Interim results for the six months ended 30 September 2017

5 December 2017

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

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

Financial Highlights

  • Discretionary assets under management ("AUM") within Tatton Capital up 15% since March 2017 to £4.44 billion at 30 September 2017 and up 33% over twelve months (March 2017: £3.85 billion; 1H16: £3.33 billion), with the run rate averaging over £80million per month
  • Group Revenue increased 31% to £7.3 million (1H16: £5.6 million)
  • Adjusted EBIT1 up 56% to £3.1 million (1H16: £2.0 million)
    • Adjusted EBIT1 margin of 42.2% (1H16:35.4%)
    • Adjusted EPS2 up 53% to 4.36 pence (1H16: 2.85 pence)
  • Reported Profit Before Tax decreased to £0.54 million (1H16: £1.86 million), after charging exceptional initial public offering (IPO) costs of £1.6 million and share option costs of £0.9 million, the latter arising from the group structuring that took place in order to deliver the IPO
  • Strong financial position, with net cash of £10.5 million (1H16: £0.1 million) and regulatory capital resources in significant surplus to requirements
  • The Group is pleased to announce an inaugural interim dividend since its IPO of 2.2 pence per share
Business Highlights
  • Successful IPO on AIM completed on 6 July 2017 raising £51.6 million, including £10m new money, followed by a strong period of organic growth, as the Group delivers against its strategic plan
  • The Group has three operating subsidiaries:  Tatton Capital Limited ("TCL"), Paradigm Partners Limited ("PPL") and Paradigm Mortgage Services LLP ("PMS")
  • TCL has continued to expand, delivering strong organic growth in AUM and also a significant increase in the number of advisory firms utilising the on-platform discretionary portfolio service for their clients. The number of firms has increased to 286 as at 30 September 2017 (1H16: 207)
  • TCL has also successfully taken over the previously outsourced investment management of the Tatton Oak fund range from August 2017 onwards
  • Testament to the development and performance of TCL over the period, the business was pleased to win the prestigious ILP Moneyfacts award for "Best Discretionary Fund Manager" in period in September 2017, beating well known wealth managers
  • PPL, the Group's compliance services business, continues to expand with member numbers increasing to 356 (1H16: 347) and revenues up 23% to £3.48 million (1H16: £2.82 million), driven by increases in Paradigm Wrap income 
  • PMS, the Group's mortgage and protection distribution business, has also performed strongly, with gross lending via its channels during the period of £2.99 billion (1H16: £2.35 billion), an increase of 27%. PMS now has 1,143 mortgage firms using its services (1H16: 1,016), a significant increase of 13% year-on-year.
Outlook and current trading:

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

Footnotes:
1. Adjusted EBIT is defined as profit before tax after adding back net finance charges, exceptional items and IFRS2 share-based costs, being the Group's UK GAAP operating profit as adjusted by the items shown.
2. Adjusted EPS is defined as earnings per share, using earnings that have been adjusted to add back exceptional items and IFRS2 share-based costs (note 8).

Roger Cornick, Chairman, commented:

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

"All three divisions have delivered growth in revenues, as a result of which Adjusted EBIT, at £3.1 million for the six months ended 30 September 2017, have increased by 56% in comparison to the first half of the previous year.
"Discretionary funds under management, the number of advisory firms utilising the Group's compliance services, and gross lending through our mortgage and protection division, have all increased over the last six months.

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

Paul Hogarth, Chief Executive Officer, commented:

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

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