TIDMASTO
RNS Number : 1277Q
AssetCo PLC
16 February 2023
LEI: 213800LFMHKVNTZ7GV45
16 February 2023 Immediate Release
AssetCo plc
Preliminary results for the year ended 30 September 2022
AssetCo plc ("AssetCo" or the "Company"), the agile asset and
wealth management company, today announces its results for the year
ended 30 September 2022.
Highlights
-- Assets under management (AuM) as at 30 September 2022 were
GBP2.7 billion (2021: GBP113m); including SVM Asset Management
which completed post year end AuM was GBP3.1 billion
-- Loss for the year GBP9.2m (2021: profit of GBP14.6m)
-- Interim dividend of 1.3p per share declared and paid
-- Significant cost reduction in listed equities business well
underway with GBP10m of annualised costs cut in River and
Mercantile by 30 September 2022
-- Invested over GBP40m in growth through acquisitions
-- Considerable progress in building out our listed equity
platform through the acquisition of River and Mercantile Group,
Revera Asset Management and SVM Asset Management
Martin Gilbert, Chairman, said:
"We continue to seek out potential opportunities for further
inorganic expansion in relatively difficult trading conditions for
asset management businesses generally. This creates opportunities
for the agile AssetCo in its mission to acquire, improve and grow
otherwise attractive businesses that are experiencing challenges or
whose true value is unrecognised. We are particularly pleased, as
an example, with Parmenion and remain strong advocates of this very
valuable business, the management team and believe that the client
led initiatives as well as industry interest over the past year
will deliver significant value for all its stakeholders.
We are relentlessly focussing on serving our clients, sustaining
investment performance, reducing costs, growing revenues and
getting the group to profitability as soon as possible whilst being
ready to pursue opportunity."
Campbell Fleming, Chief Executive, said:
"Our loss for the year was in part driven by a combination of
acquisition costs and reorganisation costs as we right-size and
integrate our acquired businesses. We are delivering on our
acquisitive growth strategy whilst maintaining a focus on reducing
costs across the business with a GBP10m annualised cost saving in
River and Mercantile achieved. AssetCo has now successfully
invested more than GBP40m in growing the business by completing the
acquisitions of River and Mercantile and Revera, taking revenues
from less than GBP0.5m last year to over GBP8m during the course of
the year, with a forward-looking run rate of GBP17m when the
acquisition of SVM is also factored in.
We are hugely grateful for the efforts of our investment, client
and operations teams as well the continued support from our clients
and our shareholders in what was a volatile, difficult and tough
year for all."
For further information, please contact:
AssetCo plc Numis Securities Limited
Campbell Fleming, CEO Nominated adviser and joint broker
Peter McKellar, Deputy Chairman Giles Rolls / Charles Farquhar
Tel: +44 (0) 785 0464 301 Tel: +44 (0) 20 7260 1000
Panmure Gordon (UK) Limited H/Advisors Maitland
Joint broker Neil Bennett
Atholl Tweedie Rachel Cohen
Tel: +44 (0) 20 7886 2906 Tel: +44 (0) 20 7379 55151
For further details, visit the website, www.assetco.com
Ticker: AIM: ASTO.L
CHAIRMAN'S STATEMENT
The financial year ended 30 September 2022 was an eventful one
for AssetCo, during which we made considerable progress in building
out the Group's listed equity platform, private markets capability
and thematic ETF business. Our objective is to build an agile asset
and wealth management business that is fit for purpose in the
21(st) century.
The acquisition of River and Mercantile Group completed
successfully in June 2022 and of Revera Asset Management in August
2022. The acquisition of SVM Asset Management, announced in June
2022, completed successfully shortly after the financial year end.
Together with established subsidiary Saracen, the combination of
this group of companies provides a complementary product set,
managed by a well respected team of managers based in the UK's two
main investment hubs of London and Edinburgh. We are now focusing
on growing assets under management and on profitability. We are
making good headway towards run rate profitability in our wholly
owned subsidiary businesses, despite difficult trading conditions.
With the support of modest growth in equity stock markets over the
financial year, we are optimistic that we can achieve sales growth
and cost savings that will deliver a positive outcome for the
Group.
Investment markets have had a lot to cope with during the
financial year: the tragedy of war in Ukraine; continuing worldwide
supply chain challenges; energy price rises and continued pandemic
disruption in China. The UK large cap stock market was remarkably
resilient, with the FTSE 100 losing only 2% during the financial
year. This masked a volatile and troubling set of market events
which undermined investor confidence and sparked outflows in assets
under management. The performance of world and mid-cap UK markets
which lost c.20% and c.25% respectively over the financial year are
perhaps more indicative of underlying sentiment and (in the case of
world markets) balance some of the special factors, such as
Brexit-specific discounting, which impacted companies operating
solely or mainly in the UK.
Equity markets generally remained nervous during the year. The
combination of rising energy prices and shortages persisting as the
global economy recovered from Covid led to a sharp rise in
inflation, which had been relatively dormant since the early
1990's. Central banks have increased interest rates to offset this
challenge to economic stability, but this also increases the
chances of an economic slowdown and recession. All of this makes
for a challenging environment for most businesses, not least asset
management businesses which are exposed to the gearing effect of
fluctuating markets.
River and Mercantile has been exposed to the full force of those
challenges. Revenues in the River and Mercantile Group have been
impacted by both market conditions generally and by resulting
client outflows, as clients typically reduced equity exposure.
While wholesale business outflows are lighter than they might have
been when compared to the experience of many of our competitors,
taken together with stock market falls they nonetheless impacted
revenues negatively by approximately GBP2m between acquisition and
the financial year end 2022, on an annualised basis. Stockmarkets
continued to exert downward pressure on revenues going into the new
financial year.
Our mission to improve and grow otherwise attractive asset
management businesses began with tackling an initial cost base of
GBP32m of annualised costs at the point of announcing our
acquisition in January 2022. This was cut aggressively to GBP22.5m
in annualised costs by the financial year end 2022, after adjusting
for pipeline committed savings. Nonetheless, it was the principal
driver of the loss made by the Group of GBP9m after interest and
tax for the year. An aggressive assault on continuing costs is
on-going and remains a key focus of the coming year.
In the financial year under review the Group has invested more
than GBP40m in growing the business through the acquisitions of
River and Mercantile and Revera. Those acquisitions take revenues
from less than GBP0.5m last year to over GBP8m during the course of
the year, with a run rate of GBP17m annualised as at end September
2022 when the acquisition of SVM in October 2022 is also taken into
account. Revenues for the Group for the financial year ended 30
September 2022 include those from River and Mercantile from 15 June
2022 and from Revera from the beginning of August 2022.
Comparisons to the previous year are not particularly
instructive as the Company had little effective revenue during that
year, other than the successful Grant Thornton litigation which
contributed net income of GBP22.4m on a one-off basis. In December
2022 we announced that the four active equity asset management
subsidiaries of the Group will come together under the River and
Mercantile brand during the course of 2023. Much work remains to be
done to realise the significant potential inherent in combining
these businesses, and existing contractual commitments to third
party suppliers, regulatory approvals and client consents are all
hurdles along the way. However, the Group has considerable talent
to draw on and considerable experience in dealing with such
challenges. Rationalisation plans are well advanced.
During the year we have been actively engaged in raising the
profile of the business both in the UK and internationally, seeking
to broaden the shareholder base. We have met with key asset
allocators in the UK and abroad and are exploring growth
opportunities for the business with partners around the world -
both organically and where deeper partnerships might be mutually
attractive.
An interim dividend of 1.3p per share (equivalent to 13p per
share before the August 2022 share split) was declared towards the
end of November 2022, as foreshadowed in the Company's shareholder
circular and AIM admission document in March 2022. This is the
first dividend paid by the Company since its re-admission and sits
alongside a share buy-back programme rolled out in the closing
quarter of the calendar year which, by end January 2023, had bought
back almost GBP6.9m of shares currently held as treasury stock. It
is our intention to pursue a progressive dividend policy where
circumstances permit.
We continue to seek out potential opportunities for further
inorganic expansion. The relatively difficult trading conditions
for asset management businesses generally creates opportunities for
AssetCo in its mission to acquire, improve and grow otherwise
attractive businesses that are experiencing challenges.
Martin Gilbert - Chairman
16 February 2023
BUSINESS REVIEW
As at the end of the financial year to September 2022, the
AssetCo Group encompasses active equities asset management in three
subsidiaries (which became four with the acquisition of SVM asset
management at the end of October 2022) an early stage
infrastructure asset management business, a majority equity
interest in an exchange traded fund provider and a structured 30%
interest in a digital platform business.
Active Equities
The acquisition of the River and Mercantile Group in June 2022
brought useful distribution capability to the Group in the UK as
well as a wide range of funds, taking Active Equities assets under
management to GBP2,291m by September 2022 year end. SVM, acquired
during October 2022, had assets under management of GBP528m as at
30 September 2022.
Movement in assets under management from end September 2022 to
end December 2022 may be summarised in the following chart, which
includes SVM on a pro forma basis:
Performance
The three months to end September 2022 have been particularly
active for River and Mercantile with the launch of two funds
compliant with the EU's sustainable finance disclosure Regulations
(SFDR) and its inaugural infrastructure fund. The launch of the two
SFDR funds, European Change for Better Fund (article 9 compliant)
and Global Sustainable Opportunities Fund (article 8 compliant),
has been well received and both are highly rated by independent and
dedicated Sustainable Investment Advisor, Mainstreet Partners. The
funds follow an investment philosophy which incorporates
sustainability into the investment manager's long-established
process, focusing on the characteristics of Potential, Valuation
and Timing. Launched with client seed capital and backing, they
invest in companies which the team believes can make a significant
improvement in their carbon footprint, as well as companies which
enable this improvement for others.
Investment performance of the River and Mercantile equities
funds over the three months to September 2022 has been encouraging
given the prevailing macro-economic headwinds. A number of funds
have responded to the pick-up in demand for a more
'value-orientated' investment approach and investors' requirement
for higher yielding investments. We believe that this trend has
much further to run. Saracen's Global Income and Growth Fund has
also performed well, and the shares are close to all-time
highs.
It is pleasing to note that the acquisition has been achieved
with minimal disruption to clients and that the ongoing River and
Mercantile funds saw less in the way of outflows than many of their
competitors, and no loss of market share. River and Mercantile is
well positioned for future growth.
Fund Performance: active equity funds managed by the Group as at
end December 2022:
Our flagship range of mutual funds, across all of our active
equities subsidiaries, is showing strong investment performance
over 1, 3, and 10 years and since inception.
The information above is disclosed in order to allow
shareholders to assess the current performance of our investment
strategies. While historical investment performance is not an
indicator of future investment performance, the long term track
records of our strategies give shareholders an indication of the
sustainability of our investment performance across different
investment cycles. Performance data is sourced from: FEAnalytics
for IA Sector Peer Group performance. B share class (net of
management fees) performance is used since share class launch for
all funds except Revera UK Dynamic which is Corporate class
performance. For any fund performance prior to the launch of these
share classes, performance is chain linked with the next highest
paying fee share class back to the earliest date.
Costs
In addition to a focus on net new business in its growth plan,
considerable attention is being paid to reducing costs, in line
with comments on right sizing the organisation made at the time of
acquisition. The sale of its UK Solutions offerings, prior to River
and Mercantile's acquisition by AssetCo, followed by the sale of
its US Solutions shortly thereafter, delivered a business with a
larger operating infrastructure than was necessary to run the
remaining active equities asset management business. Shrinking this
operating model to one more appropriate to River and Mercantile's
reduced and simplified business going forward has been a key focus.
Since announcing the deal in January 2022, River and Mercantile's
full time headcount (excluding employees who transferred with the
Solutions sale) has been reduced by 22%, and the annualised
operating costs also by 22% by year end.
A new, lower cost target operating model has been designed with
implementation taking place over the 2023 calendar year to enable a
stronger fit-for-purpose business which is scalable for both
organic growth and the acquisitive nature of the Group. River and
Mercantile's streamlined operating model is intended to be the
backbone of the active equities business for the Group, enabling
further consolidation of operations from other subsidiaries within
the Group. Further cost savings within River and Mercantile have
been identified through a combination of rationalising suppliers
and downsizing operating platforms. A detailed plan covering both
transition and consolidation of the operating model is in place and
being carefully tracked, with cost reduction and efficiency the
clear focus throughout.
SVM Acquisition
In November 2022, the Group completed the acquisition of SVM
Asset Management (SVM) for GBP11.2m. SVM is an active manager of
listed equities and is the Authorised Corporate Director to its own
ICVC fund range, whilst also managing an Investment Trust and
institutional client mandates. SVM is a key component of AssetCo's
plans to have a strong and dynamic asset management hub in
Edinburgh. Completion of the acquisition brought assets managed by
the AssetCo group companies in the Scottish capital to nearly
GBP700m.
The intention is that, over time and subject to appropriate
regulatory approvals and client consents, the majority of
compliance, operational, distribution and marketing resources will
be shared within the broader AssetCo group companies. At the same
time, the unique qualities and strengths for which SVM is well
known will be preserved to form a bedrock of growth for the
future.
Integration
In December 2022, we announced the bringing together of the four
active equity businesses under the River and Mercantile brand
which, given completion of the SVM acquisition only a month before,
was testament to AssetCo's ability to find and augment
complementary businesses. Our Edinburgh-based active equity asset
businesses (Saracen, Revera and SVM) are already working together
effectively using SVM's offices as a single base.
Infrastructure
During the year, the River and Mercantile Infrastructure Income
Fund was launched with a first series of shares to the value of
GBP115m in committed capital (representing GBP0.8m in annualised
revenue when fully drawn) and made its first investments. The first
two investments (in Spring Fibre Limited and Cohiba Communications
Limited) are consistent with the fund's core theme of supporting
the "digital transition" in the UK - through financing the delivery
of full fibre-optic and fixed wireless technology infrastructure in
selected towns, giving residential and commercial customers next
generation access to the internet. Together these investee
companies plan to provide ultra-fast broadband connectivity to more
than 2.5 million homes and, with many of these homes in socially
disadvantaged communities, aim to provide households and businesses
the affordable access to the internet required to fulfil their
potential. These "digital transition" investments, alongside the
fund's focus on supporting the UK's "energy transition",
demonstrate positive tangible Environmental, Social and Governance
(ESG) characteristics for investors and communities alike.
It is expected that this ESG-focused approach to investments
will continue to prove attractive and deliver fundraising success
for the fund during the coming year. The pipeline of interested
investors is strong and, similarly, we see a good supply of
potential investments. We expect good growth potential from this
side of our business, despite recent headwinds in the sector.
Exchange Traded Funds
2022 was a challenging year for European thematic ETF providers,
with the economic headwinds, noted previously, coinciding with an
increase in competition.
Notwithstanding the foregoing, Rize ETF's market recognition as
a leader in thematic and impact thematic funds continues to
flourish, with the firm winning two further awards in 2022,
including the "Best Food Investment Firm / Europe" from
International Investor in relation to the Rize Sustainable Future
of Food UCITS ETF (FOOD) and "Most Innovative Fund Launch -
Passive" from ESG Clarity for the Rize Environmental Impact 100
UCITS ETF (LIFE).
Rize ETF enjoyed net inflows of USD 108 million for the
financial year to 30 September 2022, taking assets under management
to GBP326m with attaching annualised revenues of GBP1.5m pa as at
that date. Rize ETF has been onboarded (approved) by a number of
major clients, including several major private banks across
Europe.
The firm's net flow for the financial year to 30 September 2022
was 1.9% of the thematic market versus a 1% AUM market share,
outpacing the broader thematic ETF market in Europe. Whilst this is
lower than originally projected given the exceptional market
conditions of 2022, Rize has nevertheless outperformed the broader
thematic ETF market and continues the trend of having only had net
inflow in each calendar year since the launch of its first two ETFs
in February 2020. Crucially, much of the net new asset allocations
in 2022 came from new investors that approved the firm in 2022,
illustrating the effectiveness of the firm's distribution strategy
and brand recognition and also the potential for more significant
top-up allocations once positive sentiment returns to equity
markets
Digital Platform
The development of Parmenion's business (30% of which was
acquired by AssetCo in October 2021) continued apace in 2022, with
a number of important initiatives launched to broaden and deepen
its relationship with the UK independent financial advice
community. In response to customer feedback, Parmenion extended its
investment proposition by adding a number of new discretionary fund
managers to the platform, providing greater choice for customers.
It also launched the Advisory Models Pro which provides open
architecture access to advisers who want to build and run their own
advisory portfolios, thereby extending the reach of the firm.
Finally, it completed the acquisition of EBI Portfolios a
Midlands-based business which administers GBP1.9bn for 150 advisory
firms. The EBI suite of 11 Earth model portfolios will be fully
integrated into the Parmenion platform's award-winning investment
proposition. Each of these initiatives should further drive growth
in assets under administration and collectively should contribute
significantly to Parmenion's growing reputation as a provider of
choice for the UK IFA community and their customers.
Parmenion was awarded UK Platform of the Year for 2022 at the
Schroder's UK Platform Awards. In addition, it has 20 Defaqto
ratings covering all aspects of the business from customer service
to platform functionality and investment proposition. This industry
recognition has been driven by strong customer service and this in
turn is reflected in strong financial results for the firm. In the
year to 31 December 2022, revenues increased by over 12% to
GBP40.4m and EBITDA more than doubled to GBP15m. Assets under
management increased to GBP10.3bn, including the EBI Portfolios
assets. We remain strong advocates of the business and the
management team and believe that the client led initiatives over
the past year will deliver significant value for all
stakeholders.
Annualised Revenue Breakdown by Business Type (as at 30
September 2022*)
Business Type AuM (GBPm) Weighted average Gross annualised
fee rate, net revenue net of
of rebates rebates (GBP000s)
(bp)
Wholesale (active equities) 2,074 54 11,228
----------- ----------------- -------------------
Institutional (active
equities) 681 35 2,374
----------- ----------------- -------------------
Investment Trust (active
equities) 64 73 471
----------- ----------------- -------------------
Infrastructure 35 68 237
----------- ----------------- -------------------
ETFs 326 47 1,520
----------- ----------------- -------------------
Total 3,180 15,830
----------- ----------------- -------------------
* Even though SVM was not acquired until after the year end,
this table includes SVM data as at 30 September 2022 as if SVM had
been acquired by this date to illustrate annualised revenue for the
Group on an ongoing basis.
This table excludes the Group's interest in Parmenion which (per
above) had AuM of GBP10.3bn, generating revenues of GBP40.4m as at
31 December 2022 (financial year end of Parmenion).
-- Wholesale refers to the active equity assets which are held
and managed in mutual funds distributed by the Group.
-- Institutional refers to the active equity assets which are
held and managed in separate accounts on behalf of institutional
clients of the Group.
-- Investment Trust refers to the active equity assets which are
held and managed in investment trusts which are clients of the
Group.
Summary Performance Indicators:
The following table includes key performance indicators
referenced in the following Strategic Report and attempts to show
the effect of including SVM at end December 2022, including some
additional alternative performance measures for comparison
purposes.
End Dec 2022 End Sept End Sept Movement
(inc SVM) 2022 2021 Sept 2021
to Sept 2022
(Sept 21
to Dec 22)
Active Equities Assets GBP2,822m GBP2,291m GBP113m +GBP2,178m
under Management (+GBP2,709m)
------------- ---------- --------- ---------------
Total assets GBP96.5m GBP102.1m GBP59.6m +GBP42.5m
(+GBP36.9m)
------------- ---------- --------- ---------------
Annualised revenue(1) GBP17.3m GBP12.9m GBP2.5m +GBP10.4m
(+GBP14.8m)
------------- ---------- --------- ---------------
Profit for the year -GBP9.3m GBP14.7m -GBP24m
(to 30 Sept)
------------- ---------- --------- ---------------
Investment performance(2) -54% points
(1 year) 77% 46% 100%(3) (-23% points)
------------- ---------- --------- ---------------
Investment performance(2) +40% points
(3 year) 53% 53% 13%(3) (+40% points)
------------- ---------- --------- ---------------
(1) Monthly recurring revenue at date shown, annualised (i.e. x
12)
(2) % active equity mutual fund AuM in 1(st) or 2(nd) quartile
when compared to competitor funds in relevant Investment
Association sectors.
(3) Saracen only
Campbell Fleming, Chief Executive Officer
Peter McKellar, Deputy Chairman
16 February 2023
STRATEGIC REPORT
Introduction
The Directors present their Strategic Report on the Group for
the year ended 30 September 2022.
Review of the business
A review of the business is contained in the Chairman's
statement on pages 3 to 4 and in the Business Review on pages 5 to
11 and is incorporated into this report by cross-reference.
Strategy
The Group's strategy is to identify high-quality asset and
wealth management businesses which can be added to the AssetCo
stable and improved by working alongside our experienced management
team to improve their capabilities, distribution and reach.
Our key areas of focus include being a responsible company and
manager, meeting the needs of clients and investors and to expand
through a combination of selective acquisitions and organic
growth.
Key performance indicators (KPIs)
The financial key performance indicators for the year ended 30
September 2022, which has focused on growing the Group's asset
management capabilities, were as follows:
As at end September 2022 2021 Movement
Active Equities Assets GBP2,291m GBP113m +GBP2,178m
under Management
---------- --------- ------------
Total assets GBP102.1m GBP59.6m +GBP42.5m
---------- --------- ------------
Annualised revenue(1) GBP12.9m GBP2.5m +GBP13.3m
---------- --------- ------------
Profit for the year -GBP9.3m GBP14.7m -GBP24m
(to 30 Sept)
---------- --------- ------------
Investment performance(2)
(1 year) 46% 100%(3) -54% points
---------- --------- ------------
Investment performance(2)
(3 year) 53% 13%(3) +40% points
---------- --------- ------------
(1) Monthly revenue at date shown, annualised (i.e. x 12)
(2) % active equity mutual fund AuM in 1(st) or 2(nd) quartile
when compared to competitor funds in relevant Investment
Association sectors.
(3) Saracen only
The key measurements for the asset and wealth management
businesses under our control or influence, include growth (in
assets and revenue) and investment performance.
Alternative Performance Measures
The Group uses non-GAAP APMs as detailed below to provide users
of the annual report and accounts with supplemental financial
information that helps explain its results, recognising the fact
that certain acquired businesses have contributed to the results
for only part of the financial year.
APM Definition Reason for use
Annualised Costs incurred Given that AssetCo has acquired and/or
costs in the month concerned, integrated businesses at different
annualised by multiplying points during the financial year,
by 12 the full year's costs as disclosed
in the statutory accounts do not
give a clear picture of what "business
as usual" might look like. Annualised
costs, as defined, allow us to aggregate
costs across all business units and
present a consolidated picture on
a consistent basis. In practice,
the actual outturn is dependent upon
actual business experience during
the year so this is not a forecast.
--------------------------- -------------------------------------------
Annualised Revenues incurred Given that AssetCo has acquired and/or
revenue in the month concerned, integrated businesses at different
annualised by multiplying points during the financial year,
by 12 the full year's revenues as disclosed
in the statutory accounts do not
give a clear picture of what "business
as usual" might look like. Annualised
revenues, as defined, allow us to
aggregate revenues across all business
units and present a consolidated
picture on a consistent basis. In
practice, the actual outturn is dependent
upon actual business experience during
the year so this is not a forecast.
--------------------------- -------------------------------------------
Risk Management and internal controls
The Board is responsible for the Company's system of internal
control and for reviewing the effectiveness of the Group's risk
management framework.
During the reporting period, the Board has taken steps to
improve the Company's risk management framework through the
appointment of a Head of Risk, Gordon Brough. The Company operates
a risk register which assesses risks facing the Group and sets out
the mitigants to those risks. The Board reviewed the risk register
during the reporting period and obtained assurance from the
Executive Directors as to the effectiveness of the risk management
framework.
The Group has been subject to significant change during the
period and further work will be undertaken to strengthen the risk
management framework in 2023 as part of the integration of the
Group's operating businesses onto a new target operating model.
However, such a system is designed to manage rather than eliminate
the risk of failure to achieve business objectives and can provide
only reasonable and not absolute assurance against material
misstatement or loss.
The Directors review the internal control processes on a regular
basis.
The Company has established procedures for planning and
monitoring the operational and financial performance of all
businesses in the Group, as well as their compliance with
applicable laws and regulations. These procedures include:
-- clear responsibilities for financial controls and the
production of timely financial management information;
-- the control of key financial risks through clearly laid down
authorisation levels and proper segregation of accounting
duties;
-- the review of business updates, cash flows and cash balances by management and the Board.
Principal risks and uncertainties
The Directors continuously monitor the business and markets to
identify and deal with risks and uncertainties as they arise. Set
out below are the principal risks which we believe could materially
affect the Group's ability to achieve its strategy. The risks are
not listed in order of significance.
Risk Responsibility and Principal
Control
Profitability and Dividends Board/Executive Team:
- Profitability remains a key Plans are being actively implemented
focus for the Group. Delays to cut costs and focus distribution
in profitability in the longer efforts thereby increasing new
term could impact the Board's business. The Group is focused
ability to pay a progressive on achieving run-rate profitability
dividend as well as the Group's at the earliest possible date.
ability to fund acquisitions. The Board monitors cash management
carefully.
---------------------------------------
Distribution - Corporate actions Board/Distribution:
such as acquisitions and business The Group continually monitors
re-structuring risk disturbing and develops its product suite
existing clients and discouraging to ensure that it remains competitive
new ones. and attractive.
Distributors and markets are
carefully targeted and the status
of client relationships monitored
to identify risk of loss. Identified
risks are suitably addressed.
---------------------------------------
Loss of Key People - The Group Board/Remuneration Committee:
has managed most departures The Board regularly reviews
on a planned basis but going succession planning for all
forwards will need to ensure senior executives.
continued retention of key staff All senior executives are subject
if it is to manage client, consultant to extended notice periods (between
and regulatory expectations six and twelve months).
. The Group seeks to offer attractive
terms as well as a flexible
working environment.
Consideration is being given
to a replacement for the Company's
cancelled LTIP.
---------------------------------------
Economic Conditions - Adverse Board/Executive Team:
markets were a significant drag The Group seeks to manage an
on performance in the last year. appropriate balance of fixed
As an equity specialist the and variable costs. In the event
business remains vulnerable of sustained economic downturn,
to any material fall in equity the Group would seek to take
markets. early action to cut fixed costs.
---------------------------------------
Systems and Controls - Operating Board/Operations:
multiple systems across multiple The Group has developed a detailed
subsidiary and associate companies controls framework which is
increases the risk of control being rolled out across operating
failure. Managing multiple service subsidiaries to create a consistent,
providers also generates challenges. harmonised approach.
The Group is seeking to consolidate
on to a single operating platform
for compatible businesses as
an early priority, as well as
seeking to rationalise service
providers.
---------------------------------------
ENVIRONMENTAL SOCIAL AND GOVERNANCE
In pursuing its strategy the Company is committed to a
responsible business approach that delivers positive outcomes and
sustainable long term value to its stakeholders. In this regard the
Company has developed an Environmental Social and Governance policy
statement (the "ESG Policy").
This ESG Policy applies to AssetCo plc ("AssetCo"). AssetCo is a
holding company whose mission is to acquire, manage and operate
asset and wealth management activities and interests, together with
other related services (our "Mission").
In pursuing our Mission we are committed to a responsible
business approach that delivers positive outcomes and sustainable
long term value to all our stakeholders and particularly to our
clients. At the heart of this is our ESG Policy which is
incorporated into all our decision-making processes.
In framing our ESG Policy we are, and will continue to be,
focused on our clients concerns and needs. We will endeavour to
engage with our clients to understand and accommodate their ESG
requirements in terms of the services we provide.
Our ESG Policy is not static, it will evolve as our business
evolves and we will continually look to improve our ESG Policy in
the light of best market practice and the expectations of our
stakeholders.
Environmental
We will strive to reduce the impact of our business activities
on the environment. This will include reducing our energy, carbon,
water and waste footprint. In due course we intend to implement
systems to track all our major environmental impacts so that we
might access the effectiveness of our policies and report to our
stakeholders.
Social
We intend to be a responsible member of the community and a
force for positive change. We will endeavour to contribute to the
community through philanthropic partnerships, paid internships and
encouraging employee volunteering.
Governance
Commensurate with the size of the AssetCo business, we embrace
high standards of integrity, transparency and corporate governance.
We foster a culture of inclusion, diversity of thought and
background (including improving our gender balance) and equal
opportunity across our businesses. We treat our staff with
integrity and respect. We are a values led business and will look
to attract, develop and retain the best talent.
Membership and Reporting
Our ESG agenda is supported by the activities of our operating
businesses. This includes the adoption of the United Nations-backed
Principles for Responsible Investment by our subsidiaries and by
becoming signatories to the UK Stewardship Code, to which both
River and Mercantile and SVM Asset Management have been accepted by
the FRC as signatories. A number of the investment products managed
by River and Mercantile and Rize have a clear ESG focussed
investment process. River and Mercantile is the investment manager
of an Article 9 SFDR Fund and an Article 8 SFDR Fund.
We are continuing to evolve our ESG policies across the Group
with the establishment of a Sustainability and Stewardship
Committee under an independent Chair to oversee progress in this
area.
Acquisitions and Service Providers
Our Mission is largely predicated by an acquisition strategy. In
terms of businesses acquired we will look to ensure that they have
or adopt policies and initiatives which are consistent with our ESG
Policy. Likewise we will expect all significant service providers
to AssetCo and its businesses to have in place policies which are
consistent with our ESG Policy.
Our stakeholders: S.172 STATEMENT
Duty to promote the success of the Company
Section 172(1) of the Companies Act 2006 requires Directors to
act in the way they consider, in good faith, would be most likely
to promote the success of the Company for the benefit of its
members as a whole, and in doing so have regard (amongst other
matters) to:
-- the likely consequences of any decision in the long-term;
-- the interests of the Company's employees;
-- the need to foster the Company's business relationships with suppliers, customers and others;
-- the impact of the Company's operations on the community and the environment;
-- the desirability of the Company maintaining a reputation for
high standards of business conduct; and
-- the need to act fairly as between members of the Company.
This Section 172 Statement sets out how the Directors have
discharged this duty.
In order for the Company to succeed in the long-term, the Board
must build and maintain successful relationships with a wide range
of stakeholders. The Board recognises that the long-term success of
the Company is dependent on how it works with a number of important
stakeholders.
The Board's decision-making process considers both risk and
reward in the pursuit of delivering the long-term success of the
Company. As part of the Board's decision-making process, the Board
considers the interests of a broad range of the Company's
stakeholders. The Board considers that its primary stakeholders are
clients, employees, shareholders, suppliers and regulators.
The Board fulfils its duties in collaboration with the senior
management team, to which day-to-day management has been delegated.
The Board seeks to understand stakeholder groups' priorities and
interests. The Board listens to stakeholders through a combination
of information provided by management and also by direct engagement
where appropriate. The following overview provides further insight
into how the Board has had regard to the interests of our primary
stakeholders, while complying with its duty to promote the success
of the Company in accordance with Section 172 of the Companies Act
2006.
Our primary stakeholders How we engage with them
---------------------------------------------------------- ----------------------------------------------------------
Clients Our distribution teams have a busy client engagement
The Company through its subsidiaries aims to provide schedule and maintain contact with our
investment products that meet the needs clients through regular meetings, reporting and written
of clients and put those needs first. communication. This helps us to understand
our clients' needs.
Members of the senior management team meet directly with
key clients to understand the views
of our clients and to ensure that we continue to meet our
clients' expectations.
Client engagement feeds into our regulated subsidiaries
assessment that their products and
services are fit for purpose and offer fair value.
---------------------------------------------------------- ----------------------------------------------------------
Shareholders The Board engages with the Company's shareholders in a
The ongoing support of our shareholders is vital in number of ways which include the AGM
helping us deliver our long-term strategic and one-to-one meetings and telephone conversations. Our
objectives. AGM allows shareholders the opportunity
to engage directly with the Board.
The Chairman, Deputy Chairman and CEO regularly meet (in
person and virtually) the Company's
major shareholders to discuss the financial performance
of the Company.
Matters discussed with shareholders include strategy and
its execution and generating strong
returns. The views of shareholders have been considered
and fed into the implementation of
the cost reduction strategy across the Group.
---------------------------------------------------------- ----------------------------------------------------------
Employees The senior management team engage regularly with
The Company's employees are senior experienced employees through face-to-face meetings where
professionals. It is of the utmost importance open discussion is encouraged. Our subsidiaries have
to the Board that we have a culture that attracts and strong management teams and engage with
retains talented employees. their employees through regular meetings and all employee
calls.
We value our diverse workforce and seek inclusion at all
levels.
The senior management team has focussed on the
integration of newly acquired businesses into
the Group over the past year and the restructuring of
certain group functions to align with
the business needs. During this process, due
consideration has been given to all stakeholders,
including employees, shareholders and our clients.
The Group is proud to support the development our
employees through study loans and paid study
leave. Supported qualifications include the CFA and
accountancy qualifications.
---------------------------------------------------------- ----------------------------------------------------------
Suppliers and service providers The Company is committed to the highest standards of
The Company places reliance on external third party business conduct.
suppliers and service providers for certain The selection process and engagement with these parties
activities and services. is undertaken by senior management.
We ensure that there is an appropriate framework of
oversight of our key third-party suppliers.
Regular meetings are held with key third-party service
providers and issues escalated to senior
management where required. Material supplier selection is
reported to the Board and significant
issues or risks related to suppliers will be escalated to
the Board.
As described above, a key focus has been on the
integration of the newly acquired businesses
into the Group. Suppliers and service providers have been
reviewed by senior management during
this period as part of this project.
---------------------------------------------------------- ----------------------------------------------------------
Regulators
The Group operates in the UK and US and is subject to the
oversight of various regulators. We have a conduct-led culture that
encourages our people to act with integrity at all times.
The Company is AIM listed and complies with the AIM Rules. We
engage with our regulators through the Group's legal and compliance
function by way of regular mandatory reporting as well as any ad
hoc interactions required by our regulators.
Community and the environment
Due regard is given to the impact of the Company's operations on
the community and environment through the activities of its
subsidiaries overseen by the senior management team.
Sustainable investing is a key focus for the Group's businesses.
During the period, River and Mercantile launched an Article 8 SFDR
Fund and Article 9 SFDR Fund. River and Mercantile, Rize, Saracen
and SVM are signatories to UNPRI. Both River and Mercantile and SVM
are signatories to the FRC's Stewardship Code.
The Group aims to make an impact within the communities it
operates in through supporting charitable activities undertaken by
employees through a GAYE payroll scheme and donation matching
(subject to cap), participation in charitable events and offering
paid internships aimed at improving diversity. Examples of specific
activities include a paid internship at River and Mercantile for
two interns through the Girls Are INvestors ('GAIN') investment
internship programme aimed at improving diversity in asset
management and participation in City Hive's Fearless Women campaign
where Campbell Fleming was a panellist.
Pages [ ] to [17] constitute the strategic report which was
approved by the Board on [ ] February 2023 and signed on its behalf
by:
Campbell Fleming
C EO
16 February 2023 Company Registration Number: 04966347
Consolidated Income Statement
for the year ended 30 September Notes 2022 2021
2022 GBP'000 GBP'000
----------------------------------- ----- --------------- ------------------
Revenue 3 8,175 408
Cost of sales - (536)
----------------------------------- ----- --------------- ------------------
Gross profit/(loss) 8,175 (128)
Other income 4 1,977 22,388
Administrative expenses 5 (25,565) (7,967)
Other gains/(losses) 6 (9,732) -
----------------------------------- ----- --------------- ------------------
Operating (loss)/profit 7 (25,145) 14,293
Gain on bargain purchase 8 3,227 -
Finance income 9 12,433 1,844
Finance costs (10) (8)
----------------------------------- ----- --------------- ------------------
Finance income (net) 12,423 1,836
Share of result of associate 181 -
----------------------------------- ----- --------------- ------------------
(Loss)/profit before income tax (9,314) 16,129
----------------------------------- ----- --------------- ------------------
Income tax credit/(expense) 10 59 (1,442)
----------------------------------- ----- --------------- ------------------
(Loss)/profit for the year (9,255) 14,687
----------------------------------- ----- --------------- ------------------
(Loss)/profit attributable to:
Owners of the parent (8,440) 14,796
Non-controlling interest (815) (109)
----------------------------------- ----- --------------- ------------------
(9,255) 14,687
----------------------------------- ----- --------------- ------------------
(Loss)/earnings per Ordinary Share Pence Pence(1)
attributable to the owners of the
parent during the year
----------------------------------- ----- --------------- ------------------
From continuing operations
Basic 11 (8.19) 18.06
Diluted 11 (8.19) 16.10
----------------------------------- ----- --------------- ------------------
(1) Prior year e arnings per share has been re-stated to reflect
the 10-1 share split carried out by AssetCo in August 2022.
Consolidated Statement of Comprehensive 2022 2021
Income GBP'000 GBP'000
for the year ended 30 September 2022
(Loss)/profit for the year (9,255) 14,687
Other comprehensive income:
Currency translation differences - (7)
----------------------------------------- -------------- ------------------
Other comprehensive (loss)/income
(net of tax) - (7)
----------------------------------------- -------------- ------------------
Total comprehensive (loss)/income
for the year (9,255) 14,680
----------------------------------------- -------------- ------------------
Attributable to:
Owners of the parent (8,440) 14,789
Non-controlling interests (815) (109)
----------------------------------------- -------------- ------------------
Total comprehensive income for the
year (9,255) 14,680
----------------------------------------- -------------- ------------------
Group 2022 Group
Consolidated Statement of Financial Position GBP'000 2021
as at 30 September 2022 GBP'000
------------------------------------------------------- ------------ ---------
Assets
Non-current assets
Property, plant and equipment 32 16
Right-of-use assets 224 -
Goodwill and intangible assets 24,600 20,067
Investment in associates 22,052 -
Long-term receivables 1,208 -
-------------------------------------------------------- ------------ ---------
Total non-current assets 48,116 20,083
-------------------------------------------------------- ------------ ---------
Current assets
Trade and other receivables 9,700 607
Financial assets at fair value through profit and loss 37 12,000
Current income tax receivable 1,173 3
Cash and cash equivalents 43,066 26,902
Total current assets 53,976 39,512
-------------------------------------------------------- ------------ ---------
Total assets 102,092 59,595
-------------------------------------------------------- ------------ ---------
Liabilities
Non-current liabilities
Deferred tax liabilities 1,070 49
-------------------------------------------------------- ------------ ---------
Total non-current liabilities 1,070 49
-------------------------------------------------------- ------------ ---------
Current liabilities
Trade and other payables 12,750 1,972
Lease liability 294 -
Current income tax liabilities 1,437 1,437
-------------------------------------------------------- ------------ ---------
Total current liabilities 14,481 3,409
-------------------------------------------------------- ------------ ---------
Total liabilities 15,551 3,458
-------------------------------------------------------- ------------ ---------
Equity attributable to owners of the parent
Share capital 1,493 843
Share Premium - 27,770
Capital redemption reserve 653 653
Merger reserve 43,063 2,762
Other reserves - 5,496
Retained earnings 42,426 18,892
-------------------------------------------------------- ------------ ---------
87,635 56,416
Non-controlling interest (1,094) (279)
-------------------------------------------------------- ------------ ---------
Total equity 86,541 56,137
-------------------------------------------------------- ------------ ---------
Total equity and liabilities 102,092 59,595
-------------------------------------------------------- ------------ ---------
Consolidated Statement of Cash Flows Group Group
for the year ended 30 September 2022 2022 2021
GBP'000 GBP'000
------------------------------------------ ---------- ----------
Cash flows from operating activities
Cash (outflow)/inflow from operations
(note 12) (18,317) 16,755
Cash released in respect of bonds - 1,104
Corporation tax paid (31) -
Finance costs (10) (8)
------------------------------------------- ---------- ----------
Net cash (outflow)/inflow from operating
activities (18,358) 17,851
------------------------------------------- ---------- ----------
Cash flow from investing activities
Net cash received from acquisitions 42,148 (16,460)
Payments for acquisition of associate (21,871) -
Interest on loan notes held in associate 1,977 -
Dividends received from financial assets
held at fair value 11,459 194
Finance income 974 -
Proceeds of disposal of investments at
FV through P and L 1,017 -
Purchase of property, plant and equipment (15) (8)
Purchase of intangibles (12) (1)
------------------------------------------- ---------- ----------
Net cash (outflow)/inflow from investing
activities 35,677 (16,275)
------------------------------------------- ---------- ----------
Cash flow from financing activities
Shares issued for cash - 25,013
Costs of share issue (1,000) (515)
Payments for shares bought back - (26,850)
Buy-back transaction costs - (171)
Lease payments (104) -
Shares bought for treasury (51) -
Net cash used in financing activities (1,155) (2,523)
------------------------------------------- ---------- ----------
Net change in cash and cash equivalents 16,164 (947)
Cash and cash equivalents at beginning
of year 26,902 27,860
Exchange differences on translation - (11)
------------------------------------------- ---------- ----------
Cash and cash equivalents at end of
year 43,066 26,902
------------------------------------------- ---------- ----------
Consolidated
Statement of Share Capita
Changes in Share premium redemption Merger Other Retained Non-controlling Total
Equity capital account reserve reserve reserve earnings Total interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ------- ---------- --------------- --------- --------- ---------- ------------- ----------------- -----------
At 30 September
2021 1,221 - - - - 31,124 32,345 - 32,345
Comprehensive
income
Profit for the
year - - - - - 14,796 14,796 (109) 14,687
Other
comprehensive
income
Currency
translation
differences - - - - - (7) (7) - (7)
------------------ ------- ---------- --------------- --------- --------- ---------- ------------- ----------------- -----------
Total
comprehensive
income - - - - - 14,789 14,789 (109) 14,680
------------------ ------- ---------- --------------- --------- --------- ---------- ------------- ----------------- -----------
Proceeds from
share issue 173 24,840 - - - - 25,013 - 25,013
Costs of share
issue - (515) - - - - (515) - (515)
Share buy-back (653) - 653 - - (26,850) (26,850) - (26,850)
Costs of share
buy-back - - - - - (171) (171) - (171)
Shares issued on
acquisition 17 - - 2,762 - - 2,779 - 2,779
Share-based
payments
- LTIP - - - - 5,496 - 5,496 - 5,496
- success fee 85 3,445 - - - - 3,530 - 3,530
Non-controlling
interest on
acquisition - - - - - - - (170) (170)
------------------ ------- ---------- --------------- --------- --------- ---------- ------------- ----------------- -----------
At 30 September
2021 843 27,770 653 2,762 5,496 18,892 56,416 (279) 56,137
Comprehensive
income
Loss for the year - - - - - (8,440) (8,440) (815) (9,255)
Other
comprehensive
income/(expense)
Currency
translation
differences - - - - - - - - -
----------------- ------- ---------- --------------- --------- --------- ---------- ------------- ----------------- -----------
Total
comprehensive
expense - - - - - (8,440) (8,440) (815) (9,255)
Shares issued on
acquisition 598 - - 41,301 - - 41,899 - 41,899
Costs of share
issue - - - (1,000) - - (1,000) - (1,000)
Share-based
payments
- LTIP 52 4,255 - - (5,496) - (1,189) - (1,189)
Share premium
cancellation - (32,025) - - - 32,025 - - -
Shares bought for
treasury - - - - - (51) (51) - (51)
------------------ ------- ---------- --------------- --------- --------- ---------- ------------- ----------------- -----------
At 30 September
2022 1,493 - 653 43,063 - 42,426 87,635 (1,094) 86,541
------------------ ------- ---------- --------------- --------- --------- ---------- ------------- ----------------- -----------
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
for the year ended 30 September 2022
1. General information and basis of presentation
AssetCo Plc ("AssetCo" or the "Company") is the Parent Company
of a group of companies ("the Group") which offers a range of
investment services to private and institutional investors. The
Company is a public limited company, incorporated and domiciled in
the United Kingdom under the Companies Act 2006 and is listed on
the Alternative Investment Market ("AIM") of the London Stock
Exchange. The address of its registered office is 30 Coleman
Street, London, EC2R 5AL.
The audited preliminary announcement has been prepared in
accordance with the Group's accounting policies as disclosed in the
financial statements for the year ended 30 September 2022 and
international accounting standards ('IFRS'), and the applicable
legal requirements of the Companies Act 2006. This preliminary
announcement was approved by the Board of Directors on 15 February
2023. The preliminary announcement does not constitute statutory
financial statements within the meaning of section 434 of the
Companies Act 2006. Statutory accounts for the year to 30 September
2020 have been delivered to the Registrar of Companies. The audit
report for those accounts was unqualified and did not contain
statements under 498 (2) or (3) of the Companies Act 2006 and did
not contain any emphasis of matter.
Certain statements in this announcement constitute
forward-looking statements. Any statement in this announcement that
is not a statement of historical fact including, without
limitation, those regarding the Company's future expectations,
operations, financial performance, financial condition and business
is a forward-looking statement. Such forward-looking statements are
subject to risks and uncertainties that may cause actual results to
differ materially. These risks and uncertainties include, amongst
other factors, changing economic, financial, business or other
market conditions. These and other factors could adversely affect
the outcome and financial effects of the plans and events described
in this announcement and the Company undertakes no obligation to
update its view of such risks and uncertainties or to update the
forward-looking statements contained herein. Nothing in this
announcement should be construed as a profit forecast.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of IFRS, this announcement does not itself
contain sufficient information to comply with IFRSs. The Company
will publish its full financial statements for the year ended 30
September 2022 by 28 February 2023, which will be available on the
Company's website at www.assetco.com and at the Company's
registered office at 30 Coleman Street, London EC2R 5AL . The
Annual General Meeting will be held on Thursday 30 March 2023.
2. Going concern
The directors have considered the going concern assumption of
the company, AssetCo plc, by assessing the operational and funding
requirements of the Group.
The directors have prepared financial projections along with
sensitivity analyses of reasonably plausible alternative outcomes.
The forecasts demonstrate that the directors have a reasonable
expectation that the existing Group has adequate financial
resources to continue in operational existence for the foreseeable
future.
3. Segmental reporting
The core principle of IFRS 8 'Operating segments' is to require
an entity to disclose information that enables users of the
financial statements to evaluate the nature and financial effects
of the business activities in which the entity engages and the
economic environments in which it operates. Segment information is
therefore presented in respect of the company's commercial
competencies, Active Specialists and High-Growth Thematics.
No secondary segmental information has been provided as, in the
view of the Directors, any overseas activities are not material.
The directors consider that the chief operating decision maker is
the Board.
The amounts provided to the Board with respect to net assets are
measured in a manner consistent with that of the financial
statements. The Company is domiciled in the UK.
The segment information provided to the Board for the reportable
segments for the year ended 30 September 2022 is as follows:
Exchange Infra-
Traded Structure Digital
Active specialists Funds investing platforms Head office Total
2022 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================== ================== ======== ========== ========== =========== ========
Revenue
Management fees 6,372 - 79 - - 6,451
Marketing fees - 1,724 - - - 1,724
========================== ================== ======== ========== ========== =========== ========
Total revenue to
external customers 6,372 1,724 79 - - 8,175
========================== ================== ======== ========== ========== =========== ========
Operating (loss)/profit (7,124) (2,794) (151) - (15,076) (25,145)
Gain on bargain
purchase - - - - 3,227 3,227
Finance income 974 - - - 11,459 12,433
Finance costs (10) - - - - (10)
Share of result
of associate - - - 181 - 181
-------------------------- ------------------ -------- ---------- ---------- ----------- --------
(Loss)/profit before
tax (6,160) (2,794) (151) 181 (390) (9,314)
Income tax credit/expense 59 - - - - 59
========================== ================== ======== ========== ========== =========== ========
(Loss)/profit for
the year (6,101) (2,794) (151) 181 (390) (9,255)
========================== ================== ======== ========== ========== =========== ========
Segment assets
Total assets 56,826 19,324 1,706 - 24,236 102,092
Total liabilities (12,157) (461) (678) - (2,255) (15,551)
========================== ================== ======== ========== ========== =========== ========
Total net assets 44,669 18,863 1,028 - 21,981 86,541
========================== ================== ======== ========== ========== =========== ========
Depreciation 9 5 - - - 14
Amortisation of
intangible assets 187 40 - - - 227
Amortisation of
right-of-use assets 187 - - - - 187
Total capital expenditure 1 26 - - - 27
========================== ================== ======== ========== ========== =========== ========
Exchange Total
2021 Active specialists Traded Funds Head office GBP'000
--------------------------- ------------------ ------------- ----------- ---------
Revenue
Management fees 135 - - 135
Marketing fees - 273 - 273
=========================== ================== ============= =========== =========
Total revenue to external
customers 135 273 - 408
=========================== ================== ============= =========== =========
Operating profit/(loss) 32 (347) 14,608 14,293
Investment income - - 1,844 1,844
Finance costs - - (8) (8)
--------------------------- ------------------ ------------- ----------- ---------
Profit/(loss) before tax 32 (347) 16,444 16,129
Income tax expense (6) 1 (1,437) (1,442)
=========================== ================== ============= =========== =========
Retained profit/(loss) 26 (346) 15,007 14,687
=========================== ================== ============= =========== =========
Segment assets
Total assets 3,518 21,742 34,335 59,595
Total liabilities (85) (471) (2,902) (3,458)
=========================== ================== ============= =========== =========
Total net assets 3,433 21,271 31,433 56,137
=========================== ================== ============= =========== =========
Depreciation - 2 - 2
Amortisation of intangible
assets 1 7 - 8
Total capital expenditure 3 5 - 8
=========================== ================== ============= =========== =========
4. Other income
2022 2021
GBP'000 GBP'000
-------------------------------- ----------- --------
Interest received on loan notes
held in associate 1,977 -
Grant Thornton litigation - 25,918
Success fee - (3,530)
--------------------------------- ----------- --------
1,977 22,388
-------------------------------- ----------- --------
Interest on loan notes held in associate
The Group has acquired a 30% equity interest in Parmenion
Capital Partners LLP through a corporate entity, Shillay TopCo
Limited. A large part of the Group's total investment is held by
way of loan notes. During the financial year the Group received
GBP1,977,000 of interest on those loan notes and this is reflected
in other income.
Grant Thornton litigation
The case against Grant Thornton was concluded successfully on 2
October 2020. The total award came to GBP30.515 million of which
GBP4.597 million was reflected in the 2020 full year accounts, as
it had been awarded by the Courts irrespective of the outcome of
any appeal. Other income shown in these accounts represents the
balance of the Court's award, less the success fee of 15% of claim
proceeds excluding costs. This item is considered exceptional as it
relates to a very specific issue from the history of the Group when
it was a very different business and the circumstances which gave
rise to the need for litigation are unlikely to occur again.
5. Administrative expenses
2022 2021
GBP'000 GBP'000
------------------------------ ----------- --------
Restructuring costs 3,196 -
Costs of re-admission to AIM 671 360
------------------------------- ----------- --------
Exceptional items 3,867 360
Acquisition costs 1,116 219
Share-based payments 3,250 6,273
Other administrative expenses 17,332 1,651
------------------------------- ----------- --------
Total administrative expenses 25,565 8,503
------------------------------- ----------- --------
Restructuring costs
RMG sold its UK Solutions business for GBP230 million on 25
January 2022, a transaction which left RMG a much smaller business
with overheads out of step with its reduced size. AssetCo has
usually bought businesses where the strategy has mainly involved
growth in revenue but in this instance a significant project to
right-size the acquired business has been needed following
acquisition by AssetCo on 15 June 2022. As part of the process the
Group has incurred one-off exceptional restructuring costs
including termination payments and other charges.
Costs of re-admission to AIM
The Group has in the last two years twice had to apply for
re-admission to AIM; once in April 2021 when shareholders were
asked to approve the change in strategy to asset and wealth
management, and again in June 2022 given the nature and scale of
the acquisition of RMG. These significant costs are in relation to
those exercises and were required because of the unusual nature of
the change in strategy and the relative size of AssetCo compared to
the acquisition target. Our strategy is now settled and, with the
completion of the acquisition of RMG, AssetCo is now at a scale
where re-admission in order to complete an acquisition is unlikely
so the Directors consider that costs such as this are not likely to
recur.
6. Other gains and losses
2022 2021
GBP'000 GBP'000
--------------------------------- ----------- --------
Reduction in fair value of asset
held for resale 9,750 -
Gain on disposal of fair value
investments (18) -
---------------------------------- ----------- --------
Total other gains and losses 9,732 -
---------------------------------- ----------- --------
On 15 June 2022 the Group acquired the entire share capital of
RMG. However the Group had in 2021 bought 5,000,000 shares in RMG
representing 5.85% of the total issued share capital and this
investment was carried on the 2021 balance sheet at a fair value of
GBP12,000,000. When calculating the overall consideration for the
whole of RMG the Group must assess the fair value of the existing
investment at the time of completion of the deal. Given the effect
on the RMG share price of normal market pricing and the significant
return to shareholders arising from the sale of the RMG Solutions
business the fair value was assessed at GBP2,250,000 leading to a
reduction in fair value of GBP9,750,000.
The Group acquired a small number of seed investments with the
acquisition of RMG in June 2022. One of those investments was sold
before 30 September 2022 for sale proceeds of GBP1,017,000
realising a gain on disposal of GBP18,000.
7. Operating (loss)/profit
2022 2021
Operating (loss)/profit is stated after charging GBP000 GBP000
the following:
Depreciation of property plant and equipment 2 2
Depreciation of right-of-use assets 187 -
Amortisation of intangible assets 227 8
Foreign exchange differences 25 89
Fees payable to the Company's auditors:
* For the audit of the parent Company and the
consolidated financial statements 262 132
90 -
* Audit fees re: subsidiaries
10 -
* Audit-related assurance services
86 -
* Tax advisory services
471 -
* Other non-audit services
Employee benefit expense (see below) 15,160 7,014
Expense relating to short-term and low value
leases 66 36
Employee expense includes a share-based charge of GBP2.749
million (2021: GBP5.496 million) in respect of the Company's LTIP
(see note 9) plus a further GBP0.501 million (2021: GBP0.777
million) charge in employers' national insurance on the share
awards to give a total charge included above of GBP3.250 million
(2021: GBP6.273 million).
8. Gain on bargain purchase
2022 2021
GBP'000 GBP'000
------------------------------ ----------- ---------
Arising on acquisition of RMG 3,227 -
------------------------------ ----------- ---------
The calculation of the difference arising on acquisition of
River and Mercantile between the purchase consideration and the
value of net assets acquired gave rise to a negative amount of
goodwill as the value of net assets acquired was larger than the
consideration. In accordance with accounting standards the amount
of GBP3,227,000 is treated as a credit to the income statement.
9. Finance income
2022 2021
GBP'000 GBP'000
--------------------------------- ----------- ---------
Dividend income 11,459 194
Gain on foreign exchange 927 -
Fair value gains on financial
instruments classified as fair
value through profit and loss - 1,650
Interest income 47 -
--------------------------------- ----------- ---------
Total finance income 12,433 1,844
---------------------------------- ----------- ---------
10. Income tax charge
2022 2021
Group GBP'000 GBP'000
Current tax:
Current tax on (loss)/profit for the year (13) 1,437
-------------------------------------------------- --------- ---------
Total current tax (credit)/expenses (13) 1,437
Deferred tax:
Arising from movement in deferred tax assets 16 (307)
Arising from movement in deferred tax liabilities (62) 312
-------------------------------------------------- --------- ---------
Total deferred tax (credit)/expense (46) 5
-------------------------------------------------- --------- ---------
Income tax (credit)/expense (59) 1,442
-------------------------------------------------- --------- ---------
11. (Loss)/earnings per share
(a) Basic
Basic (loss)/earnings per share is calculated by dividing the
(loss)/profit attributable to owners of the parent by the weighted
average number of Ordinary Shares in issue during the year.
2022 2021(1)
GBP'000 GBP'000
=========================================== =========== =============
(Loss)/profit attributable to owners
of the parent (8,440) 14,796
=========================================== =========== =============
Weighted average number of ordinary shares
in issue before share split as reported
- number - 8,194,031
Basic earnings per share as reported
- pence - 180.57
Weighted average number of Ordinary Shares
in issue post share split - number 103,017,624 81,940,310
=========================================== =========== =============
Basic (loss)/earnings per share - pence (8.19) 18.06
=========================================== =========== =============
(b) Diluted
Diluted (loss)/earnings per share is calculated by adjusting the
weighted average number of Ordinary Shares outstanding assuming
conversion of all dilutive potential Ordinary Shares. In the prior
year the Company had one category of dilutive potential ordinary
shares being shares allocated to the LTIP pool. As at 30 September
2022 the LTIP scheme was discontinued therefore there were no
dilutive potential ordinary shares.
2022 2021(1)
GBP'000 GBP'000
========================================== =========== ==========
(Loss)/profit attributable to owners
of the parent (8,440) 14,796
========================================== =========== ==========
Weighted average number of ordinary
shares in issue before share split
as reported - number - 9,877,346
Diluted earnings per share as reported
- pence - 161.05
Weighted average number of ordinary
shares in issue post share split -
number 103,017,624 91,873,460
Diluted (loss)/profit per share - pence (8.19) 16.10
========================================== =========== ==========
2022 2021
========================================== =========== ==========
No. No.
========================================== =========== ==========
Weighted average number of Ordinary
Shares in issue
Adjustment for: 103,017,624 81,940,310
- Assumed vesting of all shares in
LTIP pool - 9,933,150
Weighted average number of Ordinary
Shares including potentially dilutive
shares 103,017,624 91,873,460
========================================== =========== ==========
Note 1: The number of shares in issue and earnings per share for
2021 have been restated to reflect the 10-1 share split in August
2022.
12. Cash (outflow)/inflow from operations
Group Group
2022 2021
GBP'000 GBP'000
------------------------------------------- -------- --------
(Loss)/profit before tax (9,314) 16,129
Adjustments for:
Share-based payments
- LTIP 2,749 5,496
- Success fee - 3,530
Cash effect of LTIP (3,938) -
Share of profits of associate (181) -
Interest received from associate (1,977) -
Reduction in fair value of investments 9,750 -
Gain on disposal of fair value investments (18) -
Increase in investments - (12,000)
Proceeds of asset held for resale 5,462 -
Bargain purchase taken to other income (3,227) -
Depreciation 14 2
Amortisation of intangible assets 227 8
Amortisation of right-of-use assets 187 -
Finance costs 10 8
Finance income (974) -
Dividends from investment held at fair
value (11,459) (194)
Changes in working capital
- Trade and other receivables 928 4,367
- Trade and other payables (6,556) (591)
------------------------------------------- -------- --------
Net cash (outflow)/inflow from operations (18,317) 16,755
------------------------------------------- -------- --------
13. Long Term Incentive Plan cancellation
On 29 September 2021 the Company announced that the Remuneration
Committee was conducting an ongoing review of the quantum, terms
and form of the LTIP in respect of periods beyond the first
performance period (being the period from 8 January 2021 to 30
September 2021) (the "First Performance Period").
After concluding its review and after consultation with advisers
and Shareholders, the Remuneration Committee recommended, and the
Board was in agreement, that the LTIP would be cancelled in respect
of periods beyond the First Performance Period. The Company will
take time to consult with its advisers and Shareholders in terms of
appropriate schemes/arrangements to replace the LTIP and will make
an announcement in due course.
The number of ordinary shares of 10p each in the Company
("Ordinary Shares"), the subject of awards granted to participants
under the LTIP ("Participants") in respect of the First Performance
Period was determined to be 993,315 Ordinary Shares being released
over a five year deferral period subject to the terms of the LTIP
(the "Deferral Period"). As a consequence of the cancellation of
the LTIP, the Remuneration Committee has accelerated the release to
Participants of the Ordinary Shares which were due to be released
to them over the Deferral Period subject to the lock-in
arrangements detailed below. Further, the Remuneration Committee
has determined that the Participants' entitlements will be settled
net of their National Insurance Contributions and Pay as you Earn
obligations which will be paid by the Company, on behalf of the
Participants, with a commensurate reduction in the number of
Deferred Ordinary Shares issued to Participants. The value of the
Deferred Ordinary Shares was determined at GBP8.30, the closing
share price subsequent to 5 July 2022, the effective date of
cancellation of the LTIP. As a result, the net total of Deferred
Ordinary Shares issued to Participants on 5 July 2022 was 518,909
Ordinary Shares. This represents a significant reduction in the
dilution to Shareholders which would have resulted in the event
that the total of 993,315 Ordinary Shares had been issued to
Participants.
The details of how the shares issuable under the LTIP were
settled are set out below:
Shares 2022
No. GBP000
Shares issued on 5 July 2022 at
GBP8.30 each 518,909 4,307
Shares "retained" to fund cash payment
of employees' PAYE and NI liability 474,406 3,938
---------------------------------------- -------- -------
993,315 8,245
---------------------------------------- -------- -------
The details of the charges reflected in the income statement
over the life of the LTIP until cancellation in the current year
are set out below:
Total 2022 2021
GBP000 GBP000 GBP000
Shares issuable under LTIP 8,245 2,749 5,496
Employers' national insurance 1,278 501 777
---------------------------------- ------- ------- -------
Total share-based payment charge 9,523 3,250 6,273
---------------------------------- ------- ------- -------
Of the 518,909 shares issued on 5 July 2022 under the LTIP the
following were issued to Directors:
Name Shares 2022 2021
No. GBP000 GBP000
Martin Gilbert 160,920 784 1,649
Peter McKellar 126,029 653 1,374
Campbell Fleming 61,685 313 -
------------------ -------- ------- -------
348,634 1,750 3,023
------------------ -------- ------- -------
The Participants have entered into lock-in arrangements with the
Company whereby they are restricted from disposing of Deferred
Ordinary Shares for the period up to 30 September 2026.
14. Post balance sheet events
On 1 November 2022 AssetCo completed the acquisition of SVM
Asset Management Limited for an aggregate consideration of GBP11.2
million satisfied by the issue of GBP9 million nominal of 1% fixed
rate unsecured convertible loan notes 2023 in AssetCo plus GBP2.2
million in cash.
The loan notes may be converted into fully paid ordinary shares
of 1p each in the Company in certain circumstances. Up to GBP2
million in nominal value may be converted on or before 28 February
2023 at the market price at the time of conversion. Thereafter
conversion will be at an effective price of GBP1.45 per ordinary
share. Unless converted the loan notes will be repaid on 31
December 2023. At the date of signing of the financial statements
none of the loan notes had been converted to shares.
This acquisition will be reflected in our 2023 results by which
time the initial acquisition accounting will have been
completed.
On 20 October 2022 River and Mercantile Holdings Limited
completed the renewal of lease agreements for one and three years
on the property at 30 Coleman Street, London which is the
registered office of AssetCo and from which all non-Edinburgh based
group companies operate. In its results for the subsequent period
the Group will recognise a right of use asset and lease liability
for the new lease agreement. The contractual maturities on the
undiscounted minimum lease payments under the new lease liability
amount to GBP323,000 due within one year and GBP1,122,000 due
between one and three years, giving a total commitment of
GBP1,445,000.
On 24 November 2022 the Company announced that it would pay an
interim dividend of 1.3p per share, amounting to GBP1,798,000, on
23 December 2022.
There are no other post balance sheet events.
15. Annual general meeting
A notice convening the annual general meeting will be posted to
shareholders in due course.
16. Electronic communications
This Preliminary Announcement is available on the Company's
website www.assetco.com . News updates, regulatory news and
financial statements can be viewed and downloaded from the
company's website, www.assetco.com . Copies can also be requested,
in writing, from The Company Secretary, AssetCo plc, 30 Coleman
Street, London EC2R 5AL. The Company is not proposing to bulk print
and distribute hard copies of the Annual Report and Financial
Statements for the year ended 30 September 2022 unless specifically
requested by individual shareholders; it can be downloaded from the
Company's website.
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END
NORDZGMZFVFGFZG
(END) Dow Jones Newswires
February 16, 2023 02:00 ET (07:00 GMT)
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