Tatton Asset Management Regulatory News (TAM)

16 November 2023

Tatton Asset Management PLC

("TAM plc", the "Group" or the "Company")

AIM: TAM

UNAUDITED INTERIM RESULTS

For the six-month period ended 30 September 2023

"Strong net inflows underpin the Group's track record of consistent growth"

TAM plc, the investment management and IFA support services group, today announces its interim results for the six-month period ended 30 September 2023 (the "Period").

FINANCIAL HIGHLIGHTS

OPERATIONAL HIGHLIGHTS

Paul Hogarth, Chief Executive Officer, commented:

"The Group has delivered a solid first half result, successfully meeting our strategic objectives and maintaining strong organic growth of revenue and profits. While volatile markets continued to be a challenge, our Assets Under Management/Influence (AUM/I) still reached £14.8 billion and we expect to exceed our £15 billion "Roadmap to Growth" strategy by March 2024.

"I am delighted with the performance of Tatton, which has continued to perform strongly by consistently delivering an average of £150 million net inflows per month over the last eighteen months. This level of net inflow has continued into the second half, reinforcing the attractiveness of the MPS proposition and highlighting our ability to maintain consistent performance even in difficult macroeconomic conditions.

"Paradigm has also delivered a resilient performance in the period, despite a subdued housing market which has led to a changing mix of mortgage lending. We anticipate that this trend will continue throughout the second half of the year, with expectations for Paradigm to maintain its resilient performance.

"We look forward to making further progress over the rest of the year, while remaining acutely aware of the continuing macroeconomic turbulence and market volatility. The Board remains confident in the future prospects of the Group."

For further information please contact:

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

STRATEGIC REVIEW

The Group maintains a track record of steady growth

The Group has performed well in the Period and delivered continued growth in revenue and profits, with strong net inflows reflecting high demand for our services. We have continued to make substantial progress in line with our strategic objectives, in what has been a difficult and volatile market, demonstrating the effectiveness of our business model.

Group revenue for the Period increased by 9.9% to £17.506 million (Sep 2022: £15.934 million). Adjusted operating profit1 for the Period increased by 11.2% to £8.872 million (Sep 2022: £7.982 million), with adjusted operating profit margin1 at 50.7% (Sep 2022: 50.1%).

Pre-tax profit after the impact of amortisation of intangibles relating to acquisitions and joint ventures, finance costs and share-based payment charges increased to £7.693 million (Sep 2022: £6.624 million) and taxation charges for the Period were £2.302 million (Sep 2022: £1.291 million). This gives an effective tax rate of 29.9% when measured against profit before tax. Adjusting for amortisation and share-based payments, the effective tax rate is 25.8%.

The basic earnings per share was 8.97p (Sep 2022: 9.01p). When adjusted for amortisation of intangibles relating to acquisitions and joint ventures, finance costs relating to the unwinding of discounts on deferred consideration, and share-based payment charges, basic adjusted earnings per share was 11.08p (Sep 2022: 10.43p). Adjusted earnings per share fully diluted for the impact of share options was 10.52p (Sep 2022: 9.89p), an increase of 6.4%.

Tatton

Tatton continues to perform strongly and has sustained strong organic net inflows in an environment where, in general, asset managers have been suffering redemptions. In the last six months, organic net inflows have averaged £152 million per month and were in total £910 million (Sep 2022: £907 million). In fact, over the last eighteen months we have now consistently delivered an average of £150 million per month, which reinforces both the attractiveness of the model portfolio services ("MPS") proposition and our ability to maintain consistency of performance even in difficult macroeconomic conditions.

The total AUM/AUI1 at the end of the Period increased to £14.784 billion (Mar 2023: £13.871 billion). As we enter the final leg of the journey in our "Roadmap to Growth" strategy of delivering £15 billion AUM/AUI1 by March 2024, we remain very confident that we will exceed this amount by the target date.

Platforum, the Financial Services research consultants, have maintained their forecast that the MPS market is expected to grow at a rate of 25% per annum and reach up to £200 billion by the end of 2026 (Platforum MPS Report: July 2023). The current level of MPS on platform is £103.5 billion (Dec 2021: £81.4 billion). The Group has £14.784 billion, or 14.3% share of this market (Mar 2023: 13.4%).

Through this market growth and our increased activity, Tatton's revenue has increased by 13.4% to £14.451 million (Sep 2022: £12.738 million) and now accounts for 82.5% of total Group revenue. Meanwhile, Tatton's adjusted operating profit1 grew by 17.3% to £8.986 million (Sep 2022: £7.663 million), delivering an adjusted operating profit margin1 of 62.2% (Sep 2022: 60.2%).

This Period has also seen an expansion in our range of propositions. With the changing shape of the economic landscape and the potential for investor fatigue from market volatility coupled with rising interest rates, we launched a new risk rating within our MPS range, the Money Market risk profile. Our new risk profile offers the potential for clients to receive a return on cash that tracks the Bank of England base rate more closely than most instant access UK bank deposit accounts. While still early days, the initial uptake has been encouraging as we continue to support IFAs and their clients by providing products that meet their evolving needs.

Our strategy to promote and support the growth of the MPS market on platform through a wide-ranging IFA education programme will continue. We also continue to increase our market penetration through a broadened distribution base. As a minimum, we aim to maintain our market share and continue to grow our distribution footprint through meaningful strategic partnerships. In support of this, we have been pleased to see our IFA firms continue to grow by over 5.2% to 914 (Mar 2023: 869) over this Period. We look forward to seeing these close relationships continue to develop in the coming months as intensive activity continues to further promote the Tatton service.

As we look ahead, we will keep the needs of the IFA at the heart of our business as this remains central to all we do. This year we welcomed the launch of Consumer Duty regulation and we continue to help and assist IFAs in meeting the rising regulatory bar by continuing to build and strengthen long-term partnerships. We aim to deliver a consistent high level of service, investment performance and IFA support. Consequently, we were delighted to be recognised as leaders in our field for a sixth year running by Moneyfacts, this year winning both the "Best Investment Service" award for the second consecutive year and also this year the "Best Ethical Fund Manager" - voted for by IFAs across the UK.

As we head towards the end of our £15 billion three-year strategic growth target by the end of March 2024, we have broadly delivered the target with six months remaining. The business has made strong progress over this Period and we look forward to making further progress in the coming years. Setting targets keeps the Group focused and has served the Group well as we have consistently met our goals. It has taken Tatton ten years to grow to £15 billion and we intend to set a new ambitious AUM/AUI1 target following the end of this financial year, March 2024. To do this, we will give careful thought to the stability of the market environment at that time, but more importantly, taking into consideration our leading position in the growing and maturing MPS market, the strength of our brand and the quality of the Tatton proposition.

Paradigm

Paradigm has delivered a resilient performance in the Period, delivering revenue of £3.059 million (Sep 2022: £3.198 million) and adjusted operating profit1 of £0.959 million (Sep 2022: £1.352 million). Paradigm Mortgages increased the number of mortgage firms utilising the services to 1,798 (Mar 2023: 1,751) and Paradigm Consulting increased its members to 437 (Mar 2023: 431).

Paradigm Consulting continues to perform in line with our expectations and Paradigm Mortgages has continued to deliver a strong volume of completions in a challenging economic climate, where lenders are predicting a gross market of c.£220 billion in 2023, c.30% below 2022 volumes of £320 billion. Intermediary channel share, as opposed to mortgages sold direct by banks, continued to grow, reaching c.85% of all new sales and record product transfer maturities despite significantly reduced residential purchases. New mortgage and remortgage activity helped Paradigm Mortgages participate in completions totalling £6.9 billion (Sep 2022: £7.3 billion), a 5.5% reduction, which compares well with the total market and demonstrates the resilience of the Paradigm business.

The ongoing cost of living issues, driven by the economic climate and stubborn inflationary pressures, have negatively impacted mortgage affordability and confidence of both sellers and buyers. As a consequence, mortgage intermediaries have focused on maturities (Product Transfers) which, for the first time on record, are likely to exceed the value of gross mortgages. The impact of rising interest rates has also had a significant impact on both the supply and confidence in both the residential and buy to let mortgage market throughout 2023, and the nature and distribution of our completions this Period has reflected the wider market and shifted towards this lower margin product mix.

Looking forward, CACI, the retail finance benchmarking specialist, confirms that there are c.£176 billion of maturities in the second half of the calendar year 2023, with record peaks expected in both November and December. These product transfer opportunities, combined with a more stable but subdued house purchase market, improving consumer confidence and greater affordability, suggests a similar volume and mix of completions for the second half of our financial year.

There continues to be underlying demand for home ownership in the UK, albeit lower levels of new build activity means stock remains stubbornly low. However, on a point of optimism, subdued house prices and wage increases/inflation have led to a fall of up to 10% in the house price to income ratio, which has led to greater affordability in both consumer and lender outlook.

Lenders are now delivering record levels of choice of available products and rates continue to fall. In addition, with house price falls stabilising, we believe that, once inflation is seen to be under control and rates begin to fall further, pent up purchase activity will once again provide a strong mortgage market.

Separately disclosed items

Share-based payment charges, amortisation of intangible assets relating to acquisitions and joint ventures, and exceptional items are reported separately 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 presented within the internal reporting to the Board. Some of these measures are also used for the purpose of setting remuneration targets.

Balance sheet

The Group's balance sheet remains healthy, with net assets at 30 September 2023 totalling £40.3 million (Sep 2022: £35.7 million) reflecting the continued growth and profitability of the Group.

Cash resources

Cash generated from operations before exceptional costs was £8.3 million (Sep 2022: £7.3 million) and was 93% of adjusted operating profit1. The Group remains debt free, with closing net cash at the end of the Period of £24.2 million (Mar 2023: £26.5 million). The cash resources are after the purchase of own shares of £2.6m, the payment of corporation tax of £2.2 million and dividend payments of £6.0 million relating to the final dividend for the year ended 31 March 2023.

Issue of new shares

In the Period, the Group issued 455,677 new shares, which were issued to satisfy the exercise of options related to the Enterprise Management Incentive ("EMI") and Company's Save As You Earn ("SAYE") employee share option schemes.

Dividend proposal and capital adequacy

In this interim period, the Board recommends an increase in the interim dividend to 8.0p (Sep 2022: 4.5p), an increase of 77.8%. A larger element of this year's total dividend has been brought forward to the interim dividend and reflects the confidence of the Board in the Group's financial performance, high levels of cash and liquidity, and headroom over our regulatory capital requirement. Our long-held progressive dividend policy of paying c.70% of annual adjusted diluted earnings per share remains unchanged.

The interim dividend of 8.0p per share, totalling £4.8 million, will be paid on 8 December 2023 to shareholders on the register at close of business on 24 November 2023 and will have an ex-dividend date of 23 November 2023. In accordance with International Financial Reporting Standards ("IFRSs"), the interim dividend has not been included as a liability in this interim statement.

Business risk

The Board identified principal risks and uncertainties which may have a material impact on the Group's performance in the Group's 2023 Annual Report and Accounts (pages 32 and 33), and believes that the nature of these risks remains largely unchanged at the half year. The Board will continue to monitor and manage identified principal risks throughout the second half of the year.

Post balance sheet events

There have been no post balance sheet events.

Going concern

As stated in note 2.2 of these condensed financial statements, the Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period not less than twelve months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing these condensed financial statements.

Summary and outlook

The Group has delivered a solid first half result, delivering against our strategic objectives and maintaining strong organic growth of revenue and profits. While volatile markets continued to remain a drag on asset growth at the end of this Period, our AUM/AUI1 still reached £14.8 billion and we are pleased with the overall performance of the Group.

Net inflows remained very strong in the first six months and we remain focused on continuing to deliver similar levels of flows but remain mindful of the economic environment. However, we expect to exceed our £15 billion "Roadmap to Growth" strategy by March 2024 and Paradigm should continue to perform in line with the first half of the year.

In summary, we look forward to making further progress over the rest of the year, while remaining acutely aware of the continuing macroeconomic turbulence and market volatility. The Board remains confident in the future prospects of the Group.

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME

For the six months ended 30 September 2023

There were no other recognised gains or losses other than those recorded above in the current or prior period and therefore a statement of other comprehensive income has not been presented.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 September 2023

The financial statements were approved by the Board of Directors on 15 November 2023 and were signed on its behalf by:

Paul Edwards

Director

Company registration number: 10634323

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 September 2023

CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 September 2023

The accompanying notes are an integral part of the interim financial statements.

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, United Kingdom. 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 IFAs, the provision of mortgage adviser support services and the marketing and promotion of multi-manager funds run by the companies under Tatton Capital Limited.

The condensed consolidated interim financial statements for the six months ended 30 September 2023 do not constitute statutory accounts as defined under section 434 of the Companies Act 2006. The Annual Report and Accounts (the "financial statements") for the year ended 31 March 2023 were approved by the Board on 12 June 2023 and have been delivered to the Registrar of Companies. The auditor, Deloitte LLP, reported on these financial statements; its report was unqualified, did not contain an emphasis of matter paragraph and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

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.

2. Accounting Policies

The principal accounting policies applied in the presentation of the interim financial statements are set out below.

2.1 Basis of preparation

The unaudited condensed consolidated interim financial statements for the six months ended 30 September 2023 have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the United Kingdom. The condensed consolidated interim financial statements should be read in conjunction with the financial statements for the year ended 31 March 2023, which have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the United Kingdom. The condensed consolidated interim financial statements were approved for release on 15 November 2023.

The condensed consolidated interim financial statements have been prepared on a going concern basis and prepared on the historical cost basis.

The condensed consolidated interim financial statements are presented in sterling and have been rounded to the nearest thousand (£'000). The functional currency of the Company is sterling as this is the currency of the jurisdiction where all the Group's sales are made.

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 key accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in the consolidated financial statements.

The accounting policies adopted by the Group in these interim financial statements are consistent with those applied by the Group in its consolidated financial statements for the year ended 31 March 2023.

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. To form the view that the consolidated financial statements should continue to be prepared on an ongoing basis in light of the current economic uncertainty, the Directors have assessed the outlook of the Group by considering various market scenarios and management actions. This review has allowed management to assess the potential impact on income, costs, cash flow and capital, and the ability to implement effective management actions that may be taken to mitigate the impact. Accordingly, the Directors continue to adopt the going concern basis in preparing these financial statements.

2.3 New accounting standards

There have been a number of amendments to standards which have been adopted in the period, but these have not had a significant impact on the Group's financial results or position.

A number of new standards are effective for annual periods beginning after 1 April 2024 and earlier application is permitted; however, the Group has not early adopted the new or amended standards in preparing these condensed consolidated financial statements.

None of the standards not yet effective are expected to have a material impact on the Group's financial statements.

2.4 Operating segments

The Group comprises the following two operating segments, which are defined by trading activity:

· Tatton - investment management services.

· Paradigm - the provision of compliance and support services to IFAs and mortgage advisers.

The Board is considered to be the chief operating decision maker.

2.5 Significant judgements, key assumptions and estimates

In the process of applying the Group's accounting policies, which are described in the consolidated financial statements for the year ended 31 March 2023, 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. If the revision affects both current and future periods, it is revised in the period of the revision and in future periods. Changes for accounting estimates would be accounted for prospectively under IAS 8.

The judgements, estimates and assumptions applied in the interim financial statements, including the key sources of estimation uncertainty, were the same as those applied in the Group's last annual financial statements for the year ended 31 March 2023.

Management have reviewed the estimates for the satisfaction of the performance obligations attached to certain awards in the share-based payment schemes. It is currently estimated that 100% of the options in the existing schemes will vest.

2.6 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. All the APMs used by the Group are set out in note 17, including explanations of how they are calculated and how they can be reconciled to a statutory measure where relevant.

3. Segment Reporting

Information reported to the Board of Directors as the chief operating decision maker ("CODM") for the purposes of resource allocation and assessment of segmental performance is focused on the type of revenue. The principal types of revenue are discretionary fund management and the marketing and promotion of the funds run by the companies under Tatton Capital Limited ("Tatton") and the provision of compliance and support services to IFAs and mortgage advisers ("Paradigm").

The Group's reportable segments under IFRS 8 are therefore Tatton, Paradigm, and "Central", which contains the operating Group's central overhead costs. Centrally incurred overhead costs are allocated to the Tatton and Paradigm divisions on a pro rata basis as this is how information is presented to the Group's CODM.

The principal activity of Tatton is that of discretionary fund management of investments on platform and the provision of investment wrap services. The principal activity of Paradigm is that of provision of support services to IFAs and mortgage advisers. 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:

All turnover arose in the United Kingdom.

4. Separately Disclosed Items

Separately disclosed items shown separately on the face of the Consolidated Statement of Total Comprehensive Income or included within Administrative expenses reflect costs and income that do not relate to the Group's normal business operations and that are considered material individually, or in aggregate if of a similar type, due to their size or frequency.

Amortisation of acquisition-related intangible assets

Amortisation of intangible assets relating to joint ventures is £104,000 (2022: £nil). This includes the acquisition of customer relationships and brands. Amortisation of other customer relationships and brand intangible assets is £206,000 (2022: £207,000).

Payments made for the introduction of customer relationships and brands that are deemed to be intangible assets are capitalised and amortised over their useful life, which has been assessed to be 10 years. This amortisation charge is recurring over the life of the intangible asset, though has been excluded from the core business operating profit since it is a significant non-cash item. Underlying profit, being adjusted operating profit, represents largely cash-based earnings and more directly relates to the financial reporting period.

Share-based payment charges

Share-based payments is a recurring item, though the value will change depending on the estimation of the satisfaction of performance obligations attached to certain awards. It has been excluded from the core business operating profit since it is a significant non-cash item. Underlying profit, being adjusted operating profit, represents largely cash-based earnings and more directly relates to the financial reporting period.

Exceptional items

Acquisition-related expenses in the prior year relate to the Group acquiring 50% of the share capital of 8AM Global Limited and also relate to one-off costs incurred on the acquisition of the Verbatim funds. These costs were treated as exceptional items.

5. Taxation

The reasons for the difference between the actual tax charge for the Period and the standard rate of corporation tax in the UK applied to profit for the Period are as follows:

An increase in the UK corporation tax rate from 19% to 25% became effective 1 April 2023 and has increased the Company's current tax charge accordingly. The deferred tax asset at 30 September 2023 has been calculated based on these rates, reflecting the expected timing of reversal of the related temporary differences (31 March 2023: 25%).

6. 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 Period.

Number of shares

Own shares held by an EBT represents the Company's own shares purchased and held by the EBT, shown at cost. During the Period, the EBT was gifted 346,896 of the Company's own shares. These shares were fully utilised during the Period to satisfy the exercise of employees' EMI options. The EBT subsequently purchased a further 513,800 of the Company's own shares which remain unutilised at the Period end. In the year ended 31 March 2023, the EBT purchased 139,500 of the Company's own shares, which were fully utilised during that year to satisfy the exercise of employee share options.

1. Alternative performance measures are detailed in note 17.

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.

In August 2023, Tatton Asset Management plc paid the final dividend related to the year ended 31 March 2023 of £6,006,000, representing a payment of 10.0p per share.

In the year ended 31 March 2023, Tatton Asset Management plc paid the final dividend related to the year ended 31 March 2022 of £5,012,000, representing a payment of 8.5p per share.

In addition, the Company paid an interim dividend of £2,904,000 (2022: £2,357,000) to its equity shareholders. This represents a payment of 4.5p per share (2022: 4.0p per share).

7. Goodwill

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 then an impairment charge is made. Such impairment is charged to the Consolidated Statement of Total Comprehensive Income.

Goodwill impairment testing

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

Goodwill acquired in a business combination is allocated, at acquisition, to the cash- generating units ("CGUs") or group of units that are expected to benefit from that business combination. The Directors test goodwill annually for impairment, or more frequently if there are indicators that goodwill might be impaired. The Directors have considered the carrying value of goodwill at 30 September 2023 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 2024, 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 11.2% (2022: 11.5%). 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.

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.

8. Investment in Joint Ventures

Additions in the prior period relates to the acquisition of 50% of the share capital of 8AM Global Limited for an initial consideration of £3,838,000 followed by discounted deferred consideration of £3,118,000 (undiscounted deferred consideration £3,501,000) based on certain performance measures. The initial consideration was paid by way of shares in Tatton Asset Management.

9. Intangibles

All amortisation charges on intangible assets are included within Administrative expenses in the Consolidated Statement of Total Comprehensive Income.

10. Property, Plant and Equipment

All depreciation charges are included within Administrative expenses in the Consolidated Statement of Total Comprehensive Income.

The Group leases buildings, IT equipment and a car. The Group has applied the practical expedient for low value assets and so has not recognised IT equipment within right-of-use assets.

The average lease term is five years. No leases have expired in the current financial Period.

Right-of-use assets

At 30 September 2023, the Group is committed to £66,000 for short-term leases. The total cash outflow for leases amounts to £168,000.

11. Trade and Other Receivables

The carrying value of trade receivables is considered a fair approximation of their fair value. The Group applies the IFRS 9 simplified approach to measuring expected credit losses ("ECLs") for trade receivables at an amount equal to lifetime ECLs. 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 (2022: £nil).

The amounts due from related parties are net of provisions. The Group holds no provisions (2022: £1,311,000).

Trade receivable amounts are all held in sterling.

12. Trade and Other Payables

The carrying values of trade payables, amounts due to related parties, accruals and deferred income are considered reasonable approximations of fair value. Trade payable amounts are all held in sterling.

13. Financial Instruments

The Group finances its operations through a combination of cash resources and other borrowings. Short-term flexibility could be satisfied if required 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).

All financial assets except for financial investments are categorised as Loans and receivables and are classified as level 1. Financial investments are categorised as Financial assets at fair value through profit or loss and are classified as level 1 and the fair value is determined directly by reference to published prices in an active market.

Financial assets at fair value through profit or loss (level 1)

All financial liabilities except for contingent consideration are categorised as Financial liabilities measured at amortised cost and are also classified as level 1. The only financial liabilities measured subsequently at fair value on level 3 fair value measurement represent contingent consideration relating to a business combination.

Financial liabilities at fair value through profit or loss (level 3)

14. Equity

15. Share-Based Payments

During the Period, a number of share-based payment schemes and share options schemes have been utilised by the Company.

(A) 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. 3,022,735 options with a weighted average exercise price of £1.89 were granted, exercisable in July 2020. There have been nil (2022: nil) options exercised during the Period from this scheme.

The scheme was extended on 8 August 2018, 1 August 2019, 28 July 2020, 15 July 2021, 25 July 2022 and 24 July 2023, with 1,709,498, 193,000, 1,000,001, 279,858, 274,268 and 204,523 zero cost options granted in each respective year. These options are exercisable on the third anniversary of the grant date.

The options granted in 2018 vested and became exercisable in August 2021. There have been 50,000 (2022: 50,000) options exercised during the Period from this scheme. 168,193 of these options lapsed in 2021.

The options granted in 2019 vested and became exercisable in August 2022. There have been no options exercised during the Period from this scheme (2022: 139,500).

The options granted in 2020 vested and became exercisable in July 2023. There have been 296,896 options exercised during the Period from this scheme. 27,919 of these options lapsed in the Period.

The options granted in 2021, 2022 and 2023 vest in July 2024, July 2025 and July 2026 respectively provided certain performance conditions and targets, set prior to grant, have been met. If the performance conditions are not met, the options lapse.

A total of 2,627,186 options remain outstanding at 30 September 2023, 1,878,861 of which are currently exercisable. 6,961 options were forfeited in the Period (2022: 4,250). Within the accounts of the Company, the fair value at grant date is estimated using the appropriate models, including both the Black-Scholes and Monte Carlo modelling methodologies.

(II) Tatton Asset Management plc Sharesave scheme ("TAM Sharesave scheme")

On 7 July 2017, 5 July 2018, 3 July 2019, 6 July 2020, 2 August 2021, 4 August 2022 and 25 August 2023, the Group launched all employee Sharesave schemes for options over shares in Tatton Asset Management plc. Employees are able to save between £10 and £500 per month over the 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.

The 2020 TAM Sharesave scheme vested in August 2023 and 108,781 shares options became exercisable. Over the life of the 2021, 2022 and 2023 TAM Sharesave schemes it is estimated that, based on current savings rates, 39,160, 52,387 and 93,850 share options respectively will be exercisable. The exercise price for these schemes is shown below.

During the Period, 108,781 (2022: 48,462) options have been exercised and 2,656 (2022: 2,494) options have been forfeited.

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 options and the average 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 (B) and (C) respectively.

(B) Valuation assumptions

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

(C) IFRS 2 share-based option costs

16. Related Party Transactions

There have been no related party transactions that have taken place during the Period that have materially affected the financial position or the performance of the Group. There were also no changes to related party transactions from those disclosed in the 2023 Annual Report and Accounts that could have a material effect on the financial position or the performance of the Group. Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed. There were no other transactions with related parties which were not part of the Group during the Period, with the exception of remuneration paid to key management personnel.

17. Alternative Performance Measures

Income statement measures

Other measures

18. Events after the Reporting Period

There were no material post balance sheet events.

19. Contingent Liabilities

At 30 September 2023, the Directors confirmed there were contingent liabilities of £nil (2022: £nil).