 215 6 15 592
Disposal (644) - - (442) (1,086)
-------------------- -------------------- ------------------- -------------------- -------------------- ---------
At 31 March 2012 2,091 1,180 33 96 3,400
Charge for the year 406 215 6 15 642
Transfer of
business held for
sale - - (39) - (39)
-------------------- -------------------- ------------------- -------------------- -------------------- ---------
At 31 March 2013 2,497 1,395 - 111 4,003
-------------------- -------------------- ------------------- -------------------- -------------------- ---------
Carrying amount
At 31 March 2013 1,064 757 - 36 1,857
-------------------- -------------------- ------------------- -------------------- -------------------- ---------
At 31 March 2012 1,470 972 29 51 2,522
-------------------- -------------------- ------------------- -------------------- -------------------- ---------
At 31 March 2011 1,826 1,187 35 66 3,114
-------------------- -------------------- ------------------- -------------------- -------------------- ---------
The Group has no contractual commitments for its intangible
assets in both the current and prior period. The recognition of
acquired intangible assets in the period resulted from the
acquisitions as described in Note 14. Acquired client
relationships, acquired unit trust management contracts and
acquired investment trust management contracts are amortised over
their estimated useful lives, being ten years.
Estimates of total remaining economic life of intangible assets
for amortisation purposes are as follows:
Acquired client relationships - three years
Acquired investment trust management contracts - three years
Acquired unit trust relationships - three years
16. Property, plant and equipment
Fixtures
----------------------------------
And
Equipment
GBP'000s
---------------------------------- ----------
Cost
At 31 March 2011 4,512
Additions 1,252
Disposals (263)
---------------------------------- ----------
At 31 March 2012 5,501
Additions 482
---------------------------------- ----------
At 31 March 2013 5,983
---------------------------------- ----------
Depreciation and impairment
At 31 March 2011 2,684
Charge for the year - continuing 853
On disposals (261)
---------------------------------- ----------
At 31 March 2012 3,276
Charge for the year - continuing 1,518
---------------------------------- ----------
At 31 March 2013 4,794
---------------------------------- ----------
Carrying amount
At 31 March 2013 1,189
---------------------------------- ----------
At 31 March 2012 2,225
---------------------------------- ----------
At 31 March 2011 1,828
---------------------------------- ----------
17. Available-for-sale investments
The table below analyses financial instruments carried at fair
value, by valuation method. The different levels have been defined
as follows:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 - inputs other than quoted prices included within level
1 that are observable for the asset or liability, either directly
(i.e., as prices) or indirectly (i.e., derived from prices)
Level 3 - inputs for the asset or liability that are not based
on observable market data (unobservable inputs)
The available for sale investments held by the Group are level
three investments and are as follows:
2013 2012
GBP'000s GBP'000s
--------------------------------- --------- ---------
Included in non-current assets:
Equity investments 146 146
--------------------------------- --------- ---------
146 146
--------------------------------- --------- ---------
During the year there were no transfers between level 1 and
level 2 valuation methods and no transfers into or out of level 3
valuation method.
These investments are held at the Directors' estimate of fair
value and relate to an investment of a 4.17% privately owned
financial services company for which there is no observable market
data. The valuation has been based the Directors' review of the
investment's publicly available financial data and on discussions
with the investment's management. The effect of fair value changes
during the year is not considered significant. The Group has a
4.17% holding.
18. Trade and other receivables
2013 2012
GBP'000s GBP'000s
-------------------------------- ---------------------- ---------
Trade and other receivables
Client receivables 1,419 1,870
Prepayments and accrued income 4,722 6,146
Other receivables 479 222
-------------------------------- ---------------------- ---------
6,620 8,238
-------------------------------- ---------------------- ---------
Allowance is made for estimated irrecoverable amounts from trade
receivables of GBP67,000 (2012: GBP64,000). The Directors consider
that the carrying amount of trade and other receivables
approximates to their fair value.
Bank balances and cash comprise cash held by the Group and
short-term bank deposits with an original maturity of three months
or less. The carrying amount of these assets approximates to their
fair value.
Financial risk management
The financial risk management objectives and policies of the
Group and related disclosures are set out in the Business Review
and Note 28.
19. Deferred tax
The following are the major deferred tax liabilities and assets
recognised by the Group and movements thereon during the current
and prior reporting period.
At the balance sheet date, excess management expenses and tax
losses available for carry forward are approximately GBP5.6 million
(2012: GBP4.3 million). No deferred tax asset has been recognised
in respect of the losses due to the unpredictability of future
profit streams in the companies where the losses reside. Such
losses may be carried forward indefinitely.
On On
---------------------------------------
acquisitions share-based Total
GBP'000s payments GBP'000s
GBP'000s
--------------------------------------- ------------- ------------ ---------
At 31 March 2011 813 (359) 454
Arising on share-based payments:
Continuing operations - 4 4
Discontinued operations - - -
Released in the year (see Note [12]):
Continuing operations (145) - (145)
--------------------------------------- ------------- ------------ ---------
At 31 March 2012 668 (355) 313
Arising on share-based payments:
Continuing operations (148) (4) (152)
Released in the year (see Note [12]):
Continuing operations - - -
--------------------------------------- ------------- ------------ ---------
At 31 March 2013 520 (359) 161
--------------------------------------- ------------- ------------ ---------
2013 2012
------------------------------
20. Trade and other payables GBP'000s GBP'000s
------------------------------ --------- ---------
Trade and other payables 5,875 8,291
------------------------------ --------- ---------
The Directors consider that the carrying amount of trade
payables approximates to their fair value.
21. Loans and deferred consideration
Loans and deferred consideration have arisen in connection with
various acquisitions as follows:
GBP'000s
-------------------- ---------
At 31 March 2013
Subordinated loans 30
-------------------- ---------
At 31 March 2012
Subordinated loans
-------------------- ---------
Within one year 30
-------------------- ---------
22. Provisions
Potential Client Compensation
Payments Surplus leasehold property costs Total
------------------------------------
GBP'000s GBP'000s GBP'000s
------------------------------------ ---------------------------------- --------------------------------- ---------
At 31 March 2011 - 99 99
Increase/(reduction) in provision - (27) (27)
------------------------------------ ---------------------------------- --------------------------------- ---------
At 31 March 2012 - 72 72
Increase/(reduction) in provision 162 (30) 132
------------------------------------ ---------------------------------- --------------------------------- ---------
At 31 March 2013 162 42 204
------------------------------------ ---------------------------------- --------------------------------- ---------
2013 2012
------------------------------------
GBP'000s GBP'000s
------------------------------------ ---------------------------------- --------------------------------- ---------
Included in current liabilities 204 30
Included in non-current liabilities - 42
204 72
------------------------------------ ---------------------------------- --------------------------------- ---------
The provision in respect of surplus leasehold assets reflects
management's best estimate of the liability arising from onerous
lease obligations in respect of leasehold property interests
acquired on the acquisition of subsidiaries in the period ended 31
March 2006.
Client compensation payments reflect management's best estimate
of the liability arising from a number of known potential
compensation payments
23. Share capital
2013 2012
GBP'000s GBP'000s
-------------------------------------------------------------- --------- ---------
Issued and fully paid:
26,994,486 (2012: 26,938,473) ordinary shares of GBP0.2 each 5,399 5,388
-------------------------------------------------------------- --------- ---------
During the year the Company issued shares on the under-noted
dates in the following amounts:
Nominal
value
Number of shares
of shares issued
issued GBP'000s
---------------------------------------------------------------------------------------------- ---------- ----------
As at 31 March 2012 26,938,473 5,388
Syndicate Employee Benefit Trust - issued at GBP0.2 each (GBP0.002 pre-consolidation) 29 March
2012 56,013 11
As at 31 March 2013 26,994,486 5,399
---------------------------------------------------------------------------------------------- ---------- ----------
Number Number Nominal
of shares of shares value Proceeds
issued issued of shares of share
pre- post- issued issue
consolidation consolidation GBP'000s GBP'000s
--------------------------------------------------------------- -------------- -------------- ---------- ---------
As at March 2011 18,107,487 3,621
[Syndicate Employee Benefit Trust - issued at GBP0.2 each
(GBP0.002 pre-consolidation)
1 June 2011 17,033,333 170,333 35 35
7 October 2011 8,697,789 86,978 17 17
1 February 2012 47,438 10 10
29 March 2012 26,237 5 5
New placing - issued at GBP1.00 each on 5 December 2011 net of
GBP625 thousand expenses 8,500,000 1,700 7,875
--------------------------------------------------------------- -------------- -------------- ---------- ---------
At 31 March 2012 26,938,473 5,388
--------------------------------------------------------------- -------------- -------------- ---------- ---------
The shares acquired by the Syndicate EBT were distributed to
staff under the long-term incentive plan during the year. At the
year end the EBT held no shares in the Company.
The Company has one class of ordinary shares which carries no
right to fixed income.
Management of the Company's capital is discussed in the Risk
Management section of the Directors' Report and in Note 28.
24. Share premium reserve
Share
premium
GBP'000s
----------------- ---------
At 31 March 2012 28,697
At 31 March 2013 28,697
----------------- ---------
25. Equity reserve
Equity
---------------------------------------------
reserve
GBP'000s
--------------------------------------------- ---------
At 31 March 2011 1,369
Share-based payments - Options (30)
Share-based payments - Long Term Incentive 303
Share-based payments - Deferred share bonus -
Forfeited Long Term Incentive awards (146)
Forfeited Deferred share bonus awards (32)
Shares issued to Employee Benefit Trust (67)
Transfer from retain earnings 67
--------------------------------------------- ---------
At 31 March 2012 1,464
Share-based payments - Options -
Share-based payments - Long Term Incentive 77
Share-based payments - GSOP 19
Forfeited Long Term Incentive awards
Shares issued to Employee Benefit Trust (11)
Transfer from retained earnings 11
--------------------------------------------- ---------
At 31 March 2013 1,560
--------------------------------------------- ---------
26. Share-based payments
(a) Options
On 16 December 2008 employees and Directors released their
entitlement to 35,000 options over the Company's shares due to the
fact that the options were out of the money and unlikely ever to be
in the money. These options were replaced on 18 December 2008, for
no gain or loss in the income statement, by options over 35,000
shares which have been valued under the Black-Scholes model and
accounted for as equity-settled share-based payments in the year to
31 March 2009. The inputs to the valuation of this issue are:
Weighted average share price GBP0.0875
Weighted average exercise price GBP0.12
Expected volatility 30%
Expected life 4 years
Risk-free rate 2.63%
Expected dividends -
-------------------------------- ---------
The Company has established an unauthorised and an authorised
share option scheme. The authorised scheme received HM Revenue and
Customs approval on 9 November 2006. For each award the exercise
price is not greater than the market value of the shares at the
date of grant. The vesting period for each award is three years and
options are settled by an allotment of shares to individuals.
If the options remain unexercised after a period of ten years
from the date of award, the options expire. Furthermore, options
are forfeited if the employee leaves the Group before the options
vest. Employees who are deemed "good leavers" are entitled to
exercise their option for a period of six months after they
leave.
The following share options granted under the scheme were in
place at 31 March 2013:
Option price Number of
Date option granted per share options
------------------------------------ ------------- ---------
18 December 2008 post-consolidation GBP12.00 20,000
------------------------------------ ------------- ---------
The number and weighted average exercise price (WAEP) of share
options outstanding are as follows:
WAEP
Number (pence)
----------------------------------- ------- --------
At 31 March 2012 post-consolidation 17,250 GBP12.00
Forfeited during the year (5,250) GBP12.00
----------------------------------- ------- --------
Outstanding at 31 March 2013 12,000 GBP12.00
----------------------------------- ------- --------
These options all expire if unexercised by 8 December 2018.
(b) Long Term Incentive Plan
On 3 December 2009 the Company awarded 485,000 ordinary shares
(post consolidation) to employees of the Group under a long-term
incentive plan. These shares are accounted for as equity-settled
share-based payments and vest in equal instalments on the first
second and third anniversaries of the award date, subject to
certain performance related vesting conditions. A further 37,000
shares were awarded on 2 March 2010. These also vest in equal
instalments on the first, second and third anniversaries of the
award date subject to certain performance related vesting
conditions. The exercise price for these awards is GBPnil per
share.
The fair value of these awards is based on the market value at
the date of grant and has been calculated on the likelihood of
successful completion of the vesting conditions and has been
charged to the income statement over the vesting period of the
awards. The market value at the grant date was 2.15p per share.
These awards, if unexercised, expire in three equal amounts on 3
December 2020, 2021 and 2022.
On 1 October 2010 the Company awarded 61,500 ordinary shares to
employees of the Group under the long-term incentive plan. These
shares are accounted for as equity-settled share-based payments and
vest on the third anniversaries of the award date, subject to
certain performance related vesting conditions. These awards if
unexercised expire on 1 October 2023. The fair value of these
awards is based on the market value at the date of grant and has
been calculated on the likelihood of successful completion of the
vesting conditions and has been charged to the income statement
over the vesting period of the awards. The market value at the
grant date was 1.68p per share.
A further 41,000 shares were awarded on 1 March 2011. These vest
in equal instalments on the first, second and third anniversaries
of the award date subject to certain performance and share price
related vesting conditions. The exercise price for these awards is
GBPnil per share. These awards, if unexercised, expire on in three
equal amounts on 1 March 2022, 2023 and 2024.
These have been valued using a Monte Carlo simulation.
During the year awards 139,000 shares were forfeited by
employees. The exercise price for these awards is GBPnil per share.
Awards over 21,000 shares were exercised during the year and shares
issued to the employees concerned.
On 21 December 2012 the Group awarded 803,000 ordinary shares to
employees of the Group under the long-term incentive plan. These
shares are accounted for as equity-settled share-based payments and
vest on the third anniversaries of the award date, subject to
certain performance related vesting conditions. These awards, if
unexercised, expire on 21 December 2015. The fair value of these
awards is based on the market value at the date of grant and has
been calculated on the likelihood of successful completion of the
vesting conditions and has been charged to the income statement
over the vesting period of the awards. These have been valued using
a Monte Carlo simulation model, with expected volatility of 31%,
dividend yield of 3.1% and risk free rate of 0.5%. The fair value
at the grant date calculated using these assumptions is 26.4p per
share.
(c) Deferred share bonus
At 31 March 2010 the Company had also provided for a deferred
bonus to be awarded to staff for the year. The bonus would take the
form of an equity-settled deferred award of shares to be issued in
August 2011. Awards over 232,000 shares were made.
The Directors estimated the fair value at the grant date based
on the market value of the shares awarded (2.02p per share)
adjusted to take into account an estimate of options likely to vest
based on continued employment. This amount has been charged to the
income statement over the period from 1 April 2009 and 31 March
2011, consistent with the service period attached to the awards.
The awards were actually made in August 2010. The exercise price
for these awards is GBPnil per share.
The total number of shares over which LTIP and deferred share
bonus awards have been made at the beginning and end of the
financial year is as follows:
LTIP awards Deferred share bonus Total
------------------------------------ ------------ -------------------- ------------
At 31 March 2011 147,890,669 21,689,581 169,580,250
Awards exercised during the year (14,007,330) (11,991,281) (25,998,611)
Awards forfeited during the year (82,885,002) (1,408,500) (84,293,502)
------------------------------------ ------------ -------------------- ------------
At 31 March 2012 pre-consolidation 50,998,337 8,289,800 59,288,137
------------------------------------ ------------ -------------------- ------------
At 31 March 2012 post-consolidation 509,983 82,898 592,881
------------------------------------ ------------ -------------------- ------------
Awards exercised during the year (34,667) (27,292) (61,959)
Awards forfeited during the year (126,271) (4,702) (130,973)
Awarded during the year 803,000 - 803,000
------------------------------------ ------------ -------------------- ------------
At 31 March 2013 1,152,045 50,904 1,202,949
------------------------------------ ------------ -------------------- ------------
A charge of GBP77,000(2012: GBP95,000) has been recognised in
the income statement. The balance on the equity reserve represents
amounts provided in respect of share-based payments.
d) Growth Securities Ownership Plan
On 6 March 2013 the Company awarded ordinary shares to employees
of the Group under a Growth Securities Ownership Plan ("GSOP"), in
exchange for their continued service to the Group. The number of
shares to be awarded is calculated based on a fixed multiplier,
which varies based on the average share price in the 20 days before
the settlement date of 1 September 2016. The maximum potential
number of shares to be awarded under the GSOP is approximately 4.76
million.
The Group has the option to settle the shares in cash or equity,
under the terms and conditions of the Plan. The Group has made the
judgement that the shares should be accounted for as equity-settled
share-based payments, which vest on the settlement date, subject to
the share price related vesting conditions described above. The
fair value of these awards is based on the market value at the date
of grant and has been calculated on the likelihood of successful
completion of the vesting conditions and has been charged to the
income statement over the vesting period of the awards. These have
been valued using a Monte Carlo simulation model, with expected
volatility of 37%, dividend yield of 3.1% and risk free rate of
0.5%. The fair value at the grant date calculated using these
assumptions is GBP971,968.
In the period between the grant date and 31 March 2013, no
shares have been forfeited, exercised or have lapsed. A charge of
GBP19,000 has been recognised in the income statement (2012:
nil).
e) Share Incentive Plan
Ashcourt Rowan operates an authorised Group share incentive plan
for employees, whereby the Group will match the number of shares
acquired by the employee under the scheme up to a maximum of
GBP1,500 per annum. These matching shares vest after three
years.
The costs of purchasing any matching shares are spread over the
three years following each purchase and recorded in overheads. A
charge of GBP73,092 has been recognised in the income statement
(2012: GBP77,560)
27. Retained earnings/(deficit)
GBP'000s
---------------------------- ---------
At 31 March 2011 (34,380)
Loss for the year (2,604)
Transfer to equity reserve (67)
Transfer of share premium 50,000
---------------------------- ---------
At 31 March 2012 12,949
Loss for the year (2,145)
Transfer to equity reserve (11)
At 31 March 2013 10,793
---------------------------- ---------
On 22 February 2012, the Company was granted approval by the
High Court of Justice to reduce the amount of the share premium
account by GBP50 million to be credited as a distributable
reserve.
28. Risk management
Exposure to credit risk, market risk (which combines foreign
currency risk, interest rate risk and market price risk) and
liquidity risk arises in the normal course of the Group's business.
For details of the risks of the Company see Note 42.
Capital risk management
The Group manages its capital through continuous review of the
total regulatory capital requirements of its regulated subsidiaries
which is reported monthly to the Board. The Group and each
regulated entity have been in compliance with their regulatory
capital requirements at all times during the year. The Group is
funded by total equity of GBP46.4 million (2012: GBP48.5
million).
Externally imposed capital requirements
The Group has subsidiaries that are supervised in the UK by the
Financial Conduct Authority FCA). The regulated subsidiary
companies submit quarterly returns to the FCA relating to capital
adequacy. The Group submits a return at the half year and year end
setting out the Group's position in relation to the FCA's
requirements on a consolidated basis but has been granted a waiver
to these requirements until September 2014. Throughout the year the
Group held significant surplus capital over the regulatory
requirements. At 31 March 2013 the total regulatory capital
requirement across the Group was GBP5.5 million and the Group had
an aggregate surplus of GBP2.7 million across all regulated
entities.
Credit risk
The credit risk to the Group is limited to the non-payment of
investment management fees, commissions earned but not received,
cash at banks and investments. At the balance sheet date there were
no significant concentrations of credit risk external to the
Group.
Management has a credit policy in place and the exposure to
credit risk is monitored on an ongoing basis. The Group does not
require collateral in respect of financial assets because for the
majority of client accounts the Group has the right to deduct its
management fees from the client's investment portfolio. The
historical incidence of bad debts has been very isolated and
infrequent.
The credit risk on liquid funds is limited because the
counterparties are banks with high credit ratings assigned by
international credit-rating agencies.
At the balance sheet date the Group had the following credit
risk exposures:
2013 2012
-------------------- --------- ---------
Carrying Maximum Carrying Maximum
--------------------------------
value exposure value exposure
GBP'000s GBP'000s GBP'000s GBP'000s
-------------------------------- --------- --------- --------- ---------
Cash and cash equivalents 8,036 8,036 9,117 9,117
Client receivables 1,419 1,419 1,870 1,870
Prepayments and accrued income 4,722 4,722 222 222
Other receivables 479 479 5,007 5,007
14,656 14,656 15,216 15,216
-------------------------------- --------- --------- --------- ---------
The amounts in the above table are based on the carrying value
of all accounts. The Group has other receivables that are not
subject to credit risk.
Cash and cash equivalents
A significant amount is held with the following
institutions:
Rating at Balance at Rating at Balance at
31 March 31 March 31 March 31 March
2013 2013 2012 2012
----------------------------- ---------- ---------- --------- ----------
Royal Bank of Scotland Group A3 7,717 A2 8,878
Other financial institutions 318 238
Other cash amounts 1 1
8,036 9,117
The Board monitors the utilisation of the credit limits
regularly and at the reporting date does not expect any losses from
non-performance by the counterparties.
The following table represents the aged breakdown of client
receivables as at the balance sheet date which are past their due
date, but not deemed to be impaired:
2013 2012
Bad debt Bad debt
Gross provisions Gross provisions
GBP'000s GBP'000s GBP'000s GBP'000s
< 60 days 228 - 286 -
60-180 days 79 - 23 -
180-360 days 45 - 53 -
> 360 days 100 67 80 64
452 67 442 64
Foreign currency risk
The Group is exposed to foreign currency risk on cash balances
that are denominated in a currency other than sterling. The
currencies giving rise to this risk are primarily US dollars and
euros.
In respect of other monetary assets and liabilities held in
currencies other than sterling, the Group ensures that the net
exposure is kept to an acceptable level, by buying or selling
foreign currencies at spot rates where necessary to address
short-term imbalances.
The significant majority of the Group's clients are invoiced in
sterling and the Group only maintains a small float of cash in
foreign currencies. Therefore, the Group's currency risk is minimal
and accordingly no sensitivity analysis has been presented.
Interest rate risk
The Group's exposure to interest rate risk on financial assets
is mitigated by placing surplus funds on fixed deposit for various
levels of maturity. The interest rates obtained are market rates
which are typically linked to base rate. Typically, cash is held on
deposit for no longer then 90 days. All cash balances at the year
end were held on call deposit. The Group also has interest-bearing
financial liabilities with floating interest rates.
Management deems interest rate risk immaterial and does not
actively manage this risk. At the balance sheet date, the Group
held GBP8 million (2012: GBP9.1 million) in cash and cash
equivalents on which interest is earned and had GBPnil (2012:
GBPnil) payable in loans and deferred consideration on which
interest is paid with floating rates of interest.
An increase of 50 basis points in interest rates at the balance
sheet date would increase the interest payable on floating rate
interest bearing liabilities held at the balance sheet date by
GBPnil per annum net of tax (2012: GBPnil), assuming a corporation
tax rate of 24% (2012: 26%).
An increase of 50 basis points in interest rates at the balance
sheet date would increase interest receivable on cash and cash
equivalents held at the balance sheet date by GBP40,200 per annum
(2012: GBP45,000) net of tax, assuming a corporation tax rate of
24% (2012: 26%).
Market price risk
Equity prices are governed by markets in which such equities are
traded. The construction of equity portfolios for funds which the
Group acts as Manager is driven by the investment objectives of
each fund and consequently market risk cannot be fully mitigated.
There were no principal stock positions at the balance sheet
date.
Management deems market price risk to be immaterial.
Liquidity risk
Liquidity risk is the risk that the Group does not have
sufficient financial resources to meet its obligations when they
fall due or will have to do so at excessive cost. This risk can
arise from mismatches in the timing of cash flows relating to
assets, liabilities and off-balance sheet instruments. The Group
monitors liquidity risk taking into account cash balances held and
levels of borrowing in addition to the requirements imposed by the
Financial Conduct Authority on the Group's regulated
subsidiaries.
Non-derivative cash flows
The table below presents the cash flows receivable and payable
by the Group under non-derivative financial assets and liabilities
by remaining contractual maturities at the balance sheet date. The
amounts disclosed in the table are the contractual, undiscounted
cash flows whereas the Group manages inherent liquidity risk on
expected undiscounted cash flows.
The net liquidity positions in the table below relate to cash
flows on contractual obligations existing at the balance sheet
date. They do not take account of any cash flows generated from
profits on normal trading activities.
On demand < 3 months 3-12 months 1-5 years > 5 years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 31 March 2013
Assets
Cash and cash equivalents 8,036 - - - -
Client receivables - 1,419 - - -
Other financial assets 4,722 - - - -
Total financial assets 12,758 1,419 - - -
Liabilities
Trade and other payables - 5,875 - - -
Total financial liabilities - 5,875 - - -
Net liquidity surplus/(deficit) 12,758 (4,456) - - -
On demand < 3 months 3-12 months 1-5 years > 5 years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- ---------- ----------- --------- ---------
As at 31 March 2012
Assets
Cash and cash equivalents 9,117 - - - -
Client receivables - 1,870 - - -
Other financial assets 222 - - - -
--------- ---------- ----------- --------- ---------
Total financial assets 9,339 1,870 - - -
--------- ---------- ----------- --------- ---------
Liabilities
Trade and other payables - 8,291 - - -
Total financial liabilities - 8,291 - - -
--------- ---------- ----------- --------- ---------
Net liquidity surplus/(deficit) 9,339 (6,421) - - -
Fair values
Estimation of fair values
The following summarises the major methods and assumptions used
in estimating the fair values of financial instruments reflected in
the table.
Trade and other receivables/payables
For receivables/payables with a remaining life of less than one
year, the notional amount is deemed to reflect the fair value. All
other receivables/payables greater than one year are discounted at
base rate to determine the fair value.
29. Operating lease arrangements
2013 2012
GBP'000s GBP'000s
-------------------------------------------------------------------------------- --------- ---------
Minimum lease payments under operating leases recognised in income for the year 955 1,033
-------------------------------------------------------------------------------- --------- ---------
At the balance sheet date, the Group had outstanding commitments
for future minimum lease payments under non-cancellable operating
leases, which fall due as follows:
2013 2012
GBP'000s GBP'000s
--------- ---------
Within one year 595 923
In the second to fifth years inclusive 1,594 622
After five years - 2,411
--------- ---------
2,189 3,956
--------- ---------
Operating lease payments represent rentals payable by the Group
for certain of its office properties. Leases were negotiated for an
average term of seven years and rentals are fixed for an average of
three years.
30. Post balance sheet events
Other than the disposal of the business of Ashcourt Rowan
Administration Limited as per Note 5, there have been no other post
balance sheet events.
31. Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note. Transactions between the Company and its
subsidiaries are disclosed in the Company's separate financial
statements (see Note 41).
Company statement of financial position
as at 31 March 2013
2013 2012
Note GBP'000s GBP'000s
Non-current assets
Property, plant and equipment [35] 1,133 2,118
Investments in subsidiaries [36] 24,999 24,936
Due from Group companies 19,974 20,276
Total non-current assets 46,106 47,330
Current assets
Other receivables 2,283 757
Due from Group companies 329 -
Taxation 672 -
Cash and cash equivalents 289 4,238
Total current assets 3,573 4,995
Total assets 49,679 52,325
Current liabilities
Other payables [38] (3,276) (2,589)
Due to Group companies (1,358) (1,323)
Total current liabilities (4,634) (3,912)
Total liabilities (4,634) (3,912)
Net assets 45,045 48,413
Equity
Share capital [39] 5,399 5,388
Share premium account [39] 28,697 28,697
Equity reserve [39] 1,560 1,464
Retained earnings [40] 9,389 12,864
Equity attributable to equity holders of the parent 45,045 48,413
The financial statements were approved by the Board of Directors
and authorised for issue on 1 July 2013. They were signed on its
behalf by:
J Polin A Tagliabue
Group Chief Executive Officer Group Chief Financial Officer
Company statement of changes in equity
for the year ended 31 March 2013
Share
Share premium Equity Retained
capital reserve reserve earnings
(Note23) (Note 24) (Note 39) (Note 40) Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
At 31 March 2011 3,621 72,522 1,369 (36,887) 40,625
Total comprehensive income for the year:
Loss for the year - - - (249) (249)
Transactions with owners recorded directly in equity:
Share-based payments - - 95 - 95
Issues of shares to Employee Benefit Trust 67 - - - 67
Share premium reduction - (50,000) - 50,000 -
Issue new share placing 1,700 6,175 - - 7,875
At 31 March 2012 5,388 28,697 1,464 12,864 48,413
Total comprehensive income for the year:
Loss for the year - - - (3,475) (3,475)
Transactions with owners recorded directly in equity:
Issues of shares to Employee Benefit Trust 11 - - - 11
Share-based payments - - 96 - 96
At 31 March 2013 5,399 28,697 1,560 9,389 45,045
Share capital represents the nominal value of shares subscribed
for. The share premium reserve represents the total amount
subscribed for shares in excess of the nominal value. The equity
reserve represents the total amount charged, less any credits, in
respect of share-based payments charged to the statement of
comprehensive income. Retained earnings include all other gains and
losses and transactions with owners not recognised elsewhere.
Company statement of cash flows
for the year ended 31 March 2013
2013 2012
GBP'000s GBP'000s
Loss for the year (3,475) (249)
Adjustments for:
Depreciation of property, plant and equipment 1,467 757
Share-based payment expense 33 (12)
Investment income (11) (10)
Other gains and losses - (93)
Loss on sale of subsidiary (192) -
Corporation tax (credit)/charge and group relief (672) (180)
(2,850) 213
Increase in other receivables (1,683) (234)
(Decrease)/increase in other creditors and accruals 695 (978)
Tax and group relief received - 102
Net cash from/(used in) operating activities (3,838) (897)
Investing activities
Interest income 11 10
Purchases of property, plant and equipment (482) (1,232)
Proceeds on sale of subsidiary 353 (90)
(Loans to)/repaid by Group companies 7 (1,609)
Proceeds on liquidation of investment - 26
Net cash (used in)/from investing activities (111) (2,895)
Financing activities
Proceeds of share issues - 8,567
Costs of share issue - (625)
Net cash from financing activities - 7,942
Net increase in cash and cash equivalents (3,949) 4,150
Cash and cash equivalents at beginning of year 4,238 88
Cash and cash equivalents at end of year 289 4,238
Notes to the financial statements continued
for the year ended 31 March 2013
32. Significant accounting policies
The separate financial statements of the Company are presented
as required by the Companies Act 2006. As permitted by that Act,
the separate financial statements have been prepared in accordance
with IFRSs as adopted by the EU as applied in accordance with the
provisions of the Companies Act 2006. Advantage has been taken of
section 408 of the Companies Act 2006 and a Company only income
statement is not presented.
The financial statements have been prepared on the historical
cost basis. The principal accounting policies adopted are the same
as those set out in Note 2 to the consolidated financial statements
except as noted below.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less, where
appropriate, provisions for impairment, plus the fair value of
share-based payments attributable to employees of the Company's
subsidiary companies.
Share-based payments
The Company issues equity-settled and cash-settled share-based
payments to certain employees of the Company and the Group. Equity
settled share-based payments are measured at fair value at the date
of grant. The fair value is determined using the Black-Scholes
model at the grant date and in respect of employees of the Company
is expensed on a straight line basis over the vesting period, based
on the Group's estimate of shares that will eventually vest and
adjusted for the effect of non-market based vesting conditions. For
share-based payments in respect of employees of other Group
companies the fair value is added to the cost of investment in
those Group companies on a straight line basis.
The valuation models used together with the assumptions used on
expected volatility, risk-free rates, expected dividend yields and
expected forfeiture rates are disclosed in Note 26.
The Company awarded ordinary shares to employees of the Group
under a Growth Securities Ownership Plan ("GSOP"), in exchange for
their continued service to the Group. The number of shares to be
awarded is calculated based on a fixed multiplier, which varies
based on the average share price in the 20 days before the
settlement date of 1 September 2016.
The Company has issued a the option to settle the shares in cash
or equity, under the terms and conditions of the Plan. The Group
has made the judgement that the shares should be accounted for as
equity-settled share-based payments, which vest on the settlement
date, subject to the share price related vesting conditions
described above. The fair value of these awards is based on the
market value at the date of grant and has been calculated on the
likelihood of successful completion of the vesting conditions and
has been charged to the income statement over the vesting period of
the awards. These have been valued using a Monte Carlo simulation
model.
Intra-group balances
Amounts due from Group undertakings are classified as loans and
receivables and are initially recorded at fair value and are
subsequently recorded at amortised cost under the effective
interest method.
Amounts due to Group undertakings are classified as financial
liabilities measured at amortised cost. They are initially recorded
at fair value and subsequently recorded at amortised cost under the
effective interest method.
33. Loss from operations
The auditors' remuneration for audit services to the Company was
GBP25,000 (2012: GBP25,000).
Other significant charges include, exceptional costs of GBP2.6
million (2012: GBP1.1m) and depreciation GBP1.4million (2012:
GBP0.7million).
34. Subsidiaries
Ashcourt Holdings Limited (formerly Ashcourt Holdings plc) and
Savoy Asset Management Limited (formerly Savoy Asset Management
Plc) are the only directly wholly owned subsidiaries of the
Company. Details of the Company's subsidiaries at 31 March 2013 are
as follows:
Proportion Proportion
of voting of power
interest held
Name of subsidiary Place of incorporation ownership and operation % %
Ashcourt Holdings Limited UK 100 100
Wholly owned by Ashcourt Holdings Limited:
Ashcourt Rowan Asset Management Limited UK 100 100
Ashcourt Investment Advisers Limited UK 100 100
Ashcourt Rowan Administration Limited UK 100 100
Ashcourt Rowan Financial Planning Limited UK 100 100
Robinson Gear (Management Services) Limited UK 100 100
Ashcourt Nominees Limited UK 100 100
Ashcourt Rowan Pension Trustees Limited UK 100 100
Ashcourt Nominees No 2 Limited UK 100 100
Investment Management Holdings Limited UK 100 100
Rowan & Company Capital Management Limited UK 100 100
Paragon Trustees Limited UK 100 100
Savoy Investment Management Limited UK 100 100
Savoy Asset Management Limited UK 100 100
Wholly owned by Savoy Asset Management
Limited:
Guildhall Investments Limited UK 100 100
St Pauls Nominees Limited UK 100 100
During the year Savoy Investment Management Limited was
transferred from Savoy Asset Management Limited to Ashcourt
Holdings Limited.
After the year end, Ashcourt Rowan Trustees and Robinson Gear
(Management Services) Limited were sold to Mattioli Woods together
with the business and certain assets of Ashcourt Rowan
Administration Limited.
35. Property plant and equipment
Fixtures
and
equipment
GBP'000s
Cost
At 31 March 2011 2,584
Additions 1,232
At 31 March 2012 3,816
Additions 482
Disposals (59)
At 31 March 2013 4,239
Depreciation and impairment
At 31 March 2011 941
Charge for the year 757
At 31 March 2012 1,698
Charge for the year 1,467
Disposals (59)
At 31 March 2013 3,106
Carrying amount
At 31 March 2013 1,133
At 31 March 2012 2,118
At 31 March 2011 1,643
36. Investments in subsidiaries
GBP'000s
At 31 March 2011 24,829
Capital contribution on share-based payments 107
At 31 March 2012 24,936
Capital contribution on share-based payments 63
At 31 March 2013 24,999
The investments in subsidiaries are made up as follows:
2013 2012
GBP'000s GBP'000s
Ashcourt Holdings Limited 16,449 16,408
Savoy Asset Management Limited 8,550 8,528
24,999 24,936
37. Financial assets
At the balance sheet date, amounts due from Group companies
include amounts receivable from Group companies of GBP20.3 million
(2012: GBP20.2 million), principally loaned for the financing of
acquisitions. Group receivables of GBP329,000 (2012: GBPnil) are
due within one year in respect of management charges. Other
receivables were GBP2.3 million (2012: GBP757,000) as at the year
end date.
Cash and cash equivalents
These comprise cash held by the Company and short-term bank
deposits with an original maturity of three months or less. The
carrying amount of these assets approximates their fair value.
38. Financial liabilities
2013 2012
GBP'000s GBP'000s
Other payables comprise:
Other creditors and accruals 3,276 2,589
The Directors consider that the carrying amount of other
creditors approximates to their fair value.
At the balance sheet date, amounts due to Group companies were
GBP1,358,000 (2012: GBP1,323,000).
39. Share capital, share premium account
The movements on these items are disclosed in Notes 23 and 24 to
the financial statements.
Equity reserve
2013 2012
GBP'000s GBP'000s
---------
As at 1 April 1,524 1,369
Share based payment 96 95
Transfer to retained earnings (60) -
---------
As at 31 March 1,560 1,464
40. Retained profit
2013 2012
GBP'000s GBP'000s
---------
As at 1 April 12,804 (36,887)
Loss for the year (3,475) (249)
Transfer from equity reserve 60 -
Reduction in share premium - 50,000
---------
As at 31 March (9,389) 12,864
41. Related party transactions
The Company charged management fees to its subsidiaries of
GBP2,293,000 (2012: GBP3,432,000).
At the balance sheet date, amounts due from Group companies
include amounts receivable from Group companies of GBP20.3 million
(2012: GBP20.2 million), principally loaned for the financing of
acquisitions.
At the balance sheet date, amounts due to Group companies were
GBP1,358,000 (2012: GBP1,323,000).
42. Risk management
Exposure to credit risk, market risk (which combines foreign
currency risk, interest rate risk and market price risk) and
liquidity risk arises in the normal course of the Company's
business.
Credit risk
The credit risk to the Company is limited to the amounts owed by
subsidiary companies and cash at banks. At the balance sheet date
there were no significant concentrations of credit risk and no
amounts were overdue.
The credit risk on liquid funds is limited because the
counterparties are banks with high credit ratings assigned by
international credit-rating agencies.
At the balance sheet date the Company had the following credit
risk exposures:
2013 2012
Included in current assets GBP'000s GBP'000s
Cash and cash equivalents 289 4,238
Due from Group companies 329 -
Other debtors 2,283 757
2,901 4,995
2013 2012
Included in non-current assets GBP'000s GBP'000s
Due from Group companies 19,974 20,276
The amounts in the above table are based on the carrying value
of all accounts.
Foreign currency risk
The Company has no material exposure to foreign exchange
risk.
Interest rate risk
The Company's exposure to interest rate risk on financial assets
is mitigated by placing surplus funds on fixed deposit for various
levels of maturity. The interest rates obtained are market rates
which are typically linked to base rate. Typically, cash is held on
deposit for no longer 90 days. All cash balances at the year end
were held on call deposit. The Company also has interest-bearing
financial liabilities with floating interest rates.
Management deems interest rate risk immaterial and does not
actively manage this risk. At the balance sheet date, the Company
held GBP289,000 (2012: GBP4,238,000) in cash and cash equivalents
on which interest is earned and had GBPnil (2012: GBPnil) payable
in loans and deferred consideration on which interest is paid with
floating rates of interest.
Market price risk
Management considers the market price risk to the Company to be
immaterial.
Liquidity risk
Liquidity risk is the risk that the Company does not have
sufficient financial resources to meet its obligations when they
fall due or will have to do so at excessive cost. This risk can
arise from mismatches in the timing of cash flows relating to
assets, liabilities and off-balance sheet instruments. The Company
monitors liquidity risk taking into account cash balances held and
levels of borrowing.
Non-derivative cash flows
The table below presents the cash flows receivable and payable
by the Company under non-derivative financial assets and
liabilities by remaining contractual maturities at the balance
sheet date. The amounts disclosed in the table are the contractual,
undiscounted cash flows whereas the Company manages inherent
liquidity risk on expected undiscounted cash flows.
The net liquidity positions in the table below, relate to cash
flows on contractual obligations existing at the balance sheet
date. They do not take account of any cash flows generated from
profits on normal trading activities or dividends and loans
received from subsidiary companies.
On demand < 3 months 3-12 months 1-5 years > 5 years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 31 March 2013
Assets
Cash and cash equivalents 289 - - - -
Due from Group companies - - 329 19,974 -
Total financial assets 289 - 329 19,974 -
Liabilities
Trade payables - (3,276) - - -
Due to subsidiaries - (1,358) - - -
Total financial liabilities - (4,634) - - -
Net liquidity surplus/(deficit) 289 (4,634) 329 19,974 -
On demand < 3 months 3-12 months 1-5 years > 5 years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------
As at 31 March 2012
Assets
Cash and cash equivalents 4,238 - - - -
Due from Group companies - - - 20,276 -
----------
Total financial assets 4,238 - - 20,276 -
----------
Liabilities
Trade payables - (2,589) - - -
Due to subsidiaries (1,323) - - - -
----------
Total financial liabilities (1,323) (2,589) - - -
----------
Net liquidity surplus/(deficit) 2,915 (2,589) - 20,276 -
----------
Estimation of fair values
The following summarises the major methods and assumptions used
in estimating the fair values of financial instruments.
Trade and other receivables/payables
For receivables/payables with a remaining life of less than one
year, the notional amount is deemed to reflect the fair value. All
other receivables/payables greater than one year are discounted at
base rate to determine the fair value.
Officers and professional advisers
Current Directors
Hugh Ward, Non-Executive Chairman
Jonathan Polin, Chief Executive Officer
Alfio Tagliabue, Chief Financial Officer
Richard Sinclair, Chief Operating Officer
Steve Haines, Non-Executive Director
Jim Roberts, Non-Executive Director
Secretary
Alfio Tagliabue
60 Queen Victoria Street
London EC4N 4TR
Registered office
60 Queen Victoria Street
London EC4N 4TR
Bankers
The Royal Bank of Scotland
Corporate Banking
9th Floor
280 Bishopsgate
London EC2M 4RB
Website
www.ashcourtrowan.com
Registrars
Computershare Investor Services
The Pavilions
Bridgwater Road
Bristol BA13 8AE
Auditors
BDO LLP
55 Baker Street
London W1U 7EU
Nominated adviser and brokers
Peel Hunt
Moor House
120 London Wall
London
EC2Y 5ET
Financial adviser and brokers
Cantor Fitzgerald
One America Square
17 Crosswall
London
EC3N 2LS
Lawyers
Dundas & Wilson
Northwest Wing
Bush House
Aldwych
London
WC2B 4EZ
This information is provided by RNS
The company news service from the London Stock Exchange
END
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