TIDMTAM
RNS Number : 8374A
Tatton Asset Management PLC
03 June 2019
3 June 2019
Tatton Asset Management PLC
Preliminary Results
For the year ended 31 March 2019
Tatton Asset Management plc (the "Group", the "Company") (AIM:
TAM), the investment management and IFA support services group,
today announces its preliminary results for the year ended 31 March
2019.
Financial Highlights
-- Discretionary assets under management ("AUM") increased 24.5% to GBP6.1bn (2018: GBP4.9bn)
-- AUM net inflows increased to GBP1.1bn averaging over GBP90m per month
-- Group revenue increased 12.9% to GBP17.5m (2018: GBP15.5m)
-- Adjusted operating profit(1) up 12.3% to GBP7.3m (2018: GBP6.5m)
-- Adjusted operating profit(1) margin 41.7% (2018: 42.1%)
-- Reported profit before tax increased to GBP6.1m (2018:
GBP3.6m), after charging exceptional items of GBP0.5m and share
option costs of GBP0.9m
-- Proposed final dividend of 5.6p, giving a full year dividend of 8.4p
-- Adjusted fully diluted EPS(2) increased 9.9% to 10.0p (2018: 9.1p)
-- Strong financial position, with net cash of GBP12.2m (2018: GBP10.6m)
Operational Highlights
-- Tatton increased its member firms by 30.5% to 445 (2018: 341)
and number of accounts to 58.5k (2018: 48.8k)
-- Tatton won significant long-term investment mandate from
Tenet, one of the UK's largest Adviser support Groups (see separate
announcement)
-- Tatton won investment mandate with AIM listed financial
services company Frenkel Topping (see separate announcement)
-- Tatton launched its new inhouse administration portal,
ensuring scalability and supporting future growth
-- Tatton completed project to transfer Authorised Corporate
Director (ACD), delivering efficiencies for the Group and
decreasing the fund operating costs for end investors
-- Paradigm Mortgages, the Group's mortgage and protection
distribution business, increased gross lending via its channels by
23.5% to GBP8.4bn (2018: GBP6.8bn)
-- Paradigm Mortgages increased the number of member mortgage
firms by 14.1% to 1,392 (2018: 1,220)
-- Paradigm Consulting, the Group's compliance services
business, increased new members 6.0% to 390 (2018: 368)
1. Operating profit before exceptional items and IFRS2
share-based payment costs
2. Adjusted fully diluted earnings per share is calculated by
dividing the adjusted operating profit less cash interest and less
tax on operating activities by the weighted average number of
ordinary shares in issue during the year plus potentially dilutive
ordinary shares.
Paul Hogarth, Chief Executive Officer, commented:
"We have maintained our growth and performance despite a
challenging period and successfully created a secure platform upon
which we can continue to execute our ongoing strategy.
"The recent strategic investment mandate wins show how
compelling our investment proposition is to the wider market. We
have a simple, lean operating model that gives the IFA and their
clients the best investment management products at a sector leading
price point and we will continue to focus on their needs as well as
creating further value for our shareholders.
"With a strong balance sheet, we will invest for further growth,
ensuring we have the right blend of skills and talent to capitalise
on the many opportunities that exist within our markets. We enter
the new financial year confident of making further progress."
For further information please contact:
Tatton Asset Management plc +44 (0) 161 486 3441
Paul Hogarth (Chief Executive Officer)
Paul Edwards (Chief Financial Officer)
Lothar Mentel (Chief Investment Officer)
Nomad and Broker
Zeus Capital +44 (0) 20 3829 5000
Martin Green (Corporate Finance)
Dan Bate (Corporate Finance and QE)
Pippa Hamnett (Corporate Finance)
Media Enquiries
Powerscourt +44 (0) 20 7250 1446
Justin Griffiths
Victoria Heslop
For more information, please visit:
www.tattonassetmanagement.com
Analyst presentation
An analyst briefing is being held at 9.30am on 3 June 2019 at
the offices of Zeus Capital, 10 Old Burlington Street, London. W1S
3AG
CHAIRMAN'S LETTER
ROGER CORNICK, Chairman
The financial year ended 31 March 2019 has seen the Group make
further progress against the backdrop of a complex and challenging
market environment. Despite these headwinds the Group has delivered
double digit percentage organic growth in both revenue and profit
and continued to see strong net inflows in Assets Under Management
("AUM").
Results
The Group achieved another year of growth, with revenues
increasing by 12.9% to GBP17.5 million (2018: GBP15.5 million).
Adjusted Operating Profit increased by 12.3% to GBP7.3 million
(2018: GBP6.5 million) and profit before tax, after incurring
exceptional costs and share-based payment charges was GBP6.1
million (2018: GBP3.6 million). The resulting impact on fully
diluted adjusted earnings per share is an increase of 9.9% to 10.0p
(2018: 9.1p). Basic earnings per share was 8.7p (2018: 4.1p).
Tatton Investment Management, our on platform discretionary
asset manager increased AUM by 24.5% to GBP6.1 billion (2018:
GBP4.9 billion) with strong net inflows of GBP1.1 billion. Paradigm
Consulting, the Group's IFA adviser and support services business
increased members by 6.0% to 390 and Paradigm Mortgage Services,
the Group's mortgage services business continues to grow well with
membership increasing by 14.1% to 1,392.
STRATEGY
The Group's strategic objectives are unchanged. We retain our
focus on organic growth through the provision of products and
services that are designed to enable Independent Financial Advisers
("IFAs") to better advise their clients, and we continue to invest
in both people and technology that will steadily grow the business
by enhancing our support for IFAs.
Challenging market conditions continue to create opportunities
and threats in diverse areas and we are alert to the chance of
augmenting the business through acquisition. We have evaluated
several opportunities during the period under review but remain
disciplined in ensuring that any possibility is complementary and
strategically aligned to the existing model, and is earnings
enhancing.
Our people
As always, our grateful thanks go to all our staff within the
business for their hard work and ability to deliver the right
outcomes for our customers which ultimately leads to our success as
a business. We continue to invest in new talent to support our
growth and remain committed to developing all our people across all
functions to achieve their goals.
Board and corporate governance
Tatton Asset Management remains committed to the highest
standards of corporate governance. The Board and its committees are
key to guiding the Company and leading its strategy and we are
determined to ensure that we have the right skill set to steer the
Group forward. In a business evolving at pace, we maintain a
governance structure that underpins and encourages growth, while
ensuring effective controls and safeguards are in place.
Dividends
Given the Group's performance this year and the Board's
confidence in the immediate outlook, the Board is proposing a final
dividend of 5.6p per share, bringing the total ordinary dividend
for the year to 8.4p per share, an increase of 27.3%, and is 1.2
times covered by adjusted earnings per share. The Board operates a
progressive dividend policy and targets a pay-out ratio in the
region of 70% of annual adjusted earnings per share over the medium
term.
OUTLOOK
The Group is strategically well positioned, and we continue to
reinforce our status with strong organic growth. As we enter the
new financial year, we look to build on the success achieved to
date and deliver continued sustainable growth through further
investment, efficient operations and customer service, as well as
delivering continued returns to our shareholders through a
progressive dividend policy. We are confident regarding the future
opportunities for the Group and remain optimistic over our ability
to deliver further progress in the coming year.
CHIEF EXECUTIVE'S BUSINESS REVIEW
PAUL HOGARTH, Chief Executive Officer
I am very pleased to present the Annual Report of our second
year as a listed entity. The last twelve months have been a period
when the impact of political changes for all in the UK is yet to be
fully comprehended and the long-term impact entirely foreseen. To
make a distinction with Brexit where the outcome remains unclear,
the direction of travel of financial regulation could not be any
clearer. Transparency, with a focus on customer outcomes and an
obligation to demonstrate value is paramount. Financial services
firms and investment managers are now compelled to regularly report
all costs to clients to help demonstrate the value they add. Tatton
is ideally positioned to take full advantage since these changes
are entirely in line with our values, business model, and products
and services.
The strategy of our Group has not changed. We are committed and
excited by the opportunity of growing our business as a service
provider of choice to directly authorised Financial Intermediaries
across all of their major products and services. As we have stated
before, we champion the Independent Financial Advice sector because
it is the most competitive part of the financial services sector,
yet also the most fragmented and since Retail Distribution Review
("RDR") and Mortgage Market Review ("MMR") the least supported in
UK financial intermediation. Working closely with Financial
Advisers is of mutual benefit since we gain an insight into the
market that allows us to develop products and services in line with
the needs of advisers and their clients that are fit for current
and future regulatory expectations.
Market overview
As we reported in our inaugural Annual Report, the market for
financial advice is continuing to grow. It is widely accepted that
the role of the state in retirement provision will be limited to a
State Pension, further work place pension auto-enrolment will help
but flexible working practices and career changes mean that
consumers, of all financial circumstances, can find planning for
retirement and investing to gain financial peace of mind
daunting.
The complexity of financial planning for consumers is creating a
vibrant opportunity for financial advice, and financial services
firms are adopting a number of strategies to meet this market
demand. Last year we reported on how adoption of technological
solutions is being used to meet consumer need, either to enhance
the benefits of face to face intermediated advice or to provide
artificial intelligence led robo-advice.
In the last twelve months, robo-advice businesses are struggling
with low uptake from consumers. Contrary to their experience, many
IFA businesses are thriving. Tatton is a business that has always
believed in the benefits of independent intermediated advice and we
are very encouraged by how the IFA market is adapting to regulatory
change and the related increase in costs, delivering value to their
clients while maintaining profitable businesses.
We know from dialogue with IFAs that the imposition of
regulatory change creates operational challenges in back office
systems, compliance and increases the burden on management time. It
is refreshing and encouraging that the industry is moving toward
what we have been advocating since our creation, a focus on using
technology to lower costs and increasing business efficiency,
without reducing service standards.
The most significant change to the financial advice sector is
the increased disclosure created by the MiFID II regime, in
particular all the charges and expenses levied within investment
portfolios. Our research has revealed that for investors and
advisers using traditional off-platform discretionary asset
management firms, this level of disclosure will be enlightening,
and unfortunately place pressure on the fees they charge for the
stewardship of their clients' finances.
Rather than an obstacle to IFAs' businesses we see increased fee
disclosure as an opportunity for the IFA to actively manage costs
for their clients and demonstrate how they are adding value. The
opportunity for the Group as a provider of two of the core
functions for an IFA business adapting to these changes is clear:
compliance consultancy and low cost outsourced investment
fulfilment.
Whilst it is pleasing that we do not have to adapt our business
to the new regulatory regime, this is not the position for many
advice firms. It is clear that the creation and management of
investment portfolios for clients for many IFAs is becoming
unfeasible. Research from the lang cat ltd has shown that an
adviser managing their own clients' portfolios has to produce over
140 pages of reporting per client per quarter in the simple day to
day management of a client's portfolios.
It is no surprise that more Financial Advisers are therefore
seeking to outsource investment fulfilment to on-platform
discretionary providers that can meet their clients' investment
requirements, without adding significant additional cost now
revealed through the MiFID II regime rules.
For Tatton, we are not only able to manage the transition to a
new investment service from a compliance and business support
function, but also provide award winning discretionary asset
management. We make it easier for IFAs to change their businesses
and adopt a fit for future purpose investment fulfilment function.
As we reported last year this is a virtuous circle: the Group
benefits by supporting and facilitating a better, more efficient
supply of financial advice to satisfy increasing consumer demand
for professional financial advice.
Our services
We have not stood still in our second year as an AIM listed
entity. Our independence, robust financial position and
operationally transparent business have allowed us to maintain our
Group strategy and enhance our products and services. As a Group we
create significant benefits through market intelligence gained by
developing and maintaining deep, strategic relationships with our
Financial Adviser firms which is reflected in the changes we have
made to our Group businesses.
Tatton Investment Management
This year has been one of consolidated expansion for Tatton. We
have been able to significantly increase the number of new IFA
firms working with us and our experience shows we can expect
greater allocations from their clients over time. New engagement
with adviser firms is also being reflected in our new pipeline
which remains strong.
We now have 445 (2018: 341) adviser firms and over 58,500 (2018:
48,800) client accounts with an average portfolio size of
GBP104,000, further evidence of the attraction of making
competitively priced high quality investment products available to
the clients of Financial Advisers. AUM has grown from GBP4.9
billion to GBP6.1 billion in the year.
Our focus for the next year will be to enhance and evolve our
product offering. There are significant market opportunities where
we can apply our values and way of working with advisers and their
clients, providing the same value as we have demonstrated with our
Model Portfolio Service range of strategies.
To extend our reach into other areas, we will seek to
strategically partner with other leading UK Financial Advice firms
and fulfil their need for a centralised investment proposition. We
are also developing the means to develop third party investment
management functions for existing smaller sized Discretionary Fund
Managers.
I am pleased to report that the Tatton Blended Funds are gaining
traction in the market and now have a combined GBP71.7 million of
assets under management. They remain some of least expensive
multi-asset, multi-manager funds in the market.
Tatton is ideally positioned as a business to benefit
significantly from the market dynamics created by regulatory
changes and the cost pressure this places on some of our
competitors.
Paradigm Mortgages
As many people attempting to sell their homes know, the UK
housing market has been directly affected by the uncertainty of
Brexit. In an enhanced and significantly more rigorous regulatory
environment, the role of Financial Advisers in helping those moving
with investing in and securing the best mortgage deal is therefore
heightened and remains an opportunity for Paradigm Mortgages.
I am very pleased, therefore, that despite difficult market
conditions Paradigm Mortgages has grown its membership by 14.1% and
its lending volume by 23.5% over the past twelve months and has
increased revenues to reflect this growth. The benefit to Financial
Advisers and the carried benefit to their clients of aggregating
mortgage lending and life insurance is clear. As a scalable
business, I am confident that Paradigm Mortgages is ideally placed
to enhance its growth, particularly when confidence in the UK
housing market is restored following an eventual Brexit
resolution.
Paradigm Consulting
The changes to how Financial Advisers manage their businesses
and outsource their core functions is reflected in the changes we
have made at the start of 2019 to Paradigm Consulting and its
model. This change has created challenges at the same time as
opportunities but ultimately has made Paradigm Consulting more
adaptable. While member numbers have increased in the year, revenue
has decreased to GBP6.0 million (2018: GBP6.8 million) due to lower
levels of additional consultancy and reduced flows on the Paradigm
wrap platform.
The business has always maintained close relationships with its
Financial Adviser firms, championing the world of face to face
financial advice, listening closely and delivering solutions to
advisers' needs and providing bespoke consultancy support to help
firms effectively manage the risk of an ever changing regulatory
landscape. The introduction of a wider range of services, as well
as new fee propositions, means that it now has the model and
capability to benefit from the changes to how Financial Adviser
firms engage with compliance provision.
Rebranding as a consultancy practice in January 2019, the
business' focus is firmly on its core competency of regulatory
support. Developing close and value adding relationships with firms
that subscribe for support on an ongoing basis sits at the very
heart of the business, with the remodelling of the business now
also allowing for ad-hoc work to be undertaken, providing
flexibility for firms that prefer to pay more for the convenience
of utilising outsourced guidance as and when this is needed.
Through a combination of new face to face and remote consultancy
programmes, live events, enhanced technical support and up to the
minute regulatory reporting, the consultancy services made
available are designed to effectively support advisers in creating
even greater efficiencies in their business, allowing them time to
properly focus and interact with their clients.
Moving forwards as Paradigm Consulting, the recent changes made
to the model place the business in a stronger position to extend
its reach into the adviser community, with the aim of helping a
larger number of firms to manage regulatory risk effectively by
adopting highly regarded consultancy guidance and support in a way
which suits them best.
Outlook
The outlook for the Group is positive. We are a young business,
with a model built on years of experience and understanding of the
Financial Advice sector. I am therefore pleased that the way
Financial Advisers build their businesses and how they are
regulated is now very much aligned with our business model and
vision.
The insight we gain through our Financial Adviser clients is an
integral part of how our businesses will grow. Our benefit is
created by improving and increasing the day to day business and
long-term security of Financial Advisers, a sector we remain
committed to serve.
As we maintain our growth and performance we have created a
platform from which we continue to execute our strategy. We have a
simple lean operating model that gives the IFA and their clients
the best investment management products at a sector leading price
point and we will continue to focus on their needs while ensuring
we create value for our shareholders. With a strong balance sheet
we will invest for growth, ensuring we have the right blend of
skills and talent to ensure we capitalise on the opportunities that
exist in our markets. As we enter 2019 we are confident of making
further progress.
CHIEF INVESTMENT OFFICER'S REPORT
Lothar Mentel, Chief Investment Officer
For the preceding two financial years, global capital markets
were relatively benign. But even though that calm backdrop has
ended, Tatton Investment Management ("Tatton") has continued to
increase its rate of business growth. Assets under management
increased by 24.5% to GBP6.1 billion (2018: GBP4.9 billion). Of the
GBP1.2 billion increase, GBP1.1 billion was a result of net cash
inflows, which amounts to a 16.0% increase compared with the
previous financial year.
From an industry perspective, 2018 was marked not only by a
return of volatile capital markets but also decisive regulatory
change. The introduction of MiFID II has significantly increased
regulatory burdens for both the investment and private client
advice industries. But Tatton was one of the few beneficiaries of
the change. MiFID II forced the UK adviser community to pay more
attention to portfolio charges arising from performance drag. That
made our low cost and highly transparent charging model more
attractive.
Proposition developments and business investments
In FY 2018, Tatton launched the VT Tatton Blended Funds range, a
unitised version of our hybrid active/tracker portfolios. In doing
so, we have made our cost efficient Model Portfolio Service ("MPS")
service available on those investment platforms and product
wrappers that cannot accommodate segregated DFM structures. This
consists of three UK Non-UCITS Retail Schemes funds to which fund
administrator Valu-Trac were appointed as outsourced ACD. To
achieve identical returns to the segregated platform portfolios
without extensive seed monies, Tatton had to temporarily subsidise
the GBP0.2 million fixed cost element following the fund's launch.
This went above and beyond the usual costs of new fund launches but
established a flawless early tracking of the portfolios by the VT
Tatton Blended Funds. This allowed us to point potential investors
to the five-year track record of Tatton's investment process rather
than having to establish a separate returns track record for the
new range.
Tatton also appointed Valu-Trac as ACD for the other existing
Tatton fund ranges. By the end of the financial year, all ranges
surpassed a total of GBP2 billion in assets under management. The
benefits are already being felt through improved efficiency and
reduced fund charges. During the second half of the financial year,
we incurred a one-off project and transitioning costs of GBP0.3
million to successfully deliver the project.
In response to the rising popularity of Tatton's Balanced
Ethical portfolio, the single portfolio option was extended to a
full risk profiled range which, since launch, has attracted much
adviser, client and media interest. While growing rapidly towards
the GBP100 million mark from a standing start, we suspect that
Tatton's exclusive risk-profiled ethical portfolios also attracted
more clients to Tatton in general, as initial interest in the
Ethical/Environmental Social and Governance fund portfolios led
adviser firms towards Tatton's services.
A major business focus was the step up in sales and marketing
activity. This was driven forward by the hiring of a national sales
director and a head of communications and marketing in early 2018.
Beyond various road shows to potential and existing Tatton using
firms, this has also provided us with an enhanced penetration
approach to national IFA networks.
At the beginning of 2019, we revealed an extension to our
existing platform based DFM services through the introduction of a
platform only Bespoke Portfolio Service ("BPS" ) proposition. This
complimentary service aims to cater for individual client
requirements which cannot be fulfilled through the MPS proposition.
There is a substantial business opportunity in this market segment,
due to the cost effectiveness of transactions in the platform model
and the increasing cost transparency pressures on the traditional
wealth management providers. In February, we were delighted to
announce that one of the UK's foremost BPS industry experts, Claire
Bennison (formerly Brooks Macdonald), had joined to lead this
development.
2018/19 capital markets and returns
Investment portfolio returns for the 2018 calendar year proved
challenging across the industry, as the sudden and rapid drying up
of central bank liquidity provision led to a substantial stock
market correction in the last quarter of 2018. The global economy,
however, only suffered a slowdown and stock markets recovered
almost as rapidly in the first quarter of 2019 as they did after a
similar episode in the first quarter of 2016.
While Tatton's portfolios across all risk profiles ended the
calendar year with some losses in absolute terms, these were
reduced through some of the tactical asset allocation calls the
investment team made in particular, the equity underweight position
versus benchmark during most of the year and the temporary removal
of all emerging market exposure from all portfolios barring the
highest risk global equity strategies.
The outcome was that the liquidity-induced market correction hit
active managers' stock selection strategies particularly hard, as
they suffered substantial outflows while tracker ETF funds enjoyed
significant inflows. Despite identical asset allocation positions,
Tatton's active fund-based portfolios therefore underperformed the
tracker-based portfolios and gave back some of the relative
performance gains from 2017. This is now the second time we have
observed this active versus passive performance cycle. And judging
from experience, we expect it to be transitory once more.
Ethical portfolios performed particularly strongly; however,
this was to a large extent structural, due to their greater
allocation to US and tech stocks as a consequence of the
specificity of the ethical investment universe and its
concentration in the US and tech sector.
For the financial year ahead, our business development efforts
will focus on establishing an increasing amount of distribution
partnerships with national adviser networks and further extending
our service offering. This will be done through our MPS
complementing fund ranges, gaining a solid foothold in the BPS
market and enhancing our platform MPS DFM with "at retirement" cash
flow management drawdown option.
OUTLOOK
We expect volatile market conditions to continue as central
banks will continue to try and gradually normalise monetary
intervention levels back to the historical average. In this
environment, risk asset markets are reacting increasingly strongly
to any hints of credit markets deterioration. This is likely to be
the consequence of a higher perceived vulnerability of risk asset
markets to the next corporate default cycle. After a decade of
extraordinarily low default levels (due to the unprecedented
accommodative monetary policy) there are justified concerns that a
central bank policy mistake of tightening too much or too early
could lead to a far more severe and a more global credit default
cycle than has historically been observed.
We believe that Tatton's highly disciplined active/passive
investment approach is well positioned to deal with the challenges
and harness the opportunities ahead without exposing clients any
more to volatility risk than they established and agreed with their
financial advisers as acceptable. The Q1 2016 and Q4 2018 market
corrections have also shown us that our communications materials
are effective in soothing client worries - and therefore key to
preventing end clients from mistiming the market. The combination
of both proposition elements should lead to better long-term client
investment outcomes than experienced before or elsewhere. This
should continue to support the longevity of our adviser and client
relationships that has been just as instrumental to our strong
business growth of the past six years as the cost effectiveness we
are best known for.
CHIEF FINANCIAL OFFICER'S REPORT
PAUL EDWARDS, Chief Financial Officer
Overview
I am pleased to report that the Group has continued to make
progress and has delivered another year of double-digit organic
growth in both revenue and Adjusted Operating Profits*. The
performance has been achieved against the backdrop of an unsettled
environment with strong performances from both Tatton Investment
Management and Paradigm Mortgages, with Paradigm Consulting
addressing the challenges in its market.
Revenue - Reported revenue increased by 12.9% to GBP17.5 million
(2018: GBP15.5 million); Tatton revenue increased by 38.1% to
GBP8.7 million (2018: GBP6.3 million) supported by the continued
growth of AUM that ended the year at GBP6.1 billion (2018: GBP4.9
billion) of which net inflows of GBP1.1 billion accounted for the
majority of the growth. Paradigm Mortgages continues to make
progress growing its member firms and increasing its share of the
mortgage completion market which delivered a 12.5% increase in
revenue to GBP2.7 million (2018: GBP2.4 million). Paradigm
Consulting revenue was down by 11.8% to GBP6.0 million (2018:
GBP6.8 million) and, while the number of new firms using Paradigm
increased, the average revenue per firm came under pressure from
lower levels of additional consultancy delivered in the year and
reduced flows on the Paradigm wrap platform.
Profit - The Group delivered Adjusted Operating Profit* of
GBP7.3 million (2018: GBP6.5 million), an increase of 12.3% and the
margin was 41.7% (2018: 42.1%). Tatton continues to invest,
updating IT systems and its new online portal and investing in
additional commercial sales and marketing resource to drive and
support future growth; it contributed Adjusted Operating Profit* of
GBP4.6 million (2018: GBP3.0 million) and improved its margin to
53.0% (2018: 47.8%). Tatton's continued strong growth has ensured
it is now the largest part of the Group, contributing 50% of the
revenue and 63% of the Adjusted Operating Profit*, a trend that is
expected to continue. The contribution is before one-off costs
totalling GBP0.5 million relating to the set-up of new blended
funds at the beginning of the financial year of GBP0.2 million,
and, following a careful selection and diligence process, project
costs of GBP0.3 million related to changing its Authorised
Corporate Director. Paradigm Mortgages' Adjusted Operating Profit*
contributed GBP1.6 million (2018: GBP1.4 million), improving the
margin to 58.2% (2018: 57.9%). Paradigm Consulting contributed
Adjusted Operating Profit* of GBP3.0 million (2018: GBP3.6 million)
with its margin decreasing to 49.5% (2018: 52.7%).
Total Group Operating Profit was GBP5.9 million (2018: GBP3.6
million) after charging exceptional costs of GBP0.5 million and
share-based payments of GBP0.9 million. Operating Profit has been
adjusted for these items to give better clarity of the underlying
performance of the Group. The Alternative Performance Measures
("APMs") are consistent with how the business performance is
planned and reported within the internal management reporting to
the Board. Some of these measures are also used for the purpose of
setting remuneration targets.
Return on Capital Employed is 47.8% (31 March 2018: 48.1%). The
Group is capital light and makes efficient use of the capital
employed to generate strong returns and create value for our
shareholders.
Exceptional costs
Exceptional costs of GBP0.5 million (2018: GBP2.0 million) were
incurred by the Group in the year and are detailed above and in
note 6 to the Group financial statements.
Net finance income
The Group remains cash positive and has received cash interest
of GBP0.2 million from outstanding loan notes. It is anticipated
that the loan notes will be redeemed in the new financial year.
Earnings per share
Basic earnings per share increased to 8.7p (2018: 4.1p).
Adjusted earnings per share* increased by 14.6% to 11.0p (2018:
9.6p) and fully diluted the increase was 9.9% to 10.0p (2018:
9.1p).
Cash flow
The Group continued to see healthy cash generation. Net cash
generated from operating activities before exceptional costs was
GBP8.0 million (2018: GBP5.6 million), 110% of Adjusted Operating
Profit*. Exceptional costs totalled GBP0.5 million and net cash
generated from operating activities was GBP6.1 million (2018:
GBP2.3 million). Income tax paid was in line with the prior year at
GBP1.4 million (2018: GBP1.4 million) and dividends paid in the
year totalled GBP4.0 million (2018: GBP1.6 million). The Group made
intangible and tangible asset investments of GBP0.6 million and
ended the year with cash on the balance sheet of GBP12.2 million
(2018: GBP10.6 million).
Dividends and capital allocation
The Board is recommending a final dividend of 5.6p. When added
to the interim dividend of 2.8p this gives a full year dividend of
8.4p. This proposed dividend reflects both our cash performance in
the period and our underlying confidence in our business. Dividend
cover (being the ratio of earnings per share before exceptional
items and share-based payment charges) is 1.2 times. If approved at
the Annual General Meeting the final dividend will be paid on 12
July 2019 to shareholders on the register on 14 June 2019 and will
have an ex-dividend date of 13 June 2019. Our objective is to
maximise long-term shareholder returns through a disciplined
deployment of cash. To support this, we have adopted a cash
allocation policy that allows for: investment in capital projects
that support growth; regular returns to shareholders from our free
cash flow; acquisitions to supplement our existing portfolio of
business; and an efficient balance sheet appropriate to the
Company's investment requirements.
Statement of financial position
The Group continues to strengthen its balance sheet and net
assets increased to GBP15.3 million (2018: GBP13.6 million).
Tangible and intangible assets (excluding goodwill) increased in
line with the investments made this year in both systems and
infrastructure and totalled GBP0.6 million (2018: GBP0.1 million),
and goodwill totalled GBP4.9 million (2018: GBP4.9 million).
New reporting standards
During the year, the Group adopted the new reporting standards
IFRS 15 'Revenue from Contracts with Customers' and IFRS 9
'Financial Instruments'. The adoption of IFRS 15 has not resulted
in any changes to the way the Group accounts for revenue or costs
of sales. There have been no amendments to any of the measurement
categories for, or carrying amounts of, the Group's financial
instruments following adoption of IFRS 9.
IFRS 16 'Leases' is effective for the Group from 1 April 2019.
The detailed assessment of the impact on the Group's performance
has been completed. The Group plans on adopting the modified
retrospective approach with the right-of-use asset equal to the
lease liability at transition date. The Group's assessment is that
it will recognise right-of-use assets and lease liabilities of
approximately GBP0.6 million on 1 April 2019 with net assets
remaining unchanged.
Risk management and the year ahead
Risk is managed closely and is spread across our businesses and
managed to individual materiality. Our key risks have been
referenced in this Annual Report primarily on pages 24 and 25. We
choose key performance indicators that reflect our strategic
priorities of investment, growth and profit. These KPIs are part of
our day to day management of the business and in the year ahead we
will focus on growth and value creation. In this way we aim to
deliver continued value to shareholders.
Consolidated Statement of Total Comprehensive Income
For the year ended 31 March 2019
Year ended Year ended
31-Mar 31-Mar
2019 2018
Note (GBP'000) (GBP'000)
--------------------------------------------- ---- ----------- -----------
Revenue 17,518 15,507
Administrative expenses (10,210) (8,981)
--------------------------------------------- ---- ----------- -----------
Adjusted operating profit (before separately
disclosed items)(1) 7,308 6,526
--------------------------------------------- ---- ----------- -----------
- Share-based payment costs 6 (874) (986)
- Exceptional items 6 (509) (1,964)
Total administrative expenses (11,593) (11,931)
--------------------------------------------- ---- ----------- -----------
Operating profit 5,925 3,576
Finance income/(costs) 7 187 (26)
--------------------------------------------- ---- ----------- -----------
Profit before tax 6,112 3,550
Taxation charge 8 (1,255) (1,110)
--------------------------------------------- ---- ----------- -----------
Profit for the year on continuing operations 4,857 2,440
--------------------------------------------- ---- ----------- -----------
Loss related to disposal of discontinued
operations - (164)
Profit attributable to shareholders 4,857 2,276
--------------------------------------------- ---- ----------- -----------
Earnings per share - Basic 9 8.69p 4.07p
--------------------------------------------- ---- ----------- -----------
Earnings per share - Diluted 9 7.92p 3.85p
--------------------------------------------- ---- ----------- -----------
Adjusted earnings per share - Basic(2) 9 10.99p 9.64p
--------------------------------------------- ---- ----------- -----------
Adjusted earnings per share - Diluted(2) 9 10.02p 9.12p
--------------------------------------------- ---- ----------- -----------
1 Adjusted for exceptional items and share-based payments. See note 22.
2 Adjusted for exceptional items and share-based payments and the tax thereon. See note 22.
Consolidated Balance Sheet
For the year ended 31 March 2019
31-Mar 31-Mar
2019 2018
Note (GBP'000) (GBP'000)
-------------------------------------- ---- ---------- -----------
Non-current assets
Goodwill 11 4,917 4,917
Intangible assets 12 223 -
Property, plant and equipment 13 349 104
Deferred income tax assets 16 104 -
-------------------------------------- ---- ---------- -----------
Total non-current assets 5,593 5,021
-------------------------------------- ---- ---------- -----------
Current assets
Trade and other receivables 14 2,508 2,452
Cash and cash equivalents 12,192 10,630
-------------------------------------- ---- ---------- -----------
Total current assets 14,700 13,082
-------------------------------------- ---- ---------- -----------
Total assets 20,293 18,103
-------------------------------------- ---- ---------- -----------
Current liabilities
Trade and other payables 15 (4,521) (3,922)
Corporation tax (484) (605)
-------------------------------------- ---- ---------- -----------
Total current liabilities (5,005) (4,527)
-------------------------------------- ---- ---------- -----------
Non-current liabilities
Deferred tax liabilities 16 - (15)
-------------------------------------- ---- ---------- -----------
Total non-current liabilities - (15)
-------------------------------------- ---- ---------- -----------
Total liabilities (5,005) (4,542)
-------------------------------------- ---- ---------- -----------
Net assets 15,288 13,561
-------------------------------------- ---- ---------- -----------
Equity attributable to equity holders
of the Company
Share capital 18 11,182 11,182
Share premium account 8,718 8,718
Other reserve 2,041 2,041
Merger reserve (28,968) (28,968)
Retained earnings 22,315 20,588
-------------------------------------- ---- ---------- -----------
Total equity 15,288 13,561
-------------------------------------- ---- ---------- -----------
The financial statements were approved by the Board of Directors
on 3 June 2019 and were signed on its behalf by:
Paul Edwards
Director
Consolidated Statement of Changes in Equity
For the year ended 31 March 2019
Share Share Other Merger Retained Total
capital premium reserve reserve earnings equity
Note (GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000)
----------------------- ---- ---------- ---------- ---------- ---------- ---------- ----------
At 1 April 2017 11,182 8,718 2,133 (18,960) - 3,073
----------------------- ---- ---------- ---------- ---------- ---------- ---------- ----------
Profit and total
comprehensive income - - 598 - 1,678 2,276
Dividends 9 - - (1,564) - (1,230) (2,794)
Share-based payments 19 - - 846 - 140 986
Adjustments related
to merger accounting - - 28 (20,008) 20,000 20
Issue of share capital - - - 10,000 - 10,000
----------------------- ---- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March 2018 11,182 8,718 2,041 (28,968) 20,588 13,561
----------------------- ---- ---------- ---------- ---------- ---------- ---------- ----------
Profit and total
comprehensive income - - - - 4,857 4,857
Dividends 9 - - - - (4,025) (4,025)
Share-based payments 19 - - - - 765 765
Deferred tax on
share-based payments - - - - 130 130
----------------------- ---- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March 2019 11,182 8,718 2,041 (28,968) 22,315 15,288
----------------------- ---- ---------- ---------- ---------- ---------- ---------- ----------
The other reserve and merger reserve were created on 19 June
2017 when the Group was formed, where the difference between the
Company's capital and the acquired Group's capital has been
recognised as a component of equity being the merger reserve. Both
the other reserve and the merger reserve are non-distributable.
Consolidated Statement of Cash Flows
For the year ended 31 March 2019
31-Mar 31-Mar
2019 2018
Note (GBP'000) (GBP'000)
---------------------------------------------- ---- ---------- ----------
Operating activities
Profit for the year 4,857 2,276
Adjustments:
Income tax expense 1,255 1,110
Finance (income) / costs 7 (187) 26
Depreciation of property, plant and equipment 13 91 53
Amortisation of intangible assets 12 43 -
Share-based payment expense 6 874 986
Share of profit from joint venture - (31)
Changes in:
Trade & other receivables 78 (544)
Trade & other payables 491 (188)
---------------------------------------------- ---- ---------- ----------
Exceptional costs 6 509 1,964
Cash generated from operations before
exceptional costs 8,011 5,652
---------------------------------------------- ---- ---------- ----------
Cash generated from operations 7,502 3,688
---------------------------------------------- ---- ---------- ----------
Income tax paid (1,366) (1,374)
---------------------------------------------- ---- ---------- ----------
Net cash from operating activities 6,136 2,314
---------------------------------------------- ---- ---------- ----------
Investing activities
Purchase of intangible assets (266) -
Purchase of property, plant and equipment (336) (82)
---------------------------------------------- ---- ---------- ----------
Net cash used in investing activities (602) (82)
---------------------------------------------- ---- ---------- ----------
Financing activities
Proceeds from the issue of shares - 10,000
Stamp duty paid on share transfer - (10)
Interest received/(paid) 53 (26)
Dividends paid (4,025) (1,556)
---------------------------------------------- ---- ---------- ----------
Net cash used in financing activities (3,972) 8,408
---------------------------------------------- ---- ---------- ----------
Net increase in cash and cash equivalents 1,562 10,640
---------------------------------------------- ---- ---------- ----------
Cash and cash equivalents at beginning
of period 10,630 (10)
---------------------------------------------- ---- ---------- ----------
Net cash and cash equivalents at end of
period 12,192 10,630
---------------------------------------------- ---- ---------- ----------
Notes to the Consolidated Financial Statements
1 General information
Tatton Asset Management plc ("the Company") is a public company
limited by shares. The address of the registered office is Paradigm
House, Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND. The
registered number is 10634323.
The Group comprises the Company and its subsidiaries. The
Group's principal activities are discretionary fund management, the
provision of compliance and support services to independent
financial advisers (IFAs), the provision of mortgage adviser
support services and the marketing and promotion of Tatton Oak
funds.
News updates, regulatory news and financial statements can be
viewed and downloaded from the Group's website,
www.tattonassetmanagement.com. Copies can also be requested from:
The Company Secretary, Tatton Asset Management plc, Paradigm House,
Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND.
The Company has taken advantage of the exemption in section 408
of the Companies Act 2006 not to present its own income
statement.
2 Accounting policies
The principal accounting policies applied in the presentation of
the annual financial statements are set out below.
2.1 Basis of preparation
The consolidated financial statements of the Group have been
prepared in accordance with International Financial Reporting
Standards ("IFRSs") as adopted for use in the European Union and
International Financial Reporting Interpretations Committee
("IFRIC") interpretations issued by the International Accounting
Standards Board (IASB) and the Companies Act 2006. The financial
statements of the Company have been prepared in accordance with UK
Generally Accepted Accounting Practice, including Financial
Reporting Standard 101 'Reduced Disclosure Framework' ("FRS
101").
The consolidated financial statements have been prepared on a
going concern basis and prepared on the historical cost basis.
The consolidated financial statements are presented in sterling
and have been rounded to the nearest thousand (GBP'000). The
functional currency of the company is sterling.
The preparation of financial information in conformity with
IFRSs requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Although these estimates
are based on management's best knowledge of the amount, event or
actions, actual events may ultimately differ from those
estimates.
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented
in the consolidated financial statements.
2.2 Going Concern
These financial statements have been prepared on a going concern
basis. The Directors have prepared cash flow projections and are
satisfied that the Group has adequate resources to continue in
operational existence for the foreseeable future. The Group's
forecasts and projections, which take into account reasonably
possible changes in trading performance, show that the Group will
be able to operate within the level of its current facilities. The
Directors have considered the risks associated with Brexit,
including considering the effect on clients' wealth, attitude
towards savings and investment and changes in government policy.
The Directors do not consider that the impact of Brexit will affect
the Group continuing as a going concern. Accordingly, the Directors
continue to adopt the going concern basis in preparing these
financial statements.
2.3 Basis of consolidation
On 23 February 2017, the Company was incorporated under the name
Tatton Asset Management Limited. On 19 June 2017, Tatton Asset
Management Limited acquired the entire share capital of Nadal Newco
Limited via a share for share exchange with the shareholders of
Nadal Newco Limited. On 19 June 2017, Tatton Asset Management
Limited was re-registered as a public company with the name Tatton
Asset Management plc.
2.4 Subsidiaries
The Group's financial statements consolidate those of the Parent
Company and all of its subsidiaries as at 31 March 2019. The parent
controls a subsidiary if it is exposed, or has rights, to variable
returns from its involvement with the subsidiary and has the
ability to affect those returns through its power over the
subsidiary. All subsidiaries have a reporting date of 31 March.
All transactions between Group companies are eliminated on
consolidation, including unrealised gains and losses on
transactions between Group companies. Where unrealised losses on
intra-group asset sales are reversed on consolidation, the
underlying asset is also tested for impairment from a Group
perspective. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries
acquired or disposed of during the year are recognised from the
effective date of acquisition, up to the effective date of
disposal, as applicable.
2.5 Standards in issue not yet effective
The following IFRS and IFRIC interpretations have been issued
but have not been applied by the Group in preparing the historical
financial information, as they are not as yet effective. The Group
intends to adopt these Standards and Interpretations when they
become effective, rather than adopt them early.
IFRS 16 'Leases', effective date 1 January 2019.
IFRIC 23 'Uncertainty over Income Tax Treatments', effective
date 1 January 2019.
Annual improvements to IFRS 2015-2017 cycle - Relating to IFRS 3
'Business Combinations', IFRS 11 'Joint Arrangements',
IAS 12 'Income Taxes' and IAS 23 'Borrowing Costs', effective
date 1 January 2019.
A number of IFRS and IFRIC interpretations are also currently in
issue which are not relevant for the Group's activities and which
have not therefore been adopted in preparing the annual financial
statements.
IFRS 16, which was endorsed by the EU on 9 November 2017,
provides a comprehensive model for the identification of lease
arrangements and their treatment in the financial statements for
both lessors and lessees. IFRS 16 will supersede the current lease
guidance including IAS 17 'Leases' and the related interpretations
when it becomes effective for accounting periods beginning on or
after 1 January 2019. The date of initial application of IFRS 16
for the Group will be 1 April 2019.
IFRS 16 distinguishes leases and service contracts on the basis
of whether an identified asset is controlled by a customer.
Distinctions of operating leases (off balance sheet) and finance
leases (on balance sheet) are removed for lessee accounting, and
are replaced by a model where a right-of-use asset and a
corresponding liability have to be recognised for all leases by
lessees (i.e. all on balance sheet) except for short-term leases
and leases of low value assets.
The right-of-use asset is measured initially at cost and
measured subsequently at cost (subject to certain exceptions) less
accumulated depreciation and impairment losses, adjusted for any
remeasurement of the lease liability. The lease liability is
measured initially at the present value of the lease payments that
are not paid at that date. Subsequently, the lease liability is
adjusted for interest and lease payments, as well as the impact of
lease modifications, amongst others. Furthermore, the
classification of cash flows will also be affected because
operating leases under IAS 17 are presented as operating cash
flows, whereas under the IFRS 16 model the lease payments will be
split into a principal and interest portion, which will be
presented as operating and financing cash flows respectively.
Furthermore, extensive disclosures are required by IFRS 16. The
Group has reviewed all of the Group's leasing arrangements in light
of the new lease accounting rules in IFRS 16. The standard will
affect primarily the accounting for the Group's operating leases.
As at the reporting date, the Group has non-cancellable operating
lease commitments of GBP778,000. The Group's preliminary assessment
is that it will recognise right-of-use assets and lease liabilities
of GBP0.6 million on 1 April 2019 with zero impact on net assets.
Net current assets will be GBP26,000 lower due to the presentation
of a portion of the liability as a current liability. The Group's
activities as a lessee are not material and hence the Group does
not expect any significant impact on the financial statements. The
impact of IFRS 16 on the profit and loss account in 2019 is not
expected to be significant.
The Directors do not expect that the adoption of the Standards
listed above will have a material impact on the financial
statements of the Group in future periods, with the exception of
IFRS 16.
2.6 application of new standards
IFRS 9 'Financial Instruments'
The Group has applied IFRS 9 from 1 April 2018. The Group has
elected not to restate comparatives on initial application of IFRS
9.
With respect to the classification and measurement of financial
assets, the number of categories of financial assets under IFRS 9
has been reduced compared to IAS 39. Under IFRS 9 the
classification of financial assets is based both on the business
model within which the asset is held and the contractual cash flow
characteristics of the asset. There are three principal
classification categories for financial assets that are debt
instruments: (i) amortised cost, (ii) fair value through other
comprehensive income ("FVTOCI") and (iii) fair value through profit
or loss ("FVTPL").
Equity investments in scope of IFRS 9 are measured at fair value
with gains and losses recognised in profit or loss unless an
irrevocable election is made to recognise gains or losses in other
comprehensive income. Under IFRS 9, derivatives embedded in
financial assets are not bifurcated but instead the whole hybrid
contract is assessed for classification.
Under IFRS 9, financial assets can be designated as at FVTPL to
mitigate an accounting mismatch. In respect to classification and
measurement of financial liabilities changes in the fair value of a
financial liability designated as at FVTPL due to credit risk are
presented in other comprehensive income unless such presentation
would create or enlarge an accounting mismatch in profit or
loss.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses (ECLs) for trade receivables at an amount
equal to lifetime ECLs. The ECLs on trade receivables are
calculated based on actual historic credit loss experience on the
total balance of non-credit impaired trade receivables.
The Group considers a trade receivable to be credit impaired
when one or more detrimental events have occurred, such as
significant financial difficulty of the client or it becoming
probable that the client will enter bankruptcy or other financial
reorganization. When a trade receivable is credit impaired, it is
written off against trade receivables and the amount of the loss is
recognised in the income statement. Subsequent recoveries of
amounts previously written off are credited to the income
statement. In line with the Group's historical experience, and
after consideration of current credit exposures, the Group does not
expect to incur any credit losses and has not recognised any ECLs
in the current year (2018: nil).
See note 2.15 for further detail on financial instruments.
There have been no changes to accounting treatment or
disclosures as a result of the implementation of IFRS 9.
IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 establishes a single comprehensive model for entities to
use in accounting for revenue arising from contracts with
customers. IFRS 15 supersedes the previous revenue recognition
guidance including IAS 18 Revenue, IAS 11 Construction Contracts
and the related interpretations and became effective for the Group
from 1 April 2018. The Group has adopted the modified retrospective
approach without restatement of comparatives.
The core principle of IFRS 15 is that an entity should recognise
revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or
services. Specifically, the Standard introduces a five-step
approach to revenue recognition:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance
obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies a
performance obligation.
Under IFRS 15, an entity recognises revenue when (or as) a
performance obligation is satisfied, i.e. when 'control' of the
goods or services underlying the particular performance obligation
is transferred to the customer.
There have been no changes to accounting treatment or
disclosures as a result of the implementation of IFRS 15. No
judgements or changes in judgements were made as a result of
application of this standard.
2.7 Revenue
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for
services provided in the normal course of business, net of
discounts, VAT and other sales-related taxes. Revenue is reduced
for estimated rebates and other similar allowances. Revenue is
recognised when control is transferred and the performance
obligations are considered to be met.
The Group's revenue is made up of the following principal
revenue streams:
Fees charged to IFAs for compliance consultancy services, which
is recognised on an accruals basis.
Fees for providing investment platform services. Revenue is
accrued daily based on the Assets Under Influence held on the
relevant investment platform.
Fees for discretionary fund management services in relation to
on-platform investment Assets Under Management ("AUM"). Revenue is
recognised daily based on the AUM.
Fees for mortgage related services including commissions from
mortgage and other product providers and referral fees from
strategic partners. Commission is recognised on an accruals
basis.
Fees for marketing services provided to providers of mortgage
and investment products, which is recognised on an accruals
basis.
2.8 Separately disclosed items
Separately disclosed items are those which reflect costs and
income that do not relate to the Group's normal business operations
and which in management's judgement are considered material
individually or in aggregate (if of a similar type) due to their
size or frequency. Separate disclosure enables a full understanding
of the Group's financial performance.
2.9 Interest income and interest expense
Finance income is recognised as interest accrued (using the
effective interest method) on funds invested outside the Group.
Finance expense includes the cost of borrowing from third parties
and is recognised on an effective interest rate basis, resulting
from the financial liability being recognised on an amortised cost
basis.
2.10 Impairment
Assets which have an indefinite useful life are not subject to
amortisation and are tested for impairment at each Statement of
Financial Position date. Assets subject to depreciation and
amortisation are reviewed for impairment whenever events or
circumstances indicate that the carrying amount may not be
recoverable. Impairment losses on previously revalued assets are
recognised against the revaluation reserve as far as this reserve
relates to previous revaluations of the same assets. Other
impairment losses are recognised in the income statement based on
the amount by which the carrying value exceeds the recoverable
amount. The recoverable amount is the higher of the fair value less
the costs to sell, and the value in use.
Impairment losses recognised in respect of cash-generating units
("CGUs") are allocated first to reduce the carrying amount of any
goodwill allocated to CGUs and then to reduce the carrying amount
of other assets in the unit on a pro rata basis.
2.11 intangible assets
Following initial recognition, intangible assets are held at
cost less any accumulated amortisation and any provision for
impairment. Assets that are subject to amortisation are reviewed
for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss
is recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset's fair value less costs to sell and value in
use. For the purpose of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
flows (CGUs).
Intangible assets acquired separately are measured on initial
recognition at cost.
Computer software licences acquired are capitalised at the cost
incurred to bring the software into use and are amortised on a
straight-line basis over their estimated useful lives, which are
estimated as being five years. Costs associated with developing or
maintaining computer software programs that do not meet the
capitalisation criteria under IAS 38 are recognised as an expense
as incurred.
Gains and losses arising from derecognition of an intangible
asset are measured as the difference between the net disposal
proceeds and the carrying value of the asset. The difference is
then recognised in the income statement.
An assessment is made at each reporting date as to whether there
is any indication that an asset in use may be impaired. If any such
indication exists and the carrying values exceed the estimated
recoverable amount at that time, the assets are written down to
their recoverable amount. The recoverable amount is measured as the
greater of fair value less costs to sell and value in use.
Non--financial assets that have suffered impairment are reviewed
for possible reversal of the impairment at each reporting date.
The Directors have reviewed the intangible assets as at 31 March
2019 and have concluded there are no indicators of impairment
(2018: none).
2.12 Property, plant and equipment
Property, plant and equipment assets are stated at cost net of
accumulated depreciation and accumulated provision for impairment.
Depreciation is charged to the income statement on a straight-line
basis over the estimated useful lives of each part of an item of
property, plant and equipment. Principal annual rates are as
follows:
Computer, office equipment and motor vehicles - 20-33% straight
line.
Furniture, fixtures, and equipment - 20% straight line.
The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period, with the
effect of any changes in estimate accounted for on a prospective
basis.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. The gain or loss arising on
disposal or scrappage of an asset is determined as the difference
between the sales proceeds and the carrying amount of the asset and
is recognised in income.
2.13 Business combinations
Goodwill is not amortised but is reviewed for impairment at
least annually. For the purpose of impairment testing, goodwill is
allocated to each of the Group's CGUs expected to benefit from the
synergies of the combination. CGUs to which goodwill has been
allocated are tested for impairment annually, or more frequently
when there is an indication that the unit may be impaired. If the
recoverable amount of the CGUs is less than the carrying amount of
the unit, the impairment loss is allocated first to reduce the
carrying amount of any goodwill allocated to the unit and then to
the other assets of the unit pro rata on the basis of the carrying
amount of each asset in the unit. An impairment loss recognised for
goodwill is not reversed in a subsequent period.
Acquisitions of subsidiaries and businesses are accounted for
using the acquisition method. The consideration transferred in a
business combination is measured at fair value, which is calculated
as the sum of the acquisition-date fair values of assets
transferred to the Group, liabilities incurred by the Group to the
former owners of the acquiree and the equity interest issued by the
Group in exchange for control of the acquiree. Acquisition-related
costs are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and
the liabilities assumed are recognised at their fair value at
the acquisition date, except that: deferred tax assets or
liabilities and assets or liabilities related to employee benefit
arrangements are recognised and measured in accordance with IAS 12
'Income Taxes' and IAS 19 'Employee Benefits' respectively; and
assets (or disposal groups) that are classified as held for sale in
accordance with IFRS 5 'Non-current Assets Held for Sale and
Discontinued Operations' are measured in accordance with that
Standard.
Goodwill is measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer's
previously held equity interest in the acquiree (if any) over the
net of the acquisition-date amounts of the identifiable assets and
liabilities assumed. If, after reassessment, the net of the
acquisition-date amounts of the identifiable assets acquired and
liabilities assumed exceeds the sum of the consideration
transferred, the amount of any non-controlling interests in the
acquiree and the fair value of the acquirer's previously held
interest in the acquiree (if any), the excess is recognised
immediately in profit or loss as a bargain purchase gain.
When the consideration transferred by the Group in a business
combination includes assets or liabilities resulting from a
contingent consideration arrangement, the contingent consideration
is measured at its acquisition-date fair value and included as part
of the consideration transferred in a business combination. Changes
in fair value of the contingent consideration that qualify as
measurement period adjustments are adjusted retrospectively, with
corresponding adjustments against goodwill. Measurement period
adjustments are adjustments that arise from additional information
obtained during the measurement period (which cannot exceed one
year from the acquisition date) about facts and circumstances that
existed at the acquisition date.
The subsequent accounting for changes in fair value of the
contingent consideration that do not qualify as measurement period
adjustments depends on how the contingent consideration is
classified. Contingent consideration that is classified as equity
is not remeasured at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Contingent consideration
that is classified as an asset or a liability is remeasured at
subsequent reporting dates at fair value with the corresponding
gain or loss being recognised in profit or loss.
When a business combination is achieved in stages, the Group's
previously held interest in the acquired entity is remeasured to
its acquisition-date fair value and the resulting gain or loss, if
any, is recognised in profit or loss. Amounts arising from
interests in the acquiree prior to the acquisition date that have
previously been recognised in other comprehensive income are
reclassified to profit or loss, where such treatment would be
appropriate if that interest were disposed of.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the
items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period (see above), or
additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as
of the acquisition date that, if known, would have affected the
amounts recognised as of that date.
2.14 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and call
deposits. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a
component of cash and bank balances for the purpose only of the
Consolidated Statement of Cash Flows.
2.15 Financial instruments
Financial assets and financial liabilities are recognised in the
Group's Statement of Financial Position when the Group becomes a
party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or
deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets
or financial liabilities at fair value through profit or loss are
recognised immediately in profit or loss.
All financial assets are recognised and derecognised on a trade
date where the purchase or sale of a financial asset is under a
contract whose terms require delivery of the financial asset within
the timeframe established by the market concerned, and are
initially measured at fair value, plus transaction costs, except
for those financial assets classified as at fair value through
profit or loss. Transaction costs directly attributable to the
acquisition of financial assets classified as at fair value through
profit or loss are recognised immediately in profit or loss.
Non-derivative financial instruments comprise investments in
equity and debt securities, trade and other receivables, cash and
bank balances, loans and borrowings, and trade and other
payables.
Trade receivables
Trade receivables do not carry interest and are stated at
amortised cost as reduced by appropriate allowances for estimated
irrecoverable amounts. They are recognised when the Group's right
to consideration is only conditional on the passage of time.
Allowances incorporate an expectation of lifetime credit losses
from initial recognition and are determined using an expected
credit loss approach.
Trade and other payables
Trade and other payables are recognised initially at fair value
and subsequently measured at amortised cost using the effective
interest method, where applicable or required. These amounts
represent liabilities for goods and services provided to the Group
prior to the end of the financial period, which are unpaid.
Interest-bearing borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently stated at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in profit
or loss over the period of the borrowings using the effective
interest method.
The Group does not hold or issue derivative financial
instruments for trading purposes.
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, each determined at the inception of the
lease. The corresponding liability to the lessor is included in the
Statement of Financial Position as a finance lease obligation.
Lease payments are apportioned between finance expense and
reduction of the lease obligation so as to achieve a constant rate
of interest on the remaining balance of the liability. Finance
expenses are recognised immediately in profit or loss.
2.16 Taxation
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the Statement of Financial
Position date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences and it is probable that the temporary difference will
not reverse in the foreseeable future. Deferred tax assets arising
from deductible temporary differences associated with such
investments and interests are only recognised to the extent that it
is probable that there will be sufficient taxable profits against
which to utilise the benefits of the temporary difference and they
are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each
Statement of Financial Position date and reduced to the extent that
it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised based on tax laws and rates that have been enacted or
substantively enacted at the Statement of Financial Position date.
Deferred tax is charged or credited in the income statement, except
when it relates to items charged or credited in other comprehensive
income, in which case the deferred tax is also dealt with in other
comprehensive income.
The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in which the
Group expects, at the end of the reporting period, to recover or
settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off the current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss,
except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case the
current and deferred tax are also recognised in other comprehensive
income or directly in equity respectively. Where current tax or
deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the
business combination.
2.17 Retirement benefit costs
The Group pays into personal pension plans for which the amount
charged to income in respect of pension costs and other
post-retirement benefits is the amount of the contributions payable
in the year. Payments to defined contribution retirement benefit
scheme are recognised as an expense when employees have rendered
service entitling them to the contributions. Differences between
contributions payable and paid are accrued or prepaid. The assets
of the plans are invested and managed independently of the finances
of the Group.
2.18 Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that the Group will be required to settle that
obligation and a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the
Statement of Financial Position date, taking into account the risks
and uncertainties surrounding the obligation. Where a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash
flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, a
receivable is recognised as an asset if it is virtually certain
that reimbursement will be received and the amount of the
receivable can be measured reliably.
2.19 Equity, reserves and dividend payments
Share capital represents the nominal value of shares that have
been issued. Retained earnings include all current and prior period
retained profits or losses.
Dividend distributions payable to equity shareholders are
included in other liabilities when the dividends have been approved
in a general meeting prior to the reporting date.
2.20 Share-based payments
The Group issues equity-settled share-based payments to certain
employees. Equity-settled share-based payments are measured at fair
value at the date of grant. The fair value determined at the grant
date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest. Fair value is
measured by use of the Black-Scholes model or Monte Carlo model as
appropriate.
2.21 Operating segments
The Group comprises the following four operating segments which
are defined by trading activity:
Tatton - discretionary fund management services.
Pardigm Consulting - the provision of compliance and support
services to IFAs.
Pardigm Mortgages - the provision of mortgage adviser support
services.
Central - central overhead costs.
The Board is considered to be the chief operating decision
maker.
2.22 Significant judgements, key assumptions and estimates
In the process of applying the Group's accounting policies,
which are described above, management have made judgements and
estimations about the future that have an effect on the amounts
recognised in the financial statements. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in
the period of the revision and future periods if the revision
affects both current and future periods. Changes for accounting
estimates would be accounted for prospectively under IAS 8.
Share-based payments
Given the significance of share-based payments as form of
employee remuneration for the Group, share-based payments have been
included as a significant accounting estimate. The principal
estimations relate to:
forfeitures (where awardees leave the Group as 'bad' leavers and
therefore forfeit unvested awards); and
the satisfaction of performance obligations attached to certain
awards.
These estimates are reviewed regularly and the charge to the
income statement is adjusted appropriately (at the end of the
relevant scheme as a minimum). The sensitivity analysis carried out
shows that if it was considered that 100% of the options would
vest, the charge for the year would increase by GBP248,000.
There are no other judgements or assumptions made about the
future, or any other major sources of estimation uncertainty at the
end of the reporting period, that have a significant risk of
resulting in a material adjustment to the carrying amounts of
assets and liabilities within the next financial year.
2.23 Alternative performance measures
In reporting financial information, the Group presents
alternative performance measures, ("APMs") which are not defined or
specified under the requirements of IFRSs. The Group believes that
these APMs provide users with additional helpful information on the
performance of the business. The APMs are consistent with how the
business performance is planned and reported within the internal
management reporting to the Board. Some of these measures are also
used for the purpose of setting remuneration targets. The APMs used
by the Group are set out on page 70 including explanations of how
they are calculated and how they can be reconciled to a statutory
measure where relevant.
3 Capital management
The Group's objectives when managing capital are i) to safeguard
the Group's ability to continue as a going concern so that it can
continue to provide returns for shareholders and benefits for other
stakeholders; ii) to maintain a strong capital base and utilise it
efficiently to support the development of its business; and iii) to
comply with the regulatory capital requirements set by the FCA.
Capital adequacy and the use of regulatory capital are monitored by
the Group's management and Board. There is one active regulated
entity in the Group: Tatton Investment Management Limited,
regulated by the FCA.
Regulatory capital is determined in accordance with the
requirements of the Capital Requirements Directive IV prescribed in
the UK by the FCA. The Directive requires continual assessment of
the Group's risks in order to ensure that the higher of Pillar 1
(Minimum Capital Requirements) and Pillar 2 (Supervisory Review)
requirements is met.
Pillar 1 imposes a minimum capital requirement on investment
firms which is calculated as the higher of the sum of the credit
and market risk capital requirements and the fixed overheads
requirement ("FOR"). The FOR equates to 25% of the fixed overheads
reported in the most recent audited financial statements.
Pillar 2 requires investment firms to assess firm-specific risks
not covered by the formulaic requirements of Pillar 1, the
objective of this being to ensure that investment firms have
adequate capital to enable them to manage their risks. The Group
completes its assessment of regulatory capital requirements using
its Internal Capital Adequacy Assessment Process ("ICAAP") under
Pillar 2, which is a forward looking exercise that includes stress
testing on major risks, such as a significant market downturn, and
identifying mitigating action.
As required by the FCA, Tatton Investment Management Limited
holds capital based on a multiple of Pillar 1 and maintains a
significant surplus over this requirement at all times.
The Group manages its retained earnings, share capital and share
premium which totalled GBP15.1 million as at 31 March 2019 (2018:
GBP13.6 million). Surplus regulatory capital was maintained
throughout the year at both a consolidated Group level and
individual regulated entity level. There were no changes in the
Group's approach to capital management during the year.
4 Segment reporting
Information reported to the Board of Directors as the chief
operating decision maker for the purposes of resource allocation
and assessment of segmental performance is focused on the type of
revenue. The principal types of revenue are discretionary fund
management, the provision of compliance and support services to
independent financial advisers ("Paradigm Consulting"), the
provision of mortgage adviser support services ("Paradigm Mortgages
Services") and the marketing and promotion of the Tatton Investment
Management funds ("Tatton").
The Group's reportable segments under IFRS 8 are therefore
Tatton, Paradigm Consulting, Paradigm Mortgage Services, and
"Central" which contains the Operating Group's central overhead
costs.
The principal activity of Tatton is that of Discretionary Fund
Management ("DFM") of investments on-platform.
The principal activity of Paradigm Consulting is that of
provision of support services to IFAs.
The principal activity of Paradigm Mortgage Services is that of
a mortgage and protection distributor.
For management purposes, the Group uses the same measurement
policies used in its financial statements.
The following is an analysis of the Group's revenue and results
by reportable segment:
Paradigm
Paradigm Mortgage
Tatton Consulting Services Central Group
Period ended 31 March 2019 (GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000)
--------------------------- ---------- ----------- ---------- ---------- ----------
Revenue 8,732 6,049 2,689 48 17,518
Administrative expenses (4,104) (3,053) (1,124) (1,929) (10,210)
--------------------------- ---------- ----------- ---------- ---------- ----------
Adjusted Operating Profit* 4,628 2,996 1,565 (1,881) 7,308
--------------------------- ---------- ----------- ---------- ---------- ----------
Share-based payments (34) - - (840) (874)
Exceptional charges (496) (13) - - (509)
--------------------------- ---------- ----------- ---------- ---------- ----------
Operational profit 4,098 2,983 1,565 (2,721) 5,925
Finance (costs)/income - 198 (13) 2 187
--------------------------- ---------- ----------- ---------- ---------- ----------
Profit/(loss) before tax 4,098 3,181 1,552 (2,719) 6,112
--------------------------- ---------- ----------- ---------- ---------- ----------
Paradigm
Paradigm Mortgage
Tatton Consulting Services Central Group
Period ended 31 March 2018 (GBP'000) (GBP'000) (GBP'000) (GBP'000) (GBP'000)
--------------------------- ---------- ----------- ---------- ---------- ----------
Revenue 6,325 6,780 2,366 36 15,507
Administrative expenses (3,302) (3,207) (996) (1,476) (8,981)
--------------------------- ---------- ----------- ---------- ---------- ----------
Adjusted Operating Profit* 3,023 3,573 1,370 (1,440) 6,526
--------------------------- ---------- ----------- ---------- ---------- ----------
Share-based payments - (846) - (140) (986)
Exceptional charges - - - (1,964) (1,964)
--------------------------- ---------- ----------- ---------- ---------- ----------
Operating profit 3,023 2,727 1,370 (3,544) 3,576
Finance costs - (19) (9) 2 (26)
--------------------------- ---------- ----------- ---------- ---------- ----------
Profit/(loss) before tax 3,023 2,708 1,361 (3,542) 3,550
--------------------------- ---------- ----------- ---------- ---------- ----------
All turnover arose in the United Kingdom.
5 Operating profit
The operating profit and the profit before taxation are stated
after charging:
31-Mar 31-Mar
2019 2018
(GBP'000) (GBP'000)
------------------------------------------------- ---------- ----------
Operating lease rentals - land and buildings 252 210
Operating lease rentals - equipment and vehicles - 9
Amortisation of intangible assets 43 -
Depreciation: property, plant and equipment 91 53
Separately disclosed items (note 6) 1,383 2,950
Services provided to the Group's auditor:
Audit of the statutory consolidated and Company
financial statements of Tatton Asset Management
plc 33 31
Audit of subsidiaries 40 37
Other fees payable to auditor:
Other taxation advisory services 38 225
Non-audit services 10 443
------------------------------------------------- ---------- ----------
Total audit fees were GBP73,000 (2018: GBP68,000). Total
non-audit fees payable to the auditor were GBP48,000 (2018:
GBP668,000).
Non-audit service costs in financial year ended 31 March 2018
relate mainly to the IPO in 2017.
6 Separately disclosed items
31-Mar 31-Mar
2019 2018
(GBP'000) (GBP'000)
-------------------------------------------------------- ---------- ----------
IPO costs 13 1,964
Project set-up costs related to transferring Authorised
Corporate Director 293 -
New fund set-up costs 203 -
-------------------------------------------------------- ---------- ----------
Total exceptional items 509 1,964
-------------------------------------------------------- ---------- ----------
Share-based payments 874 986
-------------------------------------------------------- ---------- ----------
Total separately disclosed items 1,383 2,950
-------------------------------------------------------- ---------- ----------
Separately disclosed items included within administrative
expenses reflects costs and income that do not relate to the
Group's normal business operations and that are considered material
(individually or in aggregate if of a similar type) due to their
size of frequency.
During the financial year ended 31 March 2019, the Group
incurred exceptional one-off costs of GBP496,000 which related to
the funds in Tatton Investment Management Limited ("Tatton").
Tatton transferred its Authorised Corporate Director who acts on
behalf of the Company to administer the funds and this transfer
incurred significant project management charges. In addition,
Tatton launched new funds in the year and incurred material set-up
costs as part of the process; both are included within exceptional
items and separately disclosed items within administrative expenses
in the Consolidated Statement of Total Comprehensive Income.
Various legal and professional costs incurred in relation to the
IPO of the Group in July 2017 are shown as part of separately
disclosed items within administrative expenses in the Consolidated
Statement of Total Comprehensive Income.
7 Finance costs
31-Mar 31-Mar
2019 2018
(GBP'000) (GBP'000)
-------------------------------- ---------- ----------
Bank interest (expense)/income 2 (1)
Other interest (expense)/income 214 -
Bank charges (29) (25)
-------------------------------- ---------- ----------
187 (26)
-------------------------------- ---------- ----------
8 Taxation
31-Mar 31-Mar
2019 2018
(GBP'000) (GBP'000)
-------------------------------------------------- ---------- ----------
Current tax expense
Current tax on profits for the period 1,318 1,107
Adjustment for under-provision in prior periods (74) -
-------------------------------------------------- ---------- ----------
1,244 1,107
-------------------------------------------------- ---------- ----------
Deferred tax expense
Share-based payments (19) -
Origination and reversal of temporary differences 30 3
-------------------------------------------------- ---------- ----------
Total tax expense 1,255 1,110
-------------------------------------------------- ---------- ----------
The reasons for the difference between the actual tax charge for
the year and the standard rate of corporation tax in the UK applied
to profit for the year are as follows:
31-Mar 31-Mar
2019 2018
(GBP'000) (GBP'000)
-------------------------------------------------- ---------- ----------
Profit before taxation 6,112 3,550
Tax at UK corporation tax rate of 19% (2018: 19%) 1,161 675
Expenses not deductible for tax purposes 25 279
Capital allowances in excess of deprecation - (5)
Adjustments in respect of previous years (74) -
Differences in tax rates (2) -
Share-based payments 145 -
Chargeable gains - 161
-------------------------------------------------- ---------- ----------
Total tax expense 1,255 1,110
-------------------------------------------------- ---------- ----------
The UK corporation tax rate reduced from 20% to 19% with effect
from 1 April 2017 and will reduce to 17% with effect from 1 April
2020. This will reduce the Company's future current tax
credit/charge accordingly. The deferred tax liability as at 31
March 2019 has been calculated based on a rate of 17% based on when
the Company expects the deferred tax liability to reverse.
9 Earnings per share and dividends
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares during the year.
For diluted earnings per share the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares. The dilutive shares are those
share options granted to employees where the exercise price is less
than the average market price of the Company's ordinary shares
during the year.
Number of shares 2019 2018
-------------------------------------------- ---------- ----------
Basic
Weighted average number of shares in issue 55,907,513 55,907,513
Diluted
Share options 6,019,151 4,394,259
Weighted average number of shares (diluted) 61,313,712 59,121,943
-------------------------------------------- ---------- ----------
31-Mar 31-Mar
2019 2018
(GBP'000) (GBP'000)
-------------------------------------------------- ----------- -----------
Earnings attributable to ordinary shareholders
Basic and diluted profit for the period 4,857 2,276
Share-based payments - IFRS2 option charges 874 986
Exceptional costs - see note 6 509 1,964
Tax impact of adjustments (97) -
-------------------------------------------------- ----------- -----------
Adjusted basic and diluted profits for the period
and attributable earnings 6,143 5,226
-------------------------------------------------- ----------- -----------
Earnings per share (pence) - Basic 8.69 4.07
-------------------------------------------------- ----------- -----------
Earnings per share (pence) - Diluted 7.92 3.85
-------------------------------------------------- ----------- -----------
Adjusted earnings per share (pence) - Basic 10.99 9.64
-------------------------------------------------- ----------- -----------
Adjusted earnings per share (pence) - Diluted 10.02 9.12
-------------------------------------------------- ----------- -----------
Dividends
The Directors consider the Group's capital structure and
dividend policy at least twice a year ahead of announcing results
and do so in the context of its ability to continue as a going
concern, to execute the strategy and to invest in opportunities to
grow the business and enhance shareholder value.
During the year, Tatton Asset Management plc paid the final
dividend related to the year ended 31 March 2018 of GBP2,460,000,
representing a payment of 4.4p per share. In addition, the Company
paid an interim dividend of GBP1,565,000 (2018 GBP1,230,000) to its
equity shareholders. This represents a payment of 2.8p per share
(2018: 2.2p per share).
The Company's dividend policy is described in the Directors'
report on page 35. At 31 March 2019 the Company's distributable
reserves were GBP22.3 million (2018: GBP20.6 million).
10 Staff costs
31-Mar 31-Mar
2019 2018
(GBP'000) (GBP'000)
---------------------------- ---------- ----------
Wages, salaries and bonuses 4,389 3,788
Social security costs 648 510
Pension costs 110 86
Share-based payments 874 986
---------------------------- ---------- ----------
6,021 5,370
---------------------------- ---------- ----------
The average monthly number of employees during the year was as
follows:
31-Mar 31-Mar
2019 2018
--------------- ------ ------
Administration 74 72
Key management 3 3
--------------- ------ ------
77 75
--------------- ------ ------
Key Management Compensation
The remuneration of the statutory Directors who are the key
management of the Group is set out below in aggregate for each of
the key categories specified in IAS 24 'Related Party
Disclosures'.
31-Mar 31-Mar
2019 2018
(GBP'000) (GBP'000)
----------------------------- ---------- ----------
Short-term employee benefits 884 989
Post-employment benefits 14 20
Other long-term benefits 3 -
Share-based payments 587 67
----------------------------- ---------- ----------
1,488 1,076
----------------------------- ---------- ----------
In addition to the remuneration above, the Non-Executive
Chairman and Non-Executive Directors have submitted invoices for
their fees as follows:
31-Mar 31-Mar
2019 2018
(GBP'000) (GBP'000)
----------- ---------- ----------
Total fees 160 118
----------- ---------- ----------
The remuneration of the highest paid Director was:
31-Mar 31-Mar
2019 2018
(GBP'000) (GBP'000)
------ ---------- ----------
Total 343 474
------ ---------- ----------
The highest paid Director did not exercise any share options in
the period. There were 330,000 share options granted to the highest
paid Director in the year.
11 Goodwill
Goodwill
(GBP'000)
------------------------------------------------------ ----------
Cost and carrying value at 31 March 2018 and 31 March
2019 4,917
------------------------------------------------------ ----------
The goodwill of GBP4.9 million relates to GBP2.9 million arising
from the acquisition in 2014 of an interest in Tatton Oak Limited
by Tatton Capital Limited consisting of the future synergies and
forecast profits of the Tatton Oak business and GBP2.0 million
arising from the acquisition in 2017 of an interest in Tatton
Capital Group Limited. None of the goodwill is expected to be
deductible for income tax purposes.
Impairment loss and subsequent reversal
Goodwill is subject to an annual impairment review based on an
assessment of the recoverable amount from future trading. Where, in
the opinion of the Directors, the recoverable amount from future
trading does not support the carrying value of the goodwill
relating to a subsidiary company an impairment charge is made. Such
impairment is charged to the Statement of Total Comprehensive
Income.
Impairment testing
For the purpose of impairment testing, goodwill is allocated to
the Group's operating companies which represents the lowest level
within the Group at which the goodwill is monitored for internal
management accounts purposes.
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash-generating units ("CGUs") or group of
units that are expected to benefit from that business combination.
The Directors test goodwill annually for impairment, or more
frequently if there are indicators that goodwill might be impaired.
The Directors have considered the carrying value of goodwill at 31
March 2019 and do not consider that it is impaired.
Growth rates
The value in use is calculated from cash flow projections based
on the Group's forecasts for the year ended 31 March 2019 which are
extrapolated for a further four years. The Group's latest financial
forecasts, which cover a three year period, are reviewed by the
Board.
Discount rates
The pre-tax discount rate used to calculate value is 8.3% (2018:
8.3%). The discount rate is derived from a benchmark calculated
from a number of comparable businesses.
Cash flow assumptions
The key assumptions used for the value in use calculations are
those regarding discount rate, growth rates and expected changes in
margins. Changes in prices and direct costs are based on past
experience and expectations of future changes in the market. The
growth rate used in the calculation reflects the average growth
rate experienced by the Group for the industry.
The headroom compared to the carrying value of goodwill as at 31
March 2019 is GBP223 million. From the assessment performed, there
are no reasonable sensitivities that result in the recoverable
amount being equal to the carrying value of the goodwill attributed
to the CGU.
12 intangible assets
Computer
software Total
(GBP'000) (GBP'000)
---------------------------------------------- ---------- ----------
Cost
Balance at 31 March 2017, 31 March 2018 and 1
April 2018 - -
Additions 266 266
---------------------------------------------- ---------- ----------
Balance at 31 March 2019 266 266
---------------------------------------------- ---------- ----------
Accumulated amortisation and impairment
Balance at 31 March 2017, 31 March 2018 and 1
April 2018 - -
Charge for the period (43) (43)
---------------------------------------------- ---------- ----------
Balance at 31 March 2019 (43) (43)
---------------------------------------------- ---------- ----------
Net book value
As at 1 April 2017 and 31 March 2018 - -
---------------------------------------------- ---------- ----------
As at 31 March 2019 223 223
---------------------------------------------- ---------- ----------
All amortisation charges are included within administrative
expenses in the Consolidated Statement of Total Comprehensive
Income.
13 Property, plant and equipment
Computer,
office
equipment
and motor Fixtures
vehicles and fittings Total
(GBP'000) (GBP'000) (GBP'000)
------------------------------------------ ---------- ------------- ----------
Cost
Balance at 1 April 2017 353 214 567
Additions 82 - 82
------------------------------------------ ---------- ------------- ----------
Balance at 31 March 2018 and 1 April 2018 435 214 649
Additions 72 264 336
------------------------------------------ ---------- ------------- ----------
Balance at 31 March 2019 507 478 985
------------------------------------------ ---------- ------------- ----------
Accumulated depreciation and impairment
Balance at 1 April 2017 (278) (214) (492)
Charge for the period (53) - (53)
------------------------------------------ ---------- ------------- ----------
Balance at 31 March 2018 and 1 April 2018 (331) (214) (545)
Charge for the period (66) (25) (91)
------------------------------------------ ---------- ------------- ----------
Balance at 31 March 2019 (397) (239) (636)
------------------------------------------ ---------- ------------- ----------
Net book value
As at 1 April 2017 75 - 75
------------------------------------------ ---------- ------------- ----------
As at 31 March 2018 104 - 104
------------------------------------------ ---------- ------------- ----------
As at 31 March 2019 110 239 349
------------------------------------------ ---------- ------------- ----------
All depreciation charges are included within administrative
expenses in the Consolidated Statement of Total Comprehensive
Income.
14 Trade and other receivables
31-Mar 31-Mar
2019 2018
(GBP'000) (GBP'000)
--------------------------------- ---------- ----------
Trade receivables 313 172
Amounts due from related parties 107 50
Prepayments and accrued income 1,763 1,602
Other receivables 191 227
Loan notes 134 401
--------------------------------- ---------- ----------
2,508 2,452
--------------------------------- ---------- ----------
All trade receivable amounts are short term. All of the Group's
trade and other receivables have been reviewed for indicators of
impairment, and where necessary, a provision for impairment
provided. The carrying value is considered a fair approximation of
their fair value. The value of the impairment charged to the income
statement is GBPnil: (2018: GBPnil).
The amounts due from related parties are net of provisions. At
31 March 2017, Paradigm Mortgage Services LLP made full provision
of GBP1,251,000 against the recoverability of amounts due from
Jargon Free Benefits LLP. Also, as at 31 March 2017, Paradigm
Partners Limited made full provision of GBP350,000 against the
recoverability of amounts due from Amber Financial Investments
Limited, an entity controlled by Paul Hogarth.
The carrying value of the provisions as at 31 March 2019 was
GBP1,601,000 (2018: GBP1,601,000). There has been no movement in
the carrying value during the year.
Trade receivable amounts are all held in sterling.
15 Trade and other payables
31-Mar 31-Mar
2019 2018
(GBP'000) (GBP'000)
------------------------------- ---------- ----------
Trade payables 414 277
Amounts due to related parties 386 32
Accruals 1,382 1,261
Deferred income 165 216
Other payables 2,174 2,136
------------------------------- ---------- ----------
4,521 3,922
------------------------------- ---------- ----------
The carrying values to trade payables, amounts due to related
parties, accruals and deferred income are considered reasonable
approximation of fair value.
Trade payable amounts are all held in sterling.
16 Deferred taxation
Deferred
capital Share-based
allowances payments Total
GBP'000 GBP'000 GBP'000
----------------------------------- ----------- ----------- --------
Asset/(liability) at 1 April 2017 (12) - (12)
Income statement (charge)/credit (3) - (3)
----------------------------------- ----------- ----------- --------
Asset/(liability) at 31 March 2018 (15) - (15)
----------------------------------- ----------- ----------- --------
Income statement (charge)/credit (30) 19 (11)
Equity (charge)/credit - 130 130
----------------------------------- ----------- ----------- --------
Asset/(liability) at 31 March 2019 (45) 149 104
----------------------------------- ----------- ----------- --------
17 Financial instruments
The Group's treasury activities are designed to provide
suitable, flexible funding arrangements to satisfy the Group's
requirements. The Group uses financial instruments comprising
borrowings, cash and items such as trade receivables and payables
that arise directly from its operations. The main risks arising
from the Group's financial instruments are interest rate risks,
credit risks and liquidity risks. The Board reviews policies for
managing each of these risks and they are summarised below.
The Group finances its operations through a combination of cash
resource and other borrowings. Short term flexibility is satisfied
by overdraft facilities in Paradigm Partners Limited which are
repayable on demand.
Fair value estimation
IFRS 7 requires disclosure of fair value measurements of
financial instruments by level of the following fair value
measurement hierarchy:
Quoted prices (unadjusted) in active markets for identical
assets or liabilities (level 1).
Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices) (level 2).
Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level
3).
Due to the short-term nature of the loan notes, the carrying
value is a reasonable approximation of their fair value.
The loan notes are repayable on demand, carry an interest rate
of 6% and are classified as level 1.
All financial assets are categorised as Loans and receivables
and are classified as level 1. All financial liabilities are
categorised as Financial liabilities measured at amortised cost and
are also classified as level 1.
Interest rate risk
The Group finances its operations through a combination of
retained profits and bank overdrafts. The Group has an exposure to
interest rate risk, as the overdraft facility is at an interest
rate of 3.2% above the base rate. At 31 March 2019, total
borrowings were GBPnil (2018: GBPnil).
Credit risk
Credit risk is the risk that a counterparty will cause a
financial loss to the Group by failing to discharge its obligation
to the Group. The financial instruments are considered to have a
low credit risk due to the mitigating procedures in place. The
Group manages its exposure to this risk by applying Board approved
limits to the amount of credit exposure to any one counterparty,
and employs strict minimum credit worthiness criteria as to the
choice of counterparty thereby ensuring that there are no
significant concentrations. The Group does not have any significant
credit risk exposure to any single counterparty or any group of
counterparties having similar characteristics. The maximum exposure
to credit risk for receivables and other financial assets is
represented by their carrying amount.
The Group's maximum exposure to credit risk is limited to the
carrying amount of financial assets recognised at 31 March, as
summarised below:
Classes of financial assets - carrying amounts: 2019 2018
------------------------------------------------ ------ ------
Cash and cash equivalents 12,192 10,630
Trade and other receivables 2,508 2,452
------------------------------------------------ ------ ------
14,700 13,082
------------------------------------------------ ------ ------
The Group continuously monitors defaults of customers and other
counterparties, identified either individually or by the Group, and
incorporates this information into its credit risk controls. The
Group's policy is to deal only with credit worthy
counterparties.
The Group's management consider that all of the above financial
assets that are not impaired or past due for each of the 31 March
reporting dates under review are of good credit quality.
At 31 March the Group had certain trade receivables that had not
been settled by the contractual date but were not considered to be
impaired. The amounts at 31 March, analysed by the length of time
past due, are:
2019 2018
---------------------------------------------- ---- ----
Not more than 3 months 241 116
More than 3 months but not more than 6 months 72 3
More than 6 months but not more than 1 year - -
More than 1 year - -
---------------------------------------------- ---- ----
Total 313 119
---------------------------------------------- ---- ----
Trade receivables consist of a large number of customers within
the UK. Based on historical information about customer default
rates, management consider the credit quality of trade receivables
that are not past due or impaired to be good. The Group has
rebutted the presumption in paragraph 5.5.11 of IFRS 9 that credit
risk increases significantly when contractual payments are more
than 30 days past due.
The credit risk for cash and cash equivalents is considered
negligible, since the counterparties are reputable banks with high
quality external credit ratings.
Liquidity risk
Liquidity risk is the risk that companies within the Group will
encounter difficulty in meeting obligations associated with
financial liabilities. To counter this risk, the Group operates
with a high level of interest cover relative to its net asset value
and no debt. In addition, it benefits from strong cash flow from
its normal trading activities. The Group manages its liquidity
needs by monitoring scheduled debt servicing payments for long-term
financial liabilities as well as forecast cash inflows and outflows
due in day to day business. The data used for analysing these cash
flows is consistent with that used in the contractual maturity
analysis below.
The totals for each category of financial instruments, measured
in accordance with IFRS 9 (2018: IAS 39) and IFRS 7 as detailed in
the accounting policies to this historical financial information,
are as follows:
At 31 March 2019, the Group's non-derivative financial
liabilities have contractual maturities (including interest
payments where applicable) as summarised below:
Current Non-current
-------------------------
Within 6 to 12 1 to 5 Later than
At 31 March 2019 6 months months years 5 years
------------------------- --------- --------- ------ ----------
Trade and other payables 4,356 - - -
------------------------- --------- --------- ------ ----------
Total 4,356 - - -
------------------------- --------- --------- ------ ----------
This compares with the maturity of the Group's non-derivative
financial liabilities in the previous reporting period as
follows:
Current Non-current
-------------------------
Within 6 to 12 1 to 5 Later than
At 31 March 2018 6 months months years 5 years
------------------------- --------- ------- ------ ----------
Trade and other payables 3,706 - - -
------------------------- --------- ------- ------ ----------
Total 3,706 - - -
------------------------- --------- ------- ------ ----------
The above amounts reflect the contractual undiscounted cash
flows, which may differ to the carrying values of the liabilities
at the reporting date.
18 Equity
31-Mar 31-Mar
2019 2018
(number) (number)
------------------------------------- ---------- ----------
Authorised, called up and fully paid
GBP0.20 ordinary shares 55,907,513 55,907,513
------------------------------------- ---------- ----------
55,907,513 55,907,513
------------------------------------- ---------- ----------
Each share in Tatton Asset Management plc carries one vote and
the right to a dividend. Of the shares in issue, 49,497,257 were
issued in June 2017 prior to the IPO in order to acquire the three
trading divisions and the remaining 6,410,256 were issued at the
IPO in July 2017.
As noted above, the 55,907,513 ordinary shares were issued in
the prior period.
19 Share-based payments
During the year, a number of share-based payment schemes and
share options schemes have been utilised by the Company, described
under (19.1) Current Schemes, below. There were two schemes, PPL
ESS and PPL D Options, which closed prior to the IPO of Tatton
Asset Management plc in July 2017.
19.1 Current Schemes
(i) Tatton Asset Management plc EMI Scheme ("TAM EMI
Scheme")
On 7 July 2017 the Group launched an EMI share option scheme
relating to shares in Tatton Asset Management plc to enable senior
management to participate in the equity of the Company. A total of
3,022,733 options with a weighted average exercise price of GBP1.83
were granted during the period, each exercisable in July 2020. No
options were exercised or expired in the period. 111,815 options
were forfeited in the period. A total of 4,631,056 options remain
outstanding at 31 March 2019, none of which are currently
exercisable. The range of exercise prices for the options
outstanding at the end of the period is detailed in 19.2.
The options granted in 2017 vest in July 2020 and the options
granted in 2018 vest in August 2021 provided certain performance
conditions and targets, set prior to grant, have been met. If the
performance conditions are not met, the options lapse.
Within the accounts of the Company, the fair value at grant date
is estimated using the appropriate models including both
Black-Scholes methodology and Monte Carlo modelling methodologies.
Share price volatility has been estimated using the historical
share price volatility of the Company, the expected volatility of
the Company's share price over the life of the option and the
average of the volatility applying to a comparable group of listed
companies.
Number
of share Weighted
options average
granted price
Year ended 31 March 2019 (number) (GBP)
----------------------------- --------- --------
Outstanding at 1 April 2018 3,022,733 1.89
Granted during the period 1,720,138 -
Forfeited during the period (111,815) 1.89
Exercised during the period - -
----------------------------- --------- --------
Outstanding at 31 March 2019 4,631,056 1.19
----------------------------- --------- --------
Exercisable at 31 March 2019 - -
----------------------------- --------- --------
Year ended 31 March 2018
Outstanding at 1 April 2017 - -
Granted during the period 3,022,733 1.89
Forfeited during the period - -
Exercised during the period - -
----------------------------- --------- ----
Outstanding at 31 March 2018 3,022,733 1.89
----------------------------- --------- ----
Exercisable at 31 March 2018 - -
----------------------------- --------- ----
(ii) Tatton Asset Management plc Sharesave Scheme ("TAM
Sharesave Scheme")
On 7 July 2017 and 5 July 2018 the Group launched all-employee
Sharesave Schemes for options over shares in Tatton Asset
Management plc, administered by Yorkshire Building Society.
Employees are able to save between GBP10 and GBP500 per month over
a three-year life of each scheme at which point they each have the
option to either acquire shares in the Company or receive the cash
saved.
Over the life of the 2017 Sharesave scheme it is estimated that,
based on current saving rates, 195,671 share options will be
exercisable at an exercise price of GBP1.70. Over the life of the
2018 Sharesave scheme it is estimated that, based on current saving
rates, 74,274 share options will be exercisable at an exercise
price of GBP1.90. No options have been exercised or expired in the
year and 9,132 options have been forfeited in the year.
Within the accounts of the Company, the fair value at grant date
is estimated using the Black-Scholes methodology for 100% of the
options. Share price volatility has been estimated using the
historical share price volatility of the Company, the expected
volatility of the Company's share price over the life of the option
and the average of the volatility applying to a comparable group of
listed companies.
Key valuation assumptions and the costs recognised in the
accounts during the period are noted in (19.2) and (19.3)
respectively.
Number
of share Weighted
options average
granted price
Year ended 31 March 2019 (number) (GBP)
----------------------------- --------- --------
Outstanding at 1 April 2018 63,344 1.70
Granted during the period 40,502 1.72
Forfeited during the period (9,132) 1.70
Exercised during the period - -
----------------------------- --------- --------
Outstanding at 31 March 2019 94,714 1.71
----------------------------- --------- --------
Exercisable at 31 March 2019 - -
----------------------------- --------- --------
Year ended 31 March 2018
Outstanding at 1 April 2017 - -
Granted during the period 63,344 1.70
Forfeited during the period - -
Exercised during the period - -
----------------------------- ------ ----
Outstanding at 31 March 2018 63,344 1.70
----------------------------- ------ ----
Exercisable at 31 March 2018 - -
----------------------------- ------ ----
19.2 Valuation Assumptions
Assumptions used in the option valuation models to determine the
fair value of options at the date of grant were as follows:
TAM EMI TAM EMI TAM Sharesave TAM Sharesave
Scheme Scheme Scheme Scheme
2018 2017 2018 2017
---------------------------- ------- ------- ------------- -------------
Share price at grant (GBP) 2.40 1.89 2.40 1.89
Exercise price (GBP) - 1.70 1.90 1.70
Expected volatility (%) 28.48 26.00 28.48 26.00
Expected life (years) 2.70 3.25 3.25 3.25
Risk free rate (%) 0.81 0.66 0.81 0.66
Expected dividend yield (%) 2.75 4.50 2.75 4.50
---------------------------- ------- ------- ------------- -------------
19.3 IFRS 2 Share-based option costs
2019 2018
(GBP'000) (GBP'000)
--------------------- ----------- -----------
TAM EMI Scheme 839 124
TAM Sharesave Scheme 35 16
PPL ESS - 19
PPL D Options - 827
--------------------- ----------- -----------
874 986
--------------------- ----------- -----------
20 Operating lease commitments
The Group acts as a lessee for land and buildings under
operating leases. The Group's significant lease arrangements are
for properties, for which there are no significant lease
incentives. At 31 March 2019, the property lease periods range from
six months to five years. The disclosures above for non-cancellable
operating lease rentals have been split out below to show the split
between land and buildings and other assets.
2019 2018
--------------------------- ---------- ----------
Land and Land and
buildings buildings
(GBP'000) (GBP'000)
--------------------------- ---------- ----------
Less than one year 75 192
Between one and five years 703 28
--------------------------- ---------- ----------
778 220
--------------------------- ---------- ----------
Lease expense during the year amounts to GBP252,000 (2018:
GBP219,000), representing the minimum lease payments.
21 Related party transactions
Ultimate controlling party
The Directors consider there to be no ultimate controlling
party.
Relationships
The Group has trading relationships with the following entities
in which Paul Hogarth, a Director, has a beneficial interest:
Entity Nature of transactions
------------------------------ ------------------------------------------------
Amber Financial Investments The Group provides discretionary fund
Limited management services, as well as accounting
and administration services.
Jargon Free Benefits LLP The Group provides accounting and administration
services.
Paradigm Investment Management The Group incurs finance charges.
LLP
Perspective Financial The Group provides discretionary fund
Group Limited management services and compliance advisory
services.
Suffolk Life Pensions The Group pays lease rental payments on
Limited an office building held in a pension fund
by Paul Hogarth.
------------------------------ ------------------------------------------------
Related parties balances
2019 2018
---------------------------- --------------------- ------------------------ ------------------------
Value of Balance Value of Balance
income/ receivable/ income/ receivable/
(cost) (payable) (cost) (payable)
Terms and conditions (GBP'000) (GBP'000) (GBP'000) (GBP'000)
---------------------------- --------------------- ---------- ------------ ---------- ------------
Advisor Cloud Limited n/a - - - 4
Amber Financial Investments Payable within
Limited 30 days 239 (42) 523 27
Jargon Free Benefits Repayment on
LLP demand 24 43 20 19
Paradigm Investment Repayment on
Management LLP demand (11) (13) - -
Perspective Financial Payable within
Group Limited 30 days 369 72 401 423
Suffolk Life Pensions
Limited Payable in advance (56) 9 (55) -
---------------------------- --------------------- ---------- ------------ ---------- ------------
Key management personnel remuneration
Key management includes Executive and Non-Executive Directors.
The compensation paid or payable to key management personnel is as
disclosed in note 10
22 Alternative performance measures ("APMs")
Income statement measures
Reconciling
Closest items to
equivalent their statutory
APM measure measure Definition and purpose
--------------------- ---------------- ---------------- ----------------------------------------
Adjusted Operating Operating Exceptional This is considered to be an
Profit before profit costs and important measure where exceptional
separately disclosed share-based items distort the understanding
items payments. of the operating performance
See note of the business and allow comparability
6. between periods. See also note
2.23.
--------------------- ---------------- ---------------- ----------------------------------------
Adjusted Profit Profit before Exceptional This is considered to be an
before tax; tax costs and important measure where exceptional
before separately share-based items distort the understanding
disclosed items payments. of the operating performance
See note of the business and allow comparability
6. between periods. See also note
2.23.
--------------------- ---------------- ---------------- ----------------------------------------
Adjusted earnings Earnings Exceptional This is considered to be an
per share - per share costs and important measure where exceptional
Basic - basic share-based items distort the understanding
payments, of the operating performance
and the tax of the business and allow comparability
thereon. See between periods. See also note
note 9. 2.23.
--------------------- ---------------- ---------------- ----------------------------------------
Adjusted earnings Earnings Exceptional This is considered to be an
per share fully per share costs and important measure where exceptional
diluted - fully share-based items distort the understanding
diluted payments, of the operating performance
and the tax of the business and allow comparability
thereon. See between periods. See also note
note 9. 2.23.
--------------------- ---------------- ---------------- ----------------------------------------
Net cash generated Net cash Exceptional Net cash generated from operations
from operations generated costs. See before exceptional costs. To
before exceptional from operations note 6. show underlying cash performance.
costs See also note 2.23.
--------------------- ---------------- ---------------- ----------------------------------------
Other measures
Reconciling
Closest items to
equivalent their statutory
APM measure measure Definition and purpose
------------------- ----------- ---------------- ---------------------------------
Tatton - Assets None Not applicable AUM is representative of the
Under Management customer assets and is a measure
("AUM") of the value of the customer
base. Movements in this base
are an indication of performance
in the year and growth of the
business to generate revenues
going forward.
------------------- ----------- ---------------- ---------------------------------
Paradigm Consulting None Not applicable Alternative growth measure to
members and revenue, giving an operational
growth view of growth.
Paradigm Mortgages None Not applicable Alternative growth measure to
member firms revenue, giving an operational
and growth view of growth.
------------------- ----------- ----------------
Dividend cover None Not applicable Dividend cover (being the ratio
of diluted earnings per share
before exceptional items and
share-based charges) is 1.8
times, demonstrating ability
to pay.
------------------- ----------- ---------------- ---------------------------------
23 Post balance sheet event
There were no material post balance sheet events.
24 Capital Commitments
At 31 March 2019, the Directors confirmed there were capital
commitments of GBP112,000 (2018: GBP330,000) for capital
improvements.
25 Contingent Liabilities
At 31 March 2019, the Directors confirmed there were contingent
liabilities of GBPnil (2018: GBPnil).
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR EAXSFDFPNEFF
(END) Dow Jones Newswires
June 03, 2019 02:02 ET (06:02 GMT)
Tatton Asset Management (LSE:TAM)
Historical Stock Chart
From Apr 2024 to May 2024
Tatton Asset Management (LSE:TAM)
Historical Stock Chart
From May 2023 to May 2024